Pro-Arbitration Policy in the Australian Courts — the End of Eisenwerk?

DOI10.22145/flr.41.2.4
Publication Date01 June 2013
Date01 June 2013
AuthorBenjamin Hayward
SubjectArticle
PRO-ARBITRATION POLICY IN THE AUSTRALIAN
COURTS THE END OF EISENWERK?
Benjamin Hayward*
ABSTRACT
International arbitration is an important area of federal jurisdiction and federal
legislative competence, and has attracted significant policy attention in Australia. This
paper undertakes a study of pro-arbitration judicial policy in recent arbitration-related
Australian case law which touches upon the continuing applicability of the
controversial 1999 Eisenwerk decision of the Queensland Court of Appeal. Against this
pro-arbitration judicial policy context, this paper reviews five Eisenwe rk-related cases
handed down between 2 010 and 2012. It concludes that despite pro-arbitration judicial
policy being e mbedded as a requirement of reasoning in decisi ons under th e
International Arbitration Act 1974 (Cth), there is mixed evidence of such policy in the
cases surveyed. This paper concludes that the extent to which this policy is evide nced
largely corresp onds with the degree to which contemporary decisions have departed
from Eisenwerk.
I INTRODUCTION
There have been periods of lesser and periods of greater judicial and legislative support
for the arbitral process.
1
International commercial arbitra tion is (subject to one's definition)
2
a form of
alternative dispute resolution. It is not, however, completely insulated from domestic
_____________________________________________________________________________________
* Benjamin Hayward is a Lecturer in the School of Law at Deakin University and is the
Coach of Dea kin University's Willem C Vis International Commercial Arbitration Moot
and Vis (East) Moot teams. This article is an adaptation of a paper presented at the ANU
College of Law National Graduate Law Conference, Canberra, 1819 October 2012. The
author would like to thank Dr Sonia Allan, Dr Dominique Allen, Dr Jason Taliadoros and
Patricia Perlen for their comments on an earlier iteration of this paper. Any errors remain
the author's own.
1
Gary Born, International Commercial Arbitration (Kluwer, 2009) 64.
2
Alternative dispute resolution sometimes refers to non-adj udicatory forms of dispute
resolution, which excludes arbitration from its scope see, eg, Tania Sourdin, Alternative
Dispute Resolution (Thomson Reuters, 4th ed, 2 012) 23 [1.10]. On the other hand, it has been
remarked that 'arbitration is the usual method for the resolution of international
commercial disputes' Michael Pryles, 'The Case for International Arbitration' [2003]
Yearbook of the Australian Mining and Petroleum Law Association 1, 4 (emphasis added).
300 Federal Law Review Volume 41
____________________________________________________________________________________
judicial systems. A complex relationship exists between State courts and international
commercial arbitration.
3
This paper undertakes a study of pro-arbitration judicial
policy in recent arbitration-related Australian case law which touches on the
continuing applicability of Australian Granites Ltd v Eisenwerk Hensel Bayreuth Dipl-Ing
Burkhardt GmbH
4
('Eisenwerk'). The Queensland Court of Appeal’s intervention into the
arbitral process in Eisenwerk is one example of the inte rface between arbitration and the
courts.
Consideration of this issue is timely. Arbitra tion is commonly observed to be the
'principal',
5
'preferred'
6
or 'normal'
7
means of settling international commercial
disputes. Empirical research conducted through the School of International Arbitration
at Queen Mary, University of London supports these assertions. Its 2006 and 2008
studies both reported higher preferences for international arbitration compared to
transnational litigation,
8
though the relatively narrower ga p disclosed in the 2008
study has been noted in the literature.
9
Further, its 2010 study found that of the 68 per
cent of respondent corporations having dispute r esolution policies, 81 per cent
involved 'a position to adopt arbitration rather than state court litigation'
10
and for 10
per cent the use of arbitration fell in the '[m]ust comply at all times' category.
11
In t he
specific sale of goods context, the Global Sales Law Survey similarly concluded that
international trade disputes are 'primarily a matter for arbitral tribunals '.
12
_____________________________________________________________________________________
3
Cf Westport Insurance Corporation v Gordian Runoff Ltd (2011) 244 CLR 239, 261 2 [19][20]
(French CJ, Gummow, Crennan and Bell JJ) in the domestic arbitration context.
4
[2001] 1 Qd R 461.
5
Nigel Blacka by et al, Redfern and Hunter on International Arbitration (Oxford University
Press, 5th ed, 2009) 1 [1.01], 31 [1.88].
6
Julian Lew, Loukas Mistelis and Stefan Kröll, Comparative International Commercial
Arbitration (Kluwer, 2003) 5 [1.15].
7
Emmanuel Gaillard and John Savage (eds), Fouchard, Gaillard, Goldman on International
Commercial Arbitration (Kluwer, 1999) 1.
