Arbitration Mediation Adjudication Expert Determination Conciliation

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1 The Australian Arbitration Mediation Adjudication Expert Determination Conciliation ADRReporter The Australian CIArb ADRReporter Australia Issue 14 - March 2010 Quarterly Bulletin of The Chartered Institute of Arbitrators (Australia) Limited - Issue No 14 - March 2010 Arbitration in US Baseball Photograph: US Baseball Pitcher Tim Redding playing for The Washington Nationals

2 The Chartered Institute of Arbitrators (Australia) Limited Level 6, 50 Park Street, Sydney, NSW, 2000, Australia Editorial That was easy - now for the hard part Michael Sanig Executive Officer: Emma Matthews ( (02) Fax: (02) info@arbitrators.org.au President: Derek Minus ( (02) Fax: (02) Derek.Minus@ciarb.org.au Vice-presidents: Alan Limbury Albert Monichino Peter Megens Robert Morgan Pathma Nagarajan Hon Treasurer Michael Sanig ( Fax: (02) msanig@aussiebroadband.com.au Company Secretary John Wakefield Board of Directors: Alan Chuck Steven Griffith Ian Nosworthy Georgia Quick Paul Roberts Sam Luttrell Rashda Rana Damian Sturzaker Australian Business Number: Chapter Convenors: NSW: Michael Sanig VIC: Albert Monichino Qld: Steven Griffith SA: WA: Establishing an International Disputes Centre at 1 Castlereagh Street in the in Sydney Central Business District will almost certainly, in time, have been seen to have been the easiest part of the process of trying to put Australia on the map as a recognised centre for settling international commercial disputes. Opening a well equipped centre is just the beginning, marketing and selling what Australia has to offer will be a much harder ask. Much has been made of the fact that $600,000 will be spent on the fit-out. In construction terms that is small beer. The contributions of both the Commonwealth and the NSW Governments are miniscule - $100,000 from each is buying a great deal for little outlay and they took most of the kudos at the launch media conference. We have not been told what it is going to cost to run the Centre or where that money is going to come from. One assumes that room hire will have to be aggressively pursued as a major source of income. There are already institutional rooms available for dispute resolution in Sydney, including those at the Bar Association and at IAMA, so the new AIDC will be entering what is crowded field with no institutional loyalty. Who is going to fund the marketing budget that is going to be needed to promote the Centre both at home and overseas? Here we have to be talking serious money if the AIDC is to make any impression in the minds of possible overseas users. The fact is that whilst Australia has a lot going for it, it also has serious disadvantages which, not least of all, is the perception that we are just too far from the centre of activity to make Sydney a viable alternative when compared to either Singapore or Hong The location of the new Australian International Disputes Centre Kong. The idea that it is just a short hop to Australia from Asia may sound easy if you say it quickly enough but, in reality, it is a slog. A huge educational effort is required to convince even Australian lawyers to name Sydney as the seat in any dispute that may be referred to arbitration. However, even if Australia is named as the seat for a dispute, the matter does not have to be heard here so the flow-on effect hoped for - professional services, hospitality, tourism and support sectors, might not eventuate. The aggressive promotion of the Singapore International Arbitration Centre (SIAC) coupled with the recent opening of Maxwell Chambers should leave Australia in no doubt that it has a real fight on its hands if it is to gain any substantial market share (Continued on page 3) 2

3 The Australian ADRReporter Editor: Michael Sanig Editorial correspondence, articles etc for publication should be sent to:- PO Box 57, OURIMBAH, NSW, 2258 Tel: (02) Fax: (02) Mobile: com.au Articles can be submitted in Word or RTF format. Please submit photographs or images as JPEG files 300dpi or greater. Please do not use double spacing within paragraphs. Please use endnotes not footnotes. All opinions expressed in The Australian ADR Reporter are those of the contributor and publication of same does not imply endorsement by The Chartered Instituite of Arbitrators (Australia) Limited or any of its officers. Published four times per year. Copy Dates: Jun May Sep Aug Dec Nov Mar Feb All articles 2010 The Chartered Institute of Arbitrators (Australia) Limited - Permission to reproduce any item should be obtained by writing to the Editor at the address stated above. Editorial The hard part is coming (Continued from page 2) of international commercial dispute work. The magnificent four storey building at the junction of Maxwell Road and Cecil Street in downtown Singapore makes 1 Castlereagh Street look second class. The Chambers house every arbitral institution in Singapore - it is a veritable one stop shop complete with six restaurants and coffee shops. The only thing missing is a court for hearings!! In contrast, whilst the head office of CIArb Australia will relocate to AIDC, IAMA will remain firmly entrenched in Melbourne and certainly, at the time of writing, there was no plan to move its Sydney office into the new Centre. And whilst the Cafe Banksia and a sandwich shop are located on the ground floor of No 1 along with a travel agent and a NAB ATM, it doesn t quite have the same cachet as Clay Abode, Zaffran or the Osvaldo Ristorante Italiano. Robert McLelland continues to argue that the proposed changes to the International Arbitration Act will create an international best practice legal framework for arbitration in Australia. We continue to maintain that the changes do not go far enough especially in regard to single jurisdiction and arbitrator immunity. These are just two other issues that play into the hands of our competitors. Let no one doubt that the opening of the AIDC is welcomed and those involved with its creation are to be congratulated. The hard work is only just starting. The official launch is just the opening skirmish in what could well be a long and bloody war to make the Centre a success. Let the battle commence! Michael Sanig Seat of the arbitration CIArbNews Most legal systems recognise the concept of a seat of the arbitration, which is a geographical and legal jurisdiction to which the arbitration is tied. The seat will normally determine the procedural rules (lex arbitri) which the arbitration follows, and the courts which exercise jurisdiction over the seat will have a supervisory role over the conduct of the arbitration. Parties to the arbitration are free to choose the seat of arbitration and often do so in practice. If they do not, the arbitral tribunal will do it for them. Whereas it is possible to detach procedural law from the seat of arbitration (e.g. seat in Switzerland, English procedural law) this creates confusion as it subjects the arbitration to two controlling and possibly conflicting laws. The procedural law of arbitration, normally determined by the seat, ought to be distinguished from the procedure that the arbitration panel will follow. The latter refers to daily operation of the arbitration and is normally determined either by the institution in question (if arbitration is institutional, e.g. ACICA Rules) or by reference to a ready-made procedure (such as the UNCITRAL Rules). The seat of arbitration might not be the same as the place where proceedings are actually happening. Thus, for instance, an ACICA arbitration may have its seat in Sydney (and therefore be governed by the NSW law or Commonwealth law lex arbitri and ACICA procedural rules) but may take place outside Australia. The problem facing AIDC is that whilst more arbitrations may name Sydney as the seat, there is a likelihood that the venue for the hearings will not be in Australia at all. MS The newly opened Maxwell Chambers in Singapore 3

4 Eight places to be contested on the Board Annual General Meeting to take place on 28 April Five Board members are not standing for re-election and three have renominated This year s annual general meeting of CIArb Australia will be held on Wednesday 28 April, two days after the Monday Bank Holiday which has been promulgated in New South Wales and other states because Anzac Day falls on a Sunday this year. The AGM will be held at the offices of Clayton Utz, 1 O Connell Street, Sydney commencing at 5.30pm. It will not be broadcast to other states but members are invited to join in by telephone. Dial-in details The dial in details are as follows:- Access Numbers: ; or (02) Meeting Number: PIN: 8933 Basic User instructions are: Step 1 - Dial your Access Number Step 2 - At the prompt, enter (Press * before and after) Step 3 - At the next prompt, enter 8933 (Press * before and after) Not standing for re-election: Top row (l-r) David Moore who died in February, Alan Limbury and Alan Chuck, (bottom row) Jim Creer and Pathma Nagarajan. Sitting members retire This year, eight board seats out of sixteen are up for grabs. At the time of going to press, this was the situation regarding who was standing for re-election and who wasn t: Five Board members are required to re-nominate as part of the annual rotation. Of the five, Derek Minus, Michael Sanig and Ian Nosworthy have declared their intention to restand. Alan Limbury and Alan Chuck have announced that they are not restanding for election. Three other former sitting Board members are also not standing. David Moore who died on 27 February, Jim Creer, who having reached the age of 80 is required to stand down, and Pathma Nagarajan has announced her resignation from the CIArb Australia board. During the year Damian Sturzaker and Rashda Rana were co-opted onto the Board to replace David Moore and Jim Creer and, under the Constitution, are required to renominate as well. This means that for the first time, in many years, half the Board of Directors is up for election. The full list of candidates for the eight board places is:- Derek Minus Michael Sanig Ian Nosworthy Rashda Rana Damian Sturzaker Bjorn Gehle Amanda Lees Simon Davis Jos Mulcahy Kim Middleton Francis Jackson Ballot forms and biographical details of each candidate were due to be sent out during the week of 22 March. The election for Board members will close on 19 April. 4

5 CIArb Director-General visits Australia 2010 Diploma Course to be held in Malaysia The 2010 Diploma Course in I n t e r n a t i o n a l C o m m e r c i a l Arbitration will be held in Penang, Malaysia from 2 to 9 October. Further details and booking information will be published in the next edition of The Australian ADR Reporter. Please register your interest with the Executive Officer at info@arbitrators. org.au. Fast track to Fellowship The next course will take place in Sydney from April and is open to experienced members who would like to be assessed for fellowship. An Award Writing Workshop will be held on 1-2 May. Please contact Emma Matthews on to enrol for either course. Michael Forbes-Smith (above); meeting with the RICS with Derek Minus (below). Michael Rhodes (bottom right) spoke about plans for an Oceania chapter at the Planning Day. The Director-General of the Chartered Institute, Michael Forbes-Smith, made a visit to Australia at the end of January which coincided with the Australia Day holiday. He attended a Planning Day which was held on 25 January in Sydney and also met with our Patron Murray Gleeson and the NSW Chief Justice James Spigelman. Michael Forbes-Smith then travelled to Queensland where he met chapter members at a cocktail party hosted by Minter Ellison and held talks with the Oceania branch of the Royal Institution of Chartered Surveyors regarding a possible joint cooperation agreement. Australian teams for Vis Moots A number of universities are competing in year s Vis Moot competitions which will be held in from March in Hong Kong and from 26 March to 1 April in Vienna. Competing in this year s Vis Moot East in Hong Kong are: Bond University, Deakin University, Edith Cowan University, Griffith University, La Trobe University; and Victoria University Deakin, Griffith and Victoria University will also be competing in Vienna and are joined by the University of Sydney, University of New South Wales and University of Technology, Sydney. IAMA Conference to be held in Christchurch The Institute of Arbitrators and Mediators Australia (IAMA) will be holding its 2010 conference in Christchurch, New Zealand as a joint event with the Arbitrators and Mediators Institute of New Zealand (AMINZ). It will take place from 5-7 August. 5

6 Sydney wins race for new International Dispute Centre Alex Baykitch, vice-president of ACICA, introduces the NSW Attorney-General, John Hatzistergos (left) and Robert McClelland, the Commonwealth Attorney-General at the launch of the new Australian International Dispute Centre in Sydney. Sydney is hoping to share in the booming market in commercial dispute resolution with the announcement that the first dedicated international dispute resolution centre will be established in the CBD later this year. Commonwealth Attorney-General Robert McClelland and NSW Attorney-General John Hatzistergos unveiled plans on 3 March to fit out Australia s first dedicated international dispute resolution centre in Sydney. Australia is well placed to capitalise on the booming global market for cross border dispute resolution, particularly in the Asia Pacific region, Mr McClelland said. We enjoy very close ties to Asia and Europe, we have stable and robust economic, political and legal environments and we boast some of the best legal practitioners in the world. NSW Attorney General John Hatzistergos said a prime location has been selected for the Australian International Disputes Centre with the fit out to begin this month and the centre expected to open mid-year. This will be a world class seat in a prime CBD location close to existing legal services that will position Sydney as the new regional hub for international dispute resolution, he said. The $600,000 facility will feature world class communication, audiovisual and video conferencing facilities, tribunal facilities, conference rooms and access to translation and transcription services. The Centre, jointly funded by the Commonwealth and NSW Governments, the Australian Centre for International Commercial Arbitration (ACICA) and the Australian Commercial Disputes Centre, will strengthen capacity for corporations to resolve disputes without the need for court action. President of ACICA, Professor Doug Jones, who was overseas at the time of the launch, has estimated the direct and indirect economic benefits of the centre are likely to run into tens of millions of dollars each year. As well as the legal fees flowing to the centre and the legal services sector, there will be enormous flow-on for the professional services, hospitality, tourism and support sectors, he said. The fact is that international arbitration is emerging as the preferred choice for resolving commercial disputes, particularly by Asian business. The explosion in arbitration is largely due to the fact that international investors want to avoid the uncertainty of litigation in a foreign court system with the associated lack of familiarity over processes. Mr McClelland said ongoing reforms to arbitration laws, at both a State and Federal level, will create an international best practice legal framework for arbitration in Australia. Q&A What about the Australian International Disputes Centre? The Australian International Disputes Centre will be located at 1 Castlereagh Street, Sydney. The premises will include a main tribunal room, a second tribunal or conference room, six private conference rooms, an office area for support staff and main reception areas. There will be firstrate communications, audiovisual and video conferencing systems. Work on the fitout is due to start in March, The $600,000 in capital works will be jointly funded by the Commonwealth and NSW Governments with the Australian Centre for International Commercial Arbitration and Australian Commercial Disputes Centre. How much is the market in international dispute resolution growing? In 2008 a PricewaterhouseCoopers survey, International Arbitration: Corporate attitudes and practices, revealed 73% of corporations prefer to use arbitration to resolve their cross-border disputes rather than transnational litigation and saw arbitration as a means to successfully preserve business relationships. ACICA, Australia s only international arbitral institution, say 2009 figures reveal that the number of cases handled by major international arbitration centres have increased from between 50 to 150 percent over the past decade. ACICA note the reason for the rapid growth is largely due to the global financial crisis which has seen an increase of commercial disputes. ACICA note because international investors want to avoid the uncertainty of litigation in a foreign court system - excessive time and costs, the lack of familiarity with foreign court procedures, language barriers, a lack of confidentiality and a fear some countries may lack impartial judiciary - arbitration has become preferred dispute resolution mechanism. Continued on page 7) 6

