The team at Allens provide an overview of the role Australian Courts play in domestic and international arbitrations. See the full list of authors below.
As a ‘pro arbitration’ jurisdiction, the circumstances in which the Australian courts will interfere with an arbitration, or the decision of an arbitrator, are limited.
This ‘Q&A style’ article by Allens provides an overview of the role of the Australian courts in domestic and international arbitrations, and covers topics such as the powers of the Australian courts to set aside or enforce awards, and the ways in which the parties to an arbitration may seek the Australian courts’ assistance with the arbitral process, for example in relation to interim injunctions.
What is the legislative framework governing court involvement in arbitration in Australia?
Australia has adopted arbitration treaties and the UNCITRAL Model Law (the Model Law) (including the 2006 amendments) into its national and state legislation. Accordingly, the extent of Australian courts’ involvement in arbitrations depends upon the legislative framework that is applicable to the particular arbitration agreement or arbitral award.
International arbitrations
The Australian courts’ involvement in international arbitration is governed by the International Arbitration Act 1974 (Cth) (the International Arbitration Act). The Act applies to:
- international commercial arbitrations to which the Model Law applies;
- investment treaty arbitrations; and
- enforcement of ‘foreign awards’, namely awards: (i) made under an arbitration agreement in a country (other than Australia); and (ii) to which the New York Convention (NYC) applies.
Australia has adopted the Model Law as its procedural law for international arbitration under the International Arbitration Act. Although Australia is a federation of six states[1] and two self-governing territories[2] each with its own constitution, parliament, government and laws, in certain areas the states and territories are subject to Commonwealth legislation and governance. As Commonwealth legislation, the International Arbitration Act applies equally in all states and territories.
Australia acceded to the NYC on 26 March 1975, which was enacted into Australian domestic law through the International Arbitration Act (Australia’s ascension was not subject to any reservations).
Domestic commercial arbitration
Domestic arbitration in Australia is governed by Commercial Arbitration Acts applicable in each state and territory. These acts are substantially the same in each state and territory, and are collectively known as the ‘Uniform Arbitration Acts’. The Uniform Arbitration Acts generally follow the Model Law, but also contain some additional provisions not present in the Model Law.
What is the role of the Australian courts in the arbitration process?
Under the International Arbitration Act and the Uniform Arbitration Acts, the Australian courts may become involved in the arbitral process before an arbitration has commenced or during the conduct of the arbitration. Court involvement will most commonly arise in disputes of a jurisdictional nature, or in applications for interim relief. There are also a number of additional powers that the court holds to assist the conduct of the arbitration.
Referral to arbitration
Australia is a ‘pro-arbitration’ jurisdiction. As such, where parties have agreed to refer disputes to arbitration, and a dispute arises, article 8 of the Model Law and the equivalent s 8 of the Uniform Arbitration Acts oblige the Australian courts (at the request of a party) to stay any litigation that a party might bring in relation to the same dispute. The only exceptions are where the court finds that the arbitration agreement is null and void, inoperative or incapable of being performed.
Australian courts also have an inherent power to grant anti-suit injunctions to restrain foreign litigation brought in breach of exclusive jurisdiction clauses. In addition, the High Court has endorsed English case law in which anti-suit injunctions were granted to safeguard local arbitrations. Finally, there is authority (at state Supreme Court level) for a court granting an anti-suit injunction to restrain interstate court proceedings while a local arbitration was ongoing. However, Australian courts may refuse to grant an anti-suit injunction where the order would be futile or offend the comity (i.e. the processes and judicial authority) of foreign courts.
Interim measures
Interim measures may be ordered by the court in Australia before or during arbitral proceedings pursuant to article 17J of the Model Law. An example is injunctive relief. However, Australian courts have stressed that powers to grant interim relief should be used sparingly and only if there are compelling reasons to do so. Further, the courts have acknowledged that court-ordered interim measures are designed to facilitate and protect the arbitration process.
Court assistance in arbitration
In addition to granting interim measures, courts may assist the arbitral process in a number of ways. While some of these powers are expressly provided through Australia’s adoption of the Model Law, the International Arbitration Act and Uniform Arbitration Acts give the Australian courts additional powers to assist the conduct of an arbitration. Some examples of those powers are:
- taking evidence (with the approval of the tribunal);
- making orders prohibiting the disclosure of confidential information relating to the arbitral proceedings;
- issuing subpoenas;
- at a party’s request, and provided the arbitration agreement does not specify a different procedure, appointing arbitrators where parties fail to agree on an appointment; and
- hearing challenges against an arbitrator’s appointment (only after the tribunal itself has determined the matter).
