Alex Baykitch (pictured), the head of the firm’s dispute resolution and arbitration practice, welcomed last week’s (13 March) High Court decision, which confirmed the final and binding nature of arbitral awards.
He told Lawyers Weekly that the challenge had the potential to significantly impact dispute resolution practices by undermining Australia’s standing as an attractive seat for cross-border disputes.
“[Australia] would have stuck out like a sore thumb in the rest of the world ... and I’d be out of a job,” said Baykitch.
The constitutional challenge arose out of a dispute regarding a distribution agreement between China-based TCL Air Conditioner and Australian company Castel Electronics. The dispute examined the way in which arbitral awards are recognised and enforced in Australia.
In separate proceedings instituted in the High Court, Norton Rose, acting for TCL, sought to quash decisions of the Federal Court in relation to the awards. The firm argued that recognising arbitration decisions made in the absence of a judge (outlined in the UNCITRAL Model Law on International Commercial Arbitration governing the conduct of international commercial arbitrations in Australia) contravenes the constitution, which states that judicial power of the Commonwealth can only be exercised by the courts.
King & Wood Mallesons, led by Baykitch, a former Ashurst and Holman Fenwick Willan partner, acted on behalf of the Australian Centre for International Commercial Arbitration (ACICA), the Institute of Arbitrators and Mediators Australia and the Chartered Institute of Arbitrators, which intervened in the proceedings and prepared a joint submission to the High Court.
The Court unanimously dismissed TCL’s appeal, drawing a distinction between the judicial power of the courts and the power of arbitration tribunals.
The win has strengthened Australia’s international arbitration system, said Doug Jones, president of ACICA.
“This decision is confirmation that the approach of the judicial system is supportive of international arbitration,” he told Lawyers Weekly.
Baykitch agreed, claiming that the High Court demonstrated that it will support arbitral awards. He added that dispute resolution practices can continue to cash in on this increasingly lucrative area of the law, with a typical international arbitration translating into around $1 million in legal fees and arbitrator costs.
The intervention by the arbitration bodies was financially supported by litigation funder IMF Australia.
IMF’s investment manager Susanna Khouri told Lawyers Weekly that the decision could invite significant international commercial arbitration claims and bi-lateral investment treaty claims to Australia, which she described as “fertile areas” for the litigation funder.
“This this is a significant victory,” she said, adding that the decision “preserves and shows the robustness of the international commercial arbitration framework in Australia.”
This week ACICA and the Qatar International Center for Conciliation and Arbitration (QICCA) signed an agreement.