7 John Hatzistergos (top) and Robert McLelland addressing the media conference at the launch of the Australian International Disputes Centre (Continued from page 6) The Financial Review reported in October 2009 that Toby Landau, QC, one of the world s leading arbitration lawyers, said Australia has a unique opportunity to win a large slice of lucrative international arbitration work. He said some global companies had become increasingly disenchanted by the arbitration models being offered by well-known seats including London and Geneva where the process had become expensive and highly regulated. Hong Kong and Singapore are presently the leaders in international dispute resolution in the Asia Pacific. The Hong Kong International Arbitration Centre s cases doubled between 2002 and 2008 with the latest figures indicating an annual caseload of 602. In Hong Kong, the overall market for legal services accounted for about 0.7 percent of Hong Kong s GDP in 2007, or HK$10.5 billion ($1.3 billion), according to the Census and Statistics Department. The Singapore International Arbitration Centre had a 71 percent rise in cases to 99 from 2000 to In 2007, the overall legal services sector in Singapore was 0.5 percent or S$1.3 billion ($902 million) and 0.6 percent in 2008, according to Statistics Singapore. 7

8 Joint CIArb/IAMA submission to SCAG At the ACICA International Arbitration Conference held in Melbourne on 4 December 2009 a memorandum of co-operation was signed by CIArb Australia and IAMA. In their first act of co-operation, the two leading Australian ADR bodies made a joint submission to the Standing Committee of Attorneys-General (SCAG) in February 2010 in respect of the proposed reform of the uniform domestic arbitration Acts. The full joint submission appears in this issue from page 11 onwards. The joint submission expressed concern that various topics were dealt with differently in the CAA Bill compared to the way they had been dealt with in the International Arbitration Bill 2009(Cth) (IAA Bill ), for no apparent reason for example confidentiality, interest and costs. The joint submission said that as much as possible, there should be symmetry between the provisions of the new CAA and the International Arbitration Act 1974 (Cth) ( IAA ) (as amended). This will necessarily involve co-ordination between the parliamentary draftsmen of the States/Territories and the Commonwealth respectively, said CIArb/IAMA. BranchDiary Apr Fast track to Fellowship course 27 Apr Annual General Meeting 1-2 Award Writing Workshop May 22 May Award Writing Exam 2-9 Oct Diploma Course in International Commercial Arbitration, Penang, Malaysia 8

9 Jim Creer retires from CIArb Australia Board Michael Sanig writes an appreciation of Jim Creer who has just retired from the Board of CIArb Australia Jim Creer, a doyen of the Chartered Institute of Arbitrators in Australia, has retired from the Board of the Branch after giving 15 years unstinting service as chairman, councillor and latterly, as a director of the company set up to run the Institute s affairs in Australia several years ago. He joined the Chartered Institute in November 1991 and was the longest serving member on the Board in Australia having been involved since the Branch s inception. During his time on the Board Jim has been very involved in the areas of education and professional competence and has taught and tutored at innumerable courses, workshops and seminars. Through the years, he has been a vocal advocate of the head office of the CIArb being more accountable and returning more of the subscription income it receives from Australians back to the Branch rather than being used in London. Jim has been an enthusiastic supporter of The Australian ADR Reporter writing regular columns on CIArb Arbitration guidelines and other topics of interest. If there was ever a need for copy, he could always be relied upon to provide some well-chosen words. He was appointed the initial chairman of the Branch in 1995 and Michael Rhodes served as Honorary Secretary and Treasurer. The creation of the Branch had resulted from a meeting held at the Sheraton Hotel in Melbourne in October 1994 when the Institute s Chairman chaired a meeting attended by thirty members of the Chartered Institute who resided in Australia. Jim remained chairman until 1998 when he was succeeded by Gary Downes, who is now a judge of the Federal Court of Australia and President of the Administrative Appeals Tribunal. Jim started out his long professional career as an articled law clerk in 1948 and, five years later, in 1953, he was admitted to practice as a solicitor in New South Wales. Subsequently he was also admitted in Victoria, the Australian Capital Territory and the Northern Territory. In 1953, he became a partner in Abbot Tout Creer and Wilkinson and was given the responsibility for managing the firm s affairs. For thirty years from 1961 to 1991, he was both the firm s Managing Partner and Senior Partner. He retired from the partnership in 1991 and remained as a consultant for the next three years. During his thirty-three years at Abbot Tout, Jim s main practice areas were in corporate law including mineral resources, intellectual property, acquisitions, aerospace and superior court commercial litigation. From 1995 until 2009, Jim practised as a sole practitioner directing most of his attention to arbitration and mediation. Jim became a Foundation Member of the Institute of Arbitrators Australia, the forerunner of IAMA, in 1976 He has served on many boards and councils - too numerous to mention here. Of particular interest in the arbitration field - he was chairman of the Australian Chapter of the London Court of International Arbitration Asia-Pacific Council and also served three years as a councillor of the International Legal Service Advisory Council (ILSAC). By his own admission Jim Creer is still very much a typewriter and pen and ink man!! When I asked him to send me a few words about himself he said that he would write them and fax the copy as he still hadn t mastered computers - I subsequently got eight pages of closely handwritten material. His wife Margaret passed away in Their four children have given him thirteen grandchildren - maybe one of them will be able to educate him successfully in the ways of using computers. Jim will not be lost to us entirely as he is now embarking on writing an article detailing the formative years of the Branch. The Branch owes Jim a debt of gratitude for his untiring work on its behalf over a long period of time. No one can doubt that whatever he did, it was always with the Branch s interests at heart. It is planned to hold a dinner in his honour later in the year. 9

10 Obituary David Moore David Moore OAM, JP, ACIArb, FAICD, a South Australian board member of the Branch, passed away on 27 February after losing a battle with oesophageal cancer. David started his working life in the family business, Moorcroft and Co, leather merchants and then joined Elders in Adelaide as a junior in He left the company to undertake National Service training and, in 1951, joined the Citizen Military Forces rising to Regimental Sergeant Major before rejoining Elders where he reached the position of Seed and Grain Manager. He joined Wright Stephenson & Co (Australia) Pty Ltd in 1963 and served in the capacity of Senior Manager, South Australia He commenced his own export business, Australian Combined Exporters Pty Ltd in 1976 which still operates to this day. In 1982 he also formed his consultancy organisation, Applied Economic & Technology Services and in 2002 he formed his Dispute Resolution company - Agricultural Dispute Resolution Services Pty Ltd. David served with the Royal Australian Infantry Corps where he became the youngest Warrant Officer in the Australian Army at the age of 19. He was commissioned as an officer at the age of 21. He undertook studies involving the grain industry in both the United Kingdom and United States of America. In 1986 he joined the Rotary Club of Gawler, District 9500 and served as President of the Club in and Rotary International District Governor 2003/2004. David is Past Chairman, Rotary Australia World Community Service Ltd. In 1999 his club recognised David by naming him a Paul Harris Fellow. Through Rotary Australia World Community Service Limited, David was involved with an Infancy Midwifery Obstetrics and Gynaecology (IMOG) program in Timor Leste, which trains women in midwifery and local doctors in obstetrics and gynaecology. He was also involved in tsunami rehabilitation work in the Maldives, Sri Lanka and Indonesia. David was a Justice of the Peace, served as a Councillor on the Gawler Town Council and was President of the Gawler Tourist Association. He was a Fellow of the Australian Institute of Company Directors, an Associate of The Chartered Institute of Arbitrators (Australia) Ltd serving on the Board for several years, Member of the Australian Grain Institute, Past Chief Executive Officer - National Agricultural Commodities Marketing Association Limited, Past Member - Plant Breeders Rights Advisory Committee, Past Member - Gene Technology Grains Committee and had held many other industry positions over the years. More recently, he was actively involved with Australian Business Volunteers where he had been a valuable and long-standing member. Joining the Board as an association member representing the Australia Pacific Islands Business Council on 13 November 2006, David served two years before being voted in as Chairman on 18 November David was awarded an Order of Australia Medal in 2008, which recognised his outstanding contribution to agriculture. He leaves a wife, Marlene, three sons - Peter, Andrew and Jon and eleven grandchildren and five great-grandchildren. 10

11 Chartered Institute of Arbitrators CIArb Australia Full text of the Joint CIArb Australia/IAMA submission to SCAG on the draft Commercial Arbitration Act Bill 2009 Preamble The Chartered Institute of Arbitrators (Australia) ( CIArb ) and the Australian Institute of Arbitrators & Mediators Australia ( IAMA ) welcome the government review of the International Arbitration Act 1974 and the uniform Commercial Arbitration Acts, as much overdue. However, it is our shared view that it would be preferable if a single Arbitration Act were to be enacted by the Commonwealth government, as opposed to the separate Commonwealth and States/Territories acts. We would prefer to see the Commonwealth and the various State and Territory governments work together to enact a single Arbitration Act that would cover the field in the area of both international and domestic arbitration. There are a number of reasons for this: (a) a single Commonwealth Act will serve to unify the domestic and international arbitration regimes. Thereby, Australia s law relating to arbitration will become selfcontained in a single Act readily accessible to arbitration users; (b) a single Arbitration Act (based on the Model Law and reflecting international norms) is more likely to instil confidence in our Asia-Pacific neighbours that Australia is a reputable arbitration centre; (c) a single Commonwealth Act will obviate the difficulty of identifying which legislative arbitration regime applies whether the Commonwealth (international) regime or the State/Territory (domestic) regime, and if the latter, which particular State or Territory Act applies. That is, the Commonwealth Act would apply to any arbitration seated in Australia; 1 (d) future amendments can be more easily effected if there is only one Parliament instead of several separate Parliaments that need to conduct the review and make the legislative changes. In this regard, it is also undesirable for differences to develop between the so-called uniform Acts as has occurred with the present regime. (e) finally, it is desirable that as Australia moves to a unified legal profession (and possibly even a single Australian judiciary) that the same Court(s) invested with jurisdiction under the International Arbitration Act 1974 (Cth) are invested with jurisdiction under the domestic Commercial Arbitration Act(s) so that a single consistent body of jurisprudence concerning the Model Law can develop. Under the present system, the Model Law will be interpreted for the purposes of international arbitrations under the International Arbitration Act 1974 and separately for domestic arbitrations under the new Commercial Arbitration Acts, thus creating the potential for differences to develop in the interpretation of the Model Law, which is highly undesirable. As we realise that the adoption of a single Arbitration Act may not occur until some time in the future, we support the present efforts of the various movements to achieve a harmonisation of the international act and the separate domestic acts, based on the Model Law. The focus of our shared submissions is on the various amendments and additional provisions that we believe need to be made to the Bill. We believe these amendments are necessary for two reasons. Firstly, they give practical effect to an Australian arbitration regime that can stimulate the use of arbitration as a process. Secondly, they instil greater confidence in the business community to use arbitration as an effective process for the resolution of commercial disputes. REVIEW OF THE COMMERCIAL ARBITRATION BILL 2009 JOINT SUBMISSIONS BY THE CIArb and IAMA 2 A. Introduction 1. The secretary of SCAG has released a draft CAA Bill 2009 ( CAA Bill ) and Issues Paper. The CAA Bill is intended to be a uniform piece of legislation, which will be enacted by the Parliaments of the various States and Territories to replace the current uniform Commercial Arbitration Acts. 3 The CAA Bill proposes substantial and important changes to Australia s outdated uniform domestic arbitration Acts. In particular, it adopts the Model Law as the backbone of a new domestic arbitral legislative regime. In that regard, the CAA Bill is a welcome initiative. 2. Reform of the domestic arbitral legislative regime is desirable for two primary reasons: (a) firstly, to promote arbitration as a credible alternative to litigation before Australian courts in respect of the resolution of non-international disputes; (b) secondly, to promote Australia s aspirations of becoming a regional hub for international commercial arbitration in the Asia-Pacific region. 4 B. Uniformity between the CAA and IAA 3. Section 2A of the CAA Bill provides that as far as practicable uniformity between the application of the CAA to domestic commercial arbitrations and the application of the provisions of the Model Law (and inferentially the IAA) to international commercial arbitrations is to be promoted. It is highly desirable for Australia to develop a single, consistent body of jurisprudence in (Continued on page 12) 11

