Beyond the Need for Neutrality: An Approach to Ameliorating the Arbitral Process via Regional Hubs

It is customary for a seat of an international arbitration proceeding to be chosen keeping in mind the “neutrality principle.” This entails the selection of a neutral forum, to which usually all parties have no connection. However, a recent shift in the landscape of the global economy has created scintillating commercial opportunities for some, more than others. All in all, changes such as these have rendered the neutrality principle obsolete for many, with disputing parties now favouring factors such as expert resolution of disputes and expeditious relief when choosing a jurisdiction. In a paper prepared for the Law Institute of Victoria PD Intensive, the Hon. Justice Clyde Croft of the Supreme Court of Victoria (Australia) recognised this shift in preferences, and resultantly, suggested the future of arbitration to lie in the creation of regional arbitration hubs.[1]

The following paper aims to scrutinise this claim by answering two rudimentary questions. First, given the outcome of cases such as that of the ‘Sauber Case’,[2] can arbitration hubs truly be the future of improvements in the arbitral process? Second, what alternatives within the ambit of the existing arbitral regime can be utilised to achieve the same benefits without establishing a formalised hub?

Coming to the first question posed at the onset of this paper, the Sauber Case evidences a capacity for hubs such as Australia to handle urgent, high profile arbitration matters keeping in mind the evolving needs of disputing parties. Firstly, with regards to being a paradigm example, the Sauber Case showcases the presence of not just an arbitration-friendly environment, but a concrete infrastructure in place to manage disputes expeditiously. The arbitration-friendly environment is directly created via the promulgation of specialist arbitration lists in Victoria and New South Wales. Similarly, the creation of the Supreme Court (Chapter II Arbitration Amendment) Rules 2014 (“the Arbitration Rules”) and Practice Note, have led to expeditious outcomes, with the Sauber Case being the best example. The expeditious nature with which the Sauber Case was resolved is best summed up in the comments of James Peter QC in open court, who drew attention to the fact that the Sauber Case was an anomaly in legal history, insofar as very few cases have been started, appealed and then had contempt proceedings resolved within eight days.[3] Alongside the Sauber Case, the success of the arbitration rules is also highlighted in the ASADA Case,[4] which saw its legal intricacies effectively resolved in 14 days. This ASADA case not only highlights the manner in which case management is ameliorated via the establishment of specialised lists and rules of court, such as those discussed above, but also alludes the capacity of the Australian judiciary to support arbitration in a commercially meaningful way as a regional arbitration hub. It is also useful to note that, as emphasised in the Sauber Case, the Supreme Court’s Arbitration List is available at all times and at all hours, seven days a week, setting in stone an already well established foundation for arbitration in Australia.[5]

Beyond the Sauber Case, the desirability of an arbitration hub within Australia can also stem from what Croft refers to as a “comprehensive legislative framework”[6] governing the state. In this regard, the TCL Air Conditioner case[7] is of most significance. Stipulated within the judgment of this case was the constitutional validity of the International Arbitration Act 1974, potentially quashing any concerns of harmonisation in the future. The unanimous, strong, and pro-arbitration approach within cases, such as TCL and Flint International,[8] highlight Australia’s compatibility with international standards and norms for the enforcement of arbitral awards.

Lastly, there are other advantages to the utilisation of Australia as a regional arbitration hub. For example, the high standard of quality prevalent within the Australian legal system make it ideal to be used as a tool of harmonisation of the international arbitration regime.[9] This can be evidenced by the fact that, when it comes to legal expertise, most Australians are considered as to be at the forefront. Even in the Sauber Case, an Australian (Simon Greenberg) was involved as the Emergency Arbitrator in the arbitral proceedings. Similarly, the Australian legal system has also merited acclaim for its strong comprehension of the rule of law. This is most apparent in the case of Lahoud v The Democratic Republic of Congo [2017] FCA 982, where the Federal Court of Australia recognised and enforced two decisions of the International Centre for Settlement of Investment Disputes (ICSID).[10] For all these reasons, the establishment of arbitral hubs not only within Australia but also other regions could be the future of international arbitration. However, before such a concrete assessment is made, we must first discuss the alternatives to realising expeditious outcomes in arbitration.

