The new Model Commercial Arbitration Bill will effectively align current State and Territory arbitration laws and provide businesses with an efficient and cost-effective alternative to traditional litigation - a move which reflects international best practice.

"This Bill means that disputes will be resolved faster and more effectively and will make Australia a more attractive venue for the resolution of international commercial disputes," said Federal Attorney-General Robert McClelland in a statement.

According to McClelland, arbitration is fast becoming the preferred option for parties to business and commercial disputes, because it yields faster results and is less expensive and less formal than litigation.

"If we are serious about supporting Australian business and economic interests then it is critical to ensure we have up-to-date, uniform national laws," said John Hatzistergos, NSW Attorney-General.

NSW took the lead in developing the new Bill, which is based on the United Nations Commission on International Trade Law (UNCITRAL) model, which in turn reflects accepted world standards for arbitrating commercial disputes.

Importantly, the changes will not only lead to a harmonised system for domestic arbitration in Australia, but for international arbitration as well.

Doug Jones, president of ACICA, told Lawyers Weekly he believes the Bill is a "leading edge" development which places Australia at the forefront of the global move towards the use of arbitration, as opposed to litigation.

"This legislation clearly establishes that arbitration is intended to be a different form of binding dispute resolution to court proceedings and establishes, as an overriding objective, that proceedings should be efficient, expeditious and designed to meet the needs of particular disputes," he said.

As well as rejuvenating the use of domestic arbitration in Australia, Jones is confident that Australia's status as a centre for international arbitration will also benefit.

"The more competent and user-friendly arbitrators we can develop in Australia, the more attractive Australia will be as a venue for international arbitration," said Jones.