12 Chartered Institute of Arbitrators CIArb Australia Joint Submission to SCAG on draft CAA Bill (Continued from page 11) respect of the Model Law and for there to be uniformity between the IAA and the CAA. 4. It is therefore of concern that various topics dealt with in the CAA Bill are dealt with differently than in the IAA Bill, for no apparent reason for example confidentiality, interest and costs provisions. 5. As much as possible, there should be symmetry between the provisions of the new CAA and the IAA (as amended). This will necessarily involve coordination between the parliamentary draftsmen of the States/Territories and the Commonwealth respectively. C. Paramount object of Act 6. Both Institutes strongly support the inclusion of a paramount objects section (Section 1AC). The lack of such a section has long been a perceived weakness in the present CAA. D. Scope of application of the CAA 7. Section 1(1) of the CAA Bill provides that it applies to domestic commercial arbitrations. The expression is defined in section 1(3). In contrast the IAA Bill (following the introduction of a new section 21) will only apply to international commercial arbitrations. Article 1(3) of the Model Law defines what is an international arbitration. Section 16 of the IAA gives the Model Law the force of law in Australia. 8. It is undesirable for disputes to arise in future as to whether an arbitration is domestic or international and accordingly whether it attracts the IAA or the CAA. For example, while the Federal Court of Australia has jurisdiction under the IAA it will have no jurisdiction under the CAA Bill. 9. As presently drafted, there is no clear dividing line provided for in the CAA Bill between an international and a domestic commercial arbitration. For example, assume the following: (a) the parties to an arbitration agreement had at the time of conclusion of that agreement their places of business in Australia; (b) the parties have in their arbitration agreement agreed that any dispute between them is to be settled in accordance with the CAA; (c) the place where a substantial part of the obligations of the commercial relationship was to be performed and the subject matter of the dispute is most closely connected lies outside Australia. 10. The arbitration posited in the above example would be international within the meaning of Article 1(3)(b)(ii) of the Model Law (and hence the IAA) but would also be a domestic commercial arbitration for the purposes of section 1(3) of the CAA Bill. 11. Moreover, as presently drafted an arbitration does not qualify as a domestic commercial arbitration under the CAA Bill unless the parties have expressly agreed that their potential or existing dispute is to be settled in accordance with [the CAA]. To require that the parties make explicit reference to the CAA in their arbitration agreement is in our view undesirable as arbitration agreements are not always felicitously drafted. 12. Accordingly, we submit that a domestic commercial arbitration should simply be defined in the CAA Bill as an arbitration which is not an international arbitration for the purposes of the IAA. E. Recourse against an arbitral award 13. Section 34 of the CAA Bill adopts Article 34 of the Model Law in respect of recourse against arbitral awards. The Issues Paper raises the question whether the CAA Bill should provide for further grounds of judicial review in particular, error of law and/or serious irregularity, and if so, the detail of such provisions. For example, should such provisions apply on an opt-in, opt-out or mandatory basis? 14. Most Australian arbitration practitioners would agree that there is too much scope for judicial interference with arbitral awards under the current uniform Acts. In order for the proposed paramount object (contained in section 1AC of the CAA Bill) to be given effect, judicial intervention in the arbitration process must be kept to an absolute minimum. 15. However, to provide those parties that wish to embark on an arbitration process which allows for supervisory involvement by a court, we suggest that section 34 be amended to permit the parties to opt in by agreeing in writing after a dispute has arisen, that either of them may appeal against an error of law in the reasons expressed by the Arbitral Tribunal under the limited circumstances set out in section 38 of the current Uniform Commercial Arbitration Legislation. This would give the parties the opportunity, knowing the nature and circumstances of the dispute, to agree between themselves that in such a situation, they reserve the right to appeal against an error of law on the face of the record expressed by the Arbitral Tribunal. 16. We acknowledge that in general, the arbitration process should be final and the award binding upon the parties. However, in the interests of party autonomy, we believe that it would be appropriate to allow the parties, if they both see fit and at a point after the dispute between them has arisen, to enter into an agreement reserving a right to appeal. Such a right could be subject to the time limitation referred to in section 34(3), so that the right to appeal would have to be exercised promptly, or else be lost. 17. The above would, have the salutary effect of promoting the finality of domestic arbitral awards yet give parties the choice, after the extent, nature and type of dispute was known to them, to enter into a domestic arbitration that would be subject to judicial review, if that was their choice. F. Stay of court proceedings 18. The CAA Bill omits Article 8 of the Model Law and instead inserts a section 8A, based on section 53 of the present uniform domestic arbitration Acts, which provides the court with a discretion to stay court proceedings brought in the face of an arbitration agreement. On the other hand, Article 8 of the Model Law (reflected in section 7 of the IAA) obliges a court to stay court proceedings in the face of an arbitration agreement (with limited exceptions). 19. CIArb and IAMA are both of the view that a court should not have greater scope to stay a domestic arbitration than an international arbitration. The Arbitration Bill (HK), which treats domestic and international arbitrations alike in a single Act, does not apply different tests to the stay of court proceedings depending upon whether an arbitration is domestic or international in nature. Giving courts a broad discretion whether (Continued on page 13) 12

13 Chartered Institute of Arbitrators CIArb Australia Joint Submission to SCAG on draft CAA Bill John Wakefield (left), Albert Monichino (centre) and Peter Megens (right) were three of the contributors to the joint submission (Continued from page 12) or not to stay court proceedings in the face of an arbitration agreement (as opposed to mandating that they do so) will, we think, seriously undermine the efficacy of arbitration agreements. 20. Some recent cases before Australian courts reveal a reluctance of the courts to stay court proceedings in the face of an arbitration agreement, even where the necessary preconditions for a stay are satisfied We submit that the CAA Bill should contain a provision equivalent to Article 8 of the Model Law (reflected in section 7 of the IAA) which obliges a court to stay court proceedings in the face of an arbitration agreement (with limited exceptions). G. Confidentiality 22. Sections 27E-27N of the CAA Bill contain an elaborate confidentiality regimewhich applies unless the parties optout. Sections 27E-27N appear to be drawn from the Arbitration Act (NZ). The language and detail of the confidentially provisions are different to the confidentiality regime proposed by the IAA Bill. We think that this is undesirable. There should be consistency between the IAA and the CAA in terms of the respective confidentiality regimes. H. Power of the Arbitral Tribunal 23. The CAA Bill does not contain any provision which catalogues the powers that the arbitral tribunal may exercise, such as the power to: (a) order security for costs [Sub-sections 25(2)-(4) refer to orders for security for costs but the Act is silent as to the arbitrator s power to order such measure, which does not qualify as an interim measure under section 17(2) of the CAA Bill.] 6 (b) order the inspection of property the subject of dispute, including taking photographs, taking samples or conducting experiments on such property (or plant and equipment), which again does not qualify as an interim measure under section 17 (2) of the CAA Bill (c) conduct the arbitration hearing on a stop clock (or time-limited) basis. 24. Provisions which catalogue the powers that the arbitral tribunal may exercise may be found in other arbitration Acts for example, the Singapore Arbitration Act 7 and the Malaysian Arbitration Act 8. We are of the view that it is desirable for the CAA Bill to contain such a provision. I. Power of the Court 25. While the CAA Bill contains provisions that confer power on a court to order interim measures (section 17J), to grant assistance to an arbitral tribunal in taking evidence (section 27), to order subpoenae in aid of an arbitration (section 27A) and to provide assistance where there is default in compliance with the arbitral tribunal s directions in relation to the taking of evidence (section 27B), it does not provide the court with any general power to make orders in aid of an arbitration (like section 47 of the existing uniform arbitration Acts). 26. While it is desirable to limit court intervention in the arbitration process, there are times when court assistance is helpful to the arbitration process - for example, making an order against a third party requiring the third party to make available inspection of property which is relevant to the arbitral proceeding, or requiring the third party to preserve assets or evidence. Accordingly, we submit that the CAA Bill (Continued on page 14) 13

14 Chartered Institute of Arbitrators CIArb Australia Joint Submission to SCAG on draft CAA Bill (Continued from page 13) should be amended to clarify the powers of the court in relation to a domestic commercial arbitration (in addition to the provisions referred to above). We refer to sections 56 and 60 of the Hong Kong Arbitration Bill which is presently before the Hong Kong Parliament 9, as a useful guide. Section 56 of the Hong Kong Bill sets out the general powers exercisable by the arbitral tribunal while section 60 sets out the special powers exercisable by a court in relation to arbitral proceedings in particular, empowering the court to make orders for inspection of property. An alternative course would be to include a more general provision equivalent to section 47 of the existing uniform arbitration Acts. J. Role of arbitral institutions 27. Section 6 raises inferentially the question whether an arbitral institution (such as IAMA and/or CIArb) should, like ACICA in the international arbitration sphere, be nominated under the Act or regulations made under the Act as an authority to perform some of the functions referred to in Article 6 of the Model Law. 28. CIArb and IAMA submit that provision should be made in the CAA Bill for regulations to be made appointing a recognised arbitral institution to perform some of the functions referred to in the Model Law - in particular the appointment of an arbitrator in default of agreement between the parties where the parties have not nominated an arbitral institution in their arbitration agreement to perform that function - as is presently provided for in section 18 of the IAA Bill. K. Full or reasonable opportunity 29. Section 18 of the CAA Bill adopts Article 18 of the Model Law which requires that parties be treated with equality and must be given a full opportunity of presenting the party s case before the arbitrator. 30. A full opportunity might be regarded as an opportunity to embark upon a protracted presentation of voluminous documentation and other evidence, much of it irrelevant. The arbitrator should have the opportunity to determine to what extent a party s desire to present its case at great length is unreasonable. 31. The concept that each party must be given a full opportunity of presenting that party s case may also conflict with proposals to implement any form of fast track proceedings, whereby discovery, expert witnesses, the number of witnesses and the duration of submissions, are curtailed. 32. We are of the view that the CAA Bill should be amended to substitute the word reasonable for full, as this is more likely to result in the achievement of the paramount object of the Act. L. Statement of Claim and Defence 33. It would be desirable to introduce the procedural requirements of Section 23, by the words subject to the agreement of the parties or any direction by the Arbitral Tribunal to the contrary. This gives the parties the option of deciding not to proceed in this way and the arbitrator the power to determine that a simplified process would be more appropriate to the circumstances of the case. M. Extension of ambit of arbitration proceeding 34. Section 25 of the existing uniform arbitration Acts confers upon an arbitrator the power to extend the arbitration to include other disputes which may not have been the subject of the original notice of dispute or referral to arbitration. We cannot see any similar provision in the Model Law. We think it would be useful to include such a provision in the new CAA. N. Default of a Party 35. In section 25(1)(a) and (b), it is said that the Arbitral Tribunal is to terminate or continue, as the case may be. We would prefer to see the wording used, corresponding to section 25(1)(c) where the Arbitral Tribunal has a discretion. We therefore suggest that the words, is to in sections 25(1)(a) and (b) should be replaced by the word may. O. Mediation & Arbitration (MedArb) 36. The CIArb and IAMA jointly support the inclusion of a clause that assists the resolution of disputes otherwise than by arbitration (for example, by mediation or conciliation) similar to the present section Section 27D of the CAA Bill adopts the old medarb provision contained in section 27 of the current uniform Acts but makes it apply on an opt-out basis. We believe that this is preferable to the current opt-in basis. 38. We have had the benefit of reading the ACICA submission regarding the strengthening of the language of clause 27D to provide the same ability to direct the parties to undertake non-arbitral means of dispute resolution as many courts in Australia currently exercise. 39. We support the adoption of the form of the section 27 that appeared in the original Commercial Arbitration Act 1984 (NSW) as follows: (1) Unless otherwise agreed in writing by the parties in an arbitration agreement, the arbitrator or umpire shall have power to order the parties to a dispute which has arisen and to which that agreement applies to take such steps as the arbitrator or umpire thinks fit to achieve a settlement of the dispute (including attendance at a conference to be conducted by the umpire or arbitrator) without proceeding to arbitration or (as the case requires) continuing with arbitration. 40. The adoption of a medarb clause will also align the revised arbitration act with the growth of mediation, which has significantly altered the manner of settling disputes within the legal system, over the past 20 years. 41. It is preferable that a medarb clause appear in both the domestic Act and the International Act and we have urged the Commonwealth Attorney General to reconsider the inclusion of a medarb provision in the IAA Bill. This is especially relevant as in every major country in the Asian region (the primary marketplace for an Australian brand of arbitration) there are provisions that allow an arbitrator to conciliate or mediate the dispute. P. Reasons for award 42. Section 31 of the CAA Bill mirrors Article 31 of the Model Law. In particular, section 31(3) provides that the arbitral award must state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is a consent award. 43. The CIArb and IAMA are of the view (Continued on page 15) 14

