Volume 42 | Number 11 | December 2015
COMMERCIAL ARBITRATION EDITION
MORE X, LESS WHY.
Sales Finance Service Parts
THE ALL NEW BMW X1 IS NOW AT AUTO CLASSIC.
Possessing a more adventurous spirit than ever before, the all new BMW X1 xDrive20d xLine leaves little room for hesitation. With versatile performance and the presence to turn heads, this Ultimate Driving Machine urges you to embrace every opportunity. Expect more unmistakable X Range appeal, starting with strikingly athletic features. Enjoy more comfort with a luxuriously spacious interior. Experience a more seamless way to explore the world with BMW ConnectedDrive.* Live with more X and less why, starting now. Take a test-drive at Auto Classic today.
The all new BMW X1 xDrive20d xLine from
Auto Classic 48 Burswood Road, Victoria Park. Ph 9311 7533. A/H 0450 525 025. autoclassic.com.au
*BMW ConnectedDrive Terms and Conditions apply, Please refer to www.bmw.com.au/ConnectedDrive or contact Auto Classic for further information. ^Drive away price for the BMW X1 xDrive20d with xLine and no further optional extras. Price is based on the vehicle being garaged in Perth metro and a private owner with a good driving record. Price may vary according to individual circumstances. Standard production lead times may apply. Please contact Auto Classic for further details.
Volume 42 | Number 11 | December 2015
Take me with you.
Your voice at work Editor's Opinion
Case note: The referral of disputes to arbitration under s8(1) of the Commercial Arbitration Act 2010 (NSW) John Holland v Kellogg Brown & Root  NSWSC 451
Coming to Australia: Cross border and Australian Income Tax Complexities - Part 2
Spirit filled lawyers
Gino Dal Pont
Professor Nolan Sharkey FCA
New Council for 2016 A Letter from Paris
Just terms compensation and private property rights
P D Lochore
Leon Firios and Baxter Roberts
YLC Ten Pin Bowling 2015
Why ISDS is good for Australia
Dr Sam Luttrell
Urgenda v The Dutch State
Sorting the wheat from the ChAFTA
Scott Ivey and Callum Davidson
Arbitral Appointments: A Better Way?
John Cooper, Simon Bellas and Andrew Berriman
An Overview of the Australian Law Reform Commission's Recommendations to Reform Native Title Law and Practice
Perth's dedicated centre for energy and resources disputes
Beth Cubitt, Tom French and Luke Carbon interview Kanaga Dharmananda SC
Notes on arbitration clauses
54 55 56 57 58 58 59 60
Family Law Case Notes Thomas Hurley Case Notes Law Council Update Pam Sawyer Professional Announcements Classifieds New Members Events Calendar
Dispute resolution clause
Perth Centre for Energy and Resources Arbitration: Questions and Answers
DISCLAIMER The views and opinions expressed in Brief and the claims made in advertisements published within it, are not to be taken as those of, or as being endorsed by The Law Society of Western Australia (Inc.) or the Brief Editorial Committee. No responsibility whatsoever is accepted by the Society, or the Editorial Committee for any opinion, information or advertisement contained in or conveyed by Brief. COPYRIGHT Readers are advised that the materials that appear in Brief Journal are copyright protected. Readers wanting to cite from or reference articles in Brief Journal should reference as follows: (Month and Year) Brief Magazine (Perth: Law Society of Western Australia) at page __). Readers wanting to reproduce a substantial part of any article in Brief Journal should obtain permission from individual authors. If an author’s name is not provided, or if readers are not able to locate an author’s contact details, readers should contact the Law Society of Western Australia (Inc.). The trade mark BRIEF is the subject of registered trade mark 1253722 and is owned by The Law Society of Western Australia (Inc). Trade mark 1253722 is registered for Western Australia.
Published monthly (except January) Advertising enquiries to Eleanor Jackson Manager - Business Development Tel: (08) 9324 8639 Email: email@example.com Manager Marketing & Communications Moira McKechnie Communications and Design Officer Brett Syme
EDITOR Julian Sher
PRESIDENT Elizabeth Needham
EDITORIAL COMMITTEE Ronald Bower, Gregory Boyle, Andrew Cameron, Rebecca Collins, Robert French, Dr Eric Heenan, Rebecca Lee, Jason MacLaurin, Alain Musikanth, Maureen O'Connell, Tom Porter, Pat Saraceni, Julian Sher, Moira Taylor, Lorilee Yu
SENIOR VICE PRESIDENT Alain Musikanth
PROOFREADERS Sonia Chee, David Garnsworthy, Andrew MacNiven
RRP $15.00 incl GST. Printed by Scott Print
Brief is the official journal of THE LAW SOCIETY OF WESTERN AUSTRALIA Level 4, 160 St Georges Tce Perth WA 6000 Tel: (08) 9324 8600 Fax: (08) 9324 8699 Email: firstname.lastname@example.org Web: lawsocietywa.asn.au
VICE PRESIDENT Hayley Cormann TREASURER Marie Botsis ORDINARY MEMBERS Alison Aldrich, Tara Connolly, Hayley Cormann, Brahma Dharmananda SC, Nathan Ebbs, Adam Ebell, Nicholas Ellery, Catherine Fletcher, Greg McIntyre SC, Marshall McKenna, Denis McLeod COUNTRY MEMBER Georgia Pickering JUNIOR MEMBERS Emma Cavanagh, Ray Christensen, Rosie Hill
ISSN 0312 5831 SUBMISSION OF ARTICLES Contributions to Brief are always welcome. For further details, please contact email@example.com
IMMEDIATE PAST PRESIDENT Konrad de Kerloy CHIEF EXECUTIVE OFFICER David Price
President's Report Elizabeth Needham, President, The Law Society of Western Australia ANNUAL GENERAL MEETING The Society’s Annual General Meeting was held on Tuesday, 27 October 2015 at Herbert Smith Freehills (HSF) premises in the QV1 Building in Perth. Thank you to all members who were in attendance and HSF for again allowing the Society to host its AGM at their premises. The Society relies heavily on the enthusiasm and expertise of its members in order to fulfil its mission of being the voice of the legal profession in Western Australia. I look forward to your continued support of the Society in the coming year and beyond. The 2014/15 Annual Report and Financial Statements are now available to be viewed online. Please visit lawsocietywa.asn.au/annual-reports. SECURITY AT THE COURTS As many of you are aware, the Courts in Perth recently increased their security measures. This change affected secondary security screening. The Hon Chief Justice Wayne Martin AC advised the Law Society of those intended changes and the Society promptly advised members via the usual alert mechanism – Friday Facts – on 25 September. Following the implementation of those measures the Society received numerous complaints about the operation of those measures including: who was subject to secondary screening and who was not; the removal of clothing in front of clients; the way in which the new measurers were implemented with some security staff implementing the same measurers differently in different courts; and the delays at the Central Law Courts and District Courts because of only one of the 2 security entry points being in operation. The Chief Justice has since temporarily withdrawn the measurers whilst there is a further review and consultation process. I met with His Honour on 11 November to discuss the concerns raised by our members and to discuss the Chief Justice’s correspondence with the Society on the point. Options as to how the issues might be addressed were discussed and the Society is presently considering whether any follow up response at this stage is required. The Society will continue to liaise with the Chief Justice about the procedures and how both the concerns raised by our members can be addressed and security can properly do its job in protecting the public, the staff at the Courts and us – the members of the profession. LETTER TO WA MINISTER FOR HEALTH – COMPENSABLE PATIENTS AND MEDICAL CLAIMS BY HOSPITALS The Society has written to the Hon Dr Kim Hames MLA, Minister for Health, regarding compensable patients and medical claims by hospitals. By way of background, public hospital fees for compensable and motor vehicle third party insurance patients in Western Australia are regulated by the Department of Health under the Hospitals and Health Services Act 1927. The Hospitals (Services Charges for Compensable Patients) Amendment Determination
02 | BRIEF DECEMBER 2015
(No.2) 2014 (Determination) sets out the fees that can be charged by hospitals for patients who are due to receive compensation settlements. The Society’s has expressed concern that: • the Department of Health has not implemented any transparent or proper procedure for the recovery of monies under the Determination; • the current manner of recovering monies from compensable patients who have received treatment from public hospitals may give rise to inequities; and • the mechanism in place may lead to avoidant behaviours (with failure to notify of potential compensation) ultimately reducing the revenue recovered by the Health Corporate Network. REFORM OF REMOTE COMMUNITIES IN WESTERN AUSTRALIA The Society has written to the Hon Terry Redman MLA, Minister for Regional Development, Lands and Minister Assisting the Minister for State Development, and the Hon Helen Morton MLC, Minister for Mental Health, Disability Services and Child Protection, regarding proposed reform of remote communities in Western Australia. The Society has asked the Western Australian Government to ensure it works with Indigenous peoples to develop a detailed consultation framework and evaluation process which complies with Australia’s international human rights obligations, including the United Nations Declaration on the Rights of Indigenous Peoples. It is the Society’s view that a regional plan devised in consultation with Indigenous peoples provides the best prospect of reducing levels of incarceration and other avoidable interactions of Indigenous peoples within the criminal justice system. The Society has stated that it would be pleased to comment on any proposal in relation to Australia's international human rights obligations as the consultation framework is developed. LAW COUNCIL OF AUSTRALIA – LEGAL EDUCATION DISCUSSION PAPER At October’s meeting, the Society’s Council approved a submission to the Law Council of Australia, containing the Society’s feedback on the Law Council’s Discussion Paper on Legal Education in Australia. The Law Council had sought comment from its Constituent Bodies in order to gain a greater understanding of a number of legal education issues. The Society provided feedback to the Law Council on a range of legal education topics including:
Australia; and • recognition of Australian qualifications in overseas jurisdictions. The Law Council has suggested that hosting a symposium would present an opportunity to consider these legal education matters in depth. LAW COUNCIL OF AUSTRALIA – GENERIC LEGAL SERVICES MARKET ACCESS REQUEST AND TRANSNATIONAL PRACTICE NETWORK The Society has endorsed a document produced by the Law Council of Australia, entitled ‘generic legal services market access request’. The purpose of the document is to assist Australia’s trade negotiators and other stakeholders engaged in advancing the interests of Australian lawyers and legal services providers internationally. The document requests the right for Australian legal services providers to: • establish a commercial presence (through branch office or other legal presence with a right to establish one or more commercial presences as provided to local lawyers) and, where a commercial presence has been established, the option to use the firm name used in Australia respecting local customs or usage in the host country; • provide legal services covering the laws of multiple jurisdictions in respect of which the Australian legal service provider or employees of the Australian legal service provider are qualified to advise; • have an option to enter into commercial association with local lawyers and law firms, with the freedom to negotiate fee and profit sharing arrangements; • provide legal services on a fly-in/fly-out basis, without residency or registration requirements; • arrange secondments and similar exchange programmes to and from the host country; and • prepare and appear in arbitrations, conciliations and mediations. In order to help pursue access for Australian lawyers to international markets, the Law Council has proposed the establishment of a ‘transnational practice network’ to be chaired by Arjuna Nadaraja, Director, Transnational Division of the Law Council. The network is to provide a mechanism to: • share transnational practice and market access information between the Law Council and constituent bodies;
• the content and types of Australian law degrees;
• consult members of the Australian legal profession about transnational practice issues; and
• practical legal training courses and supervised workplace training;
• jointly develop initiatives to advance the international interests of Australian lawyers.
• admission requirements in Australia; • the gathering of statistics on law graduates and the transition of graduates to employment; • the process for foreign lawyers to practice in
SEASON'S GREETINGS Best wishes to all members of the Society for a safe and enjoyable break spent with family, friends and colleagues.
your voice at work
Your voice at work A snapshot of recent Society initiatives LAW SUMMER SCHOOL 2016 Law Summer School, widely regarded as Western Australia's pre-eminent legal education conference, returns on Friday, 26 February 2016, at The University Club, The University of Western Australia. Our highly regarded speakers, including Professor Gillian Triggs, Richard Susskind OBE and Professor Richard Dawkins, will tackle the theme of Technology and the Law – Looking into the Future. To register now or for more information, please visit lawsocietywa.asn.au. Law Summer School brings together an impressive collection of local, national and international legal thinkers and experts to strengthen our understanding of the nexus between technology and the law, where we are now and what the future holds for the practise of law. Be prepared to be intellectually challenged, and to expand your horizons beyond the present. Keynote Plenary – Privacy and Proportionate Limits on Human Rights Emeritus Professor Gillian Triggs is the President of the Australian Human Rights Commission, with a five year appointment. She was Dean of the Faculty of Law and Challis Professor of International Law at the University of Sydney from 2007-12 and Director of the British Institute of International and Comparative Law from 2005-7. She is a former Barrister and a Governor of the College of Law. Professor Triggs is the author of many books and papers on international law, including International Law, Contemporary Principles and Practices (2nd Ed, 2011).
College, where he remains an Emeritus Fellow today. In 1976 he was catapulted to fame with the publication of his work The Selfish Gene (over 1 million copies sold) in which he expounded the gene-centred view of evolution and introduced the term meme. Professor Dawkins is a best-selling author and documentary film maker. His most recent books are his two-part autobiography: An Appetite for Wonder and A Brief Candle in the Dark. Presented in association with the Perth Writers Festival. THE LAW SOCIETY OF WESTERN AUSTRALIA'S MOCK TRIAL COMPETITION GRAND FINAL The grand final of the 2015 Mock Trial Competition was held on Thursday, 15 October at the Supreme Court of Western Australia, starting at 5.00pm. Hale School and defending champions Mt Lawley Senior High School competed for the top prize with Hale School winning the trophy. Law Society President Elizabeth Needham said, "The Mock Trial Competition helps to demystify the practice of law and gives students a great insight into the workings of our court system." The Competition provides students with an education on the trial process and courtroom procedure and etiquette. The Competition is open to Western Australian high school students in Years 10, 11 and 12. The Competition was established in 1987 and is growing in popularity each year. 2015 saw a record number of 108 teams take part. The grand final trial was adjudicated by the
Hon Chief Justice Wayne Martin AC. Students were presented with trophies by Law Society President Elizabeth Needham and the Director General of the Department of the Attorney General, Cheryl Gwilliam. The recipient of the Murdoch Scholarship for the Most Outstanding Mock Trial Student, Calum Moultrie of Lake Joondalup Baptist College, was also presented with his certificate at the presentation ceremony by the Murdoch University Dean of Law, Professor Jürgen Bröhmer. SUBMISSIONS 20/10/2015 Legal education discussion paper Letter to Law Council of Australia 20/10/2015 Role of lawyers in relation to victims of crime Letter to Commissioner for Victims of Crime
Compensable Patients and Medical Claims by Hospitals Letter to Hon Dr Kim Hames MLA, Minister for Health 20/10/2015
Reform of Remote Communities in Western Australia Letter to the Hon Terry Redman MLA, Minister for Regional Development; Lands; Minister Assisting the Minister for State Development, and Hon Helen Morton MLC, Minister for Mental Health; Disability Services; Child Protection
Plenary – The Future of the Law Professor Richard Susskind OBE is an author, speaker, and independent adviser to major professional firms and national governments. His main area of expertise is the future of professional service and, in particular, the way in which the IT and the internet are changing the work of lawyers. He has worked on legal technology for over 30 years. He lectures internationally, has written many books, and advised on numerous government inquiries. Richard is co-author of the new book, The Future of the Professions: How Technology Will Transform the Work of Human Experts and will speak about the future of the law via a live stream from London. Closing Plenary – Science and the Law Professor Richard Dawkins is an evolutionary biologist and ethologist. Having studied zoology at Balliol College, Oxford and continued his research into animal decision making under the tutelage of Nobel Prize-winning ethologist, Nikolaas Tinbergen, Professor Dawkins later returned to Oxford in 1970 as a Fellow of New
s e h s i W t s Be o r t h e
n o s a e S Festive f
The Society's Council and staff wish all members a happy and enjoyable holiday season and a successful new year ahead.
Our offices will be closed from 12.30pm Friday, 18 December 2015 and will re-open 8.30am Monday, 4 January 2016.
"Mens sana in corpore sano"1 Julian Sher, Barrister, Francis Burt Chambers, Editor, Brief Journal
Since this is the last issue of Brief I will ever edit, I can indulge in a vain attempt to show off the benefits of a classical education, despite Latin usage being rendered redundant in favour of plain English. Actually, the genesis of my current resort to a Latin tag line was a gratuitous remark to the effect that I must have been insane to take on the onerous task of editing Brief. I subsequently proffered an apparently unconvincing reassurance that it was only for a year. I confess, though, that there have been moments this year when I have belatedly questioned my sanity – but those moments passed quickly, as the reality – and dare I say, the enjoyment – of my editorial responsibilities began to sink in. I regard my occupation of the editorial chair as a marvelous privilege and an opportunity to contribute to the profession. The Law Society allowed me the freedom to write opinion pages in my own inimitable style. I have enjoyed interacting and working with a diversity of colleagues, courtesy of my involvement in Brief. I have had the good fortune to have received the support of outstanding Law Society staff. I could not have managed without them. Without their uncomplaining professionalism, Brief would never have seen the light of day. When I took over the reins of editorship from my predecessor, I resolved to make some changes and my head was brimming with new ideas. I have been able to introduce some of these, but time poverty has prevented me from pursuing all of them although they seemed so good at the time. The main focus of Brief in 2015 was to constantly strive to improve the journal's engagement with the profession, ensuring that it remains relevant and readable, generating contributions of good quality on topical subjects. Based on unscientific feedback, Brief seems to have succeeded to some extent this year in attracting a higher level of engagement on each of these measures.
04 | BRIEF DECEMBER 2015
This month's cover feature is commercial arbitration in general and a belated recognition of the establishment of PCERA in particular. PCERA is a welcome addition to the pantheon of professional groupings open for membership in WA. PCERA stands for the Perth Centre for Energy and Resources Arbitration. Its establishment and its enthusiastic following within the profession is a reflection of the evolution of commercial arbitration as a self-contained practice area, the globalisation of legal practice and the aspirations of many to practise in this important area. In that vein, this is a bumper issue to bring 2015 to a close. Signifying the wealth of local arbitration talent, we have a variety of arbitrationrelated features this month in addition to our regular columns and non-arbitration related articles. We commence with a report from Rob French on the launch of PCERA at a well-attended function earlier in the year. There is a Letter from Paris, written jointly by Leon Firios (currently at the Paris office of Three Crowns) and Baxter Roberts (currently of the Paris office of Freshfields Bruckhaus Deringer) before the terrorist attack in November. Both Leon and Baxter are well known to the legal fraternity in Perth. They have both moved to Paris to gain experience in the arcane practices of international arbitration. There is a discussion on John Holland v Kellog Brown & Root2 by Tom Porter; an article by Dr Sam Luttrell on Why ISDS is good for Australia; Sorting the wheat from the ChAFTA, an article by Scott Ivey and Callum Davies; an article on Arbitral Appointments; a Better Way? by John Cooper, Simon Bellas and Andrew Berriman; notes from Peter Wiese on arbitration and dispute resolution clauses based on his recently delivered presentation. Specifically PCERArelated features are a PCERA Q & A with Michael Feutrill and a discussion by Beth Cubitt, Tom French and Luke Carbon entitled Perth's dedicated centre for energy and resources disputes.
Breaking away from arbitration, we publish this month the second part of Professor Nolan Sharkey's article on Coming to Australia: Cross Border Income Tax Complexities. We are also grateful for an article by Peter Lochore on Just terms compensation and private property rights; a discussion on Urgenda v the Dutch State by Katja Saunders and Justine Clarke's Overview of the Australian Law Reform Commission's Recommendations to Reform Native Title Law and Practice. Regular features include the Ethics Column by Professor Dal Pont, Your voice at work and the YLC Bowling Wrap-up by Sarah Ozanne, as well as our usual case notes. I express my thanks to the Law Society for supporting me in my editorial role and allowing me some licence with the introduction of the Editor's Opinion page. I thank the Brief committee for their sage advice, hard work and invaluable support. The new editor will be fortunate to inherit professional staff of the calibre of Moira McKechnie, Brett Syme and Andrew MacNiven, without whose diligence and professionalism the task would be impossible. Finally, thanks to our readership for supplying constructive feedback and for just reading Brief. I wish our readers festive greetings and best wishes for 2016 – and the new editor best of luck in 2016 and beyond. NOTES 1.
Lat.: "a healthy mind in a healthy body".
 NSWSC 451 per Hammerschlag, J.
Brief welcomes your thoughts and feedback. Send all letters to the editor to firstname.lastname@example.org
Merry Christmas from Profile Legal! Stacey would like to thank all of her clients and candidates for their continued support throughout 2015. We wish you all the best for the Christmas and New Year break and look forward to working with you again in 2016! For further information on our services, or for assistance with your next career move, please contact us for a confidential discussion regarding our full range of available opportunities. Please find below a selection of our latest job opportunities for December.
2-4 years PAE
This large global firm has a commitment to investing in the growth of its national Corporate group and in recent times has successfully attracted some of Perth’s most highly regarded Corporate partners and practitioners. With a significant pipeline of upcoming work, multiple opportunities now exist for quality juniors.
Led by talented partners, a top career development opportunity exists for a quality mid-level lawyer to join one of Perth’s most highly regarded Insolvency practices.
You will act for recognised public and private Australian and international corporations on M&A deals, capital raisings, general corporate advisory matters and related commercial work. With regular client contact and close mentoring on offer, you will support with corporate due diligence work, advice preparation, the drafting of corporate and commercial documents and commercial negotiations. You’ll require a strong academic background, 2-4 years with a top-tier Corporate team and solid working knowledge of the Corporations Act and ASX Listings Rules. Fabulous opportunity to gain exposure to some of Perth’s best corporate work, collaborate with leading practitioners and build your professional reputation in the area.
This team manages all recovery actions, provides advice and support to established corporate clients, insolvency practitioners or financiers on restructuring matters, receiverships, administrations and liquidations. You will be responsible for discovery, legal research, advice and court document preparation on larger dispute matters, assistance on commercial negotiations and will directly run lower level recovery matters. There will be access to superb level of mentoring and training, regular client contact and a consistent flow of work to keep you busy and challenged. You will also enjoy autonomy to manage your own files and opportunity to develop your advocacy experience further. To be considered, you will require 2 years PAE with a top-tier commercial litigation or insolvency team, solid academics, a passion for insolvency work and genuine desire to specialise in the area long term.
2-3 years PAE
Due to strong pipeline of upcoming litigation work, this leading Perth firm has an immediate requirement for a high calibre Commercial Litigator.
This successful firm as long retained a prestigious client base and is committed to providing commercially driven solutions to their clients. Currently entering an exciting new growth phase, a mid to senior level Property lawyer is now required.
As part of a talented and well-structured team, you will gain exposure to complex corporate and commercial litigation matters. Some construction litigation and arbitration matters will also form part of your role. You will require a high level of confidence in your dealings with clients, who will include major resources, engineering & construction, property and industrial companies. Your responsibilities will include the management of legal research and discovery processes; preparing evidence, witness statements, submissions and other court documents; briefing counsel; liaising with clients, experts and witnesses and assisting with trial preparation. A minimum of 2 years PAE, previous experience acting for major corporate clients on complex commercial litigation matters, strong academics and recent local experience with a top tier or quality boutique firm will ensure your success.
