Confidentiality is now “opt-out”
As of 14 October 2015, international arbitrations seated in Australia are confidential unless the parties agree otherwise. The amendments to the confidentiality provisions in the International Arbitration Act 1974 (Cth) (IAA) is one of a series of amendments made to the IAA as described below.[1]
Confidentiality
Through amendments to section 22(2) of the IAA, the confidentiality provisions in sections 23C to 23G of the IAA now apply on an “opt-out”, rather than “opt-in”, basis. This means that the confidentiality provisions automatically apply to an international arbitration seated in Australia, unless the parties choose to opt-out of their application.
These amendments bring the IAA into alignment with the general expectation that arbitration proceedings are confidential unless parties agree otherwise. Confidentiality is generally accepted as one of the most appealing aspects of arbitration proceedings, and this change to the IAA is very welcome.
It is important to note however that this amendment only applies to arbitration agreements concluded on or after 14 October 2015, and any arbitration proceedings arising out of those agreements.
Enforcement of arbitral awards
The type of arbitral awards that may be enforced under the IAA has been broadened by the removal of section 8(4) of the IAA. Section 8(4) prevented the enforcement of arbitration awards made in countries that are not party to the New York Convention, unless the person seeking to enforce the award is domiciled or ordinarily resident in Australia or in a convention country.[2]
The removal of section 8(4) of the IAA means that any arbitral award, regardless of whether or not it is an award to which the New York Convention applies, may be enforced by the Australian courts. This significantly broadens the scope for enforcement of arbitral awards to an award made in any State, not just one of the 156 State parties to the New York Convention. This amendment applies to the enforcement of an arbitral award sought on or after 14 October 2015, regardless of the date of the arbitral award.
Further, section 8(5) of the IAA has been amended so that the party challenging the enforcement of the award can rely on the legal incapacity of any party to the arbitration agreement as a reason to refuse enforcement of the award. In its previous form, the challenge had to be based on legal incapacity of the award debtor.
Application of the IAA
Section 21 of the IAA provides that if the Model Law implemented through the IAA applies to an arbitration, then the relevant State legislation (e.g. Commercial Arbitration Act 2010 (NSW) in NSW and similar legislation in the other States and Territories) does not apply to that arbitration. Section 21 was inserted into the IAA on 6 July 2010. However, section 21 failed to indicate the timing of its application.
Section 21 was amended in August 2015, to clarify that it applies to any arbitration commenced after 6 July 2010, regardless of the date of the arbitration agreement. This change now makes it clear that the model law covers the field in relation to any arbitration proceedings commenced after 6 July 2010, regardless of when the arbitration agreement was concluded.
Finally, section 30 of the IAA, which attempts to identify to which arbitrations the IAA is applicable by reference to the timing of the commencement of the IAA, has been repealed in its entirety. The Federal Court found this section to be redundant and a source of confusion,[3] likely attributable to the fact that the applicability of the IAA was clarified in section 21 of the IAA by the amendments made in August.
Conclusion
These amendments have been much needed since the IAA was revised in 2010. Now parties can be confident when conducting international arbitration in Australia with the support of the IAA as a robust regime underpinning international arbitration in Australia.
[1] The amendments have been made pursuant to the Civil Law and Justice Legislation Amendment Act 2015 (Cth) enacted on 17 August 2015 and the Civil Law and Justice (Omnibus Amendments) Act 2015 (Cth) enacted on 13 October 2015.
[2] A convention country is a country that has ratified the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
[3] Explanatory Memorandum, Civil Law and Justice (Omnibus Amendments) Bill 2015, Item 64.
