the arbitrator and mediator - july 2018

the

&

arbitrator

mediator

Volume 37

Number 1

July 2018

the arbitrator & mediator

July 2018 This issue may be cited as (2018) 37 (1) ISSN 1446-0548

General Editor

Russell Thirgood

Editorial Office

Resolution Institute Level 2 13-15 Bridge Street Sydney NSW 2000

Publisher

Resolution Institute ABN 69 008 651 232

Disclaimer

Views expressed by contributors are not necessarily endorsed by the Institute. No responsibility is accepted by the Institute, the editors or the printers for the accuracy of information contained in the text and advertisements.

The Arbitrator & Mediator is listed in Australian Government DEST’s Register of Refereed Journals.

Š 2018 Resolution Institute

Chair Gary Ulman

LLM, MA, LLB, Solicitor of the Supreme Court of NSW, Accredited Mediator NMAS

Vice Chair Hayden Wilson

LLM, BA, LLB, Barrister and Solicitor of High Court of New Zealand, PRI

Treasurer Siddharth Soin

Dip BA, BCom, CA

Secretary Russell Thirgood

BA, LLB (Hons), LLM (Hons), G Dip Constr Law, FCIArb, FACICA, FRI, Grade 1 Arbitrator, Solicitor of the High Court of Australia, Accredited Mediator NMAS

Directors Ben Thomas

BA, MBA, Accredited Adjudicator, MAICD, Emeritus Professor at Pacific Adventist University

Margaret Halsmith

B. Psych, BA, Dip Ed, Accredited Mediator NMAS, Advanced Accreditation Mediation Resolution Institute, Accredited Mediator IMI, Aust. FDRP

Sarah Blake

BA, MSA, MIK, MAICD, Accredited Mediator NMAS, Accredited Mediator IMI

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Catherine Cooper

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THE ARBITRATOR & MEDIATOR JULY 2018

Contents Chair’s message, Gary Ulman

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Editor’s commentary, Russell Thirgood

6

Articles Recent developments in arbitration: at home and abroad, Hon. Justice Clyde Croft

9

Professional development through reflective practice, Mieke Brandon

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Facilitating restorative justice in New Zealand: a personal account, Christina Tay

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Just say sorry! The place of apology in conflict resolution, Chris Marshall

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Due process paranoia and its role in the future of international commercial arbitration, Erika Williams, Hannah Fas and Tom Hannah

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And the survey says....these are the good and bad techniques used by mediators, Alicia Hill

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Challenges to the tribunal’s jurisdiction at the award enforcement stage, Bronwyn Lincoln

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Third party funding: from origins to international arbitration, Oliver Gayner

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Case notes Arbitration: when a final award is not final, Albert Monichino QC

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Trust dispute no bar to arbitration, Albert Monichino QC and Adam Rollnik

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Arbitration gone wrong, Albert Monichino QC

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Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4 and Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5, Michael Heaton QC

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Indemnity cost orders for overzealous applicants, Erika Williams and Bronte Hearn

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Notes for authors

103

Notes

106

About Resolution Institute

108

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THE ARBITRATOR & MEDIATOR JULY 2018

Chair’s message Gary Ulman 1

It is my privilege to welcome readers to this 2018 edition of Resolution Institute’s The Arbitrator & Mediator.

In an address given earlier this year on the topic Alternative Dispute Resolution - A Misnomer?, the Chief Justice of the Supreme Court of Western Australia, the Honourable Wayne Martin AC, wrote: “The rapid development and success of ADR belies any inference that it is some kind of lesser, or inferior, or less frequent system of dispute resolution. Its place as the primary means of dispute resolution is well established and it is inevitable that the role of ADR will be developed and expanded, particularly with developments in the area of IT ....”

Testimony to that sentiment is how governments of Australia and New Zealand, the courts and the wider communities are increasingly looking for non-litigious ways of resolving disputes. It is in that context that Resolution Institute continues to play a leadership role through training, accreditation and grading, professional membership and learning as well as bringing together the collective wisdom of the authors whose articles and case notes appear in this edition of the journal.

The authors, who are drawn from across the dispute resolution and restorative justice profession, provide insightful observations and share a wealth of experience covering topics such as the challenges facing domestic and international arbitration, what it is like to be a restorative justice practitioner and the findings of a survey on the conduct and technique of mediators.

The publication of this journal would not have been possible without the support and assistance of several people. To the authors, I would like to express the appreciation of Resolution Institute for supporting the journal, for your contributions and for being so generous with your time. To the staff at Resolution Institute, lead by CEO Fiona Hollier, and the staff at McCullough Robertson under the guidance of the journal’s General Editor, Russell Thirgood, my sincere thanks for the work and effort that has gone into the production of this journal for which you should feel very proud.

I would like also to especially acknowledge the work of Russell Thirgood who this year celebrates fifteen years since he was first appointed editor of the journal. It is no small task to produce a publication such as this and to do it for fifteen years is an enormous commitment and tremendous achievement for which the Board of Resolution Institute is truly grateful.

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Chair, Resolution Institute

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THE ARBITRATOR & MEDIATOR JULY 2018 This 37th edition of The Arbitrator & Mediator is another significant contribution to the body of work on the subject of dispute resolution, and I commend to you the articles and case notes in it and trust that you will find them as informative as I have.

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THE ARBITRATOR & MEDIATOR JULY 2018

Editor's commentary Russell Thirgood 1

Welcome to the July 2018 edition of The Arbitrator & Mediator.

The Honourable Justice Clyde Croft opens this edition with an insight into national and international arbitration developments. His Honour considers Australia’s place in the international arbitration field, and moves to a brief consideration of the national uniform Commercial Arbitration Acts. Looking further afield, Justice Croft provides commentary on dispute resolution clauses in investment treaties and considers international arbitration from an ethical perspective. In a development closer to home, His Honour looks at the role of subpoenaing a witness to give evidence before an arbitral tribunal. Justice Croft then moves to thought-provoking discussions on topics, including discovery in arbitration, arbitrability and public policy, forced arbitration in consumer contracts and enforcing awards that have been set aside. To conclude, Justice Croft reflects that the reinvigoration of international and domestic arbitration in Australia is a result of not only action by the government and courts, but also the efforts of commercial parties, lawyers, arbitrators and arbitral institutions.

Mieke Brandon takes us away from arbitration and guides us through the benefits of mediators undertaking reflective practice. Through an analysis of the stages of professional development, Ms Brandon describes the significance of a mediator’s personal qualities on their practice. After a discussion on the theories of reflective practice, her focus then turns to a practical guide on how readers can incorporate reflection in their practice. Ms Brandon surmises that professional development through reflective practice is one way mediators can meet the challenges of professionalism when faced with ethical obligations, standards and codes of conduct.

Christina Tay’s article on restorative justice demonstrates reflective practice in action. Ms Tay’s account of her experiences as an accredited restorative justice facilitator demonstrates the impact mediation can have on an offender and victim’s life. She proposes that mediators must be aware of human interaction and how parties react in mediation. Situational awareness, a sense of how the situation is evolving and safety for all are some of the key factors Ms Tay says mediators must consider. Ms Tay concludes that there is much to be gained by listening to each other, acknowledging pain on a human level and working collaboratively.

The importance of listening, acknowledging pain and working together is brought home by Chris Marshall, who speaks of the value of an apology by a party to dispute resolution. Mr Marshall highlights the implications of receiving an apology, including reducing negative emotions, improving settlement negotiations, reducing feelings of guilt and promoting an ongoing relationship. These factors are all

1

Partner and Head of Arbitration, McCullough Robertson Lawyers; Company Secretary, Resolution Institute; Director, Australian Centre for International Commercial Arbitration.

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THE ARBITRATOR & MEDIATOR JULY 2018 important to be cognisant of when undertaking dispute resolution. Mr Marshall acknowledges the challenges an apology brings, including the implication of fault and the consequences on legal liability.

Mr Marshall leaves the reader with the thought that the power and moral significance of an apology should never be overlooked.

Another important element to consider in alternative dispute resolution is due process. Erika Williams, Hannah Fas and Tom Hannah provide a timely commentary on the international commercial arbitration arena and the impact on efficiency and fairness by overly cautious arbitrators, who are concerned about their awards being overturned or deemed unenforceable. The term to describe this perceived phenomenon is coined ‘due process paranoia’ and is characterised by arbitrators yielding to parties’ demands for more time or extra processes. It is a particularly relevant consideration, given the objective of arbitration is for a timely and cost effective resolution. The article concludes with an insight into how transparency, proactivity, interactivity and proportionality can serve to provide a solution.

Alicia Hill takes the reader back to mediation with an exploration of different mediation techniques and provides an insight into what techniques are resonating most with those in the mediation field. Ms Hill conducts her analysis through relying on recent surveys undertaken in Australia and the United States.

Those in the Australian mediation sector found mediators making genuine enquiries into the case and premediation conferences to be the most helpful techniques. The most unhelpful conduct was found to be where a mediator fails to act in accordance with their perceived role or acts too forcefully in process control. These survey results demonstrate the impact a mediator’s personal approach can have on parties.

Ms Hill concludes by referring back to a common theme in this edition of the Journal, that mediators should take time to reflect on their own techniques.

In a link to the article on due process paranoia, Bronwyn Lincoln looks into the question of jurisdiction and challenging awards in international commercial arbitrations. Ms Lincoln discusses the active approach of challenging an award at the seat, compared to the passive approach of waiting to resist an enforcement order in a jurisdiction where the debtor has assets. The article goes on to analyse the tension where parties seek to enforce an arbitration award in a jurisdiction other than the seat. Ms Lincoln explores the questions that arise as to the validity of the arbitration agreement. In concluding, Ms Lincoln speculates that tribunals will continue to determine their own jurisdictions through reliance on the jurisprudential doctrine of competence-competence.

Addressing another ever growing topic in international arbitration, Oliver Gayner looks at third party funding in international arbitration as it continues to become a more mainstream practice. This is an insightful article into the development of third party funding in Australia and internationally. Third party funding is an example of Australia leading the way, with the practice seen as an Australian export that is accepted in other common law jurisdictions. Mr Gayner discusses the measures that different jurisdictions are using to maintain ethics where professional funders are involved in an arbitration matter. It will be interesting to watch how developments on this topic unfold both in Australia and internationally.

The case note by Albert Monichino QC about the case of Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97 provides a helpful analysis into what power an arbitrator has to issue an additional award after his or her mandate has expired. In this matter, an arbitrator delivered an award described as the ‘final award’ and declined to adjudicate on costs due to insufficient information. One of the parties applied to have the award overturned on the basis that the arbitrator did not determine the issue of costs, despite the issue falling within the scope of the arbitration agreement. This application failed, with the court finding that despite the award being styled as ‘final award’, the parties were still entitled to reengage the arbitral process to determine the issue of costs. Mr Monichino concludes with a commentary on the consequences of styling an award as ‘final award’.

In his second case note, Albert Monichino QC and Adam Rollnik look into a Western Australian matter dealing with determining the scope of an arbitration agreement. Fitzpatrick v Emerald Grain Pty Ltd [2017] WASC 206 considers the interpretation of the uniform Commercial Arbitration Acts. These

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THE ARBITRATOR & MEDIATOR JULY 2018 uniform acts provide that where a matter is referred to court and is the subject of an arbitration agreement, the dispute must be referred to arbitration upon one party’s request, provided the agreement is operative.

Mr Monichino QC comments on the importance of the case, in that it illustrates the courts’ preparedness to hold parties to their arbitration agreement and secondly that courts are prepared to take a broad, liberal and flexible approach in construing arbitration agreements.

Mr Monichino QC provides a final case note in his analysis into Hui v Esposito Holdings Pty Ltd (No 2) [2017] FCA 728; Hui Esposito Holdings Pty Ltd [2017] FCA 648. This is an important case for those in the arbitration field to take note of, as it deals with an instance where an arbitrator was removed by the court for a perceived bias. The Federal Court considered whether the arbitrator’s conduct caused the parties to lack confidence in the arbitrator’s ability to come to a fair conclusion. Mr Monichino QC concludes with an important summary of the case, that arbitrators must be cognisant of affording equal treatment to parties and hearing both sides of a matter.

Two cases that have received much attention in early 2018 are Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4 and Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5. These matters deal with the New South Wales and South Australia Security of Payment Acts that regulate progress payments in the construction industry. Michael Heaton QC provides an astute commentary on the High Court’s decision not to review an adjudication made under the New South Wales and South Australian Security of Payment Acts. An adjudicator’s decision under the Act can only be quashed where there has been a jurisdictional error. This decision will strictly limit the grounds on which parties may appeal decisions made under the Security of Payment Act in New South Wales, South Australia and potentially other jurisdictions.

Erika Williams and Bronte Hearn conclude this edition with a case note on John Holland Pty Ltd v Adani Abbot Point Terminal Pty Ltd [2016] QSC 292 and the later cost judgment heard in John Holland Pty Ltd v Adani Abbot Point Terminal Pty Ltd [2018] QSC 48. These judgments serve as a reminder to parties to be cautious in their approach in seeking to set aside an arbitral award. The applicant in this matter submitted over 2,000 pages of evidence and hundreds of pages of written submissions and was criticised by the Court for the ‘snow storm of material’ submitted in the context of an application for leave to appeal. The application was dismissed because none of the grounds relied upon by the applicant satisfied the strict requirements for granting leave to appeal an arbitration award. In addition to criticising the applicant’s conduct of the application as ‘tantamount to an abuse of process’ Justice Jackson awarded the respondent its costs on the indemnity basis. The case is an example of the strict approach the court will take in granting leave to appeal an arbitration award and the consequences of conducting an application in an ‘oppressive’ manner.

I trust readers will find the July 2018 edition of The Arbitrator & Mediator to be stimulating and insightful. I thank our new and returning contributors for their scholarly works and commend their articles to our readers.

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THE ARBITRATOR & MEDIATOR JULY 2018

Recent developments in arbitration: at home and abroad1

By Hon. Justice Clyde Croft 2

Abstract There are a number of discrete developments which have occurred in arbitration, both in Australia and overseas that are worthy of highlighting. This article considers the questionable benefits of investment treaties and particularly their dispute resolution clauses; the necessity for courts to be independently satisfied of the appropriateness of measures sought to assist an arbitration; the ethical consequences of the structure of arbitral proceedings and the practice of arbitration; potential measures which can be taken to improve the efficiency of arbitral proceedings; the principles underpinning arbitrability; and the enforceability of awards which have been set aside.

----There are a number of developments which have occurred in arbitration, both in Australia and overseas that are worthy of highlighting. Most notably, after seven years, uniformity in domestic commercial arbitration legislation has been achieved across Australia. With the first of the Commercial Arbitration Acts being introduced in NSW in 2010, 3 I think the features of the Model Law, 4 or at least the principal ones, have been well covered. Accordingly this article will focus on other issues which I believe are of continuing interest.

Before turning to specific developments, I would like to distinguish the arbitral environments of Australia, on the one hand, and those of busy arbitration jurisdictions across the world. As a country with such a strong legal framework, it might be thought that Australia should be at the forefront of international arbitration, particularly in our region, yet it is not. While Australia's geographic isolation may well impose a limit on its attractiveness as a venue for arbitration, Australia's challenges in attracting international arbitration business go further. Domestic arbitration remains comparatively rare in Australia, in no small part due to the reliability and efficiency of the courts; and, particularly, the commercial courts.

Consequently, the business which is crucial for the development of the financial, jurisprudential and professional base necessary for the success of arbitral centres, which is a significant factor in attracting international arbitration, is simply absent. This, combined with Australia's historic isolationism, when compared to European states where arbitration has flourished, has hamstrung our development as a centre for arbitration, whether domestic or international. Thus, while there are a number of areas that we must continue to improve on — from both a judicial and infrastructural point of view — if Australia is to truly

1

A paper presented to the Arbitration Special Interest Group at the Resolution Institute on Monday 16 Oct 2017.

B Ec LLB LLM (Monash), PhD (Cambridge), LFACICA, LFIAMA, JFAMINZ, FCIArb, FAAL – Judge in charge of the Arbitration List for the Commercial Court of the Supreme Court of Victoria.

3 Commercial Arbitration Act 2010 (NSW).

4 United Nations Commission on International Trade Law, UNCITRAL Model Law on International Commercial Arbitration (UN Docs A/40/17, Annex I and A/61/17, Annex I) as amended on 7 Jul 2006 (“the Model Law”).

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THE ARBITRATOR & MEDIATOR JULY 2018 establish itself as a leading destination for international arbitration, our success will undoubtedly be limited in the absence of serious public investment or a significant change in business and corporate attitudes.

Introduction of uniform legislation in the Australian Capital Territory In May 2010, the Standing Committee of Attorneys-General agreed to implement the new Commercial Arbitration Acts to provide a uniform legislative framework, based on the Model Law, for domestic commercial arbitration across Australia. 5 On 4 April 2017, the last of the uniform acts came into effect in the Australian Capital Territory. 6 This ended the peculiar situation which had previously (at least theoretically), allowed parties to make mischievous use of the lack of uniformity between state and territory arbitration legislation. For example, were substantive proceedings to be commenced in the ACT courts in breach of an arbitration agreement, a test other than that set out under article 8 of the Model Law, would apply. Thus the achievement of uniformity in the domestic arbitration regime facilitates domestic arbitration and promotes arbitration more broadly.

A shift against investment treaties Interesting developments have occurred in attitudes towards investment treaties, and in particular towards the arbitrations for which they provide. The introduction of bilateral and multi-lateral investment treaties constituted a fundamental shift in the balance of power between sovereign states and corporations, especially as these treaties included dispute resolution clauses. The wisdom of treaties of this kind has increasingly been called into question.7 The policy on which these treaties were based does not sit well with the effects of these treaties and arbitrations conducted under their provisions.

Investment treaties which provide for the settlement of disputes via independent arbitration may be thought to guard against sovereign risk and allow transnational corporations to trade with greater confidence that business will be free from unwarranted governmental interference. While they may have this effect, unsavoury consequences flow with this too. The first investor state arbitration against Australia was that brought by Philip Morris in relation to the plain packaging of tobacco products.8 The proceeding commenced in June 2011 and the Final Award regarding costs was published in March 2017, after Australia succeeded on a preliminary objection regarding abuse of rights in December 2015. 9 Despite Australia's conclusive success on a preliminary matter, the arbitration likely cost Australia tens of millions of dollars. 10 Even though Australia successfully obtained a significant portion of its costs,11 the prospect of similar proceedings could well discourage other countries from pursuing worthwhile

5

Standing Committee of Attorneys-General, Communique (16–17 Apr 2009) 2, 6.

Commercial Arbitration Act 2017 (ACT).

7 See e.g. Chief Justice RS French, ‘Investor State Disputes – A Cut Above the Courts?’ (Paper presented at Supreme and Federal Courts Judges’ Conference, Darwin, 9 Jul 2014); Gus van Harten, ‘A Critique of Investment Treaties’ in Kavaljit Singh and Burghard Ilge (eds), Rethinking Bilateral Investment Treaties: Critical Issues and Policy Choices (Both Ends, 2016) 11.

8 Commonwealth Attorney-General’s Department, Tobacco Plain Packaging – Investor-State Arbitration (accessed 10 Oct 2017) <https://www.ag.gov.au/tobaccoplainpackaging>; see also discussion in Chief Justice RS French, ‘Investor State Disputes – A Cut Above the Courts?’ (Paper presented at Supreme and Federal Courts Judges’ Conference, Darwin, 9 Jul 2014) 4–6.

9 Philip Morris Asia Limited (Hong Kong) v Australia (Jurisdiction and Admissibility) (Permanent Court of Arbitration), PCA 2012-12, (17 Dec 2015) [588].

10 See Philip Morris Asia Limited (Hong Kong) v Australia (Costs) (Permanent Court of Arbitration), PCA 2012-12, (8 Jul 2017); and see media reports including Adam Gartrell, ‘Phillip Morris ordered to pay Australia millions in costs for plain packaging case’ The Sydney Morning Herald (9 Jul 2017) <http://www.smh.com.au/federal-politics/political-news/philip-morris-orderedto-pay-australia-millions-in-costs-for-plain-packaging-case-20170709-gx7mv5.html>.

11 Philip Morris Asia Limited (Hong Kong) v Australia (Costs) (Permanent Court of Arbitration), PCA 2012-12, (8 Jul 2017) [103]–[105].

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THE ARBITRATOR & MEDIATOR JULY 2018 legislative and other measures. Moreover, as Chief Justice French noted, had that arbitration proceeded to a hearing on the merits, the tribunal would then have determined a question which was significantly similar to that which fell for determination before the High Court.12 Another issue with investment treaty arbitration is that it enables an aggrieved or potentially aggrieved investor to forum shop. 13 For example, an American investor may transfer the rights or ownership in question to a Hong Kong company to take advantage of a treaty between Hong Kong and a third country.

While this may constitute an abuse of rights if it occurs after the dispute has arisen, as was the case in the plain packaging arbitration, it may be acceptable to an international tribunal if it is done to ensure the benefit of the treaty before the dispute has arisen. In this way, an investment treaty may empower a foreign investor to invest on more advantageous terms, but it may not be the case that any additional investment is enjoyed by the contracting state. This is especially so when such treaties seldom impose obligations on the relevant investing states to prevent foreign investors piggybacking on the treaty. 14 This is particularly troubling when there is a questionable empirical basis for the oft repeated assumption that investment treaties do encourage investment. 15 On the other hand, investment treaty arbitrations may be flawed from an investor's perspective due to the limited ability of tribunals to restrict the exercise of criminal jurisdiction by a State party. 16 In Albania v Becchetti 17 an International Centre for Settlement of Investment Disputes (ICSID) tribunal provisionally ordered the Government of Albania to “take all actions necessary to suspend the extradition proceedings currently pending” against parties to the arbitration. 18 On the basis of this position, the English Westminster Magistrates’ Court found that the extradition proceedings could not proceed as a result of the tribunal's order. This is to be compared to Romania v Bodgan-Alexander Adamescu, 19 where the arbitral proceedings were commenced after the extradition proceedings. Again, the ICSID tribunal granted the provisional measures sought against the state seeking extradition, but in this case the Westminster Magistrates' Court found that the extradition proceedings should continue. The reasoning of the two cases has been criticised as lacking consistency, and this reveals a tension inherent in investor state arbitration: while tribunals must be able to protect the integrity of the arbitration, states must not be unnecessarily prevented from enforcing their criminal laws as they see fit.

International commercial courts, being courts that specialise in transnational commercial disputes, may reduce (though not eliminate) the need for investor-state arbitration by providing an impartial and reliable venue for the determination of such disputes. These courts provide the expertise which is often lauded as a benefit of commercial arbitration, while also allowing the continued operation of the doctrine of

12

Chief Justice RS French, ‘Investor State Disputes – A Cut Above the Courts?’ (Paper presented at Supreme and Federal Courts Judges’ Conference, Darwin, 9 Jul 2014) 6.

13 Chief Justice RS French, ‘Investor State Disputes – A Cut Above the Courts?’ (Paper presented at Supreme and Federal Courts Judges’ Conference, Darwin, 9 Jul 2014), 4–5; Gus van Harten, ‘A Critique of Investment Treaties’ in Kavaljit Singh and Burghard Ilge (eds), Rethinking Bilateral Investment Treaties: Critical Issues and Policy Choices (Both Ends, 2016) 41, 42.

14 Gus van Harten, ‘A Critique of Investment Treaties’ in Kavaljit Singh and Burghard Ilge (eds), Rethinking Bilateral Investment Treaties: Critical Issues and Policy Choices (Both Ends, 2016) 41, 42–3.

15 Gus van Harten, above n 14, 43.

16 See Emilie Gonin, ‘How Effective are ICSID Provisional Measures at Suspending Criminal Proceedings before Domestic Courts: The English Example?’ on Wolters Kluwer, Kluwer Arbitration Blog (30 Sep 2017) <http://arbitrationblog.kluwerarbitration.com/2017/09/30/effective-icsid-provisional-measures-suspending-criminalproceedings-domestic-courts-english-example/>.

17 Albania v Becchetti (Unreported, Westminster Magistrates’ Court, Tempia DCJ, 20 May 2016).

18 Ibid.

19 Unreported, as referred to in Emilie Gonin, ‘How Effective are ICSID Provisional Measures at Suspending Criminal Proceedings before Domestic Courts: The English Example?’ on Wolters Kluwer, Kluwer Arbitration Blog (30 Sep 2017) <http://arbitrationblog.kluwerarbitration.com/2017/09/30/effective-icsid-provisional-measures-suspending-criminal-proceedingsdomestic-courts-english-example/>.

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THE ARBITRATOR & MEDIATOR JULY 2018 precedent. 20 Since the entry into force of the Hague Convention on Choice of Court Agreements on 1 October 2015, the judgment of the chosen court may be enforced in member states in a similar manner to an arbitral award, 21 though it is still far from being as widely accepted as the New York Convention. 22 There are clearly issues with the Hague Convention,23 such as the width of the consumer transaction exclusion, 24 however it is clear that the convention may facilitate the creation of successful international commercial courts which combine the expertise and flexibility of international arbitration with the certainty and potential efficiency of courts.

Developments under the Commercial Arbitration Act: reasonableness requirement for the issue of subpoenas Recently, an application was made before me in Aurecon Australasia Pty Ltd v BMD Constructions Pty Ltd 25 for the issue of a subpoena to attend to give evidence before an arbitral tribunal, and it fell for consideration whether an element of reasonableness must be established before such an application should be granted. The answer, in my view, derives from the juristic nature of the powers of courts and tribunals respectively. An arbitration is conducted by a tribunal which derives its power from the agreement of parties.26 On the other hand, courts are organs of the State and variously derive their power from legislation, constitutions and the common law. The natural consequence of this distinction is that there are many things which courts can do which arbitral tribunals cannot. In this case, the two parties to the arbitration sought, under section 27A of the Commercial Arbitration Act 2011 (Vic), by consent, the issue of a subpoena to a former employee of Aurecon Australasia. Importantly, and in contrast to the International Arbitration Act 1974 (Cth), the Commercial Arbitration Act does not expressly require that the Court find that it is reasonable in all the circumstances to issue a subpoena to a person who is not a party to the arbitral proceedings before issuing such a subpoena. Nonetheless, in light of the serious consequences of failing to answer a subpoena, and the potential for the court's processes to be misused, I found that it was necessary that the court be independently satisfied that the issue of the subpoena is reasonable. This is because the parties sought the exercise of the State's coercive power against a stranger to the arbitration agreement and, if courts did not consider the appropriateness of the issue of subpoenas in such circumstances, this would amount to an unacceptable delegation of a public and coercive power to a private tribunal.

20

Steven Rares, ‘The Modern Place of Arbitration – Celebration of the Centenary of the Chartered Institute of Arbitrators’ (Speech delivered at the Chartered Institute of Arbitrators, Sydney, 22 Apr 2015) [12]; Doug Jones, ‘Investor-State Arbitration: the Problem of Inconsistency and Conflicting Awards’ (Speech delivered at German-American Lawyers’ Associate Practice Group Day, Frankfurt, 26 Mar 2011); Jerome Squires, ‘Do International Commercial Courts Represent a Real Challenge to International Arbitration’ (24 Nov 2015) <https://www.ciarb.net.au/resources/international-arbitration/do-internationalcommercial-courts-represent-a-challenge-to-international-arbitration/>.

21 Convention on Choice of Court Agreements, opened for signature 30 Jun 2005, (entered into force 1 Oct 2015) (‘Hague Convention’).

22 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature 10 Jun 1958, 330 UNTS 3 (entered into force 7 Jun 1959) (‘New York Convention’); see Hague Conference on Private International Law, Status Table: Convention of 30 June 2005 on Choice of Court Agreements (5 Oct 2017) <https://www.hcch.net/en/instruments/conventions/status-table/?cid=98>.

23 See J J Spigelman, ‘The Hague Choice of Court Convention and International Commercial Litigation’ (2009) 83 Australian Law Journal 386.

24 J J Spigelman, ‘The Hague Choice of Court Convention and International Commercial Litigation’ (2009) 83 Australian Law Journal 386, 391-2.

25 [2017] VSC 382.

26 But note the observation in Brazis v Rosati [2014] VSC 385, [74] and the authorities therein that this may include empowering the arbitrator to exercise statutory powers.

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THE ARBITRATOR & MEDIATOR JULY 2018

Ethics in international arbitration The relative paucity of arbitration in Australia has, to an extent, saved us from recent concerns about ethical issues peculiar to this area of practice. In public debate about the Trans-Pacific Partnership and other international trade agreements, concerns have been aired about “secret courts and secretive arbitrators acting in cahoots with corporations to asset-strip democracies”, as the summer issue of Chartered Institute of Arbitrators’ Resolver reported it. 27 While such concerns are exaggerated, there is a worry that leading practitioners in some areas of the world are continually appearing as counsel before an arbitrator or arbitrators who will appear before them or oppose them in another matter in due course.28 Thus there is a potential for significant conflicts of interest, apparent, if not actual. This issue, which is peculiar to arbitration, is exacerbated by the absence of a court or similar body to supervise the conduct of practitioners.

Unlike courts, arbitral institutions are primarily service providers and have a very limited capacity to regulate the conduct of practitioners who participate in arbitrations before them, or cultivate particular ethical cultures. While institutions such as the Resolution Institute and the Chartered Institute of Arbitrators are invaluable in this respect, they are subject to obvious inherent limits. Additionally, courts will only refuse recognition and enforcement of awards in narrowly proscribed circumstances, and arbitration generally occurs in private away from the supervision of professional regulators. Thus in terms of ensuring the ethical conduct of arbitral proceedings and that of the practice of arbitration more broadly, the burden falls on parties and free market forces.

This is particularly problematic when an arbitral tribunal is faced with corruption in which the parties are complicit. 29 The tribunal has a “selfish” interest not to antagonise its customers, and may be left in an invidious position by its competing obligations to render an enforceable award, to avoid being party to corruption and to maintain the confidentiality of information disclosed in the course of the arbitration. A tribunal might seek to investigate apparent corruption on the basis of a need to ensure that its jurisdiction is sound, 30 but practical issues abound with this approach. Of course, arbitration is often seen as, and often is a tool to, facilitate commercial dealings in jurisdictions where the independence of courts is questionable. Yet in an arbitration, judicial oversight is largely dependent on at least one party agitating issues before a court and is thus less resistant to corruption than a sound court system where judges can act swiftly to tackle corruption.

The lack of an ethical support structure has also caused problems insofar as reliance by parties and practitioners on guerrilla tactics has become prevalent.31 Guerrilla tactics are various techniques employed to gain advantage otherwise than through the ordinary prosecution of a claim on its merits, which are, at the very least, on the ethical borderline.32 At the extreme, guerrilla tactics involve violence and fraud. However their more common manifestation is in the late filing of documents, ex parte communications with the tribunal, baseless court actions seeking to impede the tribunal, and so on. Of course, such tactics are not peculiar to arbitration. As a Judge of the Commercial Court, I am confronted by guerrilla tactics on a regular basis, albeit generally those less extreme in nature. The issue with arbitration is that tribunals lack the powers on which courts rely, either directly or indirectly, to reduce

27

Chris Wilford, ‘Action Stations!’ (Summer 2017) The Resolver 12, 13.

Cf. Sundaresh Menon, ‘Some Cautionary Notes for an Age of Opportunity’ (Speech delivered at the Chartered Institute of Arbitrators International Arbitration Conference, Penang, 22 Aug 2013), [4].

