New Arbitrations Legislation

The Commercial Arbitration Bill 2016 (the Bill) was passed by the ACT Legislative Assembly on 21 March 2017, and will (once notified) replace the existing Commercial Arbitration Act 1986 (ACT).

Its object is to facilitate faster, fairer and hopefully cheaper arbitrations in line with international best practice. The new laws will modernise the ACT’s commercial arbitration framework with a view to ensuring that commercial arbitrations are undertaken in conformity with the UNCITRAL Model Law on International Commercial Arbitration (Model Law).

Up until now, the ACT has been the only jurisdiction in Australia not to have adopted and enacted versions of the Model Law. Now that the Bill has been passed, the domestic arbitration framework in Australia will be uniform across the country which will hopefully provide more certainty for parties and for construction projects operating across jurisdictions.

Why do we need new arbitration laws?

Not only is the ACT out of step with other Australian jurisdictions (and the international sphere), but its arbitrations are more vulnerable to court interference. This is due to the number of discretions given to courts under the existing Act. This means disputes will likely be subject to unnecessary delay and expense (the exact opposite of what arbitration hopes to achieve). The Bill not only modernises the ACT with best practice arbitration procedures but also goes toward ensuring disputes are managed as timely and cost-effectively as possible (and in a way which is also relative to the complexity of the issues in dispute).

What will change?

Under the Bill, arbitrators will have the power to grant ‘interim measures’. This means they can make temporary orders regarding discovery of documents, inspection of property, and taking of photographs and samples. Ultimately, this means that parties will be less likely to apply to courts for these measures, meaning the process will be less drawn out and less costly. Arbitrators will also be able to conduct ‘stop-clock’ arbitrations meaning that time will be allocated to each party and strictly enforced in any hearing. Such processes are intended to assist in reducing time and cost, which has always been a key feature of arbitration (as compared to litigation).

There are a few areas where the Bill differs slightly from the Model Law, but most of these differences are minor, and simply provide the arbitrator with the necessary discretion to decide certain aspects of the arbitration process based on the circumstances in front of them. For example, under the Bill, an arbitrator can determine costs at its discretion and to direct that parties may be limited to a specific amount. Under the Model Law, the costs of the arbitration are borne by the unsuccessful party (subject to the circumstances assessed by the arbitrator).

The Bill also provides proper certainty as to the arbitration process, including issues such as recourse against the award and natural justice issues (up until now, these issues have been dealt with by lawyers according to the case law, and open to challenge).

Will it really affect me and my contract?

If your contract contains an arbitration clause, the Bill may impact on how the procedures are interpreted and applied by the arbitrator. Most importantly, a court will be less capable of interfering with the arbitration process if the clause is activated. Under the Bill, an arbitrator must exercise its functions consistent with the paramount objectives of arbitration (i.e. to facilitate a fair and final resolution of disputes without unnecessary delay or expense). No such object is currently enunciated under the existing Act, meaning the key principles of arbitration can often be lost in complex construction cases.

You will also have more certainty around confidentiality in any arbitration proceedings which you might be involved in. The Bill provides for a comprehensive confidentiality framework, to better protect commercial interests and business reputations.

What should I do to ensure my contracts reflect best practice arbitration?

Talk to us. The team at Meyer Vandenberg can assist you with understanding your rights and obligations arising out of any arbitration agreement, as well as advising you on any procedural issues which may arise during the arbitration process.

You should also ensure that any standard form construction contracts are updated to reflect best practice commercial arbitration (in line with the Bill and Model Law).

For more information contact the Building and Construction Dispute Resolution Team:

Alisa Taylor | Partner
(02) 6279 4444