In November 2009, the Commonwealth Attorney General announced that the legislation governing domestic arbitration in Australia – the State Commercial Arbitration Acts – would be overhauled. On 7 May 2010, after a period of consultation, Australia's Standing Council of Attorneys General (SCAG), a body composed of each of the State and Territory Attorneys General, the Commonwealth Attorney General and the Minister for Home Affairs,agreed to introduce to each State and Territory legislature a Model Commercial Arbitration Bill (MCAB) to replace the state Commercial Arbitration Acts (collectively, the CAAs). Since then, a considerable amount of academic energy has been directed towards dissecting, weighing and speculating on the contents of that bill.
The need for new legislation to govern domestic arbitration has its roots in Australia's status as a federated commonwealth, with both Commonwealth and State governments. Australian arbitration law is 'dualist' – there is one law for international arbitration and another for domestic. The international arbitration regime is governed by a federal statute, the International Arbitration Act 1974 (Cth) (IAA) (itself also the subject of recent reform); the domestic arbitration regime, on the other hand, is governed by the CAAs, which were passed individually by the legislature of each State and Territory to oversee arbitrations within those jurisdictions. In an attempt to achieve consistency between the States in this regard, the CAAs are based on largely the same core text, though the courts of each of the States are at liberty to interpret the provisions of their CAA differently.
The primary purpose of the MCAB is to update the current CAAs. However, in the context of the reforms to the IAA, and against the dualist backdrop of Australian arbitration law, the MCAB also attempts to narrow the gap between the laws applicable to international and domestic arbitration. Although when the MCAB is promulgated in each state there will still be separate statutes for domestic and international arbitration, and Australia will strictu sensu still be a dualist arbitral jurisdiction, the general consistency of the MCAB with the IAA mean that, practically speaking, Australia will be close to monist in its arbitration law.
The MCAB, it is to be emphasised, isnot an amending Act, but rather an entirely new piece of legislation drawing on a completely different tradition of jurisprudence. Whereas the CAAs are based on the English Arbitration Act 1979(itself now replaced by the English Arbitration Act 1996) the MCAB is based on the provisions of the 2006 United Nations Commission on International Trade Law (UNCITRAL) Model Law, the current international benchmark for arbitral laws.
The aim of this article is to provide a detailed comparative survey of the provisions of the CAAs and the MCAB, in order to highlight some of the changes that have and will occur as the MCABs are progressively enacted. As the CAAs and MCAB come from entirely different sources, this process cannot occur by reference to section number; rather, the authors propose to examine the changes by reference to fourteen subjects that have proven to be central to the law and practice of arbitration. These key subjects are:
- The paramount objective and interpretive provisions of the CAAs and MCAB;
- The ability of the court to intervene and assist in the arbitration;
- The form and definition of arbitral agreements;
- Challenges to arbitrators;
- Bias challenges;
- The arbitral tribunal's ability to order interim measures;
- Rules of procedure;
- The general duties of the parties;
- Consolidation of arbitral proceedings;
- Confidentiality of arbitral proceedings;
- The form and contents of the award;
- Error of law
- Recourse against award by way of appeal or non-enforcement; and
- Transitional provisions.
These issues will be analysed in this order. The authors will then comment briefly on the merits of the reforms as a whole and, in particular, the way in which the shift to the Model Law has altered far more than just the jurisprudence and wording of the CAAs, but the way in which arbitration in Australia is conducted.
Comparison of issues
Paramount objectives and interpretive provisions
At the outset, it is important to note that the CAAs do not contain any express provisions regarding interpretation. As a result, the courts, when interpreting the statute, instead had recourse to the ordinary statutory and common law rules of interpretation as they exist in Australia. These rules are consistent with the interpretive canons common to all legal systems that devolve from English jurisprudence, including plain meaning, purposive construction and the presumption that Parliament does not intend to revoke those rights granted by the common law unless a contrary intention is expressly provided in the language of the statute.
The principle of purposive construction is of particular relevance to the interpretation of the CAAs. In Victoria, for example, the doctrine is expressed in s35(a) of the Interpretation of Legislation Act 1984 (Cth):[A] construction that would promote the purpose or object underlying the Act or subordinate instrument (whether or not that purpose or object is expressly stated in the Act or subordinate instrument) shall be preferred to a construction that would not promote that purpose or object.
The CAAs contain no express provision that indicates the purpose of the Act, but it is acceptable to examine the short and long titles of the Act, as well as its structure, in order to glean an understanding of its purpose.
By way of contrast, the MCAB contains several detailed directions as to how the Bill is to be interpreted and applied. The first of these comes in the form of the 'Paramount Purpose' of the Bill, contained in MCAB s1AC:
(1) The paramount object of this Act is to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense.
(2) This Act aims to achieve its paramount object by:
(a) enabling parties to agree about how their commercial disputes are to be resolved (subject to subsection (3) and such safeguards as are necessary in the public interest), and
(b) providing arbitration procedures that enable commercial disputes to be resolved in a cost effective manner, informally and quickly.
(3) This Act must be interpreted, and the functions of an arbitral tribunal must be exercised, so that (as far as practicable) the paramount object of this Act is achieved.
Somewhat self-evidently, the focus in this section is on ensuring that arbitration is an efficient and cost effective form of dispute resolution. This much was confirmed in the Second Reading Speech for New South Wales' Commercial Arbitration Act 2010 (NSW):
At the April 2009 standing committee meeting, Ministers agreed on two principles to guide the drafting of the uniform legislation. They were: that the bill should give effect to the overriding purpose of commercial arbitration, namely, to provide a quicker, cheaper and less formal method of finally resolving disputes than litigation; and that the bill should deliver a nationally harmonised system for international and domestic arbitration, noting the Commonwealth's review of the International Arbitration Act 1974. The purpose of the law, also agreed to by Ministers, is found in section 1AC of the bill, the paramount object provision, to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense. Stakeholders advocated for and endorsed the inclusion of a paramount object clause, noting the absence of such a provision as a weakness in the present uniform commercial arbitration Acts.
Previously, it has been a frequent lament of parties that arbitration had, in a sense, become a distaff of litigation, with the same connotations of expense and delay. The aim of this provision is, therefore, to ensure that the courts, to the greatest extent practicable, interpret the terms of the new laws in such a way as to prioritise these objectives and address the concerns of stakeholders.
In addition, while MCAB s1AC provides guidance as to how the Bill is to be interpreted, it is supplemented by the wording of MCAB s2A, subtitled 'International origin and general principles':
(1) Subject to section 1AC, in the interpretation of this Act, regard is to be had to the need to promote so far as practicable uniformity between the application of this Act to domestic commercial arbitrations and the application of the provisions of the Model Law (as given effect by the[IAA] of the Commonwealth) to international commercial arbitrations and the observance of good faith.
(3) Without limiting subsection (1), in interpreting this Act, reference may be made to the documents relating to the Model Law of:
(a) the United Nations Commission on International Trade Law, and
(b) its working groups for the preparation of the Model Law.
MCAB s2A is one of the most important sections of the Bill, for two reasons. First, it requires that the MCAB be interpreted in a manner that is consistent with the IAA. As noted by Justice Croft (writing extra-curially), MCAB s2A enables expertise developed under one regime to be applied under another, allowing domestic arbitration to be used as a training ground for international arbitration by parties, practitioners and arbitrators. It also encourages the development of a single body of Australian arbitral jurisprudence.
Second, MCAB s2A introduces to domestic arbitration the body of international case law that has developed around the UNCITRAL Model Law. This jurisprudence has already been accessed in the context of the IAA, which for some time now has incorporated the 1985 (and as of earlier this year, the 2006) version of the Model Law. It should be pointed out, however, that the jurisprudence surrounding the CAAs will not be entirely obsolete. It will only be displaced by the introduction of Model Law jurisprudence where the relevant question is covered by the new law, and the coverage is materially different to that which exists in the CAAs. Similarly, those areas that have never been the subject of statute, instead being regulated by judge-made law, comprise a common law stream that will likely be unaffected by the new laws.
One example is the body of rules that govern the incorporation of arbitration agreements by reference, which will arguably remain authoritative even after MCAB s7(8) (discussed below) comes into force. Broadly speaking, therefore, MCAB ss1AC and 2A will sever the bond of stare decisis that previously bound State court judges, and provide them with at least a formal basis on which to 'wipe the slate clean'. Judges may still, when appropriate, refer to decisions that pre-date the MCAB, provided of course that they do not contradict the interpretation provisions of the MCAB.
Finally, at a high level, the importation of Model Law jurisprudence by way of MCAB s2A may cause the relevance of English arbitral jurisprudence to diminish, as the England is not a Model Law jurisdiction. It is reasonable to assume, however, that consideration will still be given to English authorities, especially where the issue in question is within the stream of principles that have always been governed by common law.
Court intervention and appointment
The ability of a court to intervene in arbitral procedure can be divided into two categories: intervention before the commencement of the arbitration, and intervention after the arbitration has begun (that is, while the proceedings are on foot). This section will consider the former category of intervention, namely the ability of the court to guide the process by which the arbitrators are selected and commence hearing the dispute. The second category will be considered throughout the remainder of the article, where relevant.