Joining a cohesive team of high calibre legal practitioners, you will have access to top-tier property work, a structured career progression plan and will gain well rounded experience across property developments, acquisitions and disposals, property finance and commercial leasing matters. Acting for national and international developers, financiers, corporate and government clients, your role will focus on major property development and infrastructure projects, as well as advising on the property aspects of corporate and finance transactions. You’ll require at least 5 years’ experience with a leading local Property practice. With regular client contact and some of the best work on offer in the Perth market, this is a fabulous opportunity to refine your skills, be well remunerated for your work and progress your career, as this firm continues to grow.
Stacey Back Director p
Spirit filled lawyers Gino Dal Pont Professor, Faculty of Law, University of Tasmania
Studies reveal that lawyers abuse alcohol at a greater rate than other professionals
Abuse of alcohol can generate disciplinary consequences arising out of behaviour both in the course of practice, and outside of it
Public (or semi-public) shows of drunkenness may be counterproductive to respect for the profession
It is well known that many university students devote a disproportionate amount of their time to the excess consumption of alcohol. Law students, from my experience, hardly fall outside the norm, and anecdotally prove most 'competitive' in these stakes. Traditionally aligning entrance to university, and its attendant freedoms, with the legal age for the consumption of alcohol may go some way to explaining why university students have long 'experimented' with alcohol (ab)use. For many, however, these flourishes of youth ultimately translate to a more moderate consumption of alcohol when maturity and responsibility take hold. For law graduates, the courts have periodically distinguished, for admission purposes, misbehaviour (including that fuelled by alcohol) committed at a time of youthful immaturity from that perpetrated at a stage where society expects greater maturity.1 Yet research reveals that Australian lawyers, like their counterparts in the United States, are prone to engage in alcohol abuse more so than members of other professions.2 It is perhaps surprising, accordingly, to find relatively few disciplinary cases involving lawyers who, in the course of practice, have failed to meet their professional obligations by reason of the effects of alcohol. Be that as it may, what the cases reveal is a judicial unwillingness to countenance that the appropriate disciplinary sanction should
06 | BRIEF DECEMBER 2015
be mollified by reason of the impact of alcohol.3 Ironically, alcohol abuse seems to surface more frequently in the disciplinary case law where it is productive of misconduct outside the course of legal practice. It is apt to recall that arguably the leading Australian professional disciplinary case, the High Court's ruling in Ziems v Prothonotary of the Supreme Court of New South Wales,4 centred on alleged drink driving by the appellant barrister, who had been imprisoned for motor manslaughter. While the court upheld the barrister's appeal against an order that his name be struck from the roll, and in its place directed that he be suspended from practice for the duration of his imprisonment, what most influenced two of the three judges in the case were misgivings as to whether the accident was caused by concussion rather than alcohol.5 This raises a legitimate question over how regulatory or disciplinary bodies should view anti-social (and potentially also illegal) conduct by lawyers fuelled by alcohol abuse. In New Zealand, lawyers who have been caught drink driving have been suspended from practice,6 for a longer period where, as a result of drunkenness, they have resisted arrest and obstructed the police.7 While there may have been greater public tolerance to drink driving in former times, including by lawyers, these cases highlight that excess consumption of alcohol outside of legal practice can produce a serious disciplinary consequence, independent of anyone being injured. The point was addressed by a New South Wales judge most recently in Montenegro v Law Society of New South Wales,8 remarking that "drink driving offences, even those not involving personal injury or death, are considered seriously when deciding questions of professional fitness", the concern being "that they may evince a
disregard of lawful processes which is completely inimical to the observance of proper professional standards". It may be, to this end, that the lawyer in this case — who had, inter alia, been caught drink driving on multiple occasions and lied to the police in an attempt to circumvent responsibility — should count himself fortunate to have avoided suspension. Yet beyond potential disciplinary consequences, a lawyer's behaviour whilst under the influence of alcohol may present the profession badly to those present, and potentially the broader community. It is difficult, after all, to sustain a lasting respect for persons who cannot control their actions by reason of drunkenness. And as respect is a close relative to trust, one may well query whether the public (or even semi-public) consumption of excess alcohol by any lawyer can do the reputation of the legal profession any favours. So far as the quip "never trust a man who doesn't drink" is concerned here, it must be recalled that its author (W C Fields) died of an alcohol-related stomach haemorrhage! NOTES 1.
See, e.g. Re Application for Admission as a Legal Practitioner (2004) 90 SASR 551; XY v Board of Examiners  VSC 250 (involving misbehaviour to which alcohol abuse contributed).
Beaton Consulting, Annual Professions Study (2007).
See, e.g. Legal Practitioners Conduct Board v Nicholson (2006) 243 LSJS 293 (lawyer who, as a result of alcohol addiction and depression, withdrew trust funds without authority and almost immediately repaid the moneys was suspended until further order).
(1957) 97 CLR 279.
Per Taylor and Fullagar JJ.
See, e.g. Waikato Bay of Plenty Lawyers' Standards Committee No 1 v Pou  NZLCDT 86 (third drink driving offence and driving while disqualified; two month suspension).
See, e.g. Auckland Standards Committee No 1 v Ravelich  NZLCDT 11 (seven month suspension); Hawkes Bay Standards Committee v Beecham  NZLCDT 29 (two year suspension).
 NSWSC 867 at  per Campbell J.
Discover the benefits of using LEAP Mobile
s py ay ap olid H
LEAP Mobile enables you to access all your matters and correspondence from the palm of your hand. n Automatically record time on phone calls. n Send emails and forward documents on the go. n Data stored securely in Australia.
Take the mobile feature tour. 1300 886 243 | email@example.com leap.com.au/mobile 07
2016 Council The Society's Council for 2016 is below following the election which closed on 24 November 2015. Thank you to all members who voted and to everyone who nominated for a position on the Council. Council Executive Members
Immediate Past President
Elizabeth Needham President
Alain Musikanth Senior Vice President
Hayley Cormann Vice President
Matthew Keogh Immediate Past President
Barrister, Francis Burt Chambers Council Term Expires: 12/2016
Barrister, Francis Burt Chambers Council Term Expires: 12/2016
Senior Associate, Clayton Utz Council Term Expires: 12/2016
Senior Associate, Herbert Smith Freehills
Council Ordinary and Junior Members
Alison Aldrich Ordinary Member
Marie Botsis Ordinary Member
Jocelyne Boujos Ordinary Member
Tara Connolly Ordinary Member
Principal, Alison & Associates Council Term Expires: 12/2016
Senior Associate, DLA Piper Council Term Expires: 12/2017
Principal, Sceales & Company Council Term Expires: 12/2017
Solicitor, Valenti Lawyers Council Term Expires: 12/2016
Nathan Ebbs Ordinary Member
Adam Ebell Ordinary Member
Nicholas Ellery Ordinary Member
Catherine Fletcher Ordinary Member
Principal, Bennett + Co Council Term Expires: 12/2017
State Prosecutor, Office of the Director of Public Prosecutions Council Term Expires: 12/2017
Partner-in-Charge, Corrs Chambers Westgarth Council Term Expires: 12/2016
State Prosecutor, Office of the Director of Public Prosecutions Council Term Expires: 12/2016
Rebecca Lee Ordinary Member
Greg McIntyre SC Ordinary Member
Marshall McKenna Ordinary Member
Denis McLeod Ordinary Member
Barrister, Francis Burt Chambers Council Term Expires: 12/2017
Barrister, John Toohey Chambers Council Term Expires: 12/2016
Partner, Allens Council Term Expires: 12/2016
Managing Partner, McLeods Council Term Expires: 12/2017
Saran Bavich Junior Member
Sophie Ecker Junior Member
Jodie Moffat Junior Member
Brooke Sojan Country Member
Solicitor, Minter Ellison Council Term Expires: 12/2016
Solicitor, Bradley Bayly Legal Council Term Expires: 12/2016
Solicitor, Bennett + Co Council Term Expires: 12/2016
Restricted Practitioner, Legal Aid WA Council Term Expires: 12/2017
A Letter from Paris This letter was written before the events of 13 November 2015. Those tragic and terrible events did not cause us to change what we had written. The French will go on living. Paris is still Paris.
agreed to resolve disputes by arbitration under their contract. •
Dear Correspondent, Our title would have evoked images of la tour Eiffel, high fashion, and gourmet food at Michelin restaurants. In truth, we are both lawyers from Western Australia working in international arbitration in Paris. While the location may sound exotic and glamorous, we are the first to admit that our lives here are fairly ordinary and mundane, and not worth recounting in Brief. We are heartened, though, by the prevalence of the inane and ludicrous in the magazine. On that basis, we accepted when asked to write this short letter from Paris on our experiences as Western Australian lawyers who have ventured abroad. It may be of interest to those looking to pursue a career in international arbitration in Paris or elsewhere. At the very least, it will provide some good material to our old colleagues back in Perth for merciless ribbing. Together we represent both sides of the big firm–small firm continuum. Or put more accurately, our shops are different in size. Baxter is an associate in the arbitration team of a large international magic circle firm, the venerable Freshfields Bruckhaus Deringer LLP. The Freshfields international arbitration group spans three continents and nearly 180 lawyers, with the Paris office comprising around 20 associates and four partners dedicated to arbitration. Leon is an associate in the Paris office of a newlyestablished boutique firm called Three Crowns LLP, which works exclusively in the international arbitration space. The firm was founded in April 2014, and the Paris office has grown to two partners and around 10 associates. Both firms do a mix of international commercial arbitration, investment treaty arbitration, and public international law disputes work. For those unfamiliar with the arbitration world, in essence (and crudely): •
International commercial arbitration encompasses the typical business disputes we are all familiar with, but simply between persons located in different countries who have
Investment treaty arbitration is cut from the same dispute resolution cloth, as it were, but the legal foundation is a treaty (as opposed to a private agreement) entered into by two or more states called bilateral or multilateral investment treaties. These treaties encourage and protect foreign investments made by citizens of one signatory state in another, essentially by setting out certain standards of treatment and allowing foreign investors to sue the 'host state' if the state fails to protect the investment in accordance with those standards. Public international law disputes take on various guises, but for us in Paris they are most commonly disputes between two or more states in the International Court of Justice, based in The Hague. We tend to see mostly land and maritime border disputes between states.
To give an illustration of the kind of work we do here in Paris, and to show how incredibly important we are, we can say that one of us is acting in an ICC commercial arbitration involving a dispute over the construction of a large oil refinery under a construction contract between two Western European companies. The other currently represents an Eastern European state defending claims brought in an UNCITRAL arbitration by a foreign investor under an investment treaty involving a renewable energy project. It is all very confidential. We do not even know the names of our clients. Both of us are University of Western Australia graduates and are admitted in Western Australia. Baxter is an arbitration junkie: he wrote his honours thesis and a book on arbitration and went on to join the well-known internship programme of Freshfields' Paris office in 2012. He became an associate in the arbitration team in 2013. A more recent convert, Leon began in the disputes team of Ashurst in Perth and then joined Three Crowns at the beginning of this year as a lateral after completing a master of laws degree in the United States.
Paris is a great place to work for many reasons. On the professional side, it is a world-wide hub for international arbitration. Most international firms with arbitration practices have a presence in Paris. It is a popular place for hearings (particularly with the ICC having its headquarters here) and it is very much the gravitational centre for disputes in the region. The work is genuinely interesting and engaging: we are fortunate enough to be involved in many cases that are high-profile and high-value, and which often have broader political significance. As lowly young WA lawyers, having the opportunity to be exposed to such cases is a great privilege and learning experience. Perhaps unsurprisingly, Paris is also great for reasons beyond work. It goes without saying that it is a beautiful city. And the people, when not smoking, fussing, or spinning intricate webs of despair-inducing bureaucracy, are equally beautiful. It is hard to tire of cobblestoned alleyways, corner bistros, and Haussmann's boulevards. We both live centrally and our daily commute to the office is a walk which takes us by landmarks such as the National Opera and the Arc de Triomphe. Paris is a culturally rich milieu and a short hop from the rest of Europe. The language barrier can be challenging, but rewarding. (Be careful to order the magret de canard and not the magret de connard.) As we sit writing this outside Leon's local cave à vin, fuelled by a delicious bottle of Côtes du Rhône and an assiette de fromage, we would both wholeheartedly recommend Paris as a destination to consider for any young WA lawyer interested in arbitration and/or good food and wine. Just go easy on the croissants. Cordialement, Leon Firios and Baxter Roberts
Why ISDS is good for Australia Dr Sam Luttrell Counsel, Clifford Chance
INTRODUCTION Investor-State Dispute Settlement (ISDS) is a topic of growing public debate around the world. In Australia, the ISDS debate gained new intensity last year following the introduction of the Trade and Foreign Investment (Protecting the Public Interest) Bill 2014, a private member's bill moved by Tasmanian Greens Senator Peter Whish-Wilson that sought to prohibit the Australian Government from entering into trade and investment treaties that contain ISDS provisions. While that Bill did not progress, it did serve to highlight some of the concerns – and misconceptions – that surround ISDS as a feature of Australia's trade and investment policy. The purpose of this article is to address some of those concerns and explain why ISDS is good for Australia. THE ISDS DEBATE While the public discourse on ISDS is new, the ISDS system itself is not. ISDS as we know it has existed since 1966 when the International Centre for Settlement of Investment Disputes 10 | BRIEF DECEMBER 2015
(ICSID), the world's leading ISDS institution, was established. But the historical origins of ISDS go back centuries. Why then is the ISDS system suddenly attracting so much attention? Fundamentally, the answer is caseload. Between 1966 and 2000, there were relatively few reported ISDS cases. However, this changed following the Argentine Economic Crisis of 1999-2002, following which a diverse range of foreign investors brought compensation claims under the ISDS provisions of Bilateral Investment Treaties (BITs). To date, over 40 claims have been made against Argentina. Almost all of these claims have been referred to international arbitration the main method of ISDS. In retrospect, the Argentine experience was significant for three main reasons: first it dramatically increased the group of ISDS users, the 'newcomers', including both the claimant companies themselves (some of the world's biggest businesses) and their lawyers (some of the world's biggest firms); second, the widening of the user group led to a
dramatic proliferation of knowledge of the investment treaty/ISDS system; third, it showed the users that ISDS works: not only did Argentina actively participate in the ISDS proceedings brought against it (successfully defending many claims), but the country generally complied with the awards made against it. So, when comparable events occurred in other countries (both developed and developing), the companies and lawyers concerned knew what to do. They also had the architecture they needed: there are almost 3,000 BITs in force worldwide, with most of these instruments containing some form of ISDS clause. With every ISDS claim brought, public awareness of the system grew – to the point where, today, a system that was only a decade ago the realm of specialised legal journals is now covered by mainstream media. Through this process, ISDS has become a political issue. In developed countries like Australia, it tends to come up in the context of Free Trade Agreements (FTAs), such as those we have recently signed with Korea and China, and the Trans-
Pacific Partnership Agreement (TPP) the text of which was recently released. In Europe, the ISDS debate is occurring in the frame of a wider public discourse surrounding the Transatlantic Trade and Investment Partnership (TTIP), the proposed economic pact between the European Union and the United States. The fact that the ISDS question arises in the context of FTAs is itself interesting: it shows how ISDS – with its origins as a device of the BIT system – has migrated into the politically-charged realm of free trade. It is with this in mind that many of the criticisms of ISDS should be considered. RATIONALE OF ISDS CLAUSES One of the most common 'against' arguments is that a country like Australia does not need ISDS. The problem with this view is that it only considers ISDS from our perspective and fails to consider the essential structural role that ISDS plays in international investment law: ISDS clauses give trade and investment treaties teeth. The investor's right to arbitrate against the State in which its investment is made (host State) makes the substantive rights and protections of an investment treaty enforceable. Take ISDS provisions away, and the investor has two options for the enforcement of its treaty rights: first the investor can commence proceedings against its host State in the host State's own courts; second, the investor can ask the State from which it originates (home State) to take steps on its own behalf (either in the form of diplomatic protection or formal State-versus-State dispute resolution proceedings). The main problems with option one – action in the local courts – are that (i) the legal system of the host State might not give the investor an effective remedy (for example, under local law, it may not be possible to obtain judicial review of the measure in question; the government agencies responsible may also have claims to sovereign immunity from jurisdiction and execution, the latter meaning the local court's decision may not be enforceable in-country even if the investor prevails) and (ii) even if the aggrieved investor does have a remedy, the sovereign risk of the decision maker (the court) will essentially be the same as the sovereign risk of the defendant (the government of the host State). Regardless of whether or not the foreign investor actually suffers from "home town justice" (or bias in favour of the home State) the perception of this adjudicatory risk is real, and it is this perception that is reflected in sovereign risk. Put another way, even if (as in Australia) the courts of the host State dispense a high quality of
justice, they are still perceived by many foreign investors (and their financiers) to be riskier than a neutral, international tribunal. So, when the investor has only local courts to turn to, the sovereign risk of its investment is relatively higher, and (as discussed below) this makes the financing of its investment more costly. The efficiency of option two – home State assistance through diplomatic channels – is constrained by other factors. First and foremost, the availability of diplomatic assistance depends upon the willingness of the home State to engage. Few businesses are big and important enough to expect their home State to weigh in on their behalf, especially where significant inter-government relationships are involved. Further, the people of the investor's home State rarely have an interest in their government fighting on behalf of specific private entities doing business abroad. It would be wrong, therefore, to think that investors take comfort in the possible availability of diplomatic protection. Moreover, even if a diplomatic settlement is reached, the investor still has no direct entitlement to any compensation paid under that settlement. The payment of the settlement amount is at the home State's discretion. In reality, the remote possibility of home State protection is no substitute for the certainty of direct recourse that ISDS provisions give investors. ISDS gives a foreign investor the right to proceed against its host State in its own name, in an international forum that the host State does not control (either as a matter of fact or as a matter of appearances). The need for home State intervention is eliminated. If the investor needs to go to local courts at all (which it well may, under the terms of the applicable investment treaty), it can do so safe in the knowledge that, although an ISDS tribunal will not entertain a substantive review of the local court's decision, the arbitrators will review the procedure followed to ensure that no denial of justice occurred. If the investor prevails in the ISDS process, the arbitral award made in its favour will (subject to certain conditions) be enforceable against the host State in its own territory and in other countries in which it has susceptible assets - the particular enforcement regime being either that set out in the ICSID Convention (if it is an ICSID award) or the New York Convention (if the process has been conducted ad hoc or under the auspices of another arbitration body). It should be noted that an investor may be able to obtain ISDS rights even if it is not covered by an investment treaty or ISDS-inclusive FTA. The host State may offer ISDS through its local investment
law or the investor may be able to secure an ISDS clause in a contract with the host State (such as a concession or mining licence). As to the former method, the use of host State law to convey consent to ISDS fell out of fashion during the BIT surge of the 1990s (although there are some signs it is coming back). As to the latter, while large-scale foreign investors may have the leverage needed to secure an ISDS clause in their investment contract or concession, this is less likely to be the case for smaller foreign investors (such as mining exploration companies). This is where investment treaties are useful: they make ISDS generally available to investors of the contracting States, making it easier and safer for them to do business. ISDS AND SOVEREIGN RISK Another reason ISDS provisions are good for Australia is that they make it cheaper for Australian companies to do business in countries with high sovereign risk: by reducing the adjudicatory (i.e. "foreign court") risk of doing business in the host State, the overall sovereign risk of the investment is lowered. The foreign investor can use the fact of it being covered by an ISDS-backed investment treaty as a basis for negotiating better terms from its lenders (although the impact that such protection will have on the cost of capital will depend upon a range of factors, including the sophistication of the financiers with whom the investor is negotiating). While empirical evidence for the impact of ISDS (or BITs coverage) on the cost of project finance is lacking (for the obvious reason that the data is private), this is likely to be the subject of significant study in the coming years. At present, what can be said for certain is that, if the investor does not have access to ISDS at all, it will not be able to make any such case to its financiers. Historically, ISDS provisions have been intended to protect investors doing business in countries with higher sovereign risk than their home State. Where a treaty is signed between two countries that both have similar and low sovereign risk, the negotiators may not consider it necessary to include an ISDS clause. An example of an FTA that does not contain an ISDS clause is the United States-Australia Free Trade Agreement. But this parity of sovereign risk is the exception, not the rule. The far more common scenario is one in which there is a significant disparity in the sovereign risk of the States that are negotiating the treaty. In this situation, the low sovereign risk State will have a strong interest in obtaining ISDS protection for its nationals when they invest in the 11
high sovereign risk State. To secure that essential protection for its investors (and the competitive benefits that come with it), it will almost always be necessary for the low sovereign risk State to agree to a reciprocal ISDS clause (i.e. a clause that allows both contracting States to be sued, not just the high sovereign risk State). So Australia must remain open to the inclusion of ISDS clauses even though it has low sovereign risk and reliable (and reputable) courts. Reciprocity means that there are necessarily both benefits and detriments that flow from ISDS clauses. Obviously, the main detriment is that Australia may be subject to ISDS claims by treatycovered foreign investors. But even if such claims are made, that does not mean they will succeed, and in any event the cost they represent can only amount to a fraction of the benefit Australia enjoys by including ISDS provisions in its trade and investment treaties. ISDS AS AN INVESTMENT PROMOTION TOOL In addition to the fact that, with ISDSbacked investment treaties, Australian companies are protected when they do business abroad, ISDS ensures the Australian legal framework for foreign investment remains aligned with international norms and standards, which in turn promotes and attracts foreign investment in our own territory. Here it is worth emphasising that attracting foreign investment is a highly competitive business: even countries like Australia, blessed with vast natural resources and stable government, must actively sell themselves as investment destinations to maintain inbound capital flows. Contrary to what critics suggest, ISDS is an important investment promotion tool. As an illustration, we can look at two developing countries nearby: Indonesia and Myanmar. Indonesia has an extensive offering of ISDS through its wideranging investment treaty programme. But, frustrated by its experiences as a respondent in ISDS cases, Indonesia is currently reviewing its BITs (the BIT with the Netherlands has already been cancelled). Myanmar, in contrast, has only a small BIT programme, but is committed to promoting itself as a destination for foreign investment – particularly as a means of commercialising its considerable endowment of natural resources. To that end, the Myanmar Government is drafting a new Foreign Investment Law, in which it is intended that an offer of ISDS will be made. This is an example of a new market using ISDS as a tool to compete with an established market. Of course, Australia is not 12 | BRIEF DECEMBER 2015
Myanmar or Indonesia, but we do have similar things to sell. Ultimately, whether or not the Australian public see the availability of ISDS as "necessary or attractive" is irrelevant: the fact is many foreign investors (and their advisors) do. No doubt many readers will have experience advising major international businesses on foreign investments and acquisitions, and will know first-hand the rigour with which these actors approach investment planning and decision making. If ISDS is not available through the target host State's treaty programme (or its local law – which is rare), then the question will be whether the client investor can secure an ISDS clause in a direct contract with the Government (i.e. State Agreement). As noted above, this will depend on the investor's bargaining power. But, if Australia refuses to accept the inclusion of ISDS clauses in its trade and investment treaties and also refuses to sign State Agreements that confer equivalent ISDS rights, this last resort will not be available. Major investors may well look elsewhere. In any event, ISDS provisions are established features of trade and investment treaty practice. If Australia stops accepting ISDS provisions in future agreements, our trade and investment treaty programme will stall – or, at the very least, start to "lose its teeth". While the Australian treaty programme currently covers a reasonable range of countries, it provides only limited protection for other regions that will be important to Australian trade in the future. For example, treaty coverage is currently lacking for certain emerging markets in Africa, where sovereign risk tends to be high but there is real need for foreign capital. ISDSbacked treaties are needed to promote Australian investment in these developing countries. REALITY OF AUSTRALIA'S ISDS EXPERIENCE One of the key messages of the ISDS debate is that, if we accept these provisions in our trade agreements, we will face waves of claims. However, the record shows that Australia is much more often the benefit of ISDS provisions than the respondent to claims under them. Based on publically available information, the ISDS provisions of Australian investment treaties have been formally invoked in four cases: Tethyan Copper v Pakistan, Planet Mining v Indonesia, White Industries v India and Philip Morris Asia Limited v Australia. To this list we can add two other ISDS cases involving Australian companies: African Petroleum Gambia Ltd (Block A4) v Gambia (a claim under
an oil exploration licence) and Lighthouse Corporation v Timor-Leste (a claim under a fuel-supply contract).The only recorded ISDS action against Australia is the plain packaging case (Philip Morris Asia Limited v Australia), a matter that has attracted a great deal of attention due to the questions of public health involved. The current record is, therefore, five claims by Australian investors to one claim against Australia. And this is without taking into account: •
the significant number of ISDS cases in which Australian majority-owned or managed companies are making claims under non-Australian BITs (relying on foreign-incorporated subsidiaries and special purpose vehicles); or
other ISDS cases involving Australian parties that have not been reported (for example, because they have been resolved by ad hoc arbitration).