29 Mathew Rea, ‘Criminality in ADR: Power, Corruption and Lies’ (Summer 2017) The Resolver 16.

30 Mathew Rea, ‘Criminality in ADR: Power, Corruption and Lies’ (Summer 2017) The Resolver 16, 18.

31 Sundaresh Menon, ‘Some Cautionary Notes for an Age of Opportunity’ (Speech delivered at the Chartered Institute of Arbitrators International Arbitration Conference, Penang, 22 Aug 2013), [5].

32 See Gunther J Horvath and Amanda Neil, ‘Guerrilla Tactics in International Arbitration’ (Jul 2017) Asian Dispute Review 131.

28

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THE ARBITRATOR & MEDIATOR JULY 2018 less egregious guerrilla tactics and punish more egregious guerrilla tactics. These tactics are exacerbated in their consequences, in terms of costs and otherwise, because of the now “industrial” scale of much international and domestic arbitration.

These structural weaknesses are further aggravated by the diversity in opinion in the international arbitration community as to what is acceptable conduct. As Menon CJ noted, conduct which is outrageous in one jurisdiction may be common practice in another.33 Yet steps have been taken to create ethical structures to support arbitration. The 2013 IBA Guidelines on Party Representation in International Arbitration, where they apply, permit the arbitral tribunal when faced with guerrilla tactics to inter alia take “appropriate measure[s] necessary to preserve the fairness and integrity of the proceedings”. 34 In a similar vein, the London Court of International Arbitration Annex,35 which forms part of that institution's rules, empowers the tribunal to respond to guerrilla tactics by taking any measures against legal representatives necessary to ensure the arbitral tribunal fulfils its duties to act fairly and impartially as between all parties and to adopt procedures suitable to the circumstances of the arbitration so as to provide a fair, efficient and expeditious means for the final resolution of the dispute. 36 The creation of ethical standards will not only promote ethics, but reduce the incidence of bona fide but misguided allegations of ethical breaches.37 While I do think it plain that this lack of structural support for arbitration will not prevent the continued success of arbitration, it does mean that it will continue to be difficult to reach desired ethical standards across arbitral practice. The choice of a confident, experienced and competent tribunal is one of the best defences against unscrupulous practitioners. It also bears recalling, in the domestic context, that the Australian Solicitor Conduct Rules and the Uniform Conduct (Barristers) Rules apply to arbitration with the same force that they do to court proceedings, 38 and the obligations under the Civil Procedure Act 2010 may also apply. 39

Efficiency in arbitration: no discovery Another issue that has received recent attention is the failure of practitioners to make full use of the potential benefits of arbitration. Two advantages traditionally ascribed to arbitration are flexibility and efficiency, yet it is questionable whether these are achieved in the day to day practice of arbitration. In a recent article in the Asian Dispute Review, Peter Rees QC recounts the all too familiar procedural narrative of the constitution of the tribunal; the issuance of Procedural Order No 1; the exchange of expert reports, witness statements and submissions; document production and related objections; and so on. 40 Thus while arbitration is flexible, and gives parties and the tribunal the latitude to implement bespoke procedures, it falls prey to a risk environment which is antithetical to innovation. Simply put, successful innovation in arbitration receives little reward, especially where the revenue of legal practitioners is time-

33

Sundaresh Menon, ‘Some Cautionary Notes for an Age of Opportunity’ (Speech delivered at the Chartered Institute of Arbitrators International Arbitration Conference, Penang, 22 Aug 2013), [5]–[7].

34 International Bar Association, IBA Guidelines on Party Representation in International Arbitration (25 May 2013) Art 26(d).

35 London Court of International Arbitration, LCIA Arbitration Rules (effective 1 Oct 2014), Annex.

36 London Court of International Arbitration, LCIA Arbitration Rules (effective 1 Oct 2014), r 18.6(iii).

37 Sundaresh Menon, ‘Some Cautionary Notes for an Age of Opportunity’ (Speech delivered at the Chartered Institute of Arbitrators International Arbitration Conference, Penang, 22 Aug 2013), [20] et seq.

38 See the definition of “court” in Legal Profession Uniform Law Australian Solicitor Conduct Rules 2015 s 6 and Legal Profession Uniform Conduct (Barristers) Rules 2015 s 125.

39 See Civil Procedure Act 2010 s 11(c).

40 Peter Rees, ‘Arbitration - Elastic or Arthritic?’ (Jul 2017) Asian Dispute Review 104, 105-6.

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THE ARBITRATOR & MEDIATOR JULY 2018 based, 41 while unsuccessful attempts at efficiency can be hugely detrimental to the relevant practitioner's career.

This often plays out in the context of discovery, where, even in jurisdictions where the parole evidence rule applies strictly, extensive documents relating to conduct before and after the conclusion of the contract are sought and produced. 42 Of course, once a dispute has arisen it is unlikely to be possible to agree on the exclusion of discovery, but such a specification could be included in a dispute resolution clause at the time of contracting. 43 Alternatively, reference could be made to institutional rules which, absent a contrary indication from parties, do not allow for any document production at all.44 Were this the case, contracting parties would simply structure their dealings to ensure that they at all times retained the documents necessary for the vindication of their respective rights, and consequently both reduce the costs of the arbitration and prevent the possibility of such costs from being used in an extortionate manner.

That said, it may, depending on the circumstances, raise issues in terms of a party's right under the Model Law to “be given a full opportunity of presenting [its] case”. 45

Arbitrability: Jessel MR in Russell v Russell While uniformity in arbitral legislation and practice continues to rise both within Australia and across the world, domesticity will inevitably be present in determining issues of arbitrability and public policy, and appropriately so. For example, in a matter in the arbitration list to which the new Commercial Arbitration Act (CAA) did not apply, I denied an application for the matter to be referred to arbitration pursuant to an arbitration agreement in the partnership agreement. This decision was made on the basis of Jessel MR's finding in Russell v Russell that a person accused of fraud or the like should not be forced to have the allegation resolved in private arbitration. 46 While the scope of what is arbitrable may have been expanded by the CAA, the principle in question, whether there is a sufficient element of legitimate public interest in the subject matter of the dispute to make its private resolution outside the national court system inappropriate, 47 remains the same. While some matters are obviously inappropriate for arbitration, such as parenting disputes regarding children, there are other more borderline cases, such as trusts (of which the Court has a supervisory jurisdiction which may never be ousted in its entirety),48 which may well turn on their facts and be of commercial interest.

Also arising in the context of domesticity is the “public policy” ground for resisting the enforcement of an award. 49 It is now well accepted that public policy is, as stated by the Full Federal Court in TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd,50 “limited to the fundamental principles of justice and morality of the state”.51 Yet this is not to say that this ground will never apply: in Indian Farmers Fertiliser Cooperative Ltd v Gutnick,52 I found that where an award allowed for double recovery it would likely be contrary to public policy. 53 Importantly, it is double recovery qua double recovery

41

See also Sundaresh Menon, ‘Some Cautionary Notes for an Age of Opportunity’ (Speech delivered at the Chartered Institute of Arbitrators International Arbitration Conference, Penang, 22 Aug 2013), [16].

42 Peter Rees, ‘Arbitration - Elastic or Arthritic?’ (Jul 2017) Asian Dispute Review 104, 106-7.

43 Peter Rees, ‘Arbitration - Elastic or Arthritic?’ (Jul 2017) Asian Dispute Review 104, 108.

44 Peter Rees, ‘Arbitration - Elastic or Arthritic?’ (Jul 2017) Asian Dispute Review 104, 107-8.

45 Model Law, Art 18.

46 Russell v Russell (1880) 14 Ch D 471.

47 See Larkden Pty Ltd v Lloyd Energy Systems Pty Ltd (2011) 279 ALR 772 at 782 [63].

48 See Rinehart v Welker [2012] NSWCA 95.

49 Commercial Arbitration Act 2011 (Vic) ss 34(2)(b)(ii), 36(l)(b)(ii); International Arbitration Act 1974 (Cth) s 8(7)(b); Model Law, Arts 34(2)(b)(ii), 36(l)(b)(ii).

50 (2014) 311 ALR 387.

51 TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 311 ALR 387 at 406 [76].

52 (2015) 304 FLR 199.

53 Indian Farmers Fertiliser Cooperative Ltd v Gutnick (2015) 304 FLR 199, 229–32 [99]–[107].

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THE ARBITRATOR & MEDIATOR JULY 2018 which would be offensive to public policy. Any legal or factual error, while perhaps assisting in the identification of double recovery, has no direct relevance in evaluating whether an award is contrary to public policy. Importantly, double recovery was not established in Gutnick, and it was not necessary to determine if double recovery would be contrary to public policy. It may well be, depending on all the circumstances, that it is not. One might think that, for example, in the context of a bad faith breach of contract, such as where the contract is breached in pursuit of a profit greater than the aggrieved party's recoverable loss, the disgorgement of profits in addition to compensation for loss might not reach the high bar of being contrary to public policy.

Arbitrability: consumer contracts Another issue in relation to arbitrability which has not yet caused issues on Australia’s shores is forced arbitration clauses in consumer contracts.54 By contrast, in the US several senators wrote to the chair of the Federal Communications Commission complaining of the injustice worked by the inclusion of arbitration clauses in consumer contracts. While some suggest that these clauses are not inherently undesirable, 55 the purpose of an arbitration clause may well bear on its effectiveness. There is much to be said for the notion that the apparent use of arbitration to deny one party access to substantive justice is the harbinger of non-arbitrability. Thus, one might think that in the case of consumer contracts, the purpose of the inclusion of arbitration clauses may be to prevent group proceedings or make pursuit of a claim uncommercial, and thus deny deserving consumers substantive relief. On the other hand, while the international and domestic arbitration acts do not dictate what is and is not arbitrable, they may be seen to create a pro-arbitration bias which could affect the common law. Whichever path the case law takes, it may have a dramatic effect on the role and nature of arbitration in Australia.

This issue arose in Subway Systems Australia v Ireland, 56 where upon appeal by the franchisor I upheld the decision of VCAT not to stay proceedings under section 8 of the Commercial Arbitration Act, finding: 57 “... [I]nsofar as Parliament might be thought to have good reason to seek to preserve access to the “speedy and inexpensive”58 dispute resolution procedures of VCAT the present circumstances are illustrative of a situation where parties, the [Franchisees] as retail food outlet operators in a Melbourne suburb, find themselves having to resolve this dispute in a quite different environment. As discussed, they find themselves in an environment which raises complexities and potential delays and expense in dealing with what is, essentially, an international arbitral regime and, possibly, having to deal with both the Permanent Court of Arbitration in The Hague and also the American Arbitration Association; which on [the Franchisor's] construction of the arbitration agreement it could choose to nominate under its provisions. On the material before me I would have to infer that it is more probable than not that such an excursion for the purpose of resolving, what is essentially a shop dispute, was never dreamed of by the [Franchisee].”

54

See e.g. Letter to Chairman of the Federal Communications Commission (USA) from Senators Baldwin, Blumenthal, Booker, Brown, Durbin, Franken, Hirono, Markey, Merkley, Sanders, Udall, Warren, Whitehouse and Wyden (28 Apr 2016); see also Epic Systems Corp. v Lewis 584 U.S. __ (2018).

55 Chris Wilford, ‘Action Stations!’ (Summer 2017) The Resolver 14.

56 Subway Systems Australia v Ireland [2013] VSC 550; reversed by the Court of Appeal (Subway Systems Australia Pty Ltd v Ireland (2014) 46 VR 49) on other bases.

57 Subway Systems Australia v Ireland [2013] VSC 550, [59].

58 Subway Systems Australia v Ireland [2013] VSC 550, [37]–[39].

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THE ARBITRATOR & MEDIATOR JULY 2018 Thus it can be seen, both from the extract above and the judgment in Subway Systems Australia v Ireland 59 more generally, that Australian courts will hesitate to find that the legislature intended that arbitration would be a means of denying substantive justice.

Enforcement of awards which have been set aside There have been some interesting developments in Hong Kong regarding the enforcement of awards which have been set aside by supervisory courts. Under Art V(1)(e) of the New York Convention, recognition and enforcement of an award may be refused where the award “has been set aside or suspended by a competent authority of the country in which, or under the law of which, [the] award was made”. In Dana Shipping and Trading SA v Sino Channel Asia Ltd, 60 an English award was recognised upon application by the award creditor to the Hong Kong Court of First Instance and was to be enforced as a judgment subject to any application by the award debtor for enforcement to be denied. The award debtor made this application on the basis that it was not given proper notice of the appointment of the arbitral proceedings or was otherwise unable to present its case, and simultaneously applied to the English High Court for the award to be set aside on the ground that the award was made without jurisdiction. As the English High Court set aside the award before the Hong Kong court heard the application before it, the award debtor was able to successfully rely in Hong Kong on the effect of Art V(l)(e) of the New York Convention. In reaching this decision, the Hong Kong court approved the statement of Justice Kaplan that “even if a ground of opposition is proved, there is still a residual discretion left in the enforcing court to enforce nonetheless... although I accept that in many cases where a ground of opposition is established, the discretion is unlikely to be exercised in favour of enforcement”.61 This approach is to be compared to that taken by the Hong Kong Court of Appeal in Astro Nusantara International BV v PT Ayunda Prima Mitra, 62 where the award creditor had the award registered as judgments in Hong Kong and Singapore, the latter being the seat of the arbitration. While enforcement was resisted by the award debtor in Singapore, no steps were taken in Hong Kong as it was believed that there were no relevant assets there. Thus when the award was successfully set aside in Singapore, and assets in Hong Kong were discovered, the award debtor sought to have the enforcement of the award in Hong Kong set aside. However, by this time the award debtor was 14 months out of time, and the Hong Kong Court of Appeal found that having regard to the need for quick and final enforcement of arbitral awards and after considering the decision of the Singaporean supervisory court, it would not disturb the enforcement of the award.

The principle which I believe can be distilled from these two cases is that while foreign courts will give significant weight to the decision of a supervisory court, the residual discretion in Article V ensures that this does not exclude the consideration of other principles of arbitration. As is so often the case in judicial supervision of the arbitral process, the deference shown by a court to another decision maker, generally the arbitral tribunal but in this case the supervisory court, is not an abdication of the powers which are by their nature exclusive to the court. The enforcement of an award being an exercise of public sovereign power, and the exercise of such power being the exclusive function of the relevant domestic court, this is another instance in which courts are obliged to decline to mechanically enforce an external decision.

59

Subway Systems Australia v Ireland [2013] VSC 550; reversed by the Court of Appeal (Subway Systems Australia Pty Ltd v Ireland (2014) 46 VR 49) on other bases.

60 [2016] HKCFI 440.

61 China Nanhai Oil Joined Service Corporation Shenzhen Brunch v Gee Tai Holdings Co Ltd [1995] 2 HKLR 215, [49].

62 [2015] HKCFI 274; see also Alfred Wu and Daniel Ng, ‘The Hong Kong Court’s Approach to the Enforcement of Foreign Arbitral Awards’ (Jul 2017) Asian Dispute Review 125,129.

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THE ARBITRATOR & MEDIATOR JULY 2018

Combined effort One last point I would like to make is the importance of remembering that the reinvigoration of international and domestic arbitration in Australia cannot be achieved by governments or courts acting along. Governments have now made a crucial contribution to the process by procuring the enactment of substantially enhanced international arbitration legislation and ground-breaking domestic arbitration legislation. Rather, responsibility for this reinvigoration falls on all the various commercial arbitration stakeholders – commercial parties, lawyers (whether they be corporate, in-house lawyers, barrister or solicitors), arbitrators, arbitral institutions (particularly as educators and the custodians of ethical standards), the Commonwealth, State and Territory governments and the courts, to ensure Australia is seen as an attractive venue in the arbitration world. A failure to position itself in this way carries a very real risk that the country will become marginalised in this globalised world. This will have significant adverse consequences, particularly in terms of the development of our international legal expertise and the involvement of Australia's legal and other professionals in international trade and commerce. With responsibility for this task falling to a range of parties, close collaboration is essential to ensure Australia reaches its potential in international arbitration.

The Melbourne Commercial Arbitration and Mediation Centre One such example of the benefits that this collaboration can bring is the establishment in Melbourne of the Melbourne Commercial Arbitration and Mediation Centre. While the Centre is still very much in its infancy, its establishment has brought to Melbourne a world-class facility in which to conduct arbitrations – and also mediations. This has only been possible by the close cooperation of representatives from a number of the major arbitral institutions, the State government, the Victorian Bar, the Law Institute of Victoria, and the Supreme and County courts. It is only by everyone involved working together will Australia be able to establish itself – with its “grid” of arbitration centres – as a major centre for international arbitrations.

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THE ARBITRATOR & MEDIATOR JULY 2018

Professional development through reflective practice

By Mieke Brandon 1

Abstract Reflective practice assists mediators to personally and professionally develop, to work towards the highest standards of practice and potentially gain ‘artistry’. Through professional training and practical experience, mediators must be able to achieve a basic standard that can be further developed into professional excellence. They need to build a body of knowledge and skills together with learning from their experience through processes of reflection. To achieve this, mediators must consider reviewing their own ongoing theory of practice crucial to their growth and competence in whichever process they offer.

This article describes reflective practice and its goals for the development of self-reflection, professional development and for some reaching mastery in providing dispute resolution processes that match the parties’ needs.

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The learning cycle Participants in mediation training courses are usually (1) firstly unconsciously incompetent, as they do not know what they do or don’t know about the art and science of mediation. As they listen and practice the theory and application of the skills, they become (2) consciously incompetent, because they discover how much there is to learn and how much they do not know. 2 This sense of consciously being incompetent lingers until they have done a few mediations and have received positive feedback from employers, parties and peers about their work. Many mediators stay at level (3) of conscious competence and very few mediators make it to this fourth level of becoming (4) unconsciously competent, what Young calls ‘master mediators’. 3

Professional development Professional development as a mediator starts with ‘doing’ 4, which is applying the learned skills from the training and practicing this according to the ethical guidelines proscribed in the mediator’s professional

1

Mieke Brandon BA MSc(App) is a registered FDRP; accredited under the NMAS; self-employed DR consultant, trainer, coach, supervisor, assessor and author of many articles. She co-authored with Linda Fisher, Mediating with Families (3rd ed.

Thomson Reuters, 2012) and with Leigh Robertson, Conflict and Dispute Resolution (Oxford University Press, 2007). Some of the information in this article is drawn from Chapter 12 of this text used with pemission.

2 Paula Young, ‘Consciously Incompetent: A Mediator’s Cycle of Learning’ (Dec 2003) <http://www.mediate.com/articles/young10.cfm> (accessed 25 Sep 2017).

3 Young, above n 2, 1.

4 Daniel Bowling and David Hoffman, ‘Bringing Peace into the Room: The Personal Qualities of the Mediator and Their Impact on the Mediation’ (2000) 16(1) Negotiation Journal 5, 14.

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THE ARBITRATOR & MEDIATOR JULY 2018 role. The next stage is having a clear sense of how to expand what is known. Bowling describes the third stage as ‘being’, which means being aware of who we are, and our personal qualities. 5 The qualities that are most mentioned are: empathy, presence, genuineness, authenticity, connection, compassion, acknowledgement, understanding, engagement, and emotional intelligence so parties feel heard and valued. 6 It is suggested that the personal qualities of a mediator are perhaps more important than any techniques mediators have been taught. Conducting mediations is not for the faint hearted. 7 Practicing mediators, in their role, need to accept and feel comfortable with conflict and the expression of high emotions. They need to be able to tolerate ambiguity and contradictions, be omnipartial, have selfawareness and be disinterested in the outcome. They also need to be seen to be patient, even-handed, impartial, fair, respectful, trustworthy, intuitive, curious, and ethical. At the same time, mediators must be self-aware, authentic and responsive to the parties’ interests.8 Systemic theory has helped us to understand how, in the broader context, relationships are reciprocally influential, as certain patterns of behaviour in interactions can be observed that are functional or dysfunctional, creating misunderstandings or defensive reactions. Aspects of how the self is used show in our: • • • •

responses to conflict and high emotion; interpersonal communication style and the effect on others; strengths and limitations of handling informal or formal dispute resolution processes; and boundaries of our role as mediators.9

While the parties are often in a communication pattern of ‘reactivity’ with each other, it is important for the mediator not to get their ‘buttons pushed’ 10 and/or thinking there is a ‘victim and a villain’ in the scenario. In many cases one party may be devastated and the other has moved on. For example in a family law matter, or a personal injury matter where one party is claiming damages from the other, or an employment matter where a worker seeks reinstatement as a result of an unfair dismissal claim. Our objectivity and detachment from ‘being swept away by the drama’ is vital so the mediator does not begin to over- or under function as a result of their anxiety. 11

5

Bowling and Hoffman, above n 4, 14.

Helen Collins, ‘The most important personal qualities a mediator needs’ (Feb 2005) <https://icfml.files.wordpress.com/2014/11/the20mostimportantpersonalqualitiesamediatorneeds_collins2005.pdf> (accessed 25 Sep 2017).

7 Many mediators in organisations have regular individual and/or peer supervision for discovering one’s strengths on reflection and areas for professional development, with a focus on wellness to minimise vicarious trauma or burn out. These opportunities may not be as readily available and/or used by private practitioners, although private supervisors and membership organisations offer such reflective processes as well.

8 Louise Phipps Senft, ‘Mediator Excellence and Self-Awareness’ (Dec 2011) <http://www.mediate.com/articles/PhippsSenftL1.cfm> (accessed 25 Sep 2017).

9 Mieke Brandon, ‘REFLECTION AND SELF AWARENESS’: “if you don’t know your stuff you will get caught in your clients’ stuff and that will create more stuff”, (2013) 37 Dispute Resolution Centre News, Paper 41. <http://epublications.bond.edu.au/drcn/41>; See also David A Hoffman and Richard N Wolman, ‘Mediation As A Spiritual Practice’ (Jan 2011) <http://www.mediate.com/articles/HoffmanWolman.cfm?nl=300> (both accessed 25 Sep 2017).

10 See ‘hot buttons’ <http://www.convirgente.com/hotbuttons.aspx?tabid=2260&code=en> (accessed 25 Sep 2017).

11 Wayne F Regina, Applying Family Systems Theory to Mediation (University Press of America,®Inc., New York, 2011) 120.

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Reflection Reflection offers mediators a process for learning how to learn about their practice. In this regard, selfreflection allows a re-evaluation of the experience, through linking one’s thoughts, feelings and actions in response to what the participants were doing, either during a session or afterwards. 12 Lang and Taylor 13 explain that reflection is the process by which professionals link their experiences, events and situations of practice and then attempt to make sense of them in light of the professional understanding of relevant theory. They identify ‘reflection in action’ as the reflective process that occurs during practice and ‘reflection on action’, which occurs after the experience.14 Rather than being skilled mechanics trying out one tool after another without understanding what tool would be appropriate for the task, 15 mediators need to make theoretical principles of practice the foundation upon which to base an assessment of a conflict situation and design an appropriate intervention accordingly. Theories should be evaluated on the basis of utility as certain concepts will speak to one mediator and not to another.16 The more diagnostic models and tools mediators have, the more likely it is that they will understand any given dispute and intervene effectively. 17 How underlying emotions influence the discussions, negotiations and outcome in dispute resolution processes, is particularly important to understand. 18 Mediators, like all adult learners, have different ways of accessing information, some recall certain memorable incidents, and others ruminate on how they can improve their practice or put specific time aside and formally structure their reflections.19 Ideally, reflection in and on practice needs to become integrated into the practice of dispute resolution across the spectrum. The following provides a range of ways of encouraging reflective practice.

Concepts of reflective practice Bowling 20 suggests that reflective practices and mindfulness are ‘synergistic’. Bowling recommends finding a quiet space to recall a specific mediation event, listen and re-count the story that unfolds (by oneself or with a colleague), notice and learn from when you were ‘present’ or felt distracted, plan and record what you were satisfied with together with actions to overcome what you failed to employ (or forgot). Then, you should consider what you would repeat and what you would change. Your action plan can be revised until satisfied that it is steering your development as a mediator thematically. 21

12

Michael D Lang and Alison Taylor, The Making of a Mediator (Jossey-Bass, San Francisco, 2000) 19.

Lang and Taylor, above n 12, 69-91.

14 Lang and Taylor, above n 12, 117.

15 Michael Lang, ‘Becoming Reflective Practitioners’ (Consensus 1998, Jul 2000) <http://www.mediate.com/articles/reflect.cfm> (accessed 25 Sep 2017).

16 Gary T Furlong, ‘Conflict Resolution Toolbox: Introduction’ (Aug 2005) <http://www.mediate.com/articles/furlong2.cfm> 113 at 10 (accessed 25 Sep 2017).

17 Furlong, above n 16, 10.

18 See Daniel Shapiro, ‘How do you handle emotions in negotiation?’ <https://www.youtube.com/watch?v=xBu9aSR3q7A>; See also Understanding David Rock’s SCARF Model <https://conference.iste.org/uploads/ISTE2016/HANDOUTS/KEY_100525149/understandingtheSCARFmodel.pdf> (both accessed 25 Sep 2017).

19 Nan Waller Burnett, ‘Master Practitioner Series: The Reflective Brain’ (2012) <http://www.disputepro.com/files/The_Reflective_Brain.pdf> (accessed 25 Sep 2017).

20 Daniel Bowling, ‘Who am I as a Mediator?’ (Fall 2005) ACResolution, 14-15.

21 Bowling, above n 20, 14.

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THE ARBITRATOR & MEDIATOR JULY 2018 Fox and Gafni 22 state that newer mediators in practice regularly reach a decision point in a mediation in which they have to ‘engage their minds’ review the knowledge gained from their training and ‘think through’ the best next move to make, in contrast to ‘master practitioners’ who ‘relax their minds’, listen into what they call the force field, and ‘perceive what is needed’.23 Mediators, who can feel the force, ‘intuit that it is time to take a break, to encourage an apology, to offer an analysis of liability and damages, or to initiate some other kind of intervention’. 24 Fisher 25 contrasts mindfulness ‘a heightened state of awareness of both self and environment’ with mindlessness, which includes mediators becoming model bound, having personal goals about their success rate and making assumptions about what the dispute is about and whether emotions are appropriate. He recommends that it helps to firstly stop what you are doing, secondly take a deep breath, and to thirdly observe bodily sensations and mental activity, before proceeding which helps to become mindful in the moment. This state of awareness helps to reduce reactivity and enhances the mediator’s ability to fully connect with the parties.26 Bronson 27 promotes reflection through using a self-assessment tool which links the mediator’s presence and ethical behaviour as fundamental attributes with their knowledge and skill. In each mediation process there is a unique combination of the mediator and parties working together to understand and make decisions regarding a specific dispute at a particular moment in time. 28 The whole case needs to be considered and addressed in a process of reflection, as it combines the parties’ expectations, mediator suitability, the setting, and time frames for interventions. 29 In reflecting, we should recall a key intervention we made and why, as this helps us to reflect on the appropriateness of our actions, our creativity, and whether we added value.30 When the work gets easier and mediators take on a range of disputes and disputants without fearing a disaster or having a stake in the outcome, mentoring, teaching and presenting at conferences, and perhaps even publishing and training other mediators, mediators become (3) consciously competent. As mediators continue to learn from different teachers, trainers and mentors who bring different theories and practice applications, mediators will continue to experience the cycle of what mediators know now, what they do not know now, what there is still to learn and what they do not know yet. As life-long learners and experience in dispute resolution processes grows, there is still much to discover and this will continue for many years into the future.

This growth, as ‘conflict resolvers’, suggests Mayer, ‘requires us to increase our sophistication in thinking and applying our concepts in our practical efforts through re-evaluating this thinking by engaging in reflective practice to gain the characteristics of advanced practitioners’.31

22

Erica A Fox and Marc Gafni, ‘Seeing with New Eyes’ (Fall 2005) ACResolution, 22-25 at 24.

Fox and Gafni, above n 22, 24.

24 Fox and Gafni, above n 22, 25.

25 Tom Fisher, ‘Beginner’s mind, cultivating mediator mindfulness’ (Fall 2005) ACResolution, 29.

26 Fisher, above n 25, 29.

27 Sue Bronson, ‘Improving Mediator Competence Through Self-Assessment’ (Winter 2000) 18(2) Mediation Quarterly 171 at 171-175.

28 Bronson, above n 27, 117.

29 Sue Bronson, et al., ‘Self-Assessment Tool for Mediators, Wisconsin Association of Mediators Peer Support Team of the Standards and Ethics Committee’ (Madison, USA, 1998) 1-16.

30 Judy Dell and Alison Cotter, ‘Reaching for the stars: Encouraging reflection on practice: Strengthening Mediation Practice: Reflective Practice and Assessment’ (2012) <http://www.mediationconference.com.au/wp-content/uploads/2012-conferencepapers/Reaching%20for%20the%20stars%20-%20Dell%26Cotter.pdf> (accessed 25 Sep 2017).

31 Bernard S Mayer, The Dynamics of Conflict Resolution (Jossey-Bass, San Francisco, 2000) 239.

23

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Self-awareness The five dimensions of emotional intelligence consisting of three personal competencies described by Goleman 32 as self-awareness, self-regulation and motivation, combined with the social competencies of empathy and other social skills, assist mediators to handle challenging situations with diplomacy and tact.

Bjerknes and Paranica 33 refer to the level of optimism or pessimism that prevents mediators from giving up and provides them with the motivation for starting again and again with new parties in dispute. The key to motivation comes from understanding successes in the same terms as the reasons for setbacks, by placing appropriate responsibility upon oneself and things external to us.

Mediators’ awareness of the emotions with which they enter mediation, the feelings they have about the subject of the dispute, the emotional reactions that the mediation generates are all pertinent to how the mediation proceeds. 34 Being open to learning about who we are, being motivated to reflect on our role as mediators, and taking into account how we affect others becomes essential to our work and life.

Intuition and gut feeling Many mediators explain their work with parties as ‘working intuitively’. Intuition can be triggered and results in an instinctive response to the dynamics in the room or what is being said or what is not spoken of. The mediator’s intuitive knowledge comes from their immediate experience. Their interventions appear from automatic spontaneity. They often cannot express this in precise words as their intuition provided them with a certain truth. Becoming aware of this source of knowledge, learning to understand and to trust it will develop over time and allowing oneself to do some things by guesswork.

Formal professional training cannot offer the kinds of experience critical for the training of effective mediators according to Benjamin. 35 ‘No theory can replace gut instinct’ Benjamin states, the heart of practice is not technical expertise, but gut instinct and intuition. He urges that this needs to be developed by mediators as ‘the best professional practitioners in any field come to appreciate the value of tacit knowing, hunches and intuitive understanding’.36

Improvisation and spontaneity Gladwell 37 describes how people can think without thinking and in a ‘blink’ of a moment come up with amazing ideas and make sophisticated decisions on the spur of the moment. Gladwell suggests that while the ideas or decisions seem chaotic and random, and without the benefit of any kind of script or plot, the improvisation is actually an art form and has its own rules.

It may assist mediators to think that when someone or issues get challenging, consider this as an ‘offer’ as this changes the perspective. 38 To receive these situations as ‘offers’, McWalters suggests that mediators,

32

Daniel Goleman, Working with Emotional Intelligence (Bantam Books, New York, 1998) 317.

