The 2021 ACICA Rules and the 2020 Australian Arbitration Report

Australia, Asia-Pacific

On 1 April 2021 the 2021 ACICA Arbitration Rules (2021 ACICA Rules) and Expedited Arbitration Rules (2021 ACICA Expedited Rules) came into effect; updating the previous ACICA rules and better reflecting current international best practice in arbitration.

The key amendments introduced in the 2021 ACICA Rules (with changes to the 2021 ACICA Expedited Rules being broadly similar) include:

Embracing technology 

  • the 2021 ACICA Rules expressly make provision for arbitral tribunals to hold virtual hearings and conferences (or to do so by a hybrid means), with virtual hearings deemed to be held at the seat of arbitration.

  • the default position provides for the electronic filing of certain documents (e.g. Notice of Arbitration and Answer to Notice of Arbitration).

  • awards may be signed electronically and/or in counterparts and assembled into a single instrument. 

  • an arbitral tribunal may adopt measures for personal data protection.

Consolidation, multi-party and multi-contract arbitrations

  • an arbitral tribunal may (subject to the satisfaction of the other mandatory criteria) consolidate two or more arbitrations into a single arbitration even where the parties to the arbitrations are not the same. 

  • parties (including the additional party) may expressly agree to additional parties being joined to an arbitration notwithstanding that the additional party may not be bound by the same arbitration agreement as the other parties.

  • parties may commence a single arbitration that concerns disputes under multiple contracts.  

  • an arbitral tribunal may (after consulting with the parties) conduct two or more arbitrations concurrently, one after the other or suspend a proceeding, where there is a common question of law or fact and the same arbitral tribunal is constituted in each arbitration. 

Effective case management

  • the default requirement under the 2021 ACICA Rules is for arbitral awards to be made by the earlier of (i) 9 months from the date the file is transmitted to the tribunal and (ii) 3 months from the date the tribunal declares the proceedings closed. 

  • alternative dispute resolution (ADR) methods are encouraged, and parties may apply for a suspension of the arbitration to allow for ADR to occur. 

Third-party funding disclosure

  • disclosure of third-party funding arrangements is required.

Costs

  •  if there is a deposit for costs directed to be paid by ACICA that remains unpaid (in whole or part), the tribunal may, after consulting ACICA, order the suspension or termination of the whole or any part of the arbitration. 

  • an arbitral tribunal may make costs decisions at any time during the arbitration with the default position being that the unsuccessful party bears the costs of the arbitration. 

Early dismissal 

  • the tribunal has the power to make an award granting early dismissal or termination of any claim, defence or counterclaim.

In light of the ongoing effect of the COVID-19 pandemic on international and domestic travel, the amendments to facilitate remote/virtual hearings and for greater reliance on technology are particularly welcome.

The Report

It is of note that shortly before the 2021 ACICA Rules came into effect, on 9 March 2021 ACICA released its 2020 Australian Arbitration Report (Report) into the practice of arbitration in Australia.  

The Report indicated that arbitration in Australia is generally in robust health and that Australian corporates and dispute resolution practitioners are increasingly turning to arbitration.   The 2021 ACICA Rules are aimed at increasing efficiencies in the arbitration process, and as such are clearly welcome and will likely further encourages parties to consider arbitration as an option for resolving their disputes.

The Report’s findings were derived from survey data collected from 111 respondents in relation to 223 unique arbitrations concluded, conducted, or commenced between 2016 and 2019 with an Australian connection (i.e. involving Australian parties, Australian projects, or Australian legal or expert assistance).  Of the 223 arbitrations considered, 111 were international and 109 were domestic (with the responses in relation to 3 arbitrations not indicating whether the arbitration was domestic or international). The total amount in dispute over the 223 arbitrations was in excess of AUD $35 billion (of which approximately 75% related to international arbitrations). 

The key findings/recommendations of the Report include:

  • Opportunities for Australia– there has been a rise of online hearings and virtual platforms because of the COVID-19 pandemic and as a result, Australia’s location should no longer be perceived to be too remote geographically.  Australia’s position geographically within the Asia-Pacific region also stands out as a stable democracy with an independent and supportive judiciary. 

  • Industry sectors the use of arbitration, although historically concentrated in the construction, infrastructure, mining and resources sectors, is diversifying into other sectors. 

  • Efficiency in arbitration – respondents to the survey reported that the efficiency advantages and flexibility generally associated with arbitration were often unrealised due to the use of rigid, formal procedures (like the procedures used in domestic litigation). 

  • Satisfaction with the arbitration process – over 80% of the respondents to the Report indicated that they were satisfied with the arbitration process.

  • Strengths of the arbitration process – respondents highlighted the perceived strengths of resolving disputes via arbitration as primarily being enforceability, confidentiality, and flexibility. 

  • Arbitrator gender –where respondents to the survey indicated the gender of the arbitrator(s) appointed, less than 10% of those appointed were women.

  • Rules of arbitration – the most popular arbitration rules adopted by the Respondents in their disputes were the SIAC Rules, the ICC Rules, the ACICA Rules and the UNCITRAL Rules. 

  • Arbitration seat – the most popular seat of arbitration chosen by the parties in the arbitrations Respondents referred to was Singapore, followed distantly by Hong Kong and London. 

Conclusion and implications

Considering its relative isolation and small population, there remains a significant volume of activity within the arbitration space in Australia, particularly within the construction and energy sectors. 

As the Australian economy continues its recovery from the COVID-19 pandemic an opportunity exists to build on this arbitration activity domestically, as well as to enlarge Australia’s share of regional international arbitrations; the adoption of more efficient processes and greater reliance on technology (as is encouraged by the 2021 ACICA Rules and leading institutional rules used throughout the APAC region) will encourage growth in the arbitration space in Australia.    

There is no doubt that other more established international arbitration seats, such as Singapore, will remain the preferred option for many parties (particularly those located elsewhere in the  APAC region). Indeed, in 2020 alone the Singapore International Arbitration Centre reported 1080 new arbitration cases filed at SIAC alone – a five-fold increase over a ten-year period. However, in the new “virtual world” of online hearings, Australia’s geographic isolation is no longer the hindrance that it has historically been perceived to be and Australia’s independent judiciary and pro-arbitration legal environment offer opportunities to significantly enhance Australia’s share of regional arbitration activity.