While Singapore and Hong Kong remain the regional leaders for hosting international arbitrations, the world of international arbitration does not stand still. Increasingly Australia is demonstrating it competitiveness in this area. This article considers these trends.
The 2015 International Arbitration Survey undertaken by Queen Mary College of the University of London found that 90 per cent of corporations prefer to use international arbitration to resolve their cross-border disputes rather than transnational litigation. Only 4 per cent of corporations prefer to use transnational litigation.
International arbitration remains the dispute resolution method of choice for a number of reasons. Most lawyers and in-house counsel value the confidentiality and privacy afforded by international arbitration. However, the 2015 International Arbitration Survey found that corporations most value enforceability of awards and avoiding specific legal systems/national courts.
The fact that corporations prefer international arbitration because of the ease with which awards can be enforced is not surprising; an award of an arbitral tribunal is enforceable (in theory at least) in 146 countries which are signatories to the New York Convention. The enforceability overseas of domestic court judgments is far, far less certain.
Selecting the arbitration seat
The choice of arbitral seat, or venue, is often a vexed issue.
London remains the global venue of choice. However, in recent years, following the rise of Asia as an economic power house, Singapore and Hong Kong have eroded the dominance of London (and other European venues).
The 2015 International Arbitration Survey found that 41 per cent of corporations had used Singapore or Hong Kong as the seat of arbitrations in the last five years. Corporations also said that Singapore and Hong Kong were the seats of arbitration that had most improved in the last five years.
The selection of a seat of arbitration is one of the most important decisions a corporation can make when selecting arbitration as its choice for dispute resolution. A variety of factors drive that decision.
When asked why certain arbitral seats were used corporations indicated that the reputation and recognition of the seat and the law governing the substance of the dispute were the predominant factors.
Australia’s competitive advantage
Australia’s competitive advantage as a venue for international arbitrations can be seen when regard is had to a corporation’s most important reasons for preferring certain arbitral seats.
The 2015 International Arbitration Survey found that the top reasons for choosing particular arbitral seats were:
- neutrality and impartiality of the local legal system
- a track record of enforcing agreements to arbitrate and arbitral awards
- availability of quality arbitrators
- availability of specialised lawyers at the seat.
Australia has real weight as a choice of arbitration seat when these factors are considered.
Amendments to the International Arbitration Act 1974 (Cth), passed in 2010 by the Australian Parliament, facilitate the conduct of international arbitration in Australia and the enforcement and recognition of arbitral awards made outside Australia.
Australian courts have shown deference to arbitration and there are now a number of specialist arbitration judges in some jurisdictions ensuring the speedy aid of arbitrations and the enforcement of arbitral awards.
As in the gas industry, Australia has a real competitive advantage in terms of people. Australia has a number of specialist arbitration lawyers and pre-eminent international arbitrators.
The resources boom has seen the depth of Australia’s arbitration experience expand with the number of arbitrations taking place in Australia at records levels.
All of this suggests that Australia will increasingly be a country of choice for international arbitrations.