Daniel Bjerknes and Kristine Paranica, ‘Training Emotional Intelligence For Conflict Resolution Practitioners’(Jul 2002), <http://mediate.com/articles/bjerknes.cfm pp 1-4> (accessed 25 Sep 2017).

34 Lori S Schreier, ‘Emotional Intelligence and Mediation Training’ (Fall 2002) 20(1) Conflict Resolution Quarterly 99 at 101.

35 Robert Benjamin, ‘Gut Instinct: A Mediator Prepares’ (Apr 2002) <http://www.mediate.com/articles/benjamin6.cfm>; See also Robert Benjamin, ‘The Natural Mediator’ (2004) <http://www.mediate.com//articles/benjamin1.cfm> (both accessed 25 Sep 2017).

36 Benjamin, above n 35.

37 Malcolm Gladwell, Blink: The Power of Thinking without Thinking (Little Brown & Co, New York, 2005) p 113.

38 Viv McWalters, ‘Improvised facilitation-the paradox of being prepared to be spontaneous’ (2006) 8(6) ADR Bulletin, 104-106.

33

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THE ARBITRATOR & MEDIATOR JULY 2018 ‘need to be present with all their senses, listening to all and being aware of what is happening in the room before acting to do something’.

Developing artistry in practice The idea of artistry in mediation, can be achieved through a process of reflection before, during and after a session when mediators reflect through ‘formulation’, using their ‘constellation of theories’. 39 Formulation is done through putting together a) the characteristics of the disputants, b) the context and type of dispute, and c) the methodology of mediation that would be most helpful. Such formulation is speculative, but never true or false. The formulation takes into account underlying power dynamics, and areas of conflict such as structural, data, relationship, and value causes of conflict. Formulations also determine the interests of all parties and any legal aspects of the dispute. 40

Reflecting in action Reflection in action happens when a mediator watches, hears and analyses what they are doing during a mediation session. By paying particular attention to critical moments and making informed choices about what to ignore, what to address next, or what intervention will make a difference, mediators learn from the experience in action.41 Most mediators have learned a number of models and develop different styles and approaches according to their personalities. What different mediators demonstrate will vary according to the circumstances and their framework based on their values, personal beliefs, influences from their background and training and the theories studied. It is thought that mediators with a settlement focused framework and knowledge about the content of the dispute will most likely be more evaluative than facilitative. Mediators with a bias for the development of improved relationships in a dispute will possibly be more transformative and therapeutic in their approach.

Mediators who have a framework that suggests that their role is purely to facilitate the discussions between the disputing parties will be more facilitative focused on parties’ self-determination. 42 When a certain theory no longer completely fits the mediator’s professional development or the types of disputes the mediator is currently involved in, they may adopt, adapt or synthesise a range of other theories and most likely apply their techniques and interventions accordingly for the benefit of the parties.

Reflecting on action Lang and Taylor 43 state that by reflecting on practice, mediators can come to fully know what they know, such as their accumulated personal knowledge and understanding, which includes facts, models, theories, and core beliefs forming their ‘constellation of theories’. These are all interconnected with the field of conflict resolution. The constellation includes dispute resolution processes, conflict, communication and negotiation theories, and ideas about the nature of mankind, ethical practice, laws and other factors that affect the dispute resolution practitioners’ work.

39

Lang and Taylor, above n 12, 69-91.

Lang and Taylor above n 12, 69-91.

41 Lang and Taylor above n 12, 93-118.

42 See Linda Fisher and Mieke Brandon, Mediating with Families (3rd ed. Thomson Reuters, Sydney, 2012) 36-39 for a range of frameworks.

43 Lang and Taylor, above n 12, 93-118.

40

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THE ARBITRATOR & MEDIATOR JULY 2018 To achieve an acceptable standard of practice, mediators need to work congruently, so that their beliefs and practice approach fall into line with what they do. This is a reflection on action and for this purpose supervision is invaluable. 44

Reflection on reflection In reviewing one’s abilities and challenges as a result of reflexive journaling, debriefing, informal and formal supervision a ‘reflective experience-on-reflection is created’.45 To foster this growth in our learning, as ‘conflict resolvers’, suggests Mayer, ‘requires us to increase our sophistication in thinking and applying our concepts in our practical efforts through re-evaluating this thinking by engaging in reflective practice to gain the characteristics of advanced practitioners’.46 To achieve ‘mastery’ 47 in practice mediators need to have a combination of psychological, intellectual and spiritual qualities as mediation is less about what mediators do and more about who they are. 48

Professionalism in dispute resolution Knowing precisely what dispute resolution services will be rendered, and the required skill set to deliver that service, is necessary to target the training and qualifications that will underpin credentialing. 49 Ideally mediators need to be able to describe to their clients and colleagues the details of their process and the range of interventions and techniques they use for quality assurance so that the parties are clear about what the mediator has to offer them. 50 ‘What disputants need from conflict resolvers is more than process: they need understanding, engagement, creativity, strength, wisdom, strategic thinking, confrontation, patience, encouragement, humour, courage, and a host of other qualities that are not only about process or substance.’ 51

Conclusion Mediators can use many different approaches along the continuum of dispute resolution processes and practices, from arbitration at one end to self-determination at the other. When they work in one of these processes, it is important for mediators to clearly articulate their practice approach to that particular practice area. Many times, preparation may be extremely useful and from time to time letting go of the

44

See Fredrike Bannink, Handbook of Positive Supervision (Hogrefe, Ashland, OH, 2015); See also ‘What does “good” professional supervision look like?’ Some thoughts from experienced supervisors LEADR and IAMA (2015) <https://www.resolution.institute/documents/item/1372> (accessed 25 Sep 2017).

45 Samantha Hardy, "Teaching Mediation as Reflective Practice"(2009) 25(3) Negotiation Journal 385 at 388 <https://researchonline.jcu.edu.au/15882/> (29 May 2018).

46 Bernard S Mayer, The Dynamics of Conflict Resolution (Jossey-Bass, San Francisco, 2000) 239.

47 Daniel Bowling and David Hoffman, ‘Bringing Peace into the Room: The Personal Qualities of the Mediator and Their Impact on the Mediation’ (2000) 16(1) Negotiation Journal 5 at 6: <http://media.wiley.com/product_data/excerpt/01/07879685/0787968501.pdf> (29 May 2018).

48 Love and Kovach cited in Currie, C. M., Mediating Off the Grid, (2004) 7. <http://www.mediate.com/articles/currieC4.cfm> (accessed 25 Sep 2017).

49 Love and Kovach cited in Currie, C. M., Mediating Off the Grid, (2004) 7. <http://www.mediate.com/articles/currieC4.cfm> (accessed 25 Sep 2017).

50 Charkoudian L, De Ritis C, R Buck R and Wilson CL, ‘Mediation by Any Other Name would Smell as Sweet- or Would it?

The Struggle to Define Mediation and the Various Approaches’ (2009) 26(3) Conflict Resolution Quarterly 293 at 313.

51 Bernard S Mayer, Beyond neutrality: confronting the crisis in conflict resolution (Jossey-Bass, San Francisco, 2004) 146.

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THE ARBITRATOR & MEDIATOR JULY 2018 plan and improvise is just as important. Characteristics of mediators and facilitators working spontaneously, by improvising, or intuitively, and by gut feelings will become evident in the discussions about their work, which often cannot be verified by objective standards. The growing and diverse field of mediation and the flexible concept of the mediatorâ&#x20AC;&#x2122;s role must, however, meet the challenges of professionalism according to ethical practice obligations and responsibilities, national standards, accreditation, codes of conduct and grievance processing mechanisms. Professional development through reflective practice is one way to achieve this.

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Facilitating restorative justice in New Zealand: a personal account

By Christina Tay 1

Abstract I clearly recall watching the training video on restorative justice and thinking to myself, gosh, could I really do this work? The amount of emotion and hurt being displayed in the role play on the video made me feel rather uncomfortable. The real life facilitator on the training video seemed to me to possess a real capability of being able to sit with discomfort, gently but firmly asking those involved in the preconference meeting subtle probing questions to tease out their feelings, emotions and experiences. I was especially impressed by his ability to hone in on those individuals who were displaying irritation or frustration but not verbalising this to the group. As I made my way through the training material, I wondered if I would ever reach a point of being able to do this work credibly enough to ensure that harm was addressed, without harming those involved in the restorative justice conference. Fast forward three years, and I am happy to say that I have built up enough experience and have been fortunate to be surrounded by wonderful restorative justice peers that I feel able to say that I really didnâ&#x20AC;&#x2122;t need to worry, as much as I did.

----I do acknowledge that my transition from a fledging restorative justice facilitator trainee to a New Zealand Ministry of Justice approved accredited restorative justice lead facilitator was not a simple process. I spent many hours involved with pre-conferences and conferences. A huge amount of effort goes into trying to contact the offender and offence victim(s) and being able to convince them to initially meet with myself and a co-mediator. This proved challenging, at times, because people didnâ&#x20AC;&#x2122;t know what to expect or they felt reluctant to meet with a person that had caused them harm. Mostly, though, people were open to the idea of at least meeting and discussing what restorative justice was and how they may be able to gain some benefit from being involved.

The work allowed me to visit offenders and offence victims in their homes or in community rooms. I also went into the local prison to meet with offenders held on remand. All in all, it was all worthwhile. Being able to sit with people, sit with their shame, their guilt, their pain and their hurt and have them share this with me and my co-mediator was a privilege. This work offered me an insight into how people process their experience of being hurt or being the person who has caused harm. The training that is provided offers a sound foundation on how to run the process.

However, what the training did not offer is how to work within the restorative justice process on a very human level and the myriad of reactions that present at the conferences. Having the ability to provide

1

At the time of writing this article, Christina Tay was an accredited restorative justice lead facilitator, completing her Masters in Mediation and Conflict Resolution through University of Strathclyde.

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THE ARBITRATOR & MEDIATOR JULY 2018 situational awareness is vital. Being able to sense when a situation may evolve into an unsafe experience is a skill that improves over time. For me, safety for all involved was always paramount. That means that at times I had to raise my voice, take people from the room to calm down and, on one occasion stand up in the middle of the conference and clap my hands to intervene in a conversation that was escalating due to the conflicting nature of it.

It was the human interaction element of the role that I loved the most. As I reflect on the many people that I met from such varying backgrounds, I realise how blessed I have been to meet all of these amazing people. There was a lovely exchange of wisdom, ideas, resilience, kindness, compassion and learning that is shared with each person that I came into contact with. I am not saying that I never experienced frustration or disappointment; I am of course talking about interacting with humans. On the whole, the majority of people were committed to the principles of restorative justice. I did on occasion meet with an offender who had been instructed by their lawyer to 'do restorative justice' as it would be seen as favourable by the court. Once I explained the process of a restorative justice conference to the offender, some elected to withdraw as the idea of meeting a person they harmed was just too much for them to bear.

I want to highlight that there is immense courage required by both an offender and an offence victim to agree to a conference. In a country the size of New Zealand, some were worried that once they met the offender, they could be identified. This is a very legitimate concern. However, after talking through these concerns, a lot of offence victims arrived at their own conclusion that the desire and opportunity to ask about the ‘why’ outweighed any hesitation or concern they possessed.

There is so much of oneself that one brings to this work. I was raised in a mix culture household, my mother is a New Zealand Maori and my father was from Singapore. From my mother’s culture I observed the silent strength exuded by the strong women in my wider family. They could translate a great deal through the expression in their eyes, that words were not required. In my role as a lead facilitator, I applied this knowing in the form of being able to sit with silence. Being raised by a father from an Asian culture, I learned how important it was to ensure that I did not create a situation where people ‘lost face’.

My father also taught me the importance of standing in my truth. My cultural background and my passion for travel over the past 20 or so years set me in good stead for dealing with people from many different cultures and races. The underlying thread in dealing with the many people that I came into contact with was honouring each of them. Having a clear desire to truly hear them and understand what they needed to share as either an offender or an offence victim.

In New Zealand, we talk about restorative justice being ‘victim-centred’. Yes, I agree with that wholly however, I have always viewed restorative justice as being people centred. One of the key reasons I became involved in restorative justice was to work with people in a way where I could help them to restore their self. My vision was to work with offenders in such a way that I could challenge their thinking and their decision making which may persuade them from going on to commit further crime.

This for me meant discussing who they are, what their vision was for their self and what was possible in making this vision a reality. In my interactions with offence victims, I looked to understand how they could best benefit from meeting with the offender and how I could support them on many levels to achieve this.

In the Maori culture we have a beautiful saying that asks: "what is the most important thing in the world?

It is the people, the people, the people". This for me was my guiding principle in dealing with both offenders and offence victims. As a restorative justice facilitator, I had the absolute privilege of working with those involved in an experience where harm had occurred and through the application of skill and self, I was able to work with these individuals to assist them to transition beyond pain, hurt and for the offender, often shame and guilt. My passion for restorative justice is underpinned by the amazing shifts that I witnessed taking place between offenders and offence victims in a conference. I saw people move from a position of pure anger and deep pain to true forgiveness. The effect that true forgiveness had on an offender was incredible to behold. It was a true privilege to observe the creative, compassionate, kind and generous outcomes emerge from joint thinking in a restorative justice conference.

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THE ARBITRATOR & MEDIATOR JULY 2018 Society has so much to gain from implementing restorative justice across many different forums. I sincerely hope that Scotland is able to implement restorative justice for the benefit of many. There is so much to be gained as a society in learning to listen to each otherâ&#x20AC;&#x2122;s stories, to acknowledge pain on a human level and to work collaboratively to move towards addressing harm. When we do this work, we look to improve communication between people and that can only benefit present and future generations in terms of human interaction and I for one, am certainly in favour of this.

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Just say sorry! The place of apology in conflict resolution

By Chris Marshall 1

Abstract An apology can have a meaningful impact on a situation, and provide the aggrieved party with the comfort of acknowledgment. Through use of a case study, the author explores the power of apology. This article looks at the benefits, difficulties and consequences of apologising in conflict resolution.

----On 21 October, 1998, a 10 year-old child named Lisa Shore was admitted to the emergency room of the world-renowned Hospital for Sick Children in Toronto. She was there to get treatment for a chronic pain in her leg, stemming from a broken bone she had suffered eight months earlier. Her condition was not life threatening, but by the next morning, tragically, Lisa was dead. She had not died from her complaint, but from an accidental overdose of morphine. The two nurses responsible for her care had failed to properly monitor the morphine pump during the night, which they were supposed to check every hour.

The parents brought a civil case against the hospital, which was settled in September 1999 before a mediator. At the same time, a coroner’s inquest was underway. The Coroner released his findings in early 2000 in which he ruled that Lisa’s death was a “homicide” and made 35 recommendations for preventing similar deaths in the future. This led the Toronto police homicide squad to launch an investigation into the case. In 2001, they laid charges against the nurses for “criminal negligence causing death”, but withdrew the charges in 2003 before the case went to court.

In 2005 – some seven years after Lisa’s death – the two nurses were referred to the nurses licensing body, where they were found guilty of professional misconduct. Immediately after the verdict, however, the nurses returned to their regular employment at the same hospital.

Lisa’s mother, Sharon, ended up writing a book in which she detailed her prolonged battle with the health authorities to learn the truth of what had happened to Lisa and to receive an appropriate apology for, what she called, this “unmitigated disaster”. At different points in the process, the family did receive a number of so-called written “apologies”, which included statements such as: “This was a very sad event and we offer sincere condolences to the entire Shore family”.

1

Diana Unwin Professor of Restorative Justice School of Government, Victoria University of Wellington. This is the text of a paper delivered at the Relate-Resolve-Restore Conference in Wellington, Nov 1-3, 2017.

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THE ARBITRATOR & MEDIATOR JULY 2018 “Lisa’s death is a very sad thing. The hospital offers its sincere condolences to the entire Shore family”.

“We apologize again to the Shore family for the pain we have caused them. They can be sure the College will review the nursing issues in detail.”

Such expressions of sympathy did nothing to mitigate the parent’s anguish or stem their anger. Lisa’s mother referred to them as a “co-ordinated string of non-apologies”. She deeply resented the fact that it had taken the hospital seven years before properly reprimanding the nurses or holding them to account.

Even after doing so, by continuing to employ them it had effectively “wrapped them in a protective cocoon”, denying they had done anything wrong. She was also scornful of the hospital’s attribution of Lisa’s death to a “systems error” rather than to human fault or egregious carelessness.

Twelve years after the event, Lisa’s mother was asked to describe the kind of apology she thought she ought to have received from the hospital, and the impact of what she did receive instead. This is part of what she wrote: “I have been asked to write about the apology I would like to have received. That apology would have three things that yours did not: it would have been timely; it would have acknowledged that the two nurses had been grossly negligent; and the two nurses would have been fired and reported to the College of Nurses for professional misconduct No apology in the world could ever have assuaged my pain, but a genuine one from you would have allowed me to forgive. Instead, your apologies were nothing but hot air.

Each one made me hate you a little more…

How could you fail to realize that your nursing chief’s rehearsed, emotionally flat apology, proffered from the witness stand at the eleventh hour to the gathered media and hospital executives, would be seen as offensive and insincere…I said to your president that his apology was worthless unless he did something about the two nurses – fire them, I said – and he refused.

You fired your Chief of Nursing instead, making her the scapegoat for your sins. Was that supposed to appease me?...Is it really a surprise that I have nothing but contempt for you?..

How much more believable an apology would have been, when eventually tendered, if it was accompanied by hard evidence that the issues had already been appropriately dealt with. Your apologies, without acknowledgement and ownership, were glib and selfserving.

I needed you to acknowledge that your nurses had been grossly negligent. I needed to hear you say that what happened – my daughter’s death – should not have happened.

Part of an admission of wrongdoing is taking responsibility for it. You did not. Along with responsibility, there should be remorse, shame, guilt – emotion! That this happened under your watch. There was none of that.

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THE ARBITRATOR & MEDIATOR JULY 2018 Most of all, I needed to see concrete action taken, proof that you would not – could not – employ nurses who did not follow hospital policies, procedures, or doctor’s orders, and who lied to cover up their wrongdoings.

It is still not too late. I am here.”2 There is so much insight here into the character of apology that we could spend the rest of the session dissecting it. In technical terms, what she wanted from the hospital was a “full apology”, but she only received what is sometimes called a “partial apology” – or, in her words, “a string of non-apologies”. The hospital’s carefully calibrated statements of regret came across as insincere, manipulative and selfserving, inflaming her sense of injustice and inflicting additional pain.

Arguably, it may have been better the hospital not to have apologised at all than to offer a sequence of flawed apologies. For, as Aaron Lazare observes, “an apology that fails is potentially more destructive than no apology at all. With no apology, one can hope for a future apology, but with a failed apology, one often concludes the matter is hopeless”. 3

The paradox of apology This heart-wrenching story is a cautionary tale about the problems and pitfalls involved in factoring apologies into dispute resolution processes, not only for organisations or statutory bodies facing formal complaints, but also in private disputes between individuals. The reason for this dilemma is that there is something deeply paradoxical about the social dynamics of apology-making.

On the one hand, saying “sorry” when things go wrong is an exceedingly simple, intuitively necessary and utterly commonplace occurrence. In the rough and tumble of everyday life, apologies function as a kind of social lubricant that prevents emotional overheating between people and facilitates ongoing cooperation.

In the ancient Babylonian Talmud (Pes 54a), it says that God created repentance – which is the Bible’s word for apology – even before he created human beings, so that when human beings did eventually come on to the scene, they would be able to live together successfully. Apology, in other words, is an essential prerequisite for human collaboration, and the more numerous our interactions are with one another, the more frequent apologies become.

Today we live in the most interactive and interdependent period in human history, due especially to modern communications technology and to the growing emphasis on collaborative work environments.

This means that for most of us, apology-making is virtually a daily experience. This is especially the case for women, who, statistically, apologize more readily and more often than do men, for a variety of culturally gendered reasons. But for men as well, apology-making is a routine happening that eases tension and preserves social peace.

This is true, not just for resolving minor squabbles between individuals, but also for resolving more entrenched conflicts and formal grievances. When people lodge formal complaints about the way they have been treated by someone else, amongst the things they are looking for is an acknowledgement of the distress or injustice they have suffered, and some kind of appropriate remedy, signified by an apology.

2

Frank Gomberg, “Not Too Late”, in Susan McIver and Robin Wyndham, After The Error: Speaking Out About Patient Safety Saves Lives (Toronto: ECW Press, 2013).

3 Aaron Lazare, On Apology (Oxford: OUP, 2004), 73.

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THE ARBITRATOR & MEDIATOR JULY 2018 Without an apology, the complainant’s feeling of redress will likely remain partial. We know from research that receiving an apology serves to: • • • •

Reduce feelings of anger and the desire for retribution, and to promote efforts to find mutually agreeable solutions and outcomes; Improves the dynamics of settlement negotiations, and prevents the escalation of small irritations into full blown legal conflicts; Helps those responsible for causing harm to deal with their feelings of guilt or regret or failure, and to express empathy for those they have hurt.

Apologies also enable those involved in ongoing relationships, such as in a workplace, to “clear the air” and make a fresh start – indeed, only an apology has the power to do this.

What this means is that providing a mechanism for aggrieved parties to offer and receive an apology is not only a sensible way to address conflicts and complaints, it can also be extremely cost-effective. One American study found that the decision of hospitals in one district to proactively go through their records and disclose past medical errors to patients with apologies, even when the patient did know of the mistake, led to an overall reduction in formal complaints and a 61% saving in legal costs.4 So then, this is one side of the apology paradox: it is a straightforward, necessary and pervasive social practice that enables us to cope with human imperfections and to allow our relationships, both intimate and formal, to function more effectively. We simply cannot do without it.

The other side of the paradox, however, is that apology is also an extremely complex phenomenon, fraught with potential complications and uncertainties. We cannot do without it, but doing it well can sometimes prove exceedingly hard, and the consequences of not doing it well can be disastrous.

When it comes to conflict resolution processes, the functioning of apology can be complicated by three kinds of factors: The first is a lack of skilfulness on the part of the individuals involved. Some people find it extremely difficult, or even impossible, to apologise, even when they are clearly in the wrong (think of Donald Trump, for example). To do so would undermine their need to feel in control of the situation or would threaten their self-image by triggering feelings of failure or by lowering them in the eyes of others.

Even those who are prepared to acknowledge personal fault sometimes do not know how to go about expressing it, since it was never part of their family upbringing. This is often interpreted as a lack of empathy, or even a psychopathy, but it may also be due to a kind of neuro-linguistic deficit, in that the art of apology, through which to identify and articulate their feelings, has never been learned.

A second complicating factor is the existence of ambiguity or uncertainty about whether an apology is justified or appropriate in these particular circumstances. Such ambivalence is common in two situations in particular – where the harm has been accidental or unintentional or unavoidable, and in situations where both parties have contributed to the problem, where the blame is shared, or where both parties feel that they are the true victim and the other side the wrongdoer.

4

Nina Khouri, “Sorry seems to be the Hardest Word: The Case for Apology Legislation in New Zealand”, NZ Law Review 603 (2014), 609.

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THE ARBITRATOR & MEDIATOR JULY 2018 This is quite common in dispute resolution, as we all know. Interpersonal conflict is often a complex, multi-layered and nuanced reality, and the appropriate place of apology in resolving it correspondingly ambiguous.

The third thing that often complicates the practice in conflict resolution processes – especially when it involves employers or professional bodies or statutory agencies – are the possible legal ramifications of proffering an apology to the complainant. Apology, after all, implies an admission of fault, and an admission of fault may constitute acceptance of legal liability. This, in turn, risks significant financial costs for the respondent, either to fight the case in court or to settle it out of court.

Accordingly, company managers, directors and lawyers, insurance companies, public agencies and professional bodies frequently instruct their members never to apologise in informal resolution processes, because to do so may spill over in legal proceedings. In short, the fear of possible litigation, with all its associated financial and reputational costs, militates against providing the very thing that can be most helpful in achieving an early and satisfying resolution of the dispute – a straightforward, open, sincere apology.

Several mechanisms have been used to ease this problem. One is to have the parties sign confidentiality or “without prejudice” agreements, so that any statements made in a negotiation setting cannot be used in court. Such agreements are standard fare in mediation (and in some restorative processes). But they are not as legally watertight or comprehensive as often assumed, 5 and to offer an apology only on the proviso that it is “without prejudice” surely undermines its sincerity.

Several jurisdictions have enacted “apology legislation” that renders apologies offered in a settlement 6 process inadmissible as evidence of liability at trial. New Zealand’s no-fault Accident Compensation Corporation compensation scheme eases the need for such legislation here, though a case can still be made for acknowledging in law the importance of being able to offer apologies without legal reservation in all informal settings.

Another common strategy to forestall possible legal problems is to carefully word the apologies so as to avoid admitting full responsibility. As noted previously, a distinction is often made in complaint

5

In NZ, s57 of Evidence Act 2006 prevents apologies offered during a settlement negotiation or mediation to be admissible as evidence of liability in civil proceedings. However there are problems with the application of this to apologies: • The privilege only applies to settlement negotiations in a civil dispute; it does not cover apologies offered prior to any investigation or mediation, and it does not apply to non-civil disputes • It only applies insofar as the information or settlement document is kept confidential, and lapses if this confidentiality is breached. Publically delivered apologies will never be privileged • While an apology can be rendered privileged by the apologizer qualifying the apology as “without prejudice”, this undermines the sincerity of the apology • Pending changes to the Evidence Act will allow the court to override any “without prejudice” agreement “in the interests of justice” See Nina Khouri, “Sorry seems to be the Hardest Word: The Case for Apology Legislation in New Zealand”, NZ Law Review 603 (2014), 604-34.

6 Apology legislation has been enacted in the UK, all states and major territories of Australia, nearly all Canadian provinces and over 30 states in the USA. Apologies are excluded as admission of liability but may be used in assessing damages. In some cases, only partial apologies are protected; in others, especially in Canada, all apologies are included. NZ does not have such legislation, and the pressure for it is eased by the existence of ACC. However, Khouri argues that there is still room for such legislation and that it should include full apologies, not just partial apologies (which are not admissions of liability anyway).

Although some argue that apology legislation is unwise because it undermines the moral significance of apology and could encourage the cynical use of apology to dupe complainants into foregoing their due rights – which litigation would prevent – the arguments in favour are much stronger. Clearing the way for apologies to be offered without legal reservation would promote dispute resolution and acknowledge the social value of apologies as reinforcing social norms and strengthening social bonds. See further Nina Khouri, “Sorry”, 604-34.

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THE ARBITRATOR & MEDIATOR JULY 2018 processes between “partial” and “full” apologies. A partial apology is an expression of regret for the situation that has occurred, without conceding personal fault, such as saying, “I am sorry this happened to you” or “Lisa’s death is a very sad thing; the hospital offers its sincere condolences”. A full apology includes an active acceptance of responsibility for perpetrating the harm, such as, “I am sorry I did this to you” or “I made a mistake, which I deeply regret”.

The value of such a distinction is that it recognises the complexity of situations in which harm occurs and the problem of calculating blame. But the whole notion of a “partial apology” is, to my mind, deeply misleading. It is like being “partially pregnant” or “a bit truthful” or “moderately faithful”. The qualifier doesn’t suit the quality. A partial apology is not a bit of an apology; rather it is a distinct kind of acknowledgement, one of three different ways in which we commonly employ the phrase “I am sorry”.

• • •

Sometimes we use it as a moral judgment on our actions, an acknowledgement of personal fault, such as, “I am sorry I stole your wallet”.

Sometimes we use it to express emotional solidarity with someone else’s distress, such as saying, “I’m sorry to hear your father died” or “I’m sorry you didn’t get the job”.

And sometimes, we use the phrase as a rational acknowledgement of social etiquette, such as, “I’m sorry for yawning” or “I’m sorry I have to leave early today”.

Only the moral usage constitutes a true apology. The second category is perfectly legitimate, but it is not a partial apology and should not be called such. It is an expression of sympathy or compassion. The test of a true apology is where the apologizer indicates that he or she would not repeat their behaviour if the same circumstances arose in the future. Apology involves choices and actions, not just feelings, though emotions are certainly entailed.

So, the meaning and impact of the statement “I am sorry” depends entirely on the context, and it is unhelpful, and potentially detrimental in resolution processes, to regard all usages as instances of apology.

We need to be more discriminating about it than that.

Different types of apology To try to bring some clarity to the semantic confusion that surrounds the category of apology, I suggest it may be helpful to distinguish six common ways we construct apologies, with only three of them having a positive role to play in conflict resolution processes.

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Types of apology 1. Polite apology

2. Pseudo-apology

“I beg your pardon!”

“I’m sorry you found my behaviour so upsetting.”

“Sorry to interrupt you but…”

“Apologies for having to leave early today.”

“We regret any inconvenience caused by the postponement of this flight.”

“I’m sorry if you have been offended.”

“I’m sorry you took it the wrong way.”

“In hindsight, mistakes were made.”

“I regret any injuries that may have occurred.”

“It’s not really my fault, but I apologize anyway.”

3. Premature apology

4. Sympathetic “apology”

“I’m sorry for everything. Let’s just forget about it and move on.”

“I am really sorry things worked out this way.”

“Sorry, sorry, sorry, OK then?”

“I’m sorry for what you’ve been through; it has been terrible.”

“I’m sorry to hear your father passed away.”

“I’m sorry your wife is unwell.”

“I am sorry your arm was broken; it was an accident.”

5. Personal, moral apology

6. Public, formal apology

“I apologise for speaking that way to you; I should not have done so.”

Made by a representative body to a broad audience, acknowledging responsibility for harm and offering repair

“I’m sorry for not contacting you earlier; I should have remembered.”

“I apologise for hurting you; it won’t happen again.”

“What happened was wrong, and I’m sorry for my part in causing it.”

(1) Polite apologies are simple expressions of social nicety – such as, “I’m sorry for being a little late” or “sorry you have to listen to my croaky voice”. These are irrelevant for our purposes since they don’t even imply the existence of conflict, never mind resolution.

(2) Pseudo-apologies are statements such as, “I’m sorry if I offended anyone” or “I’m sorry you took it so hard”. I call them “pseudo apologies” because they masquerade as an apology, when in fact they shift the burden of responsibility from the actions of the apologizer to the reactions of the person who takes offence. Such apologies are exceedingly damaging and should be avoided at all costs in resolution conversations.

(3) Premature apologies are where the apologizer hurries to offer an apology before they have confronted the true impact of their actions or in order to shut down the conversation before it gets too uncomfortable. If the apologizer says, “I’m sorry for everything; let’s just forget about it and move on”, he or she is denying the right of the harmed party to tell their story and have their

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THE ARBITRATOR & MEDIATOR JULY 2018 losses acknowledged. Premature apologies short-circuit the healing process in an unhelpful way, and should be discouraged in conflict conversations. I will return to this shortly (4) Sympathetic ‘apologies’ are not real apologies, as we have seen, but they still can play an important role in conflict resolution conversations, providing they are sincere. To say to someone, “I am really sorry for what you’ve been through, it must have been awful” can be an entirely appropriate compassionate validation of the other person’s experience, as long as it is not done to evade genuine accountability.

(5) A “personal moral apology” is one where the apologizer takes full responsibility for their role in causing the harm. Ideally it should include as many of the seven core elements of apology as possible – the 7Rs of recognition, responsibility, remorse, reasons-giving, remedy, reassurance and request. There is no time here to unpack these elements here – but this is what is entailed in “learning the art of apology” or doing it well.