15 Chartered Institute of Arbitrators CIArb Australia Joint Submission to SCAG on draft CAA Bill Ron Salter (left) and Laurie James were contributors to the joint submission. (Continued from page 14) that section 31(3) should be amended to reverse the effect of the Victorian Court of Appeal decision in Oil Basins Ltd v BHP Ltd [2007] VSCA In this case, the Victorian Court of Appeal held in relation to a domestic arbitration that the failure of the arbitral tribunal to provide adequate reasons for their decision and, further, to deal with important submissions in evidence, mounted to an error of law in making of the award and, further, misconduct of the arbitral tribunal, resulting in the setting aside of the award. In the course of the trial judge s decision10 his Honour held that in certain circumstances the reasons of an arbitral tribunal should be of the same tandard as the reasons of a superior court judge. This finding was upheld on appeal. This case has raised eyebrows in international arbitration circles and is generally regarded as a retrograde decision for arbitration. Q. Costs 45. Sections 33B, 33C and 33E deal with cost in quite an elaborate manner. There should be uniformity in the treatment of costs between the CAA and the IAA. R. Interest 46. Sections 33F and 33G deal with interest. Compound interest is not provided for. In contrast, the IAA Bill confers power on an arbitrator to award compound interest from the date of making the arbitral award. 47. We are of the view that domestic arbitrators should have the power to award compound interest both up to the date of making the award and following the ate of the award. This is the case in other jurisdictions - for example, see section 49 of the Arbitration Act 1996 (UK). S. Interest 48. Section 33 of the CAA Bill provides for immunity of both the arbitrator and the arbitral institution appointing the arbitrator. This is desirable. In contrast the IAA provides for immunity of the arbitrator only. It is noted that the CAA Bill provides for immunity of the arbitrator in different terms to that provided for in the IAA Bill. 49. It is desirable that the immunity provision in the CAA be consistent with the immunity provision in the IAA, but also provide for immunity to be conferred on the relevant arbitration institution. Endnotes: 1. If the additional (opt-in or opt-out) provisions were to apply to all arbitrations seated in Australia, it would not be necessary to determine whether the arbitration was domestic or international in nature, hence overcoming the difficulty of determining which Act applies, as experienced in Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WASCA In this submission, CIArb means the Chartered Institute of Arbitrators (Australia) Ltd and IAMA means the Institute of Arbitrated & Mediators Australia. The two organisations have chosen to combine our submissions to provide a single voice to government and better represent the views of our members for significant and practical reform of the present legislative regime, to enable greater use of arbitration processes in the resolution of commercial disputes in Australia. 3. Comprising the Commercial Arbitration Act 1984 (NSW), Commercial Arbitration Act 1984 (Vic), Commercial Arbitration Act 1990 (Qld), Commercial Arbitration Act 1985 (WA), Commercial Arbitration and Industrial Referral Agreements Act 1986 (SA), Commercial Arbitration Act 1986 (Tas), Commercial Arbitration Act (NT), Commercial Arbitration Act 1986 (ACT). 4. A review of the International Arbitration Act 1974 (Cth) is under way. On 25 November 2009, the International Arbitration Amendment Bill 2009 ( the IAA Bill ) was introduced into the Commonwealth Parliament. It is expected to be debated in the in the Spring Session of Parliament commencing in August See Viridian Noosa Pty Ltd v Neumann Contractors Pty Ltd [2009] QSC 398 which considered section 53 of the existing uniform arbitration Acts. See also AED Oil v Puffin FPSO Limited [2009] VSC 534 which considered section 7 of the existing IAA. Under section 7 of the IAA a court is mandated to stay a court proceeding where the necessary preconditions are satisfied. Yet the court refused to stay the court proceeding. 6. The power of an arbitrator to award security for costs is provided for in other countries - see for example section 38 (3) of the Arbitration Act 1996 (UK) and section 57 (1) (a) of the draft Hong Kong Arbitration Bill. 7. Arbitration Act 2001(Singapore), section Arbitration Act 2005(Malaysia), section 21(3). 9. See footnote 6 above. See also section 12 of the Singapore International Arbitration Act (Cap 143A). 15

16 International Washington Nationals pitchers Sean Burnett, Brian Bruney lose out in arbitration Chico Harlan of The Washington Post reports on the arbitration hearings of two Washington Nationals baseball pitchers. Reliever Sean Burnett hardly enjoyed his arbitration hearing, saying: It does wear on you.... the whole situation is awkward. Photograph: Toni L. Sandys/the Washington Post One Saturday night, no longer consumed by all that grim business from earlier in the week, Washington Nationals General Manager Mike Rizzo again called Brian Bruney and Sean Burnett, two of his favourite guys on the team. Both, Rizzo said, are going to be huge not only in 2010 but beyond. Bruney, a righty, is 28. Burnett, a lefty, is 27. In previous months, Rizzo orchestrated trades to acquire both of them, the clearest possible sign that they are wanted. For the most part, despite all those mixed messages from the past week, Bruney and Burnett still believe this. The relationship between the Nationals and their two relief pitchers only grew complicated because of something both sides found miserable. Recently both players - Bruney on a Tuesday, Burnett on a Thursday of the same week - drove several hours across Florida, walked into a conference room at the St. Petersburg Renaissance Vinoy, and argued for several hours with their employers about money. In both cases, several hundred thousand dollars were at stake. In both cases, the Nationals, arguing for a lower salary, spent an hour describing each player s shortcomings. In both cases, a three-person arbitration panel sided with the Nationals, and so by Saturday both Bruney and Burnett were back at Washington s spring training complex, trying to reconcile the strange feeling of losing to your own team in a financial battle and helping it win in the months to come. Those who call arbitration hearings just business typically haven t attended one. Brutal, Bruney called his. Uncomfortable, (Continued on page 17) 16

17 Arbitration in baseball (Continued from page 16 ) Burnett called his. It does wear on you. You listen to guys belittle you, make you feel like you re invaluable. It s like, [Damn], these guys really hate me. But at the same time, too, when your guy is talking it s weird to hear all the praise. The whole situation is awkward. Major League Baseball s arbitration process, at its core, is a matter of finance. Barring a few exceptions, players are eligible for arbitration hearings once they have between three and six years of big league service time. Every season, hundreds of players can, conceivably, opt for this method: The player (or his agent, rather) recommends a desired salary. The team recommends a lower salary. A panel of strangers picks one or the other. But because the arbitration process also leaves scar tissue - a hatefest, said Jason Bergmann, an arbitration-eligible pitcher who agreed to a contract in January, thus avoiding a hearing - very few teams and players end up in battle. Since 2006, 32 cases league-wide have gone to a hearing. Washington has been involved in seven of those cases, winning five. This year, the Nationals had two of the eight cases. Historically, arbiters award the lower salary with 57.6-percent frequency. Historically, too, baseball is loaded with guys such as Bruney and Burnett willing to gamble on their own performance. I m not much of a gambler, Burnett said, but I know I m pretty good at baseball and I know I had a pretty damn good year last year. So this was a chance I was willing to take. To hear Burnett and Bruney describe it, salary -- and the willingness to fight for several hundred thousand dollars of it -- is less a matter of money than pride. Bruney, pitching for the New York Yankees, made $1.25 million last season; he finished with a 3.92 ERA in 39 innings, and asked to earn $1.85 million in Burnett, splitting his year between the Pirates and Nationals, earned $408,500 in 2009; he finished with a 3.12 ERA and asked for $925,000 in The arbitration-eligible players arrived at those target numbers not by happenstance, but by comparing salaries and performances with analogous peers. In a way, that comparison - not the desire for more money - reduces the desire to fight. By the time a player has typically reached his third year, he s placed himself - reasonably or not - within a hierarchy, armed with either numbers or opinion. Early in the offseason, Bergmann, for instance, received from his agent a threeinch binder of numbers, stats and salaries. I read the damn thing, too, Bergmann said. Because it s homework. You see other players, you compare, you find your value. Bergmann eventually agreed to a one-year, $750,000 deal. According to Bruney, both sides spent much of his hearing using the influence of comparable players. Washington, requesting a salary of $1.5 million, compared Bruney to, among others, Houston s Tim Byrdak. Bruney and his agent, Gregg Clifton, found Detroit s Bobby Seay as a better parallel. There is a method to picking the number, Bruney said. And I ve got strong principles, values and beliefs. What it boils down to is, I m not pitching to please the people that were in that arbitration case. I m pitching for the guys in here and for myself. You know, for me, I don t play this game to be an all-star, I don t play it to make a [boat] load of money. That s not why I play. At the end of the day it s about respect. At the respective hearings, the abstractions for both players vanished. The room that Burnett walked into was big, with tables set up in a T formation - agents here, team there, arbiters in between. All told, about 80 people, including representatives from the players union and commissioner s office, crowded the room. And they re all just staring at you, Burnett said. Rizzo, though in attendance, remained silent, which for Burnett was a relief. Washington vice president and general counsel Damon Jones spoke on behalf of the team. Burnett s case took four hours. Afterward, though the panel wouldn t deliver its decision until the following day, Rizzo found his reliever and said, We put those things behind us and we move on, and now it s baseball. By the end of the week, Burnett and Bruney had taken their annual physicals, in advance of Sunday s first official workout. Burnett, now with a 2010 salary of $775,000, headed to the outfield at Space Coast Stadium, where he played catch with teammate Matt Capps. Bruney hung out in the clubhouse with pitcher Shawn Estes, shooting the breeze about pitch grips. Neither reliever regretted his decision. If you ve got pride and you think you re worth more, Burnett said, that s a risk you are willing to take. If anything, I think [the hearing] can better you, Bruney said. Because I know the only bad things they can say about me are things I can fix. 17

18 ICSID expected to announce decision soon in Occidental v Ecuador case QUITO (Dow Jones)--The World Bank s International Center for Settlement of Investment Disputes (ICSID) may soon rule on a case brought by U.S. oil company Occidental Petroleum Corp. (OXY) against Ecuador, a high-level official from Ecuador s Attorney-General s office said in a recent interview with Dow Jones. The ruling is expected to take place in the second half of the year, said Rafael Parreno, Ecuador s deputy attorney general. Ecuador expects the court s ruling to recognize that the Ecuadorian government acted in accordance with the laws and reject Oxy s claims for compensation, because the company violated the Ecuadorian laws and its contract s terms, said another official from the attorney general s office who did not want to be named. Occidental is seeking $3.2 billion in damages for the decision by Ecuador s government in May 2006 to cancel the company s operating contract. The government alleges Occidental broke several of its agreed terms by transferring a 40% stake in its Ecuadorian projects to Canada s EnCana Corp. (ECA), without Energy Ministry approval. Occidental has said the Ecuadorian government violated the U.S.-Ecuador bilateral investment treaty by illegally nullifying its exploration rights and expropriating its assets. In early February, Ecuador attended a hearing in Washington, where both sides presented their final oral arguments. The judges are analysing the evidence submitted by both sides before ruling. Before it left Ecuador, the Los Angelesbased Occidental produced about 100,000 barrels a day from its Block 15, now operated by state oil company Petroamazonas SA. The block now produces about 98,000 barrels a day. Ecuador officially terminated its Rafael Correa - President of Ecuador membership with the International Centre for Settlement of Investment Disputes in January, and last July, President Rafael Correa signed a decree terminating the country s relationship with the ICSID. ICSID rules, however, say membership expires six months following the official notification, and the withdrawal from ICSID doesn t annul pending lawsuits but does protect Ecuador from future ones. The government has several times maintained that many companies have turned to the international arbitrator, without having the right to do so. Ecuador s constitution prohibits the signing of international agreements in which Ecuador would have to cede jurisdiction to international arbitration courts in contractual or commercial matters between the state and individuals or corporations. However, the constitution allows for disputes to be resolved between Latin American states and their nationals via regional arbitration courts. The ICSID has been an alternative for companies, especially oil companies, seeking redress in disputes with the Ecuadorian government since the 1980s. Ecuador faces arbitration claims at ICSID worth a total of at least $10 billion. Twelve foreign companies, and one local company, are suing Ecuador at ICSID. Among the companies that have suits against Ecuador are the Anglo-French Perenco Corp, Chevron Corp (CVX) and Burlington Resources Inc., a subsidiary of ConocoPhillips (COP). Mercedes Alvaro, Dow Jones Newswires 18

