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NRF report highlights key international arbitration issues

A broad range of issues impacting boards and companies operating on an international level have been covered in the 16th issue of Norton Rose Fulbright’s International Arbitration Report.

user iconLauren Croft 29 June 2021 Big Law
NRF report highlights key international arbitration issues
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The report covers a number of issues relevant to the Australian market and references an Australian court decision on an online arbitration clause in particular, as well as revised 2021 international arbitration rules.

According to the report, the Federal Court of Australia’s decision in Dialogue Consulting Pty Ltd v Instagram, Inc provides a detailed study of the principles for enforcing foreign arbitration agreements in Australia. 

“It sets the table for some of the biggest arbitration battles to come, including whether an arbitration clause can constitute an unfair contract term. The implications will be felt far beyond the tech sector,” the report stated.

 
 

Australian tech company Dialogue Consulting operates a software-as-a-service product, Sked Social, to help companies manage their marketing content via social media. In February 2019, the product’s web domains were banned by Facebook and Instagram – the platforms citing that Dialogue has violated Instagram’s terms of use. In April 2019, Dialogue commenced a proceeding against Facebook and Instagram in the Federal Court of Australia, in which it alleged breach of Instagram’s terms of use as well as misleading and deceptive conduct, statutory unconscionable conduct, and anti-competitive conduct.

In April 2020, Facebook and Instagram requested a stay of the proceedings on the basis that the majority of Dialogue’s claims should be referred to arbitration. Dialogue challenged the stay on various grounds and succeeded on one of them.

Justice Jonathan Beach of the Federal Court said that the case involved a tricky choice of law questions and matters of Australian consumer law, both of which the court is better placed to decide than an arbitrator.

Despite Instagram’s terms of use including a clause requiring disputes be resolved by arbitration under the American Arbitration Association’s consumer arbitration rules, the Australian court decided the arbitrator’s jurisdiction and the stay application was dismissed.

“Arbitration clauses in internet-based contracts are enforceable in Australia, at least insofar as a web user is put on notice of and offered access to the relevant terms,” the report said of the case.

“Parties resisting arbitration might seek to challenge arbitration clauses under Australian consumer law, either as “unfair contract terms” or on the basis that efforts to enforce them constitute unconscionable conduct. Australian courts, however, will not lightly strike down an agreed arbitration clause even in cases of unequal bargaining power.”

In addition, the report also clarified the revised arbitration rules set by the International Chamber of Commerce (ICC) – which have applied to arbitration proceedings initiated as of January this year.

“The 2021 Rules codify certain practices of the Court of Arbitration of the ICC and also introduce new measures aimed at improving the flexibility, efficiency and transparency of ICC arbitration proceedings. This new version of the Rules consolidates the major developments achieved by the Court in these fields under the presidency of Alexis Mourre,” the report said.

The 2021 Rules build on the progress made in previous years and place emphasis on multiparty arbitration, on measures aimed at guaranteeing the independence and impartiality of the arbitral tribunal and on the extension of the scope of the expedited arbitration procedure. Hearings are also starting to be encouraged to be heard remotely and parties have been allowed to complete “certain formalities exclusively by electronic means”. In fact, the ICC has already published a guidance note in response to COVID-19 inviting both arbitrators and the parties in a proceeding to hold virtual hearings where possible.

There are also several important new articles to take note of.

The 2021 Rules include a new article 12.9 that gives the vourt the power to designate all tribunal members regardless of the arbitration agreement. However, “this faculty must be used in ‘exceptional circumstances’ and to avoid a significant risk of unequal or unfair treatment that could affect the validity of the award,” according to the report.

Under article 11.7 of the 2021 Rules, parties will also be under an obligation to disclose the intervention of third-party funders in the framework of ICC arbitration proceedings.

Furthermore, the new article 13.6 means that an arbitrator can no longer have the same nationality as any party to the arbitration, further guaranteeing fair and neutral proceedings.

The 2021 Rules also favour communicating via email or other electronic means rather than hard copies, which looks to modernise arbitration and preserve the environment.