In practice, pre-commencement intervention is most often connected to the exercise of appointment powers. The CAA, in Part II, gives to the relevant court a considerable role in the appointment process. CAA s8(4) gives an aggrieved party the right to apply to the court to set aside an arbitrator's appointment – or any other consequence – that is not in compliance with the terms of the arbitral agreement, or where the other party was otherwise in default of its power to appoint the arbitrator or arbitrators under the arbitral agreement. Where this occurs, CAA s8(4) also gives the court the power to make an arbitral appointment itself.
This power is extended under CAA s10, which, on the application of a party to the arbitration agreement, gives the court the power to fill a vacancy in an arbitral tribunal, whether or not an appointment as previously been made, where:
- the arbitral agreement provides no method for filling the vacancy;
- the method provided by the arbitration agreement or the CAA for the filling of the vacancy cannot for some reason be followed; or
- the parties to the arbitration permit the court to fill the vacancy.
Under CAA s11, the court is also granted powers of appointment (or replacement) where it removes an arbitrator from the tribunal. On the application of a party to the arbitration agreement, the court may appoint a person as arbitrator in place of the person previously removed, or even order that the arbitration agreement shall cease to have effect with respect to the dispute to which the arbitration relates.
The MCAB adopts the Model Law's approach to court supervision. MCAB s6, itself based on Model Law art 6, specifies that the Supreme Court can perform various functions referred to in the balance of the MCAB. In the context of the Model Law, and the UNCITRAL Secretariat's commentary thereon, Model Law art 6 reflects the following understanding:
Recent amendments to arbitration laws reveal a trend in favour of limiting and clearly defining court involvement in international commercial arbitration. This is justified in view of the fact that the parties to an arbitration agreement make a conscious decision to exclude court jurisdiction and prefer the finality and expediency of the arbitral process.
The drafters of the 2006 Model Law made a conscious decision to limit the ability of courts and other authorities to intervene in an arbitration. The Model Law therefore envisages court intervention only in the following instances: recognition of the arbitration agreement, including its compatibility with court-ordered interim measures (Model Law arts 8 and 9); issues of appointment, challenge and termination of the mandate of an arbitrator (Model Law arts 11, 13 and 14); jurisdiction of the arbitral tribunal (Model Law art 16); court-ordered interim measures (Model Law art 17J) and recognition and enforcement of interim measures (Model Law arts 17H and 17I); court assistance in taking evidence (Model Law art 27) and setting aside and recognition and enforcement of arbitral awards (Model Law arts 34, 35 and 36). These provisions are largely mirrored in the MCAB but for the fact that in the MCAB they relate to functions conferred on the courts with respect todomestic arbitrations, whereas the Model Law is self-evidently concerned with international arbitrations.
These limited nature of these provisions is mirrored in Model Law art 5, which forms MCAB s5. It reads:
In manners governed by this Act, no court must intervene except where so provided by this Act.
To return to issues of appointment as they are contemplated under the MCAB, MCAB ss11(3) and (4) permits the court to act as an appointing authority in the event that a party is in default of their appointment obligations or in the event that the parties or party-appointed arbitrators cannot agree on the president of the tribunal. Under MCAB s11(5), such a decision by the court is final. MCAB s11(6) notes that, in appointing an arbitrator in any capacity, the court is to have regard to any qualifications that the arbitrator is to have by the agreement of the parties, and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator.
The upshot is this: the MCAB exhibits a considerably more controlled attitude to the subject of court intervention in the appointment process. On some levels, the provisions are similar – the ability for the court to generally act as an appointing authority, for example – but on the whole the drafting of the MCAB is far clearer and will, the authors expect, lead to fewer instances of confusion. In addition, the MCAB – for example, in MCAB s11(6) – pays greater heed to the wishes of the parties in making arbitral appointments, and MCAB s5 limits considerably the ability of the court to intervene beyond circumstances that are within the clear lines provided by the MCAB. Such a provision is not included expressly in the CAAs, which indeed includes in CAA s47 a general power of the court to make interlocutory orders of the same kind that it could in relation to ordinary court proceedings.
Form and definition of arbitral agreements
As arbitration is a creature of contract, the rules that surround the form and definition of an arbitration agreement are key constitutional aspects of the process. The CAAs adopt the traditional approach to the concept of an arbitral agreement in CAA s4(1), wherein 'arbitration agreement' is defined as 'an agreement in writing to refer present or future disputes to arbitration'. While no special words are required to commit a dispute to arbitration, and the intent to arbitrate can be inferred, the requirement that the clause be reduced to writing is clear and essential.
The MCAB, in contrast, has been influenced by the Model Law, itself influenced by the 1996 UNCITRAL Model Law on Electronic Commerce and the 2005 United Nations Convention on the Use of Electronic Communications in International Contracts. MCAB s7 reads as follows:
(1) An arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) The arbitration clause must be in writing.
(4) An arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by any other means (emphasis added).
(5) The requirement that an arbitration agreement be in writing is met by an electronic communication if the information contained in it is accessible so as to be useable for subsequent reference.
(6) In this section:
data message means information gathered, sent, received or stored by electronic, magnetic, optical or similar means, including, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.
electronic communication means any communication that the parties make by means of data messages.
(7) Furthermore, an arbitration agreement is in writing if it is contained in an exchange of statement of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.
(8) The reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference is such as to make that clause part of the contract.
The effect of this wording is that it dilutes considerably the previously rigid writing requirement by virtue of the italicised MCAB s7(4). The section requires the use of writing, but recognises a record of the contents of the agreement in any form (including orally) as the equivalent of 'writing' as it is traditionally known. Put another way, so long as the arbitration agreement is recorded in a form that can be reproduced at a later date to prove the fact of the agreement – but it as an email, a recorded conversation or an unchallenged recollection in an affidavit – then the writing requirement will be satisfied.
MCAB s7(8) relates to incorporation by reference. This is an increasingly important area of arbitration law, as the types of disputes that are most commonly referred to domestic arbitration in Australia (such as construction disputes) often involve a series of contracts and cross-references. Under the CAAs, incorporation by reference has been a matter of common law. Australian common law is unsettled on the question of how an arbitration clause can be incorporated by reference. At present, there are two lines of authority on point:
- the strict approach, which requires incorporation by express reference to the arbitration clause itself, rather than simply the contract which contains the arbitration clause. This line of authority stems from Sir John Megaw's judgment in the English case of Aughton Ltd v MF Kent Services Ltd. This stricter view was adopted in Carob Industries (in liq) v Simco Pty Ltd and subsequently, though perhaps reluctantly, the rule in Aughton was adhered to by Rolfe J in Conagra International Fertiliser Company v Lief Investments Pty Ltd; and
- the more liberal approach, which permits incorporation by general reference to the contract containing the arbitration clause. In Trefalk Centre for Cats & Dogs Pty Ltd v Sommer, Wilson J of the Queensland Supreme Court held that, at least in the circumstance where parties adopt a standard form contract created specifically for persons in positions such as theirs, general words of incorporation may be sufficient to incorporate an arbitration clause.
MCAB s7(8) only says 'provided that the reference is such as to make that clause part of the contract'. As such, it leaves to the common law the question of whether the reference is sufficient to make the arbitration of one contract 'part of' the other contract. This is, on one view, disappointing insofar as the MCAB will not solve the problem of whether the more arbitration-friendly rule in Trefalk, which posits the sufficiency of general words as a means of incorporation, can be used to uphold arbitration agreements incorporated by general words. The potential for the strict rule in Aughton to function as a barrier to the validity of an arbitration agreement incorporated by general reference will remain even after the new arbitration laws come into force. It may be, however, that the clear pro-arbitration policy of the MCAB interpretive provisions provides some scope for argument that the rule in Trefalk should apply.
Challenges to arbitrators
One of the areas in which the courts exercised extensive oversight under the CAAs is that of challenges to arbitrators. CAA s44 provides the court with the power to remove an arbitrator on the application of a party where the court is satisfied that the arbitrator is guilty of 'misconduct' (CAA s44(a)), has been the subject of undue influence (CAA s44(b)) or is otherwise incompetent or unsuitable to deal with the dispute in question (CAA s44(c)).
The application of the concept of 'misconduct' in CAA s44(a) is one that is traditionally slippery and difficult to define. CAA s4 notes that it includes (but is not limited to) corruption, fraud, partiality, bias and a breach of the rules of natural justice. Miles CJ noted correctly in Holland Stolte Pty Ltd v Murbay Pty Ltd that:[T]he definition [CAA s4] is not exhaustive and how far it encompasses 'technical' misconduct in the sense of an irregularity of procedure and the like is not clear. It may be that 'even a mistaken procedure' will still be held to be misconduct.