This directly brings us to the second question posed at the onset of this paper. To begin with, it must be noted that the jurisdiction being utilised is not always to blame for the non-expeditious dealing of a proceeding. Many a time, parties spend enormous amounts of time and money trying to argue whether their dispute merits an arbitral proceeding. Instances like these showcase an active need for individualistic introspection, one that must be immediately catered to.[11] Therefore, the first strategy should be aimed at increasing the number of arbitral institutions creating special rules for fast-track arbitration. Moreover, where possible, fast-track arbitration can also be promoted to take place within the mandate of institutions which have only rudimentary provisions in this regard. An example of this could be Article 32 of the ICC Rules, which generally provide for expedited procedures only.[12] Similarly, another approach could be via making participation in preliminary hearings (as highlighted in the Van Dyke v Lone Star case) mandatory for all parties across all jurisdictions. This could be done in many ways, including but not restricted to an amendment in existing legal instruments governing the realm of arbitral processes.[13] These strategies can formulate useful alternatives to regional hubs; however, these are likely to only influence micro-elements of an already expansive arbitration process.

Therefore, in conclusion, some weight can be given to the claims made by Hon. Justice Clyde Croft of the Supreme Court of Victoria. The landmark case of Sauber highlights the propensity for regional hubs to be highly effective considering the evolving needs of parties. However, before such an ambitious change is realised on global scale, the establishment of a hub for the Asia-Pacific region can serve as an effective litmus test for the future.

References

  1. Clyde Croft, Promoting Australia as Leader in International Arbitration, <https://www.supremecourt.vic.gov.au/sites/default/files/assets/2017/09/c5/a6340d0cf/promoting%2Baustralia%2Bas%2Bleader%2Bin%2Binternational%2Barbitration.pdf> Accessed 22nd April 2020.
  2. Giedo van der Garde BV v Sauber Motorsport AG [2015] VSC 80; Sauber Motorsport AG v Giedo van der Garde BV [2015] VSCA 37 (collectively “the Sauber Case”).
  3. Transcript of Proceedings, Giedo van der Garde BV v Sauber Motorsport AG [2015] VSC 80 (Supreme Court of Victoria, S CI 2015 00978, Croft J, 14 March 2015) page 64, line 2–9.
  4. Chief Executive Officer of the Australian Sports Anti-Doping Authority and Australian Football League v 34 Players and One Support Person [2014] VSC 635 (“the ASADA Case”).
  5. Catherine Amirfar and Julien Fouret, The Current State and Future of International Arbitration: Regional Perspectives, <https://www.ibanet.org/Document/Default.aspx?DocumentUid=2102CA46-3D4A-48E5-AA20-3F784BE214CA> Accessed 22nd April 2020.
  6. (n-1).
  7. TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia [2013] HCA 5 (“TCL”).
  8. Flint Ink NZ Limited v Huhtamaki Australia Pty Ltd and Lion-Dairy & Drinks Pty Ltd [2014] VSCA 166.
  9. (n-1).
  10. Jonathan Mackojc, Moving Beyond Rhetoric: Positioning Australia as an Upcoming Regional Arbitration Hub, <http://arbitrationblog.kluwerarbitration.com/2017/10/29/moving-beyond-rhetoric-positioning-australia-upcoming-regional-arbitration-hub/?doing_wp_cron=1586898166.9327270984649658203125> Accessed 22nd April 2020.
  11. Tyrone Holt, Whither Arbitration? What Can Be Done to Improve Arbitration and Keep Out Litigation’s Ill Effects, <https:// via.library.depaul.edu/cgi/viewcontent.cgi?article=1120&context=bclj> Accessed 24th April 2020.
  12. Irene Welser and Christian Klausegger, Fast Track Arbitration: Just fast or something different?, <https://www.cerhahempel.com/ fileadmin/docs/publications/Welser/Beitrag_Welser_2009.pdf> Accessed 23rd April 2020.
  13. Charles N. Brower, Michael Pulos and Charles B. Rosenberg, ‘So Is There Anything Really Wrong With International Arbitration As We Know It?’ <https://www.international-arbitration-attorney.com/wp-content/uploads/arbitrationCharles_Brower_So_Is_There_Anything_Really_Wrong_with_International_Arbitration_A.pdf> Accessed 22nd April 2020.

Author:

Hammad Ali Kalhoro

The author is a law graduate from LUMS.