- COVID-19 has disrupted the efficient determination of commercial disputes in New South Wales and throughout Australia. While trials are gradually resuming, the backlog of civil proceedings will not be resolved for some time.
- Now, more than ever, alternative dispute resolution is critical to resolving civil disputes between parties and reducing the pressure on courts in NSW.
- Arbitration is an efficient and effective alternative means of resolving existing and future commercial disputes.
- There are significant advantages in the resolution of commercial disputes by arbitration, including expedition, expertise and economy.
COVID-19 has had a significant impact on the resolution of civil disputes in New South Wales. For several months, hearings of civil cases were suspended in New South Wales courts. While trials are gradually resuming, to the credit of the courts and judges, disruption has been an unavoidable consequence of the pandemic and will continue. This is something which we, as lawyers, must now navigate.
The backlog of civil proceedings will not be resolved for some time, and will probably grow, particularly in courts where criminal proceedings must take priority. For those cases which make it to the front of the queue, hearings will be slower: courts are operating under social distancing regimes and, in some cases, continue to operate in the ‘virtual courtroom’ using audio-visual facilities. Inevitably, longer hearings mean increased costs for the litigants, which is unwelcome news as the Australian economy approaches a recession. Finally, the future of the pandemic is unknown.
Now, more than ever, alternative dispute resolution (‘ADR’) is critical to resolving civil disputes between parties and reducing the pressure on courts in New South Wales. In many cases, the most effective, efficient and economical form of ADR is arbitration.
What is arbitration? A refresher on the basics
Arbitration is a binding form of ADR. It is a procedure whereby a dispute is submitted, by agreement of the parties, to one or more arbitrators whose award determines the dispute. In domestic arbitration it is typical to appoint a single arbitrator. In some larger disputes and under some rules for international arbitration, a tribunal of three arbitrators is sometimes appointed. It is long recognised as an efficient, impartial and enforceable means for resolving commercial disputes.
Most arbitration in New South Wales is governed by the Commercial Arbitration Act 2010 (NSW), the ‘paramount object’ of which is ‘to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense’ (s 1C).
The Act seeks to achieve this by:
- enabling parties to agree on how their dispute will be resolved (subject to statutory safeguards); and
- providing procedures that enable the resolution of disputes in a quick, fair and cost-effective manner.
The Act contains provisions governing arbitration agreements (Part 2), composition of the arbitral tribunal (Part 3), the jurisdiction and conduct of arbitral proceedings (Parts 4 and 5), the making of awards and termination of proceedings (Part 6), recourse against awards (Part 7), and the recognition and enforcement of awards (Part 8).
Scope of arbitration
The Act applies to ‘domestic commercial arbitrations’ (s 1(1)), but its practical scope is broader than that phrase suggests.
To be covered by the NSW Act, the arbitration must be ‘domestic’ (s 1(3)). An arbitration is ‘domestic’ if the parties’ places of business are in Australia. If the arbitration is international, it is governed instead by Part III of the International Arbitration Act 1974 (Cth), which operates in a very similar way: both are based on the UNCITRAL Model Law on International Commercial Arbitration (‘Model Law’).