Drawing further on Australian case law, and English jurisprudence defining the same terminology, misconduct consists of any conduct indicating 'a departure from a judicial frame of mind in determining the issues between the parties'. It is fundamentally a question of fact and degree. In Melbourne Harbour Trust Commissioners v Hancock, Isaacs J held that 'misconduct' in the context of the conduct of an arbitral tribunal included 'even a mistake in the procedure which has or may have unjustly prejudiced a party', a sentiment restated relatively recently by Cole J in Harwood v Civic Constructions Ltd. That said, the learned author Marcus Jacobs, pointing to the recent recasting of 'misconduct' in the English Arbitration Act 1996 as 'serious irregularity' (see s68 of that Act) has argued that the boundaries thrown by these cases are too wide and should be redrawn.
A recent pronouncement on the meaning of misconduct comes from the Victorian Court of Appeal in Oil Basins Ltd v BHP Billiton Ltd, wherein it was said:
The expression 'misconduct' as used in relation to arbitration does not necessarily or indeed often involve moral turpitude on the part of the arbitrator. As was said in Williams v Wallace & Cox, 'misconduct' does not really amount to much more than such a mishandling of the arbitration as is likely to amount to some substantial miscarriage of justice. […]
The point to be made, from the perspective of the authors, is this: whilst it is important, in the context of arbitrations, to ensure that procedure is followed and the rights of parties to a full and fair discussion of the issues are upheld, it is equally important to ensure that arbitral procedures are final and binding, and cannot be derailed by an amorphous charge of 'misconduct' on the part of the arbitrator. The UNCITRAL Secretariat, recognising this tension, adopted Model Law art 12, which itself informs MCAB s12. This limits the grounds for challenging an arbitrator to the following:
(1) When a person is approached in connection with the person’s possible appointment as an arbitrator, the person must disclose any circumstances likely to give rise to justifiable doubts as to the person’s impartiality or independence.
(2) An arbitrator, from the time of the arbitrator’s appointment and throughout the arbitral proceedings, must without delay disclose any circumstances of the kind referred to in subsection (1) to the parties unless they have already been informed of them by the arbitrator.
(3) An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence, or if the arbitrator does not possess qualifications agreed to by the parties (emphasis added).
(4) A party may challenge an arbitrator appointed by the party, or in whose appointment the party has participated, only for reasons of which the party becomes aware after the appointment has been made.
(5) For the purposes of subsection (1), there are justifiable doubts as to the impartiality or independence of a person approached in connection with a possible appointment as arbitrator only if there is a real danger of bias on the part of the person in conducting the arbitration.
(6) For the purposes of subsection (3), there are justifiable doubts as to the impartiality or independence of an arbitrator only if there is a real danger of bias on the part of the arbitrator in conducting the arbitration.
The effect of MCAB s12, therefore, is to reverse in part the open-ended procedural connotations of CAA s42, and confine the grounds of challenge solely to expressions of partiality, however expressed. This elevates certainty of the arbitration over the need for strict compliance with arbitral procedure whilst permitting the more egregious examples of procedural unfairness to form the basis of a bias application. Fraud and corruption would also serve as a basis for challenge, as they are themselves indicia of particularly severe or actual bias.
Notably, MCAB s12(6) adopts a new test for bias, based on the presence of a 'real danger' of partiality. It wording is derived from the decision of the House of Lords in R v Gough. Importantly, the Gough clause raises the bar in respect of bias challenges considerably higher than that previously employed in Australia, which relied on the R v Sussex Justices; Ex parteMcCarthynotion of the existence of a 'reasonable apprehension of bias' in the eyes of a reasonably informed third person to inform the challenge provisions of the CAAs.
The drafting of the Gough clause is such that the Model Law notion of 'justifiable doubts' is preserved in MCAB s12(6), with the 'real danger' test functioning more as an internal evidentiary standard rather than a rule in its own right. This is consistent with the approach that was taken to the application of Gough in England, where the courts applied the then-applicable common law 'real danger' test to challenges under s24(1)(a) of the English Arbitration Act 1996 (which borrows 'justifiable doubts' from Model Law art 12).
However, it is important to observe that there is a gap between the text of MCAB s12(6)and the elements of theGough test. The full text of the Gough test is:
Having ascertained the relevant circumstances, the Court should ask itself whether, having regard to those circumstances, there was a real danger of bias on the part of the relevant member of the tribunal in question, in the sense that he might unfairly regard (or have unfairly regarded) with favour, or disfavour, the case of a party to the issue under consideration by him […]
The main difference between the test laid down by Lord Goff of Chieveley in Gough and the content of MCAB s12(6) is vantage. Where the Gough test has two arms – the first arm being 'reasonable court' vantage and the second arm being the 'real danger' standard itself – MCAB s12(6) is express only in respect of the second arm. It follows that the first arm of the Gough test is not necessarily part of MCAB s12(6). This leaves two possible outcomes open:
- Outcome 1: the 'real danger' standard applies, but the first arm (vantage) remains a common law matter; or
- Outcome 2: the 'real danger' standard applies, and so does the first arm of Gough, with the effect that the common law test for apparent bias of arbitrators it taken to have been replaced telle quelle.
Favouring Outcome 1 is the fact that in 1994 the High Court of Australia considered and rejected both arms of theGough test in Webb. Webb is binding on all Australian courts, and the relationship between the fictional citizen observer and the procedural public policy expressed in Lord Hewart's dictum has been confirmed many times. It follows that if MCAB s12(6) leaves the question of vantage to the common law, then there is a good argument to be made that the Sussex Justices fiction of the 'fair minded lay observer' remains the point from which the appearance of a 'real danger' must be evaluated.
With this common law authority in mind, if the judicial application of MCAB s12(6)leads to Outcome 1, then the Australian test for apparent bias of international arbitrators will be closer to that laid down in Porter v Magill, where Lord Hope married a 'real possibility' second arm with a Sussex Justices-derived 'fair minded and informed observer' first arm. This will mean that the Australian law of bias challenges will, to all intents and purposes, be the same as England and Hong Kong (where Porter prevails).
Turning to Outcome 2, MCAB s12(6) is in the same terms as IAA s18A. The Explanatory Memorandum and the Second Reading Speech of the IAA Amendment Bill refer to Gough without excluding its first arm. Item 92 of the Explanatory Memorandum to the IAA Amendment Bill explains IAA s18A in the following terms:
[T]he test for whether there are justifiable doubts as to the impartiality or independence of an arbitrator is the real danger of bias test set out in R v Gough.
Considering SCAG's stated objective of achieving virtual monism in Australian arbitration law, and the fact that MCAB s2A requires that the CAA be interpreted in a manner that is consistent with the IAA, there is no reason in principle why this stated legislative objective should not be taken as relevant to the MCAB as well. There would, in the view of the authors, be an argument that the test set out in Goughincludes both arms – 'real danger' and 'reasonable court' vantage - and the separation of the two would be inconsistent with the clear legislative objective of IAA s18A (and its counterpart in MCAB), which is to adopt Gough. It may also be that the influence of Gough-era English decisions on arbitrator challenges (such as AT&T Corporation & Lucent Technologies Inc v Saudi Cable Companyand Laker Airways v FLS Aerospace), which will presumably provide some guidance to Victorian courts when the apply MCAB s12(6), functions as a conduit to the first arm of Gough as an incident of the first arm codified in MCAB s12(6).
We suspect, however, that (at least at first instance) a State court would seek to preserve the common law to the extent it could, and that Outcome 1 would be the result. The main reason for this is that Australian courts have consistently placed a high priority on the observance of Lord Hewart's dictum in Sussex Justices that 'justice must be done and be seen to be done', and the 'fair minded lay observer' personifies this maxim. In any event, due to the increasing rate at which tactical (and often frivolous) bias challenges are being launched in arbitration, and their potential to delay the proceedings and deny the other party the arbitrator of its choice, the introduction of the second arm of Gough alone is a positive step.
Finally, the MCAB makes considerable changes to the procedure for the challenge of arbitrators. Under CAA s42 of the CAA, the matter is dealt with by simple application to the court. CAA s13(1) notes that the parties are free to agree on the procedure for challenging such an arbitrator, but failing such agreement, CAA s13(2) provides that an aggrieved party must make a written statement to the tribunal within 15 days of (a) the composition of the tribunal; or (b) after becoming aware of any of the circumstances contained in CAA s12(2). Unless the arbitrator agrees step down, or the parties agree on the result of the challenge, the tribunal will decide the challenge. If they reject it, then the challenging party may make an application to the court to decide the challenge within 30 days of receiving notice of the tribunal's decision to reject the challenge under CAA s13(4), with the court's decision being final under CAA s13(5). Under CAA s13(6), whilst the challenge on foot, the tribunal may continue to conduct the arbitral proceedings and render an award.
Although CAA s23 gives the tribunal the power to render an interim award, the CAAs are silent on the subject of interim measures, that is, the ability of the tribunal to issue those interlocutory directions necessary to prevent damage from occurring to the interests of the parties. Whilst an arbitrator could issue suggestions that a party would be foolhardy to ignore (and which may in some circumstances sound in damages), the power to make an formal interlocutory order was not provided by the CAA, and even if it was, it would likely have suffered the same problems as the pre-amendment version of the IAA (which adopted art 17 of the 1985 Model Law). 1985 Model Law art 17 empowered the tribunal to issue interim measures, but provided no procedure by which the interim measure could be enforced by a court. This is because the enforcement provisions under the 1985 Model Law applied only to 'awards', which, at the very least, must finally determine some of the issues in dispute between the parties.