19 Occidental v Ecuador - a very long running dispute On May 15, 2006, Ecuador s Minister of Energy announced the cancellation of Occidental Petroleum Corporation s operating contract in an area of the country where it was extracting more than 100,000 barrels of oil daily, approximately 7% of Occidental s global oil production. Occidental immediately retaliated by filing a billion dollar ICSID claim. Occidental Petroleum (Oxy) has been active in Ecuador for more than two decades, first providing contractual services to Petroecuador, the state-owned corporation, and then in 1999 becoming a direct contractor and undertaking its own drilling operation in an area called Block 15. Local and international environmental and indigenous organisations have accused the US-based company of numerous human rights abuses and widespread environmental devastation in Ecuador. As in other parts of the Andean region, an indigenous renaissance has taken place in Ecuador during the last ten years that has included massive mobilisations which have brought down successive presidencies. A central demand has been to grant indigenous peoples control over their land and natural resources and the benefits generated from them. Most specifically, this has translated into a demand that the Ecuadorian government end the exploitation of oil reserves, including the cancellation of the Occidental contract. Oxy and the Ecuadorian government also have a long history of legal conflict. In 2004, Oxy was awarded $75 million in a BIT case over the Ecuadorian government s refusal to give the company Value-Added Tax refunds. This outcome was criticised by numerous lawyers as having strayed too far in its national-treatment analysis. The potential breadth of the award is somewhat disconcerting stated the American Journal of International Law. Shortly after this controversial ruling, Petroecuador accused Oxy of improperly transferring a share of Ecuadorian production to a Canadian company. The Energy Minister investigated and concluded that the action was a breach of Occidental s contract with Petroecuador, setting the legal stage for cancelling the contract. Meanwhile, civil society demands to cancel Oxy s contract again reached a heightened pitch. This time, it appears, the government felt they had more to lose by holding on to the contract than by cancelling it. To support Occidental, the US government suspended free trade negotiations with Ecuador. The US Trade Representative (USTR) demanded an immediate clarification as to whether Ecuador intends to fully compensate the company as required under our Bilateral Investment Treaty. State Department official Charles Shapiro stated that legal recourse against the contract cancellation certainly would be supported by the State Department. The IMF also entered the fray by suggesting that Ecuador should immediately begin to accumulate reserves to pay off a possible ruling against the country by the ICSID tribunal. Ecuador s Attorney General Jose Borja responded by accusing the IMF of hateful partiality in favour of interests that have seriously hurt the country. Ecuador s President Rafael Correa has stated that Ecuador was under no obligation to accept ICSID arbitration because the company s illegal actions caused the contract termination. He contended that under these circumstances the BIT would give Oxy access to Ecuadorian courts but not to international arbitration. Correa warned that the people would be in the streets if the ICSID case moved forward. He also claimed that the ICSID Executive Secretary had committed an irregularity by posting the registration of Oxy s claim because the claim had not yet been accepted by the Ecuadorian government. The outcome of this case will be an important barometer of the ability of the ICSID system to respond to a direct challenge to its legitimacy, and to investor-state lawsuits more generally. 19

20 What is ICSID and what does it do? The International Centre for Settlement of Investment Disputes (ICSID), an institution of the World Bank group based in Washington, D.C., was founded in 1966 pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention or Washington Convention). As of March 2010, 155 countries had signed the ICSID Convention and 144 countries had ratified it. ICSID has an Administrative Council, chaired by the World Bank s President, and a Secretariat. It provides facilities for the conciliation and arbitration of investment disputes between member countries and individual investors. During the past decade, with the proliferation of bilateral investment treaties (BITs), most of which refer present and future investment disputes to the ICSID, the caseload of the ICSID has substantially increased. As of June 30, 2005, ICSID had registered 184 cases more than 30 of which were pending against Argentina Argentina s economic crisis in the late 1990s and subsequent Argentine government measures led several foreign investors to file cases against Argentina. Bolivia, Nicaragua, Ecuador and Venezuela have announced their intention to withdraw from the ICSID. The 1966 establishment of the ICSID On a number of occasions in the past, the World Bank as an institution and the President of the Bank in his personal capacity have assisted in mediation or conciliation of investment disputes between governments and private foreign investors. The creation of the International Centre for Settlement of Investment Disputes (ICSID) in 1966 was in part intended to relieve the President and the staff of the burden of becoming involved in such disputes. But the Bank s overriding consideration in creating ICSID was the belief that an institution specially designed to facilitate the settlement of investment disputes between governments and foreign investors could help to promote increased flows of international investment. ICSID was established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States which came into force on October 14, ICSID has an Administrative Council and a Secretariat. The Administrative Council is chaired by the World Bank s President and consists of one representative of each State which has ratified the Convention. (Continued on page 21) Australia s Bilateral Investment Treaties Australia has signed 22 BITs, of which 19 have come into force, with countries including China, Hong Kong, Indonesia, and Papua New Guinea (see table on adjoining page). Australia s Free Trade Agreements with Thailand and Singapore also contain sections on the treatment of investments that are very similar to an investment treaty. Australia s BITs generally contain key provisions on fair and equitable t r e a t m e n t, p r o t e c t i o n a g a i n s t expropriation unless there is a nondiscriminatory public interest justification and due compensation is given, and full protection and security for the investment. Australia has not signed a BIT with Zimbabwe. Therefore, Australian investors, who have not structured their investments with a view to taking advantage of a BIT between Zimbabwe and a third country, will not be able to have recourse to international law and therefore, are very unlikely to have any enforceable rights against the Zimbabwean Government. 2,300 BITs worldwide There are approximately 2,300 BITs which have been ratified worldwide and, as at March 2010, 144 states have ratified the ICSID Convention out of the 155 which have signed the Convention. The rights given by BITs are usually enforceable by arbitration at the International Centre for Settlement of Investment Disputes (ICSID). BITs are usually enforced by arbitration conducted by ICSID or on an ad hoc basis. There is no right of appeal from such an arbitration to a local court system (although ICSID will review awards on a very narrow basis). In addition, such awards have the benefit of being supported by the World Bank, which can bring commercial pressure to bear, so that awards are complied with. 20

21 What is ICSID and what does it do? (Continued from page 20) Annual meetings of the Council are held in conjunction with the joint Bank/Fund annual meetings. ICSID is an autonomous international organisation. However, it has close links with the World Bank. All of ICSID s members are also members of the Bank. Unless a government makes a contrary designation, its Governor for the Bank sits ex officio on ICSID s Administrative Council. The expenses of the ICSID Secretariat are financed out of the Bank s budget, although the costs of individual proceedings are borne by the parties involved.[1] ICSID activities Pursuant to the Convention, ICSID provides facilities for the conciliation and arbitration of disputes between member countries and investors who qualify as nationals of other member countries. Recourse to ICSID conciliation and arbitration is entirely voluntary. However, once the parties have consented to arbitration under the ICSID Convention, neither can unilaterally withdraw its consent. Moreover, all ICSID Contracting States, whether or not parties to the dispute, are required by the Convention to recognise and enforce ICSID arbitral awards. Besides this original role, the Centre has since 1978 had a set of Additional Facility Rules authorising the ICSID Secretariat to administer certain types of proceedings between States and foreign nationals which fall outside the scope of the Convention. These include conciliation and arbitration proceedings where either the State party or the home State of the foreign national is not a member of ICSID. Additional Facility conciliation and arbitration are also available for cases where the dispute is not an investment dispute provided it relates to a transaction which has features that distinguishes it from an ordinary commercial transaction. The Additional Facility Rules further allow ICSID to administer a type of proceedings not provided for in the Convention, namely fact-finding proceedings to which any State and foreign national may have recourse if they wish to institute an inquiry to examine and report on facts. A third activity of ICSID in the field of the settlement of disputes has consisted in the Secretary-General of ICSID accepting to act as the appointing authority of arbitrators for ad hoc (i.e., non-institutional) arbitration proceedings. This is most commonly done in the context of arrangements for arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), which are specially designed for ad hoc proceedings. Provisions on ICSID arbitration are commonly found in investment contracts between governments of member countries and investors from other member countries. Advance consents by governments to submit investment disputes to ICSID arbitration can also be found in about twenty investment laws and in over 900 bilateral investment treaties. Arbitration under the auspices of ICSID is similarly one of the main mechanisms for the settlement of investment disputes under four recent multilateral trade and investment treaties (the North American Free Trade Agreement, the Energy Charter Treaty, the CONFÉRENCE DES NATIONS UNIES SUR LE COMMERCE ET LE DÉVELOPPEMENT Cartagena Free Trade Agreement and the Colonia Investment Protocol of Mercosur). In addition to these activities, ICSID also carries on advisory and research activities, publishing Investment Laws of the World and of Investment Treaties, and collaborates with other World Bank Group units. Since April 1986, the Centre has published a semi-annual law journal entitled ICSID Review-Foreign Investment Law Journal. ICSID proceedings do not necessarily take place in Washington, D.C. Others possible locations include the Permanent Court of Arbitration in The Hague, the Regional Arbitration Centres of the Asian-African Legal Consultative Committee in Cairo and Kuala Lumpur, the Australian Centre for International Commercial Arbitration in Melbourne, the Australian Commercial Disputes Centre in Sydney, Singapore International Arbitration Centre, the GCC Commercial Arbitration Centre in Bahrain and the German Institution of Arbitration (DIS). UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT Total number of Bilateral Investment Treaties concluded, 1 June 2009 Reporter Partner Date of signature Date of entry into force Australia Argentina 23-Aug Jan-97 Chile 9-Jul Nov-99 China 11-Jul Jul-88 Australian Bilateral Investment Treaties as at 1 June 2009 as reported by UNCTAD Czech Republic 30-Sep Jun-94 Egypt 3-May-01 5-Sep-02 Hong Kong, China 15-Sep Oct-93 Hungary 15-Aug May-92 India 26-Feb-99 4-May-00 Indonesia 17-Nov Jul-93 Lao People's Democratic Republic 6-Apr-94 8-Apr-95 Lithuania 24-Nov May-02 Mexico 23-Aug Pakistan 7-Feb Oct-98 Papua New Guinea 3-Sep Oct-91 Peru 7-Dec-95 2-Feb-97 Philippines 25-Jan-95 8-Dec-95 Poland 7-May Mar-92 Romania 21-Jun Apr-94 Sri Lanka 12-Nov Turkey 16-Jun Uruguay 3-Sep Dec-02 VietNam 5-Mar Sep-91 21

22 AMTAC Reception On 18 January 2010, AMTAC hosted a reception for a delegation of senior Chinese maritime law judges who were in Sydney visiting judges from the Federal Court of Australia s Admiralty Division. At the reception, which was held at the offices of Holman Fenwick Willan, AMTAC was represented by its Chair, Peter McQueen, and ACICA by its Director of Arbitration, David Fairlie and Secretary General Emma Matthews. Also attending the reception were the President of the New South Wales Court of Appeal, Justice Allsop, Mary-Louise Williams and Jeffrey Mellefont from the Australian National Maritime Museum and members of Holman Fenwick Willan including senior partner Robert Springall. International Conference on Maritime Law AMTAC s Chair, Peter McQueen, and Vice Chair, Professor Sarah Derrington (also President of the Maritime Arbitration of Australia and New Zealand) attended the seventh International Conference on Maritime Law held in Shanghai between 13 and 15 November 2009 and convened by the China Maritime Law Association, in conjunction with the Shanghai Maritime Court and the Shanghai Maritime University. They presented papers on maritime arbitration and maritime law at the Conference, which was attended by 250 delegates, including representatives from China Maritime Arbitration Commission (CMAC), the Shanghai Arbitration Court of International Shipping, the Hong Kong International Arbitration Centre (HKIAC) and the London Maritime Arbitration Association (LMAA). 22

