On 5 February 2015, Herbert Smith Freehills’ Perth office hosted a seminar that examined the potential for Perth to build on its reputation as a key player in the mining sector and become a hub for international energy and resources arbitration.
The seminar focused on the increasing prevalence of energy and resources disputes in Western Australia, the growing interest among the Australian business community in arbitration (in particular, international arbitration) as a method of dispute resolution and what needs to be achieved for Perth to compete with popular and well established international arbitration hubs like Singapore.
Chaired by Alastair Henderson (Herbert Smith Freehills, Managing Partner, South East Asia), the panel comprised His Honour the Chief Justice Wayne Martin AC QC of the Supreme Court of Western Australia, Rashda Rana SC (Barrister and Arbitrator, Singapore) and Elizabeth Macknay (Herbert Smith Freehills, Partner, Perth). Please see below for a summary of the key themes emanating from the seminar.
The success of other regional centres in the Asia Pacific
In his opening remarks, Alastair Henderson highlighted the emerging Australian interest in international arbitration and asked the panel what factors have contributed to the success of international arbitration in places such as Singapore.
Rashda Rana SC, a Singapore based barrister and arbitrator who has been appointed as arbitrator in a number of domestic and international arbitrations around the world, considered the factors that had made Singapore a particularly popular seat for international arbitrations in the region.
In Ms Rana’s view, Singapore’s status as an economic hub in South East Asia and the Singapore government’s proactive promotion of Singapore as a venue for international arbitration have been key to its success. Ms Rana explained that the Singapore government has provided funding and support for, among other initiatives, the recently launched Singapore International Mediation Centre and Singapore International Commercial Court and that support of this kind from government for ADR is critical. Other important factors are the ability for foreign lawyers to practice international arbitration in Singapore and the awareness and support amongst Singapore’s judiciary for the arbitral process.
Elizabeth Macknay added that, in her view, the proven pro-arbitration stance of the Singapore judiciary, and the presence of well-established arbitral institutions and prominent highly qualified arbitrators have all contributed to its appeal as an arbitral seat.
The role of the courts in attracting arbitration work
The panel then considered the crucial role that courts play in the success of international arbitration around the world and what the Western Australian courts can do to attract more arbitration work into Australia.
His Honour the Chief Justice, Wayne Martin AC QC, made the point that, while Australia’s role as a source of energy and minerals into international markets is well known, perhaps less well known and of great significance is the fact that companies based in Western Australia are significantly involved in the development of mining and energy projects all around the world with significant projects on every continent other than Antarctica.
His Honour observed that the previously fractured nature of Australian law on domestic and international arbitration has now been remedied with the adoption of almost uniform national laws that have brought the procedures applicable for resolution of arbitral disputes in line with the process under the International Arbitration Act 1974 (Cth) and international best practice. This harmonisation at the legislative level will almost certainly lead to the development of consistent and coherent jurisprudence in the various Australian jurisdictions relating to the supervision of arbitration and the enforcement of arbitral awards.
His Honour noted that despite some aberrant decisions in certain Australian jurisdictions in the past, the dominant and consistent trend in recent Australian decisions has been to take a robust approach to enforcement of arbitration agreements and a light touch approach to supervision of arbitral disputes. This is evident from such recent decisions as the Full Federal Court decision in TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd [2014] FCAFC 83 as well as the increasing tendency for Australian courts to stay litigation brought in breach of an arbitration agreement and the ordering of indemnity costs against parties attempting to litigate in breach of those agreements.
His Honour stated that a key to the development of consistency in Australian decisions on these issues was the creation of specialised arbitration lists in the courts as has been developed in Victoria, New South Wales and recently in the Western Australian Supreme Court with the creation of the ad hoc Commercial Arbitration List.
In Ms Rana’s view, one important aspect of judicial decision making was that the Australian courts continue to take a narrow view of the availability of the 'public policy' ground for refusing enforcement of arbitral awards.
Whether the status of Western Australia and Queensland as energy and resources centres is likely to be replicated in the resolution of disputes in those areas
Elizabeth Macknay explained that some of the difficulties that Western Australia faces in advancing as a centre for international arbitration are,
- the tough competition it faces from well-established arbitral seats that are on its front door, particularly Singapore,
- prior to the recent establishment of the Perth Centre for Energy and Resource Arbitration, there was no established institution promoting Western Australia as an arbitral seat,
- despite the judiciary’s support for arbitration, some of the aberrant decisions from 10 or 20 years ago remain in the memories of those who are drafting the arbitration clauses and choosing where any arbitration ought be seated, and
- the lack of focussed government support.
Ms Macknay observed that there is nevertheless real potential for Australia, and WA in particular, to develop itself as an arbitral hub as the state has a neutral, independent judiciary that is supportive of arbitration in a country that is both safe and politically stable. Furthermore, Ms Macknay stated that, particularly for energy and resources disputes, WA has many well respected and highly skilled lawyers and other industry professionals such as accountants, geologists and engineers who are experts in the industry. Users of arbitration are comforted by this.
His Honour the Chief Justice highlighted Perth’s geographic proximity to major Asian business centres and the fact that energy and resources work and dispute resolution is what Perth does as key advantages of basing energy and resources arbitrations in Perth.
For further information, please contact Elizabeth Macknay, Partner, Scott Ivey, Solicitor, or your usual Herbert Smith Freehills contact.
Disclaimer
Herbert Smith Freehills LLP has a Formal Law Alliance (FLA) with Singapore law firm Prolegis LLC, which provides clients with access to Singapore law advice from Prolegis. The FLA in the name of Herbert Smith Freehills Prolegis allows the two firms to deliver a complementary and seamless legal service.