The MCAB adopts the 2006 Model Law. The 2006 Model Law updated the 1985 Model Law's provisions on interim measures, providing a regime for the recognition and enforcement of interim measures modelled – as far as was appropriate – on the system for the recognition and enforcement of arbitral awards under Model Law arts 35 and 36.
Part 4A of the MCAB deals with the subject of interim measures. An interim measure is defined in MCAB s17(2) as:[A]ny temporary measure, whether in the form of an award or in another form, by which, at any time prior to the issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a party to:
(a) maintain or restore the status quo pending determination of the dispute, or
(b) take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself, or
(c) provide a means of preserving assets out of which a subsequent award may be satisfied, or
(d) preserve evidence that may be relevant and material to the resolution of the dispute.
Examples of the above are provided in MCAB s17(3), which relates:
Without limiting subsection (2), the arbitral tribunal may make orders with respect to any of the following:
(a) security for costs,
(b) discovery of documents and interrogatories,
(c) giving of evidence by affidavit,
(d) the inspection of any property which is or forms part of the subject-matter of the dispute,
(e) the taking of photographs of any property which is or forms part of the subject-matter of the dispute,
(f) samples to be taken from, or any observation to be made of or experiment conducted on, any property which is or forms part of the subject-matter of the dispute,
(g) dividing, recording and strictly enforcing the time allocated for a hearing between the parties (a 'stop clock' arbitration).
Before granting an interim measure under MCAB s17, the tribunal must first be satisfied that the conditions specified in MCAB s17A – that harm not reparable be an award of damages is likely to result if the measure is not granted, that this harm is likely to outweigh the burden placed on the party that is the focus of the award and that there is a reasonable possibility that the party who is seeking the award will succeed on the merits – have been met. These conditions draw on the decision of Lord Diplock in American Cynamid v Ethicon. That said, when the focus of the interim award is the preservation of evidence that is relevant and material to the resolution of the dispute, the requirements of MCAB s17A will only apply to the extent that the tribunal considers appropriate (see MCAB s17A(3)).
As has been foreshadowed, one of the more significant aspects of the new interim measures regime is the introduction of a procedure by which these measures can be enforced by a court. This enforcement mechanism is essential because an arbitrator does not have the power to hold a party in contempt for disobedience of an interim measure. The mechanism for enforcement of arbitrator-issued interim measures is contained in Part 4A, Division 4 of the MCAB. The lead provision is MCAB s17H, subtitled 'Recognition and enforcement'. It appears in the Commercial Arbitration Act 2010 (NSW) as follows:
(1) An interim measure issued by an arbitral tribunal under the law of this State is to be recognised as binding and, unless otherwise provided by the arbitral tribunal, enforced on application to the Court, subject to the provisions of section 17I.
(2) An interim measure issued by an arbitral tribunal under the law of another State or Territory is to be recognised as binding in this State and, unless otherwise provided by the arbitral tribunal, enforced on application to the Court, irrespective of the State or Territory in which it was issued, subject to the provisions of section 17I.
(3) The party who is seeking or has obtained recognition or enforcement of an interim measure must promptly inform the Court of any termination, suspension or modification of that interim measure.
(4) The Court may, if it considers it proper, order the requesting party to provide appropriate security if the arbitral tribunal has not already made a determination with respect to security or where such a decision is necessary to protect the rights of third parties.
The grounds on which recognition or enforcement of an interim measure may be refused are contained in MCAB s17I. These grounds generally replicate the grounds for refusal of recognition or enforcement of an arbitral award proper, though other possible reasons for non-enforcement are also provided (see MCAB ss17(1)(a)(ii) and (iii), 17(b)).
The MCAB also retains the substance of CAA s47 in MCAB s17J, which provides that the court may also issue interim or interlocutory orders in respect of the arbitration, though s17J(2) compels the court to exercise this power in accordance with its own procedures, taking into account the specific features of a domestic commercial arbitration.
Rules of procedure
As might be imagined from the title of this section, this area of reform is rather broad, and covers a wide range of questions of arbitral procedure. From the outset, it should be noted that the banner notion of arbitral procedure – and with it the general rule that the tribunal has the ability to conduct proceedings under an arbitral agreement in any manner that its members see fit – is contained in both the CAAs (s14) and the MCAB (s19(2)). What sets the MCAB apart, therefore, is the introduction of additional constraints on the discretion of the tribunal, and a corresponding increase in the ability of the parties to shape the arbitral procedure themselves. These additional controls have two sources: the first being the Model Law; and the second being the series of 'Australian made' Model Law Plus provisions that have been introduced in order to cater for the exigencies of domestic commercial arbitration.
By way of overview, the additional procedure provisions are:
- Equal treatment of parties – MCAB s18, based on Model Law art 18, compels the arbitrators to treat the parties with equality, and to give each party a reasonable opportunity of presenting its case.
- Representation –in contrast to s 20 of the CAAs, under MCAB s 24A(2), individuals without legal qualifications are expressly permitted to represent parties at the hearing of commercial disputes.
- Expert appointment – MCAB s26, based on Model Law art 26, permits the tribunal to appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal, and further permits the tribunal to compel the parties to provide evidence to the expert. The CAAs contain no commentary on the provision of a tribunal-appointed expert.
- Non-arbitral intermediary– MCAB s27D retains CAA s27, and is not from the Model Law. It is a controversial provision that allows the parties to authorise an arbitrator to act as a mediator, conciliator or 'other non-arbitral intermediary' between them. These sections provide that this changing of roles is legitimate so long as the arbitrator complies with the rules of natural justice. To the authors, this concept is potentially problematic for a number of reasons, two of which will be mentioned here:
(1) The parties are unlikely to caucus effectively with an arbitrator/mediator if they know that, if the mediation fails, the arbitrator may have discovered information about their case that would never have been aired in front of the tribunal, and which the arbitrator will struggle to banish from his or her mind.
(2) If the mediation fails and reverts to an arbitration, the arbitrator could reasonably expect the parties to be unusually sensitive to any partiality shown, believing it to have derived from information obtained during the mediation and an indication of actual or apparent bias. It should be said, however, that the adoption of the 'real danger' test for bias may go some way to reducing risk of such a challenge.
- Umpires – the CAAs contain, in s16, a little-used provision regarding the circumstances in which an umpire could enter into an arbitration as a replacement for the arbitrators. This option has been removed from the MCAB and no mention of an umpire or any intervening official is made.
- Oral and written hearings– the CAAs, in s19, give the arbitrators some control over the form that arbitral hearings take. This provision is expanded upon by MCAB s24 (which is based on Model Law art 24) to include, in essence, the elements of the 'hearing rule' of procedural fairness:
(1) the tribunal has a discretion over whether the matter will be dealt with by written or oral submissions (subject to contrary agreement by the parties);
(2) unless the parties have agreed that no hearings will be held, the tribunal must hold hearings at an appropriate stage of proceedings if a party requests them;
(3) the parties must be given advance notice of any hearings and of any meeting of the tribunal for the inspection of goods, property or documents;
(4) all evidence submitted to the tribunal by one party must be supplied to the other; and
(5) any expert report or evidentiary document on which the arbitral tribunal may rely in the making of its decision must be communicated to the parties.
- Stay of court proceedings – in CAA s53, the court is given a discretion as to whether court proceedings are to be stayed in the event of a valid arbitration clause between the litigants. MCAB s8 has stiffened this rule considerably, with the provision mandating that a court shall refer a matter to arbitration if an applicable arbitration agreement exists between the parties, provided that the agreement in question is not null, void, inoperative or incapable of being performed.
- General duties of the parties
MCAB s24B contains a Model Law Plus provision regarding the duty of the parties to honour an arbitration agreement. CAA s37 is the progenitor of MCAB s24B, providing that:
The parties to an arbitration agreement shall at all times do all things which the arbitrator or umpire requires to enable a just award to be made and no party shall wilfully do or cause to be done any act to delay or prevent an award to be made.
MCAB s24B is a more expansive home grown provision that focuses on considerations of efficiency. It reads as follows:
(1) The parties must do all things necessary for the proper and expeditious conduct of the arbitral proceedings.
(2) Without limitation, the parties must:
(a) comply without undue delay with any order or direction of the arbitral tribunal with respect to any procedural, evidentiary or other matter, and
(b) take without undue delay any necessary steps to obtain a decision (if required) of the Court with respect to any function conferred on the Court under section 6.
(3) A party must not wilfully do or cause to be done any act to delay or prevent an award being made.