In policy terms, it would be a mistake to make too much of one case against Australia, especially given that it is yet to be decided. It is also significant to note that, of the five claims brought by Australian investors against foreign host States, all claims related to activities in the energy and resources sector – an area in which a significant number of Australian companies (including many managedfrom Perth) operate internationally. IMPORTANCE OF THE ISDS SYSTEM TO THE INTERNATIONAL RULE OF LAW One of the less obvious benefit of the ISDS system is that it contributes to the international rule of law. The very fact that there is a growing dialogue about ISDS and State rights shows how effective the system has been at promoting respect for the international rule of law – if this was not the case, States would simply ignore awards against them. On any view, the current system is a lot better than what we had before. We all have an interest in promoting the rule of law and leaving behind the days of gunboat diplomacy – when countries used the threat of military force to obtain reparations for measures taken by foreign powers against the property of their nationals. As the former President of the International Court of Justice, Judge Stephen Schwebel, said in 2014, to cast aside the ISDS system now would be "one of the profoundest misjudgements ever to afflict the procedures of peaceful settlement of international disputes". It is critical that countries like Australia remain active participants in the ISDS system (and, in the rare event they
are sued, the ISDS process), both for the broader reason Judge Schwebel identified and for reasons of their own national interest. If Australia opposes ISDS, we will place ourselves in the unlikely company of a small group of countries that have rejected the ISDS system (examples being Venezuela, Ecuador and Bolivia). Doing so would also put us at odds with our major regional trading partners, including the Association of South East Asian Nations (ASEAN) and the People's Republic of China, whose current practice is to include ISDS clauses in their trade and investment treaties. No system of justice is perfect, nor will it ever be. The ISDS system has its issues, but it is still relatively young. Many of the aspects of the ISDS system that critics identify as flaws are actually structural consequences of decentralisation: variation in the case law on key investment protection standards, divergent approaches to procedural issues that bear on the transparency of the ISDS process, the absence of a standing corps of arbitrators (and problems arising out of the partyappointment system for arbitrators), the lack of an appellate jurisdiction. These structural features have origins in the fact that, for the last three decades or so, States have tended to rely on bilateral instruments (namely BITs) to convey their consent to ISDS procedures (and to set out the substantive rules of the game). The result has been the development of an international investment law system in which there are thousands of 'constitutions' (some similarly worded, others very different), each with its own 'court'. But multilateral instruments (such as FTAs) are taking over from BITs as the preferred means of engagement in the area of investment promotion and rule-making. In this process, the age of bilateralism/decentralisation is ending and a new era of multilateralism/centralisation is beginning, in which the ISDS system will be consolidated and improved. The TPP is a good example. Countries like Australia have important roles to play in this renovation process. THE WEAKNESS OF THE REGULATORY CHILL THESIS Another common argument against the ISDS system is that it limits a State's right to regulate, causing regulatory chill. In his second reading speech in support of the Trade and Foreign Investment (Protecting the Public Interest) Bill 2014, Senator Whish-Wilson made direct reference to this theory: The influence of ISDS goes beyond the direct impact of
cases. In their 2010 report the Productivity Commission identify the phenomenon of 'regulatory chilling.' In other words ISDS provisions mean governments second guess themselves on whether a public policy initiative will cause an arbitration claim to be made against them by a foreign corporation. Regulatory chill is a complex thesis and is, as many of its proponents would concede, still being developed. Although studies in the field have moved on considerably from when the Productivity Commission released its report in 2010, empirical evidence for the phenomenon is still lacking. But that does not mean it should be dismissed, only that more work needs to be done before regulatory chill can be considered a reliable policy premise. At the moment, the best evidence for regulatory chill is anecdotal. There have been cases where, faced with claims under ISDS clauses, States have backed down, and arguably legitimate measures have been â€“ rightly or wrongly - reversed (Australia is not an example, as the plain packaging claim is being defended). But settlements are a feature of every dispute resolution system, and the terms of settlements naturally vary from case to case. It would be wrong to suggest that settlements necessarily represent victories for the investor. Further, as the 42% rate of State victory cited by Senator Whish-Wilson in his second reading speech shows, States have good chances of successfully defending legitimate public interest measures in an ISDS process (especially when they are represented by skilled counsel, of whom Australia has no shortage). In defending measures they have taken in the public interest, States have a range of international law principles and doctrines at their disposal, including rules against abuse of process, limitations on the types of investments given protection, the defence of necessity, pleas based on police powers (i.e. the sovereign right to regulate), State-friendly readings of the fair and equitable treatment standard and rules for the review and annulment of ISDS tribunal decisions. It is open to Australia to continue to negotiate for the inclusion of provisions that clarify, codify or expand these rules and principles in future trade and investment treaties - as the Government did in the FTAs with Korea and China and as it has in the TPP. COSTS OF ISDS FOR THE RESPONDENT STATE
of money to defend meritless claims. Where a State has to defend itself in an ISDS procedure, legal fees represent a significant (if not dominant) part of the fees it will incur. But the host State is likely to incur significant legal expenses even without ISDS, because it will either have to defend itself in its own courts (where, in contrast to ISDS, there will likely be multiple levels of appeal) or respond to measures taken by the investor's home State, or both. So, for the host State, investment disputes carry cost consequences in any event, and these costs are higher when the dispute plays out in multiple forums. ISDS is, in contrast, a single procedure. However, the main cost-benefit of ISDS is macroeconomic. As a procedure, ISDS allows the dispute to be resolved in a way that does not require its escalation to the inter-State plane. This is important because, when a dispute does play out on the inter-State plane, the bilateral trade and diplomatic relations of the host State and the home State may be damaged. ISDS allows States to avoid this risk and the shorter-term costs of intervening on behalf of their investors. This cost saving is, by its nature, hard to measure, but it should be taken into account. Finally, it must also be remembered that, when an investor brings an ISDS claim and fails, the tribunal has the power to order that the investor pay some or all of the host State's costs of defence. Such costs orders are common. CONCLUSION At present, the Federal Government has a policy of considering the inclusion of ISDS provisions on a case-by-case basis. This policy should be maintained because ISDS is good for Australia. The Government has a range of negotiating strategies available to address the concerns that certain sections of the public have voiced in relation to ISDS â€“ many of which stem from the decentralised nature of the system. In particular, the Government can (as it has with the TPP) negotiate for the inclusion of interpretive provisions that clarify the substantive protections and standards of treatment granted under the treaty or condition access to ISDS procedures; the Government may also back proposals for the establishment of an International Investment Court or regional ISDS appeals body, the centralising effects of which would be positive for the ISDS system. Imposing a blanket ban on ISDS clauses is neither sensible nor necessary.
Another criticism levelled against ISDS is that it costs States vast amounts 13
Sorting the wheat from the ChAFTA â€“ the operation of investor-State dispute settlement clauses and their limits in recent Australian free trade agreements Scott Ivey, Senior Associate, Herbert Smith Freehills Callum Davidson, Solicitor, Herbert Smith Freehills
Over the past two years, the Australian Government has concluded free trade agreements with Japan1 (JAEPA), South Korea2 (KAFTA), and China3 (ChAFTA), a significant achievement considering that the three Asian giants are also the nation's three largest export markets.4 The inclusion of investor-State dispute settlement (ISDS) clauses in ChAFTA and KAFTA is a controversial issue in Australian politics. The recently concluded Trans-Pacific Partnership (TPP) between Australia and 11 other Pacific Rim countries also includes ISDS provisions.5 Concerns that have been raised in respect of the ISDS process include the potential for 'regulatory chill' on the part of countries anxious to avoid costly investor-State arbitration, and perceptions that ISDS affords rights and opportunities to foreign investors over and above those available to domestic investors.6 This article considers what a dispute under an ISDS clause involves, and examines whether the claims that have been made in public discourse about the effect of Australia's recent free trade agreements are on all fours with the treaty texts of JAEPA, KAFTA and ChAFTA. It concludes that the rights that Korean and Chinese companies have to commence investment arbitration proceedings against the Australian Government under KAFTA and ChAFTA are more circumscribed than popular opinion may assume. THE OPERATION OF ISDS CLAUSES ISDS is a dispute resolution mechanism allowing investors in a host State recourse against that State for breach of various protections promised to a class of investors. Those protections are most often derived from an International Investment Agreement (IIA), such as a Bilateral Investment Treaty (BIT) or a Free Trade Agreement (FTA). The class of investors protected is determined by reference to their domicile in a State that is party to the relevant IIA. ISDS provisions, particularly in newer IIAs, often contain detailed provisions for the 14 | BRIEF DECEMBER 2015
procedural steps that must be taken in order to submit a claim to arbitration. The first step will be the submission of a notice of dispute to the host State, stating the grounds on which the dispute under the IIA is said to arise. ISDS provisions confer jurisdiction on arbitral tribunals by reference to particular 'treatment standards' which the host State is obliged to accord to investors of the other State in their territory. Some examples include obligations in an investment treaty to accord 'fair and equitable treatment' to investors or investments,7 or to refrain from expropriating investments without compensation.8 The notice of dispute will often indicate the treatment standards said to have been breached by the host State, and will state that a formal submission of a claim to arbitration will follow if the dispute cannot be resolved by negotiation. The submission of an investment-related claim to arbitration may have procedural pre-requisites and consequences. Many IIAs impose additional 'waiting periods' post-negotiation by restricting investors from submitting a claim to arbitration unless they have first pursued the dispute in a host State's domestic court for a certain period of time.9 Some IIAs force investors to make an irrevocable and exclusive choice between attempting to vindicate their rights under the IIA through domestic courts of the host State, or through international arbitration (a socalled 'fork-in-the-road' clause).10 As with the resolution of disputes by international commercial arbitration, most ISDS clauses nominate a particular institutional forum by which the arbitration will be administered, and the rules by which the arbitration will be conducted. A popular and well-established forum is the International Centre for Settlement of Investment Disputes (ICSID), an organ of the World Bank located in Washington DC. Australia is a party to the ICSID Convention establishing the ICSID,11 it is nominated as a forum for the resolution of investment disputes in ChAFTA and KAFTA.
Investment tribunal proceedings are often shrouded in confidentiality. Side agreements on confidentiality are common in complex IIAs, and documents submitted to investment tribunals will often not be made public. Once a tribunal has rendered its decision, it publishes an 'award' giving its reasons for deciding in favour of the claimant or respondent, and indicating the remedy to be granted. Awards may be enforced by a court of competent jurisdiction so that the successful party may obtain relief as if the award were a judgment of that court. In Australia, the recognition and enforcement of arbitral awards made by international arbitral tribunals is governed by the International Arbitration Act 1974 (Cth) (IAA). With respect to awards made by ICSID tribunals, Part IV of the IAA gives the recognition and enforcement provisions of the ICSID Convention the force of law in Australia, and allows the award to be enforced in any Supreme Court of a State or Territory, or the Federal Court. While never tested before an Australian court, it is likely that awards by investment tribunals conducted ad hoc, or under the auspices of institutions other than ICSID, may be enforced in the same manner as awards rendered by international commercial arbitral tribunals. This is because prima facie an ISDS clause is an arbitration agreement to which the New York Convention applies,12 and thus an award rendered under an ISDS clause is a 'foreign award' that must be enforced, unless caught by an exception, pursuant to section 8 of the IAA. DIFFERENT APPROACHES IN ChAFTA, JAEPA AND KAFTA The policy of the current government is to consider the inclusion of ISDS provisions on a case-by-case basis.13 This approach to the negotiation and conclusion of ISDS clauses in Australian FTAs is readily apparent in a comparison of the investment chapters in each FTA. JAEPA does not include an ISDS clause, although there are numerous treatment
standards with substantive protections. The investment chapters of KAFTA and ChAFTA do contain ISDS clauses, but their respective scopes are vastly different. Under ChAFTA, the only possible claim that Chinese investors may make to an arbitral tribunal is that an Australian government has breached the 'national treatment' standard. This requires the host State to avoid treating investors from the other State less favourably than their own investors, with respect to the acquisition, management, expansion, conduct, operation and sale or other disposition, and in Australia's case, the establishment, of investments in its territory.14 By contrast, Korean investors under KAFTA enjoy expansive treatment standards that may be the subject of a claim for arbitration, including (amongst others): •
most-favoured-nation treatment (requiring the host State to avoid treating investors from the other State less favourably than the most favourable treatment they accord to investors of other States);
fair and equitable treatment;
full protection and security; and
The ISDS provision in KAFTA is also an example of what is known as an 'umbrella clause', in that it permits claims under certain contractual arrangements between an investor and the State as well as breaches of relevant treatment standards to be arbitrated. All three FTAs contain general exceptions, which allow the State parties to impose measures that would otherwise be in breach of the relevant treatment standards that are: •
necessary to protect human, animal
or plant life or health; •
necessary to ensure compliance with laws and regulations (that are not inconsistent with the FTA) imposed for the protection of national treasures of artistic, historic or archaeological value; or related to the conservation of living or non-living exhaustible natural resources,
so long as they are not discriminatory or a disguised restriction on international trade or investment.16 Finally, there is a significant number of 'non-conforming measures', at both State and Commonwealth levels, which are specifically excluded from the nondiscrimination treatment standards (namely, national treatment and mostfavoured-nation treatment) in all three FTAs. Many of these laws relate to domicile requirements (such as the rule that at least one director of a public or private company must be a resident in Australia), but others include restrictions on foreign ownership in certain sectors or enterprises (such as the rule allowing the prohibition of an acquisition of a controlling interest in a corporation on the ground that it is contrary to the national interest).17 Australia has also reserved the right to maintain existing, or enact future, or more restrictive, non-conforming measures in a wide range of specific sectors, such as: • property investment by foreigners in Australian urban land; • measures for "essential security interests"; • measures for the "screening of proposals" for investment in agriculture of more than $15 million in land or $53 million in agribusiness; • privatisation of government services; • public services such as education, social security, utilities, welfare,
health and law enforcement; • the arts and broadcasting; • wholesale and retail trade of tobacco, alcohol and firearms; • gambling; • healthcare measures and in particular the Pharmaceutical Benefits Scheme; • shipping; and • airports.18 ISDS IN THE TRANS-PACIFIC PARTNERSHIP The conclusion of negotiations on the TPP was announced on 5 October 2015, and the text was made available to the public on 5 November 2015. The United States Trade Representative previously indicated that numerous safeguards would be incorporated into the TPP to address concerns that have been raised about the impact of ISDS on governmental action in key policy areas. 19 The text of the TPP reveals that many of these safeguards were included, such as: • limiting the circumstances when the investor may make a claim that their ‘expectations’ have been frustrated; • exclusion of non-monetary remedies (except restitution of property), and requiring the investor to prove that the breach of an investment standard was the ‘proximate cause’ of the losses suffered; • broad transparency requirements, including mandating that arbitral hearings are open to the public, and that all notices of arbitration, pleadings, submissions and awards are to be made public; • a wide power for the arbitral tribunal to accept amicus curiae submissions from persons or entities with a ‘significant interest’ in the proceedings; • linking the test for non-discrimination
Summer is well and truly nigh, so prepare your career changes now whilst jobs are hot to trot! Shearn HR Legal - Human Resource + Recruitment is here for you, so call Julianna at anytime for a confidential discussion as to your legal career, remuneration, hot jobs and better times ahead! Julianna Shearn B.Juris.,LL.B. Director 0401 001 888 firstname.lastname@example.org
Suite 4, 5 Colin Street, West Perth WA 6005 T (08) 9322 3300 F (08) 9322 3355 www.shearnhrlegal.com.au 15
treatment standards to whether the impugned measure is for a ‘legitimate public welfare objective’; •
allowing the State parties to agree to issue ‘authoritative interpretations’ of relevant provisions that ‘shall be binding on a tribunal’; and for Australia, excluding all decisions made under Australia’s foreign investment policy from the application of the ISDS provisions. 20
CONCLUSION The potential for the ISDS processes in KAFTA and ChAFTA to have a 'chilling effect' on regulation in important policy areas such as public health and the environment is diminished by the safeguards present in the text of each treaty. TWhile there remain legitimate concerns with the inclusion of ISDS in Australian IIAs, care should be taken to avoid dismissing the utility of ISDS as an international dispute resolution mechanism. It may be a key concern of State parties in the negotiation of investment treaties under which Australian exporters stand to reap considerable economic benefits. NOTES 1.
Free Trade Agreement between the Government of Australia and the Government of the Republic of Korea, signed 8 April 2014,  ATS 43 (entered into force 12 December 2014).
Free Trade Agreement between the Government of Australia and the Government of the People's Republic of China, signed 17 June 2015 (not yet entered into force).
See e.g. Agreement between the Republic of Turkey and Australia on the Reciprocal Promotion and Protection of Investments, signed 16 May 2005 (entered into force 29 June 2009) art 13(4); ChAFTA art 9.14(2); KAFTA art 11.18(2).
Department of Foreign Affairs & Trade, 'Composition of Trade Australia 2014.' August 2014, available from: http://dfat.gov.au/about-us/publications/Documents/ cot-cy-2014.pdf.
Convention on the Settlement of Investment Disputes between States and Nationals of Other States, opened for signature 18 March 1965, 575 UNTS 159 (entered into force 14 October 1966).
Office of the United States Trade Representative, The Trans-Pacific Partnership: Upgrading & Improving Investor-State Dispute Settlement, Available from: https://ustr.gov/sites/default/files/TPP-Upgrading-andImproving-Investor-State-Dispute-Settlement-FactSheet.pdf.
See e.g. Chief Justice Robert French AC, 'ISDS – Litigating the Judiciary' (Speech delivered at the Chartered Institute of Arbitrators Centenary Conference, Hong Kong, 21 March 2015), Available from: http:// www.hcourt.gov.au/assets/publications/speeches/ current-justices/frenchcj/frenchcj21mar15.pdf.
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature 10 June 1958, 330 UNTS 3 (entered into force 7 June 1959). The definition of an 'arbitration agreement' in article II of the New York Convention is very wide, namely: "an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration."
Department of Foreign Affairs & Trade, Investor-State Dispute Settlement http://dfat.gov.au/trade/topics/ pages/isds.aspx.
ChAFTA arts 9.3 and 9.12.
KAFTA Chapter 11 Section A and art 11.16.
ChAFTA art 9.8; JAEPA art 14.15; KAFTA art 22.1(3).
ChAFTA art 9.5(1) and Section A of Annex III; JAEPA art 14.10(1) and Annex 6; KAFTA art 11.12(1) and Annex I.
ChAFTA art 9.5(3) and Section B of Annex III; JAEPA art 14.10(2) and Annex 7; KAFTA art 11.12(2) and Annex II.
Office of the United States Trade Representative, The Trans-Pacific Partnership: Upgrading & Improving Investor-State Dispute Settlement, Available from https://ustr.gov/sites/default/files/TPP-Upgrading-andImproving-Investor-State-Dispute-Settlement-FactSheet.pdf.
Department of Foreign Affairs & Trade, Trans-Pacific Partnership: FTA text and associated documents, Available from http://dfat.gov.au/trade/agreements/tpp/ official-documents/Pages/official-documents.aspx.
Agreement between Australia and Japan for an Economic Partnership, signed 8 July 2014 (entered into force 15 January 2015).
See e.g. Agreement between the Government of Australia and the Government of the Republic of the Philippines on the Promotion and Protection of Investments, signed 25 January 1995,  ATS 28 (entered into force 8 December 1995) art 3(2); Agreement between the Government of Australia and the Government of Democratic Socialist Republic of Sri Lanka for the Promotion and Protection of Investments, signed 12 November 2002,  ATS 22 (entered into force 14 March 2007) art 3(2); JAEPA art 14.5; KAFTA art 11.5. See e.g. Agreement between the Government of Australia and the Government of the Argentine Republic on the Promotion and Protection of Investments and Protocol, signed 23 August 1995,  ATS 4 (entered into force 11 January 1997) art 7; Agreement between the Government of Australia and the Government of the Republic of Indonesia concerning the Promotion and Protection of Investments, signed 17 November 1992,  ATS 19 (entered into force 29 July 1993) art VI; JAEPA art 14.11; KAFTA art 11.7. See, for example, the 18 month 'waiting period' in many Argentinean BITs, such as article X(3) of the Agreement for the Reciprocal Promotion and Protection of Investments between the Kingdom of Spain and the
The best just got better for employers Introducing
Your career. Maximised.
PLT Plus is the College of Law’s new practical legal training program. Our completely revised program trains law graduates for 21st century legal practice.
What does that mean for employers? + Graduates are trained to solve problems in a new task-based format – a non-academic approach to gaining competence + Only 5 days onsite – less time out of the office + Legal Business Skills option covers important skills such as time and work management, communication, client service and developing a commercial mindset
Ask for an information booklet today at email@example.com or download at www.collaw.edu.au/employers
16 | BRIEF DECEMBER 2015
Argentine Republic, signed 3 October 1991, 1699 UNTS 187 (entered into force 28 September 1992).
TECHNOLOGY AND THE LAW LOOKING INTO THE FUTURE
Widely regarded as Western Australia’s pre-eminent legal education conference, Law Summer School promises to engage you in active discussion with an extraordinary calibre of speakers as we consider the future of law and legal thinking in Western Australia and beyond.
The theme of Law Summer School 2016, Technology and the Law - Looking into the Future, will delve into the important topics of technology, human rights, privacy, social media, employment law, and property law, and will question how the law should respond to new and changing technologies.
