As the modern global economy generates more cross-border work and multinationals continue to bring their business to foreign lands, parties want the assurance that should things go wrong, safe avenues exist to pull them out from the deep. The case then for an arbitration clause in a modern day contract is compelling.
When conditions turn and things are no longer smooth sailing, the choice a party in dispute has to make is where to go for help. Traditionally, one of the ‘big four’ seats in London, Paris, The Hague or New York has served as the first port of call.
But with rise of Hong Kong and Singapore as major hubs that share in the range of dispute resolution work flowing from transnational activities, people are now asking how Australia can get its own piece of the arbitration action.
Opportunities for the taking
In April next year, Sydney will play host to the 24th Congress for the International Council for Commercial Arbitration (ICCA). ICCA is a worldwide organisation that aims to promote and improve the processes of arbitration, conciliation and other forms of resolving international commercial disputes.
The theme that has been chosen for the 2018 congress is ‘Evolution and Adaptation: The Future of International Arbitration’. It is a fitting focus in light of current questions Australia is wrestling with about how to attract more work to our shores and carve itself out as a major seat among the other leading arbitral venues in the world.
Rashda Rana SC of 6 St James Hall International has worked across the various international jurisdictions for arbitration for more than 20 years. She says that in addition to high-profile events, such as the ICCA congress, a more concerted push must be made to sell Australia to the arbitration world. Ms Rana stresses that this will require improved monetary investment from the government.
“These events are a great opportunity to showcase international arbitration in Australia, [but] I think it needs more than the organising committees doing everything they can to promote the seat,” Ms Rana says.
“The ICCA congress is going to capture about 7,000 people, and it needs the government to come in and put on stuff to show how fabulous it would be if those people come to do their arbitrations in Australia or use [Australia’s capital cities] as a seat,” she says.
King & Wood Mallesons partner Alex Baykitch AM has served as the president of the Australian Centre for International Commercial Arbitration (ACICA) since 2014.
The Sydney-based lawyer is part of the team to make the bid to bring the ICCA congress to Australian and New Zealand soil next year.
While Mr Baykitch says benefits from hosting the ICCA congress will bring efforts to position Australia as a more attractive arbitration seat are clear, he also acknowledges the virtues of active awareness-raising to leverage Australia’s exposure to the rest of the world.
“I think what needs to happen is more roadshows by ACICA together with other stakeholders, including the judiciary and the Chartered Institute of Arbitrators (CIArb) Australia.
“We need to go out to other jurisdictions and to promote Australia as a venue for arbitrations and obviously promote ACICA as an arbitral institution too,” Mr Bayktich says.
ACICA was established over 30 years ago, and has sole default appointing authority under Australian legislation to perform arbitrator appointment functions in Australia. Having won the chance host the 2018 ICCA congress with the Arbitrators' and Mediators' Institute of New Zealand (AMINZ), both organisations hope the event will give ACICA and AMINZ the same visibility that Singapore enjoyed when it played host in 2012.
“We’re very proud to be hosting the ICCA event. It’s going to see the world’s leading arbitration practitioners come to Australia and provide all of us with an opportunity to showcase the increasing importance of the Australian region to the arbitration community and obviously showcase Australia as a fantastic venue for arbitration,” Mr Baykitch says.
Ms Rana says that events like the ICCA congress as well as the International Bar Association’s annual conference, which will also be held in Sydney later this year, offer special opportunities to spruik Australia as an arbitration venue. But she also believes that those opportunities are diminished without serious government support. According to the barrister and arbitrator, there is room to improve the strategy to promote Australia as an arbitration seat.
“If the country wants to prove its salt as a preferred seat in the international arbitration community, it needs to put its money where its mouth is,” Ms Rana says.
“The international arbitral venue competition is fierce after all, and there are other institutions making the investment to market themselves in this environment that Australia is not.”
“We need to do more to promote Australia; I really think we are not doing enough. Australia has huge potential, but it’s just not garnering that in terms of how it deals with the outside world,” Ms Rana says.
“Hong Kong and Singapore have done a great deal of legwork in order to make themselves the preferred places in Asia and if we want to get that, we do have to compete. It’s not just a case of saying ‘look at me, I’m good’. You have to say, ‘I am better’.”