Like CAA s37, MCAB s24B represents an attempt on the part of SCAG to further ensure that arbitrations under the MCAB are efficient and cost-effective. Significantly, it contains both mandatory and prohibitive elements, exhorting parties to 'do all things necessary for the proper and expeditious conduct of the arbitral proceedings' whilst at the same time forbidding 'undue delay' when following tribunal or court directions and 'any act to delay or prevent an award being made'.
While the effectiveness of MCAB s24B is yet to be tested, the strong language of the provision – especially when read in light of the paramount objective contained in MCAB s1AC – indicates that it will be an effective means of ensuring that parties not only avert from mischievous and obfuscatory behaviour, but take positive steps to ensure the timely resolution of the issues on foot in the manner contemplated by their arbitration agreement. It is arguable that these proscriptions and obligations are implied terms of the arbitration agreement, and perhaps more tenuously aspects of good faith (if such a duty exists). The main benefit of MCAB s24B is to codify these implied terms, and make access to them simple and certain.
Section 26 of the CAAs contains the procedure under that regime for the consolidation of arbitrations, either with the same (s 26(1)) or different (s 26(2)) tribunals. A consolidation regime – again, home grown and not based on the Model Law – is also provided in s 27C of the MCAB. MCAB s27C unifies the consolidation procedure into one regime that can be used for arbitrations presided over by the same or different tribunals.
Both CAA s26(3) and MCAB s27C establish a number of prerequisites to consolidation. An application by a party for consolidation must be supported by one of three grounds, namely:
- that a common question of fact or law arises in relation to the proceedings in question;
- that the rights to relief claimed in all of these proceedings are in respect of, or arise out of, the same transaction or series of transactions; or
- for some other reason specified in the application, it is desirable that an order for consolidation be made.
In a further similarity, MCAB s27C(2) provides that if matters with different tribunals are to be consolidated, then the tribunals must deliberate and rule jointly on the application for consolidation. Once the arbitrations are consolidated, the parties will again undertake the process of appointment of an arbitral tribunal under MCAB ss10 and 11, using the members of the consolidating tribunals as a pool of candidates. CAA s26(4) hints at a similar process, noting that that 'the arbitrator […] for the consolidated proceedings shall be the person agreed on for the purpose by all the parties to the original proceedings'. That said, the regime specified in the CAAs is problematic, as it refers the matter to the court for further appointment if the parties are unable to reach an agreement on the arbitrator or arbitrators. It has been argued that this can lead to enforcement difficulties, as art V of the United Nations Convention on the Enforcement of Foreign Arbitral Awards and the Model Law in arts 34(2)(a)(iv) and 36(1)(a)(iv) provide that an award will not be upheld if it is made otherwise than in accordance with the agreement of the parties.
MCAB s27C(6)(c) gets around this problem by, in the event of a consolidation, routing the parties back into the formal appointment process mandated by MCAB ss10 and 11. This creates a new tribunal based on a new agreementbetween the parties, and avoids the possibility of non-recognition or non-enforcement of a resultant arbitral award.
IAA s24 is almost identical to MCAB s27C, but for the fact that IAA s24 does not include an equivalent of MCAB s27C(8). MCAB s27C(8) mandates that, before a consolidation order can be issued, the tribunal or tribunals considering the application in question must also take into account whether any party would or might suffer substantial hardship if the consolidation order were made.
The CAAs contain no concrete commentary on the confidential nature of arbitrations. Without belabouring the point, the authors note that confidentiality is one of the most attractive features of arbitration as a form of dispute resolution for commercial parties, as it enables parties to avoid the difficulties inherent in airing their differences in public. This much was recognised in a ruling on the confidentiality of arbitrations under English law, leading practitioners Alan Redfern and Martin Hunter describe as the 'classical' position:
If it be correct that there is at least an implied term in every agreement to arbitrate that the hearing shall be held in private, the requirement of privacy must in principle extend to documents which are created for the purpose of that hearing […]
The trend of the Australian courts, however, has been to diminish, or at least to question, the confidentiality or arbitral proceedings, particularly where the proceedings in question have a genuine public interest. The most prominent example of this is the decision of the High Court of Australia in Esso Australia Resources Ltd v Plowman, where the Mason Court concluded that whilst the privacy of an arbitral hearing should be respected, confidentiality was not an essential attribute of a private arbitration.
The MCAB circumvents the rule in Esso by including s27E, subtitled 'Disclosure of confidential information', an opt-out regime designed to promote confidentiality in arbitral regimes. It reads as follows:
(1) The provisions of this section apply in arbitral proceedings unless otherwise agreed by the parties.
(2) The parties must not disclose confidential information in relation to the arbitral proceedings unless:
(a) the disclosure is allowed under section 27F, or
(b) the disclosure is allowed under an order made under section 27G and no order is in force under section 27H prohibiting that disclosure, or
(c) the disclosure is allowed under an order made under section 27I.
(3) An arbitral tribunal must not disclose confidential information in relation to the arbitral proceedings unless:
(a) the disclosure is allowed under section 27F, or
(b) the disclosure is allowed under an order made under section 27G and no order is in force under section 27H prohibiting that disclosure, or
(c) the disclosure is allowed under an order made under section 27I.
As can be seen, MCAB s27E prohibits the disclosure of confidential information from an arbitral proceeding unless such disclosure is done within the confines prescribed by the Act. MCAB s27F sets out the circumstances in which confidential information may be disclosed by the parties or the arbitral tribunal:
(1) This section sets out the circumstances in which confidential information in relation to arbitral proceedings may be disclosed by:
(a) a party, or
(b) an arbitral tribunal.
(2) The information may be disclosed with the consent of all the parties to the arbitral proceedings.
(3) The information may be disclosed to a professional or other adviser of any of the parties.
(4) The information may be disclosed if it is necessary to ensure that a party has a reasonable opportunity to present the party’s case and the disclosure is no more than reasonable for that purpose.
(5) The information may be disclosed if it is necessary for the establishment or protection of a party’s legal rights in relation to a third party and the disclosure is no more than reasonable for that purpose.
(6) The information may be disclosed if it is necessary for the purpose of enforcing an arbitral award and the disclosure is no more than reasonable for that purpose.
(7) The information may be disclosed if it is necessary for the purposes of this Act and the disclosure is no more than reasonable for that purpose.
(8) The information may be disclosed if the disclosure is in accordance with an order made or a subpoena issued by a court.
(9) The information may be disclosed if the disclosure is authorised or required by a relevant law or required by a competent regulatory body, and the person making the disclosure gives written details of the disclosure (including an explanation of the reasons for the disclosure) to:
(a) if the person is a party – the other parties and the arbitral tribunal, and
(b) if the arbitral tribunal is making the disclosure – all the parties.
Under MCAB s27G, the arbitral tribunal may allow disclosure of confidential information. This discretion is open-ended, but can only be exercised after each of the parties has been given the opportunity to be heard. In addition, under MCAB s27H, the court may prohibit the disclosure of confidential information is certain circumstances, or, under MCAB s27I, allow it. Significantly, the court's power to permit or forbid disclosure contains a consideration of the public interest, which was mentioned as a ground for allowing disclosure by Mason CJ in Esso. Accordingly, it remains to be seen whether the reforms proposed in MCAB ss27E – I are truly sufficient to ensure complete confidentiality of arbitrations.
Form and contents of the award
The CAAs (in s29) and the MCAB (in s31) contain rules as to the form that an arbitral award is to take, with the latter being based on the requirements of Model Law art 31. Both require, unless the parties agree otherwise:
- that the award be made in writing;
- that the award be signed by the arbitrators; and
- that the award include a statement of reasons.
Both the CAAs (in s30) and the MCAB (in s33) also grant to the tribunal the power to correct any mistakes in the award if necessary. MCAB s33(1)(b), however, gives the tribunal the power – provided that the parties agree – to issue an interpretation of a particular point of the award. Under MCAB s33(3), this interpretation form part of the award for the purposes of enforcement.
The major differences between these two regimes arises in the area of the reasons that an arbitrator must give. This difference does not, however, arise from the wording of the two pieces of legislation, but rather from the manner in which various Australia state courts have interpreted the reasons requirement under the CAAs. CAA 29(1)(c) is currently the subject of a substantial difference of opinion between the Victorian and New South Wales Courts of Appeal. The Victorian Supreme Court, in Oil Basins Ltd v BHP Billiton Ltd, held that the complexity of reasons that was required of the arbitrator was directly proportional to the complexity of the arbitral proceedings in respect of which the reasons were given and that in certain circumstances, the complexity of reasons required could reach that of a judgment of a superior court.
In contrast, the New South Wales Supreme Court, in Gordion Runoff Ltd v Westpoint Insurance Corporation, held that Oil Basins was incorrect, and an arbitrator was simply required to 'set out what, on their view of the evidence, did or did not happen and should explain succinctly why, in light of what happened, they have reached their decision and what that decision is'. What is more applicable to the present circumstance, however, is the manner in which the Court overruled Oil Basins; that is, by extensive reference to international and academic authority, as well as the Model Law. Allsop P remarked:
Reference to international authority is legitimate, not only to understand the Model Law, but also the [CAA s29(1)(c)] given its inspirational source in this respect in the Model Law. [The author] Binder, refers to three authorities on [Article] 31(2), two Canadian and one German. None gives apparent support for the proposition that [Article] 31(2) of the Model Law required reasons of a standard expected by law of a judge in a common law jurisdiction.