Elements of a full apology Element

Explanation

1. Recognition

Acknowledging the offence, identifying the parties who have been injured, and recognizing its impact on them.

2. Responsibility

Admitting responsibility for the offence, whether intentional or unintentional, cf. “It was my fault” or “I am partly to blame.”

3. Remorse

An inner feeling of painful regret about the offence, which is communicated in some recognizable way to the injured party.

4. Reasons

An explanation of what happened and the reasons for one’s actions, cf. “You owe me an explanation!”

5. Remedy

A willingness to do what is needed to repair the damage, perhaps symbolically, cf. “What can I do to make it up to you?”

6. Reassurance

Resolving to refrain from such behaviour in the future, thus reassuring the injured party of a commitment to shared values and future safety, cf. “It won’t happen again.”

7. Request

Asking, perhaps implicitly, for forgiveness (release from resentment) and renewed trust in the relationship (the Golden Rule).

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THE ARBITRATOR & MEDIATOR JULY 2018 (6) The final category is a formal public apology. This is one offered by the authorised representatives of some larger agency, such as the state, and is addressed to a wide circle of victims. Such apologies have a distinctive character and need to be carefully crafted and delivered. Yet they are still seen by their recipients as an essential step in resolving past injustices and lingering impacts. 7 One of the great strengths of the Treaty settlement process in NZ is the important role given to a formal apology on part of the Crown to iwi.

Now making these six distinctions is only one way of carving up the territory, and the categories can overlap in practice. But the important point to recognise is that there are diverse ways in which apology language operates, and it is often helpful for parties entering a resolution process to understand this.

Good conflict practice always requires good preparation of the participants. Part of that preparation, I propose, should be a discussion around the role of apology: Is an apology expected? Should one be offered? How will it be received? What kind of apology is appropriate – an expression of sympathy for the person’s losses or a clear acknowledgement of fault? Or both? How should it be expressed? What will help the other side appreciate its sincerity? Should the apology include a request for forgiveness? Or is that inappropriate? If the hurt has been reciprocal, should there be reciprocal apologies? How can this happen in the meeting?

The timing of an intended apology is also worth considering. In restorative justice conferences, there is typically a clear wrongdoer and a clear victim and the duty of repair usually runs one way. Acceptance of accountability by the offender is a prerequisite for their participation in the conference and it is having the opportunity to express an apology to the victim that often motivates them to do so. It is important, however, that the apology happens in a way and at a time that reflects rather than replaces the victim’s story of their experience. A premature expression of remorse can serve to silence victims, by shifting attention away from their needs and on to the need of the wrongdoer for absolution.

It may therefore be helpful in the pre-meeting to flag this risk and to suggest that the apology is delayed until after the victim’s testimony is absorbed, as a form of respect. Where the apology is blurted out at the beginning of a meeting, it is worth returning to it at the end and linking it to what has been heard from the victim during the meeting.

All this effort presupposes that the act of apology has an essential role to play in resolving situations of conflict and that it needs to be done wisely. This involves timing, but it mainly involves incorporating the seven elements listed above – recognition, responsibility, remorse, reasons-giving, remedy, reassurance and request. Let me to finish by commenting briefly on why apologies work and why we ought to attend carefully to their remarkable power.

7

According to Lazare, On Apology, whereas a private apology transpires between two individuals, a public apology takes place in front of a broader audience. Both types have similar features, but there are also key differences (39-40): • Private apologies depend on sincere remorse for their effectiveness; public apologies depend more on public declarations of the offence and the restoration of public dignity • Private apologies may be spontaneous, emotional, flexible, responsive, whereas public apologies are carefully prepared in advance and depend on the influence of third parties • With private apologies, it is easy to identify the offender and offended; in public apologies people act as representatives • When the public apology is for historical offending, the apology does not signal personal responsibility for the actions but rather an identification with the shame of the action carried out by forbears and sometimes a recognition that one has benefited from past injustices. Just as we take vicarious pride in the success of our nation or sports teams, so we can express vicarious shame at the wrongs perpetrated by others in our name (41f). It is a part of belonging to the group. “…if we can be proud of national accomplishments not of our making, so, too, must we accept shame for national misdeeds not of our making. Accepting these responsibilities is part of what we mean when we speak of having a national identity” (84).

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The power of apology According to Lazare, the offering and accepting of apologies is “one of the most profound of human interactions”.

“Apologies have the power to heal humiliations and grudges, remove the desire for vengeance, and generate forgiveness on the part of the offended parties. For the offender, they can diminish the fear of retaliation and relieve the guilt and shame that can grip the mind with a persistence and tenacity that are hard to ignore. The result of the apology process, ideally, is the reconciliation and restoration of broken relationships.” 8 But why do apologies have such extraordinary therapeutic and transformative power? 9 And why do pseudo-apologies, or the lack of apology, create such havoc, as we saw in the Lisa Shore story?

The best explanation, I think, is that apology satisfies a range of emotional, moral and psychological needs in the parties, what in restorative theory are called “justice needs”. Legal rulings and imposed penalties can resolve the substantive or objective issues involved, but only a genuine apology can address the subjective needs of the participants. Only an apology can confer peace on the conflict. Only an apology can begin to restore trust between parties and encourage reconciliation. Only an apology can attest to the wrongdoer’s commitment to change. Apology works because it meets needs, both the needs of the injured party and the needs of the person responsible for the injury, needs that are much harder to satisfy in some other way.

It is possible to identify seven primary needs people have when they have been mistreated by another person, and two dominant needs those responsible for the mistreatment have, all of which an apology can address.

8 9

Lazare, On Apology, p.1 According to Ross London, the healing power of apology has been explained in three main ways: a) The “attribution theory” roots the power of apology is its role in clarifying the attribution of blame. Victims may blame themselves, or be blamed by others, for failing to order their affairs properly so as to avoid harm. A public apology cancels out the misattribution of blame. b) The “equity theory” suggests that the offence creates an imbalance in the relationship between people through the perception of unfairness or injustice. Restoring equity means restoring the balance by eliminating the unfair advantage the perpetrator has gained. Both punishment and restitution can ease this imbalance, but only an apology can redress the injury of degradation. The apology both restores the proper balance and reinforces society’s condemnation of the behaviour in question. c) The “expressive theory” stresses the role of apology is an expression of the acceptance of the norms of society and as a way in which the offender submits to the moral judgment of the victim. The victim has suffered disrespect and their self-esteem is affected; the apology expresses respect and esteem for the dignity and power of the victim. The victim is thereby re-empowered, for the victim has the power to accept or withhold forgiveness and to determine whether to readmit him to the moral community.

Ross London, Crime, Punishment, and Restorative Justice: From the Margins to the Mainstream (Boulder Col./London: FirstForumPress, 2011), 95-98.

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Apology needs of harmed party Need

Meaning

1. Respect

The offence is often experienced as disrespectful (cf. “dissed”) – viz., a disregard of the person’s value or dignity or equality. At worst, the offended party feels humiliated or shamed. Hence he or she needs a restoration of respect and affirmation of their dignity.

2. Shared Values

The offence breaches the Golden Rule. The offended party needs the offender to reaffirm their commitment to the common values and norms that enable them to live together safely.

3. Vindication

The injured party needs reassurance that they were not primarily to blame for the incident; that responsibility for the harm rests elsewhere. They need to have their innocence vindicated.

4. Validation

The offence has caused distress, and offended party needs to know the offender has understood their anguish and regrets causing it.

Hence, the harmed party needs an opportunity to communicate their experience and have it acknowledged.

5. Reciprocity of suffering

As an experience of undeserved suffering, the injured party needs to know offender also experiences some pain (e.g., by feeling remorse; by making sacrifices to make compensation; by undergoing retributive punishment).

6. Repair

Where possible, the offended party needs to have their actual losses made good and damage repaired. Sometimes this is essential to the apology; at other times repair is not possible, except at a moral or symbolic level.

7. Release

The injured party needs to be able to let go of their bitterness or resentment or sense of grievance, as means of gaining freedom from being controlled by the memory of offence or offender.

Apology motivations of offending party Need

Explanation

1. Need to satisfy their conscience (internal moral drive)

Drive to relieve inner feelings of guilt and shame; to live up to one’s self-image as decent, caring person.

2. Need to renegotiate the relationship (external, relational drive)

Drive to restore balance or peace or equity to the relationship, or to avoid painful consequences, such as tit for tat retribution.

3. Other goals?

Once again, there is no time to go through these one by one, but let me highlight just three of the needs that victims have and how apology helps meet them.

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THE ARBITRATOR & MEDIATOR JULY 2018 The first is the need for respect. To be wronged by someone else is experienced fundamentally by the recipient as an act of disrespect. It comes across as a denial of one’s value and rights, a disregard for one’s feelings and interests, as though they don’t really matter. This experience of disrespect covers the spectrum from being moderately slighted or snubbed to feeling utterly humiliated or degraded. At best, it leaves a simmering resentment towards the offender. At worst, it crushes the spirit of the offended party as they internalize the message that they don’t really matter.

This means that an urgent need of aggrieved parties is to have the person who treated them with such disdain reaffirm their value and bestow renewed respect. The act of apologizing does this: it confers value and expresses respect. It shows that what the victim has suffered does actually matter to the wrongdoer, that their dignity deserves recognition and their feelings count for something. Having once used their power to override the other person’s interests, the apologizer now surrenders that power and makes himself vulnerable to the power of the victim – the power to receive or reject his expression of remorse.

The act of apologizing is so powerful because it reverses the power dynamics of the offence.

A second need of offended parties is to be reassured that the person who hurt them shares the same values or norms that they do. If the harm-doer refuses to acknowledge their actions were wrong or unacceptable, they cannot be trusted to refrain from them again. If they offer a genuine apology, however, they signal that, despite what happened, they accept the values that make relationships safe and predictable. Only then is it possible to begin rebuilding trust between the parties.

A third need of injured parties – although this is not always appreciated – is the need to witness a reciprocity of suffering on the part of the person who hurt them. Having suffered pain at their hands, the recipient needs to know the perpetrator has suffered pain as well. Justice seems to require a certain equity of suffering.

The suffering may take the form of suffering retaliation, or undergoing retributive punishment, or making sacrifices to pay financial compensation, or being excluded from their peer groups. But a genuine apology also meets this need for reciprocated suffering. It evidences the suffering of shame and remorse, an empathetic, emotional participation in the anguish unleashed on others by their actions. The importance of this shared suffering should not be underestimated. It explains why the absence of remorse is such an exquisite source of pain for victims (such as Lisa’s mother) and why it is something that makes restoration of relationships virtually impossible.

So, the need for respect, shared values and reciprocal suffering are some lf the needs that the act of apology helps meet. Others are the need for vindication, validation, repair and release, but these must wait for another day.

Conclusion I began with the heart rending story of Lisa Shore and the failure of the medical authorities to meet her family’s need for a truthful apology. Let me finish with the story of Eric Lomax, a young British soldier who, like thousands of others, was brutalized for years by the Japanese as a prisoner of war, while working on the infamous railroad at the River Kwai.10 At one point, Lomax was caught with a secret radio and was starved, beaten and tortured for days, while caged in a tiny cell.

10

Lomax, On Apology, 182-83, 242-48.

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THE ARBITRATOR & MEDIATOR JULY 2018 After the war, Lomax suffered from recurrent nightmares, uncontrollable rage, emotional withdrawal and relational breakdown. Things got worse as he grew older. He fantasized about the revenge he would extract from the men who tortured him and, in particular, from the Japanese interpreter who facilitated his interrogation and who kept telling Lomax that he would be executed after the torture was finished.

After he retired, by chance Lomax learned that the interpreter, a man called Nagase Tagashi, was still alive. He had written a book about Japan’s mistreatment of prisoners and had spent his life seeking to atone for his part in it. With his permission, Lomax’s wife wrote to Nagase, asking if he would be prepared to meet with her husband because he had so many questions that needed answering. Nagase agreed, saying her letter had “reminded me of my dirty old days” and that it struck him like a “dagger thrusted into my heart to the bottom”.

The story of their meeting is recounted in Lomax’s book (and the film) the Railway Man. It is story of apology and forgiveness, that ended 60 years of suffering and shame, on both sides. Before they met, Lomax had been unable to let go of his hatred and desire for vengeance. After the meetings, Nagase, he said, had been turned from a “hated enemy” into a “blood brother”.

As Lomax reflected on why meeting with Nagase and hearing his apology had been so liberating, he realized that the apology had met several of his most basic needs. One was his need to feel power over the person who had once had such power over him, and who was now utterly fragile. Lomax knew that he had the power to kill Nagase (literally) or to accept his apology and be reconciled.

Another was his need to learn that Nagase shared the same basic values as he did. Nagase’s expression of shame and remorse, his opposition to militarism, and the steps he had taken to memorialize the victims of Japanese atrocities, showed that he inhabited the same moral universe as Lomax, which was critically important to know.

Lomax also had the needed to hear the truth about what happened. He needed an “indelible historical account” in which he could find himself in, that would validate his subsequent suffering, and would help him grieve for what he had lost.

Most importantly, Lomax needed to know that Nagase had also suffered, that his life had also been damaged by his behaviour. “I wanted to see Nagase’s sorrow”, Lomax wrote, “so that I could live better with my own”. When they met, Lomax said, “He was kind enough to say that, compared to my suffering, his was nothing; and yet it was obvious that he had suffered too”.

It was these profound needs – the need for restored power and self-respect; the need for an affirmation of shared values and a validation of past losses; and the need to a witness a shared mutual suffering – that Nagese’s apology satisfied. This is why apology works, and why, even in much less dramatic exercises in conflict resolution, its power and moral significance should never be overlooked or minimized.

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Due process paranoia and its role in the future of international commercial arbitration

By Erika Williams, 1 Hannah Fas 2 and Tom Hannah 3

Abstract Due process is an undeniably important element of international commercial arbitration. However, the right of a party to have its case heard can be interpreted in extreme terms by overly cautious arbitrators who are concerned about their awards being overturned or deemed unenforceable by state courts. This paper discusses the increasing phenomenon of ‘due process paranoia’ within the context of international commercial arbitration and, by reviewing the limited circumstances in which it may be violated, critically evaluates whether it should be a concern in practice.

-----

Principles of arbitration and the phenomenon of due process paranoia The attractiveness of international commercial arbitration is inextricably tied to its efficiency and fairness.

Recently, arbitration has earned a reputation as a ‘one stop shop’ for resolution of disputes between foreign parties. However, from an arbitrator’s perspective, balancing efficiency and fairness, and managing parties’ expectations in this context, is not a straightforward task.

Indeed, the White & Case 2015 International Arbitration Survey highlighted, as an issue requiring special attention, ‘a reluctance by tribunals to act decisively in certain situations for fear of the arbitral award being challenged on the basis of a party not having has the chance to present its case fully’, 4 which one contributor dubbed ‘due process paranoia’. The White & Case 2018 Survey recently confirmed that the phenomenon continues to be a widespread source of concern. 5 Further, the 2016 International Dispute Resolution Survey by Queen Mary University of London and the School of International Arbitration found that the phrase (along with synonyms ‘split the baby’ and

1

Senior Associate, McCullough Robertson Lawyers; Member, Chartered Institute of Arbitrators; Director, ArbitralWomen; BA, LLB (Hons).

2 Graduate, McCullough Robertson Lawyers; LLB (Hons), BAppSc(Biotech).

3 Graduate, McCullough Robertson Lawyers; LLB (Hons), BBus(Fin).

4 Paul Friedland and Professor Loukas Mistelis, ‘2015 International Arbitration Survey: Improvements and Innovations in International Arbitration’ (Report, White & Case, 6 Oct 2015) 10.

5 Paul Friedland and Professor Stavros Brekoulakis, ‘2018 International Arbitration Survey: The Evolution of International Arbitration’ (Report, White & Case, 9 May 2018) 27.

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THE ARBITRATOR & MEDIATOR JULY 2018 ‘broken wings syndrome’) was used repeatedly by interviewees to describe arbitrators’ fear of being challenged and concern about procuring the next appointment. 6 Due process paranoia is now recognised as the perceived overcautiousness of certain arbitrators who, instead of opting for compromise, repeatedly accede to parties’ demands in the pursuit of running an unimpeachably fair arbitration. This caution stems from a fear of the parties later crying foul and manifests in prolonged proceedings, stifling the very goals of arbitration. The phenomenon is particularly concerning where it is the desired result of recalcitrant parties who adopt dilatory tactics at the expense of the very purpose of arbitration (and probably the arbitrator’s sanity).

This article considers what amounts to a violation of due process, to what extent the procedural judgment rule provides a safe harbour for arbitrators, and the circumstances in which violations of due process will lead to a successful appeal against an arbitral award. Further, the author critically evaluates whether due process paranoia is truly a problem faced by international commercial arbitration in practice, and, if so, how it should be solved.

What causes due process paranoia?

On one side, arbitrators are faced with the need for the efficient and cost-effective resolution of the dispute, and, on the other, they may fear that any refusal to submit to parties’ procedural demands will open the award to challenge on the basis of violation of due process rights. 7 The overriding objective and commercial appeal of arbitration is the ‘quick, cost effective and fair’ resolution of disputes. 8 Parties who elect to arbitrate expect a much faster and cheaper resolution than if they chose to litigate.

However, parties value their procedural rights in arbitration just as highly as in court proceedings, and will often take a strong stance where they believe those rights have been disturbed. An arbitrator who is found to have denied due process faces the risk of his or her award being set aside, or denied enforcement. This can present a source of professional embarrassment and damage his or her reputation, leading to a decrease in appointments – a risk some arbitrators are not willing to take.

The pressure is not only internal; the rules themselves demand that arbitrators ensure their awards are irreproachable, for example: (a) the International Chamber of Commerce (ICC) Rules of Arbitration 2017 direct that the arbitral tribunal ‘shall make every effort to make sure that the award is enforceable’ (Article 41); (b) the London Court of International Arbitration (LCIA) Rules 2014 require that the arbitral tribunal ‘shall act at all times in good faith, respecting the spirit of the arbitration agreement, and shall make every reasonable effort to ensure that any award is legally recognised and enforceable at the arbitral seat’ (Article 32.2); and (c) the Singapore International Arbitration Centre Rules 2016 provide that the arbitral tribunal ‘shall act in the spirit of these rules and shall make every reasonable effort to ensure the fair, expeditious and economical conclusion of the arbitration and the enforceability of any award’ (Article 41.2).

6

Queen Mary University of London and the School of International Arbitration, ‘International Dispute Resolution Survey: Preempting and Resolving Technology, Media and Telecoms Disputes’ (Report, Pinsent Masons LLP, Nov 2016) 32.

7 Klaus Berger and J Jensen, ‘Due process paranoia and the procedural judgment rule: a safe harbour for procedural management decisions by international arbitrators’ (2016) 32(3) Arbitration International 415, 419-420.

8 Australian Centre for International Commercial Arbitration (ACICA) Arbitration Rules 2016 art 3.1.

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THE ARBITRATOR & MEDIATOR JULY 2018 As a result of these internal and external pressures, arbitrators can take an overzealous approach to due process in practice. Examples of such conduct include: 9 (a) acceding to repeated requests for extensions of time; (b) allowing multiple interim measures of protection of a party, including orders for asset preservation, evidence preservation, or security for costs; (c) accepting multiple amendments to written submissions; (d) agreeing to the belated introduction of additional claims or new evidence; and (e) granting requests to reschedule oral hearings at the eleventh hour.

What amounts to a violation of due process?

In the context of international commercial arbitration, the arbitrator’s discretion to conduct the proceedings in any way they see fit, subject only to the parties’ due process rights 10 is one of the ‘foundational elements of the international arbitration process’. 11 In reality, the parties’ due process rights amount only to the guarantee that proceedings will be fair, and that parties will be given an opportunity to be heard. It is broadly analogous to legal concepts such as natural justice and procedural fairness. Extrajudicially, the Hon James Allsop AO has said: 12 ‘Whether one refers to natural justice, procedural fairness, due process, the right or opportunity to be heard, the principle of contradiction (le principe de la contradiction) or the right to equal treatment, the underlying conception of fairness is the same.’

Article 18 of the United Nations Commission on International Trade Law Model Law on International Commercial Arbitration (UNCITRAL Model Law) therefore reflects the ‘golden rule’ of arbitration (that is, fairness), 13 and states: ‘The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.’

It is widely accepted that the term ‘full’ is to be understood as ‘reasonable’. 14 In Australia the International Arbitration Act 1974 (Cth) (IA Act) specifically qualifies Article 18 of the Model Law by providing: 15 ‘For the purpose of Article 18 of the Model Law, a party to arbitral proceedings is taken to have been given a full opportunity to present the party’s case if the party is given a reasonable opportunity to present the party’s case.’

Thus, the right to be heard is not absolute and does not cover unreasonable, dilatory procedural requests. 16 Article 21.2 of the ACICA Rules 2016 can be said to further soften the fairness requirement by providing that:

9

Remy Gerbay,‘Due Process Paranoia’(6 Jun 2016) Kluwer Arbitration Blog <http://arbitrationblog.kluwerarbitration.com/2016/06/06/due-process-paranoia/>.

10 UNCITRAL Model Law art 19(2).

11 Gary B Born, International Commercial Arbitration (Kluwer, 2nd ed, 2014) 2145.

12 The Hon James Allsop AO, ‘Authority of the Arbitrator’ (2013) Clayton Utz University of Sydney International Arbitration Lecture.

13 Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd [2016] VSC 326 [27].

14 Nigel Blackaby et. al., Redfern and Hunter on International Arbitration (Oxford University Press, 6th ed, 2015) 6.14.

15 International Arbitration Act 1974 (Cth) section 18C.

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THE ARBITRATOR & MEDIATOR JULY 2018 ‘… the arbitral tribunal shall adopt suitable procedures for the conduct of the arbitration in order to avoid unnecessary delay or expense, having regard to the complexity of the issues and the amount in dispute, and provided that such procedures ensure equal treatment of the parties and afford the parties a reasonable opportunity to present their case.’

To what extent does the procedural judgment rule provide a safe harbour for arbitrators?

Arbitrators’ procedural management decisions are those pertaining to the ‘proper conduct and organisation of the proceedings’ and are distinguished from substantive decision-making duties and powers. 17 Klaus Peter Berger and J. Ole Jensen argue that, when determining issues of due process, an arbitrator is protected by what the authors label the ‘procedural judgment rule’. This rule is analogous to the ‘business judgment rule’ applicable to decisions made by directors of companies. 18 In Australia, for example, the business judgment rule provides protection for directors who make a business decision in good faith for a proper purpose, on an informed basis and on a rational belief that the decision is in the best interests of the company. 19 Similarly, Berger and Jensen suggest that the procedural judgment rule would protect an arbitrator’s procedural management decision when it is based on a genuine assessment of the case and the decision is reasonable in the circumstances.20 As the authors surmise, a ‘safe harbour for arbitrators’ exercise of their procedural discretion’ can be found in state courts’ approach to reviewing arbitrators’ management of procedural issues. 21

In what circumstances do violations of due process lead to successful appeals against arbitral awards?

In practice, there is a high threshold for setting aside arbitral awards. Article 34(2)(a)(i) of the UNCITRAL Model Law provides that an arbitrator’s award may be set aside if a party was unable to present its case. Article V(1)(b) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (New York Convention) is worded in identical terms.

Equally, section 8(5) of the IA Act provides that Australian courts may refuse to enforce a foreign arbitral award if the party against whom enforcement is sought proves to the court’s satisfaction that the party was unable to present his or her case.

The recent case of Hui v Esposito Holdings Pty Ltd 22 sets out the relevant test in stringent terms: 23

16

Above n 7, 422.

Ibid, 422.

18 Ibid, 428.

19 Corporations Act 2001 (Cth) s 181.

20 Above n 7.

21 Above n 7, 428.

22 (2017) 345 ALR 287.

23 Ibid [183]-[185].

17

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THE ARBITRATOR & MEDIATOR JULY 2018 ‘In order to justify the setting aside or remittal of an award, real unfairness or real practical injustice must have resulted by the denial of the relevant opportunity to a party to present its case… Real unfairness or real practical injustice can be demonstrated by showing that there was a realistic rather than fanciful possibility that the award may not have been made or may have differed in a material respect favourable to the party said to have been denied the opportunity… The onus rests on the party seeking to set aside the award or remit the matter and no reverse onus applies.’

Analysis of relevant case law reveals that courts are reluctant to interfere with international arbitrators’ procedural management decisions. Considering it is a ‘key overriding principle’ that arbitrators are afforded the ‘widest discretion’ by law when making procedural management decisions, the courts will only interfere to safeguard the parties’ rights where there is a clear breach of procedural fairness. The courts insist that the tribunal’s ultimate discretion in conducting proceedings does not justify an arbitrator failing to provide each party with a reasonable opportunity to present its case and deal with that of its opponent. 24 In practice, arbitrators have been found to have violated due process (and therefore their awards were set aside) where: (a) in Australia: 25 (1) the claimant claimed it was entitled to the balance of monies it said were due and payable under a contract; (2) the arbitrator held a number of directions hearings and delivered three sets of reasons and rendered two partial awards; the first declared that the respondents were obliged to make certain payments under the contracts, and the second dismissed a respondent’s application that he be withdrawn; (3) there were real issues as to: (A) who had contractual liability, and whether it sounded in liquidated or unliquidated damages; and (B) the availability of any set-off for any breach of certain provisions, particularly where there was insurance cover; and (4) the arbitrator decided these substantive questions without hearing the respondents’ arguments (and also exceeded the bounds of the preliminary hearing); and (b) in Hong Kong: 26 (1) arbitration proceedings were commenced by two claimants; (2) the respondent expressly confirmed during the hearing that its arguments on a certain point were directed against one claimant only; (3) the unaddressed claimant consequently made no further submissions on that point; and (4) in its award the tribunal made a ruling on that issue against the unaddressed claimant, and consequently ordered it to make a payment to the respondent; (c) in Dubai: 27 (1) the claimant made an error in the respondent’s name in both the request for arbitration and statement of claim; (2) the respondent was not notified and was unaware of the arbitration proceedings;

24

Fabricio Fortese and Lotta Hemmi, ‘Procedural fairness and efficiency in international arbitration’ (2015) 3(1) Groningen Journal of International Law 110, 112.

25 Hui v Esposito Holdings Pty Ltd (2017) 345 ALR 287.

26 China Property Development (Holdings) Ltd v Mandecly Ltd HCCT 53/2010.

27 Ashraf El-Motei, ‘Dubai Court of Appeal rejects a DIAC award due to arbitrator’s breach of due process’ (5 May 2016) Kluwer Arbitration Blog <http://arbitrationblog.kluwerarbitration.com/2016/05/05/dubai-court-of-appeal-rejects-a-diac-awarddue-to-arbitrators-breach-of-due-process/>.

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THE ARBITRATOR & MEDIATOR JULY 2018 (3) when the respondent was eventually notified, it requested time to appoint a lawyer and submit its statement of defence; (4) the request was rejected by the arbitrator because it was submitted ‘without an official power of attorney’ (a fact contested by the respondent); and (5) the arbitrator ordered the respondent to pay the claimant damages and legal fees for breach of contract, plus interest and costs.

In all of these cases, the awards (or infected parts of the awards) were judicially set aside.

Is due process paranoia truly justified?

It is difficult to quantify the success of arbitration in resolving disputes and the rate at which awards are enforced, due to the scarcity of reliable data on the topic.28 However, a 2008 PricewaterhouseCoopers (PWC) study found that, of the cases studied, only 11% of arbitrations ended in proceedings for enforcement and recognition and a mere 8% involved an apparent settlement or award but were followed by litigation. 29 A more recent 2013 report by PWC confirmed that arbitration remains a popular mechanism for dispute resolution: 52% of respondents chose international arbitration as their first choice for resolving cross border disputes. 30 These statistics clearly evidence both the attractiveness of arbitration and the disinclination of parties to challenge arbitrators’ awards.

The 2018 White & Case Survey lends its voice to the chorus calling into question the legitimacy of due process paranoia. Counsel and arbitrators who were surveyed ‘vigorously contested’ the concept, arguing that arbitrators should be confident enough that the courts at the seat would support arbitration. The report canvasses the widespread belief that the popularity of ‘arbitration-friendly’ jurisdictions stems partly from the fact that local courts readily defer to arbitrators’ procedural management decisions in arbitration. The authors hypothesise that, if this is indeed the case, then the paranoia may arise more often in relation to jurisdictions where the local judiciary’s support for arbitration is not so assured.31 There is extensive judicial commentary on the topic, which further reinforces the courts’ hesitancy to question arbitrators’ procedural management decisions. For example, the majority of the Federal Court in key authority, TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd, 32 notes that an arbitrator’s decision will not be impeachable unless ‘there is unfairness, true practical injustice’.33 In that case, the evidence revealed no breach of due process, because the appellant received a scrupulously fair hearing in a hard fought commercial dispute. The Court found that the appellant’s complaints concerned the evaluation of factual material only.

A Ugandan arbitral award was found to be enforceable in Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd, 34 wherein Foster J reflected on the right to a ‘reasonable’ opportunity to present one’s case under the IA Act. His Honour acknowledged, ‘The whole rationale of the Act… is to enforce such awards wherever

28

Laina Chan, ‘International Disputes, the Execution of Foreign Arbitral Awards in the Asia Pacific and Two Case Studies’ (2015) 28(2) New York International Law Review 1,1.

29 Gerry Lagerberg and Professor Loukas Mistelis, ‘International Arbitration: Corporate Attitudes and Practices’ (Report, PWC, 2008) 2.

30 Gerry Lagerberg and Professor Loukas Mistelis, ‘2013 International Arbitration Survey’ (Report, PWC, 2013) 6.

31 Above n 5.

32 (2014) 311 ALR 387.

33 Ibid [108].

34 (2011) 277 ALR 415.

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THE ARBITRATOR & MEDIATOR JULY 2018 possible… in order to support certainty and finality in international dispute resolution’.35 The Federal Court agreed that the arbitral award was not infected by any issues of due process.

In IMC Aviation Solutions Pty Ltd v Altain Khuder LLC, 36 Warren CJ emphasised that ‘in all but the most unusual cases, applications to enforce foreign arbitral awards should involve only a summary procedure’. 37 Her Honour stated that in order for section 8(5) of the IA Act to warrant a court’s refusal to enforce an arbitral award, the court must be satisfied that the award ‘is tainted by either fraud or vitiating error on the part of the arbitral tribunal.’ 38 This case is one of only a few in the Australian canon in which an arbitral award was not enforced. In that case, the Victorian Court of Appeal refused the enforcement of a Mongolian tribunal’s arbitral award of $USD 6 million against IMC Aviation Solutions, due to the extraordinary circumstances of the arbitration (i.e. the fact that IMC was not a party to the arbitration agreement).

International courts have also demonstrated a strong pro-enforcement stance. For example, when the Hong Kong Court of First Instance took the extraordinary measure of setting aside an ICC award in Grand Pacific Holdings Ltd v Pacific China Holdings Ltd,39 the Court of Appeal did not hesitate to overrule its inferior court, and reinstate the award.40 The Court of Appeal found that there was no violation of due process, and went even further, noting that, the ‘court may refuse to set aside an award notwithstanding such violation if the court was satisfied that the outcome could not have been different’. 41

How do we solve the problem?