It is tempting for Australia to look to Singapore as the nearest competitor venue for arbitration work. And although the Singapore International Arbitration Centre (SIAC) has had a head start over Australia in its efforts to position itself as a preferred seat, a comparison of the work that flows to both countries would imply we have a lot of catching up to do.
As of June 2016, SIAC’s active caseload sat at 600 cases. Australia’s workload is unreported, but Ms Rana says that in the context of other seats in Asia, Europe and the America’s, it is a “very low” workload, possibly in the single digits.
On the one hand, there are those such as Bronwyn Lincoln, who believe that in time more work will come to Australia. She considers Australia’s place in the scheme of other arbitral venue neighbours as unique and says we should focus on developing our strengths rather than fixating on competing in accordance to the same parameters with a seat like Singapore’s.
“There is a lot of arbitration going on. It is difficult to provide numbers because arbitration is confidential, so you usually know what’s going on by talking to people, and even then they don’t tell you much about it,” Ms Lincoln says.
“You don’t really know until those matters make their way through a court somewhere in the world for enforcement, if in fact they do. But there is a real depth of expertise of matters in Australia at the moment that I think suggests we can certainly hold our own place.
“The Singapore government has made a huge investment in infrastructure, and they are quick to change the law if it’s not supportive of arbitration. I think it would be unrealistic to say that the Australian or state governments have the budget available to make the same type of investment that Singapore has made,” she says.
Ms Lincoln is a litigation and dispute resolution partner at Corrs Chambers Westgarth and chair of the Melbourne Commercial Arbitration and Mediation Centre.
Earlier this year, she joined one of four Australian designees appointed to the panel of conciliators for the International Centre for Settlement of Investment Disputes (ICSID).
Ms Lincoln argues that the goodwill among Australian practitioners, academics and judges, has fostered a well-accepted understanding across the local legal fraternity as to why an active arbitration market in Australia is important. That, coupled with Australia’s secure and stable infrastructure, can help deliver more hearing work domestically.
Instead of fixating on making Australia a major seat, Ms Lincoln suggests that encouraging parties to hold their arbitral hearings in Sydney, Melbourne or Perth may be a more realistic approach for Australia in the international arbitration context.
“My personal view is that we can’t be a Singapore, and we shouldn’t try to be but that doesn’t mean we should not have an incredibly active arbitration practice in Australia.
“We can still promote Australia by having excellent arbitrators go out around the world and encourage parties engaged in arbitration to have their hearings here, even if they choose a seat in Hong Kong or Singapore,” Ms Lincoln says.
Mr Baykitch has a more optimistic outlook. He points to an appetite for an efficient way of doings things, in tandem with the multiple time zones that Australia’s vast continent covers as promising features for more multinational corporations choosing an Aussie seat in the future.
“Certainly Singapore and Hong Kong have been considered safe seats for a long time, but Australia is increasingly being seen as a safe seat and that is largely a reflection of multinational corporations, perhaps with a Western bent to them, feeling more comfortable in a country such as Australia because that is what they’re used to back home,” Mr Baykitch says.
“I think we are an attractive proposition for the US companies doing business in Asia as Australia seems to be a safe venue for hearing of disputes through arbitration,” he says.
According to Mr Baykitch, in recent times ACICA’s caseload has enjoyed a boost from US companies doing more work in Asia and wanting to resolve their disputes by way of arbitration in venues such as Perth, Sydney and Brisbane.
He adds that America’s West Coast, including Houston, look favourably on the time zone of Australia’s eastern states when considering a venue for arbitration. Perth also offers a safe and neutral seat for companies doing work in India and Africa.
The tyranny of distance
For all of Australia’s attractive qualities as a prospective venue, all are in agreement that one of the main challenges is geography. The reality is that the Great Southern Land is a far less convenient country to actually get to than the big four traditional seats or many of the other cities emerging around the world as a popular venue.
No matter the strength of Australia’s rating in terms of expertise, efficiency and neutrality, our role as a seat in international dispute resolution continues to be hindered by the tyranny of distance.