FRIDAY, 26 FEBRUARY 2016
THE UNIVERSITY CLUB CONNECTED • INFORMED • GLOBAL
With thanks to our sponsors
EVENT PRICING Full-day Registration Law Society Members Individuals at least 5 years practising Individuals less than 5 years practising, articled clerks/practical legal training (PLT) and students Law Society Non Members CPD Active Member
6 CPD Points across 3 competencies $1,170 $710 $1,695 $700
2.0 – 3.0 points / Comp. 1 / Practice Management 1.0 – 1.5 points / Comp. 3 / Ethics and Professional Responsibility 1.5 – 3.0 points / Comp. 4 / Substantive Law
Registration and breakfast
Welcome to Country and welcome speech by the President of Law Society Elizabeth Needham, President of the Law Society
8.00am – 9.00am
1. Breakfast plenary: Back to the future – the future is now, what does it look like? Tony Joyner, Managing Partner, Herbert Smith Freehills Michael Paterson, Principal, Michael Paterson & Associates Emma Cavanagh, Convenor, Young Lawyers Committee
Kate Offer, Assistant Professor, Law School, The University of Western Australia
9.00am – 10.30am
2. Keynote plenary: Privacy and proportionate limits on human rights Professor Gillian Triggs, President, Australian Human Rights Commission
The Hon Justice Janine Pritchard, The Supreme Court of Western Australia
10.30am – 11.00am
11.00am – 12.30pm
3. Concurrent Sessions 3.A Criminal Law – the challenges posed by technology Commissioner Karl O’Callaghan, Western Australia Police The Hon Justice Lindy Jenkins, Supreme Court of Western Australia Joe McGrath SC, Director of Public Prosecutions for WA, Office of the Director of Public Prosecutions for WA Hylton Quail, Barrister, Francis Burt Chambers
3.B Employment Law – Adverse Action; Common Law Contracts; and Enterprise Bargaining Agreements Harry Dixon SC, Barrister, PG Hely Chambers The Hon Jennifer Smith, Acting President, Western Australia Industrial Relations Commission
Maria Saraceni, Barrister, Francis Burt Chambers
3.C Social Media and its impacts on civil litigation Carmel Galati, Sole Practitioner, Carmel Galati Rick O’Brien, Partner, O’Sullivan Davies
Gail Archer SC, Barrister, Francis Burt Chambers
3.D Property Law – Developments in real property and PPSA Katrina Banks-Smith SC, Barrister, Francis Burt Chambers Linda Widdup, Lecturer, Curtin Law School
12.30pm – 1.30pm
1.30pm – 2.30pm
4. Plenary: Legal ethics in the digital age: the same, but different Jacinta Dharmananda, Assistant Professor, Faculty of Law, The University of Western Australia Joshua Thomson SC, Barrister, Francis Burt Chambers
2.30pm – 3.00pm
3.00pm – 4.00pm
5. Plenary: The future of the law Richard Susskind OBE, author of the book, Tomorrow’s Lawyers (2013), speaker and independent adviser, via video link
John Fiocco, Special Counsel, Slater and Gordon Lawyers
4.00pm – 5.00pm
6. Closing plenary: Science and the law Richard Dawkins, English ethologist, evolutionary biologist, and writer
Elizabeth Needham, President of the Law Society
Register online at lawsocietywa.asn.au/law-summer-school Enquiries (08) 9324 8600 I Fax (08) 9324 8699
The Hon Justice Kenneth Martin, The Supreme Court of Western Australia
Arbitral Appointments: A Better Way? John Cooper, Simon Bellas and Andrew Berriman1
"The opportunity for the disputing parties to select and appoint members of their arbitral tribunal is one of the most attractive aspects of arbitration." Daphna Kapeliuk2 "Picking your own arbitrator is a massively overrated advantage of arbitration – because the corollary of being able to pick your own arbitrator is that so can the guy on the other side." Peter Rees QC3 INTRODUCTION Arbitration clauses are regularly included in high value commercial contracts because they accord with the parties' attitude to dispute resolution. The fact that parties can choose their arbitral panel or arbitrator is often cited as an advantage of arbitration over litigation. The New York Convention,4 national legislation and institutional rules all give broad autonomy to the parties to agree their arbitrators (or to a mechanism for their selection). Conversely, the flexibility and ability to choose one's arbitrator requires time and further steps. An unwilling disputant (usually a respondent) can delay the commencement of arbitration by delaying the appointment of an arbitrator or arbitral panel – thereby prolonging the resolution of the dispute and frustrating the commercial purpose of the arbitration clause. In the context of construction disputes, for instance, a respondent 'principal' may have an interest in delaying (complicating and making more expensive) the resolution of any issues relating to the payment of a claimant 'contractor'. Delay in the appointment of an arbitral panel may also arise, due to various factors, even where both parties are acting in good faith. While potential delays may be addressed by experienced arbitrators, once a panel has been constituted and the arbitral proceedings are on foot, no such protection (and supervision) exists prior to appointment. This article summarises the traditional approaches to appointing an arbitral panel and considers possible alternatives and 18 | BRIEF DECEMBER 2015
improvements. TRADITIONAL APPROACHES TO APPOINTMENT Arbitral rules typically provide two types of arbitral appointments: (a) a panel of three arbitrators, two of whom are appointed by each of the parties, with the third appointed either by the nominatedarbitrators or by a central body (arbitral panel); or (b) a single arbitrator, appointed by a central agency (sole arbitrator). In each case, the appointments are reactive. The parties turn their minds to the appointment of the arbitrators after the dispute arises. The rationale behind this approach is that the most appropriate time to appoint the arbitral panel is when the "value and complexity of the dispute has crystallised".5 The following sections explain how the typical process of appointing an arbitral panel can bring about unnecessary delay, may be open to abuse and, if executed incorrectly, could void an award made pursuant to it. a. Arbitral Panel An arbitral panel typically involves the use of three arbitrators. The prototype arbitral panel appointment clause is art 10 (3) of the UNCITRAL Model Law on International Commercial Arbitration (Model Law). It provides that the parties are each to appoint an arbitrator, both of whom shall appoint the third. Articles 12 (4) and (5) of the rules of the ICC Court of Arbitration provide a good example: (4) Where the parties have agreed that the dispute shall be resolved by three arbitrators, each party shall nominate in the Request and the Answer, respectively, one arbitrator for confirmation. If a party fails to nominate an arbitrator, the appointment shall be made by the Court. (5) Where the dispute is to be referred to three arbitrators, the third arbitrator, who will act as president of the arbitral tribunal, shall be appointed by the Court, unless the parties have agreed upon another
procedure for such appointment, in which case the nomination will be subject to confirmation pursuant to Article 13. Should such procedure not result in a nomination within 30 days from the confirmation or appointment of the co-arbitrators or any other time limit agreed by the parties or fixed by the Court, the third arbitrator shall be appointed by the Court. Practical experience belies the simplicity of the text. Parties will research and interview candidates for appointment pursuant to arbitral panel clauses after searching for potentially favourable appointees.6 Martin Hunter put it starkly: "When I am representing a client in an arbitration, what I am really looking for in a party-nominated arbitrator is someone with the maximum predisposition towards my client, but with the minimum appearance of bias".7 The process of selecting one's own arbitrator for nomination, of making enquiries about availability and in dealing with any challenge to the nomination of an arbitrator often takes a significant amount of time and resources. This is especially so when considered in the context of the modern-day push for more streamlined cost and time efficient arbitration practices, including limited disclosure and stop-clock hearings. Putting aside the rational inclination of parties to obtain as favourable a decision-making panel as is possible, the rules in respect to appointing a panel can also present juridical problems. One example arises in the case of consortium or joint venture arrangements. The decision of the French Court of Cassation in Siemens AG/BKMI v Dutco Construction8, is illustrative. There, a dispute arose between the parties to a tripartite consortium agreement. The governing arbitral rules had provided that the parties would appoint an arbitral panel. The arbitral rules were understood to have required Siemens and BKMI to appoint an arbitrator jointly although the interests of the parties were not aligned. An arbitral panel was convened pursuant to this understanding but under protest
of the parties. The arbitral panel issued an award. On appeal, the French Court of Cassation held that the arbitral panel was irregularly constituted, Siemens and BKMI having each been entitled to appoint an arbitrator. Yet according to French law, the decision did not entitle each party to a consortium or joint venture agreement to appoint an arbitrator where an arbitral panel was to be used.9 b. Sole Arbitrator There are two prevailing procedures for the appointment of a sole arbitrator. The first is to permit the parties to come to an agreement upon the identity of the arbitrator. Should they fail to do so, a third party is nominated to make the nomination for them. The second is to place the decision in the first instance in the hands of a nominated third party. The Australian Centre for International Commercial Arbitration (ACICA) arbitral rules (2011 edition) are an example of the first approach: 9.1 If a sole arbitrator is to be appointed, either party may propose to the other the names of one or more persons, one of whom would serve as the sole arbitrator. 9.2 If within 30 days after receipt by a party of a proposal made in accordance with Article 9.1 the parties have not reached agreement on the choice of a sole arbitrator and provided written evidence of their agreement to ACICA, the sole arbitrator shall be appointed by ACICA. 9.3 In making the appointment, ACICA shall have regard to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and shall take into account as well the advisability of appointing an arbitrator of a nationality other than the nationalities of the parties. The rules of the London Court of International Arbitration (LCIA) (2014 edition) exemplify the second approach. Clause 5.7of the LCIA rules provide that: [n]o party or third person may appoint any arbitrator under the Arbitration Agreement: the LCIA Court alone is empowered to appoint arbitrators (albeit taking into account any written agreement or joint nomination by the parties). A possible example of a delaying tactic by a party (albeit in the context of an expert determination) is reported in 1144 Nepean Highway Pty Ltd v Abnote Australasia Pty Ltd (2009) 26 VR 551.
" . . . what I am really looking for in a partynominated arbitrator is someone with the maximum predisposition towards my client, but with the minimum appearance of bias."
There, a lessor and a lessee fell into dispute. The lease had provided that in the event of a dispute the parties would agree upon an expert to resolve the dispute, or failing agreement, the Law Institute of Victoria would select an expert. In May 2009, when the parties did fall into dispute, the lessee nominated experts; the lessor commenced proceedings. Those proceedings were stayed and the Law Institute appointed an expert in June of that year. That expert soon after recused himself on account of a conflict of interest. Approximately two weeks later, the Law Institute appointed another expert. The lessor rejected that appointment on 2 July 2009. The Law Institute appointed a fresh expert on 3 July 2009. By 13 July 2009, he too declined to accept the appointment because of the lessor's protestations. By the end of July, the lessor had rejected another appointment, too - so
the lessee applied for an injunction to compel the lessor to execute the agreement appointing the expert. That application succeeded and an appeal on it was dismissed by 18 December 2009. The respondent effectively staved off the commencement of the expert determination by six months. Arbitrators will always be subject to challenge or removal, either before or during an arbitration if there are circumstances which indicate a lack of independence or impartiality. This has long been a source of possible delay to the commencement and conclusion of arbitrations. With the higher "real danger of bias" test having been introduced by section 18A of the International Arbitration Amendment Act 2010 (Cth), a party will now be less able to delay the process or to have an arbitrator replaced with one perceived to be more favourable to that party's cause. That said, even if successful 19
challenges are becoming more difficult and rare, the procedure for challenge still involves delay (especially for international arbitrations where the seat is in Australia). That is so, first, because a challenge will be dealt with by the arbitrator or by the arbitral institution (depending on what legislation or rules apply) and second (where the seat is in Australia), because of the ability to refer an unsuccessful challenge to the Court (under 13(3) of the Model Law). Outside Australia, if the seat of arbitration is, for example, Singapore and the SIAC Rules apply, any challenge will be decided by SIAC itself and that decision will be final and not subject to an appeal. ANOTHER WAY? The typical models of arbitral appointment clearly have capacity to cause delay, to be misused and to play into the hands of those wishing to detract from the expanding use of arbitration. One way to avoid this could be to defer all arbitral appointments to a third party. However, this would align arbitration with the practice in litigation and would remove a fundamental advantage of arbitration that the parties invariably have a choice in the appointment of an arbitrator.10 It is apposite to note that a third party may only appoint an arbitrator unilaterally where the parties have agreed to defer their authority to appoint an arbitrator to the third party.11 The authors propose, for consideration by those entering into major transactions and their legal advisors, the greater use of prenomination of arbitrators. Pre-nomination is consistent with the principles of choice and consent, but may lessen the susceptibility of the appointment process to abuse and delay. For example, parties may enclose with their contract a schedule nominating a pool of arbitrators. Admittedly, this is not the norm.12 An arbitration clause may for example stipulate that should the asserted value of the dispute fall below a certain threshold, a sole arbitrator will be appointed; or
should it be above that threshold that a panel of three be appointed. The schedule could list arbitrators in the order of priority, that they be approached for possible appointment and also which arbitrator would be the chair (in order of priority). There is, of course, a risk that by selecting arbitrators in advance circumstances may intervene. Nominated arbitrators may also be unavailable for whatever reason. In order to prevent the frustration of the arbitration clause, the clause should provide a binding process for appointment to cover the eventuality of a panel not being constituted from the list (for example, by deferring the appointment to a third party body). In that event, the parties might consider stipulating certain characteristics desired of the arbitrators to be appointed by the third party. It is not unusual for parties to prepare a list of potential arbitrators. However, the approach is usually reactive. The model proposed in this article is prospective. It contemplates that the parties consent to a list of potential arbitrators before a dispute arises, thereby preventing the potential delay in the commencement of a proceeding. The critical difference is that the arbitrators would be selected at a time when it is in the interests of all parties to conclude the contract, thereby necessitating cooperation. Some may say that the proposed approach does not obtain the consent of the arbitrator. However, the answer to that is, clearly, to obtain the arbitrator's consent confidentially before entry into the contract. CONCLUSION There is no doubt that arbitration may be an effective means of resolving disputes, particularly transnational disputes. The efficacy of arbitration is reflected in its increasing use in the region. However, arbitration is clearly not perfect. It also has its fair share of detractors who cite, among other things, increased delays and
rising costs. The challenge for arbitration, for arbitration practitioners and for those bodies facilitating arbitration is for arbitration practice to continue to evolve and improve. Pro-active approaches are available to overcome possible delays at various stages of any arbitration. Potential frustrations with the traditional approaches to the appointment of an arbitral panel may in some cases be avoided where parties consider preselecting a pool of potential arbitrators. The use of prospective arbitral appointments at the drafting stage of a contract may go some way in blunting a weapon in the arsenal of a reluctant disputant. By identifying a pool of potential arbitrators at a time when parties share an economic interest in agreeing upon as much as possible, arbitration panels may in some cases be more efficiently constituted. NOTES 1.
John Cooper and Simon Bellas are Partners in the Perth office of Jones Day, a global law firm. Andrew Berriman is an Associate in the Sydney office of Jones Day.
Daphna Kapeliuk, 'The Repeat Appointment Factor: Exploring Decision Patterns of Elite Investment Arbitrators' (2010) 96 Cornell Law Review 47 at 60.
Recorded in: Juan Fernandez-Armesto, 'Salient Issues of International Arbitration' (2011) 27 American University International Law Review 721 at 725.
Convention on the Recognition and Enforcement of Foreign Arbitral Awards 330 UNTS 3 (entered into force 7 June 1959), art v (1)(d).
Bjorn Gehle, 'The Arbitration Rules of the Australian Centre for International Commercial Arbitration' (2009) 13 Vindobona Journal 251 at 262 -263.
Doak Bishop, Lucy Reed, 'Practical Guidelines for Interviewing, Selecting and Challenging Party-Appointed Arbitrators in International Commercial Arbitration' (1998) 14 Arbitration International 395.
Martin Hunter, 'Ethics of International Arbitration' (1987) 53 The Arbitrator 219 at 223.
Siemens AG/BKMI Industrieanlagen GmBH v Dutco Construction Company (1993) 17 Yearbook of Commercial Arbitration 140.
Franz Schwarz, Christian Konrad, The Vienna Rules: A Commentary on International Arbitration in Austria (Wolters Kluwer, 2009) at 327.
Alan Redfern, Martin Hunter, Law and Practice of International Commercial Arbitration (Sweet & Maxwell, 1990) at 190.
As is the case per the London Court of International Arbitration rules, above.
Emilia Onyema, 'Drafting an Effective Arbitration Agreement in International Commercial Contracts' (2003) 7 Vindobona Journal 277 at 283.
The Dogs’ Refuge Home (WA) operates under a pro-life policy and relies on community support for funding. E S TA B L I S H E D 1 9 3 5
Dog lovers can leave a lasting legacy By suggesting a bequest to the Dogs’ Refuge Home of WA, you can help your client leave a lasting legacy to support the caring and rehoming of lost and abandoned dogs in Perth. We are one of WA’s oldest animal charities and operate a pro-life policy. Your clients can also be assured that we can make arrangements for their pet dogs to be cared for and re-homed.
20 | BRIEF DECEMBER 2015
For information, visit www.dogshome.org.au or request our Bequest brochure on 9381 8166. You can also contact Chris Osborn, who is a Lawyer for any advice on 9481 2040; 0400 206 105 or firstname.lastname@example.org Our recommended wording is: “I leave...to the Dogs’ Refuge Home (WA) Inc of 30 Lemnos St, Shenton Park, WA for its general purposes and the receipt of its President, Treasurer or Secretary shall be a sufficient discharge to my Trustees”.
PCERA Symposium 14 October 2015 Robert French Barrister, Francis Burt Chambers
On Wednesday, 14 October 2015 the Perth Centre for Energy and Resources Arbitration (PCERA) in association with the Association of International Petroleum Negotiators and the UWA Law School hosted a symposium to consider practical issues involved in negotiating and drafting arbitration clauses. Clayton Utz and Francis Burt Chambers kindly assisted in hosting and supporting the event. The speakers were Peter Wiese, a corporate and commercial partner from Clayton Utz, Michael Brooks, the Commercial Operations Manager for Dampier to Bunbury Natural Gas Pipeline, and Craig Colvin SC, director of PCERA. Set out below are some highlights of their speeches. Guests from a range of firms and corporates attended. Below is a summary of their speeches. Peter Wiese, Clayton Utz Peter Wiese spoke about the fundamental technical aspects of arbitration and arbitration agreements. Amongst other topics, Mr Wiese considered the statutory definition of an arbitration agreement and identified the different ways in which the requirement for it to be in writing could be satisfied. His full speech has been reproduced in this edition of Brief at page 24. Michael Brooks, Dampier to Bunbury Natural Gas Pipeline (DBP) Michael Brooks from DBP spoke about arbitration and mediation from the point of view of commercial end-users. Mr Brooks emphasised that a simple dispute resolution mechanism was especially important on large-scale projects. However, he cautioned against overly ambitious attempts to resolve very
large complex disputes too quickly as important factual issues may not be fully considered. Mr Brooks opined that mediation tended not to be the appropriate mechanism to resolve factually complex disputes and that arbitration was to be preferred. Mr Brooks noted that expert arbitrations were generally not attractive to commercial people as there was a prevailing view that it was difficult to identify an appropriately independent expert. The challenge for the arbitration community is to persuade end-users that the available experts were truly independent. Mr Brooks did point out however, that expert arbitration might be an appropriate mechanism for resolving price review disputes. Craig Colvin SC, Francis Burt Chambers Craig Colvin SC focused on issues that parties should consider in deciding whether to nominate an arbitration centre in the arbitration agreement. Mr Colvin outlined the benefits of nominating an arbitration centre. He observed that, parties can get the benefit the ongoing work by the centre to innovate and improve arbitration practices. Mr Colvin emphasised that commercial parties should, however, carefully consider the appropriate arbitration centre for their particular arbitration agreement as it would have a significant effect upon the nature and conduct of the arbitration.
Mr Colvin encouraged parties to consider how the arbitrators will be chosen if a particular centre is nominated. The suggested arbitrator might, for example, be drawn from a published panel or alternatively be identified because of their connection and influence within a small sub-set of the local legal community. Some arbitration centres focus on particular specialist fields. Mr Colvin said that parties should think about the type of disputes and technical issues that may arise under an agreement and consider whether it would be appropriate to nominate a particular specialist centre. He noted that WIPO is a good example of a centre that deals with intellectual property disputes and PCERA, with energy and resources disputes. Many arbitration centres develop their own rules and require them to be used for their arbitrations. Mr Colvin emphasised that it was important to review the rules of the particular centre and see if they are consistent with the parties' objectives for the arbitration. Mr Colvin concluded by considering the different approaches of various centres to the provision of expert evidence and discovery. Question Time The speeches were followed by questions and then drinks and mingling.
Perth's dedicated centre for energy and resources disputes Beth Cubitt, Tom French and Luke Carbon of Clyde & Co interview the director of the Perth Centre for Energy and Resources Arbitration (PCERA), Kanaga Dharmananda SC.
PCERA is the first dedicated arbitration institution to be established in Western Australia, which is home to some of the world's biggest energy and resources projects and companies. Western Australia is a global centre for exploration, exploitation and export of natural resources. Last year, the value of resources projects under construction or in the committed stage of development in Western Australia was valued at around A$160 billion. As a result, legal practitioners and judges in Western Australia have developed specialised legal and technical knowledge in the energy and resources sectors, both in relation to contentious and transactional legal work. Despite this, Perth has not historically been a common seat for international arbitration in the Asia Pacific Region. PCERA's goal is to make use of local industry knowledge and expertise in the energy and resources industries. It is hoped PCERA will establish Perth (which is in the same time-zone as Singapore, Hong Kong and mainland China) as a specialised regional centre for energy and resources arbitrations. Clyde & Co spoke to one of the directors of the centre, Kanaga Dharmananda SC. What gave rise to the creation of PCERA? PCERA arose as a result of a felt need for assistance in relation to a number of arbitrations being conducted in Western Australia without the support of any institution, being ad hoc arbitrations. It also responded to a perception about how international arbitration practice could be best implemented in relation to the energy and resources sector in Western Australia. The aim is to develop best practice by reference to the requirements of the industry. As it happens, I was awarded a Churchill Fellowship to study the establishment of an arbitral centre in 2012 and to some extent, PCERA reflects what I learnt during that fellowship.
22 | BRIEF DECEMBER 2015
Do you think Perth could ever become a regional hub for energy and resources arbitration? What are the challenges? Despite the tyranny of distance and the possibility that perceptions as to the attractiveness of Perth as a centre for arbitration may not be universally positive, I think there is real scope for Perth to become a regional hub for energy and resources arbitration. This is because the dispute may well relate to a project that is geographically most closely connected to Perth. It is also because, as there is greater familiarity with what Perth has to offer in terms of a stable court system with great efficiency in terms of support for arbitration, there well could be further interest in using Perth. Perth happens to be in the same time zone as a number of countries in South East Asia and in Asia. Ultimately, however, the question will be for inhouse counsels as it is their preferences that usually dictate the selection of clauses. The challenges that PCERA faces in attracting international work relate to the fact that it is a nascent institution. It is developing its brand and its name recognition. This is to be contrasted with other more established institutions that have had decades to establish their brand. In addition, there are a number of alternatives including traditional litigation that will challenge the capacity of PCERA to build its book of cases. Still, ultimately where there is a desire for a private process using persons with a special expertise in energy and resources, PCERA presents as a good choice. What are the advantages of PCERA over other established arbitral institutions? The advantages relate to PCERA's dedicated focus to the energy and resources sectors and PCERA's desire and commitment to proceed innovatively in relation to the resolution of disputes.