Further, if a tribunal determines its own jurisdiction as a preliminary question, a party may request that the court decide that matter.
How does a party set aside or challenge proceedings in the Australian courts?
What are the grounds for setting aside?
As outlined above, international arbitration in Australia is conducted in accordance with the Model Law. Generally, Australian law does not permit arbitral awards to be challenged on their merits. Awards may only be challenged in accordance with the grounds set out in article 34 of the Model Law. Australian courts recognise that article 34 seeks to significantly limit the circumstances in which an award may be set aside.
In accordance with article 34, Australian courts may only set aside an arbitral award where:
- the arbitration agreement is not valid under the governing law;
- the party seeking to set aside the award was not given proper notice of the arbitral proceeding or was otherwise unable to present his case;
- the award dealt with matters that exceeded the tribunal’s jurisdiction. If the decisions on matters that exceeded the tribunal’s jurisdiction can be separated from those properly submitted to arbitration, only the former may be set aside;
- the composition of the tribunal or the arbitral procedure was not in accordance with the parties’ agreement, unless that agreement conflicts with a Model Law provision from which the parties cannot derogate;
- the court finds that the subject-matter of the dispute is not capable of settlement by arbitration under the laws of Australia; or
- the court finds that the award is in conflict with the public policy of Australia, including if it was induced or affected by fraud or corruption, or made in connection with a breach of natural justice.
A breach of the rules of natural justice or real unfairness will generally be required in order to justify setting aside an award.
The position is largely congruent for setting aside domestic arbitral awards. Under the Uniform Arbitration Acts, parties to a domestic arbitral award can also apply to have the award set aside in limited circumstances. While the Uniform Arbitration Acts depart from the Model Law to permit appeals on a question of law, the parties to the arbitration must agree that an appeal may be brought and the court must grant leave. Such an agreement can be contained in the parties’ arbitration agreement, and in appropriate circumstances may be implied.[3] Leave will only be granted in limited circumstances, namely where the question will affect substantive rights, where the tribunal was asked to determine the question, and where the tribunal’s determination is obviously wrong, or where the question is open to serious doubt and is a matter of general public importance.
Which court should hear the application?
The appropriate Australian court to hear an application to set aside an award depends on which legislative framework governs the award, and the place of the arbitration. An application to set aside proceedings under the International Arbitration Act may be commenced in the Federal Court of Australia.. If the place of the arbitration is, or is to be, an Australian state or territory, an application may also be commenced in the Supreme Court of the relevant state or territory. Applications must be made no more than three months from the date on which the party making the application received the award, or the date on which the tribunal disposed of a request for interpretation or correction of the award.
An application to set aside a domestic arbitral award should be directed to the relevant state or territory Supreme Court.
What outcomes are available in an application to set aside?
Generally, a successful application to set aside an award will simply result in the impugned award being set aside. However, if appropriate and on request by a party, the court may suspend proceedings to set aside an award in order to allow the tribunal an opportunity to resume the arbitration or take action which the tribunal believes will eliminate the grounds for setting aside.
Foreign awards which are successfully challenged in accordance with article 34 of the Model Law may only be set aside.
Where an award is appealed on a question of law under the Uniform Arbitration Acts, the court may confirm or vary the award, or remit the award – together with the court’s opinion on the question of law – to the tribunal for reconsideration. The court may also set aside the award in whole or in part, although it must not do so unless satisfied that it would be inappropriate to remit the matter back to the tribunal.
How do the Australian courts recognise and enforce arbitral awards?
Recognition of foreign arbitral awards
Recognition and enforcement of foreign arbitral awards is dealt with by both Part II of the International Arbitration Act and Chapter VIII of the Model Law. Where both would apply in relation to an award, Chapter VIII of the Model Law is deemed not to apply.
Section 8 of the International Arbitration Act provides that, prima facie, a foreign award is recognised as binding on all parties to it by virtue of the Act itself. An arbitral award under the Model Law is also recognised in Australia, regardless of the country in which the award was made.
Enforcement of foreign arbitral awards
The grounds on which enforcement of foreign and domestic awards can be resisted under the International Arbitration Act closely resemble the grounds for refusing enforcement in the Model Law.
Applications for the enforcement of a foreign award may be made to the Federal Court of Australia, or the court of any Australian state or territory. A foreign arbitral award may be enforced in the same manner as a judgment or order of an Australian court.