23 Comment &Opinion CIArbNews Doug Jones The new CAA: The necessary amendments to the Model Law Doug Jones looks at the changes he would like to see to the Model Law to strengthen the new proposed Domestic Arbitration legislation The underlying purpose of the reform in Australia is to ensure that domestic arbitration becomes a more effective alternative dispute resolution mechanism. To this end, the reforms will focus on the fact that arbitration should be a quicker, cheaper and less formal means of resolving disputes than commercial litigation. For these reforms to be successful there are two key issues that need to be addressed. There should be: legislative enactment making it clear that arbitration is intended to be and should be a different process to court proceedings; and a clear statement that the objective of arbitration is speed, efficiency and cost effectiveness. So far as the second of these is concerned, a useful exposition of the relevant statement of principle can be found in section 1 (a) of the English Arbitration Act 1996 (UK). This provision is concerned with obtaining fair resolutions of disputes without unnecessary delay or expense and upholding the principle of party autonomy. T h e d i f f i c u l t y i s t h a t E n g l a n d, notwithstanding the statement of objective domestic arbitration, fails to provide as cost effective means of binding dispute resolution as for instance does international arbitration. The reason for this is that the principles are declared to be subject to the agreement of the parties. It is therefore necessary, for the Australian reform to be effective, that party autonomy be limited so that the overriding obligation of an arbitrator would be to ensure that the procedure adopted satisfies the objectives of arbitration notwithstanding the agreement of the parties. A provision similar to this can be found in the London Court of International Arbitration (LCIA) Rules where the statement of general principle is appropriately qualified so far as the capacity of parties to override the discretion of the tribunal to ensure the achievement of this objective: Clause 14.1 The parties may agree on the conduct of their arbitral proceedings and they are encouraged to do so, consistent with the Arbitral Tribunal s general duties at all times: (i) to act fairly and impartially as between all parties, giving each a reasonable opportunity of putting its case and dealing with that of its opponent; and (ii) to adopt procedures suitable to the circumstances of the arbitration, avoiding unnecessary delay or expense, so as to provide a fair and efficient means for the final resolution of the parties dispute. The issue is thus not so much a need for wholesale reform of the Uniform Acts but rather the introduction of legislation which introduces a change of focus - a focus on the goals of commercial arbitration; to act as a speedy, cost-effective alternative dispute resolution mechanism. The Model Law may be used as a benchmark in achieving this change in focus. The adoption of the Model Law for the purposes of domestic arbitration in Australia is something for which the Model Law was not designed; it was intended to apply to international arbitration. Accordingly, some amendment to the Model Law would be required in order to pick up the more detailed provisions developed over time in Australia s domestic arbitration law. The Model Law was really designed to provide a framework for countries where international arbitration was not already provided for in their existing legal frameworks. Notwithstanding this, the Model Law has been adopted with amendments to cover domestic arbitration in a number of jurisdictions. To this end, the (Continued on page 24) 23

24 Comment&Opinion The new CAA: The necessary amendments to the Model Law (Continued from page 23) Model Law offers a set of basic rules that are also suitable for domestic arbitration. The following will expound the relevant amendments and additions to the Model Law that should be considered when redrafting Australia s domestic arbitration legislation. The focus of these reforms is to reinforce the importance of the overriding principles of commercial arbitration. 5. Necessary amendments to the Model Law The drafters of the Act must ensure that it carries into effect the overriding principles of commercial arbitration. To this end, the Act should promote the goals of arbitration, namely; to provide a quicker, cheaper and less formal method of resolving disputes in contrast to litigation. Accordingly, the Act must provide for a an impartial tribunal that reaches a decision efficiently. The principle of party autonomy, although important, would give way to the overriding principles of commercial arbitration. This will ensure that arbitrators can negate the dilatory tactics of the parties (or any other issues contradictory to these principles) should they arise. Another important policy consideration is the level or extent of judicial intervention that should be permissible under the Act. The level of recourse against an arbitral award should ideally be minimised. (a) Article 1 Model Law: Application Using the Model Law as a benchmark for domestic arbitration is likely to improve efficiency for the current process. However, here are a variety of issues that arise with a direct application of the Model Law to the domestic arbitration setting. For instance, care must be taken to avoid any confusion in the Act with the application of the International Arbitration Act 1974 (Cth). The application of the domestic arbitration Act should be based on the Model Law, but should apply to domestic arbitration only. We should glean from the application provisions of the existing Uniform Acts (see for example, section 3 of the CAA(NSW)). (b) Article 2 Model Law: Definitions Where appropriate, definitions should be amended or added. (c) Article 2A Model Law: International Origin and General Principles This section will need to be amended or excised. Rather than having regard to international origins in the interpretation of the legislation, a new provision should be added to reflect the focus on the overriding principles of domestic commercial arbitration. Specifically, this provision should reflect the overriding objective of this legislation to facilitate the fair and final resolution of disputes by an impartial tribunal, quickly and cost-effectively. Party autonomy is also important, however, this principle should be subject to the overriding objectives of arbitration. (d) Article 6 Model Law: Court or other authority for certain functions of arbitration assistance and supervision The Supreme Court of each State or Territory should be the relevant court to perform these functions (as stipulated in Articles 11(3), 11(4), 13(3), 14, 16(3) and 34(2)) unless parties have agreed otherwise. Where parties have agreed otherwise, a similar approach should be followed to that in section 4(2) of the CAA (NSW). Namely, any reference in this Act to the Court is, in relation to that agreement, a reference to the District Court or a Local Court, as the case requires and as agreed on by the parties. (e) Article 7 Model Law: Definition and form of arbitration agreement Option 1 (subsections 1-6) of Article 7 of the Model Law should be used to define an arbitration agreement. (f) Article 8 Model Law: Arbitration agreement and substantive claim before a court Article 8 should not be included in the Act. This provision effectively requires the court to order mandatory stay of court proceedings and refer the parties to arbitration unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. Instead, a section similar to that of section 53 of the existing Uniform Acts would provide the court the option of staying proceedings in favour of arbitral proceedings. This would, in effect, be more consistent with the overriding principles of arbitration. Conversely, a strict application of Article 8 of the Model Law may allow for dilatory tactics to be used by a party already undergoing an arbitration as the court has to determine whether the arbitration agreement is prima facie valid. A replacement of a provision similar to that of section 53 CAA (NSW) would promote the fact that commercial arbitration should remain a speedy dispute resolution mechanism. (g) Article 10 Model Law: Number of arbitrators Article 10 of the model law should be amended such that the default number of arbitrators is one as opposed to three. This is consistent with section 6 of the Uniform Acts which stipulates that a single arbitrator should be appointed unless the arbitration agreement otherwise provides, or the parties otherwise agree in writing. (h) Duties of the parties clause Two provisions should be added that encompass the duties of the parties and the default by parties. These sections should be based on the Uniform Acts. These provisions aim to strike a balance between upholding party autonomy and respecting the overriding principles of commercial arbitration. The duties of the parties clause is indicative of the fact that parties should respect a duty to do all things necessary (Continued on page 25) 24

25 Comment&Opinion The new CAA: The necessary amendments to the Model Law (Continued from page 24) for the proper and expeditious conduct of the arbitral proceedings. The terms of both section 37 of the Uniform Acts and section 40 of the Arbitration Act 1996 (UK) might be considered in drafting this clause. (i) Default by parties clause In the event that a party fails to adhere to the aforementioned duties of the parties provision by failing to do something necessary for the proper and expeditious conduct of the proceedings, the default by parties provision becomes relevant. This provision should be similar to that of section 41 of the Arbitration Act 1996 (UK). If a similar provision is followed, parties should be free to determine the arbitrator s powers in the event of default. This promotes party autonomy. However, if the parties fail to agree or if the parties agreement is inconsistent with the overriding principles of arbitration, the arbitrator should have the discretion to determine their power (consistent, of course, with the overriding principles). The arbitrator should have the power to, for example: make an award dismissing the claim where there has been inexcusable delay; hear and decide proceedings in a party s absence (or on the basis of written material before him or her) if they failed to attend the hearing or submit evidence to the arbitrator; make peremptory orders requiring the party to comply to an order within a given period; make an award dismissing a claim if a party has failed to comply with a peremptory order to provide security for costs; or, make such an order as it feels fit as to the payment of costs of the arbitration as a consequence of the non-compliance. (j) Article 27 Model Law: Court assistance in taking evidence There should also be an addendum to Article 27 of the Model Law so as to add more force to the power of the courts to expedite the arbitration process. The Supreme Court should be allowed to subpoena the relevant party requiring them to attend an arbitration and/or produce documents for evidence in the relevant arbitration. For instance, such provisions as sections 17 and 18 of the Uniform Acts should be included in the Act. (k) Consolidation of arbitration proceedings clause A provision similar to that of section 26 of the Uniform Acts should be added to the Act. This would have the effect of allowing an arbitrator to consolidate arbitration proceedings where appropriate. Section 26(3) sets the tests to be applied when an arbitrator considers joining separate arbitration proceedings as provided in subsections 26(1)(a) and (2)(a). 1 Section 26 does not defer to the agreement of the parties for the purposes of avoiding application, it is a mandatory provision, the parties can not defer to the arbitration agreement. 2 Orders, including provisional orders, may be made under section 26(3) if it appears that: some common question of law or fact arises in all of the arbitration proceedings; the rights of relief claimed in all of the proceedings are in respect of or arise out of the same transaction or series of transactions; or for some other reason it is desirable to make the order or provisional order. If any of these circumstances exist, then section 26 provides an arbitrator with the powers to make orders with respect to consolidation of proceedings. It is a power to order that the proceedings be heard at the same time or one after the other, or that any of the proceedings be stayed until the determination of all of them. This provision should be included into the Act as it may help improve the efficiency of arbitration procedure. (I) Settlement of disputes otherwise than by arbitration clause A settlement of disputes otherwise than by arbitration provision should be included in the Act. This should be based on section 27 of the Uniform Acts, but should apply on an opt-out rather than an opt-in basis. Subsection 1 of this section provides that: Parties to an arbitration agreement: (a) may seek settlement of a dispute between them by mediation, conciliation or similar means; or (b) may authorise an arbitrator or umpire to act as a mediator, conciliator or other non-arbitral intermediary between them (whether or not involving a conference to be conducted by the arbitrator or umpire), whether before or after proceeding to arbitration, and whether or not continuing with the arbitration. This provision should act as an express statutory recognition of such processes as arbmed. The arb-med process is an important feature of arbitration. It is a technique that fuses mediation and arbitration into a process of dispute settlement. The difference between the two procedures is whether the neutral third party can impose a decision upon the parties. Arb-med provides a forum in which the parties can reach a mutually acceptable agreement prior to the imposition of a decision by a third party. It is also based on the transformation of mediation and arbitration into a continual process whereby parties who fail to reach a settlement during mediation may continue to an arbitration process, thereby saving time, reducing costs, and creating process efficiency. The rationale underpinning the inclusion of this section is that, subject to the overriding principles, the contracting parties should be allowed to resolve their dispute using a number of agreed ADR alternatives. This promotes flexibility of the arbitration proceedings and is consistent with the overriding principle of efficiency in that a variety of ADR mechanisms may be used (Continued on page 26) 25