Does PCERA solely cater for ad hoc arbitration? Can other arbitral rules be used in the PCERA arbitration? PCERA hopes to be used for more than mere ad hoc arbitrations and would welcome the chance to administer arbitrations that are to be governed by other arbitral rules. Do you see any difficulties for foreign parties to contracts with Australian counterparts agreeing to have any disputes administered by PCERA arbitration in Perth? There may at first blush be some notion that arbitration in Perth, to be administered by PCERA, somehow presents as an advantage to an Australian party. On closer analysis, such a perception would not sit comfortably with PCERA's declared desire for a truly international panel from which to draw arbitrators to be appointed, the eminence and unquestioned independence of PCERA's advisory committee, and the reality of the utility of being close to the project in respect of which a dispute has arisen. In light of all of these factors, despite any initial reservations about using PCERA if a counterpart is an Australian party, I suspect that sophisticated parties will soon realise that it is the quality of the arbitration, and the arbitral tribunal itself, that will dictate the selection of an institution. How does PCERA differ from Australia's other institutions that administer arbitration? There are currently three institutions in Australia which facilitate international and domestic arbitration, all based in Sydney. ACICA – the Australian Centre for International Commercial Arbitration – has been providing arbitration services since 1985 and administers cases under its own rules, which largely mirror the UNCITRAL Arbitration Rules. AMTAC – the Australian Maritime and Transport Arbitration Commission – is a commission established by ACICA to
provide specialised services and training for maritime and transport dispute resolution in the Asia Pacific region. It also has its own arbitration rules, which are similar to ACICA's arbitration rules. IAMA – the Institution of Arbitrators and Mediators Australia – has been providing dispute resolution services in Australia since 1975. It administers its own arbitration rules which are also similar to the UNCITRAL Arbitration Rules. PCERA differentiates itself from these three in that it is specifically designed for energy and resources disputes and heavily markets Western Australia as a power house in the resources sector, with lawyers and judges that have state of the art expertise. You mentioned a panel from which arbitrators will be drawn? Is this already in place? And can parties appoint off-panel? PCERA has approached a number of persons to confirm they would
be prepared to accept a PCERA appointment as arbitrator. Indeed, PCERA aims to have suitable candidates from around the globe, identified and signed on with the assistance of its convenient advisory committee. Parties may, if they wish, appoint their own nominee in accordance with the relevant clause. Does the centre offer its own rules adapted to energy disputes? PCERA is presently considering the development of specific rules for particular types of disputes within the energy and resources sector. Are you originally from Perth? What is your career background before you started this role?
at the bar since 2006. I have taught International Commercial Arbitration in the University of Western Australian Law School for over a decade. What will PCERA be doing to increase its name recognition internationally in the near future? PCERA hopes to raise its profile incrementally and with purpose. Conferences are planned and PCERA hopes to become involved in regional developments. There will be a conference later this year and an annual session to consider improvements in process and procedures. NOTES This article was originally published in the Global Arbitration Review.
While not born in Perth, Perth has been home for most of my life, with stints with the UN in Geneva, in Singapore, in Tokyo, and studies in the UK and the US. After roles in-house, and as a partner of a law firm, I have been
GET READY FOR THE
NEXT WAVE Announcing exciting soon to be released seminars on the Law Society’s eLearning platform, offering the legal profession an even greater range of online CPD.
Defending Driving Offences
Law Summer School: Commercial Equity
Creating and managing precedents
Networking for Professional Success
The Law Society’s eLearning platform is a convenient way to access CPD on your terms, offering an ever expanding library of interesting and well-regarded seminars across all four competencies. Register today and join almost 1500 other members of the profession who are using eLearning. lawsocietywa.asn.au
Notes on arbitration clauses Peter Wiese Partner, Clayton Utz
Lord Campbell in Scott v Avery (1856) 5 HLC 811; 10 ER 1121 said: My Lords, I know that there has been a very great inclination in the courts for a good many years to throw obstacles in the way of arbitration. Now, I wish to speak with great respect of my predecessors the judges; but I must just let your Lordships into the secret of that tendency. My Lords, there is no disguising the fact, that as formerly the emoluments of the judges depended mainly or almost entirely upon fees, and they had no fixed salary, there was great competition to get as much as possible of litigation into Westminster Hall, and a great scramble in Westminster Hall for the division of the spoil .... Therefore, they said that the courts 24 | BRIEF DECEMBER 2015
ought not to be ousted of their jurisdiction, and that it was contrary to the policy of the law. This was replaced in the case as reported in 28 LT 207 at 211 and 5 HLC 811 at 853 with: It probably originated in the contests of the different courts in ancient times for extent of jurisdiction, all of them being opposed to anything that would altogether deprive every one of them of jurisdiction.1 1. What is an arbitration agreement Section 7 of the Commercial Arbitration Act 2012 (WA) defines an arbitration agreement as an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not. This definition is similar to the definition derived from Article II(1) of the New York Convention2 and used in s3 of the International Arbitration Act 1974 (Cth), namely that an arbitration agreement is an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration. An arbitration agreement can therefore form part of a contract, or can exist independently of â€“ or without â€“ another contract.
Arbitration agreements can therefore exist in relation to such things as claims in tort, for breach of statutory duty, for conspiracy, for misfeasance in public office and inducement to commit a breach of contract, as the authors of Russell on Arbitration note at Âś2-0043. However, in the practice of commercial law we are primarily concerned with disputes arising under contracts, and hence the drafting of arbitration provisions in those contracts themselves. An arbitration agreement commonly specifies the means by which some or all of the disputes that may arise under the contract may be resolved. It has been described as "an agreement inside an agreement"4, and s7(2) of the Commercial Arbitration Act5 and Article II(2) of the New York Convention6 both provide accordingly. The validity of an arbitration clause is generally not affected by the validity of the contract in which it appears. Thus s16(3) of the Commercial Arbitration Act provides that a decision by the arbitral tribunal that the contract is null and void does not of itself entail the invalidity of the arbitration clause, and Article 16 of the UNCITRAL Model Law on International Commercial Arbitration, which has the force of law in Australia under s16 of the International Arbitration Act, does likewise by providing that a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. There have been exceptions to this general rule â€“ usually based on fundamental issues with the contract to which the arbitration agreement relates, such as illegality7, but these are unlikely to affect an arbitration clause in a modern contract in the energy and resources industry. 2. How can an arbitration agreement be brought into existence Under s7(3) of the Commercial Arbitration Act, an arbitration agreement must be in writing. Similarly, as already noted, s3 of the International Arbitration Act defines an arbitration agreement as an agreement in writing. What does this mean? In the Commercial Arbitration Act, ss7(4) to 7(8) provide that an arbitration agreement is in writing if its content is recorded in any
termination or invalidity, must be settled by arbitration in accordance with the UNCITRAL Arbitration Rules (as revised in 2010) as modified by PCERA from time to time.
form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means, and this requirement is met by an electronic communication if the information contained in it is accessible so as to be useable for subsequent reference, where 'electronic communication' means any communication that the parties make by means of data messages.
The arbitration is to be administered by PCERA, and by any tribunal, in accordance with the PCERA Arbitration Principles.
In addition, an arbitration agreement is in writing if it is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other, and a reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference is such as to make that clause part of the contract. Section 6(4) of the International Arbitration Act provides in similar terms.8 Section 7(8) of the Commercial Arbitration Act and s6(4)(c) of the International Arbitration Act are interesting. They have the effect that an oral agreement that incorporates by reference a written arbitration clause is treated as a written arbitration agreement. What constitutes a valid incorporation by reference of a written arbitration clause into an oral contract may be an issue in some cases, and the view in the English courts appears to be that general words of incorporation by reference to another contract between different parties (for example, a reference in a subcontract to a head contract in general terms, rather than to the arbitration clause in that contract) are not sufficient, but a general reference to a set of general terms and conditions may be sufficient without a specific reference to the arbitration clause in those general terms and conditions.9 These following relate only to arbitration clauses embedded in contracts. 3. The arbitration clause The easiest part of drafting an arbitration clause is the adoption of the clause recommended by the chosen appointing authority. The Perth Centre for Energy & Resources Arbitration (PCERA) clause is typical: Any dispute, controversy or claim arising out of or in connection with this contract, or claims about its breach,
The appointing authority is to be a director of PCERA acting with the advice of the Advisory Committee of PCERA. The number of arbitrators is ______. The language to be used in the arbitral proceedings is ________________. The seat of the arbitration is Perth.
The AIPN Model International Dispute Resolution Agreement is, of course, available on the AIPN website.
The PCERA clause deals with the most important matters on the usual checklist: (a) is there a clear reference to arbitration; (b) is what may be referred to arbitration (a 'dispute') clear; (c) what is the seat of the arbitration; (d) what procedural rules apply to the conduct of the arbitration; (e) what law will be applied to the resolution dispute; (f) in what language will the arbitration be conducted; and (g) how is the tribunal to be appointed and how many members are there to be. Other things on the check-list might be: (h) what is the venue of the arbitration (where will it take place in the physical sense); (i) whether the parties are entitled to legal representation; (j) whether the rules of evidence apply; (k) is there any risk of a party claiming sovereign immunity, and do all parties have the legal capacity to submit to arbitration; (l) carve-outs to the disputes that are referable to arbitration 25
(e.g. disputes carved out for reference to an expert, or for litigation); (m) is 'fast-track' arbitration contemplated; (n) can summary, provisional and interim decisions be made by the tribunal; (o) is an award of exemplary or punitive damages permitted; (p) are there to be any exceptions to the usual confidentiality regime (note that ss27F to 27I of the Commercial Arbitration Act are not taken from the Model Law); (q) should applications to the court and appeals be excluded (note that s27J of the Commercial Arbitration Act, allowing applications primarily on points of law, is not taken from the Model Law); and (r) should the consolidation of other arbitral proceedings be permitted (in which case who are the parties to the arbitration agreement, since agreement is required). 4. The checklist discussed 4.1 Clear agreement Section 7 of the Commercial Arbitration Act and Article 7 of the Model law require there to be an arbitration agreement. The PCERA clause, if subscribed to, constitutes a clear agreement. 4.2 What may be referred to arbitration The draft clause attached to these notes defines a 'dispute' as any dispute under, in relation to, arising out of or in connection with this Agreement or anything done or purported to be done pursuant to it,Â including [but not limited to] any question regarding its existence, validity, termination or effect or the rights or obligations of any Party under it, and whether based on the common law, the principles of equity or any written law. One of the issues for decision in the NSW Court of Appeal in Rinehart v Welker10 was whether, in construing arbitration clauses, the word 'under' should be construed more narrowly than phrases such as 'arising out of', 'in connection with', and 'in respect to', or the presumptive approach of the House of Lords in Fiona Trust & Holding Corporation v Privalov.11 The approach adopted by Lord 26 | BRIEF DECEMBER 2015
Hoffman in Fiona Trust was that arbitration clauses are to be construed irrespective of language in accordance with the presumption that the parties are likely to have intended any dispute arising out of the relationship between them to be decided by the same tribunal, unless clear language to the contrary exists. The NSW Court of Appeal held that, despite Lord Hoffman's approach, it was not possible to ignore the express language used by the parties, and that the phrase 'under this deed' had consistently been given a narrower construction than phrases such as 'arising out of the deed' or 'in connection with the deed', perhaps contradicting the Western Australian Court of Appeal in Paharpur Cooling Towers Ltd v Paramount (WA) Ltd12. The NSW Court of Appeal suggested that its position was influenced by the fact that Fiona Trust was a commercial case, while Rinehart involved essentially a family dispute, and it seems clear that in a commercial case a court will lean towards Lord Hoffman's approach, as confirmed by the Western Australian Court of Appeal in Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd13. But, as the late Gerry Fewster said in an AMPLA paper given in 1987, having no scope for an argument is better than having a good answer. For that reason, the draft clause uses wide language to define a 'dispute'. 4.3 The seat or legal place of the arbitration In Cape Lambert Resources, Martin CJ said (at Âś36): When considering a dispute referable to international commercial arbitration, it is appropriate to identify the law applying to the various dimensions of the dispute, given the complex interaction between the different systems of law bearing on the different aspects of the arbitration. ... [T] here are at least five systems of law that may apply to an international commercial arbitration. These include: (a) The law governing the arbitration agreement and performance of that agreement; (b) the law governing the existence and proceedings
of the arbitral tribunal; (c) the law governing the substantive issues of the dispute (the applicable or governing law); (d) other applicable rules and non-binding guidelines and recommendations, including any ethical codes of conduct and any UNCITRAL guidelines for international arbitral proceedings; and (e) the law governing the recognition and enforcement of the award (which may involve more than one law, depending on the nature of the arbitration). Section 1(1) of the Commercial Arbitration Act provides that the Act applies only if the place of arbitration is Western Australia. The Model Law applies under the International Arbitration Act only if the place of arbitration is in the territory of Australia. If the place of the arbitration is not Australia, the law governing the existence and proceedings of the arbitral tribunal will have to be determined by the law of that place. It may or may not be the Model Law. It is clear from decisions such as that of the NSW Court of Appeal in Raguz v Sullivan14 that the words 'seat' and 'place' are used with the same meaning. It is the seat, or legal place, of the arbitration that determines the domestic law governing the procedural rules of the arbitrationâ€”that is, the existence and proceedings of the arbitral tribunal. That case was concerned with a clause requiring a dispute to be resolved by "arbitration in a country other than Australia". It was held that the provision dealt with the seat, or legal place, not the physical venue of the arbitration. Under s20 of the Commercial Arbitration Act and Article 20 of the Model Law, if the parties do not choose the place of the arbitration, it is to be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. If that outcome is to be avoided, the seat or legal place of the arbitration must be nominated. The PCERA clause does so.
the Supreme Court. If the aim of the exercise is to have a dispute arbitrated by a specialist tribunal outside the State or Federal court system, it would seem counterproductive to throw the appointment of the tribunal back to the Supreme or Federal Court. The nominating authority should be specified, and the PCERA clause does this.
4.4 Applicable domestic law The law applicable to the arbitration may be different from the governing the law of the contract. Section 28 of the Commercial Arbitration Act and Article 28 of the Model Law provide that the arbitral tribunal must decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute. If there is no governing law specified for the contract, the arbitral tribunal must apply the law determined by the conflict of laws rules which it considers applicable. If that outcome is to be avoided, it is necessary to be clear about the governing law of the contract. 4.5. Venue The venue of an arbitration is not the same thing as its seat or legal place. The PCERA clause does not nominate a physical location, but it may make sense to do so, unless the arbitration can be conducted in cyberspace (as some arbitrations now are). The choice of venue should be dictated by convenience, cost, the location of witnesses and the evidence and the location of the project, in my view, rather than people's preferences for holiday destinations. The relative advantages of Perth as a physical location for arbitrations needs to be demonstrated. Singapore, Hong Kong, Paris and London are all world-class cities â€“ Perth must aspire to be one as well,
with world-class professional and other services, for this challenge to be met. If disputes arise in connection with Western Australian based projects, Perth itself must not be seen as a second-string venue. It must be a natural, rather than chauvinistic, choice. 4.6 Language Under s22 of the Commercial Arbitration Act and Article 22 of the Model Law, the parties are free to agree on the language or languages to be used in the arbitral proceedings, but if they fail to do so, the arbitral tribunal is to determine the language or languages to be used. This does not require comment, other than to say that it seems obvious that the language of the arbitration should be the language of the contract. 4.7 Appointment and number of arbitrators Article 6 of the UNCITRAL Arbitration Rules, as modified in the PCERA Arbitration Rules, provides for an appointing authority by saying that failing the nomination of an appointing authority: (a) s18 of the International Arbitration Act provides that the appointing authority is the appropriate State Supreme Court or the Federal Court; and (b) ss6 and 11 of the Commercial Arbitration Act provide that the default appointing authority is
The PCERA clause also specifies the number of arbitrators to constitute the tribunal. Obviously cost comes into this, and often one sees a single arbitrator specified for modest disputes and three for larger disputes. It seems to me that, at least in international arbitrations, specifying three arbitrators has some value, especially having regard for the arguments advanced in the Federal Court last month in Sino Dragon Trading Ltd v Noble Resources International Pte Ltd.15 In that case, there was a challenge to the arbitrators alleging "justifiable doubts as to their impartiality or independence". The court was asked to "decide on the challenge" under Article 13(3) of the Model Law, but held that it had no power to entertain a challenge when the appointing authority had not yet determined the challenge â€“ and that there was no reserve common law power to entertain the challenge. The basis of the challenge was the perception that the regional and cultural difference, the three arbitrators, who lived in Sydney, might have a partial understanding in the Asian respondent, which may affect the fairness of the arbitration. Sino had failed to respond to the notice of arbitration and exercise its right to nominate one of the arbitrators, leading to the appointing authority doing so. 4.8 Applicable rules Under s19(1) of the Commercial Arbitration Act and Article 19(1) of the Model Law, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. If they do not specify rules, by drafting them or by specifying an existing set of rules such as the UNCITRAL Arbitration Rules or the PCERA modification of those rules, the arbitral tribunal may conduct the arbitration as it considers appropriate. The power conferred upon the arbitral tribunal includes the power 27
to determine the admissibility, relevance, materiality and weight of any evidence. Predictability is a good thing in commercial contracts. Obviously the choice of the PCERA Arbitration Rules fixes this issue. 4.9 Legal representation Under s24A of the Commercial Arbitration Act, the parties may appear or act in person, or may be represented by another person of their choice, in any oral hearings. The Model law contains no equivalent provision. It is therefore worthwhile making it clear that legal representation is permitted. 4.10 Rules of evidence Under the UNCITRAL Arbitration Rules, Article 27 gives the arbitral tribunal the power to determine the admissibility, relevance, materiality and weight of the evidence offered. The usual rules of evidence do not apply. Consideration ought to be given to whether this is appropriate, and views may differ. 4.11 Legal capacity to submit to arbitration This is a legal due-diligence issue rather than a drafting issue, although it is common to include in international contracts a warranty that no party is able to, or will, rely on sovereign immunity. Note that the AIPN Model International Dispute Resolution Agreement offers a clause dealing with this: Any Party that now or hereafter has a right to claim sovereign immunity for itself or any of its assets hereby waives any such immunity from either jurisdiction or enforcement to the fullest extent permitted by the laws of any applicable jurisdiction. This waiver includes immunity from (i) any expert determination, mediation, or arbitration proceeding commenced pursuant to this Agreement; (ii) any judicial, administrative, or other proceedings to aid the expert determination, mediation, or arbitration commenced pursuant to this Agreement; and (iii) any effort to confirm, enforce, or execute any decision, settlement, award, judgment, service of process, execution order, 28 | BRIEF DECEMBER 2015
or attachment (including pre-judgment attachment) that results from an expert determination, mediation, arbitration, or any judicial or administrative proceedings commenced pursuant to this Agreement. Each Party acknowledges that its rights and obligations subject to this Agreement are of a commercial and not a governmental nature. 4.12 Fast-track arbitration The perception that arbitrations are a speedy way or resolving disputes is often the basis for choosing them as a means of doing so. The parties are (or at least one of them is) often disappointed. It is a paramount object of the Commercial Arbitration Act that it should enable commercial disputes to be resolved in a cost effective manner, informally and quickly (s1C(2)(b)). It is not stated as an object of the International Arbitration Act (s2D). However, time means cost, so controlling time is crucial to controlling cost. This is recognised in Article 17 of the UNCITRAL Arbitration Rules which provides, in part, that the "arbitral tribunal, in exercising its discretion, shall conduct the proceedings so as to avoid unnecessary delay and expense and to provide a fair and efficient process for resolving the parties' dispute." However, there are formal measures that can be adopted to make sure the matter is disposed of as quickly as practicable. There is a discussion of these at ¶22.4 of the Clayton Utz publication "Successful Delivery of Resources Projects" 2013. 4.13 Reservation for expert determination We are all familiar with dispute resolution clauses that reserve certain issues for expert determination rather than for resolution by means of an adversarial process such as arbitration or litigation. It is now clear that questions of mixed fact and law and pure questions of law can be left for the determination of an expert. See, for example, the comments of Hoeben J and Basten JA in Downer Engineering Power Pty Ltd v P & H Minepro Australasia Pty Ltd16 to the effect that there is ample authority for ... questions of mixed fact and law to be referred to third party
experts, although it may be that while it is a matter of contractual construction in each case, parties are more likely to have left to an expert matters involving discretion or opinion, rather than matters of objective fact. Syphoning such matters off to a different kind of process is a caseby-case exercise – it is important to be clear in defining those matters that are to be channeled into that kind of process and to define the questions that are to be put to the expert. And it is important to be clear about the scope of an expert's decision-making power. The importance of this is illustrated by the decision of the NSW Court of Appeal in Australian Vintage Limited v Belvino Investments No 2 Pty Ltd17, where it was held that a final and binding determination was reviewable on the basis that the expert had answered the wrong question. The Court held that the fact that an expert determination is said to be final and binding makes little difference to whether the determination is reviewable. To the extent that the decision is made in accordance with the terms of the contract, it will be final and binding. To the extent that it is not, it will be subject to review. 4.14 Summary, provisional and interim decisions Commonly one sees the reservation of a right to seek injunctive or declaratory relief from a court as a carve-out from a provision requiring disputes to be referred to arbitration rather than litigation. Care must be taken to distinguish between interlocutory relief and permanent relief, which many of the clauses do not do. But more to the point, declaratory relief is final relief anyway, and will almost always involve a determination of substantive rights, defeating the purpose of the arbitration clause. Likewise, even an interlocutory injunction can have a significant effect on the conduct of a project – as in the case of an interlocutory injunction preventing a party from exercising a termination right. But there seems less point now than perhaps before in reserving rights to litigate certain matters in the face of an arbitration. It is now clear both that an arbitral tribunal may grant interim relief, including security for costs – see ss17, 17E and 17G of the Commercial
Arbitration Act and Article 17 of the Model Law; and that the Court's power to grant interim relief applies in the context of an arbitration – see s17J of the Commercial Arbitration Act and Article 17J of the Model Law. Article 26 of the UNCITRAL Arbitration Rules, and hence the PCERA Arbitration Rules, provides in similar terms. Note, however, the quotation from Cetelem SA v Roust Holdings18 employed by Martin CJ in Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd19 and approved by Edelman J in Sino Dragon Trading Ltd v Noble Resources International Pte Ltd20 that the power under Article 17J "should be exercised very sparingly and in circumstances in which such orders were effectively the only means by which the position of a party could be protected until an arbitral tribunal was convened." One further matter that should be considered is whether an arbitral tribunal should be given the power to give summary awards. One of the disadvantages of arbitration over litigation is that arbitrators are not usually given the power to give the equivalent of summary judgment. The absence of that possibility has proved to be an invitation to abuse of process in the construction industry. Whether the same problem is as likely to arise in energy and resources disputes is an open question – but the matter should be considered. 4.15 Exemplary or punitive damages Awards of exemplary or punitive damages are not available even for breach of contract in Australian law – even for deliberate breaches of contract. Contractual damages are meant to be compensatory only. They can, however, be awarded on tort, for such things as trespass, deceit and fraud, and it is trite law that acts or omissions can constitute both a breach of contract and a tort, and that contracts may confer both contractual and tortious rights.21 For that reason, it makes sense to consider precluding the arbitral tribunal from making an order for punitive or exemplary damages on any basis. 4.16 Confidentiality Under s27E of the Commercial Arbitration Act, arbitration proceedings are generally confidential unless the parties agree otherwise. Section 23D of the
International Arbitration Act applies to similar effect.
proceedings or the joinder of third parties.
However, both Acts allow the arbitral tribunal to make orders allowing the disclosure of confidential information at the request of a party after allowing the other to be heard. Both Acts also allow the court to allow or prohibit disclosure, using a public interest test, on the application of a party to the arbitration after allowing all parties to be heard and, in the case of an order for disclosure, provided that the arbitral tribunal's mandate has ended and an application to the arbitral tribunal for disclosure has already been refused.
The operation of s27C of the Commercial Arbitration Act can be excluded by agreement. Similarly, as with any of their provision, the operation of Article 17(5) of the UNCITRAL Arbitration Rules can be excluded.