International groups such as the Chartered Institute of Arbitrators, the International Bar Associations, the ICC, the International Law Office, UNCITRAL and the American Arbitration Association, have all provided ‘soft law’ including guidelines and standards to ensure greater procedural uniformity, certainty and predictability amongst differing parties. 42 Best practices, such as the Chartered Institute of Arbitrators practice guidelines for managing arbitrations and procedural orders, provide guidance on: 43 (a) ‘organising procedural and/or administrative aspects of an arbitration, including techniques which can be used to manage the proceedings’; (b) ‘issuing procedural orders’; and (c) ‘dealing with parties’ failure to comply with procedural orders’.

This helps arbitrators to manage the expectations of parties in a manner whereby due process and procedural fairness are balanced against the arbitrator’s duty to ensure an efficient, expeditious and economical resolution to the parties’ dispute. However, it is difficult to determine statistically the success that soft law provides in arbitration matters.

35

Ibid [126].

(2011) 38 VR 303.

37 Ibid [3].

38 Ibid [53].

39 [2011] 4 HKLRD 188.

40 Pacific China Holdings Ltd v. Grand Pacific Holdings Ltd [2012] 4 HKLRD 1.

41 Ibid [101].

42 Above n 24, 114.

43 Chartered Institute of Arbitrators, International Arbitration Practice Guideline arts 1-3.

36

49

THE ARBITRATOR & MEDIATOR JULY 2018 After reviewing the case law, it is clear that the application of unified procedures throughout arbitration enhances the unlikeliness of the courts setting aside arbitral awards. This has been emphasised by the national and international judicial commentary canvassed above. Therefore, by utilising soft law as guidance, arbitrators significantly lower the risk of their awards being unenforceable.

This article confirms that due process paranoia experienced by arbitrators is unjustified in modern arbitration. The courts, by continuing to apply a high threshold towards overturning arbitral awards, have levied their support towards the procedural management decisions made by arbitrators. However, we continue to see circumstances where arbitrators are willing to sacrifice the expedited and cost effective nature of arbitration to ensure they do not infringe on a party’s right to due process. But if there is no justification for the due paranoia how can it be resolved?

The answer lies in the foundations of arbitration. Tribunals, by utilising the four core principles of transparency, proactivity, interactivity and proportionality can establish a general framework for procedural management rules and help streamline proceedings while preserving parties’ due process rights. 44 These principles can be enforced through the multitude of rules (hard law), practice directions and procedures (soft law) provided by arbitral bodies.

At first instance, transparency should be utilised as an educational tool to provide parties who are unfamiliar with the arbitration process with guidance and understanding of the procedure. Such transparency can be implemented early in the process through a case management conference. Article 24 of the ICC Rules 2017 allows an arbitrator to clearly explain the procedure that the he or she intends to adopt in conducting proceedings. Furthermore, it affords each party the opportunity to raise any grievance they may have with the arbitrator’s chosen method. This not only contributes to a more streamlined proceeding, but also limits the potential for parties to appeal an award on due process grounds. Failure by the tribunal to be transparent throughout a proceeding can lead to a breach of natural justice which may result in an award being set aside. In Fraport v Philippines, 45 the tribunal’s failure to disclose what they considered to be essential issues on the matter, caused a party to be denied due process, as it was not given the opportunity to make submissions on those essential issues. This was found to be a breach of natural justice and the award was annulled.

Once tribunals have established a transparent approach to the proceedings, it becomes a matter of enforceability to ensure parties abide by the allotted timeframes and procedure agreed. The tribunal must therefore be proactive in the continuing management of the proceedings, and reactive to parties being counterintuitive. There are specific rules whereby arbitrators can efficiently manage cases while limiting parties’ rights. For example, Article 17(2) of the UNCITRAL Arbitration Rules 2013 and Article 22.1(ii) of the LCIA Arbitration Rules 2014, not only allow the tribunal to act on their own discretion, but can also limit a party’s time in presenting their case.

The 2018 White & Case survey revealed that interviewees believed that arbitrators ‘need to adopt a bolder approach to conducting proceedings and, if need be, apply monetary sanctions for dilatory tactics’. 46 Therefore, by utilising the procedural management rules at their disposal, arbitrators can ensure that proceedings remain streamlined to address the key issues in the arbitration.

Although there are numerous beneficial case management approaches available to arbitrators, the need for proportionality still remains a necessity. The principle of proportionality ‘requires that an arbitrator or

44

Above n 7, 429.

Fraport AG Frankfurt Airport Services Worldwide v The Republic of the Philippines (ISCSID Case No ARB/03/25).

46 Above n 5.

45

50

THE ARBITRATOR & MEDIATOR JULY 2018 tribunal remain flexible when considering how the proceeding should best be conductedâ&#x20AC;&#x2122;. 47 By remaining flexible and responsive and considering the position of each party, an arbitrator can reduce the possibility of having an award set aside.

47

Above n 7, 434.

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THE ARBITRATOR & MEDIATOR JULY 2018

And the survey says....these are the good and bad techniques used by mediators

By Alicia Hill, Principal, MST Lawyers 1

Abstract This paper 2 reports on the findings of an electronic survey conducted of Australian mediators, advocates and repeat users of mediation services in Australia asking for feedback on what conduct or techniques used by mediators were thought to be helpful or unhelpful to the conduct of the mediation.3 It then reviews the findings of the taskforce report released by the American Bar Association Dispute Resolution Section in June 2017 which canvassed similar issues and compares the outcomes and proposes that mediators should give serious consideration to utilising two techniques in particular when conducting mediations to maximise the prospects of resolution, party satisfaction with the process and with the mediator.

-----

Process used to obtain findings The author was requested to present to the Queensland Bar Association 2017 ADR Conference on what mediators do well and do not do well during the conduct of a mediation process.

Due to the lack of comprehensive research analysis 4 and publication in this area, an electronic survey was created and sent to a database of 90 Australian mediators, advocates and repeat users of mediation services to collate the views of respondents to the survey to present to the Conference.

In addition to collecting some basic data about the respondents to the survey four key questions were asked of respondents: (a) What mediator conduct do you find to be most helpful during a mediation; (b) What mediator conduct do you find to be unhelpful during a mediation;

1

Accredited Specialist Commercial Litigation (Qld and Victoria), Nationally Accredited Mediator, Graded Arbitrator and Committee Member of the Resolution Institute's Special Interest Group - Mediation for Victoria.

2 This paper was prepared following the delivery of a presentation to the Queensland Bar Association 2017 ADR Conference held at the Gold Coast as supplementary material for attendees consideration.

3 The author acknowledges that the process used was not compliant with academic research standards and protocols and that as a practising lawyer/mediator the author will leave preparation of a rigorous comprehensive study to more qualified researchers to conduct and implement.

4 Hampered by the confidentiality of the mediation process, the subjective nature of any views sought and the difficulty in consistently categorising responses provided.

52

THE ARBITRATOR & MEDIATOR JULY 2018 (c) What is the most helpful mediator technique you think a mediator can use; and (d) What mediator technique do you find to be unhelpful.

The survey questions were deliberately drafted to seek feedback both on mediator conduct, which were classed as being actions or traits personal to the mediator, and mediator techniques, which were classed as actions or tactics able to be utilised by a mediator during the course of a mediation.

Some overlap exists between these categories as is seen in the survey results.

Due to the individuality of the responses received the responses were collated into groups where the responses reported on the same topic. From these groups findings were identified as to what the respondents as a group considered answered the questions posed in the survey. 5 Set out below are the top four collated responses to each of the survey questions.

Findings Helpful conduct The top four responses to the survey about what constituted the most helpful mediator conduct appear in the table below. 6 Respondents answered

Helpful conduct

30%

Reality Checking

13.3% 13.3% 6.6%

Demeanour Process control Feedback in private sessions

Individual comments in the responses provided saw respondents say, in respect of each of the categories, the following.

Reality checking was the most helpful conduct a mediator could engage in especially where a mediator makes genuine enquiries into the facts to elicit the strengths or weaknesses of a case, where the mediator delves into the factual circumstances summarising what is said and reframes responses provided to play's devil's advocate on the view advanced by a party, where the mediator challenges the party's thinking.

The demeanour of the mediator was the second most helpful conduct that the respondents said that a mediator could display during the mediation process. A calm, organised mediator, who stayed engaged throughout the entirety of the process and displayed empathy with the parties but remained impartial, were the characteristics described as helpful demeanour of the mediator.

5

I received 40 responses to the survey from the 90 people to whom it was sent. Whilst there were some interesting trends from sub-groups of respondents because of the small number of responses received I do not seek to draw any conclusions relating to subgroups. Generically however family and employment areas of practice appear to display responses in some instances which are counter to the broader group.

6 As only the top four responses are reported the total of the percentages displayed will not total 100% as other responses with smaller percentages were omitted from the reporting.

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THE ARBITRATOR & MEDIATOR JULY 2018 Process control included comments from respondents that a mediator who explained the benefits of resolution, elicited the best alternative to a negotiated agreement (BATNA) and worst alternative to a negotiated agreement (WATNA), interrupted when necessary to redirect the parties to progress the mediation process and avoid rehashing the same territory and reminded the parties of the impact that future costs may have on each of their positions were helpful to the conduct of the mediation process.

The fourth helpful conduct a mediator could display was providing feedback in private sessions.

Respondents said that this included: providing a high level summary of the identified issues between the parties and assisting highlight difficulties or difficult areas in the dispute for the parties as an outsiderâ&#x20AC;&#x2122;s perspective.

Unhelpful conduct The top four responses to the survey about what constituted unhelpful mediator conduct appear in the table below. 7 Respondents answered

Unhelpful conduct

13.3%

Acting contrary to perceived mediator role Appearing partial

10% 10%

Not managing emotion well Bullying to get outcome

26.2%

Individual comments in the responses provided saw respondents say, in respect of each of the categories, the following.

Acting contrary to perceived mediator role - Mediators who act outside of the participantâ&#x20AC;&#x2122;s perceived role of the mediator was considered to be the most unhelpful type of conduct that a mediator could engage in. Mediators who display the following were considered to be acting outside the perceived role of a mediator: (a) try to behave as arbitrator and push a solution they want on the parties; (b) who are nothing more than a messenger between the parties; (c) who provide advice as to prospects which conflicts with advice provided by a party's legal adviser; (d) mediators who tell a party to accept an offer in strong terms despite the legal adviser for that party expressing a different view; (e) mediators who have little or no input into the process and palm off the parties to resolve their differences without the mediatorâ&#x20AC;&#x2122;s input; and (f) a mediator whose mind is elsewhere and not totally engaged with the mediation - and gives the impression that they have other things to do and are in a hurry to conclude the mediation.

Appearing partial was seen to be an unhelpful trait of a mediator by respondents. This included losing rapport with a party by being seen as too judgemental, becoming overly friendly with the parties, displaying partiality (including in one instance a mediator who identified with one self-represented party so much that the mediator inadvertently referred to that party as "my client").

7

Ibid.

54

THE ARBITRATOR & MEDIATOR JULY 2018 A mediator who does not manage emotions well was also said to constitute unhelpful mediator conduct. Comments made in respect of this conduct included where a mediator forgot that the dispute was a business dispute and focused too heavily on emotions according to the respondent. Similarly a mediator who forgot the goal was to achieve a commercial outcome and instead focused on making the parties feel better was said to be unhelpful.

The final unhelpful conduct category was a mediator who bullied the participants to get an outcome.

Respondents reported that a where a mediator has a perceived agenda to get an outcome, no matter what the parties views, then the mediator just becomes another player in the dispute, similarly where a mediator starts from a position that in order to get an outcome they must lower expectations by attacking each parties position is unhelpful.

Helpful techniques The top four responses to the survey about what constituted helpful techniques used by a mediator during the course of a mediation are set out in the table below: 8 Respondents answered

Helpful techniques

40% 16.6% 13.3% 6.6%

Pre-mediation conferences Party/party conferences Mediator's offer / bid Open joint session

Individual comments in the responses provided saw the respondents say, in respect of each of the categories, the following.

Pre-mediation conferences - This technique in terms of responses provided to the survey was a stand out by respondents as the most helpful technique used by a mediator in the mediation process. It had more than 20% additional support than the technique considered to be the second most helpful technique used by mediators in the mediation process.

Respondents said that pre-mediation conferences established rapport between the parties and the mediator as the mediator explains the process, it tests preparation done to date and what still might be required, it fleshes initial issues out, assists the mediator develop a view of the dispute and identify matters not available from any papers briefed to the mediator.

The second most helpful technique used by mediators was party / party conferences (being meetings between parties without legal advisers just with the mediator) as these allowed the parties to speak with each other, helped to focus on the problem / resolution and not legal positions and brought back the focus on the fact that the dispute is an issue between people.

Respondents also said that the mediator's offer / bid was a helpful technique as it permitted the gap between the parties after an exchange of offers to be bridged with no one seen as to have moved from their last position. This assisted in the perception of saving face for the parties.

8

Ibid.

55

THE ARBITRATOR & MEDIATOR JULY 2018 The fourth technique respondents said was helpful to the mediation process was the conduct of open joint sessions. Respondents commented that these sessions encouraged direct participation by the parties which encouraged joint ownership of the issues and resolution of these. It also saw party participation increase and allowed a party to feel that the other party heard them and their expressed position.

Unhelpful techniques The top four responses to the survey about what constituted unhelpful techniques used by a mediator are set out in the following table: 9 Respondents answered

Unhelpful techniques

20.8% 16.6%

Too forceful process control Provide advice / legal opinion Not having / inappropriate use of premediation conferences Too much focus on emotional / feel good

12.5% 8.3%

Individual comments in the responses provided saw the respondents say, in respect of each of the categories, the following: Respondents indicated when referring to â&#x20AC;&#x2DC;too forceful process controlâ&#x20AC;&#x2122; that where the mediator did any of the following it was unhelpful in progressing the mediation: (a) forced the parties to negotiate face to face; (b) where the mediator threatens the parties in some way if they do not participate in the mediation; (c) where the mediator threatens to leave the mediation as a ploy or says to the parties unless there is a resolution in the next 30 minutes the mediation will end; and (d) separating the parties into separate rooms immediately after opening statements without any joint discussions.

The next most unhelpful technique respondents said was not having or inappropriately using premediation conferences. Especially where the pre-mediation conference is used as a ploy to start eliciting offers or to start the substance of the mediation early.

The fourth unhelpful technique used by mediators is having too much focus on emotional or feel good factors especially in commercial disputes with experienced participants.

American Bar Association (ABA) dispute resolution section: taskforce report Contemporaneously with the closure of the Australian electronic survey the ABA dispute resolution section released a taskforce report prepared after the review of 47 studies of the effect of mediation

9

Ibid.

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THE ARBITRATOR & MEDIATOR JULY 2018 techniques to learn what existing empirical evidence tells about which mediator action enhances outcomes and which have a detrimental effect.10 The taskforce concluded that: (a) none of the categories of mediator actions has clear uniform effects across the studies. That is, no action is consistently negative, positive or of no effect; (b) some actions can have a positive or negative effect and in some instances, could have an effect in the direction opposite that of the majority of studies; and (c) there are some actions which appear to have a greater potential for effect (either positive or negative) on mediation outcomes.

What follows is the taskforce's findings of which actions have greater potential to impact a mediation, both positively and negatively.

• • • •

•

•

Mediator pressure on or criticisms of parties either had no effect on parties perceptions and relationships or was associated with more negative views of the mediator, process, outcome and ability to work with other party.

Recommending or proposing a particular settlement or suggesting possible outcomes or solutions, or offering some form of case evaluation or other views about the dispute or its resolution generally either increased or had no effect on settlement Eliciting parties suggestions or solutions generally increases settlement and is associated with more favourable views on the mediator, process, outcome, and ability to work with the other party.

Giving more attention to parties emotions / relationships or sources of conflict generally either increased or had no effect on settlement. Thus working hard to build trust, expressing sympathy or praise and structuring the agenda have the potential to increase settlement, enhance parties relationship and perceptions of the process.

Pre-mediation conferences- when used to establish trust and build a relationship with the parties, pre-mediation conferences increased settlement and reduced parties post- mediation conflict. But when used to get the parties to accept settlement proposals, pre-mediation conferences either had a negative effect or had no effect.

Private sessions during mediation - parties who spent more time in private session were more likely to return to court to file enforcement action. Private sessions either had no effect or had a negative effect on parties’ perceptions and post mediation conflict.

Proposals for mediator consideration Whilst the survey and the taskforce report provide food for thought for mediators there appear two standout points from both the Australian survey and the Amercian Taskforce report.

The first is the perception of the effectiveness of pre-mediation conferences to increase the potential for resolution of the dispute.

10

American Bar Association Dispute Resolution Section Taskforce report (Jun 2017).

57

THE ARBITRATOR & MEDIATOR JULY 2018 40% of Australian survey respondents said it was a helpful technique, this being 20% more than the second most helpful identified technique. 11 Similarly the ABA taskforce report said that when used to build rapport and trust these had the potential to increase resolution and post dispute conduct.

The second is the view that direct party engagement and participation in joint session with each other is considered to increase the potential for resolution of the dispute and satisfaction with the process and the mediator.

The Australian study highlighted the view that party / party conferences were a helpful technique and the ABA taskforce report noted that more time spent in private and not joint session resulted in it being more likely that parties would return to court to file enforcement action.

Whilst in time more accurate and rigorous examination and analysis will no doubt be undertaken, mediators should consider these results and reflect on their own mediation style, practice and experience.

If not already part of their own mediation practice then perhaps it is time to consider incorporating these two techniques as part of the service they offer to mediating parties.

11

Note however that the Australian survey did not seek to link conduct or techniques to mediation outcomes.

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THE ARBITRATOR & MEDIATOR JULY 2018

Challenges to the tribunal’s jurisdiction at the award enforcement stage1

By Bronwyn Lincoln 2

Abstract The question of the jurisdiction of an arbitral tribunal in international commercial arbitration is a question of some complexity. It can arise at all stages of the arbitration proceeding. Challenges based on the scope of the arbitration agreement or the existence of an arbitration agreement generally arise shortly after the commencement of the arbitration proceedings. The rules of most of the well-recognised arbitral institutions require challenges to jurisdiction to be raised before the filing of the statement of defence.

There are, however, also opportunities for a party to challenge the jurisdiction of an arbitral tribunal as a consequence of a procedural order (where the party contends, for example, that the order goes beyond the scope of the tribunal’s authority). Questions of jurisdiction also arise at the enforcement stage; Article V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) provides that recognition and enforcement of the award may be refused, relevantly and amongst other things, where there was no valid arbitration agreement or where the award deals with a difference which is outside of the scope of the arbitration agreement. This paper considers challenges to jurisdiction arising from a claim that there is no valid arbitration agreement in light of recent Australian authorities.

-----

The arbitration agreement as the starting point As Gary Born observes in his treatise on international commercial arbitration3: … it is elementary that international commercial arbitration is consensual: unless the parties have validly agreed to arbitrate a dispute, the arbitral tribunal has no authority to resolve that dispute.

This is reinforced by the statement of French CJ and Gageler J in TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia4 cited by Croft J in Indian Farmers Fertiliser Cooperative v Gutnick 5:

1

This paper was presented in the Federal Court of Australia in Melbourne (and via video to other Australian States and Territories) on 27 Feb 2018 at the first in the 2018 series of seminars co-presented by the Federal Court of Australia and the Chartered Institute of Arbitrators Australia.

2 Partner, Corrs Chambers Westgarth 3 Gary B Born, International Commercial Arbitration (Wolters Kluwer, 2nd ed, 2014) 3447, §26.05[C][a].

59

THE ARBITRATOR & MEDIATOR JULY 2018 Enforcement of an arbitral award is enforcement of the binding result of the agreement of the parties to submit their dispute to arbitration …

Croft J said further 6: This means that the role of the courts under the Act [International Arbitration Act] is understood to be limited to the enforcement of contractual obligations – that is, holding the parties to their bargain to finally determine disputes using arbitration.

Options for challenging an award There are two options available to a party to ‘challenge’ an arbitral award. The first is by way of application to set aside at the seat. The second is to wait until enforcement is sought in a local court in a jurisdiction where the award debtor has assets. The International Arbitration Act 1974 (Cth) (IAA) acknowledges that an application to set aside at the seat might be brought at the same time as an application for enforcement in another jurisdiction.

Section 8(8) provides that: (8) Where, in any proceedings in which the enforcement of a foreign award by virtue of this Part is sought, the court is satisfied that an application for the setting aside or suspension of the award has been made to a competent authority of the country in which, or under the law of which, the award was made, the court may, if it considers it proper to do so, adjourn the proceedings, or so much of the proceedings as relates to the award, as the case may be, and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.

These two options have been described as demonstrating a dichotomy between ‘active’ and ‘passive’ remedies 7. In the context of enforcement, proceedings at the seat would constitute an ‘active’ remedy.

The question of whether to engage at the seat or to ‘sit and wait’ for enforcement proceedings under the New York Convention might be driven by strategic considerations or practical issues.

From a strategic perspective, the recognition given by courts in the Asia Pacific region to the judgment of other courts in the region might discourage a party from applying to set aside an award at the seat. The reason is that if the application to set aside was unsuccessful, the court in another regional jurisdiction, when considering a challenge to enforcement under the New York Convention, may well have regard to the earlier ‘set aside’ judgment. By adopting the ‘sit and wait’ approach, the award debtor ensures that the enforcement court is the first court to consider a challenge in respect of the award.

This issue is particularly pertinent where there is increasing regard to the need to avoid what has been described by both courts in Australia and courts in Singapore as the ‘temptation of domesticity’.

Specifically, in Robotunits Pty Ltd v Mennel 8, Croft J observed:

4

(2013) 251 CLR 533 [34].

[2015] VSC 725 [17]; this case was the subject of an appeal but the observations of Croft J were undisturbed by the Court of Appeal.

6 Ibid [18].

7 PT First Media TBK v Astro [2013] SCGA 57 [68].

8 (2015) 297 FLR 300.

5

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THE ARBITRATOR & MEDIATOR JULY 2018 This is an important illustration of the need for courts to resist the temptation of domesticity in approaching matters involving Model Law and/or New York Convention based legislation. In other words, courts must resist the temptation to approach such matters through the prism of principles and doctrines not found in the Model Law or the New York Convention, and which may be peculiar to a particular domestic jurisdiction.

Working with the dichotomy Whilst much might be made by the award-creditor of an award-debtor’s decision not to actively challenge an award by way of an application to set aside at the seat, the fact remains that the court called upon to recognise and enforce the award in a jurisdiction where the award-debtor has assets must still decide the application for enforcement under the applicable law in that jurisdiction. In Australia, this is the IAA. There is seemingly no jurisprudence to suggest that the decision to take the passive rather than the active course might be taken into account in that decision making process. The issue was raised, however, in the Gutnick decision.

This decision did not involve a question of the validity of an arbitration agreement – recognition and enforcement was in fact challenged on grounds that the award provided for ‘double recovery’ and was therefore contrary to public policy. It is relevant, however, because it involved an award which was the subject of enforcement proceedings in both Australia and Singapore.

In this case, the application in Victoria for recognition and enforcement of the award made in Singapore was made some time after an application had been made in Singapore by the award creditor for recognition of the award as a judgment of the Singapore court. In terms of the dichotomy identified by the Singapore Court of Appeal in the Astro decision, the award-debtors had not only taken no active step to challenge the award in the seat (by way of an application to set aside), but they had also taken no step to challenge litigation by the award-creditor to enforce the award in the seat.

A consequence of this was that the public policy argument was made for the first time in the Victorian Supreme Court.

Whilst the litigation in Singapore was a matter raised by way of background in the application heard by Croft J (and later on appeal by the Court of Appeal), it did not on the face of the judgments of either the trial judge or the Court of Appeal factor into the question of whether the award ought be recognised and enforced in Victoria.

There may also be practical reasons why a party may choose to challenge jurisdiction at the enforcement stage in that party’s home jurisdiction (and not by proactively seeking to set aside in the seat). Litigation in a foreign jurisdiction (even where that jurisdiction has been agreed as the seat for arbitration proceedings) is expensive; there is also an element of the unknown.

In circumstances where, as above in the Gutnick matter, the award-debtors did not take up the opportunity to resist recognition and enforcement of the award as a judgment of the Singapore courts, absent the availability of assets in Singapore against which the award might have been enforced, participation in the Singapore litigation would not have prevented the award-debtors facing recognition and enforcement in another jurisdiction (whether by way of an application to enforce the award under the New York Convention or by way of an application to recognise and enforce the judgment of the Singapore court).

Enforcement and the validity of the arbitration agreement

61

THE ARBITRATOR & MEDIATOR JULY 2018 A party’s entitlement to challenge an award which is not supported by a valid arbitration agreement is found in Article V(1)(a) of the New York Convention (Schedule 1 of the IAA) and reflected in s 8(5) of the IAA which provides, relevantly, that: (5) Subject to subsection (6), in any proceedings in which the enforcement of a foreign award by virtue of this Part is sought, the court may, at the request of the party against whom it is invoked, refuse to enforce the award if that party proves to the satisfaction of the court that: … (b) the arbitration agreement is not valid under the law expressed in the agreement to be applicable to it or, where no law is so expressed to be applicable, under the law of the country where the award was made.

As Gary Born observes 9, the question of whether a court might resist enforcement on grounds that there was no valid arbitration agreement is intrinsically connected with the obligation of convention states under Article II of the New York Convention to recognise and enforce arbitration agreements. He observes that: In general, the same substantive analysis that applies in the context of recognition and enforcement of arbitration agreements under Article II is equally applicable to recognition and enforcement of awards under Article V.

Burden of proof The question of the burden of proof in cases where the arbitration agreement is challenged also invites commentary and debate. The party seeking enforcement of the award, being the applicant or the plaintiff, has a positive obligation to provide to the court a copy of the arbitration agreement under which the award is made. In Australia, that obligation is found in s 9 of the IAA. However, where an award-debtor challenges an award on grounds that the arbitration agreement was invalid, it is the award-debtor which must prove its case to the court.

In IMC Aviation Solutions Pty Ltd v Altain Khuder 10, Warren CJ (as she then was) observed in relation to the burden of proof that: Section 8(5)(a)-(e) require the enforcing court to be satisfied that a foreign award is tainted by either fraud or vitiating error on the part of the arbitral tribunal. Given that the Act declares arbitration to be ‘an efficient, impartial, enforceable and timely method by which to resolve commercial disputes’, the enforcing court should start with a strong presumption of regularity in respect of the tribunal’s decision and the means by which it was arrived at. The enforcing court should treat allegations of vitiating irregularity as serious. A correspondingly heavy onus falls upon the award debtor if it wishes to establish such an allegation on the balance of probabilities. Furthermore, the conduct of the parties to the agreement at each of the various stages prior to an enforcement order being sought in these courts, and its consistency with the defence subsequently asserted, will be a relevant fact to consider when deciding whether that burden has been discharged to the necessary standard.

9

Born, above n 3, 3448.

[2011] VSCA 248.

10

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THE ARBITRATOR & MEDIATOR JULY 2018 There are two relatively recent decisions of the Federal Court of Australia which consider the question of the validity of an arbitration agreement, including the burden of proof.

Alfield case Liaoning Zhongwang Group Co Ltd v Alfield Group Pty Ltd 11 concerned an application for recognition and enforcement of a foreign arbitral award pursuant to s 8(3) of the IAA. The award in question was made in China by the China International Economic and Trade Arbitration Commission (CIETAC).

Alfield resisted enforcement on three grounds: (a) First, there was no valid arbitration agreement between the parties; (b) Secondly, Alfield had been unable to present its case in the arbitration; and (c) Thirdly, that enforcement would be contrary to public policy.

These three grounds were linked. The public policy arguments were unique to the facts of the case.

Alfield claimed that the agreement containing the arbitration agreement was a sham and that Alfield could not fully participate in the arbitration hearing because of a threat made to the liberty of its sole director and that director’s reasonable fear of detention in China.

When the matter came before the Court, it came by way of an application for summary judgment. As interesting as the facts might be in relation to the public policy arguments, the relevant aspect of the decision to the topic at hand is the Court’s observations in relation to the validity of the arbitration agreement.

It was not in dispute that the arbitration agreement was contained in an agreement called the mercantile agreement. Clause 12 of the mercantile agreement provided that12: All disputes in connection with this contract or the execution there of shall be settled through friendly negotiations between two parties. If no settlement can be reached, The [sic] case in dispute shall then be submitted for arbitration to china [sic] international economic and trade arbitration commission, Beijing in accordance with it’s [sic] rules of procedure and the decision made by the arbitration organization shall be taken as final and binding upon both parties. The arbitration expenses shall be borne by the losing party unless otherwise awarded by the arbitration organization.

The arbitral award noted that the parties had signed the mercantile agreement and that the mercantile agreement had been performed. It recorded that 13: Thereby, the mercantile agreement shall be the basis of hearing by the Arbitral Tribunal.

On these facts and at first blush, in light of the finding of the arbitral tribunal that the ‘container agreement’, being the mercantile agreement, was the basis for the arbitration hearing, there is a question whether in considering whether there was a valid arbitration agreement, the court was in fact being asked

11

[2017] FCA 1223.

At [17].

13 At [37].

12

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THE ARBITRATOR & MEDIATOR JULY 2018 to re-open the merits of the dispute. Alfield submitted that this was not the case and that an examination of the validity of the arbitration agreement was a permissible review.

As to whether there was proof before the Court of an arbitration agreement, s 9(5) of the IAA provides that a document produced to the court in accordance with this section is, upon mere production, receivable by the court as prima facie evidence of the matters to which it relates 14.

Counsel for Alfield submitted that in deciding an application for recognition and enforcement of the award, the Court ought consider only what might be described as the operative part of the award and not recitations and findings of fact. Counsel for the applicant submitted that the entire document ought stand for the purposes of s 9. The Court’s decision on this issue was of significance because the award set out matters which were relevant to Alfield’s resistance to enforcement.

In considering these submissions, the Court looked to the CIETAC Arbitration Rules under which the arbitration had taken place – these rules set out, amongst other things, matters to be covered by the award, including (in summary form), the claims, the facts, the tribunal’s findings and the result. The Court held that, in light of these requirements, the reference to award in s 9 of the Act captures the entire Arbitral Award document, and the entire document is receivable as prima facie evidence of the matters to which it relates 15. Relying on matters of fact set out in the award, the Court accepted that Alfield had for some time participated in the arbitration proceedings, it had invoked the arbitration agreement for a counterclaim and it had not made a challenge to the arbitration agreement in the course of the proceedings. Additionally, because of the nature of the public policy argument, there were detailed statements before the Court as to the conduct of the arbitration proceedings and in support of the facts underlying the public policy defence.

Relevantly, in relation to the burden of proof, the Court found that: (a) the applicant had met the evidentiary requirements of s 9(1) of the IAA, that is, provision of the arbitration agreement, by the production to the court of copies of the arbitral award and the mercantile agreement containing the arbitration clause; and (b) the applicant was therefore prima facie entitled to enforcement 16.

