13 September 2011
Mr MORRIS (Mornington) — I must say I had no problem detecting the passion in the contribution of the member for Yuroke.
This is a bill to replace the Commercial Arbitration Act 1984. I welcome the introduction of the bill. It is an example of the good work that the Federation can achieve.
I am sure many members have heard me speak before about the need for vigilance in the Council of Australian Governments’ process and the necessity, in my view, to maintain competition between the states, to maintain the capacity of Victoria to determine its own future and to avoid the very real risk of falling into a lowest common denominator approach.
While I have been consistent in those views for many years, I have also consistently supported the need for common ground between jurisdictions wherever and whenever that can be achieved. The bill before the house certainly assists in that aim. It achieves common ground between the jurisdictions and avoids, very effectively, the lowest common denominator approach.
What is proposed will result in a real improvement over the current arbitration regime. I believe there is some doubt as to whether the current regime is providing a real alternative to litigation, whether it is improving the process, whether in reality going down the path of arbitration is cost effective and time effective, and whether in fact it is a more flexible approach currently than the legal alternative.
Certainly concern has been expressed that the current process has become unnecessarily formal, that it is merely an alternate process rather than a more flexible approach and that the way it is operating is an equally restrictive process of litigation which it is supposed to replace.
Under the present regime the courts retain broad powers for intervention and consequently the current arbitration process cannot guarantee certainty in the outcome; in fact it cannot even guarantee finality. It is also important to note in the context of the national economy that the current act retains significant inconsistencies with the commonwealth law and with international law and practice.
It is fair to say that the process to reach this conclusion has been somewhat tortuous, having been first placed on the agenda of the Standing Committee of Attorneys‑General in 2002. So for seven years until 2009, despite some efforts, essentially there has been little progress.
Some two and a half years ago the committee agreed that a new model law would be developed. It would draw on the United Nations Commission on International Trade Law’s model law on commercial arbitration, but that model law would be modified to make it relevant to the Australian domestic scene.
In May last year the committee agreed to proceed with the resulting bill, which has subsequently been modified I believe as recently as July, particularly to make clause 27D(4) consistent with the New South Wales act. Clause 27D provides a power for the arbitrator to act in a non‑arbitral capacity — in other words, as a mediator or conciliator. That is not a provision that has a comparable clause in the model law as it stands in its original form.
The intent of the bill is to ensure access to the process for the settlement of commercial disputes in a manner which is both fair and final — two obvious essentials in the process — and which does not involve undue delays or undue expense, both of which are sometimes and perhaps even frequently encountered under the current alternatives whether that be arbitration or litigation.
The passage and implementation of the bill will put in place opportunities for far greater use of commercial arbitration and will also provide opportunities for the consequent growth of expertise in the field of arbitration both for the business community and for the legal community.
The complementary legislation has been passed in the New South Wales and Tasmanian parliaments, and I understand that there are bills before the West Australian and South Australian parliaments and also before the Legislative Assembly of the Northern Territory. The commonwealth International Arbitration Act 1974 has also been amended to ensure consistency with the model bill.
What are the key changes? What are the reforms that are proposed by this bill?
Firstly, parties will have greater flexibility; they will have flexibility in the way that procedures are structured. Clause 19 of the bill deals with that. Importantly clause 1AC ensures that the paramount object of the act is ‘to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense’. The object is maintained but the process is flexible, so the tribunal has the opportunity to vary procedures if, for example, the established processes add greatly to the time or expense it takes to resolve a particular case. That flexibility remains as long as the intention — the prime point of the bill — remains. In this context the current duty which is imposed on tribunals to act or to not misconduct proceedings can and does provide discretion to the courts to set aside awards that have already been made under arbitration.
In a similar vein the bill restricts the grounds for contesting the appointment of the arbitrator. Clause 12 deals with that in subclauses (3) and (6).
Clauses 34 and 34A deal with appeals, including procedural defects, errors of law and that sort of thing. The bill also imposes an obligation to confidentiality under clause 27G, which is appropriate in a commercial setting. There are some significant exemptions detailed in the bill. Time does not permit me to address those, but that confidentiality approach is entirely reasonable.
The final aspect of the bill I want to cover tonight is in regard to the extent the bill will vary section 85 of the constitution of the state of Victoria, which is the section that deals with the powers and jurisdiction of the Supreme Court.
A number of clauses in this bill will vary section 85, and of course the minister made the necessary statement when he moved the second reading. That was attached to the second‑reading speech. The variations to section 85 will provide that decisions made under the act when it becomes an act which are within the functions and powers of the courts are final and binding and not subject to further judicial review, which is an important part of this process.
I note that the Scrutiny of Acts and Regulations Committee has considered the bill, reviewed the minister’s statement and considers that the proposed provisions are, in the committee’s words, ‘appropriate and desirable in all the circumstances’.
In conclusion, the bill will ensure that our commercial arbitration law will again reflect international best practice, and I commend the bill to the house.
Legislative Assembly 13 September 2011
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