Given that MCAB s2A appears to compel reference to international jurisprudence on the Model Law when interpreting that legislation, it seems likely in the authors' opinion that the approach defined in Gordion Runoff is more likely to become the norm than the approach in Oil Basins (which relied heavily on Australian and English authorities, the relevance of which may well diminish in the future).
On the subject of costs and interest, the CAAs and the MCAB do not differ considerably - both the CAAs and the MCAB establish regimes for the calculation of costs and interest, with the sole real difference being that the MCAB does not contain an equivalent for CAA s35, which permits the parties to apply to the court for relief if the tribunal refuses to issue an award unless its outstanding fees are paid.
On the subject of remedies, the MCAB permits the tribunal to make the kinds of awards ordinarily expected of arbitration and in addition, imports in MCAB s33A the subject matter of CAA s24, which gives the tribunal the power to make orders of specific performance, unless a contrary intention is expressed in the arbitration agreement.
Error of law
One of the most significant features of the MCAB is that it has narrowed the options available to parties that wish to contest an arbitral award. Under the CAAs, s38 governed the judicial review of arbitral awards. That section states at the outset that the court does not have the jurisdiction to overturn an award merely because of an error of fact or law on the face of the award, defined by Lord Dunedin in Champsey Bhara & Co v Jivraj Balloo Spinning & Weaving Co Ltd as follows:
An error of law on the face of the award means, in their Lordships' view, that you can finds in the award or a document actually incorporated thereto, as for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous.<a id="_ftnref76" title="" href="http://ciarb.table buy tadalafil.spoon.com.au/#_ftn76" name="_ftnref76">
However, CAA s38(2) provides that an appeal may lie to the court on any question of law arising out of the award, provided that the parties consent to the bringing of the appeal or, under CAA s38(5):
(a) having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration agreement; and
(b) there is–
(i) a manifest error of law on the face of the award;
(ii) strong evidence that the arbitrator or umpire made an error of law and that the determination of the question may add, or may likely add, substantially to the certainty of commercial law.
The breadth of the term 'manifest error' resulted in an appellate regime that was relatively uncertain, leading on occasions to unjustified challenges to the award. Under the CAAs, when there is a manifest error of law on the face of an arbitrator's award, the court will correct the award or send the award back to the arbitrator for reconsideration. Nevertheless, even though it does not result in vacatur, experience has shown that a 'manifest error of law' has serious consequences for the parties. Historically, such a finding has only been made in 'exceptional circumstances'. As examples, State courts have corrected awards on the basis of manifest error of law in the following circumstances:
- Oil Basins Ltd v BHP Billiton Ltd (the arbitrators failed to give adequate reasons for their decision);
- Energy Brix Australia Corp Pty Ltd v National Logistics Coordinators (Morwell) Pty Ltd (the arbitrator made a mistake of law in his conclusion that a contract under seal could only be discharged by another contract under seal);
- Allmore Constructions Pty Ltd v Failli (the arbitrator allowed an uncontested set-off claim, even though the claimant did not prove its case);
- Davids Distribution (Vic) Pty Ltd v Dance (the arbitrator made a mistake of law by concluding that demotion amounted to termination of an employment contract); and
- Banque Nationale de Paris v Cardil Pty Ltd (the arbitrator made a mistake of law by finding that he had the power to order that a retail lease be rectified).
The MCAB provides two mechanisms for appeal from a simple question of law. First, MCAB s34A – which does not have a counterpart in the Model Law – permits an appeal to the court where the parties agree to allow the appeal and the court grants appropriate leave. For this reason, the section is unlikely to be employed regularly; if a party is satisfied with an award, they are unlikely to agree to have the matter appealed. Instead, MCAB s34A is only intended to operate when both parties – perhaps for different reasons – are unhappy with the result produced by the tribunal.
Second, MCAB s34A acts as an additional avenue of appeal to MCAB s34 where there is an 'obvious' error in the award. The key feature of the 'error of law' provision of the MCAB that sets it apart from the CAA 'error of law' rule is that the MCAB provision is 'opt in', whereas the CAA rule was 'opt out'. Under the MCAB s34A(1)(a), unless the parties opt-in in their arbitration agreement or agree within three months of the date of the award that there may be an appeal (and the court grants leave), there will be no error of law appeal from the award. Common sense alone dictates that the party who holds the award in its favour is not likely to consent to an appeal, and even if they do, the court must still grant leave. This combination should significantly reduce the rate of merits appeal from arbitral awards.
Another difference is that, although there is a general similarity of elements of the two rules, MCAB s34A(3) does not expressly adopt the CAA notions of 'misconduct' and 'manifest error'. Instead, it confers the right of appeal in the following terms:
(3) The Court must not grant leave unless it is satisfied:
(a) that the determination of the question will substantially affect the rights of one or more of the parties, and
(b) that the question is one which the arbitral tribunal was asked to determine, and
(c) that, on the basis of the findings of fact in the award:
(i) the decision of the tribunal on the question is obviously wrong, or
(ii) the question is one of general public importance and the decision of the tribunal is at least open to serious doubt, and
(d) that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the Court to determine the question.
Rather than a manifest error, the equivalent element of MCAB s34A(3)(c) requires that an award be 'obviously wrong'. Whether this is different from a 'manifest error' is not explained in MCAB, and it is conceivable that the common law principles that developed around the CAA notion of 'manifest error' will remain relevant when the MCAB is enacted. If this is the approach taken, a similar test to that described above will be adopted for the element of obviousness. After all, it must be acknowledged that the terms 'obvious' and 'manifest' are close, even synonymous - the Concise Oxford English Dictionary defines 'obvious' as 'easily seen or recognised or understood; palpable, indubitable'; similarly the CAA term 'manifest' has been read as requiring that the error must be 'evident and obvious, rather than merely arguable'.
However, when MCAB s34A is taken as a whole, it may be that the MCAB s34A(3) notion of 'obvious' error is narrower than the CAA s38(5) concept of 'manifest error'. It could be argued, for example, that the tight scope of the MCAB s34 and 36 vacatur grounds should generally inform the interpretation of MCAB s34A and raise the threshold accordingly. Put another way, just as the Model Law demonstrates a desire to protect arbitral awards from unjustified challenge, so too should MCAB s34A. The interpretive provisions of the MCAB seem to lend support to this reading.
Finally, under MCAB s27J the court is further empowered to hear and determine preliminary points of law arising out of an arbitration, provided that all parties to the arbitration consent, or the arbitrator adds his or her consent to that of the applicant. Again, this is a Model Law Plus provision. The only problem with this right of referral is that it is not clear whether the decision of the court is final, or subject to appeal. If it is subject to appeal, the risk would be that the arbitration is overshadowed (and likely delayed) by parallel appeal proceedings in state courts. The flipside to this risk is that the right to refer matter to the court may be beneficial insofar as it may make the use of non-legally qualified arbitrators (such as engineers and trade specialists) a more attractive option. Such an arbitrator could deal with the facts and all technical aspects of the matter, and the more complex issues of law could be referred to the court. On balance, the authors see this benefit as outweighing the potential delay of parallel appeal proceedings (assuming such action can be taken).
Recourse against award
The MCAB adopts the approach of Model Law arts 34 and 36, which permit an award to be overturned or not enforced in very limited circumstances, namely if:
(a) the party making the application furnishes proof that:
(i) a party to the arbitration agreement referred to in section 7 was under some incapacity, or the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication in it, under the law of this State, or
(ii) the party making the application was not given proper notice of the appointment of an arbitral tribunal or of the arbitral proceedings or was otherwise unable to present the party’s case, or
(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside, or
(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Act, or
(b) the Court finds that:
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State, or
(ii) the award is in conflict with the public policy of this State.
In respect of the substance of MCAB ss34(b)(ii) and 36(b)(ii), no guidance is provided as to the meaning of 'public policy', and the term is notoriously difficult to define within Model Law jurisprudence. That said, it will be recalled that MCAB s2A compels those interpreting the MCAB to have reference to the Model Law as it is developed by the IAA. Interesting, IAA s19 provides that public policy in the context of Model Law arts 34(b)(ii) and 36(b)(ii) refers to:
(a) the making of an interim measure or award was induced or affected by fraud or corruption; or
(b) a breach of the rules of natural justice occurred in connection with the making of the interim measure or award.
The substance of this IAA provision would arguably be imported into the MCAB by way of MCAB s2A. If this is the case, then it may be that the MCAB notion of 'public policy' is construed narrowly, consistent with the pro-enforcement/pro-arbitration policy that prevails in Australia courts. In this regard, some guidance may be taken from the decision of White J of the New South Wales Supreme Court in Yang v S&L Consulting Pty Ltd, which shows that a narrow reading of the public policy exception under the IAA is preferred.
