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Dispute Resolution & Litigation

2020 ACICA Arbitration Report and the new 2021 ACICA Rules – Arbitration ‘thriving’ in Australia

On 9 March 2021, the Australian Centre for International Commercial Arbitration (ACICA) in conjunction with FTI Consulting released the inaugural Australian Arbitration Report (Report). The Report was produced based on the survey conducted on 111 arbitration professionals as well as arbitration data for 223 cases conducted between 2016 and 2019. Overall, this Report confirms that arbitration in Australia is ‘thriving’, and an increasing number of corporates and lawyers are choosing arbitration as a means of resolving disputes. The key findings of the Report are as below: •   Australia’s opportunities Dispute resolution practice has been transformed by the effects of the COVID-19 pandemic, resulting in a rise of online hearings and virtual platforms. Because of that, Australia’s distant geographical location has receded. Further, within the Asia-Pacific region, Australia, among the arbitration seats and venues, stands out as a stable liberal democracy with an independent and supportive judiciary, which can no longer be taken for granted in modern society. •   Value in dispute The total value in dispute for the arbitration reported exceeded AU$35 billion, of that, international arbitration took up around 75%. The average value in dispute for the international arbitration was around AU$250 million, whereas that for domestic arbitration was AU$75 million. •   Rules of arbitration The Report indicated that the Singapore International Arbitration Centre (SIAC) rule and the International Court of Arbitration (ICC) rule are the most preferred rules for international arbitration. Also, the most popular seat of arbitration was Singapore, followed by Hong Kong and London. •   Disputes by industry While the vast majority of international arbitration occurred in relation to construction, engineering and infrastructure (43%), there has been a significant use of other industries such as oil and gas (20%), mining and resources (13%), and transport (4%) industries. •   Efficiency in arbitration The Report provided that a key complaint made by the respondents is that efficiency in arbitration is hindered by the use of rigid and formal procedures. Practitioners dealing with arbitration should bear in mind not to conduct arbitration like litigation called “judicialisation” of arbitration. •   Satisfaction with the arbitration process More than 80% of the respondents indicated their satisfaction with the arbitration process. Particularly, it was highlighted that the perceived benefits of arbitration are enforceability, confidentiality and flexibility. However, the respondents reported that speed and costs for arbitration still are the most common weakness. The Report provided the following suggestions to improve the arbitration process:  º more ‘robust’ case management.  º early agreement of the issues by the parties.  º separation of liability and quantum.  º use of joint expert reports.  º joint expert testimony. •   Diversity The Report includes questions related to diversity in arbitration. Regretfully, less than 10% of arbitrators appointed were women. While there has been an increase in the appointment of female arbitrators, that has been mostly driven by the increased appointments by institutions, not by the parties. Further, nationality of arbitrators was mostly from Australia and the United Kingdom.   On 1 April 2021, the 2021 ACICA Arbitration Rules and Expedited Arbitration Rules came into effect enhancing the arbitration procedure in light of the COVID-19 pandemic, such as the virtual hearings and electronic filing and execution, and reflecting developments in international best practice. The key amendments and additions to the Rules include:   •   Rules facilitating virtual hearings, e-filing and electronic execution of documents;   •   the scope and procedure for consolidation and multi-party contract arbitrations;   •   effective case management provisions including the possibility of using mediation or other forms of ADR;   •   disclosure of third-party funding arrangements;   •   enhanced oversight of costs provisions including non-independent experts and third-party funding costs; and   •   early dismissal procedure.   As can be seen from the Report, there have been considerable activities in the arbitration practice in Australia, particularly with the construction and energy sectors, and more companies are including an ACICA arbitration clause in commercial contracts. The new ACICA Rules provide the parties with the greater flexibility, control, efficiency, transparency and certainty in the arbitral process.    Written on 1 October 2021 Disclaimer:The contents of this publication is of general nature and does not constitute legal advice. The information may have been obtained from external sources and we do not guarantee the accuracy or currency of the information at the date of publication or in the future. Please obtain legal advice specific to your circumstances before taking any action on matters discussed in this publication.