The party seeking to enforce a foreign award must supply the court with an authenticated or certified copy of the original award, along with the original arbitration agreement or a certified copy. The applicant must also provide certified translations, where applicable. The award is then presumed to be enforceable unless a defence to enforcement is made out.
The duration of proceedings concerning the recognition and enforcement of arbitral awards is largely dependent upon whether or not recognition or enforcement is resisted. Recognition or enforcement is generally resisted on the basis that an award is said to be liable to be set aside.
Absent any grounds for resisting enforcement, an award will be capable of being enforced quickly (within weeks, or perhaps ever a shorter period if urgency could be demonstrated).
Recognition of domestic arbitral awards
Recognition and enforcement of domestic arbitral awards is governed by the Uniform Arbitration Acts. Under the Uniform Arbitration Acts, domestic arbitral awards are recognised in all Australian states and territories, regardless of the state or territory in which the award was made. A party relying on a domestic arbitration award (for example, as the basis for res judicata) must provide the court with the original award or a copy of it.
Enforcement of domestic arbitral awards
On written application, a court may enforce a domestic arbitral award, subject to the grounds for refusing enforcement which are substantively similar to those in article 36 of the Model Law. A party applying for enforcement of a domestic arbitral award must provide the court with the original award or a copy of it. Where none of the grounds for refusing enforcement apply, a court may make any orders it considers appropriate for the enforcement of the award, including judgment for the amount of the award, specific performance, injunctions, or damages where a party has failed to perform the award. An application for enforcement of a domestic award may be made to the Supreme Court in any Australian state or territory.
Enforcement of arbitral awards in Australia
Australian courts may refuse to enforce an award on various procedural grounds, for example, where the party against whom the award is invoked was not given proper notice of the arbitral proceedings, or where the arbitration agreement is found to be invalid under the law expressed in the agreement. The courts may also refuse to enforce an award that has been set aside or suspended at the seat. Although there is no definitive authority on the matter, it is thought that Australian courts would be likely to exercise that discretion, and decline to enforce an award if it would be invalid under the law of the seat.
In addition, the courts may refuse to enforce an award found to be contrary to public policy.
In proceedings involving foreign state parties, the Foreign States Immunities Act 1985 (Cth) (FSIA) provides that a foreign state is generally immune from the jurisdiction of the courts of Australia. However, a foreign state will submit to the jurisdiction by instituting proceedings or by intervening in, or taking steps in a proceeding (other than to apply for costs, to assert immunity, or assert an interest in property).
The FSIA further provides that jurisdictional immunity will not be available if the foreign state has entered into an arbitration agreement, and if the foreign state would not be immune in court proceedings regarding the dispute, for example proceedings determining the validity of the arbitration agreement. Even where a foreign state is found to have waived immunity or submitted to the jurisdiction, its property (other than its commercial property) may still be found to be immune from the execution of court judgments.
For example in Kingdom of Spain v Infrastructure Services Luxembourg,[4] the Full Federal Court of Australia allowed Spain’s appeal, pursuant to the FSIA, in relation to two ICSID awards obtained against Spain for breaches of the Energy Charter Treaty. The court distinguished between the recognition and enforcement of the awards, holding that Spain, having ratified the ICSID Convention, had expressly agreed to submit to the jurisdiction of the court. Consequently, immunity was not available at least in relation to the recognition of the awards. However the matter of whether immunity would apply to the execution and enforcement of an arbitral award was not settled by the Full Federal Court. Spain has subsequently been granted leave, by the High Court of Australia, to appeal the Full Federal Court’s decision.
Authors:
Jonathan Light, Partner, Allens Sydney 
Nikki O’Leary, Partner, Allens Brisbane
Jeremy Quan-Sing, Partner, Allens Perth
Nick Rudge, Partner, Allens Melbourne
Lucy Zimdahl, Senior Overseas Practitioner, Allens Sydney
Samuel Leeson, Associate, Allens Melbourne
Allens is a leading international law firm serving clients throughout Australia and Asia with a wealth of arbitration experience across each of its four Australian offices and through its global alliance partner, Linklaters. Allens advises clients on all aspects of the dispute resolution process, including the drafting of dispute resolution clauses, acting in international and domestic arbitrations and in arbitration-related court processes.
Please get in touch with your Allens contact or any of the authors listed below for further information.
[1] New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania.
[2] The Northern Territory and the Australian Capital Territory.
[3] Inghams Enterprises Pty Ltd v Southern Cross Farms Australia Pty Ltd [2022] SASCA 7 at [85] (Doyle JA, Livesey and Bleby JJA agreeing).
[4] [2021] FCAFC 3
