Summit that practically announces – Australia’s international arbitration benchmarks are firmly established
The COVID-19 pandemic has been a catalyst for change in the international arbitration space. For Australia in particular, the playing field has arguably become more level, removing its ability to compete optimally and climb to the top by joining cross-border dispute resolution hubs. Encouragingly, although further changes in conventional practice are still needed, recently released arbitration growth statistics suggest that Australia is in a privileged position to fully demonstrate its top-notch arbitration qualities and to take advantage of this opportunity somehow. unorthodox unorthodox. In particular, given the increased volume and success of virtual hearings, negating the often jarring appreciation that Australia’s “ impractical ” geographic location will perpetually frustrate its potential to attract the most important international disputes enjoyed by the more “ nearby ” main arbitration seats, such as Hong Kong and Singapore.
Travel restrictions, border closures and quarantine requirements during the COVID-19 (COVID) pandemic have had a significant impact on all facets of daily life, business and travel. Due to its intrinsically cross-border dimensions, the field of international arbitration is no exception. Only very rarely will the anatomical elements of an international arbitration bring together disputing parties, lawyers, witnesses, experts and tribunal members, all based in the same geographic location or even in the same time zone. . As a result, as it so often does, international arbitration has been forced to adapt quickly to the changing environment, adopting virtual hearings and adapting procedures to resolve potential issues arising from a reality of Offshored virtual arbitration..
The Australian Center for International Commercial Arbitration (ACICA) recently released its 2020 Australian Arbitration Report (ACICA Report) which is the first empirical study of arbitration activity in Australia and offers significant insight into the dynamics of the Down Under arbitration market. The ACICA report examined 223 arbitrations (national and international) concluded, conducted or initiated between 2016 and 2019.
The results indicate a strong Australian link with regard to the arbitrations examined, with the majority of the disputes reported occurring in the construction and engineering sectors. Overall, however, the results also reveal that oil and gas disputes with an Australian connection were much more likely to be the subject of international arbitration as a means of resolving controversies, rather than reverting to dispute resolution procedures. national arbitration.
Of the 223 arbitrations studied, the ACICA report estimates that the total amount in dispute was AUD 35 billion, of which around 75% are subject to international arbitrations. The ACICA report further states that the inclusion of ACICA clauses in new contracts has become more common, likely leading to an increase in future arbitration cases adopting ACICA rules..
For Australia, and its prospects as a compelling, leading international arbitration center, this empirical evidence is encouraging. More so, given the trade-offs reported all preceding the COVID epidemic; the consequences of which (combined with pre-existing growth trends) should – where appropriate – strengthen Australia’s confidence, which it presents as an essential seat of arbitration. In addition, this new state of affairs should strengthen the confidence that the headquarters are globally invested by the users and participants of international arbitration.
In addition, the most active arbitration institutions in the Asia-Pacific region, the Hong Kong International Arbitration Center (HKIAC) and Singapore International Arbitration Center (SIAC) both benefited from a sharp increase in filings for the year 2020 – in fact record volumes in each case. Other Asian arbitration centers are also statistically flourishing, including some striking year-over-year growth trends, such as the Vietnam International Arbitration Center (VIAC)., the Korean Commercial Arbitration Council (KCAB), the China International Economic and Commercial Arbitration Commission (CIETAC), and the Asian Center for International Arbitration (AIAC) in Malaysia.
As these reports collectively confirm, Asia Pacific is increasingly seen as one of the most favored geographic regions for arbitration filings. Despite neighborhood competition, for Australia this is surely carpe diem ground – a timely window to redirect some of the gravitational pull to Hong Kong and Singapore where international arbitrations have an Australian connection. .
Of course, while anecdotal evidence may strongly suggest a favorable needle change, only statistical analyzes conducted over the next several years will truly determine whether or not Australia seizes this moment to achieve its long-standing ambitions as a “ go-to ”. arbitral hub. In this regard, some promising signs are emerging from recent statistics released across the Asia-Pacific region:
- As noted above, Australia has long been viewed as an attractive seat for international arbitration in all but one respect: the constraints of its geographic location and what has been commonly referred to as its “tyranny of distance. Have often seen international arbitration users opt for a more attractive geographic location with seats in the Asia-Pacific region. The ACICA report points out that this may no longer be the case in the wake of COVID, which has forced users and international arbitration institutions to embrace dispute arbitration in a virtual world.
- The impact of COVID could cause long-established and usually the most popular arbitration seats to be further removed from London and Paris, in preference to arbitration centers in the Asia-Pacific region. This, for Australia, may be the “circuit breaker” it has been waiting for. Although not mandatory, in-person hearings often take place at the seat of the arbitration. Virtual auditions, on the other hand, are outsourced. This allows arbitral seats traditionally considered to be geographically distant, such as Australia, to become a more attractive option.
- Virtual hearings give parties the freedom to choose the seat of arbitration based solely on legal / procedural advantages, regardless of perceived geographic disadvantages.
- Where parties have a clear preference for face-to-face hearings, Australia has an exceptional caliber of international arbitration specialists within its borders. This option, however, may require the parties to choose Australian-based attorneys and tribunal members while international border closures remain in effect. While this may be considered too restrictive for some users, others may welcome the ability to hold in-person hearings, especially where there are perceived strategic drawbacks to holding a virtual hearing.
- Judicial support for international arbitration is strong in Australia, which has continued to demonstrate its ‘pro-arbitration bias’ and enduring policy of minimalist interference, ranking it among the benchmark jurisdictions in matters of judicial neutrality, independence and integrity. Especially, where recent times have shown that other traditionally “safe” arbitration seats are less stable from a geopolitical point of view, such as Hong Kong.
Adding to Australia’s cache of international arbitration, it has become a frequent hotbed of “mega” projects with a project value exceeding $ 1 billion. In particular, megaprojects in the construction, infrastructure, natural resources and energy sectors in its various states. Projects of this gigantic scale:
- are statistically subject to significant risks and explosions in time, quality and budget deliverables, resulting in complex, substantial value and high stakes litigation; and
- naturally involve international stakeholders, asset owners and participants (often operating through joint ventures) throughout the project value chain. This broad confluence of nationalities, investments and interests characteristically predisposes the settlement of international disputes, outside the auspices of Australian national courts, as the ultimate “neutral” guardian of those interests as they drift or fall apart. dislocate.
“In the midst of the difficulty lies the opportunity,” said Albert Einstein. For Australia, the COVID-catalyzed virtual era in which arbitration is now immersed is precisely that. To capitalize on and achieve wider recognition of Australia as the preferred seat of arbitration, concerted efforts will be essential to actively promote its obvious strengths, particularly where an Australian link exists in the underlying contract or dispute. himself. Such efforts may cause some legal advisers and arbitration users to initially suffer from the discomfort of adopting more innovative approaches to their usual contract drafting and dispute resolution practices.
Clearly, absent the headwind of the ‘tyranny of distance’, the conditions are now ideal for Australia to climb to the top of international arbitration centers. Indeed, if the moment is not right now, then when?