the dla piper guide to arbitration in asia

262 Pages·2007·2.03 MB·English

THE DLA PIPER GUIDE
TO ARBITRATION IN ASIA
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Introduction
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Introduction
Asia is a very important region to the global economy. Asia is presently the world’s fastest growing
economic region as liberalization of markets such as China and India leads to increased investment in
infrastructure, manufacturing and professional services across the region.
At the same time, Asia is a culturally diverse region. Asia consists of more than thirty countries, each of
which have developed their own Court system and rules of law which are unique to that country. There
are similarities between the Court systems and rules of law adopted across the region in the same way
that there are many differences which reflect that country’s particular approach to commerce and the
resolution of commercial disputes.
It is against this background of economic importance and cultural diversity that this Guide has been
produced to assist businesses when commercial relationships sour and disputes arise. In particular, this
Guide outlines the arbitration procedures available in fourteen Asian jurisdictions which can be adopted
to resolve commercial disputes. This Guide focuses on arbitration because arbitration has become the
preferred method of resolving international disputes: that is where the parties to that dispute are of
different nationalities or the subject of that dispute is located in a different country.
Arbitration has become the preferred method for resolving international disputes for three reasons. First,
an arbitral award given in one country can be enforced in over 140 other countries provided that both
countries are signatories to the New York Convention of 1958. Second, arbitration avoids either party
having any perceived advantage by litigating the dispute in its national Court. Third, arbitration ensures
the confidentiality of the dispute which goes some way to enabling the parties to maintain a commercial
relationship, at least after the dispute has been resolved.
Arbitration is a consensual procedure in that, although the parties will be bound by the arbitral award
with often limited grounds for appeal, the parties must first agree to resolve their dispute by arbitration.
That agreement may be recorded within the original contract between the parties or by way of a separate
arbitration agreement entered into between the parties after the dispute has arisen. A Guidance Note
providing examples of an arbitration clause that may be included in a commercial contract and an
arbitration agreement that may subsequently be adopted by the parties can be found in the Notes section
of this Guide.
This Guide is intended to provide an overview of the arbitration procedures available in the fourteen
jurisdictions which it covers. As such, it is no substitute for detailed legal advice as to the applicable laws
and procedures which govern the resolution of any particular dispute. Such advice should be sought at
the earliest stage possible in order to determine the most appropriate course to adopt.
DLA Piper would like to thank the arbitration institutions and law firms which contributed their time
so generously in the drafting and compilation of this Guide. The contact details of the contributing
institutions and law firms can be found at the end of each chapter. The contact details of DLA Piper’s six
offices throughout Asia can be found at the end of this Guide. DLA Piper has one of the strongest global
arbitration practices with specialized arbitration lawyers in each of its sixty two offices worldwide and
more than sixty arbitration and dispute resolution lawyers working in its Asia offices.
Justyn Jagger
Partner
March 2007
DLA Piper Singapore
80 Raffles Place
UOB Plaza 1 #48-00
Singapore 048624
T +(65) 6512 9595
F +(65) 6512 9500
E [email protected]
Legal system changes daily. Please note, therefore, that even as this guide went to press, relevant laws may
have changed.
This publication is intended to provide clients with information on recent legal developments. It should not be
construed as legal advice or legal opinion on specific facts. Pursuant to applicable Rules of Professional Conduct,
it may constitute advertising.
Published by DLA Piper UK LLP
Copyright 2007@DLA Piper UK LLP
All Rights Reserved
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I. Arbitration Legislation
. What legislation governs arbitration?
The International Arbitration Act 974 (Cth) (“IAA”) and at state and territory level the
various state and territory acts. These acts are uniform, though not completely identical.
The state and territory acts are:
Australian Capital Territory (“ACT”) Commercial Arbitration Act 986
New South Wales (“NSW”) Commercial Arbitration Act 984
Northern Territory (“NT”) Commercial Arbitration Act 985
Queensland (“Qld”) Commercial Arbitration Act 990
South Australia (“SA”) Commercial Arbitration Act 986
Tasmania (“Tas”) Commercial Arbitration Act 986
Victoria (“Vic”) Commercial Arbitration Act 984
Western Australia (“WA”) Commercial Arbitration Act 985
(together the “Commercial Arbitration Acts”).
2. What is the basis of the arbitration legislation?
The UNCITRAL Model Law is the basis of the IAA and is incorporated into the legislation.
In addition to giving force of law in Australia to the UNCITRAL Model Law, the IAA
implements two international conventions. The first is the New York Convention, which
provides for the international enforcement of arbitration agreements and awards. The
second is the ICSID Convention or, as it is also known, the Washington Convention, which
provides for a special system of arbitration for disputes between States (countries) and
foreign investors.
The basis for the Commercial Arbitration Acts is the uniform approach agreed between the
states and the territories.
3. Does the legislation distinguish between international
and domestic arbitrations?
Yes. International arbitration is governed by the IAA whilst domestic arbitration is governed
by the Commercial Arbitration Acts.
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II. Arbitration Agreement
4. What are the requirements of an enforceable
arbitration agreement?
Under the IAA, an “arbitration agreement” is an agreement by the parties to submit to arbitration
all or certain disputes which have arisen or which may arise between them in respect of
a defined legal relationship, whether contractual or not. An arbitration agreement may be
in the form of an arbitration clause in a contract or a separate agreement.
The arbitration agreement must be in writing. An agreement is in writing if it is contained in
a document signed by the parties; or in an exchange of letters, telexes, telegrams or other
means of telecommunication which provide a record of the agreement; or in an exchange
of statements of claim and defence in which the existence of an agreement is alleged by
one party and not denied by another. The reference in a contract to a document containing
an arbitration clause constitutes an arbitration agreement provided that the contract is in
writing and the reference is such as to make that clause part of the contract.
Under the Commercial Arbitration Acts, the arbitration agreement:
• must be "an agreement in writing to refer present or future disputes to arbitration"
(this is the wording of the definition used in each of the acts)
• must provide a means to resolve disputes rather than, for example, merely
preventing disputes; and
• can include clauses whereby one party "may", by election, refer disputes to arbitration
or whereby some event must occur or some condition must be satisfied so that
disputes can be referred to arbitration, even if only one party has the right to elect or is in
a position to control the event or satisfy the condition.
III. National Arbitration
Institute/Centre
5. Is there a National Arbitration Centre (“NAC”)?
Yes. The Australian Centre for International Commercial Arbitration (“ACICA”).
Australia
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6. Does the NAC publish a set of procedural rules?
Yes, there is one set of rules. The rules stipulate that they apply: “except [that] where any
of these Rules are in conflict with a provision of the law applicable to the arbitration from
which the parties cannot derogate”.
7. Does the NAC publish a panel of
recommended arbitrators?
No, not as such. ACICA maintains a panel of international arbitrators and a list of experienced
arbitration practitioners. It provides information on international arbitration and is involved
in education through the provision of seminars. Its website states that it can recommend
arbitrators, but it does not publish any recommendations.
There are “corporate members” consisting of seven Australian law firms and each of
these specifies several partners practising in the field but there are no “recommended”
arbitrators as such. ACICA also has 5 “fellows” of ACICA who constitute the ACICA Panel
of Arbitrators.
8. Does the NAC publish a recommended
arbitration clause?
Yes, it is as follows:
“Any dispute, controversy or claim arising out of, relating to or in connection with this contract,
including any question regarding its existence, validity or termination, shall be resolved by
arbitration in accordance with the ACICA Arbitration Rules. The seat of arbitration shall be
Sydney, Australia [or choose another city]. The language of the arbitration shall be English
[or choose another language]. The number of arbitrators shall be one [or three, or delete
this sentence and rely on Article 8 of the ACICA Arbitration Rules*].”
* Article 8 of the ACICA Arbitration Rules states:
“Number of Arbitrators
If the parties have not previously agreed on the number of arbitrators (i.e. one or three),
and if within 5 days after the receipt by the Respondent of the Notice of Arbitration the
parties cannot agree, ACICA shall determine the number of arbitrators taking into account all
relevant circumstances.”
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9. Does the NAC administer arbitrations?
Yes.
In addition, ACICA provides the following services:
• administration of arbitrations and mediations;
• nominations of arbitrators and mediators;
• information on experienced international arbitration practitioners;
• information on arbitration agreements, rules and arbitration law and practice;
• assistance with hearing rooms, transcription and IT services and accommodation;
and
• educational services, including seminars and conferences.
0. What are the NAC’s costs?
ACICA’s costs are as displayed in the table below:
As well as the fees shown in the table, when submitting the notice of arbitration at the
beginning of the arbitration, the claimant (the party initiating arbitration) must pay to ACICA
a registration fee of $2,500. The registration fee is not refundable.
All amounts above are in Australian dollars.
Amount in dispute Administrative fees
$ to $500,000 % of the amount in dispute
$500,00 to $,000,000 $5,000 plus 0.5% of the amount in dispute above
$500,000