These provisions do not appear to be capable of exclusion by agreement. Clearly their effect should be considered. Note also that under Article 34(5) of the UNCITRAL Arbitration Rules, an award may be made public where and to the extent disclosure is required of a party by legal duty, to protect or pursue a legal right or in relation to legal proceedings before a court or other competent authority. The effect of this should also be considered. 4.17 Appeals Under s34 of the Commercial Arbitration Act and Article 35 of the Model Law, an appeal to the court against an arbitral award may be made on very limited grounds, which I do not propose to discuss here, save that in the case of an arbitration under the Commercial Arbitration Act (but not under the Model Law), an appeal can be made to the court on a question of law arising out of an award if the parties agree that an appeal may be made, and the court grants leave. Clearly, this right of appeal on questions of law can be refused by either party withholding its agreement to an appeal. That being the case, it seems that it could be excluded by the terms of the arbitration clause. 4.18 Consolidation Most arbitration clauses define a dispute as a disagreement between the parties to the relevant contract in connection with the contract or its performance. Section 27C of the Commercial Arbitration Act (to which there is no equivalent in the Model Law) and Article 17(5) of the UNCITRAL Arbitration Rules (and hence the PCERA Arbitration Rules) provide for the consolidation of arbitral
Consolidation and joinder can often be resisted because of the definition of a dispute and the concept of privity of contract. It is an issue to be considered carefully, as arbitration is a consensual procedure, arrived at by agreement, and the introduction of parties who are not parties to that agreement can be problematic. If the possibilities of joinder and consolidation are to be preserved, all contracts in the chain of contracts should be consistent in recognising the possibility and binding the parties to all of those contracts to the resultant joinder or consolidation. 5. The multi-tiered approach 5.1 Overview Arbitration is treated as the last resort in many modern contracts. Once arbitration is chosen, s5 of the Commercial Arbitration Act and Article 5 of the Model Law as applied under the International Arbitration Act will apply – "in matters governed by this Act (or Law), no court must intervene except where so provided by this Act (or Law)". The force of this proposition has already been observed.22 Commonly, commercial agreements provide for a series of steps that are to occur before a dispute is escalated to mediation and then arbitration. In many cases, the observance of these steps is drafted as a condition precedent to a right to arbitrate, and hence considerable care is needed in their drafting. In particular, care needs to be taken to ensure that no one party has the ability to stall the process to secure an advantage by deferring the commencement of the arbitration. Typically, the multi-tiered approach requires the early definition of the dispute, usually in writing; a requirement that there be a discussion among those people immediately responsible for the administration of the contract in an attempt to achieve a resolution; that if they fail to achieve a resolution, the reference of the dispute to a 29
more senior level of management within the disputing companies; that there is perhaps a final reference to the chief executives; perhaps then a reference to mediation and only in default of agreement at that level may there be a reference to arbitration. There can be many reasons for such an approach, including: (a) a desire, at the stage at which the contract is being negotiated, to be seen as conciliatory, not given to disputation, always willing to discuss problems and generally pleasant to do business with; (b) a desire to try to resolve disputes quickly, cheaply and without engaging external assistance; (c) a desire to empower management personnel to resolve disputes and the parties to the contract to maintain a dialogue â€“ especially in long term contracts; and (d) a desire to make a reference to arbitration as inconvenient for the other party as possible by building in mandatory time periods and procedural steps. For several reasons, the multi-tiered approach can be futile, or at least problematic: (a) senior management personnel are usually well aware of disputes long before they reach the stage of being identified under the dispute resolution clause and hence positions are entrenched by that stage; (b) the proposition that senior management personnel will take positions radically different from those reporting to them is difficult; (c) in contracts with major companies, assembling senior management personnel in the same place at the same time can be problematic, so there is often a conflict between the time limits in the mandatory procedure and the availability of personnel; (d) it is tempting to use the procedure as a means of delaying the ultimate resolution of disputes, rather than advancing it; (e) in any event, the settlement of a major dispute invariably 30 | BRIEF DECEMBER 2015
requires board approval, so the concept of an executive attending a meeting armed with appropriate authority to settle on the spot is probably unrealistic; and (f) to the extent that a dispute involves difficult or complicated questions of law or fact, the prospect of achieving a settlement at such an early stage is reduced. 5.2 Mandatory or not Although most of these multi-tiered clauses are drafted in mandatory terms, as conditions precedent, one might seriously wonder why, save perhaps where there is a requirement for formal meditation. If the parties are similarly motivated to resolve disputes in a cooperative, economical way, they will try to do so, regardless of the prospect of litigation or arbitration. Discussions directed towards trying to resolve disputes can always be conducted by agreement. If they are not so motivated in the early stages of the dispute, experience tells us that an imminent appearance in an arbitration or a court is a powerful motivating force. Where the preliminary steps are mandatory, they must be complied with.23 Thus we see something like this: Except for applications which it may bring for injunctive or declaratory relief, neither party may commence any arbitration proceedings against the other party unless the requirements of the procedural steps for the preliminary negotiations have first been satisfied, or the other party has failed or refused to attend a meeting requested by a party pursuant to those procedural steps, or has failed to act in good faith and in a spirit of mutual cooperation and mutual trust in the negotiation of the dispute or difference in the course of those preliminary negotiations. The AIPN International Dispute Resolution Agreement includes options for senior executive negotiations and mediation. The senior executive negotiations clause requires additional agreement among the parties to work â€“ such as the time and place of meetings. It is not clear whether the procedure is mandatory, although it appears to be, as it prescribes that the parties
shall seek to resolve any dispute by negotiations among senior executives. There are several aspects of these typical clauses that deserve to be addressed. 5.3 Applications for injunctive or declaratory relief Comment has already been made on the issue of applications for injunctive or declaratory relief,24 but see also Electra Air Conditioning BV v Seeley International Pty Ltd,25 where it was argued unsuccessfully that a carve-out to an IAMA clause in the following terms: Nothing in this Section 20 prevents a party seeking injunctive or declaratory relief in the case of a material breach or threatened breach of this Agreement was confined to injunctive or declaratory relief sought from the arbitrators. It was held that the carve-out permitted applications to the court, which is hardly surprising given that Article 17 of the Model Law already permitted the arbitrators to grant interim relief. 5.4 Obligations to negotiate in good faith etc. The law on whether an obligation to negotiate in good faith, or in a spirit of mutual cooperation and mutual trust, is enforceable can hardly be regarded as settled. There is, however, a good discussion of the authorities in Baldwin v Icon Energy Ltd.26 There, the parties entered into a memorandum of understanding or deed to facilitate the development of a gas supply agreement that required them to "use their reasonable endeavours to negotiate by 30 August 2008 (and in any event no later than 30 October 2008) a Gas Supply Agreement ... on the basis of the principles contained in Schedule 2". It was held that schedule 2 was drafted in terms that made it clear that it did not constitute a concluded agreement, so the argument moved to what was meant by the expression "use their reasonable endeavours to negotiate". The usual suspects were interrogated, including Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd,27 Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd,28 Trawl
Thank You Law Access thanks pro bono lawyers and their firms for their generosity in taking so many Law Access referrals this year. Law Access Christmas Appeal Law Access is now a charity with Deductible Gift Recipient status. To make a secure donation online please log onto lawaccess.net.au and follow the Donate Now link at the bottom of the page.
Industries Australia Pty Ltd v Effem Foods Pty Ltd trading as "Uncle Ben's of Australia",29 Healey v Commonwealth Bank of Australia,30 United Group Rail Services Ltd v Rail Corporation of New South Wales,31 and Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd.32 The trial judge (Philip McMurdo J) concluded that the law relating to such clauses in the context of the negotiation of the resolution of a dispute within an existing contractual relationship may well
32 | BRIEF DECEMBER 2015
be enforceable, given that failure to agree normally leads to another procedure for the resolution of the dispute dictated by the contract, but that generally such clauses should not be enforceable where the negotiations involved were those that might lead to the formation of the contract itself. As Allsop P said in United Group Rail Services Ltd v Rail Corporation of New South Wales,33 where the context was an obligation for the senior representative parties to meet and undertake genuine and good faith negotiations with a view for resolving a defined and particularised dispute or difference: ... honest business people who approach a dispute about an existing contract will often be able to settle it. This requires an honest and genuine attempt to resolve differences by discussion and, if thought to be reasonable and appropriate, by compromise, in the context of showing a faithfulness and fidelity to the existing bargain. If such clauses are enforceable in the context of negotiations for the settlement of a dispute, the scope for subsidiary disputes about what is involved in complying with an obligation to negotiate in good faith, or in a spirit of mutual cooperation and mutual trust, is obvious. That dispute will be about a condition precedent to a right to arbitrate. If one party seeks to defer the arbitration by relying on an allegation about the other's conduct in the mandatory negotiation process, there would seem to be little to prevent it from doing so. The result is the potential for delay and expense, without necessarily any increase in the prospect of avoiding an arbitration on the substantive issues. On that basis, there are good reasons not to impose standards on the parties in such a process. If they both want a resolution, they will almost certainly negotiate in good faith to try to achieve one. If only one of them wants a resolution, the negotiations will fail no matter how they are conducted. 5.5 The procedural steps themselves As noted earlier, if the preliminary steps are mandatory, they must be complied with. In such a case, care must be taken to ensure that one party cannot exercise an effective veto over the progression
of the dispute to arbitration by inaction, such as failing to appoint representatives, or appropriately empowered representatives, to attend compulsory meetings, or failing to convene or attend meetings. There must always be a fall-back provision that allows at least the party having the carriage of the dispute, and probably either of the parties, to proceed to the next step despite the failure of the preceding step for any reason except, perhaps, its own breach. NOTES 1.
Noted in Raguz v Sullivan (2000) 50 NSWLR 236;  NSWCA 240 per Spigelman CJ at .
Schedule 1 to the International Arbitration Act 1974 (Cth).
D St John Sutton, J Gill, M Gearing. Russell on Arbitration (23rd ed)., Sweet & Maxwell, 2007.
Union of India v McDonnell Douglas Corp  2 Lloyd's Rep 48, per Saville J.
An arbitration agreement may be in the form of a clause in a contract or in the form of a separate agreement.
The term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement.
E.g. O'Callaghan v Coral Racing Ltd, reported in the Times on 26 November 1998 and cited in Russell at ¶2-013.
An agreement is in writing if: (a)
its content is recorded in any form whether or not the agreement or the contract to which it relates has been concluded orally, by conduct, or by other means; or
it is contained in an electronic communication and the information in that communication is accessible so as to be usable for subsequent reference; or
it is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.
Russell, at ¶2-047 and following.
 NSWCA 95.
 UKHL 40;  4 All ER 951.
 WASCA 110.
 WASCA 66 per Martin CJ at -, where the competing views are discussed, with a conclusion at -.
(2000) 50 NSWLR 236;  NSWCA 240.
 FCA 1028.
 NSWCA 318; also WMC Resources Ltd v Leighton Contractors Pty Ltd (1999) 20 WAR 489;  WASCA 10.
 NSWCA 275.
 ECWA Civ 618;  4 All ER 52.
 WASCA 66.
 FCA 1028 at ¶105.
See, e.g., Henderson v Merrett Syndicates Ltd  2 AC 145, at pages 193-194.
In JT Mackley & Co Ltd v Gosport Marina Ltd  EWHC 1315, failure to comply with a condition precedent rendered the arbitration notice invalid.
 FCAFC 16.
 QSC 12.
(2014) 251 CLR 640;  HCA 7.
(1991) 24 NSWLR 1.
(1992) 27 NSWLR 326.
 NSWCA 103.
 NSWCA 177.
(2010) 41 WAR 318.
(2009) 74 NSWLR 618, at 637 .
Dispute resolution clause Peter Wiese Partner, Clayton Utz
1. Dispute Resolution
Notice is deemed to have been received by it under clause [notices], by notice given by hand-delivery or by email to the Claimant, nominate a representative authorised to negotiate and resolve the Dispute on the Respondent's behalf (subject, where applicable, to any board approval the Respondent requires in relation to any such resolution).
1.1 Determination of Disputes
Subject to clause 2, any dispute under, in relation to, arising out of or in connection with this Agreement or anything done or purported to be done pursuant to it, including [but not limited to] any question regarding its existence, validity, termination or effect or the rights or obligations of any Party under it, and whether based on the common law, the principles of equity or any written law (Dispute) is to be determined by arbitration, subject to the process described in this clause 1 (Dispute Resolution Process).1
1.2 Negotiation and mediation to precede arbitration
The steps in the Dispute Resolution Process described in clauses 1.3 to 1.5 must be exhausted in relation to a Dispute before a Party may commence any arbitration proceedings under clause 1.6 in relation to that Dispute.2
(c) Whether or not the Respondent complies with clause 1.3(b), the Claimant, if it has complied with clause 1.3(a) may, by notice (Notice of Representatives' Meeting) given by hand-delivery or by email to the Respondent no earlier than 10 Business Days after the Dispute Notice is deemed to have been received by the Respondent under clause [notices], nominate: (i) a date that is no earlier than 5 Business Days and no later than 10 Business Days after the after the date of the Notice of Representatives' Meeting; and
(i) state that the notice is given under this clause 1; (ii) describe the nature of the Dispute; and (iii) nominate a representative of the Claimant who is authorised to negotiate and resolve the Dispute on the Claimant’s behalf (subject, where applicable, to any board approval the Claimant requires in relation to any such resolution). (b) The Respondent must, within 5 Business Days after the Dispute
1.4 Reference to a Panel (a) If, for any reason, a Dispute is not resolved under clause 1.3 by the date that is 10 Business Days after the date for which the Representatives' Meeting was first convened (or, if the Dispute is resolved subject to any board approvals, notice of unconditional board approval is not given by the relevant Party or Parties within 10 Business Days of the Dispute being so resolved), either Party may, by notice (Notice of Panel Meeting) given by hand-delivery or by email to the other Party, refer the Dispute to a panel comprising the chief executive officers (or, if the chief executive officer of a Party is unavailable, his or her delegate) of the Parties (Panel), nominating in that notice: (i) a date that is no earlier than 5 Business Days and no later than 10 Business Days after the date of the Notice of Panel Meeting; and
(ii) a time within normal business hours,
1.3 Negotiation by representatives (a) Where a Dispute arises between the Parties, either Party (Claimant) may give notice to the other Party (Respondent) by any of the means permitted under clause [notices] initiating a Dispute Resolution Process in respect of the Dispute (Dispute Notice). The Dispute Notice must:
which apply to that notice with such modifications as the context requires.3
for the Parties’ representatives to meet at the offices of [ ] in Perth with a view to resolving the Dispute (Representatives' Meeting). Each Party must ensure that its representative appointed under clause 1.3(a) or 1.3(b) (as the case requires) attends the Representatives' Meeting. A representative may be accompanied by not more than two advisers at the Representatives' Meeting.
(d) If the Claimant fails to give a Notice of Representatives' Meeting by that day that is 20 Business Days after the Dispute Notice is deemed to have been received by the Respondent under clause [notices], the Respondent, if it has complied with clause 1.3(b) may, by handdelivery or by email to the Claimant, give a Notice of Representatives' Meeting in accordance with clause 1.3(c), the provisions of
(ii) a time within normal business hours,
for the Panel to meet at the offices of [ ] in Perth with a view to resolving the Dispute (Panel Meeting). Each Party must ensure that its chief executive officer (or, if the chief executive officer is unavailable, his or her delegate) attends that meeting. A chief executive officer or delegate may be accompanied by not more than two advisers at any such meeting.
(b) If more than one Party gives a notice under clause 1.4(a), the notice given first in time prevails. 1.5 Reference to mediation (a) If, for any reason, a Dispute is not resolved under clause 1.4 by the date that is 10 Business Days after the date for which the Panel Meeting was first convened (or, 33
if the Dispute is resolved subject to any board approvals, notice of unconditional board approval is not given by the relevant Party or Parties within 10 Business Days of the Dispute being so resolved), either Party may, by notice given by hand-delivery or by email to the other Party, refer the Dispute to mediation in Perth and, in that notice, nominate a person who is acceptable to it as a mediator and is independent of the Parties, confirming that the person so nominated is prepared and available to act and giving details of the fees that person requires to act as mediator.
in a mediation initiated under this clause 1.5. All hearings before the mediator are to be conducted in private and the provisions of clause [confidentiality] apply to the existence of the mediation, any settlement agreement, materials Peter Wiese, PCERA created for the purpose of the mediation and documents produced by each Party in the mediation proceedings.5
(b) If more than one Party gives a notice under clause 1.5(a), the notice given first in time prevails. (c) Within 5 Business Days after service of a notice under clause 1.5(a), the recipient of the notice must notify the Party who served it whether the latter's nomination of a proposed mediator is acceptable or not. If that person is acceptable to both Parties, that person is the mediator. If that person is not acceptable to both Parties, or the recipient of the notice under clause 1.5(a) fails within the required time to notify the other Party whether or not that person is acceptable, either Party may, no later than 10 Business Days after service of the notice under clause 1.5(a), request PCERA (acting through a director of PCERA on the advice of the Advisory Committee of PCERA) to nominate the mediator, and the person so nominated is the mediator. (d) A mediation initiated under this clause 1.5 must: (i) be conducted by such process as the parties agree or, failing agreement within 10 Business Days after the appointment of the mediator, in accordance with such process as the mediator may determine4; (ii) be conducted at the expense of the Parties equally (except that each Party must pay its own advisers, consultants and legal fees and expenses); and (iii) if the Dispute is not resolved earlier, terminate at the end of 20 Business Days after the appointment of the mediator (or such longer period as the Parties all agree). (e) The Parties may be represented by their respective legal advisers 34 | BRIEF DECEMBER 2015
to or in connection with a Dispute are not limited by the terms of the Dispute Notice first given under clause 1.3(a);
1.6 Reference to arbitration
If, for any reason, a Dispute is not resolved under clause 1.5 by the date the mediation is terminated, either Party may, by notice given by hand-delivery or by email to the other Party, refer the Dispute to arbitration [in Perth] in accordance with and subject to the UNCITRAL Arbitration Rules (as revised in 2010) as modified by PCERA from time to time. The arbitration is to be administered by PCERA, and by any tribunal, in accordance with the PCERA Arbitration Principles. The appointing authority is to be a director of PCERA acting with the advice of the Advisory Committee of PCERA. The number of arbitrators is three. The arbitral proceedings are to be conducted in English. The seat of the arbitration is Perth.
(e) in conducting the arbitration, the arbitral tribunal must take into account the matters set out above, particularly in deciding issues such as: (i) how many written submissions will be allowed; (ii) where appropriate, the length of written submissions; (iii) the extent of document discovery permitted, if any; (iv) the consolidation of arbitration proceedings, when requested; (v) the joinder of Parties or the consolidation of proceedings, when requested; (vi) the length of any hearing; and (vii) the number of experts, if any, each Party is allowed to appoint; and
1.7 General principles of arbitration
The following general principles relating to the procedure of any arbitration under this Agreement:
(viii) that the arbitral tribunal has the power to grant all legal, equitable and statutory remedies, including the granting on interim relief and the making of summary awards, but does not have the power to make ex parte awards or to award punitive or exemplary damages.
(a) the Parties have chosen arbitration for the purposes of achieving a just, quick and cost-effective resolution of any dispute; (b) each Party is entitled to legal representation at the arbitration; (c) an arbitration conducted pursuant to this clauseÂ 1 should not necessarily mimic court proceedings and the practices of courts will not regulate the conduct of the proceedings before the arbitral tribunal; (d) the defences (including by way of set-off of any counter-claim or cross-claim) that a Party may raise
1.8 Award final and binding
If an arbitration under this Agreement is subject to the provisions of the International Arbitration Act 1974 (Cth), any award made in that arbitrationÂ is final and binding upon the Parties to this Agreement and may be enforced as an international arbitration award under the 1958
United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (known as the "New York Arbitration Convention"). If the International Arbitration Act 1974 (Cth) does not apply to an arbitration under this Agreement, any award made in that arbitration may be enforced as a domestic arbitration award under the Commercial Arbitration Act 2012 (WA). 1.9 Dispute Resolution Process not to interrupt performance
(b) subject to any other determination by the experts under clause 2(c) (iv), the costs of obtaining the determination must be borne by the Parties equally (except that each Party must pay its own advisers, consultants and legal fees and expenses) unless the Parties otherwise agree;
(c) in making the determination:
The Parties must ensure that neither the conduct of any Dispute Resolution Process nor any Expert determination:
(iii) the experts may determine both questions of fact and, where it is necessary to do so, questions of law, and may seek independent advice on questions of law where they deem it necessary to do so;
unless the performance by a Party of its obligations under this Agreement is materially affected by the submission of the matter in dispute to the Dispute Resolution Process or Expert determination or by the result of any such Dispute Resolution Process or Expert determination.
(iv) the experts may determine which Party or Parties should bear the costs of any such determination and in what proportion, but otherwise clause 2(b) applies. In making this determination, the experts must consider the degree to which they consider any Party was unreasonable in failing to agree to a basis for the resolution of the matter proposed by any other Party; and
1.10 Clause does not apply to matters where consent required If this Agreement refers to the Parties reaching agreement on a matter or the consent of any Party being given then, except where this Agreement requires that agreement or consent is not to be withheld unreasonably, the Dispute Resolution Process cannot be used to resolve a dispute between the Parties in relation to the reaching of that agreement or the giving of that consent.
Where a matter is permitted or required by this Agreement to be determined pursuant to this clause 2, or if the Parties so agree, either Party may, by notice to the other Party given by any of the means permitted under clause [notices], refer the matter for determination pursuant to this clause 2 and the following provisions apply:
(a) unless the Parties agree otherwise, the determination is to be conducted in accordance with the collaborative expert resolution
Or a pro-forma mediation agreement can be attached; and when PCERA's mediation rules are available they can be invoked.
The AIPN form provides as an option: Mediation. [Subject to the requirements of negotiation between Senior Executives pursuant to Article 3.1(B),] [t]he Parties to the Dispute shall seek to resolve the Dispute by mediation. Within thirty (30) days after the date of the receipt by each Party to the Dispute of the Notice of Dispute [NOTE: Alternative, if Paragraph (B) is selected: forty-five (45) days after the date of the receipt by each Party to the Dispute of the Notice of Dispute], any Party to the Dispute may initiate such mediation pursuant to the [select mediation rules], as modified herein, by sending all other Parties to the Dispute a written request that the Dispute be mediated.
(ii) the experts' finding is final and binding upon the Parties in the absence of manifest error;
(b) affects any of the time limits fixed in this Agreement,
It is not clear, however, whether this is intended by the AIPN form to be a condition precedent to arbitration. Note also the difficulty in giving representatives open authorisation to settle.
(i) the experts must act in that capacity and not as arbitrators;
(a) causes any interruption to the performance by the Parties of their respective obligations under this Agreement; or
to exchange relevant information in an attempt to resolve the Dispute. If a Senior Executive intends to be accompanied at the meeting by an attorney, each other Party’s Senior Executive shall be given written notice of such intention at least three (3) business days in advance and may also be accompanied at the meeting by an attorney.
process of PCERA (PCERA CER) and, for that purpose, each Party agrees to the PCERA standard form agreement by which a dispute may be submitted to PCERA CER;
(v) the experts may employ consultants to assist them or to carry out their duties.6 NOTES 1.
This is similar to the AIPN definition: Dispute means any dispute, controversy, or claim (of any and every kind or type, whether based on contract, tort, statute, regulation, or otherwise) arising out of, relating to, or connected with this Agreement, or the operations carried out under this Agreement, including but not limited to any dispute concerning the existence, validity, interpretation, performance, breach, or termination of this Agreement. Often terms such as 'law' are separately defined, in which case the definition could be shortened.
cf. the AIPN clause - see endnote iii.
