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Amendments to the International Arbitration Act 1974 (Aust)

The Civil Law and Justice (Omnibus Amendments) Act 2015 (Cth) (the Act) came into force on 13 October 2015, which gave rise to a series of changes in various Legislation, including some significant amendments to the International Arbitration Act 1974 (Cth) (IAA).

The changes primarily relate to the enforcement of foreign arbitral awards and the confidentiality of arbitral proceedings.

It has been widely accepted that the changes are a significant step forward in improving the appeal of Australia as a viable seat for international arbitration.

In recent times, Australia has struggled to remain competitive as an attractive seat of arbitration by comparison to other highly popular arbitration locations in the Asia-Pacific region, including Singapore, Hong Kong and, more recently, China.

Part of this difficulty has been the deficiencies of the IAA by comparison to arbitration legislation in other jurisdictions.  Some of these deficiencies have now been addressed by the passing of the Act

The amendments have the effect of bringing the IAA more closely into line with the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), as well as the UNCITRAL Model Law and other international arbitration conventions.

The most significant changes are summarised below as follows:

Confidentiality

Under the new amendments, a default position has been created, whereby arbitration agreements entered into, after 13 October 2015, will be confidential unless the parties to the arbitration agreement have expressly opted out of the existing confidentiality provisions as set out at sections 23C to 23G of the IAA.

This brings the IAA into line with Australian domestic arbitration legislation, which already includes default provisions for confidentiality (with an opt-out provision available to parties if required).

The implementation of this particular provision, will also result in the effective reversal of the High Court of Australia decision in ESSO Australia Resources Limited and Plowman (1995) 183 CLR10, which held that there was no implied term of confidentiality in an arbitration agreement.

There is an exception in the amendment, which allows reasonable disclosure of an arbitration agreement to enable a party to protect its legal rights, or to enforce an arbitral award.

The effect of these changes is significant in that confidentiality remains a key area of concern for parties to arbitrations in the Asia Pacific region.

Enforcement of Foreign Arbitral Awards

Prior to the amendments, pursuant to section 8(4) of the IAA, a foreign arbitral award could only be enforced in Australia if the award was made in a state that was also a party to the New York Convention.

Most countries are already party to the New York Convention, however, there are approximately 40 states that are still not party to the convention, including a large number of nations which are geographically and financially relevant to Australian corporations, such as Papua New Guinea and Taiwan.

With the repeal of section 8(4) of the IAA, there is a greater level of security for Australian companies who regularly undertake business in these countries.

Conclusion

The changes to the IAA are a step forward in improving Australia’s profile in the international arbitration community. It is hoped that changes such as these legislative amendments will result in a rise in the number of international arbitrations seated in Australia.

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