The Court then turned to Alfield’s case. As to the proof required to demonstrate the absence of a valid arbitration agreement, the Court again turned to observations of the Court in Altain Khuder in relation to the interpretation of s 8(5) 17: [T]he Act neither expressly nor, in our opinion, by necessary intendment provides that the standard of proof under s 8(5) and (7) is anything other than the balance of probabilities, as one would expect in a civil case. Section 8(5) requires proof ‘to the satisfaction of the court’ whereas s 8(7) refers to a finding. But in either case, it is on the balance of probabilities. It is thus seen that the legislature has adopted different language in these provisions, which serves to emphasise not only the deliberate use of language but also the absence of language such as ‘heavy onus’, ‘extremely onerous and a heavy burden’, and ‘clear, cogent and clear proof’. The true position, in our view, is that what may be required, in a particular case, to produce proof on the

14

At [21].

At [25].

16 At [65]-[66].

17 At [75].

15

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THE ARBITRATOR & MEDIATOR JULY 2018 balance of probabilities will depend on the nature and seriousness of that sought to be proved.

The difficulty faced by the Court was that the governing law of the mercantile agreement was Chinese law. Alfield’s counsel encouraged the Court, in the absence of evidence of Chinese law, to apply the presumption that Chinese law was the same as Australian law, the lex fori.

Having regard to the detailed submissions before it (which are set out in the judgment), the Court observed that 18: I am not persuaded that the question of the validity of an arbitration agreement is an area of broad legal principle upon which it is reasonable to assume that the laws of Australia and the laws of China are broadly the same. Tweeddale A and Tweeddale K, Arbitration of Commercial Disputes: International and English Law and Practice (Oxford University Press, 2007), para [7.01], express the view that perhaps no other area of arbitration law has received as much academic interest as the issue of which law or laws govern the arbitration agreement and the arbitration procedure.

Application of the presumption in this context may undermine the legislative framework which is expressed, in several places, to apply by reference to the law of the country in which the arbitration took place, or the law of the country in which the award was made. It would be potentially at odds with the importance of attempting to “create or maintain, as far as the language employed by Parliament in the [Act] permits, a degree of international harmony and concordance of approach to international commercial arbitration”: cf TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd [2014] FCAFC 83; (2014) 232 FCR 361 (“TCL”) at [75].

Further, in my view, the proper interpretation of s 8(5)(b) is that the requirement for proof of the circumstance that the arbitration agreement is not valid under the law of the country where the award was made is a requirement for affirmative proof of the foreign law by the party seeking to invoke s 8(5)(b). That requirement is not met by applying Australian law in the absence of proof of the foreign law. This interpretation is based primarily on the language which requires that the party resisting enforcement “proves to the satisfaction of the court” invalidity “under the law of the country where the award was made” without reference to any presumption about the content of that law. A contrary interpretation would place the burden upon the party seeking to enforce the award that the laws of the country in which the award was made was different from the laws of Australia, which is inconsistent with the general scheme of facilitating enforcement of foreign awards subject to limited circumstances which may be demonstrated by a party resisting enforcement.

These observations were made after the Court had acknowledged and cited the objectives of the IAA. The judgment considers the further two grounds relied on by Alfield in resisting recognition and enforcement, but in relation to the question of the validity of the arbitration agreement (which is the subject of this paper), the Court concluded that 19: … Alfield has no reasonable prospect of resisting the application for enforcement of the award pursuant to s 8(7) on the basis of its evidence that there was a lack of mutual

18 19

At [95]-[96].

At [111].

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THE ARBITRATOR & MEDIATOR JULY 2018 intention between the parties to enter into the arbitration agreement or that the agreement was part of a sham arrangement. That evidence must be considered in the context of Alfield’s affirmation of the arbitration agreement by its participation in the arbitration process including, most significantly, appointing Ms Jin Fengju as a member of the arbitral tribunal, submitting a “Statement of Defense”, submitting counterclaims for determination by the arbitral tribunal and seeking an adjournment of the oral hearing of the tribunal for the purposes of trying to reach a settlement with Zhongwang. In that context, there is no evident basis upon which it could be said that enforcement of the award would be contrary to public policy.

Trina Solar case The second (and earlier) decision of the Federal Court which provides guidance where there is a question as to the validity of an arbitration agreement is Trina Solar (US), Inc v Jasmin Solar Pty Ltd 20. Trina Solar involved an application by a plaintiff to civil proceedings in Australia for leave to serve those proceedings out of the jurisdiction. The primary judge granted leave. Specifically, his Honour found that Jasmin Solar had established a prima facie case in respect of the causes of action framed by the statement of claim and that ‘jurisdiction’ was engaged 21. There was no challenge to his Honour’s findings in this regard.

Trina Solar, however, appealed on grounds that the primary judge ought to have looked beyond the mandatory requirements of the Federal Court Rules and had erred in refusing to exercise a residual discretion to dismiss the application because an order granting leave to serve in the US would be of no use where the civil proceedings in Australia would be stayed on application by Trina under s 7(2) of the IAA. The Full Court judgment includes a detailed discussion as to the availability and exercise of the residual discretion, however it is the Court’s analysis on choice of law rules (both in determining the existence of an agreement and in the context of the IAA,) which is of particular interest. Trina submitted that the question of the validity of and parties to the arbitration agreement ought be determined according to New York law. Greenwood J examined the jurisprudence, principally in Australia and in the United Kingdom, where the courts had been called upon to determine the existence, construction and validity of a pleaded contract (including where an application to stay proceedings was founded on the parties’ contractual arrangements). Having undertaken the analysis, his Honour was persuaded by the obiter of Brennan J and Gaudron J of the High Court of Australia in Oceanic Sun Line Special Shipping Company Inc v Fay22 and by the English cases, concluding that 23: Having regard to Oceanic and the discussion in these reasons, it seems to me that the lex fori ought to be applied when determining [whether an agreement was reached].

Beach J and Dowsett J agreed with Greenwood J, with Beach J observing that the appropriate choice of law [to determine whether there is consensus ad idem between the parties] is the law of the forum24, and noting, amongst other things, that it is counter-intuitive to suggest that the choice of law to assess consensus ad idem should be that set out in an agreement that an entity says it is not a party to because

20

[2017] FCAFC 6.

At [5].

22 (1988) 165 CLR 197.

23 At [46].

24 At [128].

21

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THE ARBITRATOR & MEDIATOR JULY 2018 there was no consensus ad idem 25. Beach J also relied in his finding on obiter of the High Court in Oceanic.

Whilst the Court noted that it was not necessary for the primary judge to finally determine whether a stay would be granted under the IAA (and that the primary judge did not in fact do so), each of Greenwood J and Beach J looked at the operation of ss 7 and 8 of the IAA. Section 7(2) of the IAA provides that the court shall on application of a party to an arbitration agreement stay the proceedings or so much of the proceedings as involves the determination of the matter, as the case may be, and refer the parties to arbitration in respect of that matter. Section 8(5) of the IAA (which concerns enforcement of a foreign arbitral award and was referred to earlier in this paper) provides, inter alia, that the court may refuse enforcement where the arbitration agreement is not valid under the law expressed in the agreement to be applicable to it, or where no law is so expressed to be applicable, under the law of the country where the award was made or where a party to the arbitration agreement […] was, under the law applicable to him or her, under some incapacity at the time when the agreement was made.

These provisions require the Court for the purposes of the IAA, to look not to the lexi fori to determine the validity of the arbitration agreement which underpins a foreign arbitral award, but to the proper law of the agreement itself (or, where there is no proper law expressed in the agreement, to the law of the place where the award was made). The question for the Court in those circumstances is therefore, as Greenwood J observed, whether there is an arbitration agreement, so defined, between the parties said to be parties to it whether or not there is a contract according to the law of the forum 26. In answering this question, his Honour had regard to the seminal cases of Comandate Marine Corp v Pan Australia Shipping Pty Ltd 27 and TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia 28, to the New York Convention and the UNCITRAL Model Law and the leading academic studies. His Honour concluded that 29: [a]lthough the [IAA] does not select, for the purposes of recognition of an arbitration agreement [… ], the same choice of law rule selected at s 8(5)(b), the question of whether a party to a proceeding contemplated by s 7(2) is a “party to an arbitration agreement” for the purposes of the [IAA], ought be governed by the same choice of law rules that govern the very same question when it arises in the context of whether the court will refuse to enforce a foreign award on the proven ground of invalidity due to the relevant party never having been a “party to the arbitration agreement”.

Beach J, on the other hand, accepted that the New York Convention is to encourage uniformity of international standards, but observed that [t]he fact that s 8(5)(b) provides for a choice of law different to the law of the forum in relation to whether an “arbitration agreement” exists to which a party is bound, does not entail that the same choice of law needs to be made for s 7(2) 30. A factor in his Honour’s reasoning was that policy considerations which apply to the recognition and enforcement of foreign arbitral awards do not exist in relation to the enforcement of arbitration agreements. Dowsett J agreed,

25

At [130].

At [52].

27 (2006) 157 FCR 45.

28 (2013) 251 CLR 533.

29 At [82].

30 At [182].

26

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THE ARBITRATOR & MEDIATOR JULY 2018 noting that I see no support for the proposition (if it be advanced) that the references to proper law in s 8 should be imported into s 7 [of the IAA] 31.

Whilst the judgment contains different analyses in relation to the choice of law issue, the Court unanimously dismissed the appeal.

Conclusion International commercial arbitration, by its nature, involves consideration of international jurisprudence.

In a recent address for the opening of the 2018 legal year in Singapore32, Chief Justice Sundaresh Menon referred to the growing internationalisation of legal practice. Practitioners the world over will continue to look for novel and innovative arguments to assist their clients in challenging jurisdiction of tribunals and the enforcement of foreign arbitral awards. At the same time, national courts will move forward in their support of arbitration as a legitimate and effective option for the resolution of international disputes.

And in the midst of this growth and support, tribunals will continue in reliance on the jurisprudential doctrine of competence-competence to do as they have always done which is to determine their own jurisdiction to the best of their ability in each case that is entrusted to them.

31 32

At [3].

Supreme Court of Singapore, â&#x20AC;&#x2DC;Response by Chief Justice Sundaresh Menon, opening of the legal year 2018â&#x20AC;&#x2122; (Jan 2018) <https://www.supremecourt.gov.sg/Data/Editor/Documents/Response%20by%20Chief%20Justice%20%20(Checked%20again st%20Delivery%20version%20-%20080118).pdf>.

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THE ARBITRATOR & MEDIATOR JULY 2018

Third party funding: from origins to international arbitration1

By Oliver Gayner 2

Abstract The use of commercial third party funding (TPF) first developed in insolvency proceedings in Australia, and subsequently in class actions. The early evolution of TPF was characterised by interlocutory disputes over its lawfulness. Following the High Court’s decision in Fostif, Australian case law established precedents on several key issues, including the extent to which TPF requires court approval and the role played by funders in managing litigation. Similar issues are being considered in other common law jurisdictions, including the UK, Canada, Hong Kong and Singapore. Through the adoption of TPF by international arbitration in particular, a new set of internationally recognised common standards is beginning to emerge.

-----

Origins of TPF In 1995, the Australian Federal Government introduced legislative reforms to allow insolvency practitioners to begin using commercial third party funding (TPF) in order to meet the expenses of claims which could be characterised as “company property”. Funders such as IMF Bentham Ltd (formerly IMF Australia, with the initials standing for “Insolvency Management Fund”) began contracting with liquidators to meet the costs of such actions in exchange for a return from the proceeds.

From the outset, TPF can be understood as a free market response to a free market problem, namely the ever increasing and often prohibitive costs of litigation. Of course, the difficulties faced by both claimants and defendants in meeting the high costs of professional services, billed hourly with an uncertain outcome, were not new in 1995; and nor was TPF the only solution. As Lord Denning MR observed in 1967:

1

Adapted from a presentation to the International Bar Association’s Annual Conference, Sydney, 10 Oct 2017. The author wishes to acknowledge the contributions of his fellow panellists Ira Nishishato (BLG, Toronto), Craig Miles (King & Spalding, Texas), Tim Elliss (Enyo Law, London), and with particular thanks for the sections on Australian law, the Hon. Justice M J Beazley AO (President of the Court of Appeal, New South Wales).

2 Oliver S. H. Gayner MA (Hons) DipL MCIArb. Oliver is an Investment Manager with the international litigation funder IMF Bentham Ltd based in Sydney. He was formerly a solicitor advocate (England & Wales) specialising in complex international dispute resolution. His work includes commercial arbitration, investment arbitration, class actions (securities, environmental tort, investment schemes, cartels), insolvency and general commercial disputes.

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THE ARBITRATOR & MEDIATOR JULY 2018 “Much maintenance is considered justifiable today which would in 1914 have been considered obnoxious. Most of the actions in our courts are supported by some association or other, or by the state itself. Comparatively few litigants bring suits, or defend them, at their own expense. Most claims by workmen against their employers are paid for by a trade union. Most defences of motorists are paid for by insurance companies. This is perfectly justifiable and is accepted by everyone as lawful, provided always that the one who supports the litigation, if it fails, pays the costs of the other side." – Hill v Archbold [1967] 3 All ER 110.

So numerous were these exceptions that the doctrines of maintenance and champerty came to be viewed as obsolete (“a dead letter in our law” 3), and by the mid 1990s had come to be abolished as crimes and torts in most Australian states. 4 However there remained the vestigial issue of whether a TPF arrangement could be contrary to public policy. In the late 1990s and early 2000s funded claims were frequently met with interlocutory challenges brought by defendants arguing for a stay on the basis that TPF constituted an abuse of process. Even where proceedings are not successfully stayed, satellite litigation can be debilitating, and a clarification of the law may be required.

Against this background the High Court delivered its decision in Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386. The case concerned a series of representative proceedings brought by tobacco retailers against tobacco wholesalers seeking restitution of a licence fee that had been found to be unconstitutional. The proceedings were funded by a third party funder, Firmstone, in exchange for a third of the litigation proceeds and substantial rights relating to the conduct of the litigation, such as instructing solicitors on behalf of the plaintiffs.

At first instance, the funding arrangement was held to be unlawful “trafficking in the retailers’ litigation” and thus an abuse of process contrary to public policy. 5 However, the Court of Appeal took an entirely different stance. First, it described an abuse of process as dependent on whether the role of the funder had “corrupted or was likely to corrupt the processes of the Court to a degree that attracts the extraordinary jurisdiction to dismiss or permanently stay proceedings”. 6 In concluding that there was no such evidence before the court, Mason P held that: ““Public policy” in the sense of the policy of the law has changed and become more narrowly focused in this area. It has nothing to do with the ‘private notions of judges as to what is good or expedient policy’. The law now looks favourably on funding arrangements that offer access to justice so long as any tendency to abuse of process is controlled […] public policy now recognises that it is desirable in order to facilitate access to justice that third parties should provide assistance designed to ensure that those involved in litigation have the benefit of legal representation” 7 By a majority of 5-3, the High Court upheld the Court of Appeal, finding that:

3

“Maintenance and champerty as crimes are a dead letter in our law. There are no records of any prosecution for either for many years past. They do no more today than add unnecessarily to the length of legal textbooks and the statute book. To rid the law of these crimes would be merely to clear away lumber discarded in practice.” – Law Commission of England & Wales, Proposals for Reform of the Law relating to Maintenance and Champerty, 25 Oct 1966, para 7.

4 Criminal Law Consolidation Act 1935 (SA) sch 11 ss 1(3), 3(1); Wrongs Act 1958 (Vic) s 32; Crimes Act 1958 (Vic) s 322A; Maintenance, Champerty and Barratry Abolition Act 1993 (NSW) ss 3, 4; Civil Law (Wrongs) Act 2002 (ACT) s 221(1).

5 Keelhall Pty Ltd t/as “Foodtown Dalmeny” v IGA Distribution Pty Ltd (2003) 54 ATR 75.

6 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203, [132].

7 Ibid, [105].

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THE ARBITRATOR & MEDIATOR JULY 2018 “89. As Mason P rightly pointed out in the Court of Appeal, many people seek profit from assisting the processes of litigation. That a person who hazards funds in litigation wishes to control the litigation is hardly surprising. That someone seeks out those who may have a claim and excites litigation where otherwise there would be none could be condemned as contrary to public policy only if a general rule against the maintenance of actions were to be adopted. But that approach has long since been abandoned and the qualification of that rule (by reference to criteria of common interest) proved unsuccessful. And if the conduct is neither criminal nor tortious, what would be the ultimate foundation for a conclusion not only that maintaining an action (or maintaining an action in return for a share of the proceeds) should be considered as contrary to public policy, but also that the claim that is maintained should not be determined by the court whose jurisdiction otherwise is regularly invoked?

90. Two kinds of consideration are proffered as founding a rule of public policy – fears about adverse effects on the processes of litigation and fears about the "fairness" of the bargain struck between funder and intended litigant. In Giles v Thompson, Lord Mustill said that the law of maintenance and champerty could best "be kept in forward motion" by looking to its origins; these his Lordship saw as reflecting "a principle of public policy designed to protect the purity of justice and the interests of vulnerable litigants".

91. Neither of these considerations, whatever may be their specific application in a particular case, warrants formulation of an overarching rule of public policy that either would, in effect, bar the prosecution of an action where any agreement has been made to provide money to a party to institute or prosecute the litigation in return for a share of the proceeds of the litigation, or would bar the prosecution of some actions according to whether the funding agreement met some standards fixing the nature or degree of control or reward the funder may have under the agreement. To meet these fears by adopting a rule in either form would take too broad an axe to the problems that may be seen to lie behind the fears.”

The High Court’s view has proved highly influential and has led to the development of a “light touch”, court-based approach to regulating TPF, not just in Australia, but in other common law jurisdictions around the world. There are several strands to the decision which are worth separating out.

First, a key part of the majority’s reasoning was that, to the extent there was evidence of abusive or corrupting conduct by a funder, the courts already possessed sufficient powers to sanction such conduct, for example through orders for third party costs or contempt of court. For example, s 98 Civil Procedure Act 2005 (NSW) provides the Court with an unfettered jurisdiction to make costs orders in relation to proceedings before the Court. Accordingly, funders face the same disincentives from committing abuse as litigants themselves – in particular if the funder’s involvement is disclosed and visible to the Court or Tribunal. 8 Second, orders for third party costs and contempt are only made by Court following actual evidence of improper conduct (usually contested evidence, with the respondent being given due opportunity to appear

71

THE ARBITRATOR & MEDIATOR JULY 2018 and defend its actions). Why should TPF be regulated by “spectres” and “fears” of conduct that has not yet happened, and may indeed never happen?

Third, and as Lord Denning observed in Hill v Archbold (op cit.), the law has long recognised the legitimacy of ceding conduct of litigation to parties such as insurers or trade unions, “provided always that the one who supports the litigation, if it fails, pays the costs of the other side." Where a funder accepts responsibility for the adverse consequences of the proceedings, for example through the lodgement of a Deed Poll, it follows that the funder should be permitted the right to guide and manage those proceedings so that they are run proportionately and cost effectively. 9 There are two important qualifications: the level of control ceded to the funder should be agreed with the funded party and recorded in the funding agreement, and the arrangement must not cause prejudice to the court or tribunal’s process.

The High Court’s decision in Fostif has been adopted and expanded in subsequent Australian caselaw, 10 in particular through the jurisprudence of class actions. Part IVA of the Federal Court Act 1976, when introduced in 1992, failed to address the recommendation by the Australian Law Reform Commission that representative plaintiffs be entitled to funding from the state in order to bring actions on behalf of group members. Since representative plaintiffs under the legislation were responsible not just for meeting the fees and disbursements of the class, but also the defendant’s adverse costs should the claim fail, there was a lacuna which was left to TPF to fill.

Expansion of TPF to other jurisdictions TPF has been described as an “Australian export”,11 which has been adopted and accepted in other common law jurisdictions such as the USA, Canada, New Zealand, the UK, Hong Kong and Singapore, as well as in some civil law jurisdictions including Germany, France and the Netherlands. Whilst in general the “light touch” approach adopted by Australia has reached favour, there are nuances to the approach taken towards TPF in each jurisdiction. The underlying issues raised by TPF are a complex mix of politics and economics as well as law. For example: • • •

Should the State intervene in this sector, or leave it to the free market to develop solutions?

How should TPF be compared to pre-existing forms of funding, such as insurance, conditional feels and contingency fees?

If regulation is required, does it fall under the Ministry of Finance or the Ministry of Law?

9

For example, where contractually so agreed with the funded party, IMF Bentham will file and serve a Deed Poll which confirms its liability for payment of any adverse costs orders made against the funded party, which the opposing party can enforce as a debt within the jurisdiction. Since at least 2012, all Deed Polls provided by IMF Bentham in Australia have ultimately been accepted as good security for costs.

10 See for example: • Jeffrey and Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43 (third party funded proceedings without giving adverse costs indemnity, arrangement held not to be abusive); • Project 28 Pty Ltd v Barr [2005] NSWCA 240 (by analogy with insurance law, an arrangement ceding absolute control to the funder, including responsibility for instruction of lawyers and settlement, was upheld); • Dorajay v Aristocrat Leisure Ltd (2005) 147 FCR 394 and QSPX Ltd v Ericsson Australia Pty Ltd (No. 3) (2005) 219 ALR 1 (respondents’ applications to stay the proceedings on the grounds that the funder exercised excessive control failed); • Deloitte Touche Tohmatsu v JP Morgan Portfolio Services Ltd (2007) 158 FCR 417 (Full Federal Court upheld an arrangement whereby an entity formerly in the JP Morgan group granted the “entire benefit and virtual control” of proceedings to its new ultimate beneficial owner, Westpac, which was held to have a genuine commercial interest in the outcome and had submitted itself to the court’s processes, including as to costs).

11 Michael Legg et al, “The Rise and Regulation of Litigation Funding in Australia” (2011), 38 Northern Kentucky Law Review 626, 629.

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THE ARBITRATOR & MEDIATOR JULY 2018 • •

If the decision making is to be left to the Courts, should the Courts require disclosure and approval of TPF in each case?

And how should the Courts reconcile competing doctrines, such as freedom of contract, access to justice and protecting due process?

In the U.K., some of the leading decisions in this area are to be found in the jurisprudence of the Court of Appeal (then led by Lord Phillips MR) in the mid 2000s. In conducting a balancing exercise of competing public policies, the Court of Appeal came to the view that the public policy in favour of promoting access to justice should have overriding weight: see for example Hamilton v Al Fayed [2002] EWCA Civ 665, 12 R (Factortame & Ors) v Secretary of State for Transport [2002] EWCA Civ 932, and Arkin v Borchard Lines [2003] EWHC 2844 (Comm). TPF has subsequently been endorsed by Lord Justice Jackson’s Review of Civil Litigation Costs, which led to the creation of a code of conduct promulgated by the UK Association of Litigation Funders (ALF). In effect, the ALF Code is a form of voluntary self-regulation.

There are material points of difference between funding under the ALF Code and practice in Australia. In particular, the English courts have traditionally been more reluctant to permit funders to exercise the wide degree of control set out in Fostif and subsequent cases. Here too though the gap may be narrowing. In the recent Court of Appeal decision in Excalibur Ventures LLC v Texas Keystone & Ors [2016] EWCA Civ 1144, Lord Justice Tomlinson, with whom Lady Justice Gloster and Lord Justice David Richards agreed, held: “31. I should also comment on the suggestion of the ALF that "to avoid being fixed with the conduct of the funded party, the funder would have to exercise greater control over the conduct of the litigation throughout and that this runs the risk that the funding agreement would be champertous". I understand why this concern is raised but I consider that it is unrealistic. As the judge pointed out, champerty involves behaviour likely to interfere with the due administration of justice. Litigation funding is an accepted and judicially sanctioned activity perceived to be in the public interest. What the judge characterised as "rigorous analysis of law, facts and witnesses, consideration of proportionality and review at appropriate intervals" is what is to be expected of a responsible funder – as the ALF to some extent acknowledges and as did some of the funders in this case in their evidence presented to the judge – and cannot of itself be champertous. I agree with Mr Waller that, rather than interfering with the due administration of justice, if anything such activities promote the due administration of justice. For the avoidance of doubt I should mention that on-going review of the progress of litigation through the medium of lawyers independent of those conducting the litigation, a fortiori those conducting it on a conditional fee agreement, seems to me not just prudent but often essential in order to reduce the risk of orders for indemnity costs being made against the unsuccessful funded party. When conducted responsibly, as by the members of the ALF I am sure it would be, there is no danger of such review being characterised as champertous.”

In Canada, recent decisions by the Federal Court of Canada and the Ontario Superior Court in funded cases have determined that TPF is not unlawful per se, the litigation privilege attaches to funding

12

“[There is] clear evidence […] of a trend in public policy towards funding access to the courts. […] Access to the courts is a fundamental aspect of the rule of law in a democratic society, guaranteed by everyone by Article 6(1) of the European Convention on Human Rights. It should not be denied to those who cannot afford to pay the court’s fees” – per Hale LJ (now Lady Hale, President of the UK Supreme Court), at 81, citing R v Lord Chancellor, ex parte Witham [1998] QB 575.

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THE ARBITRATOR & MEDIATOR JULY 2018 agreements, 13 and that whilst funding arrangements require approval in the context of class actions, 14 outside class actions no such approval is required.15 In both Hong Kong and Singapore, the Courts have held that it is lawful for liquidators to use TPF to fund claims arising out of insolvency. In Hong Kong, three liquidator claims have been funded under the socalled “insolvency exception” identified by the Court of Final Appeal in Unruh v Seeberger [2007] HKCFA 9. Outside of insolvency, TPF of commercial claims would only be permitted on the current state of the law if to do so promoted “access to justice”, although the CFA in Seeberger recognised that the categories of what constitutes “access to justice” are not closed. In Singapore, the High Court held in Re Vanguard Energy [2015] SGHC 156 that insolvency funding was permitted with prior Court approval.

However, perhaps the most striking and far reaching reforms are taking place in the field of international arbitration.

TPF and international arbitration Just as TPF and class actions found themselves to be natural bedfellows, so too have TPF and arbitration.

Whilst parties to arbitration are often sophisticated commercial entities (with less need for protection by the Courts), the costs of arbitration can be high, and claimants can frequently be at a substantial financial disadvantage to respondents. For example, in investment treaty arbitration the investor’s business may have been expropriated or otherwise damaged by the state’s actions, leaving the investor exhausted of funds and with little capacity to pursue a powerful opponent.

In 2015, the Hong Kong Law Reform Commission (Arbitration Funding Sub-Committee) published a paper following a two year study which recommended permitting TPF of international arbitration matters in Hong Kong provided certain “ethical and financial safeguards” were met. In 2017, these reforms were embodied into amendments to the Arbitration Ordinance, and a draft Code of Practice was published for consultation, which adopts many of the features set out in the UK ALF Code.16 In 2017, the Ministry of Law in Singapore introduced legislation abolishing maintenance and champerty as crimes and torts, and providing a “safe harbour” regime for the funding of international arbitrations in Singapore (and related court proceedings) by professional funders who meet a basic capital adequacy requirement. 17 SIAC has also released Investment Arbitration Rules which, for the first time, directly address the use of TPF including a basic disclosure requirement.18 Also in 2017, a joint ICCA / Queen Mary University taskforce published a draft Report into TPF of arbitration. 19 Over a 4 year period, the taskforce consulted with more than 50 key stakeholders, such as arbitrators, counsel, lay clients, academics and professional funders. The goal was to try and identify common answers to some of the key questions posed by TPF, such as consistency amongst definitions, disclosure of funding arrangements, conflicts of interest, liability for adverse costs, protection of legal

13

Seedlings Life Sciences Ventures LLC v. Pfizer Canada Inc. [2017] F.C.J. No. 945, 2017 FC 826, Order of Jul 17 2017.

Houle v. St Jude Medical Inc. [2017] O.J. No. 4489, 2017 ONSC 5129 (Aug 29, 2017).

15 Seedlings Life Sciences Ventures LLC v. Pfizer Canada Inc. [2017] F.C.J. No. 945, 2017 FC 826, Order and Reasons of Sep 12, 2017 (“the manner in which Seedlings chooses to fund a litigation it has every right to bring is of no concern to the Court or to the Defendant… The Defendant has no legitimate interest in enquiring into the reasonability, legality or validity of Seedlings’ [TPF] arrangements… because they do not affect or determine the validity of the rights asserted by Seedlings in this action” (per Case Management Judge Tabib).

16 See the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016.

17 See the Civil Law (Amendment) Act 2017 (No. 2 of 2017) and the Civil Law (Third Party Funding) Regulations 2017.

18 See the Investment Arbitration Rules of the Singapore International Arbitration Centre (1st Edition, 1 Jan 2017).

19 See Report of The ICCA-Queen Mary Task Force on Third Party Funding in International Arbitration, Apr 2018.

14

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THE ARBITRATOR & MEDIATOR JULY 2018 privilege, and the extent to which control by a funder should be permitted. In so doing the taskforce also considered a range of global precedents, such as the ALF Code, the new legislation in Hong Kong and Singapore, and some of the key caselaw cited above. The final recommendations were then published in April 2018 during the ICCA Congress in Sydney.

The Reportâ&#x20AC;&#x2122;s valuable and detailed conclusions should act as a blueprint for arbitration tribunals when considering funded cases in the future. In place of the piecemeal development to date, it appears that a new set of global common standards may be emerging for the use and regulation of TPF. That Sydney was the venue for the publication is perhaps symbolic â&#x20AC;&#x201C; some twenty years after a fledging industry was born in Australia, in 2018 TPF has become more mainstream than ever before.

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Case note Arbitration: when a final award is not final Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97

By Albert Monichino QC 1

Abstract When is an arbitral award styled “Final Award” not a final award? What power does an arbitrator have to issue an additional award after he is functus officio? Does the power to set aside an award extend to a situation where an arbitrator has failed to deal with an issue falling within the arbitral reference? The above questions fell for consideration in the following case.

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Facts In 2012, B commenced Supreme Court proceedings alleging L had breached a design and construct contract. A partial settlement was reached on 21 April 2016. Under the deed of settlement, the remaining issues were referred to arbitration. An arbitrator was appointed and delivered an interim award on 15 June 2016 resolving the majority of the remaining issues. However, the arbitrator did not, by his interim award, resolve the question of the costs of the Supreme Court proceeding. B sought all of those costs. The settlement deed envisaged that the parties could put on short evidence as to costs of the proceeding. The arbitrator gave the parties an opportunity to make written submissions, including a round of reply written submissions. There was no oral hearing. In its reply written submissions, L submitted that B had not provided the arbitral tribunal with an evidentiary basis on which to determine the claim for costs and accordingly the claim should be dismissed.

On 9 August 2016, the arbitrator rendered an award styled “Final Award”. He declined to determine the issue of the Supreme Court costs on the basis that there was insufficient information for him to do so. The dispositive part of the final award provided that “the issue of the payment of costs of the Supreme Court proceedings between the Claimant and the Respondent is not decided, without prejudice to the rights of the parties to apply for the costs in the Supreme Court of Victoria.”

L contended that the arbitrator was functus officio as he had delivered a Final Award. B did not request the arbitrator to render an additional award under s 33(5) of the Commercial Arbitration Act 2011 (Vic) (‘CAA’) (reflecting Article 33(3) of the UNCITRAL Model Law on International Commercial Arbitration ‘Model Law’) in respect of the remaining issue. Instead, on 4 November 2016, B applied by

1

Barrister, Chartered Arbitrator and Mediator

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THE ARBITRATOR & MEDIATOR JULY 2018 summons (in the earlier Supreme Court proceeding) to set aside the award under s 34 of the CAA (reflecting Article 34 of the Model Law) “to the extent that the arbitrator had declined to determine the Supreme Court costs issue, or had sought to refer that issue to the Supreme Court for determination”. L applied to stay the summons pursuant to s 8 of the CAA (reflecting Article 8 of the Model Law).