26 Comment&Opinion The new CAA: The necessary amendments to the Model Law (Continued from page 25) to achieve a just result in a timely fashion. (m) Specific performance clause For the purposes of enabling arbitral tribunals to hand down more effective awards, they should have access to an array of remedies. Accordingly, it would be appropriate to insert an additional provision (based on or similar to section 24 of the Uniform Acts) to allow an arbitrator to make an award ordering specific performance of a contract. The tribunal should, however, only be permitted to utilise this remedy in situations where the Supreme Court would have the power to order specific performance of that contract. 3 (n) Costs clause Broadly speaking the cost provisions in the Uniform Acts adequately serve the purpose of domestic commercial arbitration. Accordingly, sections of the Uniform Acts should be included in the Act. The costs provision should also empower the arbitrator to direct that the recoverable costs of an arbitration, or any part of arbitral proceedings, be limited to a specific amount or be calculated in a specific manner. The provisions of the Uniform Acts that should be included in the domestic arbitration Act encompass costs (s 34), assessment of arbitrator s or umpire s fees and expenses (s 35), application of Division 11 of Part 3.2 of Legal Profession Act 2004 (NSW) which sets out costs assessment (s35a), and costs of abortive arbitration (s36). (o) Interest on awards clause A provision for interest on awards and debt under awards based on sections 31 and 32 of the Uniform Acts should also be included in the Act. Section 31 currently sets out interest up to making of award and section 32 is concerned with interest on debt under award. (p) Article 34 Model Law: Application for setting aside as exclusive recourse against an award Some commentators argue that Article 34 of the Model Law should be extended to include additional provisions that allow for judicial review on additional grounds. For instance, parties should be allowed to challenge an arbitral award where there is an error of law or due to procedural irregularities. The first of these is not contentious and is already provided for under section 38 of the Uniform Acts. Parties are allowed to appeal to the Supreme Court on any question of law arising out of an award. However, parties should be able to optout of this provision. There is some contention as to how much protection should be granted to parties with respect to challenging an award on the grounds of procedural irregularities. The amount of court intervention in arbitral proceedings should ideally be minimised. To this end, it is important that the drafters of the new legislation query the scope of this power. This issue goes back to the heart of the intended reform, to respect the overriding purpose of arbitration. If a broad discretion is granted to the courts, this may be contradictory to the intention of the Act. It may however, be necessary to draft a provision that permits parties to challenge of an award for procedural irregularities. The formulation of this court intervention power is a difficult issue and as such it is important that a balance is sought between protecting the parties and upholding the central tenets of commercial arbitration. To extend the Act to include section 68 of the Arbitration Act 1996 (UK) would be inappropriate. The Arbitration Act 1996 (UK) introduces the concept of serious irregularity and expressly states the categories of irregularity which might justify a challenge to an award. It provides that the irregularity has to be serious such that the court is able to consider that it has caused or will cause substantial injustice to the applicant. Applying this provision directly would have the effect of expanding the scope of court intervention in domestic arbitration. It is argued that when formulating provisions with respect to court intervention that drafters should tread carefully. After all, if the courts were to limit their interference in the arbitral process, this would enable parties to resolve their disputes in a speedy and economic manner (consistent with the underlying goals of commercial arbitration). (q) Determination of preliminary point of law by Supreme Court clause To promote expedient resolutions and avoid unnecessary delay, the Act should allow for the determination of a preliminary point of law by the Supreme Court. This provision should be the equivalent of section 39 of the Uniform Acts to allow parties to seek Supreme Court determination of any questions of law arising during the course of the arbitration. (r)liability (immunity) of arbitrators and liability (immunity) of institutions The Act should also include provisions that account for the immunity of arbitrators and arbitral institutions from liability where something is done or omitted in good faith. As such, the arbitrator or umpire is not personally liable when an act or omission is done in good faith whilst they are acting within the scope of their functions as an arbitrator/umpire. It is also important to provide similar provisions in order to protect institutions that are designated to appoint arbitrators or administer arbitrations (arbitral institutions), as this will allow for the development of institutional arbitration. (s) Court rules clause An additional provision should be inserted (Continued on page 27) 26

27 Comment&Opinion The new CAA: The necessary amendments to the Model Law (Continued from page 26) so as to reflect sections 62 and 63 of the Uniform Acts, which provide for the making of court rules to give effect to the purpose of the Act. This will ensure consistency between existing legislation. 6. Implications of the reforms After the reform to the Uniform Acts takes place, parties in Australia should have access to a more efficient and less expensive arbitration process. In practice, parties who use arbitration will have more freedom to agree on dispute resolution procedures as long as their agreement is consistent with the overriding principles of arbitration. The legislation should also aim to discourage the interventionist approach taken by the courts in recent decades with respect to arbitration. It follows that once an award is handed down by an arbitral tribunal that there is less chance of that award being set aside. This will have the effect of helping to raise the profile of Australia as an arbitration friendly nation. It is hoped that this process will encourage confidence in domestic arbitration in Australia. The yardstick of any success of these reforms will be whether commercial arbitration will in fact become a quicker and cheaper dispute resolution mechanism. 7. Conclusion The first step in improving domestic arbitration in Australia is to change the attitude of stakeholders in the arbitration and judicial review process. By entrenching arbitration s overriding principles in statute, the courts will have a responsibility to ensure that they exercise judicial restraint and limit their interference with the arbitral process to the absolute minimum. 24 This process will ensure that the goals of commercial arbitration are achieved. The Model Law acts as an appropriate framework with respect to domestic reform, however, to make the legislation relevant, additional provisions must be included. This process must be handled with great care. For example, in considering the amendment of Article 34 of the Model Law; if judicial review is too broad, arbitration merely becomes an entree to litigation. 25 Conversely, if the protections of the arbitral award are too limited, this may deter parties from arbitration. Accordingly, the drafters must strike the right balance between ensuring that party autonomy and the right to judicial review are protected, while ensuring that the goals of arbitration are achieved. After these reforms take place, both on the domestic and international front, it is likely that we will witness a marked improvement in terms of the efficiency of arbitration in Australia. This will ensure that Australia becomes an international hub and a more attractive forum for international arbitration. It is time for a change in the arbitration framework in Australia and the international and domestic reforms will act as a double edged sword. The reforms will improve the effectiveness of arbitration on a local level, whilst improving the profile of arbitration in Australia from an international perspective. Endnotes: 1. Sections 26(3) and (1)(a) generally reflect like powers of consolidation as provided in Part 31 rule 7 of the Supreme Court Rules 1970 (NSW). 2. A A de Fina, Consolidation of Arbitral Proceedings (2001) 17(5) BCL In determining whether specific performance is an appropriate remedy, the Court will often consider jurisdictional factors precluding an order for specific performance. For example, whether the binding contract was for valuable consideration: A court has no jurisdiction to grant specific performance of a promise not supported by consideration, even if the parties executed a deed: Ellenborough, Towry Law v Bume [1903], Colman v Sarrel (1789); Whether damages at common law are inadequate: if a plaintiff can be adequately compensated by an award of damages then in common law, the court has no jurisdiction to order specific performance: Beswick v Beswick [1968]. See also, s 68 Supreme Court Act 1970 (NSW). This section provides for damages in case for equitable relief: Where the Court has power: to order the specific performance of any covenant, contract or agreement, the Court may award damages to the party injured either in addition to or in substitution for the injunction or specific performance. Security of Payment Cases 2009 (Continued from page 32) Securcorp Limited v. Civil Mining Construction P/L [2009] QSC 249 Baxbex Pty Ltd v Bickle (No 2) [2009] QSC 270 All Type Developments Pty Ltd v Hickey [2009] QSC 224 Bloomer Constructions (Qld) Pty Ltd v O Sullivan Anor [2009] QSC 220 John Holland Pty Ltd v TAC Pacific Pty Ltd Ors [2009l QSC 205 Baxbex Pty Ltd v Bickle [2009] QSC I94 Queensland Bulk Water Supply Authority v. McDonald Keen Group P/L Anor [2009] QSC 165 Uniting Church in Australia Property Trust (Qld) v. Davenport Anor [2009] QSC 134 Zen Ridgeway Pty Ltd v Adams Anor [2009] QSC 117 Nebmas P/L v Sub Divide P/L Ors [2009] QSC 92 Skinner v Timms Anor [2009] QSC 46 Tailored Projects P/L v. Jedfire P/L [2009] QSC32 Austruct Qld v Independent Pub Group P/L [2009] QSC1 WESTERN AUSTRALIA Wormall Pty Ltd v Marchese Investments Pty Ltd [2009] WADC 102 O Donnell Griffin Pty Ltd v John Holland Pty Ltd [2009] WASC 19 There are no cases reported on Austlii from the Northern Territory which, at the end of 2009, was the only other jurisdiction where Security of Payment legislation had been in operation for any length of time. 27

28 International Arbitration ICSID arbitrator disqualified for comments in media LegalUpdate The Permanent Court of Arbitration at The Hague recently upheld a challenge that a state-respondent had brought against a leading arbitrator, holding that comments the arbitrator had made to the media gave rise to doubts regarding his impartiality or independence.matt Skinner (pictured left), James Pearse and Dr Sam Luttrell (right) report. How does it affect you? The decision may provide some authority for the legitimacy of referring bias challenges to arbitrators in investor-state arbitrations governed by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965 (the Washington Convention) to external authorities for determination; and illustrates the increasing number of ways in which an appearance of bias may arise in an investment treaty arbitration. Introduction Bias challenges are an increasingly common feature of international dispute resolution, including international commercial arbitration and investor-state arbitration. In this case, a state-respondent (Ecuador) challenged a leading arbitrator, the Honourable Charles N Brower, on the basis of comments he made outside the arbitration concerning Ecuador s disobedience of interim measures and withdrawal from the Washington Convention. The Permanent Court of Arbitration (the PCA) held that Judge Brower s comments gave rise to justifiable doubts as to his impartiality or independence. 1 Amongst other things, the decision raises the question of whether the PCA s decision is enforceable, given that the parties may not have had the power to contract out of the International Centre for Settlement of Investment Dispute s (the ICSID) challenge procedure. Background The challenge to Judge Brower arose out of an ICSID arbitration between French company Perenco and the Ecuadorian stateoil company, Empresa Estatal Petroleos del Ecuador (Petroecuador). 2 Perenco filed for ICSID arbitration in April 2008, alleging that Ecuador had breached the France-Ecuador Bilateral Investment Treaty by expropriating Perenco s participating interest in an oil tenement in the Amazon region of Ecuador. Perenco appointed Judge Brower as its arbitrator. The parties agreed that any challenges to arbitrators would be resolved by the Secretary General of the PCA, according to the International Bar Association Guidelines on Conflicts of Interest in International Arbitration (the IBA Guidelines). Facts giving rise to the challenge Ecuador formally denounced the Washington Convention on 6 July Ecuador s reaction to the ICSID tribunal s provisional measures (which included a temporary restraining order against the State), and its withdrawal from the Washington Convention, attracted a good deal of media attention. In August 2009, Judge Brower was interviewed by The Metropolitan Corporate Counsel. After being asked to comment on Ecuador s withdrawal from the Washington Convention, Judge Brower was asked the following question: Editor: Tell us what you see as the most (Continued on page 29) 28