It may also be that MCAB s2A causes the MCAB 'public policy' rule to take on some of the colour of IAA s19, with the effect that the primary concern of the court under MCAB 36(b)(ii) will be to police contraventions of procedural public policy (such a fraudulent or corrupt conduct by the arbitrators and denials of natural justice). That is not to say, however, that offences to substantive public policy will not be objectionable under this head of challenge. An example would be where the award is tainted by illegality, for example because the contract from which the dispute arose was unlawful. In this case, enforcement would certainly be against public policy.
Perhaps a more interesting question is whether it would be against public policy to enforce an award that contains an egregious error of law. This has been argued with varying degrees of success in other common law jurisdictions, including Singapore, India and New Zealand. For example, In Downer-Hill Joint Venture v Government of Fiji, the High Court of New Zealand held that a
serious and fundamental error of law or fact could result in an award being contrary to the public policy of New Zealand because breaches of natural justice had occurred in connection with the making of the award. However, such a threshold was high and mere mistake would not suffice.
Following Downer-Hill, it would seem that such an argument would only have prospects of success under MCAB s36(b)(ii) if the relevant error of substantive law could in some way be attached to a proven breach of the rules of natural justice. Although it remains to be seen whether such an argument will be viable under the new domestic regime, it can be said with some certainty that the burden of persuasion on the party resisting enforcement would be a heavy one – if it was not, the clear pro-arbitration policy of MCAB would be offended.
The regime governing the transition from the CAAs to the MCAB is contained in MCAB s42. To summarise, once enacted in the jurisdiction governing the arbitration clause (that is, the lex fori), the MCAB will apply to every arbitration agreement in that jurisdiction, whether or not it was made before or after the commencement of the MCAB (or rather, the 'new CAA'). In addition, MCAB s42(1)(b) provides that a reference in an arbitration to an existing CAA or a provision of that CAA will be altered by the passage of the MCAB to be construed as a reference to the MCAB or to the corresponding provision of the MCAB (if any).
If an arbitration has already commenced when the MCAB is enacted, then it will continue to be governed by the now-repealed CAA as if the MCAB were not law. MCAB s42(3) contains a guide as to when an arbitration has commenced, namely if:
(a) a dispute to which the relevant arbitration agreement applies has arisen; and
(b) the arbitral tribunal has been properly constituted.
The MCAB will fundamentally change the way domestic arbitrations are conducted and regulated in Australia. As has been alluded to throughout this article, the central thrust of the MCAB is the adoption of the Model Law as the centrepiece of the regime. The Model Law will unify arbitration in Australia in three ways. First, it will bring the domestic regime into line with the international regime as expressed in the IAA. Second, it will bring the domestic arbitral regime into line with international best legislative practice, which is for the most part represented by the 2006 text of the Model Law. Third, it provides a point of entry for the wealth of jurisprudence that has developed around the Model Law in other countries, including most of the common law states of the Asia Pacific region. In the opinion of the authors, these advances are to be welcomed.
If there is a broad criticism to be made about the MCAB, it is that it will exist at all. The previous experiment of the CAAs demonstrated that although these Acts contained similar if not identical wording, they were still able to being driven apart by the differing interpretations of State superior courts. In practice, the CAAs did not achieve uniformity, but rather a form of fractured dualism. The disjunction between Oil Basins and Gordian Runoff is but one example of this, and there are others (including the rules for incorporation by reference). A complete solution to this problem would be outright monism – to merge the domestic and international arbitration regimes in Australia and to give sole jurisdiction for all arbitration matters to the Federal Court of Australia. It is highly unlikely, however, that the State and Territory Attorneys General that make up SCAG would agree to such a situation, and there is a lack of political will at the Commonwealth level to introduce legislation that will override the State Acts under s109 of the Constitution of Australia.
While the potential for differing interpretations of MCAB remains a problem, it must be recognised that further reforms are underway to unify the State arbitration regimes. The State superior courts are currently in the process of creating lists of specialist judges – an example being List G of the Commercial Court of the Supreme Court of Victoria – that will handle arbitration matters and engage in an informal dialogue, the objective being to interpret the provisions of the MCAB consistently. In addition, MCAB ss1AC and 2A will further compel the consistent interpretation of the legislation. While the situation is perhaps not ideal, therefore, significant attempts are being made to ensure that the continued dualist model does not have negative practical effects, and that some kind of de facto monism is achieved.
In conclusion, the MCAB is intended to act as a 'reset button' for domestic arbitration in Australia, and the authors predict that it will succeed in this regard. The CAAs, based on English legislation that had itself been superseded, had developed significant problems, resulting in a regime that was often costly, usually time consuming and occasionally uncertain. The MCAB makes a deliberate attempt to remedy these defects, and over time, once the operators (arbitrators, lawyers and judges) are familiar with the new system, the authors expect that the MCAB will succeed in this objective.
 The New Zealand Attorney General is also a member of SCAG and a representative of Norfolk Island has observer status.
 The Hon Robert McClelland MP and the Hon John Hatzistergos MLC, Agreement on the new Model Commercial Arbitration Bill (Press Release, 7 May 2010).
 Commercial Arbitration Act 1986 (ACT); Commercial Arbitration Act 1984 (NSW); Commercial Arbitration Act 1985(NT); Commercial Arbitration Act 1990 (Qld); Commercial Arbitration and Industrial Referral Agreements Act 1986(SA); Commercial Arbitration Act 1986 (Tas); Commercial Arbitration Act 1984 (Vic); Commercial Arbitration Act 1985(WA).
 For an example, see the recent disagreement between the Courts of Appeal of Victoria and New South Wales on the standard of reasons required of an arbitrator under CAA s29(1)(c): Oil Basins Ltd v BHP Billiton Ltd (2007) 18 VR 346 and Gordion Runoff Ltd v Westpoint Insurance Corporation (2010) 267 ALR 74.
 The authors will use the Commercial Arbitration Act 1984 (Vic) as a template for their discussion of the CAAs.
 At the time of writing, the only jurisdiction to implement the MCAB is New South Wales, which introduced the Bill to Parliament the day after the MCAB was approved by SCAG. The result is the Commercial Arbitration Act 2010(NSW). This Act is to take effect at a date to be proclaimed, presumably when the remainder of the Australian States and Territories enact their own versions of the MCAB.
 Cooper Brooks (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297.
 Mills v Meeking (1990) 169 CLR 214; Acts Interpretation Act 1901 (Cth) s15AA(1); Interpretation of Legislation Act 1984 (Vic) s35(a).
 R v Coco (1994) 179 CLR 427.
 New South Wales, Legislative Council, Hansard (The Hon John Hatzistergos, 12 May 2010) 22432.
 Justice Clyde Croft, Arbitration law reform and the Arbitration List G of the Supreme Court of Victoria (Paper presented to the Building Dispute Practitioners' Society Inc and the Business Law Section of the Law Council of Australia (Construction and Infrastructure Committee), Melbourne, 5 May 2010) 16.
 That said, the decision to separate the domestic and international arbitration regimes in Australia and, furthermore, divide the former further still between the superior courts of the States and Territories ensures that while everyone may be singing from the same song book, the choir has many members.
 This power is particularly poorly worded, and relies on a combined reading of CAA ss8(1), 8(3) and 8(4).
 Provided that all the parties to the arbitration agreement in question are domiciled or ordinarily resident in Australia at the time the arbitration agreement was entered into: CAA s8(2).
 UNCITRAL Secretariat, Explanatory note to the UNCITRAL Model Law on International Commercial Arbitration 1985 with amendments adopted in 2006 (2006) UNCITRAL, http://www.uncitral.org/pdf/english/texts/arbitration/ml-arb/07-86998_Ebook.pdf at 3 August 2010, .
 Ibid, .
 MCAB s6(2) provides that, if the parties agree that another approved court is to have jurisdiction over the arbitration, than the jurisdiction of the Supreme Court of the relevant State will pass its jurisdiction to that court. In the context of the Commercial Arbitration Act 2010 (NSW), for example, the District and Local Courts of New South Wales have been given alternative jurisdiction. In Victoria, the County and Magistrates' Courts would presumably be given similar powers. Interestingly, no provision has been made under the MCAB or the Commercial Arbitration Act 2010 (NSW) for a private arbitral institution such as the Australian Centre for International Commercial Arbitration or the Institute of Australian Mediators and Arbitrators to make appointment decisions, though the selection of appropriate arbitral rules would no doubt ameliorate this situation.
 Briscoe & Co Pty Ltd v Victorian Railways Commissioners  VLR 523; M S Jacobs, Commercial Arbitration: Law and Practice (Looseleaf, 2010) [4.20].
 Model Law art 7, presents adopting states with two options as to the definition of 'arbitration agreement'. MCAB s7 is reflective of the first of these options.
 UNCITRAL Secretariat, above n 16, . The Convention on the Use of Electronic Communications in International Contracts has yet to receive enough ratifications to enter into force, but can be found at: GA Res 60/515, UN GAOR, 60th sess, 53rd plen mtg, UN Doc No A/60/515 (23 November 2005).