Decision The crux of B’s complaint was that the arbitrator did not decide the Supreme Court costs claim, notwithstanding that it fell within the scope of the reference to arbitration.

According to Croft J, the arbitrator considered and decided, expressly, not to determine the Supreme Court costs claim “at that time on the then available evidence”,2 but there was no indication that the arbitrator was not prepared to deal with the costs claim if and when the requisite evidence was provided. 3 His Honour did not accept that the arbitrator attempted to direct the parties to apply to the Court to deal with the remaining issue. Thus, the arbitrator had not purported to delegate any part of his decision making duties to a third party. 4 Croft J noted: “I do not accept that the arbitrator attempted to permit or direct the parties to apply to this Court. The arbitrator did not have this power and his award does not suggest that he tried to exercise such a power. 5 While the arbitrator expressed a view in the award that the parties may find determination elsewhere, “the arbitrator’s view in this respect was not correct”. His Honour noted: “… it is one thing for an arbitrator to leave a claim undetermined and express a view that the parties may, nevertheless, find determination elsewhere, and quite another to decline to resolve a claim and purport to direct and delegate the arbitral decision making role to another. In my view… the arbitrator’s view and conduct was of the former, rather than the latter, type.”6

Was the award a final award?

Croft J considered that the key to the resolution of the proceeding was the proper characterisation of the award. 7 Under s 32 of the CAA, an arbitral tribunal is functus officio upon delivery of a final award, subject to s 33 (which allows for correction, interpretation and an additional award) and s 34 (which allows the Court to remit an award upon a setting aside application for the purposes of removing the ground for setting aside).

Notwithstanding that it was a styled a “Final Award”, properly considered, the award was not a final award for the purposes of the CAA because it did not deal with all of the issues referred to arbitration.

Croft J held that a deliberate and articulated decision by an arbitrator not to deal with all issues which are

2

Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97 at [48].

Ibid [26].

4 Ibid [48].

5 Ibid [47].

6 Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97 at [47].

7 Ibid [59].

3

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THE ARBITRATOR & MEDIATOR JULY 2018 within the arbitral mandate (but reserving the ability to revisit any outstanding issue) does not produce a final award. 8

Ability to seek an additional award?

Even if the award was a final award and the arbitrator was functus officio, s 33(5) of the CAA provided a mechanism for B to seek an additional award on the unresolved issue within 30 days. On an application under s 33(5), an arbitrator may hear further evidence and take further submissions. After an extensive examination of the UNCITRAL drafting notes, Croft J concluded that the power to grant an additional award under s 33(5) applies only to inadvertent omissions by an arbitral tribunal. On the other hand, a conscious and deliberate decision by an arbitral tribunal not to deal with an issue (as in the present case) leaves the arbitral tribunal with an undischarged mandate which does not require the assistance of s 33(5). 9 Thus, the fact that B had not availed itself of the mechanism in s 33(5), within the time limited by that sub-section, was of no consequence on the facts of the present case.

Setting aside of the award B sought to set aside part of the award under s 34(2)(a)(iii) of the CAA, which empowers the supervising court to set aside an award insofar as it contains decisions on matters beyond the scope of the submission to arbitration. Croft J noted that there was some confusion in B’s submissions regarding the precise decision that it sought to set aside: “Blanalko variously identified the arbitrator’s decision as “permitting the parties to make application to the Supreme Court for it to determine the question”, “a decision not to make a decision” and even that the arbitrator “did not make any decision at all” 10 Here, there was no relevant decision on matters beyond the scope of the submission to arbitration for the purposes of s 34(2)(a)(iii). The arbitrator had not gone beyond his mandate. Indeed, he did not discharge his whole mandate. As the award, properly characterised, was not a final award (and did not preclude determination of the remaining issue by arbitration), there was no basis for setting aside any part of the award on the grounds that the arbitrator had failed to determine a relevant claim. 11 As an aside, Croft J noted that a decision not to make a decision is not a decision that may be set aside under s 34(2)(a)(iii) of the CAA, as that section applies to decisions that exceed the tribunal’s jurisdiction, not decisions which do not: “Section 34 of the CAA is based on article 34 of the Model Law which in turn is based on Article V of the New York Convention. The predecessor of the New York Convention, the Geneva Convention on the Execution of Foreign Arbitral Awards, specifically allowed for an award to be set aside for failure to deal with the whole of its reference:

8

Ibid [62].

Ibid [24].

10 Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97 at [45].

11 Ibid [58].

9

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THE ARBITRATOR & MEDIATOR JULY 2018 [R]ecognition and enforcement of the award shall be refused if the Court is satisfied:— ... (c) That the award does not deal with the differences contemplated by or falling within the terms of the submission to arbitration or that it contains decisions on matters beyond the scope of the submission to arbitration.

The italicised section was omitted from Art V(1)(c) of the New York Convention and subsequently, from s 34(2)(a)(iii) of the Model Law and s 34(2)(a)(iii) of the CAA. This supports the notion that a “decision not to make a decision” is not a decision that may be set aside under s 34(2)(a)(iii) of the CAA.”12 In that regard, Croft J compared Article 34 of the Model Law with s 68(2)(d) of the Arbitration Act 1996 (UK). The latter specifically empowers the supervising court to set aside an award in circumstances where a tribunal fails to deal with all the issues referred to it. No equivalent provision is to be found in the Model Law. 13 Croft J noted that the fact that a party did not make a request under s 33(5) for an issue to be the subject of a further award may be relevant to the court’s discretion in a setting aside application by that party under s 34. 14 As s 33(5) had no application in the present case, this was not a relevant consideration. His Honour also noted that a party may request an additional award (under s 33(5)) and apply for an award to be set aside (under s 34) simultaneously. 15

Stay of court proceeding Turning to L’s stay application, Croft J observed that unless the Court found that the arbitration agreement was inoperative or incapable of being performed, it was obliged to stay B’s application to the court for it to determine the remaining issue. His Honour noted that “inoperative or incapable of being performed”, for the purposes of s 8, was a high bar to satisfy. Practical impossibility as opposed to mere inconvenience was required. 16 Croft J rejected the submission that an arbitration agreement is inoperative when an arbitrator determines not to decide all of the matters contained in the reference to arbitration. 17 Indeed, the fact that an arbitrator is rendered functus officio does not result in an arbitration agreement being inoperative or incapable of being performed. 18 Thus, whether the arbitrator was functus officio was irrelevant for the purposes of L’s stay application: “… where an arbitral tribunal delivers an award that deals with the whole of the reference to arbitration, it is s 8 of the CAA, not res judicata or some other general doctrine, which prevents the substance of the award being re-litigated. The arbitration agreement continues to operate in this sense. Similarly, where an arbitral tribunal

12

Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97 at [49].

Ibid [62].

14 Ibid [51].

15 Ibid [28].

16 Ibid [34].

17 Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97 at [37].

18 Ibid [14].

13

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THE ARBITRATOR & MEDIATOR JULY 2018 delivers an award that deals with most of its reference, as is the case here, it is s 8 of the CAA which prevents the re-litigation of those matters which have been finally decided in the award. This means that the arbitration agreement is operative and therefore that those matters which were decided in the award may not be re-litigated.

Thus, an arbitration agreement will not be inoperative or incapable of being performed merely because it is not fully performed. It is for this reason that whether the arbitrator is wholly or partially functus officio is irrelevant for the purposes of s 8 of the CAA.” 19

Conclusion In the end result, B’s application to set aside part of the award failed, and L’s application for a stay succeeded. The Court concluded that the arbitrator’s mandate continued to determine the remaining issue, and that either party could apply to the arbitrator to re-engage the arbitral process to determine that issue.

Comment Accepting for the moment that the arbitrator decided, expressly, not to decide the Supreme Court costs claim “at that time on the then available evidence”, it is incongruous that he styled his award as a Final Award and made no directions for the later determination of the outstanding issue. Indeed, it is surprising that the arbitrator neither requested further evidence before delivering his Final Award nor decided the issue on the available evidence.

If the Court had found that the arbitrator had no intention to revisit the outstanding question, the award may have been characterised as a final award and the arbitrator may have been functus officio (as the time for requesting an additional award had expired). Thus Croft J observed: Intentional “omissions” … may, on a purposive approach … be subject to s 33(5). That is not, however, the position here, so the point is not necessary to decide”.20 In such circumstances, the arbitration agreement arguably would have continued in existence and the parties could have initiated a fresh arbitration before a new arbitrator to resolve the outstanding question.

Overall, the judgment is instructive in illuminating, amongst other things, what constitutes a final award and the operation of ss 33(5) and 34(2)(a)(iii) of the CAA.

19 20

Ibid [37].

Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97 at [25].

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Case note Trust dispute no bar to arbitration Fitzpatrick v Emerald Grain Pty Ltd [2017] WASC 206

By Albert Monichino QC 1 and Adam Rollnik 2

Abstract Arbitration – scope of arbitration agreement – whether a dispute as to an alleged breach of trust constitutes a “matter” within the scope of an arbitration agreement – proper approach to interpretation of arbitration agreements – whether the arbitration agreement is incapable of being performed – application for stay of proceedings under s 8 of the Commercial Arbitration Act 2012 (WA) ----The plaintiffs (the Growers), comprising 47 grain growers in WA, commenced proceedings in the Supreme Court of Western Australia in connection with contracts between each of them and the defendant (Emerald) in relation to the placement of grain produced by the Growers into a pool of grain held by and sold by Emerald. The precise characterisation of the contracts, and whether they gave rise to a trust relationship, whereby Emerald held funds received from the sale of the grain on trust for each grower, was one of the main matters in dispute.

Each of the contracts contained an arbitration clause which stated, relevantly: Any dispute or claim arising out of, relating to or in connection with these Terms and Conditions, a Pool Contract[ 3] or delivery of Commodities to a Pool, including any question regarding the existence of a contract, the validity or its termination, and which cannot be resolved between the parties, shall be resolved by arbitration in accordance with the GTA Dispute Resolution Rules[ 4] in force at the commencement of any arbitration. [Emphasis added] In the court proceedings, the Growers sought, among other things, an order for payment to each Grower of their entitlement, and relief pursuant to the Trustees Act 1962 (WA), including the appointment of a new trustee to administer the Trust. Emerald applied for orders to stay the court proceedings and to refer

1

Barrister, Chartered Arbitrator and Mediator.

FCIArb, Barrister.

3 A pool contract is a contract between wheat growers on the one hand and the operator of a grain commodity pool on the other, whereby wheat growers pool their wheat with wheat grown by others in order to form large exportable parcels, which are then sold by the operator on behalf of the wheat growers.

4 The dispute resolution rules of Grain Trade Australia.

2

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THE ARBITRATOR & MEDIATOR JULY 2018 the parties to arbitration pursuant to s 8 of the Commercial Arbitration Act 2012 (WA) (CAA) which provides, inter alia, as follows: 8. Arbitration agreement and substantive claim before court (cf. Model Law Art 8) (1) A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party’s first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.

This section is based on Article 8 of the UNCITRAL Model Law on International Commercial Arbitration (which is given the force of law by s. 16 of the International Arbitration Act 1974 (Cth)). The same provision is found in the domestic Arbitration Acts enacted in each State and Territory.

Accordingly, the relevance of this case extends beyond Western Australia.

Chief Justice Martin identified the matters in issue (at [41]), in connection with s 8 on the facts of the case before him, as follows: (a) What is the scope of the arbitration agreement? (b) Do the proceedings include a matter or matters which are within the scope of the arbitration agreement? (c) Is the arbitration agreement incapable of being performed?

Scope of the arbitration agreement The Court held that the terms of an arbitration agreement are to be construed by the principles that apply to the construction of commercial contracts generally, that is, the terms must be construed objectively and by ascertaining what a reasonable businessperson would have understood the words to mean by reference to the text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose. 5 Importantly, his Honour said at [45]: However, the commercial objectives ordinarily attributed, objectively, to rational businesspeople will generally require the court to adopt a broad, liberal and flexible approach to the construction of an arbitration agreement, to the extent that such an approach is consistent with the words used by the parties.

His Honour went on to consider the effect of the prepositional phrases used in the arbitration agreements to denote the necessary connection with the subject matter of the dispute, namely: “arising out of”, “relating to” or “in connection with”. In relation to each of these the Court said (among other things): Arising out of: “is sufficiently broad to include disputes with respect to the existence of the relevant contract”: [48]; Relating to: “is a term of the widest import which should not, in the absence of compelling reasons, be read down”: [49];

5

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [46]-[47].

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THE ARBITRATOR & MEDIATOR JULY 2018 In connection with: “should be construed widely so as to include claims which do not arise out of or pursuant to the relevant contract, but nevertheless have a sufficient degree of connection with that contract”: [50].

Chief Justice Martin concluded at [51] that: [A]n ordinary businessperson would understand the arbitration agreement to extend to, and embrace, a very wide ambit of disputes or claims having at least some degree of connection with, or relationship to, the substantive agreement between the parties […] [emphasis added]

Do the proceedings involve a “matter” which is the subject of the arbitration agreement?

Next, Martin CJ held that if one or more of the disputes or controversies to be determined in the course of the Court proceedings is a dispute or controversy which can be determined pursuant to the arbitration agreement (the burden of which rests on the applicant for the stay, on the balance of probabilities), then section 8 of the CAA is engaged.

One of the arguments advanced by the Growers as to why the proceedings should proceed in Court was that, on a proper construction of the arbitration agreements, they should not be construed as attributing an intention that claims by growers based on an alleged breach of trust should be resolved by arbitration. In rejecting this argument, the Court said (among other things) that: • • •

the arbitration agreements are expressed in the widest possible terms; the fact that the arbitration agreements do not extend to all persons with an interest in the dispute does not mean they should not be enforced by the Court; whether Emerald is a trustee of the proceeds of sale, and if so, whether Emerald is in breach of trust, is clearly a dispute arising out of, relating to, or in connection with the Growers’ agreements with Emerald,

and so, unless the arbitration agreement is incapable of being performed (discussed below), the proceedings must be stayed and the parties must be referred to arbitration.

Are the arbitration agreements incapable of being performed?

Finally, the Growers submitted that the nature of the issues raised in the proceedings with respect to the proper administration of the trust, the relief sought with respect to the removal of Emerald as trustee, and the appointment of another trustee in place of Emerald, were not arbitrable, and therefore the arbitration agreements were incapable of being performed (within the meaning of s 8(1) of the CAA). The Growers also submitted that the dispute was not arbitrable because all necessary and appropriate parties could not be joined to the dispute.

The Court noted that the doctrine of non-arbitrability is recognised by Australian law and has been described as:

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THE ARBITRATOR & MEDIATOR JULY 2018 resting on the notion that 'some matters so pervasively involve public rights, or interests of third parties, which are the subjects of the uniquely governmental authority, that agreements to resolve such disputes by "private" arbitration should not be given effect' 6 However, the Court confirmed that it is only in extremely limited circumstances that a dispute that the parties have agreed to refer to arbitration will not be arbitrable. The Court said that the equitable rights in issue in this case depended entirely on the construction of the relevant contracts and in those circumstances the possible characterisation of those rights as equitable did not mean the disputes were not arbitrable.

The Court also held that it is well established that the fact that: •

•

an arbitrator cannot grant all the relief a court is empowered to grant does not mean that the dispute is incapable of arbitration (and whether the arbitration agreement empowers the arbitrator to grant all the relief which a court might have granted is best determined by the arbitral tribunal); 7 and the fact that a “matter” (the subject of proceedings falling within s 8 of the CAA) may affect the interests of others, who are not party to the arbitration agreement, does not result in the “matter” being non-arbitrable.8

In the end result, Martin CJ stayed the proceedings and referred the parties to arbitration.

Comment This case is important for at least two reasons. First, it reinforces the Courts’ preparedness to hold parties to their arbitration agreements. Second, the Court made it clear that a broad, liberal and flexible approach should be adopted in construing arbitration agreements.

The approach taken by Martin CJ is consistent with the approach taken by the Full Court of the Federal Court of Australia in the recent case of Hancock Prospecting v Rinehart 9. While Fitzpatrick v Emerald Grain was not cited in Hancock Prospecting v Rinehart, the Full Court 10 endorsed the approach that a referral to arbitration should be given a “liberal” and “flexible” construction, so as to ensure that the commercial purpose of the arbitration clause (i.e. to refer disputes to arbitration) is given effect to.11 In so doing, the Full Court noted that parties ordinarily do not intend the inconvenience of having possible disputes heard in two places 12 (which may arise if the Court gives the words used to refer disputes to arbitration – words like “under” or “arising out of” – a narrow and inflexible construction).13 The Full Court gave the narrow expression “dispute under this deed” a liberal construction, so that it encompassed a dispute about whether the deed was invalid and should be set aside for some vitiating

6

At [90], referring to Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10 at [80]; GB Born, International Commercial Arbitration (Kluwer Law International, 2009) 768.

7 Commercial Arbitration Act 2012 (WA) s 16; UNCITRAL Model Law art 16.

8 John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [72].

9 Hancock Prospecting Pty Ltd v Rinehart [2017] FCAFC 170.

10 Allsop CJ, Besanko and O’Callaghan JJ. 11 See [167].This is consistent with the approach taken by the Court of Appeal in the UK in Fiona Trust & Holding Corporation v Privalov [2007] EWCA 20; and Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192.

12 Hancock Prospecting v Rinehart [2017] FCAFC 170 [166].

13 Ibid [167].

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THE ARBITRATOR & MEDIATOR JULY 2018 factor (for example, misrepresentation). In this regard, the Full Court parted ways with the New South Wales Court of Appeal (‘NSWCA’) in Rinehart v Welker, 14 that interpreted the same words restrictively to exclude a dispute about the validity of the deed. Instead, the NSWCA held that the phrase “under this deed” limited arbitral disputes only to disputes the outcome of which was “governed or controlled” by the deed (which assumes the validity of the deed).

The Full Court noted 15 that they were acutely aware that their views differed from those of the NSWCA but were “persuaded to the necessary point of clarity that [Bathurst CJ’s] construction is not correct”.

The Full Court 16 agreed with Martin CJ in Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd 17 that Fiona Trust Holding Corporation v. Privalov 18 does not say anything different in substance than Comandate Marine Corp v. Pan Australia Shipping Pty Ltd. 19 Accordingly, a division of judicial opinion as to the proper interpretation of arbitration agreements has emerged in Australia, with the Federal Court and the Supreme Court of Western Australia on one side, and the Supreme Court of New South Wales on the other. While the difference in approach is nuanced, it may have practical significance in particular cases, as demonstrated by the decisions in Rinehart v Welker and in Hancock Prospecting v Rinehart, which both involved the interpretation of the same arbitration clause.

14

[2012] NSWCA 95.

Ibid [205].

16 Ibid [193].

17 [2013] WASCA 66.

18 [2007] EWCA 20.

19 [2006] FCAFC 192.

15

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Case note Arbitration gone wrong Hui v Esposito Holdings Pty Ltd (No 2) [2017] FCA 728; Hui v Esposito Holdings Pty Ltd [2017] FCA 648

By Albert Monichino QC 1

Abstract Arbitrator purported to determine matters beyond those that had been hived off for preliminary determination. Purported justification of what occurred demonstrated Arbitrator’s lack of objectivity.

Award set aside in part. Arbitrator removed.

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Facts Esposito Holdings Pty Ltd (‘Esposito’) sold its shares in a company to UDP Holdings Pty Ltd (‘UDP’) for $70 million. Under the agreement, UDP’s director, Mr Hui (‘Hui’), guaranteed UDP’s obligations. Part of the purchase price ($9 million) was to be paid post-closing and transfer of the shares. Esposito provided certain seller’s warranties. The agreement contained an arbitration clause referring disputes to arbitration under the UNCITRAL Arbitration Rules. Following closing, UDP fell into financial difficulty.

Esposito commenced an arbitration against both UDP and Hui to recover the shortfall of the purchase price. The Arbitrator directed the Respondents (who were separately represented) to file defences and any counter-claims, and for Esposito to file any application for a preliminary hearing of any issues (Esposito having advised that it wished to do so). On the due date for filing the defence and counter-claim, UDP advised the Arbitrator that it could not do so because it had to investigate potential breaches of the seller’s warranties. The Arbitrator acceded to Esposito’s application and set down Esposito’s claims for a preliminary hearing. Thereafter, UDP and Hui filed defences and counter-claims, raising certain claims by way of set-off. Receivers, managers and administrators, were then appointed to UDP. They advised that UDP would not be represented at the preliminary hearing.

The preliminary hearing took place on 3 – 4 June 2015. Esposito contended that it was entitled to a partial award in respect of its claims. On the other hand, Hui maintained that no partial award should be published until the set-off defences were heard and determined. During the preliminary hearing’s closing

1

Barrister, Chartered Arbitrator and Mediator

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THE ARBITRATOR & MEDIATOR JULY 2018 addresses, Esposito made submissions (for the first time) in relation to the set-off defences. 2 Hui did not engage with those submissions.

Following the preliminary hearing, UDP filed an amended defence and counter-claim, in which it raised substantial claims for breach of the seller’s warranties.

On 25 September 2015, the Arbitrator published his reasons in respect of the issues falling for determination in the preliminary hearing. This was done by way of a draft partial award. The Arbitrator found in favour of Esposito, dismissed several of the set-off defences raised by UDP and Hui, and found Hui liable on the guarantee.

UDP and Hui then objected that the Arbitrator had strayed beyond the remit of the preliminary hearing, exceeded his jurisdiction and had denied them procedural fairness.3 They applied to the Arbitrator for him to remove himself under Art 13 of the UNCITRAL Model Law on International Commercial Arbitration (‘Model Law’). The Arbitrator responded that he was yet to make a formal award and was prepared to hear argument as to whether his reasons were wrong. 4 Following submissions by the parties, the Arbitrator published a second set of reasons on 15 April 2016 in a second draft partial award. He concluded that he had not exceeded his jurisdiction and that UDP/Hui should have foreseen the possibility of him determining the set-off issues. 5 He conceded, however, that he had erred in pre-judging Hui’s liability on the guarantee without affording him a reasonable opportunity to be heard. 6 UDP and Hui continued to maintain that the Arbitrator should withdraw.

On 12 September 2016, the Arbitrator published a (formal) first partial award (containing a third set of reasons), in effect in the same terms of his second draft, except that it did not make any findings (or grant any relief) in respect of the enforceability of the guarantee. A few days later, the Arbitrator published a second partial award in which he gave reasons dismissing the application for him to remove himself.

Curiously, the decision was recorded in an Award as opposed to a Ruling.

UDP and Hui made application to the Federal Court to set aside the first partial award under Art 34(2)(a)(ii) (inability to present their case), Art 34(2)(a)(iv) (the arbitration procedure was not in accordance with the agreement of the parties) and Art 34(2)(b)(ii) (breach of public policy) of the Model Law, which is given the force of law under s 16 of the International Arbitration Act 1974 (Cth). In addition, they made an application, under Art 13 of the Model Law, for the Arbitrator to be removed.

Decision Beach J set aside the first partial award to the extent that it made any findings or granted any relief in respect of the set-off defences. His Honour also removed the Arbitrator and remitted the balance of the claims to a replacement arbitrator to be appointed by the Court in default of agreement of the parties.

The judge considered the following issues:

2

Hui v Esposito Holdings Pty Ltd (No 2) [2017] FCA 728 [161].

Ibid [77].

4 Ibid [78].

5 Ibid [88].

6 Ibid [90].

3

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THE ARBITRATOR & MEDIATOR JULY 2018 (a) What was the proper scope of the preliminary hearing and did the Arbitrator go beyond that proper scope? (b) Should the first partial award be set aside (in whole or in part), alternatively should the matter be remitted to the Arbitrator? (c) Should the Arbitrator be removed?

Proper scope of the preliminary hearing The judge found that the Arbitrator confirmed before and throughout the preliminary hearing that he would not adjudicate on the merits of the set-off defences.7 That is, the preliminary hearing was concerned only with Esposito’s prima facie entitlement to recover on its claims (subject to defences and counter-claims that were to be determined later).

The judge noted that there was a stark contrast between the Arbitrator’s first set of reasons (which dealt with points of contract interpretation and contained an elaborate discussion of the set-off defences) and Esposito’s submissions, further demonstrating that the Arbitrator travelled well beyond what was contemplated at the preliminary hearing. 8 The Court found that the Arbitrator engaged in ex post facto rationalisation of what had occurred, pointing to select (but incomplete) parts of the factual record in his second draft partial award of April 2016. 9

Setting aside of the award While the Court noted that considerable judicial restraint should be exercised when exercising the power to set aside an award under Art 34 of the Model Law, 10 it found that the case involved an exceptional breach of procedural fairness. 11 By making the first partial award, the Arbitrator carried the prejudgment (of the set off issues) made in his 25 September 2015 reasons into effect 12 and consequently breached several of the grounds in Art 34 of the Model Law relied on by UDP and Hui, including Art 34(2)(a)(ii) [inability to present case] and Art 34(2)(b)(ii) [breach of public policy], 13 in respect of which the Court noted there was some overlap.

The judge observed that the set-off defences were reasonably arguable and therefore UDP/Hui lost a real (as opposed to a fanciful) opportunity by reason of the Arbitrator’s prejudgment of those issues without giving them a reasonable opportunity to be heard. They therefore suffered real practical unfairness and injustice. 14 The position may have been otherwise if the defences were hopeless.

Beach J noted that to demonstrate real unfairness or practical injustice, the party alleging it must demonstrate that there was a real possibility the award may not have been made, alternatively may have

7

Ibid [162].

Ibid [94].

9 Ibid [89] and [175].

10 Ibid [117].

11 Ibid [229].

12 Ibid [235].

13 Ibid [121].

14 Ibid [179].

8

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THE ARBITRATOR & MEDIATOR JULY 2018 differed in a material respect favourable to him. 15 Such forensic inquiry necessarily involves the Court, to some limited extent, reviewing the merits.

It did not matter that the Arbitrator’s formal partial award was only made in September 2016, one year after the first draft partial award and after giving the parties opportunity to address the set-off issues.

According to Beach J, this did not cure the prejudgment that had occurred in the first draft partial award. 16 Moreover, the Arbitrator’s acceptance that he had erred in pre-judging the guarantee issue did not cure the injustice that Hui suffered in relation to the prejudgment of the set off issues.17 The Court noted that setting aside and remittal of the Award were disjunctive alternatives under Art 34 of the Model Law. Given the pre-judgment, and the Arbitrator’s attempt at ex post facto rationalisation of what had occurred, Beach J considered that remittal was inappropriate. Instead, the Court set aside part of the first partial award (to the extent that it went beyond deciding Esposito’s prima facie entitlement to relief).

Removal of the arbitrator The Court noted that the ‘justifiable doubts’ test in Art 12 of the Model Law had been modified by s 18A of the IAA to require a ‘real danger of bias’. According to Beach J, a real possibility of pre-judgment satisfied the real danger test. 18 As for removal of the Arbitrator, the question was not whether he was a fit and proper person to continue to conduct the proceedings, but rather whether his conduct destroyed the confidence of the parties in him to come to a fair conclusion. 19 The judge considered that a reasonable person would no longer have confidence in the Arbitrator’s ability to come to a fair and balanced conclusion. The Arbitrator’s concession that he had pre-judged the guarantee issue alone provided enough reason as to why he should not continue as Arbitrator. 20 While the Arbitrator had indicated that he was willing to change his mind, some aspects of his second draft partial award gave rise to various questions as to his objectivity. 21 Beach J held that in the circumstances the real danger test was ‘well’ satisfied.22 The Court granted liberty to apply within 28 days in the event that the parties could not agree on the appointment of a substitute arbitrator.

Comment There were significant flaws in the arbitral procedure adopted by the Arbitrator. In particular, there were dangers of hiving off incomplete separate questions in circumstances where the issues had not properly crystallised (before the filing of defences). The problems were partly caused by the strategic choice made

15

Ibid [184].

Ibid [233].

17 Ibid [234].

18 Ibid [240].

19 Ibid [244]-[245].

20 Ibid [91].

21 Ibid [246].

22 Ibid [247].

16

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THE ARBITRATOR & MEDIATOR JULY 2018

by Esposito, with which the Arbitrator misguidedly agreed. Moreover, the issuing of draft arbitral awards for comment is a dangerous practice and is best avoided.

While arbitration may afford the opportunity to implement innovative procedural devices which might not be available in curial proceedings, an arbitrator must always be cognisant of the mandatory requirements to afford equal treatment to the parties and a reasonable opportunity for them to be heard.

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THE ARBITRATOR & MEDIATOR JULY 2018

Case note

Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4 and Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5

By Michael Heaton QC1

Abstract Probuild and Maxcon have determined that non-jurisdictional errors of law on the face of the record are not reviewable by the Supreme Courts of New South Wales and South Australia under their respective Security of Payment Acts (SOP Acts). The Queensland, ACT, Victorian and Tasmanian SOP Acts are similar and indistinguishable in their objects and intent. The High Court decisions would therefore apply to the relevant state SOP Acts, however the position in Victoria is probably different because there is no privative section in the Victorian SOP Act as required by section 85(5) of the Constitution Act 1975 (Vic).

This may leave Victoria as a “one out” in regard to judicial review for non-jurisdictional errors of law on the face of the record. Maxcon also dealt with what constitutes a “pay when paid provision” under section 12(2)(c) of the SA SOP Act, which has its equivalent in each of the other states on the eastern seaboard.

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Purpose, object, means and risk allocation of the SOP acts The purpose and object of the SOP Acts is to provide for, and ensure entitlement to, progress payments for persons who carry out construction work or who supply related goods and services under a construction contract.

The means by which this is achieved is by granting a statutory entitlement to progress payments. The statutory scheme is independent of, and separate from, the contractual regime and it takes precedence over it. There are thus, two regimes running in parallel: the statutory scheme and the contractual regime.

The allocation of risk under the SOP Acts is therefore changed to principals and head contractors rather than those lower down the chain who are least able to bear the risk. The SOP Acts thus promote cash flow which is said to be the life blood of the industry. Thus, it is a pay now, argue later statutory scheme.

Jurisdictional and non-jurisdictional error

1

LLM Uni Melb, LLB B Juris Monash University, Barrister, Resolution Institute (Grade 1 Arbitrator), FCIArb (UK), FACICA, Adjudicator Vic, WA and NT, Nationally accredited mediator and Victorian Bar accredited advanced mediator.

