The RIBBON building in Sydney Annalucia; Shutterstock
Companies are increasingly turning to arbitration as a means of solving disputes in Australia with the total value of claims running into billions of dollars, the first national study on the use of commercial arbitration has claimed.
Arbitration specialists in Australia have welcomed the publication last week of the Australian Arbitration Report 2020 by the The Australian Centre for International Commercial Arbitration (ACICA).
The study found that more than 223 cases valued at around $27bn were heard in the three years from the start of 2016 to the beginning of 2019. Of these 111 were international and 109 were domestic with the nature of three disputes remaining undisclosed.
The ACICA’s president, Herbert Smith Freehills partner Brenda Horrigan, said the report pointed to a “thriving market” while for King & Wood Mallesons arbitration partner Alex Baykitch AM it provided “empirical evidence of what we have thought for some time now - that arbitration is alive and well in Australia”.
Speaking at the unveiling of the report, Amanda Stoker MP, assistant minister to the Attorney General, said: “We are now in a position to build on existing arbitration activity in Australia. We have already laid a strong foundation for Australia to be a reputable seat. The timing is right for us to seize the opportunity to increase that volume of arbitration activity.”
Reflecting Australia’s vibrant infrastructure market, the construction, engineering and infrastructure sector accounted for just short of 50% of all cases, making it the most popular sector for both domestic and international disputes.
Oil and gas accounted for around 20% of all arbitrations but 34% of total value. These disputes were the second-most frequent international disputes while mining and resources was the sector that accounted for the second-highest number of domestic cases.
While more than 80% of the respondents ‘indicated either their satisfaction or their clients’ satisfaction with the arbitration process’, however, respondents felt that efficiency in Australian domestic arbitration was being stifled by judicialisation. Survey respondents overwhelmingly felt that domestic arbitration was run too much like litigation, often driven by practitioners without relevant arbitration expertise.
HFW partner Nick Longley said that although the number of arbitrations in Australia was lower than in Hong Kong or Singapore, the value of the disputes was comparatively high. He pointed out that in 2020 Hong Kong administered 318 arbitrations with a total value of $8.8bn. “Australia is becoming the regional home of high value arbitrations,” he added.
Sydney-based independent arbitrator, Doug Jones AO, added: “The efforts of ACICA and other arbitral institutions to build upon the enthusiasm and expertise of counsel, law firms, and arbitrators has and will continue to pay dividends for the benefit not only of Australia but also for the region.”
Meanwhile, the report found that gender diversity remained an issue: more than 90% of party-nominated arbitrators were male while less than 20% of institutional nominations went to women arbitrators.
By contrast, a report by the International Council of Commercial Arbitrators (ICCA) in 2020 showed that the total number of women arbitrators globally had almost doubled from 12.2% in 2015 to 21.3% in 2019.
ACICA produced the report in conjunction with FTI Consulting, with support from the Australian Bar Association, the Western Australia Arbitration Initiative and Francis Burt Chambers.