8
In the 2006 study, 73% of corporate respondents indicated a preference for international
arbitration School of International Arbitration, In ternational Arbitration: Corporate
Attitudes and Practices 2006 (2006) 5 [1.2] <http://www.arbitrationonline
.org/docs/IAstudy_2006.pdf>. In the 2008 study, 44% of respondents indicated that
arbitration was their most-used dispute resolution method as opposed to 41% most
commonly using transnational litigation School of International Arbitration, International
Arbitration: Corporate Attitudes and Practices 2008 (2008) 5 [1]
<http://www.arbitrationonline.org/docs/IAstudy_2008.pdf>.
9
Lawrence Newman, 'Agreements to Arbitrate and the Predictability of Procedures' (2009)
113 Penn State Law Review 1323, 1323.
10
School of International Arbitration, 2010 International Arbitration Survey : Choices in
International Arbitration (2010) 5 [1] <http://www.arbitrationonline.org/
docs/2010_InternationalArbitrationSurveyReport.pdf>.
11
Ibid 6 [1].
12
Ingeborg Schwenzer and Christopher Kee, 'International Sales Law The Actual Practice'
(2011) 29 Penn State International Law Review 425, 437.
2013 Pro-Arbitration Policy in Australian Courts The end of Eisenwerk? 301
____________________________________________________________________________________
The federal government recognises that international commercial arbitration
represents a 'market'.
13
Mistelis suggests that attracting 'arbitration cases and
arbitration work' to a jurisdiction 'is good for local lawyers [and] good for the local
economies'.
14
International arbitration has been described as 'the new black' in
Australia
15
and as one commentator observed, 'it is incontrovertible that international
arbitration is an area of federal jurisdiction which is significant for Australia's national
interest'.
16
In his foreword to The International Arbitration Act 1974: A Commentary,
Justice James Allsop goes so far as to describe that Act as 'one of Australia's most
important pieces of legislation'.
17
When the topic of i nternational commercial arbitration is addressed in the
Australian context, reference is often made to Singapore and Hong Kong both
established international commercial arbitration centres in the Asia-Pacific region.
18
Pro-arbitration judicial p olicy is seen as a key aspect of Australia rising to the ra nks of
these neighbours. As noted by Megens and Cubitt:
For Australia to truly rival Singapore and Hong Kong as the preferred seat for
international arbitration in the Asia-Pacific region, there must exist a legislative
framework that is tailored to international arbitration and a judicial system that provides
support and consistency rather than interference.
19
This paper analyses the recent line of cases having a bearing on the continued
applicability of Eis enwerk. I n so doing, it reflects on those cases through the prism of
pro-arbitration judicial policy and considers the exte nt to which manifestation of that
policy has brought the Eisenwerk principle to its end.
II THE 'WHO, WHY, WHAT, WHERE AND HOW' OF PRO-
ARBITRATION POLICY IN THE AUSTRALIAN COURTS
What, then, is meant by pro-arbitration judicial policy? And why is it important? In
this Part, pro-arbitration judicial policy is explained as a concept sourced to the federal
_____________________________________________________________________________________
13
Robert McClelland, 'International Commercial Arbitration in Australia: More Effective and
Certain' (Speech delivered at the International Commercial Arbitration: Efficient, Effective,
Economical? conference, Melbourne, 4 December 2009).
14
Loukas A Mistelis, 'Arbitral Seats Choices and Competition' in Stefan Kröll et al (eds),
International Arbitration and International Commercial Law: Synergy, Convergence and Evolution
(Kluwer, 2011) 363, 379.
15
Richard Garnett and Luke Nottage, 'The 2010 Amendments to the International Arbitration
Act: A New Dawn for Australia?' (2011) 7 Asian International Arbitration Journal 29, 31.
16
Albert Monichino, 'International Arbitration in Australia: The Need to Centralise Judicial
Power' (2012) 86 Australian Law Journal 118, 131.
17
Justice James Allsop, 'Foreword' in Malcolm Holmes and Chester Brown, The International
Arbitration Act 1974: A Commentary (LexisNexis Butterworths, 2011) vii.
18
See, eg, Albert Monichino, 'International Arbitration in Australia 2010 / 2011 in Review'
(2011) 22 Australasian Dispute Resolution Journal 215, 215. For examples of such references in
the mainstream press, see Rachel Nickless, 'Rivalries Cost Business', The Australian Financial
Review (Sydney), 21 October 2011, 40; Samantha Bowers, 'Aiming for an A in Arbitration',
The Australian Financial Review (Sydney), 12 August 2011, 41.
19
Peter Megens and Beth Cubitt, 'Emerging Trends in Judicial Approach to International
Arbitration in Australia: The Winds of Change' (2011) 77 Arbitration 33, 4 1 (emphasis
added).

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