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THE ARBITRATOR & MEDIATOR JULY 2018 Since Kirk v Industrial Court (NSW) 2 and Plaintiff S 157/2002 v Commonwealth of Australia 3 it is clear that the legislatures of the Commonwealth and the states cannot remove the power of the superior courts to review administrative decisions on the basis of jurisdictional error. By contrast, it is within the power of the legislatures both Commonwealth and state to remove judicial review for non-jurisdictional errors of law on the face of the record. In Probuild the plurality comprising Keiffel CJ, Bell, Keane, Nettle and Gordon JJ said: “Unlike the supervisory jurisdiction enforcing limits of executive and judicial power, the jurisdiction of a Supreme Court to review, and to make an order in the nature of certiorari, for error of law on the face of the record is not part of the defining characteristics of the State Supreme Courts. This jurisdiction may be ousted by statute.” 4 Further, the plurality in Probuild stated that Parliament’s intention to exclude review of non-jurisdictional error may be apparent because of a necessary implication from the statutory scheme even where there is no express statement to that effect. The plurality said: 5 “An intention to alter the settled and familiar role of the superior courts must be clearly expressed. But the question is a matter of statutory construction; and in the resolution of such a question, context is, as always, important. The Security of Payment Act contains no privative clause providing in terms that an adjudicator's determination is not to be quashed by way of certiorari on the basis of error of law on the face of the record. But that is not the end of the inquiry. There remains for consideration the question whether, absent an express statement but read as a whole, the Security of Payment Act has that effect. Whether it does depends on examination of the text, context and purpose of the Security of Payment Act. In undertaking that process, "[w]hether and when the decision of an inferior court or other decision-maker should be treated as 'final' (in the sense of immune from review for error of law) cannot be determined without regard to a wider statutory and constitutional context.

The Security of Payment Act evinces a clear legislative intention to exclude the jurisdiction of the Supreme Court to make an order in the nature of certiorari to quash an adjudicator's determination for non-jurisdictional error of law on the face of the record.” (Footnotes omitted).

As said by the plurality whether the intention is evident depends on an examination of the text, context and purpose of the relevant Act.

Judicial review – error of law – traditional approach The traditional judicial review for error of law on the face of the record approach is set out in the judgment of the Victorian Supreme Court of Appeal in Saville v Hallmarc Construction Pty Ltd. 6 The Court of Appeal held that a reference date under the SOP Act was a jurisdictional fact. It stated in classic

2

(2010) 239 CLR 531.

(2003) 2011 CLR 476; [2003] HCA 2 [2010] HCA1.

4 Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4, [30].

5 Ibid, [34] and [35].

6 [2015] VSCA 318.

3

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THE ARBITRATOR & MEDIATOR JULY 2018 terms and without qualification in respect of the SOP Act that errors of fact made within jurisdiction (non-jurisdictional errors) are unreviewable in a proceeding for judicial review save where the error amounts to an error of law on the face of the record. 7

Judicial review – error of law - the SOP acts Probuild and Maxcon held on their proper construction both the NSW and SA SOP Acts exclude the jurisdiction of the Supreme Courts of NSW and SA to make an order in the nature of certiorari for nonjurisdictional error of law on the face of the record.

Maxcon also dealt with what constitutes a pay when paid provision under section 12(2)(c) of the SA SOP Act which has the same paragraph in the eastern seaboard states.

In both cases there was a joint judgment delivered by Keiffel CJ, Bell, Keane, Nettle and Gordon JJ and separate judgments by each of Gageler J and Edelman J. Both Gageler J and Edelman J looked at the history of errors of law and judicial review thereof. The Queensland, ACT, Victorian and Tasmanian SOP Acts are indistinguishable, in principle, from the NSW and SA SOP Acts.

The High Court’s decisions were made despite there being no express words or privative clause providing that an adjudicator’s determination is not to be quashed by way of certiorari for non-jurisdictional error of law on the face of the record.

Nevertheless the High Court held there was a clear legislative intention to exclude the jurisdiction of the Supreme Courts of NSW and SA to make an order in the nature of certiorari to quash an adjudicator’s determination for non-jurisdictional error of law on the face of the record.

Grounds relied upon by the High Court The High Court referred to five grounds evidencing an intention to preclude judicial review for nonjurisdictional errors of law on the face of the record.

First, the purpose of the SOP Acts was to stamp out the practice of developers and contractors delaying payment to subcontractors and suppliers and this was done by setting up the statutory scheme. 8 Second, the SOP Acts of NSW and SA do not finally and conclusively determine entitlements of the parties to the construction contract. An adjudication determination is an interim determination which will be taken into account when and if court proceedings or arbitral proceedings on the contract are pursued.9 The Court emphasised that the statutory scheme is in addition to, and separate from, entitlement under the construction contract.

7

Ibid. [62].

Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4, [36].

9 Ibid. [37] – [39].

8

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THE ARBITRATOR & MEDIATOR JULY 2018 Third, cash flow is the life blood of the construction industry. The Court said the SOP Act has strict and brutally fast deadlines which are not conducive to lengthy consideration and detailed submissions on all the questions of law. 10 Fourth, the SOP Acts permit informal procedures in the conduct of proceedings to determine an adjudication application. The adjudicator may for example call a conference of the parties which is to be conducted informally and without any entitlement to legal representation.11 Fifth, there is no right of appeal from a determination. The Court noted from the Explanatory Memorandum in NSW that this was a deliberate omission by the legislature. In addition, the Court noted an adjudication certificate may be filed by the claimant as a judgment debt and under any application to set aside a judgment the respondent is not entitled to bring any cross claim, to raise any matter of defence under the construction contract or challenge the adjudicator’s determination. Further, the respondent must pay into court the unpaid portion of the adjudicated amount.

The Court stated the SOP Acts create an entitlement that is determined informally, summarily and quickly and then summarily enforced without prejudice to common law rights of both parties which can be determined in the normal manner. 12 The High Court referred to two further propositions pointing to the intention to exclude non-jurisdictional errors of law on the face of the record in the SOP Acts. The first was the absence of judicial review for non-jurisdictional error of law does not prevent a party from enforcing contractual rights.13 Second, preservation of contractual rights affirmatively supports the conclusion that review for nonjurisdictional error of law on the face of the record is excluded. By contrast, to permit such review would frustrate the operation and evident purposes of the statutory scheme. 14 It is easy to see that by creating arguable errors of law on the face of the record the purpose, object and operation of the SOP Act could easily be delayed and frustrated.

The Court stated this understanding of the statutory scheme accords with the NSW Court of Appeal decision in Brodyn Pty Ltd v Davenport 15 on this point. The effect of Brodyn was not altered by amendments to the NSW SOP Act.

Victorian SOP act and judicial review for errors of law on the face of the record The Victorian SOP Act is indistinguishable from the other eastern seaboard SOP Acts.

10

Ibid. [40] – [41].

Ibid. [42].

12 Ibid. [43] – [44].

13 Ibid. [46].

14 Ibid. [47] – [48].

15 [2004] 61 NSWLR 421.

11

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THE ARBITRATOR & MEDIATOR JULY 2018 Victoria, however, has a unique provision in the Constitution Act 1975 (Vic) in subsections 85(5) and (6).

Sections 85(1) and (3) confer the jurisdiction on the Supreme Court as a Superior Court of Victoria with unlimited jurisdiction and with all such powers and authorities as it had immediately before the commencement of the Supreme Court Act 1986 (Vic).

Subsections 85(5) and (6) of the Constitution Act 1975 (Vic) provide: â&#x20AC;&#x153;(5) A provision of an Act, other than a provision which directly repeals or directly amends any part of this section, is not to be taken to repeal, alter or vary this section unless (a) the Act expressly refers to this section in, or in relation to, that provision and expressly, and not merely by implication, states an intention to repeal, alter or vary this section; and (b) the member of the Parliament who introduces the Bill for the Act or, if the provision is inserted in the Act by another Act, the Bill for that other Act, or a person acting on his or her behalf, makes a statement to the Council or the Assembly, as the case requires, of the reasons for repealing, altering or varying this section; and (c) the statement is so made (i) during the member's second reading speech; or (ii) after not less than 24 hours' notice is given of the intention to make the statement but before the third reading of the Bill; or (iii) with the leave of the Council or the Assembly, as the case requires, at any time before the third reading of the Bill.

(6) A provision of a Bill which excludes or restricts, or purports to exclude or restrict, judicial review by the Court of a decision of another court, tribunal, body or person is to be taken to repeal, alter or vary this section and to be of no effect unless the requirements of subsection (5) are satisfied.â&#x20AC;?

In Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd, 16 Vickery J considered in what was strictly an obiter judgment on this point, that the effect of subsection 85(5) of the Constitution Act 1975 (Vic) was that the jurisdiction of the Victorian Supreme Court to review nonjurisdictional errors of law on the face of the record was not excluded because there was no compliance in the SOP Act in the terms stipulated in section 85(5) of the Victorian Constitution Act. Further, that there is a privative provision in relation to section 28R in section 51(2) of the Victorian Act suggests that if the legislature had wanted a broader exclusion of non-jurisdictional error on the face of the record it would and could have said so explicitly. Vickery J concluded that relief in the nature certiorari is not excluded either expressly or by implication under the SOP Act and the prerogative writ may be invoked in relation to the determination of an

16

[2009] VSC 156.

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THE ARBITRATOR & MEDIATOR JULY 2018

adjudicator under the Victorian SOP Act for non-jurisdictional error on the face of the record and in this respect he did not follow Brodyn. 17 In Grocon Constructions Pty Ltd v Planit Cocciardi Joint Venture (No 2) 18 at [99]- [101] Vickery J stated: “In Victoria, to take the step of limiting the reach of the prerogative writ of certiorari, by implying into the Act a restriction that it is not intended to apply to voidable errors of law on the face of the record found in the determinations of adjudicators, would exclude or restrict to that extent, judicial review by the Court of such determinations.

The necessary procedures not having been followed, as demonstrated by the absence in the Act of any s.85(5)(a) reference to the matter, would result in a contravention of s.85(6) of the Constitution Act and for this reason the implication is not open.

I am compelled to arrive at this conclusion in spite of powerful countervailing factors such as those addressed by the Court of Appeal in Brodyn. Further, the considerations raised by Palmer J in Multiplex Constructions Pty Ltd v Luikens and Anor, 19 are of weight, particularly where his Honour made the observation that: The Courts recognise that a legislative intention to abrogate such rights does not always have to be explicit: such an intention may be found in legislation “by necessary implication”: see Annetts v McCann [1990] HCA 57; (1990) 170 CLR 596, at 599; Public Service Association (SA) v Federated Clerks Union of Australia [1991] HCA 33; (1991) 173 CLR 132, at 160 per Dawson and Gaudron JJ; Darling Casino at 633 per Gaudron and Gummow JJ. In my opinion, the only way to correct the position in Victoria, if the legislature saw fit to do so in order to reinforce the purposes and objects of the Act and provide for desirable uniformity with similar interstate legislation, is by passing an act of Parliament which properly addresses s.85 of the Constitution Act 1975.”

Again in Amasya Enterprises Pty Ltd & Anor v ASTA Developments (Aust) Pty Ltd & Anor 20 Vickery J stated: Accordingly, on the basis of current authority in Australia, an adjudicator appointed under the Victorian Act, in exercising the statutory functions of inter alia determining the amount of a progress payment and the date on which such amount becomes payable, falls comfortably within that class of decision-maker who is amenable to the supervisory jurisdiction of this Court by judicial review which may, in an appropriate case where error is shown, expose the adjudication determination to relief in the nature of certiorari and declaration to quash the adjudicator’s determination for either jurisdictional error of law or error on the face of the record. 21

17

See also Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd [2009] VSC 156, [72 ] - [90] especially [87] – [90].

[2009] VSC 426.

19 [2003] NSWSC 1140, [40],[41].

20 [2015] VSC 233.

21 [37].

18

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THE ARBITRATOR & MEDIATOR JULY 2018 Thus, in relation to judicial review for errors of law on the face of the record, the position in Victoria in relation to the SOP Act would appear to be different to the position in the other eastern seaboard states, not by virtue of there being any distinguishing features in the SOP Act, but by virtue of subsections 85(5) and (6) of the Constitution Act 1975 (Vic).

There are two recent decisions in Victoria, both of Riordan J, which hold that an out of time adjudication determination is not a jurisdictional error and therefore is a valid adjudication determination. This is consistent with NSW authority. The question arises, however, whether an out of time adjudication determination, in Victoria, is a non-jurisdictional error of law on the face of the record which could be challenged as there is no privative clause or section in the SOP Act depriving the Supreme Court of the power of review for non-jurisdictional errors of law on the face of the record. Those decisions are Ian Street Developer Pty Ltd v Arrow International Pty Ltd 22 and PHHH Investments No 2 Pty Ltd v United Commercial Projects Pty Ltd. 23 The writer understands Ian Street is under appeal.

Pay When Paid SA Section 12)(2)(c), NSW Section 12 (2)(c), Vic Section 13(2)(c), Qld Section 16(2)(c), ACT Section 14(2)(c) and Tas Section 16(1)(c) These provisions are identical and section 12(2)(c) of the SA SOP Act provides that a pay when paid provision includes a provision of the contract: “(c) that otherwise makes liability to pay money owing, contingent or dependent on the operation of another contract”.

In Maxcon Constructions Pty Ltd v Vadasz, 24 Mr Vadaz was a subcontractor who performed piling work for Maxcon the head contractor.

Under the subcontract release of retention monies was dependent upon the issue of a Certificate of Occupancy which was dependent upon certification by the builder, Maxcon. Issue of the Certificate of Occupancy depended on completion of the whole project in accordance with provisions of the Head Contract. Under the subcontract until that certificate was issued on completion of the project, the retention sum was not to be released.

The High Court held that the due dates for payment of the retention sum were dependent on operation of another contract, namely completion of the head contract, which would in turn have enabled a Certificate of Occupancy to be issued.

Thus, the retention provisions were pay when paid provisions within section 12(2)(c) of the SA SOP Act and Maxcon was not entitled to deduct the retention sum from the progress payment.

22

[2018] VSC 14, [85] – [95].

[2018] VSC 15, [51] – [61].

24 [2018] HCA 5.

23

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THE ARBITRATOR & MEDIATOR JULY 2018 There would most probably be any number of contracts and contractors to which the High Court judgment in Maxcon will apply. This would disentitle the withholding of retention by a head contractor under the relevant SOP Act.

Conclusion The High Court has clarified that under the SOP Acts for the states on the eastern seaboard, save for the unique situation in Victoria, non-jurisdictional errors of law on the face of the record are not reviewable by the Supreme Courts of those states. The position in Victoria is unique because of sections 85(5) and (6) of the Constitution Act 1975 (Vic) it would appear legislative amendment is required in order to bring Victoria into line with the other states.

Maxcon has promoted the purpose, object and operation of the SOP Acts in the eastern seaboard states in clarifying the pay when paid provision in paragraph (c) of the definition of pay when paid provisions.

There is of course the report, just released, of John Murray AM in reviewing the SOP Acts throughout all of the states in Australia. We wait to see whether harmony will be produced.

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THE ARBITRATOR & MEDIATOR JULY 2018

Case note Indemnity cost orders for overzealous applicants John Holland Pty Ltd v Adani Abbot Point Terminal Pty Ltd [2016] QSC 282; [2018] QSC 48

By Erika Williams 1 and Bronte Hearn 23

Abstract In John Holland Pty Ltd v Adani Abbot Point Terminal Pty Ltd4 (John Holland Judgment), the Queensland Supreme Court considered an application for leave to appeal an arbitration award under the now repealed Commercial Arbitration Act 1990 (Qld) (the Act). The application was dismissed on the basis that no errors of law were made out. Given the oppressive nature in which John Holland Pty Ltd (John Holland) filed its submissions, Justice Jackson in John Holland Pty Ltd v Adani Abbot Point Terminal Pty Ltd (No 2) 5 (John Holland Cost Judgment) ordered John Holland pay the costs of Adani Abbot Point Terminal Pty Ltd (Adani) on an indemnity basis.

The authors note that John Holland would not have been able to seek leave to appeal the arbitration award under the current Commercial Arbitration Act 2013 (Qld) (2013 Act), without agreement to appeal from Adani. Section 34A(1) of the 2013 Act states that an appeal on a question of law arising from an award is only available where the parties agree that an appeal may be made and the Court grants leave.

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Background In 2009, John Holland contracted with Ports Corporation of Queensland (PCQ) to upgrade the Abbot Point Coal Terminal. In May 2011, Adani acquired an interest in the Abbot Point Coal Terminal pursuant to which PCQâ&#x20AC;&#x2122;s rights and obligations in the Abbot Point Coal Terminal passed to Adani.

In May 2014, John Holland alleged that PCQ breached an essential term of the contract, being a clause that PCQ would ensure that the superintendent would act honestly and fairly in the exercise of his functions under the contracts and would not interfere with the superintendent (Clause 23). John Holland alleged PCQ had repudiated the contract and purported to terminate. The repudiation claim was heard in

1

Senior Associate, McCullough Robertson Lawyers; Member, Chartered Institute of Arbitrators; Director, ArbitralWomen; BA, LLB (Hons).

2 Graduate, McCullough Robertson; LLB (Hons), BJourn.

3 The authorsâ&#x20AC;&#x2122; firm represented Adani in this matter.

4 [2016] QSC 292.

5 [2018] QSC 48.

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THE ARBITRATOR & MEDIATOR JULY 2018 arbitration, and the arbitrator found PCQ did not breach or repudiate the contract and therefore the contract was not terminated.

John Holland sought leave to appeal the arbitral award in the Supreme Court under section 38(4)(b) of the Act. Under section 38(5) of the Act, the Court may only grant leave to appeal where there is a question of law and its determination could substantially affect the rights of one or more parties to the arbitration agreement and: (a) there is a manifest error of law on the face of the award; or (b) strong evidence that the arbitrator made an error of law and that the determination may add or likely add substantially to the certainty of commercial law.

John Holland judgment John Holland sought to rely on 11 grounds of appeal, although Justice Jackson found that ground 11 was related to other groups of grounds and so proceeded to consider 10 main grounds. In the judgment, the Court stated the number and width of the grounds were unusual and the combinations of questions of law were unmanageable. Justice Jackson also remarked on John Holland’s ‘snow storm of material’, which included over 2,000 pages of affidavit material filed on behalf of John Holland, an unpaginated folder of central communications and hundreds of pages of written submissions for John Holland. His Honour held the application so framed was ‘tantamount to an abuse of process’ and explained that he had to comment on the manner in which John Holland had presented its application because failing to comment ‘would be to acquiesce in an unacceptable method of proceeding, inconsistent with the obligation of a party under r 5 of the Uniform Civil Procedure Rules 1999 (Qld) to proceed in an expeditious way’.

After making these comments about the manner in which John Holland presented its application, Justice Jackson set out his determinations in relation to the grounds of appeal.

In brief, the first two grounds of appeal centred on whether the arbitrator misconstrued Clause 23 and failed to correctly apply legal principles in considering whether undisclosed communications between PCQ, PCQ’s lawyers and the superintendent were material representations calculated to influence the superintendent’s administration of the contract. These grounds also considered whether PCQ interfered in the superintendent’s administration of the contracts.

In his consideration of grounds one and two, Justice Jackson commented on the detailed submissions by John Holland in relation to what it called ‘Impugned Representations’, noting an annexure listing 140 communications and meetings it submitted in the arbitration and a further 299 paragraphs of written submissions in the application. His Honour admitted to spending hours considering these materials but then rejected that the Court is ‘required to scour through them to ascertain for itself what might be the content of the applicant’s contention that there is a question of law’.

The grounds were rejected as they did not amount to manifest errors of law on the face of the award and there was no evidence the arbitrator made such an error.

Ground three was ‘expressed in a confusing manner’, although Justice Jackson managed to derive that it was in relation to whether the arbitrator incorrectly failed to consider whether the undisclosed communications between PCQ, PCQ’s lawyers and the superintendent could create an apprehension of impartiality in a fair-minded person. In rejecting the submission, Justice Jackson stated that John Holland had not read the paragraph relied on in the arbitrator’s reasons in context and that the arbitrator’s finding in this respect was unexceptional.

The fourth ground was a submission that the arbitrator erred in law by making findings without any probative evidence. Justice Jackson rejected John Holland’s argument that the onus was on Adani to

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THE ARBITRATOR & MEDIATOR JULY 2018 identify the probative evidence and instead stated the onus lay with John Holland to prove the absence of evidence. After noting that John Holland had ignored the requirement for leave to appeal that the determination of the question of law must also add or be likely to add substantially to the certainty of commercial law, the Court stated that a determination of the alleged error in this case was not a sufficient ground of appeal as it did no more than redress the rights of parties in a particular case.

Grounds five and six were submissions that the arbitrator made errors of law in failing to provide adequate reasons for the determinations made on substantial matters in dispute and that the arbitrator failed in his duty to give reasons of a quality that reflected the nature of the case including the large commercial subject matter, the status of the arbitrator, the retainment of senior counsel and large commercial firms, the formality of the pre-hearing procedures and the requirement of detailed written and oral submissions. After commenting that John Holland had not identified the findings for which it submitted there was a failure to give adequate reasons, Justice Jackson stated that in his view, John Holland’s submissions ‘should be recognised as an attempt to dress up a question of fact as a question of law’. His Honour noted that even if there were errors of law, they were confined to the particular case.

Ground seven was related to grounds five and six and concerned an argument that the arbitrator engaged in technical misconduct by failing to deal with submissions, and failed to consider and examine evidence.

The Court also rejected ground seven as it was deemed a question of fact, or a question of law confined to the case.

Ground eight was an argument that the arbitrator failed to either exercise jurisdiction or accord procedural fairness or that he dismissed a part of John Holland’s case without adequate reasons. Under the contract, the superintendent had discretion to extend the date for practical completion, even where the provisions requiring notice were not complied with. In the arbitration, John Holland submitted that the superintendent’s failure to exercise his discretion to extend the date was a breach of the requirement to act honestly and fairly. In the award, the arbitrator found the superintendent had the discretion, however John Holland contended that the arbitrator did not otherwise refer to this part of John Holland’s case. The Court held that the arbitrator had made a finding that the superintendent had the discretion and chose not to exercise it. Further, the Court found that such a consideration is not an error of law and would therefore not be considered. Justice Jackson said that nothing of substance is added by construing a failure to address contentions at a hearing as both a failure to give adequate reasons and a failure to accord procedural fairness. The Court also rejected ground eight on the grounds that whether the arbitrator failed to exercise jurisdiction or dismissed part of John Holland’s case without adequate reasons, were not questions of law.

Ground nine concerned the issue of information barriers with PCQ’s lawyers acting as the lawyers for both PCQ and the superintendent. John Holland submitted that the arbitrator did not deal with an important part of John Holland’s case or dismissed it without adequate reasons. The Court rejected the ground and Justice Jackson stated the Court is not available to hear an ‘unlimited range of submissions not properly raised as questions of law, in circumstances where already an excessive burden has been created by the manner of conducting the application’.

The tenth ground was whether the arbitrator made an error of law in failing to find Clause 23 as an essential term. Justice Jackson commented that it was not necessary for the arbitrator to determine whether or not Clause 23 was an essential term for the purpose of the award and therefore questioned how it could be required in law for the arbitrator to give reasons on an unnecessary matter for his decision.

Nevertheless, the Court considered this ground as a question of law that could substantially affect the rights of the parties to the arbitration agreement but ultimately rejected leave to appeal, stating that the submission was not strongly arguable.

The Court also considered a discretionary consideration, being if leave to appeal was granted, was there a breach of contract that went to the root of the contract enabling John Holland to terminate. John Holland submitted that it was fanciful to suggest that it ought to have produced to the arbitrator the combination of

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THE ARBITRATOR & MEDIATOR JULY 2018 findings that would amount to a substantial breach justifying termination. The Court rejected this submission on the grounds that the submission amounted to saying that the arbitrator was required to sift through all possible permutations and combinations. The Court stated that if it was too difficult for John Holland to answer whether there was a breach of contract that enabled termination, then how could the arbitrator know what case he should consider and Adani know what to address. After commenting on the plethora of points taken by John Holland on the application for leave to appeal, the Court concluded that it was not possible to assess whether, if leave to appeal was granted, John Holland could make out a breach of contract justifying termination.

The Court dismissed John Holland’s application for leave to appeal.

John Holland costs judgment Adani applied for an order that John Holland pay Adani’s costs on an indemnity basis as John Holland conducted the application in an unacceptable manner. Adani argued that this caused an undue prolongation of the case, loss of time and the greater investment of the court’s and Adani’s resources.

Justice Jackson considered John Holland’s application to be tantamount to an abuse of process. His Honour commented on the ‘many items of detail that were unnecessary for the points to be decided on an application for leave’ and noted that John Holland did not explain why over 2,000 pages of affidavit material or a second hearing day were justified for the application. Justice Jackson stated that the presentation of the application was not what was required for an application for leave to appeal.

John Holland submitted that the Court should not order costs on the indemnity basis as Adani had not put John Holland on notice that it would be seeking an indemnity costs order. Justice Jackson held that while a lack of warning was a relevant factor to take into account, a warning is not a precondition to making an indemnity costs order.

The Court concluded there was oppression in the material filed by John Holland and in the conduct of the application for leave to appeal and that, even though Adani had not warned John Holland of the special costs order it sought, it was appropriate that Adani be awarded its costs on the indemnity basis.

Conclusion These judgments highlight that the circumstances where the Court will grant leave to appeal an arbitration award are strictly limited. The circumstances where leave to appeal will be granted is further narrowed by the 2013 Act which now requires parties to agree to the appeal, in addition to the Court granting leave.

If parties are able to overcome such hurdles, the John Holland Judgment and John Holland Cost Judgment show the need for parties to consider the manner in which they present their applications to the court, bearing in mind that creating oppression by burdening another party and the court with voluminous material and a lengthy hearing could result in an indemnity costs order.

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Notes for Authors Contributions to the Journal are welcome, and should be sent to: Russell Thirgood General Editor of The Arbitrator & Mediator Resolution Institute Level 2, 13-15 Bridge Street Sydney NSW 2000 P: 02 9251 3366 E: infoaus@resolution.institute If you are interested to contribute an article, book review or case note, the following criteria are required for acceptance:

Manuscript 1. Authors are required to denote their details including postnominals, position, organisation and other relevant information (50 words or less) in the first footnote of the manuscript.

2. In all submissions, the first footnote should denote the author’s name, position and other relevant information.

3. The manuscript should be provided electronically via email in Word format.

4. Authors should provide an abstract of the manuscript (60 to 100 words) to be included at the beginning of the published submission.

5. Word length for the manuscript should be approximately 3000 to 5000 words for articles, 1000 to 2000 words for case notes, and 750 to 1000 words for book review. Case notes should provide a brief outline of the facts and judgment together with evaluation and analysis of the importance of the decision for alternative dispute resolution.

6. The manuscript should be in its final form, as corrections on proofs will generally be limited to literal errors or changes necessitated by legislative developments. However, manuscripts may on occasion be edited to correct spelling and syntax errors, clarify meaning, or enhance expression.

Minor amendments may occur without the editor seeking the author’s approval. The author will normally be consulted should major changes be considered advisable.

7. When preparing the manuscript, please refer to the, Style Points, on the next page. More detailed information is available from the Australian Guide to Legal Citation (AGLC), published by Melbourne University Law Review Association. An online copy of the AGLC is available at <https://law.unimelb.edu.au/__data/assets/pdf_file/0007/1586203/FinalOnlinePDF2012Reprint.pdf>. The recommended dictionary is the Macquarie Dictionary.

8. Authors are totally responsible for the accuracy of case names, citations and other references, spelling of judges names, accuracy of quotations, etc.

9. It is assumed that submissions for The Arbitrator & Mediator have not been sent to another publisher or journal or that the material published in the journal has not been already published elsewhere. (It is the author’s responsibility to inform the editor if the article has been submitted to another publisher or journal.) It is Resolution Institute’s Policy to publish material that has been published only with the agreement and/or acknowledgement of the previous publisher.

10. Articles published in The Arbitrator & Mediator are critically appraised or reviewed by external academic or professional peers of the authors.

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Style points General 1.

2.

3.

4.

Levels of headings should be clearly indicated (no more than five levels).

Authorised reports should be used in citations.

Gender-neutral language should be used.

Quotations use single quotation marks. Double quotation marks are reserved for use within a quotation. Use a colon to introduce block quotations.

5. Ensure that hyphens and dashes are differentiated.

6. Use a colon to introduce lists set off from the text, and to introduce run-on lists except those that begin with for example, that is, including, such as and so on, which do not require punctuation.

7. Abbreviations (except those that begin with an initial capital, e.g.‘Mon.’) and contractions do not take a full stop.

Citations In all submissions, case, legislation, book, journal and internet citations should appear not in the text but as footnotes, numbered consecutively throughout. All citations must conform to the AGLC (see 7 above).

The following style is preferred: Cases Case citation follows case name. Case names should generally be omitted in accompanying footnote when referred to in the text. Abbreviated case names may be used in references subsequent to the initial citation. Abbreviated case names should be italicised in parenthesis following initial citation, e.g.

Imperial Leatherware Co Pty Ltd v Macri & Anor (Imperial Leatherware).

Legislation International Arbitration Act 1974 (Cth). Abbreviations should be used in pinpoint references to delegated legislation, excepting at the start of a sentence.

Books Doug Jones, Commercial Arbitration in Australia (Thomson Reuters (Professional) Australia Limited, 2011) 14.

Tania Sourdin, Alternative Dispute Resolution (Thomson Reuters (Professional) Australia Limited, 4th ed, 2012) 10.

Journal Articles Scott Ellis,‘Arbitrators and Self Represented Parties’ (2004) 23 (3) The Arbitrator & Mediator 20, 20–25.

Internet references References should include (where available): author, document title, year, website name, pinpoint reference, URL and date of retrieval. The URL should be enclosed within angle brackets. The following style is preferred:

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THE ARBITRATOR & MEDIATOR JULY 2018 Pat Marshall, ‘Understanding Mediation from the Client’s Perspective’ (2015) LEADR & IAMA ‘kon gres <www.resolution.institute/documents/item/1735>.

In footnotes,‘op cit’,‘loc cit’, ‘supra’ and ‘infra’ should not be used. The abbreviated form of the title and surname of author(s) should appear in subsequent references. Ibid should not be used to refer to a source of legislation, but the legislation should be cited in full in all subsequent references. Cases and treaties should be cited in full in all subsequent references. Subsequent references to a source other than legislation, cases and treaties should use ‘above n’. Ibid should be used to refer to source in the immediately preceding footnote (whether ‘above n’ or full citation). Pinpoint references should only appear if a different page number is referred to. For example: 1.

Doug Jones, Commercial Arbitration in Australia (Thomson Reuters (Professional) Australia Limited, 2011) 14.

2.

Ibid. 57.

3.

Scott Ellis, ‘Arbitrators and Self Represented Parties’ (2004) 23(3) The Arbitrator & Mediator 20, 20– 25.

4.

Jones, above n 1, 33.

Deadline for Submissions The Journal is published two times a year and submissions are due eight weeks before publication. Late submissions may be considered for future editions. Further details are available on our website <www.resolution.institute/membership-information/journal>.

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Notes

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About Resolution Institute Resolution Institute is a vibrant community of mediators, arbitrators, adjudicators, restorative justice practitioners and other DR professionals. Created as a result of the integration of LEADR with IAMA in 2014, we are a not-for-profit organisation with more than 3,300 members in Australia, New Zealand and the Asia Pacific region.

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Resolution Institute is a vibrant community of dispute resolution (DR) professionals including mediators, arbitrators, adjudicators, restorative justice practitioners. Resulting from the integration of IAMA into LEADR, Resolution Institute is a not-for-profit organisation with more than 3,300 members in Australia, New Zealand and the Asia Pacific region. Resolution Institute encourages business, government and the community to use resolution processes to prevent, manage and resolve disputes, to assist in robust planning and decision making and to foster sound relationships.