When asked what more has to be done to improve the way Australia is perceived by the outside world as a desirable seat, Mr Baykitch quips, “I think we have to move closer to the northern hemisphere!”
Our physical distance from everybody else is partly the reason why Ms Lincoln holds the view that Australia should not model its approach to international arbitration exactly after Singapore’s example.
“It’s not so much what we should do differently but how we see ourselves. We have to recognise that Australia is not halfway between somewhere and London,” Ms Lincoln says.
Ms Rana also echoes the sentiment that Australia’s greatest impediment is the effort to get here.
“This is despite the fact that so many of the country’s features should win over parties looking to settle a dispute by arbitration,” she says. Despite this qualification, Ms Rana goes a step further to suggest that because of Australia’s geographic isolation from the rest of the world, a more proactive marketing approach should be pursued.
“It is the perception of most of the world that coming to Sydney or Melbourne is just a step too far, distance-wise. It’s just a long way away, and if you can stop at Hong Kong or Singapore, then why go to Sydney?” Ms Rana says.
“This is even though, in the context of international arbitration, there are certain markers that people say make a venue a very important seat – Australia has all of them in spades. It has an independent judiciary. It’s a democratic society. There’s rule of law, great facilities, great technology, great talent – all the stuff that people say are important things in choosing a seat,” she says.
Flying the flag
With the confidence in today’s sophisticated international arbitration regime anchored by the New York Convention, of which Australia, along with more than 150 other nations, is a signatory, there is plenty of work on offer globally for mediators, conciliators and arbitrators, Ms Lincoln says. And a number of home-grown practitioners are flying Australia’s banner abroad.
“Australia is quite a torch bearer. There are people who attend the international conferences – we have a large number of well-respected arbitrators, practitioners, and a lot of people here who are practising in international arbitration have actually practiced overseas, and they’ve come back to Australia and realised that they can do it well,” she says.
Unlike Ms Lincoln, who makes the case that there are a number of very good Australian arbitrators out there working in the rest of the world to fly Australia’s flag, Ms Rana says local practitioners are failing to promote Australia to parties at a critical stage of business – at the time that contracts are drafted.
Providing for an arbitration clause in business contracts is widely regarded as a way to help manage local and foreign relationships, before conditions get rough and from the outset. Usually arbitration clauses drafted into a contract will suggest where the parties will take their dispute to be settled if a dispute occurs along the way.
This is another lost opportunity to promote Australia to the international business community which, Ms Rana believes, needs to be addressed.
“There are certainly lots of Australians who work overseas, but they’re working in law firms and in other countries where they either stay or some of them come back at some stage – but that doesn’t mean they’re bringing work here,” Ms Rana says.
“One of the problems is Australians don’t promote Australia enough. When people are looking at a contract or dispute resolution clause, Australian practitioners suggest other [international] institutions like the SIAC, the International Chamber of Commerce or somebody else, and that’s just shooting themselves [as Australians] in the foot,” she says.
Ms Rana follows with the suggestion that Australia needs to address three things to improve its exposure as a desirable seat to the wider international business community. Firstly, corporate lawyers must understand how important dispute resolution is as a risk management tool for client business. Secondly, we must educate corporate lawyers about the range of dispute resolution options that exist internationally. And finally, Australia must be promoted as a preferred seat at the time business agreements are drafted.
Recent case law would indicate that Australia’s courts are willing to take an arbitration-friendly approach with respect to the incorporation of arbitration clauses in their contracts. So at the very least, the goodwill on the part of our judiciary offers a foundation for more fertile arbitration opportunities in Australia.
According to Mr Baykitch, Australia’s courts have also handed down a number of cases since 2010 which has shown a willingness to apply the provisions of the country’s amended International Arbitration Act. ACICA’s dialogue with the Australian judiciary is also facilitated by a liaison committee, led by former NSW Supreme Court Chief Justice James Spiegelman AC.
“Maintaining this dialogue ensures a consistency with respect to arbitration in Australia,” Mr Bayktich says.
“Arbitration is alive and well, and remains to be the preferred method of resolving cross-border disputes. I don’t see that changing in the near future, and I think it’s an exciting area to be involved in,” he adds.
“Australia is on the cusp of achieving great things in the arbitration space.”