 Interestingly, in the context of a defence filed in response to a statement of claim, simply responding to an allegation that an arbitration agreement is on foot between the parties by 'not admitting' the fact of the arbitration agreement (as opposed to admitting it or denying it outright) would likely be sufficient on a plain reading of MCAB s7(7) to prove the existence of the arbitration agreement.
 UNCITRAL Secretariat, above n 16, .
  57 BLR 1.
 (1997) 18 WAR 1.
 (1997) 141 FLR 124.
  1 Qd R 443.
 Unreported, ACTSC, 22 October 1991, 7–8.
 Jacobs, above n 19, [38.20].
 Mabanaft GmbH v Consentino Shipping Co SA (The Achillet)  2 Lloyd's Rep 191.
 (1927) 39 CLR 571, 587.
 Unreported, NSWSC, 1 June 1990, 8.
 Jacobs, above n 19, [38.30].
 Melbourne Harbour Trust Commissioners v Hancock (1927) 39 CLR 570, 587–8 (Isaacs J); Gas & Fuel Corporation of Victoria v Wood Hall Ltd  VR 385, 391 (Marks J).
  2 KB 478, 484 (Lush J), 485 (Atkin J).
 Melbourne Harbour Trust Commissioners v Hancock (1927) 39 CLR 570, 588 (Isaacs J): ' a mistake in procedure which has or may have unjustly prejudiced a party'; Van Dongen v Cooper  WAR 143, 146 (Virtue J): 'no reflection on the integrity of the arbitrator'.
 (1997) 18 VR 346, 373–4 (Buchanan, Nettle and Dodds-Streeton JJA), restated in Thoroughvision Pty Ltd v Sky Channel Pty Ltd  VSC (Unreported, 22 April 2010, Croft J) .
  AC 646.
 R v Sussex Justices; Ex parteMcCarthy  1 KB 356; followed by the High Court of Australia in Webb v R(1994) 181 CLR 41.
  AC 646, 670 (Lord Goff) (emphasis added).
  2 AC 357.
 The prospect of this result should be of comfort to those in the Australian arbitration community who have identified the Gough amendment as an undesirable departure from the position in England.
 Explanatory Memorandum, International Arbitration Bill 2009 (Cth). The Explanatory Memorandum to theCommercial Arbitration Act 2010 (NSW) uses slightly different language though with largely the same effect, saying CAA ss12(5) and (6) are 'based on the test for bias applied by the House of Lords in R v Gough  AC 646': Explanatory Memorandum, Commercial Arbitration Bill 2010 (NSW).
  All ER (Comm) 625.
  2 Lloyd's Rep 45
 Such as mandatory and prohibitive injunctions, Mareva orders and Anton Piller orders.
 See further Croft, above n 12, 7.
 UNCITRAL Secretariat, above n 16, .
 Though it expressly fails to adopt the Model Law provisions on preliminary measures, contained in Section 2 of Chapter IVA of the Model Law.
 1 All ER 504, 506ff.
 These are contained in MCAB s36, and will be discussed in the section on recognition and enforcement below.
 Subject of course to the terms of the parties' agreement and any arbitral rules that they choose to incorporate by reference.
 See Jacobs, above n 19, [15.10]ff. The section basically contemplated two situations in which this could occur: (a) where the arbitrators have failed to make an award within the time specified by the arbitration agreement or any extension of that time ordered by the court under s 48 of the CAA; or (b)(i) the arbitrators have failed to determine the matter arising for determination, (ii) by reason of that failure, the dispute cannot be resolved, and (iii) at least one of the arbitrators has served on either party to the dispute or the umpire a notice to that effect. The court also has the ability to order the intervention of an umpire regardless of the terms of the agreement between the parties on the application of a party to the arbitration.
 The requirement of the arbitrator to observe procedural fairness was implied into the CAAs. As the proceedings before an arbitrator are judicial or quasi-judicial, it follows that the rules of natural justice apply: Gas & Fuel Corporation of Victoria v Wood Hall Ltd  VR 385, 394 (Marks J). See further Jacobs, above n 19, [38.50]. The main difference between the CAAs and the MCAB, therefore, is that certain elements of the doctrine have been made explicit in the latter.
 This is already a manifestation of a well-known aspect of natural justice, to provide not only the opportunity to be heard, but also notice of any hearings that is sufficient to give the recipient time to prepare: see R v Thames Magistrate; Ex parte Polemis  2 All ER 1219; Ansell v Wells (1982) 63 FLR 127.
 Opened for signature 10 June 1958, 330 UNTS 38 (entered into force 7 June 1959).
 Jacobs, above n 19, [25.170].
 N Blackaby, C Partasides, A Redfern and M Hunter, Redfern and Hunter on International Arbitration (5th ed, 2009) [2.149].
 Hassneh Insurance Co of Israel v Mew  2 Lloyd's Rep 243, 247 (Colman J); see also Dolling-Baker v Merrett  2 All ER 890; Ali Shipping Corporation v 'Shipyard Trogir'  1 Lloyd's Rep 643.
 Redfern and Hunter, above n 48, [2.152].
 (1995) 183 CLR 10.
 That is, the court as it was composed during the tenure of Mason CJ, ironically known for its tendency – unusual in Australia at that point – to acknowledge and promote international trends.
 See Croft, above n 12, 13–14.
 In marked contrast to the confidentiality regime introduced to the IAA, which is an opt-in procedure: ss 22(3)(a), 23C. This has been the subject of criticism by Croft J, writing extra-curially: Croft, above n 12, 13–14.
 (1995) 183 CLR 10, 31.; see also Commonwealth of Australia v Cockatoo Dockyard Pty Ltd (1995) 36 NSWLR 662, which introduced considerations of public health and the environment to the calculation of public interest in the context of arbitral confidentiality.
 MCAB s31 also includes some additional requirements, such as that the award must state its date and place of arbitration, that the award is taken to have been made at the place stated in the award and that, after the award has been made, a copy must be delivered to both parties.
 (2007) 18 VR 139.
 (2007) 18 VR 139, 367–8 (Buchanan, Nettle and Dodds-Streeton JJA).
 (2010) 267 ALR 74.
 (2010) 267 ALR 74, 113 (Allsop P, with whom Spigelman CJ and Macfarlan JJA agreed) citing the test provided in Bremer Handelsgesellschaft mbH v Westzucker Gmbh (No 2)  1 Lloyd's Rep 130, 132–3 (Donaldson LJ).
 (2010) 267 ALR 74, 112.
 For a more expansive analysis of Oil Basins, Gordian Runoff and s 29(1)(c) of the CAAs, see N Rudge and C Miles, 'Clarification of an Arbitrator's Obligation to Give Reasons under the Australian State Commercial Arbitration Acts: The Emerging Requirement of Proportionality' (2010) 73 Arbitration 571. In addition, Gordian Runoff is at the time of writing the subject of an application for special leave to appeal to the High Court.
 See CAA ss31 (interest up to making of award), 32 (interest on debt under award), 34 (costs), 35 (assessment of arbitrator's or umpire's fees and expenses), 36 (costs of abortive arbitration) and MCAB ss33B (costs), 33D (costs of an abortive arbitration), 33E (interest up to making of award), 33F (interest on debt under award).
  AC 480, 497, cited with approval in Tuta Products Pty Ltd v Hutcherson Bros Pty Ltd (1972) 127 CLR 253, 258 (Barwick CJ). The issue of an error 'on the face of the award' in Australian law is fraught with controversy and should be approached with caution: see further Jacobs, above n 19, [34.30].
 Concrete Constructions Group Ltd v DVP Engineering Pty Ltd  VSC (Unreported, Gillard J, 31 July 1997) 8.
(2007) 18 VR 346.
(2002) 5 VR 353.
 (2004) 20 BCL 65.
  VSC 258 (Unreported, McDonald J, 21 July 1999).
  1 VR 229.
 Concise Oxford English Dictionary (9th ed, 1995).
 Anaconda Operations Pty Ltd v Fluor Australia Pty Ltd  VSC 275 (Unreported, Dodds-Streeton J, 28 July 2003).
  NSWSC 223 (Unreported, White J, 31 March 2009).
 See for example Soleimany v Soleimany  QB 785
 Government of the Republic of the Philippines v Philippine International Air Terminals Co. Inc  1 SLR 278
 See for example ONGC v SAW Pipes Ltd, 2003(5) SCC 705
  1 NZLR 554, – (Downer-Hill).
 See generally above n 11.
 Section 109 of the Constitution provides that:
When the law of a State is inconsistent with the law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.
Under Australian law, a notion of 'indirect inconsistency' has developed in the context of s109, such that where the Commonwealth has somehow indicated that it intends a particular law to 'cover the field' in respect of an area of regulation, any State Act that overlaps will be invalid: Ex parte McLean (1930) 43 CLR 472, 483 (Dixon J). For example (and without providing for further complexity) if a State were to introduce a statute that purported to govern international arbitrations, it would conflict with the Commonwealth's intention that the IAA cover the field and would be invalid.
 Croft, above n 12, response to question.
 See generally above n 11.