The AIPN form includes, as an option:
It then provides for the selection of mediation rules— form the Commercial Mediation Rules of the American Arbitration Association, the CPR Mediation Procedure, the ADR Rules of the International Chamber of Commerce or the LCIA Mediation Procedure. Obviously one would nominate the PCERA mediation rules when they have been finalised. 6.
The AIPN clause is: For any Dispute referred to an expert for determination, the Parties hereby agree that such determination shall be conducted expeditiously by an expert selected unanimously by the Parties to the Dispute. The expert is not an arbitrator of the Dispute and shall not be deemed to be acting in an arbitral capacity. The Party desiring an expert determination shall give the other Parties to the Dispute written notice of the request for such determination. If the Parties to the Dispute are unable to agree upon an expert within ten (10) days after receipt of the notice of request for an expert determination, then, upon the request of any of the Parties to the Dispute, the International Centre for Expertise of the International Chamber of Commerce (ICC) shall appoint such expert and shall administer such expert determination through the ICC’s Rules for Expertise. All Parties agree to cooperate fully in the expeditious conduct of such expert determination and to provide the expert with access to all facilities, books, records, documents, information, and personnel necessary to make a fully informed decision in an expeditious manner. Before issuing a final decision, the expert shall issue a draft report and allow the Parties to the Dispute to comment on it. The expert shall endeavor to resolve the Dispute within thirty (30) days (but not later than sixty (60) days) after his or her appointment, taking into account the circumstances requiring an expeditious resolution of the matter in dispute. The expert’s decision shall be final and binding on the Parties to the Dispute unless challenged in an arbitration pursuant to Article 2.1 within sixty (60) days of the date the expert’s final decision is received by the Parties to the Dispute and until replaced by such subsequent arbitral award. In such arbitration (i) the expert determination on the specific matter shall be entitled to a rebuttable presumption of correctness; and (ii) the expert shall not (without the written consent of the Parties to the Dispute) be appointed to act as an arbitrator or as adviser to the Parties to the Dispute. Note the residual right to arbitrate the expert's decision, which seems to defeat the purpose of seeking an expert determination.
Negotiations. The Parties to the Dispute shall seek to resolve any Dispute by negotiations among Senior Executives. A 'Senior Executive' means any individual who has authority to settle the Dispute for a Party. Within thirty (30) days after the date of the receipt by each Party to the Dispute of the Notice of Dispute (which notice shall request negotiations among Senior Executives), the Senior Executives representing the Parties to the Dispute shall meet at a mutually acceptable time and place
Perth Centre for Energy and Resources Arbitration: Questions and Answers Brief recently asked some questions of the Perth Centre for Energy and Resources Arbitration (PCERA). The discussion is reproduced here.
Michael Feutrill Barrister, Francis Burt Chambers
What is PCERA's role and who are its directors? PCERA was officially launched by the Honourable Dr Michael Nahan, Treasurer and Minister for Energy, Citizenship and Multicultural Interests in March 2015. PCERA is a not-for-profit company established for the purpose of promoting innovative, efficient and effective dispute resolution in the energy and resources sector. It also aims to cement Perth as a place with a global comparative advantage in the resolution of energy and resources disputes. PCERA was founded by Craig Colvin SC, Kanaga Dharmananda SC and Michael Feutrill in 2014. Dr Erika Techera, Dean of Faculty of Law, University of Western Australia, joined the Board in March 2015. PCERA is funded by its members. It has 11 foundation members, all of which have made significant financial contributions to the establishment of PCERA. The foundation members also provide ongoing non-financial support and assistance. PCERA has a number of individual members comprised primarily of in-house legal counsel, lawyers in private practice and arbitrators. As well as promoting arbitration as a form of dispute resolution generally, one of PCERA's objectives is to bring about a cultural change in the way in which domestic arbitration is conducted in Australia. More particularly, it aims to bring domestic arbitration practice into line with international best practice. One of the ways in which PCERA aims to achieve that objective is through the application of the PCERA Arbitration Principles and ensuring that arbitrators who conduct PCERA arbitrations adopt and apply those principles. The goal of the PCERA Arbitration Principles is to provide an innovative approach to arbitration tailored to 36 | BRIEF DECEMBER 2015
meet the needs of the parties to each individual dispute. That includes selection of an arbitral tribunal with familiarity or expertise in the area of the dispute and minimising delay and expensive interlocutory processes that are unnecessary for the just and expeditious resolution of disputes. PCERA also will offer a form of binding or non-binding early expert determination that will permit the parties to a dispute to obtain an independent view before positions become entrenched and significant legal costs are expended. More details of the PCERA Arbitration Principles and other innovations are available on the PCERA website at www.pcera.org.au. What do you see as the key advantages to arbitration as a dispute resolution mechanism for resourcebased disputes? To answer this question it is first necessary to acknowledge that the introduction of the commercial and managed cases list in the Supreme Court of Western Australia has diminished the attractiveness of domestic arbitration (as it generally is conducted) as a means of 'alternative' dispute resolution. Court processes have become, through judge-based case management, more timely, effective and efficient without parties losing the right to an appeal should the original decision-maker make an error of law or fact. Hence, many of the traditional perceived advantages of arbitration over litigation are not applicable if arbitrations mimic current court procedures. Nonetheless, the judicial process is long and expensive and is not particularly suited to certain types of disputes. For example, the confidential and private nature of arbitration is often preferable to hard-fought public litigation for parties
in long-term relationships. Commodity pricing disputes are also well suited to arbitration because of confidentiality and privacy. Arbitration can work particularly well in bilateral relationships like construction, contract mining and engineering relationships. Arbitration also works well in environments where strict legal proof is difficult or not in keeping with commercial practice, or a large amount of theoretical economic evidence is required. An example is in infrastructure access disputes, where views have to be formed about hypothetical alternative infrastructure and the associated economics. Arbitration conducted appropriately with practitioners working co-operatively, albeit it for different parties, can result in less damage to long-term commercial relationships. The resolution of disputes by an experienced person or panel acting to reduce areas of dispute and focus the parties' attention on the matters of primary commercial significance determined in a commercial way â€“ as they would be resolved by reasonable commercial parties â€“ can provide parties with a truly alternative, effective and efficient means of resolving disputes. So, coming back to the question, the key advantages are confidentiality, privacy and, if undertaken appropriately, lower harm to commercial relationships and more commercially-focussed outcomes. But, PCERA recognises that for domestic arbitration to provide a true alternative to litigation there needs to be a cultural shift among those in the legal profession engaged in dispute resolution. That is, those engaged in dispute resolution cannot continue to see arbitration as private litigation; it has to be seen as a genuine alternative form of dispute resolution.
What arbitration services will PCERA be offering?
experienced commercial energy and resources lawyers.
PCERA will provide a nomination service where it is the appointing authority. That is, PCERA may be nominated as the appointing authority under an arbitration agreement, in which case PCERA will appoint an arbitrator for the parties' arbitration if agreement is not reached. In the selection of the arbitrator PCERA will take into account the nature of the dispute between the parties and will attempt to select an arbitrator that is suited to that dispute.
Any person nominated or appointed as an arbitrator by PCERA will be a person who is appropriately qualified and experienced for the nature of the parties' dispute.
PCERA also will offer a service of providing nominations for potential appointments to a party seeking such advice. In this case, PCERA will provide parties with a list of potential arbitrators rather than appoint the arbitrator to their dispute. Again, PCERA will select nominees based upon the nature of the dispute. PCERA has an international advisory panel comprising recognised leaders in international arbitration: Jan Paulsson, Lucy Reed, Michael Hwang SC, Dr Colin Ong, and Kevin (Kap-You) Kim. PCERA will draw upon this panel for advice, as required, regarding potential nominees for PCERA disputes. In particular, in any PCERA dispute involving parties where one party is an Australian-based subsidiary of an international company and in international arbitrations PCERA intends to draw on its international advisory panel to assist to ensure that PCERA arbitrations are conducted in accordance with international best practice. PCERA will also offer a nomination service for its early expert determination process. PCERA will appoint a mediator, if requested. Again, PCERA will appoint experts and mediators based upon the nature of the dispute. PCERA will also provide services such as arranging hearing rooms, arranging for secretaries to arbitrators and arbitral tribunals, arranging transcription services and so forth on an ad hoc fee for service basis. Further details of the services provided and fees charged for those services may be obtained from the PCERA website at www.pcera.org.au. Who sits on the PCERA panel? As mentioned, PCERA has a panel of arbitrators who have agreed to conduct arbitrations in accordance with the PCERA Arbitration Principles. Australian members of that panel include retired Federal and Supreme Court judges, Queens Counsel and eminent and highly
How does PCERA choose arbitrator candidates for a PCERA arbitration? As mentioned, there are two ways in which PCERA may nominate arbitrators for an arbitration. In the first, PCERA is nominated by the parties as the appointing authority in the arbitration agreement. In this instance, if the parties are unable to agree on the appointment of an arbitrator, the arbitrator will be appointed by PCERA. In these cases PCERA will be provided with a short outline of the nature of the dispute between the parties and it will select from the PCERA panel of arbitrators a person who is available and appropriately qualified and experienced in the subject matter of the parties' dispute. If an appropriate person is not available or cannot be identified from the existing panel, then PCERA will draw on the experience of its advisory committee to assist with the identification of an appropriately qualified person. PCERA will strive to appoint a person who has the experience and capability to adapt and apply existing knowledge to the subject matter of the dispute in question. Further, through adoption of the PCERA Arbitration Principles, to the extent any independent expert evidence is required, an independent expert may be appointed to advise the arbitrator in the matter. In the second instance, a party or parties may request PCERA to nominate a number of potential candidates for appointment as arbitrators. In these cases, PCERA will provide the parties with the names of two or more possible appointees. A similar process for selection of nominees to the process undertaken in the appointment of an arbitrator will be conducted by PCERA in those case.
of the world. PCERA can see great advantage in having disputes resolved by commercial lawyers or non-lawyers with significant experience in the commercial aspects of the energy and resources sector. Arbitrators of that kind may bring a less adversarial approach to the resolution of disputes and to finding a balance between competing interests. Some members of the PCERA panel are commercial lawyers. PCERA also will encourage the appointment of arbitrators who are not based in Australia; and in particular, arbitrators based in Asia who may assist with the internationalisation of domestic arbitration. How does PCERA further assist parties to tailor an arbitration to meet the particular needs of the dispute? This is a question that is really directed towards the PCERA Arbitration Principles. Those principles are available on the website. In short, the process of a PCERA arbitration will generally be as follows. •
After the appointment of the arbitrator each party will be required to file a statement of material facts, a draft statement of issues expressed as questions and a short preliminary outline of contentions stating the parties claim as to how each issue should be resolved and the main reason supporting that claim. The purpose of these documents is to guide the arbitrator in establishing the procedure for the arbitration.
At the earliest opportunity after the exchange of the preliminary documents the arbitrator will convene the procedural conference at which the parties will discuss the directions required for the proper conduct of the arbitration. After that conference, the arbitrator will issue a draft directions timetable for all steps in the arbitration and propose final hearing dates including the duration of that hearing.
The timetable usually will include provision for the legal representatives of the parties to meet face to face at specified times to discuss any issues of preparation. The purpose of these conferences is to ensure that interlocutory steps are resolved without disputation so far as is possible.
Except in the most exceptional case, the final dates for arbitration once set by the arbitrator will not be changed and will not exceed 12 hearing days.
Is PCERA limited to local (i.e. Western Australian) arbitrators? The short answer is no. In fact, PCERA wishes to encourage international and interstate arbitrators to adopt and apply the PCERA Arbitration Principles and to be available for nomination as a PCERA arbitrator. Also, PCERA does not want to confine potential nominees to retired judicial officers or eminent barristers in Western Australia, Australia or any other part
The directions will require the claimant to file a revised statement of material facts and revised statement of issues, and the respondents to file a response to each of those documents which may be followed by replies by the claimant to each of the respondent's documents. These documents will serve a similar purpose to pleadings and are intended to be in the form of notice of each party's case.
The directions usually will provide for the parties to file detailed contentions dealing with the matters raised by the issues as stated by both parties. The contentions may be supplemented by further written and oral submissions as directed by the arbitrator.
The directions will require the exchange of statements of evidence of each witness from whom evidence is intended to be given at the hearing. Subject to any direction by the arbitrator, disputed factual matters may be resolved by any means that would inform and guide usual commercial decision making, including hearsay evidence where the source of a statement is given. There will not be an order for discovery. Parties will be required to provide the copies of the documents referred to in the statements of material facts and witness statements but parties may be given an opportunity to make limited requests for specified documents or classes of documents from the other side which are necessary for the party to conduct its case. Except in the most exceptional case, all expert evidence in a
BARBAGALLO VOLVO CORPORATE PROGRAMME
particular field of expertise will be given by a single expert appointed by the arbitrator. The arbitrator may direct that any party is entitled to file a statement from an expert engaged by that party in response to the evidence of the single expert. In any event, each party usually will be allowed to cross examine the expert appointed by the arbitrator. The arbitrator will provide a process for the identification of questions and assumptions for the expert to make in the course of providing the expert opinion. •
The arbitrator or tribunal will deliver written reasons within six weeks of the conclusion of the hearing. There will be a requirement for the parties to provide the arbitrator with details of the costs incurred on a regular basis.
The PCERA Arbitration Principles are compatible with any arbitral rules or any arbitration agreement. Put another way, the PCERA Arbitration Principles are a way of doing things rather than a specific set of rules. PCERA also has specific arbitration rules designed to complement the PCERA Arbitration Principles. The PCERA Arbitration Rules essentially adopt the UNCITRAL arbitration rules with a few modifications. The PCERA rules and PCERA Arbitration Principles may be found on the PCERA website at www.pcera.org.au. The purpose and aim of the PCERA Arbitration Principles is to facilitate a process that is more time and cost effective than Court based dispute resolution and current general practice in domestic arbitration.
adopt a process that will strip out all unnecessary interlocutory steps and encourage a cards on the table approach to dispute resolution. Further, the nature and extent of interlocutory processes including the way in which evidence is produced to the arbitrator may be and will be modified depending upon the nature of the dispute and the quantum involved. In PCERA arbitration there is no one size fits all mentality. The process will be adapted to the individual case and the individual issues that arise in each case; always, however, with the general objective of removing unnecessary steps and procedures. How do parties nominate PCERA as the institution to administer their dispute? The usual way to nominate PCERA will be to include PCERA in the arbitration clause as the appointing authority or to adopt PCERA rules as the applicable rules of any arbitration. A standard form of arbitration clause can be found on the PCERA website at www.pcera.org.au. As mentioned, if parties have already chosen different arbitral rules they can, nonetheless, agree that PCERA will be the appointing authority for the arbitration in question or register the arbitration as a PCERA arbitration so that the PCERA Arbitration Principles will apply to their arbitration. There have already been instances where parties have agreed after a dispute has commenced to adopt the PCERA Arbitration Principles and PCERA would, obviously, encourage parties in the energy and resources sector to do so and, if they so wish, to nominate PCERA as the appointing authority.
Arbitrators will encourage and, where necessary, cajole, parties to
The Volvo Cars Corporate Programme enhances ownership through the delivery of benefits at the corporate level. The Programme, like our cars, is responsive and adaptable. THE VOLVO CORPORATE PROGRAMME INCLUDES: – Corporate Advantage Discounts – Complimentary 3 years/100,000km scheduled servicing * – 5 year roadside assistance – 3 year unlimited kilometre warranty * – VolvoLife membership Please contact Barbagallo Volvo Cannigton for further information. *Whichever occurs first. Excludes wear and tear items such as batteries, tyres, oils and additives.
Barbagallo Volvo Cannington 38 | BRIEF DECEMBER 2015
1286 Albany Highway Cannington WA 6107
T 1300 935 635 barbagallovolvo.com.au
Case note: The referral of disputes to arbitration under s8(1) of the Commercial Arbitration Act 2010 (NSW) John Holland v Kellogg Brown & Root  NSWSCÂ 451 Tom Porter Barrister, Francis Burt Chambers Section 8(1) of the Commercial Arbitration Act 2010 (NSW) provides, in broad terms, that a court must refer a dispute to arbitration if the dispute is the subject of an arbitration agreement, and if one of the parties request the dispute to be so referred. The case of John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd1 is authority for the proposition that the only relevant question, where a party requests a dispute to be referred to arbitration, is whether or not the dispute is the subject of an arbitration agreement. Once the existence of an applicable arbitration agreement is established, that is the end of the matter: the dispute must be referred to arbitration. FACTS John Holland was engaged to design and construct part of a rail facility known as the Auburn Maintenance Centre. John Holland entered into a subcontract with Kellogg Brown & Root, an engineering and construction company, to carry out part of the works. John Holland separately contracted with Atlantis, a water management company, to undertake other parts of the works. A few years after it had been constructed, the Auburn Maintenance Centre began to subside. The precise cause of the subsidence was not known, however John Holland believed that either Kellogg or Atlantis, or both, were responsible. With the expiry of a limitation period fast approaching, John Holland commenced proceedings in the Supreme Court of New South Wales against both Kellogg and Atlantis. The contract between John Holland and Kellogg contained an arbitration agreement, as did the contract between John Holland and Atlantis. In each case, the arbitration clause was in broad terms, applying to any dispute arising
out of, relating to, or in connection with, the relevant contract. APPLICATIONS FOR REFERRAL TO ARBITRATION After proceedings were commenced, Kellogg applied for an order that the dispute between it and John Holland be referred to arbitration. Atlantis brought a similar application in respect of its dispute with John Holland. The orders sought by Kellogg and Atlantis, if made, would result in two separate arbitral proceedings. This created a difficulty for John Holland because, in the absence of the parties' consent, the separate arbitral proceedings could not be consolidated. John Holland submitted, in opposition to both applications, that each dispute did not fall within the scope of the relevant arbitration agreement. The basis for this submission was that the arbitration agreement in each case was limited
to disputes between the contracting parties only. Because John Holland had brought proceedings against both Kellogg and Atlantis, and there was the possibility of further parties being joined, that dispute fell outside of the scope of the arbitration agreement. John Holland contended that this position was consistent with the commercial presumption that the parties did not intend the inconvenience of having disputes from their transaction heard in multiple places.2 Hammerschlag J rejected this submission. His Honour identified that the relevant question, for the purposes of s8(1) of the Commercial Arbitration Act was whether the dispute the subject of the proceedings falls within "the ambit of controversies which the parties to the arbitration agreement have, on its proper construction, agreed to refer to arbitration".3 Whether or not a particular dispute falls within an
and Kellogg was clearly a dispute 'between them' arising out of their contract. The fact that John Holland may also have rights against parties other than Kellogg had "no bearing on whether the dispute that exists between John Holland and [Kellogg] is one which arises out of or relates to the performance of the contract between them or its breach".5 The position was the same in respect of the dispute between John Holland and Atlantis.6
We’re here to make banking easier. Our banking specialists are committed to understanding you or your business, to help make banking easier. Find out how we can help. Tina Baker Private Banking π 0417 911 326 ¬ email@example.com Brad SmiTh Business Banking π 0467 786 813 ¬ firstname.lastname@example.org
Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL/Australian credit licence 234945. BWA-Ad221 181115
BWA-Ad221arbitration 181115.indd agreement 1
is a "question11/18/15 of construction of the words used, albeit that such an agreement should not be construed narrowly".4 Section 7(1) of the Commercial Arbitration Act defines an arbitration agreement as an agreement by the parties to submit to arbitration certain disputes which have arisen or which may arise 'between them' in respect of a defined legal relationship. Referring to this definition, Hammerschlag J found that the dispute between John Holland
40 | BRIEF DECEMBER 2015
In support of its case, John Holland relied on the decision of the Court of Appeal of Western Australia in Paharpur Cooling Towers Ltd v Paramount (WA) Ltd7. In that case, the Court of Appeal held that where a party to an arbitration agreement brought proceedings against both the other party to the arbitration agreement, and an entity that was not a party to the arbitration agreement, it was "difficult to ascribe to the parties to the arbitration an intention that in such an event the dispute should be fragmented and that the liability of the party to the arbitration agreement and that of the third party respectively should be determined in different forums". Hammerschlag J found that this case did not assist John Holland for two reasons. First, Paharpur v Paramount concerned predecessor legislation to s8(1) of the Commercial Arbitration Act8. Under that predecessor legislation, the court retained a discretion, even where it was established that there was an applicable arbitration agreement, to decline to refer a dispute to arbitration if there was a "sufficient reason" to take that course. No such residual discretion exists under s8(1). This legislative change reflects "the modern trend both domestically and internationally to facilitate and promote the use of arbitration and to minimise judicial intervention in the process".9 Second, even if the circumstances of Paharpur v Paramount were relevant, Hammerschlag J found that it was wrongly decided, and that he would decline to follow it. This was 11:43 AM because the words of the arbitration agreement in that case, did not support an exclusion from the arbitration agreement of disputes that involved, or may involve, third parties to the arbitration agreement. The fact that a fragmentation of the dispute may occur "could not impact on the meaning of the words that the parties chose in their arbitration agreement".10 Hammerschlag J found for Kellogg and referred the dispute between it and John Holland to arbitration under
s8(1). In respect of Atlantis, the court found that the parties had not satisfied the contractual preconditions to the operation of the arbitration agreement. This being the case, the court granted a stay of the proceedings to allow the parties to address those preconditions. CONCLUSION All that matters, on an application to refer a dispute to arbitration, is whether there is an arbitration agreement and whether the dispute falls within the scope of the arbitration agreement, properly construed. Where the existence of an applicable arbitration agreement is established, it is irrelevant, to the disposition of the application, that the referral of a dispute to arbitration will fragment a single curial proceeding into multiple arbitral proceedings and cause significant procedural inconvenience to the plaintiff. This decision highlights the potential problems that can arise, particularly on large projects, if dispute resolution provisions across the various contracts relevant to the project contain arbitration agreements, but do not provide for the consolidation of those separate arbitral proceedings. NOTES 1.
 NSWSC 451.
John Holland did oppose the application on other grounds, such as subsequent agreement, waiver, estoppel and invalidity. Those grounds were dismissed on the basis that they were not, on the facts, proved by John Holland.
John Holland v Kellogg Brown & Root  NSWSC 451, .
John Holland v Kellogg Brown & Root  NSWSC 451, .
John Holland v Kellogg Brown & Root  NSWSC 451, .
John Holland v Kellogg Brown & Root  NSWSC 451, .
 WASCA 110.
s7 of the International Arbitration Act 1974 (Cth) and s53(1) of the repealed Commercial Arbitration Act 1984 (NSW).
John Holland v Kellogg Brown & Root  NSWSC 451, .
John Holland v Kellogg Brown & Root  NSWSC 451, .
Coming to Australia: Cross border and Australian income tax complexities with a focus on dual residence and DTAs and those from China, Singapore and Hong Kong - Part 2 Professor Nolan Sharkey FCA Barrister, Francis Burt Chambers; Winthrop Professor of Law, UWA; Professorial Fellow in Tax, Atax, UNSW Address presented at the 48th Western Australia State Convention 13 – 14 August 2015, Pullman Resort, Bunker Bay The first portion of this article appeared in the November edition of Brief.
for people from China and Singapore.
Considering all the above law, an analysis of some fundamental issues can be carried out. In terms of Australian residence under domestic law, it is proposed that people coming from their home lands will be non-tax residents for the earlier period of their stay but as they reach six months in Australia, there is likely to be a strong case that they are tax resident in Australia. This will be different for clear migrants who may be regarded as tax residents from arrival.
