65 The CIArb Australia News 2019
Leah Ratcliff Global Disputes, Jones Day View Profile
The Future Significance of International Arbitration Distinguished guests, Justices, ladies and gentlemen. Today I want to talk about how arbitration assists with mitigating some of the challenges that arise in international dispute resolution. That is not to say that it is a silver bullet or that it can clear the path of obstacles but it can assist in reducing risk and increasing predictability. There are two particular characteristics of arbitration that I will focus on, namely: •
the privacy of proceedings; and
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procedural flexibility, including in particular, the ability of parties to shape the arbitral process.
Flexibility and privacy Imagine this scenario: a joint venture with Japanese, Chinese, American and Australian parties. The JV is anticipated to run for 20 years. But, a high value contractual dispute has arisen between the participants, and the would-be claimants are advised that they have good prospects. However, the situation is complicated by a number of factors:
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The would-be respondent has a vertically integrated business model, and so is both an operational participant in the JV, and its customer.
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Each of the potential claimants has strongly held and differing views about how to navigate the competing objectives of maintaining productive commercial relationships and enforcing legal rights: a. the majority joint venturer may initiate proceedings unilaterally, but is concerned about the potential commercial impact in both the short to medium term as well as the JV becoming unworkable; b. one of the parties wants to sue as a matter of principle, and is beginning to use minority veto rights in protest; c. the third potential claimant is a co-venturer in other projects with the respondent off-shore, and it is opposed to bringing a claim. It is a multi-billion dollar company but has not been a party to largescale litigation in recent memory.
Arbitration can assist with resolving this impasse. Because the proceedings are private there are greater opportunities to maintain commercial goodwill, including by reaching a negotiated outcome. In particular: •
proceedings can be commenced confidentially, but with sufficient rigor to clarify the issues in dispute;
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at the same time procedural flexibility means that there is significant scope to stay proceedings and continue commercial negotiations, if the opportunity arises; and
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the parties potentially have greater capacity to agree on procedural aspects of the arbitration compared to litigation, including, for example, the scope of discovery, the volume of evidence and submissions.
This is not to say that the process is perfect and that arbitrations do not become unduly contentious – but it offers the opportunity to resolve disputes in a manner which is better aligned with the maintenance of long term commercial relationships. This is fundamentally important within Australia. The scenario that I have described could readily arise on
