Arbitration

Contributed by HenryMoser and current to 27 July 2018

Arbitration is generally applied in the Commercial and Family Law area to resolve disputes quickly and inexpensively.

Simply put, in arbitration the parties involved in the dispute together appoint a third party, the Arbitrator, to resolve their dispute and to be bound by the decision made by the Arbitrator. That decision is called an “award”.

There is legislation which supports arbitration: in commercial disputes the Commercial Arbitration Act 2012 applies together with rules of Courts, in Family Law the Family Law Act 1975 (Cth) and the Family Court Act 1997 (WA).

Although each State has its own Commercial Arbitration Act 2012, the provisions of those Acts are uniform.

Therefore the law on arbitration is the same throughout Australia both for commercial and Family Law matters.

Why Arbitrate?

Financial disputes in the commercial and family law fields range from the simple to the very complex. They all have similarities but no two are the same. Often it is impracticable, expensive and uncommercial to go to Court.

In the commercial setting, it may be beneficial to make it part of a contract to agree beforehand how and where a dispute should be resolved.

In such circumstances arbitration may be an appropriate way of resolving the dispute due to:

1. its flexibility: the parties can tailor the extent and the procedure to their individual requirements;
2. its privacy: Arbitration is ordinarily done in private so that there is a reduced risk of what parties may regard as sensitive information being publicly disseminated. Although there are already restrictions on publication of matrimonial matters, proceedings are usually heard in open court. Examples may include commercially sensitive information, medical histories, family violence, tax evasion or social security fraud.
3. the ability for the parties to select their Arbitrator: the parties may be more comfortable being able to choose an Arbitrator rather than having no control over which judicial officer may be assigned to their case;
4. the lower cost: depending on the form of arbitration chosen, the cost of the Arbitrator to the parties in the great majority of cases can be agreed in advance and shared between the parties;
5. the greater speed: the parties can design their own procedure and implement their own timetable which can result in a decision being made as quickly as seven days after receipt of submissions by the Arbitrator but usually within six to eight weeks of the arbitration agreement being signed.

It is implicit in the individuality of each case that for each of the advantage set out above a disadvantage exists. Indeed, some of these factors can be a two-edged sword, and a sharp one to boot!

As far as privacy is concerned, the Arbitrator is not allowed to disclose any information obtained as part of the arbitration process and in Family Law has to make an oath or affirmation to that effect. However, there are some instances where the interest of other persons (such as a child, life and health of a person, imminent threat to property) may override the duty of confidentiality).

Arbitration Agreement

The arbitration procedure has to be underpinned by an agreement between the parties and the Arbitrator. This arbitration agreement sets out and determines:

1. the appointment of the Arbitrator;
2. the issues for determination;
3. the form of the arbitration;
4. a timetable;
5. the procedure;
6. whether or not the rules of evidence will be applied
7. receipt of evidence from sources other than the parties, eg. experts, documents;
8. default procedures and the circumstances in which the arbitration can be terminated;
9. the costs of the arbitration, including payment of disbursements and the responsibility for payment of those costs;
10. any other matter the parties may feel is relevant.

In some instances, it may be more appropriate for the arbitration agreement to deal only with the main points, that is the appointment of the Arbitrator, the issues for determination, the form of the arbitration and the costs. The other issues can then be discussed and agreed (or determined by the Arbitrator) at a Planning Conference which is to precede the arbitration itself.

Forms of Arbitration

The tailoring of the arbitration procedure can extend to matters such as – to mention only a few:

1. Papers only arbitration;
2. Representation of the Parties;
3. Oral evidence or by affidavit only;
4. No, limited or full cross-examination;
5. No, limited or full discovery;
6. No, limited or full pleadings;
7. Opening and closing addresses.

To stay within the perceived advantages of arbitration, most cases will be dealt in a relatively simple manner, that is either on the papers with agreed statements of facts and submissions in writing or involving a hearing of no more than a days’ duration.

The latter will in most cases demand a limitation on the presentation of evidence and submissions.

Procedures in Aid

There are a number of circumstances where the Court can be called upon to assist in the conduct of the arbitration apart from having a general power to make orders which facilitate the arbitration.

The first particular instance is the ability of the Arbitrator to refer a question of law arising in the arbitration to a Judge of the Court for determination

The second arises in circumstances where a party does not comply with a procedural direction or in the view of the Arbitrator does not have the capacity to participate in the arbitration. In the former case the Arbitrator may suspend the arbitration and refer it to the Court and in the latter, the Arbitrator may terminate the arbitration and also refer it to the Court.

The third instance of assistance provided by the Court relates to the ability of a party to apply to the Court for the issue of a subpoena to attend and/or produce documents at the arbitration This subpoena has the same validity and effect as any other subpoena issued by the Court and can be followed up with any necessary enforcement action the Court may consider appropriate to enable the arbitration to proceed.

Recognition and Enforcement of Awards

Once an award has been handed down in the prescribed form it is either recognised to be valid or a party can apply to the Court for the registration of the award.

On registration the award has the same effect as if it were an order of the Court and can be enforced in the same way.

Review and Setting Aside of Awards

Once the award has been made, either party can apply to the Court for the review of the award by a Judge, but only on a question of law. In Commercial matters, leave to appeal is required. The Judge can determine all questions of law and can affirm, reverse or vary the award accordingly.

A party can however also apply to a Judge to have the award set aside if the Judge can be satisfied that:

On an application to set aside the award, the Judge can reverse, affirm or vary it.

Qualifications of Arbitrators

In Family Law matters an award is only binding if made by a person who meets the requirement set out in the Regulations. The person has to:

1. be a legal practitioner;
2. either be an accredited family law specialist or have practised for a period of at least 5 years to at least 25% in family law matters;
3. complete specialist arbitration training;
4. enter his or her name in the list kept by the Law Council of Australia or its nominee, which currently is the Australian Institute of Family Law Arbitrators and Mediators (AIFLAM).