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New Australian Legislation gives more power to arbitrators and creates uncertainty as to its application by Eugene Duhovnikoff BA/LLB and Simon Reeves LLB/LLM

The Commercial Arbitration Act 2013 (Queensland -Qld) came into force on 17 May of that year.[1] It is the latest Act enacted in Australia in accordance with the draft Commercial Arbitration Bill issued in 2009 by SCAG.[2]

 

Aim of the Act

An object of the Act is to 'facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delays or expense."[3]

The Act must be interpreted and the functions of the arbitral tribunal must be exercised so that (as far as practicable) the paramount object of the Act is achieved.[4]

 

Key provisions

The Act leaves the power to decide as how the disputes are to be resolved to the parties themselves.[5]

This obliges the parties and their advisors to choose such procedures which would ensure that the disputes are settled in a cost-effective manner.[6]

In case of agreement not being reached the arbitrational tribunal has the power to[7] conduct the arbitration in such a manner as it considers fit.

A court does not have the power to intervene into an arbitration process except where so provided by the Act and the court's power to grant a stay on the proceedings is removed [8]subject to an arbitral agreement [9] under section and the classical, limited grounds for setting an award aside.[10]

The effect

More power to arbitrators The new legislation places a limit on the principle of parties' autonomy which, in short, can be stated as the parties' freedom to agree to a procedure for the conduct of the arbitration. Under this new 2013 legislation the parties cannot choose a procedure or a process which would cause undue delay and expense. Similarly the arbitrators cannot choose a procedure which would cause undue delay and expense following a failure by the parties to choose one for themselves. Coupled with restrictions on the courts' power to intervene the arbitrators can now truly influence the local alternative dispute resolution setting.

Unlike a legal situation in neighboring New Zealand where some of the provisions of the local Arbitration Act 1996 apply to domestic and international arbitration Australia's legal system requires the place of arbitration (whether in a state or territory) to be designated, even when it applies to a domestic arbitration. Uncertainty and the 'place of arbitration' On the one hand s. 1 (2) of the Act provides that the provisions of a state's Commercial Arbitration Act can only apply if Queensland is the place of arbitration. [11] On the other hand the parties are free to agree to the place of arbitration (whether in Queensland 19 or elsewhere). Failing such an agreement, the place of arbitration is to be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.[12]

Thus, an arbitrator cannot be appointed and the place of arbitration determined until the place of arbitration has been designated. That creates an uncertainty which has to be resolved soon by further statutory provision before the courts would do so at the expense of two or more parties being forced to become a test case to resolve the legislative deficiency . We urge those who are engaged in drafting arbitration clauses to pay particular attention to this uncertainty before it is resolved in ways unacceptable to those who would seek relief under the new Act.

 

Conclusion

There is a certain degree of uncertainty regarding the 'place of arbitration'. However it is hoped that this uncertainty would not stand in the way of local arbitrators who, armed with this new semi-judicial power, now have a real opportunity to improve the commercial efficacy of local arbitrations.

 

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Professional assistance

You should therefore not rely on the information in this website as an alternative to obtaining your own legal advice from your attorney or other professional.

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[1] The previous relevant legislation being Commercial Arbitration Act 1990 (Qld) is thus repealed.

[2] This process began in 201 0 with New South Wales enacting its domestic arbitration legislation based on the draft Bill.

[3]s. 1 AC of the Act.

[4]s. 1AC(3) of the Act

[5] s. 19 of the Act.

[6] An act puts an obligation on the parties to do all things necessary for proper and expeditious conduct of the arbitral tribunal (s. 24B of the Act).

[7] Subject to the provisions of the Act: 19 of the Act.

[8] s.5 of the Act.

[9] s.8(l) of the Act.

[10] s.34 of the Act.

[11] Except sections 8,9 17H, 171, 17J, 35 and 36.

[12] s 20(2) of the Act.

Reeves/Duhovnikoff & Associates Ltd. 2017

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