$,000,00 to $0,000,000 $7,500 plus 0.25% of the amount in dispute above
$,000,000

$0,000,00 to $00,000,000 $30,000 plus 0.0% of the amount in dispute above
$0,000,000

Over $00,000,000 $39,000 plus 0.02% of the amount in dispute above
$00,000,000 up to a maximum of $60,000
Australia
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IV. Commencing Arbitration
. How is arbitration commenced?
This is governed by the IAA which says that:
“Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular
dispute commence on the date on which a request for that dispute to be referred to
arbitration is received by the respondent.”
The Commercial Arbitration Acts also have provisions relating to commencement.
The example below is from the Victorian Act and is reflective of the provisions in the other
state acts:
“(5) For the purposes of this section, an arbitration shall be deemed to have been
commenced if-
(a) a dispute to which the relevant arbitration agreement applies has
arisen; and
(b) a party to the agreement-
(i) has served on another party to the agreement a notice requiring that
other party to appoint an arbitrator or to join or concur in or approve of
the appointment of an arbitrator in relation to the dispute;
(ii) has served on another party to the agreement a notice requiring that
other party to refer, or to concur in the reference of, the dispute to
arbitration; or
(iii) has taken any other step contemplated by the agreement, or the law
in force at the time the dispute arose, with a view to referring the
dispute to arbitration or appointing, or securing the appointment of,
an arbitrator in relation to the dispute.”
The ACICA Arbitration Rules also provide for a process of commencement which involves
issuing a notice of arbitration and payment of the registration fee.
2. Can litigation proceedings be stayed in favour
of arbitration?
Yes. This is provided for by both the IAA and the Commercial Arbitration Acts and there
is case law on the application of their provisions.