29 LegalUpdate ICSID arbitrator disqualified for comments in media (Continued from page 28) pressing issues in international arbitration. Brower: There is an issue of acceptance and the willingness to continue participating in it, as exemplified by what Bolivia has done and what Ecuador is doing. Ecuador currently is expressly declining to comply with the orders of two ICSID tribunals with very stiff interim provisional measures, but they just say they have to enforce their national law and the orders don t make any difference. But when recalcitrant host countries find out that claimants are going to act like those who were expropriated in Libya, start bringing hot oil litigation and chasing cargos, doing detective work looking for people who will invoke cross-default clauses in loan agreements, etc., the politics may change. After a certain point, no one will invest without having something to rely on. 3 On 19 September 2009, Ecuador filed a Request for Disqualification of Judge Brower with the Secretary General of the PCA, alleging that Judge Brower s answer to the above question gave rise to justifiable doubts as to his impartiality or independence. On 13 October 2009, the PCA gave notice to the parties that it accepted jurisdiction to decide upon the challenge. Perenco gave notice that it believed the challenge lacked merit, and submissions were filed in October and November The PCA s decision In arriving at his decision as to Judge Brower s bias, the Secretary General of the PCA applied General Standard 1 and General Standard 2 (Conflict of Interest) of the IBA Guidelines. He stated that the question was one of whether: from a reasonable third person s point of view having knowledge of the relevant facts, Judge Brower s comments give rise to justifiable doubts as to his impartiality or independence. Stated in another way, could a reasonable and informed third party conclude that there is a likelihood that Judge Brower may be influenced by factors other than the merits of the case as presented by the parties in reaching his decision? 4 The Secretary General concluded that: the combination of the words chosen by Judge Brower and the context in which he used them have the overall effect of painting an unfavourable view of Ecuador in such a way as to give a reasonable and informed third party justifiable doubts as to Judge Brower s impartiality. 5 Ecuador also argued that Judge Brower appeared to have prejudged two issues: first, the issue of whether provisional measures are legally binding under the Washington Convention; and second, the merits issue of expropriation. The Secretary General held that Ecuador s argument on prejudgment of the provisional measures issue failed because Judge Brower was simply repeating what the tribunal had already decided. 6 As to the merits prejudgment question, the Secretary General concluded that Judge Brower s comments also gave rise to a justifiable doubt that he had prejudged the issue of whether Ecuador had expropriated Perenco s investment. Questions this case raises The challenge to Judge Brower raises a number of both practical and theoretical questions of international law: Was it open to the parties to agree that the Secretary General of the PCA decide challenges? At the time the agreement to refer challenges to the PCA was concluded in October 2008 Ecuador was a member state of the Washington Convention. Article 71 of the Washington Convention proscribes that withdrawal only becomes effective six months after formal notice is given by the withdrawing state. Ecuador s withdrawal from the Washington Convention only took effect on 6 January 2010, almost four months after the request for disqualification of Judge Brower was filed with the PCA. The effect of Article 72 of the Washington Convention is that withdrawal cannot operate retroactively. It follows that, despite Ecuador s withdrawal from the Convention, the Perenco v Ecuador arbitration was, at the time of the challenge that arose out of it, still subject to the Convention. The Washington Convention is a multilateral treaty. It is trite law that a multilateral treaty is not capable of exclusion by bilateral agreement of two signatories, let alone one signatory and a corporate national of another. While there is an emerging custom of referring ICSID bias challenges to the PCA, this is normally only done where the challenge is to a member of an annulment committee and the Chairman of ICSID is conflicted out. 7 It is therefore likely that it was not open to the parties to agreement for the PCA to determine the challenge and, as such, the validity of the agreement to refer challenges to the PCA is, therefore, open to question under international law. Were the parties able to opt-down into the lower threshold for bias challenges posited by the IBA Guidelines? Given that the Convention was still applicable to the challenge when it was filed, the standard for arbitrator independence and impartiality should have been derived from the Washington Convention. Article 57 allows for the challenge of any tribunal member on account of any fact indicating a manifest lack of the qualities required of an arbitrator under Article 14(1): namely, high moral character, expertise and independent judgment. Would the result have been different if the PCA had applied the Washington Convention instead of the IBA Guidelines? The Washington Convention threshold is set significantly higher than the threshold for bias challenges posited by the IBA Guidelines. The key word in Article 57 of the Convention is manifest. Manifest has been interpreted to mean obvious or evident, 8 to exclude reliance on speculative assumptions or arguments, 9 and to operate as an evidentiary condition, which imposes a relatively heavy burden of proof on the party making the proposal [to disqualify]. 10 With these authorities in mind and, considering the material facts of the challenge, the challenge to Judge Brower may not have succeeded if it were heard by the remaining two arbitrators under normal ICSID procedure and decided by application of the Washington Convention. Concluding remarks The challenge to Judge Brower is a good example of the growing legal complexity of bias challenges in investor-state settings, where the law of nations and the law of commerce do not always interact with certainty. The challenge to Judge Brower illustrates this friction. The problem is, first, one of autonomy: to what extent are the parties free to tailor challenge procedures in an ICSID arbitration? (Continued on page 30) 29

30 LegalUpdate ICSID arbitrator disqualified for comments in media (Continued from page 29) The issue then evolves into a question of applicable law what law applies to a challenge that arises out of an arbitration between an investor and a state that has denounced (but not yet effectively withdrawn from) the Washington Convention? Without criticising his decision to withdraw from the reference, we might have answers to these questions if Judge Brower refused to stand down, and Ecuador was put in a position where it had to attempt to enforce the decision of the Secretary General of the PCA. However, the fact that Judge Brower resigned voluntarily means these questions remain unanswered. Matt Skinner is a partner in the Sydney office of Allens Arthur Robinson. Dr Sam Luttrell is a lawyer in the Perth office of the firm and James Pearse, a research assistant. This article was first published by AAR on 2 March 2010 and is reprinted with permission. Footnotes 1.PCA Case No. IR-2009/1, decision dated 8 December Perenco Ecuador Limited v Republic of Ecuador & Empresa Estatal Petroleos del Ecuador, ICSID Case No. ARB/08/6. 3. PCA Case No. IR-2009/1, para 26, citing A World-Class Arbitrators Speaks!, The Metropolitan Corporate Counsel, August PCA Case No. IR-2009/1, para PCA Case No. IR-2009/1, para PCA Case No. IR-2009/1, para See Generation Ukraine v Ukraine, ICSID Case ARB/00/9 (Award 16 September 2003). 8. Suez Sociedad General de Aguas de Barcelona S.A. & InterAguas Servicios Integrales del Agua S.A. v Argentine Republic, ICSID Case ARB/03/17 (Decision on the Proposal for the Disqualification of a Member of the Arbitral Tribunal, 22 October 2007), para Compania de Aguas de Aconquija S.A. & Vivendi Universal v Argentine Republic, ICSID Case ARB/97/3 (Decision on the Challenge to the President on the Committee, 3 October 2001) 17 ICSID Review (2002) FILJ 168, para Schreuer et al, above note 20 at p The Honorable Charles N. Brower The Judge at the centre of the storm! Judge Brower s 45-year career in the law has combined extensive practice at the bar with distinguished public service, both national and international, concentrating during more than 25 years in the fields of public international law and international dispute resolution. Following eight years with the international law firm White & Case LLP in New York City ( ), acting both as a commercial trial and appellate attorney and as criminal defense counsel in prominent cases, Judge Brower resigned his partnership to serve for four years ( ) in the United States Department of State in Washington, DC, where as Acting Legal Adviser he was the chief lawyer of the Department and principal international lawyer for the United States Government. Thereafter, he rejoined White & Case LLP, co-founding its Washington, DC office, where his practice, originally concentrated in the litigation of administrative and public law cases, came to be comprised almost exclusively of substantial international arbitrations. He has served continuously since 1983 as a Judge of the Iran-United States Claims Tribunal in The Hague,The Netherlands, where he sat full-time from 1984 to That service was interrupted for some months in 1987 by White House service as Deputy Special Counsellor to President Reagan. While continuing to serve in The Hague on a part-time basis, Judge Brower resumed partnership in White & Case LLP from 1988 until joining 20 Essex Street Chambers. Judge Brower currently also serves as Judge Ad Hoc of the Inter-American Court of Human Rights, as a member of the Register of Experts of the United Nations Compensation Commission in Geneva (UNCC), and as a member of the Panels of Conciliators and Arbitrators of the International Centre for Settlement of Investment Disputes (ICSID) (a member of the World Bank Group). He has represented various governments in proceedings before the International Court of Justice (World Court) and is a member of the panels of arbitrators of a number of arbitral institutions around the world. As counsel or arbitrator he has handled cases on all six continents, principally under the rules of the ICC, UNCITRAL, the LCIA, the AAA, the UNCC, and ICSID.These cases have involved a wide variety of commercial disputes as well as issues of public international law, particularly involving the oil and gas sector, major infrastructural projects, expropriations, and other investment disputes, including ones arising under both bilateral and multilateral investment treaties (such as NAFTA and the Energy Charter). Judge Brower s many peer listings were highlighted recently by his selection as one of the Global Counsel Top 10 Arbitration Experts worldwide and as one of the Top Ten Arbitrators in the American Lawyer s Summer 2005 Focus Europe. Judge Brower has served as President of the American Society of International Law, Governor of the American Bar Association, Chair of the Institute for Transnational Arbitration, and on the Executive Council of the International Law Association. He has published and spoken around the world on international law and international dispute resolution. He has been a Visiting Fellow at Cambridge University (Jesus College and the Lauterpacht Research Centre for International Law) and has been selected as John A. Ewald, Jr. Distinguished Visiting Professor at the University of Virginia School of Law. 30

31 LegalUpdate Insigma: Party autonomy trumps pathological tendencies Albert Monichino (left) comments on a recent case in Singapore Introduction Party autonomy (meaning that parties are free to decide how and in what manner their dispute is to be determined) is a fundamental underpinning of arbitration law. Where possible, courts should give effect to the parties contractual choice as to the manner of dispute resolution. However, sometimes (usually through poor drafting) the dispute resolution agreement is unworkable. Such clauses are typically referred to as pathological. In Insigma Technology Co Ltd v. Alstom Technology Ltd 1 the Singapore courts were confronted with an arbitration agreement which purported to refer future disputes to arbitration to be administered by one arbitration institution under the rules of another arbitration institution. The Singapore courts upheld the unwieldy arbitration agreement, thus giving effect to party autonomy and sending a clear message to the international arbitration community that Singapore has an unequivocal judicial policy of facilitating and promoting arbitration. 3 The Facts Insigma and Alstom entered into a licence agreement governed by Singapore law under which Alstom granted Insigma a limited licence to use certain technology in China.. Article 18(c) of the licence agreement contained an arbitration agreement in the following terms:. Any and all such dispute shall be finally resolved by arbitration before the Singapore International Arbitration Centre [SIAC] in accordance with the Rules of Arbitration of the International Chamber of Commerce [ICC] and the proceedings shall take place in Singapore A dispute arose over the basis of calculating annual royalties under the licence agreement. Alstom first referred the dispute to the ICC, Insigma objected so Alstom withdrew the ICC request and instead referred the dispute to SIAC. An arbitral tribunal of three was empanelled, and Insigma then objected to the tribunal s jurisdiction on the grounds inter alia that Article 18(c) was not valid or enforceable as it was unworkable. It may be recalled that ICC arbitrations have somewhat unique features: for example, there is a terms of reference procedure by which the issues are determined, and the terms of reference as well as the arbitral award are scrutinised by the ICC court. 3 Alstom obtained from SIAC confirmation that it was prepared to administer an arbitration in accordance with ICC arbitration rules. SIAC nominated corresponding actors to perform the functions of the ICC Secretariat, Secretary-General and the ICC Court under the ICC rules. Notwithstanding that the arbitral tribunal considered that Article 18(c) was the sort of formulation which teachers and textbooks would admonish practitioners to avoid it rejected the jurisdictional objection and instead upheld the arbitration agreement saying that it was clear enough that the parties had intended for SIAC to administer an arbitration in accordance with the ICC rules. Court Decisions Insigma appealed to the High Court of Singapore which similarly rejected the contention that the arbitration agreement was inoperative for uncertainty. In doing so, the court treated the arbitration agreement as an agreement to refer a dispute to ad hoc arbitration. 4 Justice Judith Prakash noted that there was no objection in principle to an arbitral institution administering arbitration proceedings in accordance with the procedural rules of another body chosen by the parties as long as there was no significant inconsistency in the application of those rules. 5 As SIAC was prepared to substitute various actors designated under the ICC rules with equivalent actors, no significant inconsistency arose. 6 Her Honour noted that party autonomy was one of the most important principles in arbitration law 7 and that inefficiency alone cannot render a clause invalid so long as the parties had agreed and intended for their arbitration to be conducted in a particular manner. 8 Insigma then appealed to the Singapore Court of Appeal, which upheld the first instance decision and in doing so provided some important guidance on the interpretation of arbitration agreements. 9 In particular: (a) Singapore courts will ordinarily respect the principle of party autonomy and will give effect to arbitration agreements provided they are workable and do not offend any public policy considerations; (b) an arbitration agreement should be construed like any other form of commercial agreement; (c) where the parties have evinced a clear intention to settle any dispute by arbitration, the court should give effect to that intention even if certain aspects of the arbitration agreement may be ambiguous, inconsistent or incomplete, and the giving effect to such intention does not result in an arbitration that is outside the parties contemplation; (d) there is no objection in principle to parties agreeing on a hybrid ad hoc arbitration administered by one arbitral institution but governed by the arbitration rules of another arbitral institution, provided that the administering institution can arrange for organs to carry out any functions that are required to be performed under the rules by the other institution; (e) not every defect in an arbitration clause will render it pathological and unenforceable. Analysis Insigma confirms that it is possible for parties to specify in their arbitration agreement that future disputes are to be resolved by ad hoc arbitration administered by a particular arbitral institution according to the rules of another arbitral institution. However, this course is not advisable as often such institutional rules provide for unique functions to be performed by the institution promulgating those rules. Endnotes 1. [2008] SGHC 134, [ 2009] 1 SLR 23 per Judith Prakash J; affirmed on appeal [ 2009] SGCA See also Tjong Very Sumito & Ors v Antig Investments Pte Ltd [2009] SGCA The ICC court is an arbitration body attached to the ICC with the function of ensuring the proper application of the ICC rules. 4. At [34]. Ad hoc arbitrations are to be distinguished from institutional arbitrations. The latter are arbitrations administered by a specialist arbitral institution under its own rules of arbitration: see Redfern & Hunter, Law and Practice of International Commercial Arbitration (2004, Sweet & Maxwell) at [1-99] 5. At [26] 6. At [28]. Otherwise, it is almost certain that Article 18(c) would have been held to be invalid. 7. At [32] 8. At ]36] 9. At [30] [39] per Chan Sek Keong CJ. 31