Corrs High Vis: Episode 10 – Arbitration and its role in Common Law - Construction & Planning

This week Corrs High Vis considers whether arbitration can assist in the development of Common Law. Partner Andrew Stephenson and Associate Astrid Andersson consider the Australian perspective.

Corrs High Vis tackles the issues that matter in the construction industry. The podcast series, brought to you by Corrs Construction team, offers analysis and insights to help you make smarter decisions.

TEXT VERSION

Alice Haze: Commentator

Andrew Stephenson: Corrs Chambers Westgarth –Partner

Astrid Andersson: Corrs Chambers Westgarth – Associate

ALICE: Hello and welcome to Corrs High Vis. My name is Alice Haze and today we will be discussing how arbitration could assist in the development of the common law. In particular, we will be discussing an article published in the International Construction Law Review in October 2016 entitled "Arbitration, can it assist in the development of the common law, an Australian point of view". Joining me today are the authors of that article – Andrew Stephenson who is a partner at Corrs and Astrid Andersson who is an associate at Corrs. Welcome Andrew and Astrid. There has recently been some amendments to the arbitration legislation in Australia. What are they and what are their implications?

ANDREW: The most significant amendment for present purposes is the abolishment of a general right of appeal which was available pursuant to section 38 of the previous commercial arbitration acts of the States of Australia. The result is that unless the parties agree there will be no right of appeal. Even where the parties do agree, the right of appeal is subject to leave being granted by the court or the relevant court. The new acts also significantly limit the circumstances in which leave will be granted. Most of the arbitration clauses in circulation at the moment do not include a right of appeal for domestic arbitrations. Therefore the general position will be that there is no right of appeal unless the parties subsequently agree which is certainly unlikely after the award. In those circumstances, for obvious reasons, the successful party will be unlikely to agree to an appeal. In an international environment, the right of appeal has not existed for many years. The only remedy associated with an award, both internationally and domestically other than the right of appeal where there is an appeal in the domestic environment, is for jurisdictional error of one type or another. Such relief is very limited and as a result there will be very few decisions of superior courts arising in those industries which extensively use arbitration clauses.

ALICE: Thank you Andrew. Are there problems associated with the prevalence of arbitration within certain industries such as construction.

ASTRID: Yes. One of the unintended side effects of the increase in arbitration in certain industries such as construction is that there is a corresponding reduction in litigation through the courts. This means that there is a decrease in new case law coming through the courts. This in turn affects the development of the common law. This can be a problem in industries such as construction where the law is particularly complex and often in need of development to keep step with new developments in technology and other progress within the field, where the law cannot develop to correspond to that, there's less certainty for the participants in the market to know what to expect when a dispute arises. For that reason, it is important that the law develop. It is particularly pronounced in the construction field because arbitration is so common. In fact it is the default dispute resolution mechanism.

ALICE: Thank you Astrid. In your article you propose a way to mitigate the impact of arbitration on the development of common law. What is your proposal.

ANDREW: The proposal which we recommended was that there be publication of awards in a manner which preserves one of the primary advantages of arbitration, that is confidentiality, but does disclose the arbitrator's name, the facts appropriately sanitised to maintain confidentiality and most importantly the legal reasoning. While these decisions of arbitrators will be of no precedential effect, that will not prevent them from being referred to argument in superior courts or in other arbitrations, in much the same way as other sources are used in courts on a regular basis, for examples, decisions of superior courts in the United States, Canada, Singapore and England. It also has the advantage because the name of the arbitrator is published for parties wishing to appoint an arbitrator to review some of the arbitrator's previous work to ensure that the arbitrator is suitably qualified for appointment as an arbitrator. Unfortunately, the number of people available to be appointed includes people whose skill set is not as high as it might be for a particular arbitration relating to a particular subject matter. More information being available to parties to an arbitration allows a better educated selection process than would otherwise arise. So for these reasons, we have advocated in the article that arbitrators awards be published. Obviously over time, some arbitrators will develop a reputation of being effective thinkers about complex problems and their decisions will develop an independent currency in the same way as academics do through their published works.

ALICE: Thanks to Andrew and Astrid that was really interesting. To our listeners, my name is Alice Haze and thank you very much for listening. We look forward to you joining us for the next edition of Corrs High Vis. Thank you for joining us.

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