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Transcript of Arbitration
Jurisdiction and conferral of public authority on non-judicial bodies.
Access to judicial review and judicial standard of adjudication.
Impact of confidentiality on the development of the law through precedent and requirements of open court.
Flexibility and enforceability
Arbitration has the combined benefits of enforceability, neutrality, speed and expertise. But they must be conducted with some intervention by the judicial organ of states to ensure that the process is conducted fairly in conformity with reasonable expectations of justice.
Forms of Arbitration
Courts have an important role to play in systematising and explain legal principles. Arbitrations do not offer that perspective because they are conducted in confidentiality. There is no principle of stare decisis in arbitration.
The scope of the judicial review of arbitration awards necessarily determines the utility of the arbitration process. Resolving disputes by invoking provisions of the CAA means trading strict adherence to justice and generous rights of appeal, with advantages of speed and cost.
is an adversarial process where the arbitrator (a nuetral 3rd party) considers evidence presented by the parties and makes a binding decision (award). Arbitration is guided by the CPA (compulsory arbitration) and the Commercial Arbitration Act 2010 (NSW) (arbitration by agreement). Arbitration under the CPA and UPCPR is flexible but involves certain requirements such that it operates differently from other kinds of arbitration (e.g. under the CAA NSW)
The Courts and arbitration have a symbiotic relationship in resolving
commercial disputes. Ordinarily, as reinforced by the Federal, State and Territory
Arbitration Acts, the Courts can be expected to hold parties to their bargains to arbitrate their disputes. That role is an incident of the judicial function of enforcing rights and obligations according to law. Australia has an opportunity to broaden its international reputation as a seat for arbitration. At the same time, the Courts can also be a source of certainty and guidance for arbitrators on the construction of standard form agreements used in trade and commerce. Finally, the Courts have their own, distinct, powers to refer matters before them to arbitration.
The proposition from Oil Basins is that the requirement for reasons in arbitration is a statutory importation of the same standard as applies to judges in Australian courts: “judicial standard”. But what is required to satisfy the provision will depend upon the nature of the dispute and the particular circumstances of the case.
The complexity of arbitration is relevant when considering the requirement in s29(1)(c).
Number of arbitrators - 1 arbitrator unless otherwise agreed by the parties: s 10
Appointment of arbitrators - as agreed by the parties, or if 3 arbitrators and 2 parties then 1 arbitrator by each party, with the 3rd chosen by the arbitrators themselves, or with court assistance: s 11
Procedure for challenging appointment of arbitrator - provided in ss 12, 13
The arbitral tribunal's jurisdiction: s 16
Place of arbitration - as agreed by the parties or as determined by the arbitral tribunal: s 20.
Language to be used - as agreed by the parties or as determined by the arbitral tribunal: s 22.
Costs of arbitration - unless otherwise agreed by the parties, the costs of the arbitration may be determined by the arbitral tribunal, who may also cap the costs to a certain amount from the beginning: s 33B.
Parties to do all things necessary for the proper and expeditious conduct of arbitral proceedings: s 24B.
Power to deal with delay or failures to comply: s 25.
Power to issue subpenas: s 27A.
Compulsory arbitration is provided for in Part 5 of the CPA:
The arbitrator is conferred with the same jurisdiction of the referring court: s 37.
The arbitrator issues a written and signed determination: s 39.
A dissatisfied party may apply for a re-hearing before a judge: s 42. See ss 42-47 for the procedure involved.
A determination which is not disputed is final and is treated as a judgment issued by the referring court: s 40.
The court may make a costs order regarding the arbitration and any rehearings: s 46.
In order for parties to refer matters to arbitration, they must follow the procedure and rules set in the CCA. First, there must be an arbitration agreement. An arbitration agreement is defined in s 7 of the act, the essential subsections being:
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.
An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
The arbitration agreement must be in writing.
Arbitration by agreement
other procedural rules from CCA include:
Per Justice Harper, VSC:
per Justice Rares of FCA:
JURISDICTION: Larkden v Lloyd Energy Systems  NSWSC 268
Larkden holds patents for a number of inventions in the renewable energy field. Lloyd is engaged in R&D; in particular the construction of a solar thermal power station in Western Australia.
