President of the Chartered Institute of Arbitrators (CIArb) Derek Minus has disputed a clause in the Commercial Arbitration Bill 2010 which he believes will seriously hamper alternative dispute resolution processes.
Minus has also alleged that the clause, in its current form, was not contained in the draft Bill provided to key arbitral bodies during the consultative process, and that he was only given a copy of the Bill containing the clause once it had been tabled in Parliament.
Minus told Lawyers Weekly that the heart of the problem lies in clause 27D, which gives parties to a commercial dispute the choice to withhold consent for arbitral proceedings if a mediation or conciliation has been unsuccessful.
"Not to allow an arbitrator to continue with the arbitration after conciliation, without the written consent of the parties, is a retrograde step," he said.
"A private arbitrator, who has often been through a long process of selection, will avoid attempting to conciliate, let alone mediate."
As well as potentially causing significant delays, Minus believes the clause also provides a deterrent to mediation because the confidentiality of matters disclosed during mediation cannot be guaranteed if parties do subsequently go to arbitration.
"In my view, it is going to be a significant problem," he said.
"If the Bill doesn't offer a better process than [what] we have at the moment, then people won't use it. And in my view, it doesn't."
Minus believes that if the Bill is passed without amendment to clause 27D, the outcome will not result in the "cost-effective and efficient alternative to litigation" which NSW Attorney-General John Hatzistergos has said is his ultimate goal.
"Arbitrators [should] be given the power to order parties to attend mediation or conciliation as the NSW courts are currently able to do so," he said.
Minus believes the past 20 years have demonstrated that without such power, parties are highly unlikely to participate in alternative processes.
"Unless you have the ability to tell people; 'Look, this is really silly, I can see what the major issue is because I'm an expert in this area and we really need to talk about this and get some agreement' it won't work," he said.
If the Bill is passed, the legislation will be applied throughout Australia in a long-awaited "clean up" of the current law.
"For the last 15 to 20 years, arbitrators have been trying to fix [the legislation] but they never got around to doing it," said Minus.
"If we get it wrong now, we could have another 15 or 20 years of trying to fix it."
Lawyers Weekly has contacted the NSW Attorney-General and is still waiting for a response.