First of the New Commercial Arbitration Acts

It is now some 20 years since the last overhaul of the Arbitration Acts around Australia, and during this time they have become increasingly out of touch with modern practice, and in particular the UNCITRAL Model Law which has set the modern standard.

In May of this year, all of the State Attorneys-General of Australia agreed that all States would bring their arbitration laws into line with a model Commercial Arbitration Bill 2010, and New South Wales is the first State to introduce its new Commercial Arbitration Act 2010.

Experience from other jurisdictions from around the world suggests that these changes do indeed improve the efficiency of the arbitration process in a number of respects:-

  • The new Act reduces the scope for court interference during the course of the arbitration, and the scope for appeals at the end of the arbitration. South Australia in particular has had a very poor record in the past in the terms of court interference, and when introduced, this legislation should allow arbitrations to proceed more quickly, unimpeded by court intervention.
  • The legislation introduces the concept of Kompetenz-Kompetenz, whereby the arbitrator may rule upon his own jurisdiction. This power largely resolves the difficulties which arise when there is doubt as to the existence of a binding contract including an arbitration clause.
  • Under the old law, if the contract contains an arbitration clause, but one party nevertheless issued proceedings in court, the court had a discretion, on an application by the other party, as to whether to allow the court proceedings to continue. Under the new law, the court must stay the court proceedings in order for the arbitration to proceed unless it finds that the agreement is “null and void, inoperative or incapable of being performed”. This change is important, and will increase the number of arbitrations. Parties should not now include arbitration clauses unless they are really sure that they want their disputes to go to arbitration. Westchester New York Personal Injury Lawyers focus solely on personal injury law.
  • The Act enhances the power of the arbitrator to control time and cost, in particular by ordering a “stop clock” arbitration (in which the time allocated for the hearing may be strictly allocated) and the power for the arbitrator to limit the amount of costs recoverable between the parties.

In South Australia, the agreed legislative change has not yet been introduced to Parliament, but given that the form of the legislation is already settled, there seems no reason why this process should not occur promptly.

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