Larkden (Licensor) and Lloyd (Licensee) entered into a Licensing Agreement. Clause 3.1(a) of the agreement grants Lloyd a licence to “use, commercialise, adapt, exploit, modify and improve any and all aspects of the Technologies for the purpose of developing the Activities and exploiting the Project Objectives. The agreement defines the relevant patents, sets out license fee schedule and defines the technologies in terms of corresponding rights registered or recognised.
Clause 7.1 of the agreement sets out that the licensor and the licensee shall inform the other immediately upon learning of any infringement of or any other matters adversely affecting the rights of the other in respect of the technologies or their respective businesses.
Clause 19 of the Agreements sets out that:
a) The licence shall be deemed to be a contract governed by the laws of New South Wales
b) All disputes in connection with the Licence, which are not adjusted by Licensing Agreement between the parties, shall be finally settled by arbitration in accordance with the Commercial Arbitration Act of NSW.
A dispute arose when two new patent applications were made. Lloyd had a commercial interest in both patents; Larkden claimed an interest in the patents contending that they were improvements or modifications to the Technologies (governed by the Licensing Agreement).
The arbitrator ruled that he had jurisdiction; Larkden requested that the Supreme Court of NSW decide the matter of jurisdiction contending that the power to grant new patents can only be exercised by the Commissioner of Patents or the Federal Court.
Lloyd submitted that an arbitrator need only determine the parties’ obligations in relation to the licensing and use of the technologies in respect of certain agreed intellectual property rights. Lloyd submitted they were not seeking a binding determination as to the presence or absence of any rights in relation to the patent applications.
Applicable Legal Rules from Larkden v Lloyd Energy Systems
Generally, any dispute or claim which can be the subject of an enforceable award is capable of settlement through arbitration. There are exceptions for disputes in the exclusive domain of a national court or other tribunal.
These may arise because there is a sufficient element of public interest in the subject manner to render inappropriate the private resolution of dispute. The types of remedies that an arbitrator can award are limited by considerations of public policy (which are reflected in legislature) because he is appointed by the parties and not by the state. The arbitrator cannot make a declaration, which binds third parties or the public at large.
Such matters would include:
- Criminal prosecutions
- Determination of status e.g. bankruptcy, divorce, insolvency, and certain types of dispute concerning intellectual property such as whether a patent should be granted.
Patents and trademarks are monopoly rights that only the state may grant. This power is conferred exclusively by the Patents Act on the Commissioner of Patents of the Federal Court upon appeal. Statutory powers may not be conferred on an arbitrator by private arrangement.
There is no impediment to the parties using arbitration to resolve a dispute in relation to their rights in and entitlements to a patent application. In this case, the arbitrator is not called to do anything more than to resolve a dispute between the parties as to their respective rights and obligations under their Licensing Agreement.
GIVING REAONS: Westport Insurance v Gordian Runoff Ltd  HCA 37
Gordian underwrote a 7-years director’s and officers liability runoff policy for FAI Insurance. Following a dispute, a panel of three arbitrators delivered a 3-paragraph written award in favour of Gordion accompanied by a 96-paragraph statement of reasons.
Westport appealed the award on the grounds that the arbitrators’ reasons were inadequate, contrary to s 29(1)(c) now 31(3) of the CCA: “the award must state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given…”
The outcome of arbitration turned upon a complex construction of s18B of the Insurance Act 1902 (NSW). Pleadings extended to more than 60 pages, arbitration took over a week, and the evidence and submission were extensive; the case ran like a judicial hearing in a superior court.
An award determined in arbitration is final and binding on the parties to the agreement. The award may order such remedies with such enforceability as would be available to the Supreme Court (e.g. an order specific performance).
The Supreme Court is empowered to remove an arbitrator who has misconducted the proceedings or who is incompetent or unsuitable to deal with the dispute: s44.
These statutory provisions of the CCA indicate that making an award in arbitration is more than the performance of private contractual arrangements.
The requirement that arbitrator’s give reasons is an important provision to support that the statutory regime involves the exercise of public authority by enlistment of the jurisdiction of the Supreme Court.
The requirements for reasons also reflects legislative concern that the jurisdiction of courts to develop commercial law not be restricted by the insulation of private commercial arbitration.
The determination of an award “lacks the distinctive hallmarks of the exercise of judicial power.”
It lacks public confidence in its exercise of power, and the rationality of its outcomes and it lacks the appellate structure of the case law system. HOWEVER arbitration is not merely a private matter of contract, in which the parties have given up their rights to engage judicial power, and wholly divorced for the exercise of public authority.