All the above persons will however be temporary residents for tax purposes - indefinitely or until they obtain a permanent visa. This will likely be for a number of years except for those who arrive as migrants on permanent visas. In terms of home country law, all these same people are likely to remain residents of China or Singapore for a considerable period especially if they make trips back to their home country. Migrants to Australia may cease to be Singapore residents immediately depending on circumstances. However, this will not be the case if they maintain a home in Singapore. In light of Guo Shui Fa  No 121, China may regard migrants to Australia as tax residents for at least two years. None of this will be applicable in relation to Hong Kong arrivals. It can therefore be seen that in the case of people coming from China and Singapore, a period of dual residence is likely. This period is likely to be more extensive for those coming from China. It is a central purpose of this paper to examine this dual residence and the possibilities in taxation that it opens up
Turning to Hong Kong, we can assess the tax implications for persons coming to Australia first. This will show the outcomes for their own benefit but will also enlighten the China and Singapore analysis that will follow. Prior to coming to Australia, our Hong Kong person will be taxed as follows (it is assumed that the low-tax jurisdiction is a no-tax jurisdiction): 1. Home country wage income – taxed in Hong Kong at low salary tax rates. 2. Home country passive income (assume to be rent) – taxed in Hong Kong at low property tax rates. 3. Low tax jurisdiction passive income – Not taxed at all 4. Company business profits sourced in the home county – taxed in Hong Kong at low profits tax rates. 5. Company business profits sourced in the low tax jurisdiction – Not taxed at all.
4. If their activities in Australia are such that they give their Hong Kong company Australian sourced business profits, then these Australian sourced profits will be taxed to the company in Australia. 5. If they are the director of the Hong Kong company, then there is the chance that they will shift the company's central management and control to Australia and make it resident of Australia. In this case, the company's worldwide income will be prima facie taxable in Australia but it will be likely to get the s23AH foreign branch profits exemption on its Hong Kong and tax haven business profits. If the person takes out a permanent visa in Australia, they will lose their temporary resident status. Assuming that they are tax residents (which would be likely), the following consequences will arise: 1. Hong Kong tax will remain the same. 2. They will continue to be taxed in Australia on their worldwide wage income.
1. Their Australian wage income will be taxed in Australia as soon as they earn it.
3. They will become taxable in Australia on their Hong Kong and low tax jurisdiction passive income and receive a foreign income tax offset for any foreign tax paid (which will be small).
2. The Hong Kong tax consequences listed above on the other income will remain identical.
4. The outcomes in relation to the Hong Kong company will be the same as outlined immediately above.
3. When they become an Australian tax resident (but remain a temporary resident), the Hong Kong wage income will be taxable in Australia and a foreign tax offset will be given for the Hong Kong tax.
When the person comes to Australia and is a temporary resident for tax purposes:
Prior to coming to Australia, the person would be generally taxed in China on the following basis: 1. Home country wage income – taxed 41
in China at standard marginal tax rates.
residents, the Chinese tax will remain the same.
2. Home country passive income (assume to be rent) – taxed in China at 20%.
2. They will continue to be taxed in Australia on their worldwide wage income.
3. Low tax jurisdiction passive income – taxed in China at 20%.
3. They will become taxable in Australia on their China and low tax jurisdiction passive income and receive a foreign income tax offset for any foreign tax paid. Again note that there is an inconsistency here in relation to which country manages to tax first.
4. Company business profits sourced in the home country – taxed in China at 25%. 5. Company business profits sourced in the low tax jurisdiction – taxed in China at 25%. When the person comes to Australia and is a temporary resident for tax purposes and before considering the DTA, the following consequences arise: 1. Their Australian wage income will be taxed in Australia as soon as they earn it. 2. The China tax consequences listed above on the other income will remain identical as they are likely to remain resident of China for tax purposes. 3. China will seek to tax the Australian wage income but will grant a credit for Australian tax paid. 4. When they become an Australian tax resident (but remain a temporary resident), the China wage income will be taxable in Australia and a foreign tax offset will be given for the China tax. Note there is an inconsistency here in relation to which country manages to tax first. 5. If their activities in Australia are such that they give their China company Australian sourced business profits, then these Australian sourced profits will be taxed to the company in Australia. China will also tax these profits but give a credit for Australian tax paid. 6. If they are the director of the China company, then there is the chance that they will shift the company's central management and control to Australia and make it resident of Australia. In this case, the company's worldwide income will be prima facie taxable in Australia but it will be likely to get the s23AH foreign branch profits exemption on its China and tax haven business profits. If the person takes out a permanent visa in Australia, they will lose their temporary resident status. Assuming that they are tax residents of Australia (which would be likely), the following consequences will arise: 1. Assuming China still regards them as 42 | BRIEF DECEMBER 2015
4. The outcomes in relation to the China company will be the same as outlined immediately above. The inconsistencies noted above are the consequence of dual residency. Given this dual residency, the DTA needs to be considered. However, it will become clear that the DTA opens possibilities that go beyond simply resolving the inconsistencies. The tie-breaker will allocate the dual resident person to either Australia or China for treaty purposes. Permanent home is the first test for determining to which state a person is allocated. In most cases, this test will be decisive as an individual's permanent home will be easily identified. In this respect, the Commentary on Article 4 of the OECD Model on what a permanent home is must be noted: 12. ... the residence is that place where the individual owns or possesses a home; this home must be permanent, that is to say, the individual must have arranged and retained it for his permanent use as opposed to staying at a particular place under such conditions that it is evident that the stay is intended to be of short duration. 13. ... any form of home may be taken into account (house or apartment belonging to or rented by the individual, rented furnished room). But the permanence of the home is essential; this means that the individual has arranged to have the dwelling available to him at all times continuously, and not occasionally for the purpose of a stay which, owing to the reasons for it, is necessarily of short duration (travel for pleasure, business travel, educational travel, attending a course at a school, etc.).1 This Commentary presents a view of a permanent home that is different to the concept of permanent place of abode established in Australian common law. Permanent place of abode was interpreted in the judgements in
Applegate (1979)2 and Jenkins (1982)3 in a way that did not focus so much on a house or home, but more on a person's intentions in the place. In parts, the judgements look for a form of residence in the foreign country. The OECD Commentary is centred on 'a home' as a defined place whether a house, an apartment or a room and whether rented or owned. The permanence of the home is noted to be essential and is explained as the dwelling being available continuously, rather than occasionally. This understanding of permanence is similar to comments in Applegate, in that it does not refer to everlasting but rather as non-temporary. However, it differs from Applegate, in that the focus in the OECD Commentary on Article 4 is on the continuous availability of some form of physical abode, rather than a person living somewhere for an extended period. The foregoing analysis leads to two comments on the treaty concept of permanent home. The first observation, from a policy perspective and at a surface level, is that it appears to be an appropriate test as the main allocator of dual residence. It would be expected that an expatriate worker who is still very much connected with their original 'home-state' (hereafter 'home state' is used to indicate the original home state that the person lived in) would be more likely to have their permanent home in the home state. If they have established a new permanent home in the second state, it would be expected that their closer personal and economic interests would be in the new home state. If this was difficult to determine or indicated the new state, it would be expected that the person was either becoming significantly involved in the new state or was not significantly involved in the original home state. In these cases, it might be expected that the individual would not be a typical expatriate temporary resident and more likely be establishing themselves in the new state with some view of long-term presence.4 Consequently, it can be argued that the allocation mechanism seeks to allocate the person to the state that they are closer to and that the permanent home is simply a practical mechanism to achieve this outcome. This is why it can be seen to be appropriate from a policy perspective that the person is allocated to the state in which they have closer ties and residence is a jurisdiction based upon a person's ties to a state. The second observation about the permanent home concept is that, in practice, it may not operate to reflect the foregoing. Due to its conception of a permanent home as a physical dwelling that is continuously available, the test is
readily open to manipulation. Given that a permanent home for treaty purposes can be achieved by demonstrating that a person has an apartment, house or even a room continuously available to them, it is clearly open to a person to have one in the new state without any major practical difficulties. Likewise, other than the case of an expatriate with a spouse who remains in the original 'home country', it would be readily achievable for a person to ensure that they do not have a permanent home in that state. All they need to do is to sell or rent out their home so that it cannot be said to be available to them. There are clear difficulties with a person who has a spouse in the home state, as they would find it difficult to say that they do not have a home available to them there. However, even with this group of persons, the ease with which a permanent home can be established in the second state means they are able to argue as to the less certain test of closer ties that has some chance of either succeeding or reaching an impasse. In the case of the latter, they may find it significantly easier to argue that their new state home is their new habitual abode. The conclusion of the foregoing analysis is that in many cases it is possible for a person to use the permanent home test to facilitate their allocation to the state that is not the one in which they have closer ties. It is submitted that this goes against what the treaty policy is trying to achieve as the permanent home is meant to be a practical way of gauging the state to which a person has closer ties. However, the practical test is open to manipulation and may, in many circumstances, give an individual an effective choice as to which state they want to be allocated to. It should also be noted that a conception of permanent place of abode as used in Applegate and Jenkins would not be open to such ready manipulations, but would lose much of the practical efficiency of the treaty test. The practical point that comes out of the above is that in many cases the person coming from China may be able to determine the outcome of the tie-breaker test through their accommodation choices. This is highly relevant as international tax consequences will vary significantly depending on the outcomes.5 Assuming the person is allocated to Australia under the DTA, the following changes to the earlier analysis will result: 1. Australian tax consequences will be identical. Critically, Australia will make no greater claim over the person. 2. China will be prevented by the DTA from taxing the low tax jurisdiction
rental income. 3. China will be prevented by the DTA from taxing the Australian wage income. 4. The company will remain taxed the same unless it has had its residence shifted to Australia and it will then not be taxable in China on any of its worldwide business profits unless it has a permanent establishment in China. This PE will likely allow the taxation of its China source income only. What is critical about the above is that the DTA prevents China from taxing amounts that Australia is not seeking to tax while the person is a temporary resident in Australia. If the person obtains a permanent visa in Australia, then many of these amounts may be taxed in Australia at higher rates than China would have imposed. If the tie-breaker allocates the person to China, different outcomes arise. China's tax claim will remain the same as initially outlined. During the temporary residence stage, Australia only seeks to tax Australian source income and foreign source employment income. However, Australia may be prevented from taxing some of the Australian sourced wage income. This will be the case if the person is in Australia for less than half a year and is not paid by an Australian or through an Australian permanent establishment. Australia will be entirely prevented from taxing the foreign source employment income. If the person obtains a permanent visa in Australia but is allocated to China under the DTA, Australia will be prevented from taxing the person's China source wage and passive income as well as their low tax jurisdiction income. The above analysis has shown that there are a myriad of possibilities in relation to people who come from China to Australia who are likely to be dual residents. In different circumstances, the DTA allocation under the tie-breaker will confer significant and variable advantages to relevant people. The fact that the tie-breaker turns on a permanent home test, makes it possible for people to vary the outcomes in relation to their different circumstances. Singapore The analysis in relation to Singapore combines aspects of both China and Hong Kong. The critical difference to China is that Singapore is only ever likely to seek taxation of Singapore source income and the DTA is never likely to impinge on this claim regardless of allocation under the tie breaker test.
It follows that a person from Singapore would most beneficially seek to be allocated to Singapore under the tie breaker test. During the temporary residence stage in Australia, this will prevent Australia from taxing their Singapore source wage income and may prevent Australian taxation of Australian source wage income. This will be the case if the person is in Australia for less than half a year and is not paid by an Australian or through an Australian permanent establishment. Notably, it will also prevent Australia from taxing any third country wage income. Once the person obtains a permanent visa in Australia, the allocation to Singapore under the tie-breaker becomes significantly more beneficial as Australia will extend its tax claim to worldwide income including Singapore source income (allowing for a foreign income tax offset) and the third country income. The DTA will prevent this claim even though Singapore is not taxing this income or is taxing it very lightly in the case of Singapore source income. CONCLUDING COMMENTS This paper has shown that the international taxation of persons coming to Australia is complex and variable. Different outcomes are possible on the variation of single factors. It has illustrated this through a review of China, Hong Kong and Singapore. However, the outcomes are certainly not unique to these jurisdictions. Practitioners would be wise not to assume that DTAs have little relevance to the taxation of people coming to Australia and they should not assume that that the tax systems of the various countries operate in very general and consistent complementary manners. Finally, they should not assume that the foreign countries' law is irrelevant to Australian taxation outcomes. NOTES 1.
Paras. 12 and 13 OECD Model: Commentary on Article 4 (2014).
The Federal Court of Australia FCA, 1979, F.C. of T. v. Applegate, 79 ATC 4307 (1979) 9 ATR 899.
The Supreme Court of Queensland, 1982, F.C. of T. v. Jenkins, 82 ATC 4098 (1982) 12 ATR 745.
This commentary on permanent home is drawn from: Nolan Sharkey (2015) Tax Treaties and Temporary Residence for Individuals: Tax Abuse? - Focus on the Rules in Australia, China (People's Rep.) and Singapore in the Context of the Tax Treaties between these States and with India, Japan, Korea (Rep.) and the United Kingdom, Bulletin of International Taxation.
There may be some debate about the entitlement of a temporary resident to benefit under Australia's DTAs. This is fully explored in Nolan Sharkey (2015) Tax Treaties and Temporary Residence for Individuals: Tax Abuse? - Focus on the Rules in Australia, China (People's Rep.) and Singapore in the Context of the Tax Treaties between these States and with India, Japan, Korea (Rep.) and the United Kingdom, Bulletin of International Taxation. Here it is assumed that they are entitled to benefit as per the conclusions of the foregoing paper.
Just terms compensation and private property rights The words are changing, but will the latest amendments to WA’s compensation provisions make any real difference? P D Lochore1
State Government actions that impact upon private land use can be a very emotive issue. An individual's house and land is seen as their inviolable sanctuary from the stresses of everyday life. When the State exercises its power over privately-held land, however reasonably and with all due care for process, the stress on an individual landholder can be intense.2 1. This article is commenting on the Land Acquisition Legislation Amendment (Compensation) Bill 2014. Nevertheless, it launches with this quote because this Bill came about as much because of the Government's need to respond to a vocal interest group, as to provide substantive reform to the law of land compensation. The interest group reflects considerable community angst.3 2. The Land Acquisition Legislation Amendment (Compensation) Bill is not lengthy, extending as it does for only 15 clauses. Unsurprisingly, the Second Reading Speech of the Hon Premier only goes for 9 paragraphs.4 Interestingly, 2 of those 9 paragraphs are devoted to matters other than the content of this Bill. In those two paragraphs the Premier situates the Bill as part of the Government's broader response to address the concerns of the private land rights campaigners and foreshadows several other measures the Government has planned.
This article comments upon only one of those additional measures: the Premier's circular entitled A Private Property Rights Charter for Western Australia.
3. Before proceeding to the Bill it is salient to observe that there are a myriad of provisions in WA statutes that could be called 'compensation provisions'. Indeed, a vocal proponent for reform in this area, Murray Cowper MLA, seems to conclude that defining them all would be too difficult – or 44 | BRIEF DECEMBER 2015
risk missing some. This is because the centerpiece of the solution he advocates is to require all takings by public authorities to be on just terms, and to empower the State Administrative Tribunal to review any taking – and order compensation, damages or restitution.5 4. The Parliamentary Committee report quoted at the outset recommended consolidation so that a single statute dealt with all aspects of compulsory acquisition in Western Australia (as is generally the case in other jurisdictions). As admirable as that might be, it is not the reality. So, leaving aside the Planning and Development Act 2005 and all other statutes that include taking powers, the focus is upon the four statutes amended by the Bill. They are the: i.
Land Administration Act 1997;
Energy Operators (Powers) Act 1979;
iii. Water Agencies (Powers) Act 1984; and iv. Water Services Act 2012. 5. The cautionary observations of former Chief Justice of New South Wales, the Honorable Chief Justice Spigelman are apposite in this context:6 An assumption that there is in existence some abstract body of 'valuation principles' applicable in all contexts, irrespective of the statutory scheme or contractual provision, is liable to lead to error. Judgments in one context may prove instructive by way of analogy when dealing with another context. Nevertheless, statutory differences must be borne in mind. The ultimate task must always come back to the application of the principles in the particular context … The starting point is always to commence with the precise words of the statute.
Aims of the Land Acquisition Legislation Amendment (Compensation) Bill 2014 6. The Explanatory Memorandum articulates the aims of the Bill: This Bill is intended to deliver a fairer and more transparent approach for the assessment and determination of compensation for landholders where private property is acquired by the State. The Bill will also ensure that compensation which is payable for the compulsory acquisition of a part of a property is assessed not only on the value of the land taken, but also on the greater impact it has on the entire property. This Bill is also intended to reduce inconsistencies across different Acts and effect a greater recognition of the true impact of a taking on a landholder. The Bill implements a number of recommendations made by the Law Reform Commission of Western Australia in its 2008 report Compensation for Injurious Affection. 7. So, the Bill intends principally to deliver a fairer and more transparent approach for the assessment and determination of compensation. 8. Does it deliver? The changes will help to achieve a fairer and more transparent system, but the degree of improvement will likely be so marginal that most people really concerned about the issue will be left dissatisfied. What is the status quo and what is changing? 9. This article comments principally upon the law relating to 'just compensation': what it is, and what will change if, as is expected, this Bill passes.7 But a brief review of the other changes the Bill seeks to achieve is called for – including those regarding interests in adjoining land, severance, compensation for
entry onto land and specific changes to the way electricity and water utilities take interests in land. Just compensation 10. By way of introduction the Land Administration Act 1997, Part 9 relates to compulsory acquisition and Part 10 relates to compensation. Division 5 of Part 10 relates to assessing compensation. Within Division 5 s241 directs how compensation is to be assessed. Aside from transitional provisions, the Bill's only amendments to the Land Administration Act are to s241. 11. Section 51(xxxi) of the Commonwealth Constitution conditions the federal parliament's power to pass laws so that property can only be acquired 'on just terms'. Thus, the discretion of the federal legislature in determining what compensation it will pay for property it acquires by compulsion is qualified. Nevertheless, it has some scope to determine what it considers to be 'just'. One aspect is the balancing of the interests of the public at large, the interests of the Commonwealth Government and the interests of the individual landowner.8 12. State parliaments, including our own, are not limited by such constitutional constraints.9 Interestingly, in the 2004 Report I quoted at the start, the Standing Committee on Public Administration and Finance urged the Government to give detailed consideration to whether a constitutional amendment should be effected.10 The Standing Committee is by no means alone â€“ the lack of a state constitutional right is regularly raised by those with concerns.11 Still, change appears unlikely. The Hawke Government took a proposal along those lines, along with proposals to extend other Federal Constitutional rights, to a referendum in 1988. It was convincingly rejected. 13. A right can be just as real even when it is not enshrined constitutionally. However, none of the WA statutes that permit the taking of land refer expressly to a requirement to provide just compensation. It is sometimes said that s241(6)(e) requires just compensation because it uses the word 'just'. However, this paragraph can at most extend the head of claim that it falls within. It permits recovery of losses arising from interference with the activities being carried on by a claimant on the land.12
14. What about the historic position? The precursor to s241 of the Land Administration Act was s63 of the Public Works Act. That section included a proviso that allowed a Compensation Court considering compensation to conclude that an assessment would not be adequate to meet the special circumstances of the case, and in that case to determine such compensation as it considers adequate. It appears that this would have allowed the Compensation Court to depart from the stipulated methodology to ensure compensation was just.13 15. The equivalents of the Land Administration Act in the Commonwealth, New South Wales, South Australia, the Australian Capital Territory and the Northern Territory do include reference to just compensation. They do so in one of two ways. The Commonwealth and the ACT expressly require that the compensation be just.14 This is consistent with the Commonwealth's constitutional obligation. The others refer in the objects of the statute to the objective of compensation being just so as to ensure that any ambiguities in the legislation are resolved by reference to the object of just compensation.15 16. Curiously, the same issue exists in the United States. In America some State constitutions guarantee that compensation will be just, reasonable or adequate. Sidney Z Searles reviews the impact of these words and concludes that these are "mere epithets rather than qualifications and add nothing to meaning".16 17. Similarly, the lack of explicit reference to compensation being 'just' does not appear to make a difference here. Douglas Brown, author of one of the principal texts in this area of law writes:17 The expression 'just terms' is, perhaps, not an ideal term to use in respect of an activity which may be regarded by a dispossessed owner as inherently unjust. Owners may regard the unilateral decision to deprive them of their land as outrageous. Regardless of how 'generous' the compensation may be, the grievance of the loss of the particular land may linger for many years. Whether the use of words 'just compensation' means anything more than 'compensation', 'full compensation', 'fair
compensation' or 'reasonable compensation' is unlikely. 18. So we're left with the conclusion that, legally at least, the compensation provided for by s241 already is equivalent to 'just compensation'. However, the Government is fully aware of this. The Premier, in the second reading speech, effectively acknowledges that this amendment is not intended to change the legal position. He said:18 Although in practice there are well-established common law rules to require that there be just compensation, the insertion of an express reference to just terms will ensure that all parties must recognise this. 19. So what, precisely, is the 'just' compensation amendment that is proposed? SectionÂ 4(1) of the Bill replaces subsection 241(1), inserting wording that clarifies for all concerned that the section is intended to provide just compensation, having regards solely to the matters in the section. The new subsection will read: The amount of compensation (if any) to be offered, paid or awarded for an interest in land taken under Part 9 is the amount that, having regard solely to the matters referred to in this section, will justly compensate the person from whom the interest is taken. (newly inserted wording underlined). 20. The Law Reform Commission recommended this change. It preferred this style of amendment rather than the explicit requirement that compensation be just because this option "carries a more frank acknowledgement that minor curtailment of rights and more or less arbitrary distinctions are sometimes required."19 21. This article mentioned earlier (above at ) that the Commonwealth Parliament had the ability to define what is 'just'. Well, that is effectively what all Australian jurisdictions have done in stipulating a series of categories or heads of claim. The variation around the jurisdictions leads the Law Reform Commission to refer to "more or less arbitrary distinctions". The approach of Western Australia, New South Wales, Northern Territory and South Australia is to confine the calculation to the stipulated methodology. These jurisdictions are essentially 45
Commission's Recommendation 6.25 Severance 31. The new subsections (7), (8A), (8B) and (8C) also implement 3 other Law Reform Commission recommendations by reinstating the term 'severance', including reference to a reduction in value of adjoining land attributable to the public work, and clarifying that either or both of what previously were subsections 241(7)(a) and (b) of the subsection can apply.26
saying that what is allowed for (in our case by s241) is what is necessary to produce a 'just' result. The Bill proposes to insert words to state this explicitly. 22. The courts have accepted that limiting the heads of claim does not mean that the compensation is not just. It is also very clear is that the statutory formula in s241 seeks to provide considerably more than market value. However, it does not provide for every conceivable area of compensation. So, as Douglas Brown opined in the piece quoted above at , there will always be landowners who are aggrieved because what they receive does not fully compensate them for everything he or she has lost. 23. Returning to the new subsection (1) â€“ what is new in this is the addition of the words "will justly compensate the person from whom the interest is taken." This is consistent with the wording in several other jurisdictions.20 24. How is this of any use? A simplistic reading of the Hon Premier's wording might lead one to think he wanted the private property interest group to recognise what the courts already have â€“ that s241 already provides for just compensation!21 25. Fortunately, there is more to the change than this. While these new words are not explicitly stated to be 'objects', the intent is nevertheless very clear. Thus, courts construing any ambiguities in s241 from the time of this amendment forward should prefer a construction that furthers the objective of providing just compensation. 26. All claimant lawyers are likely to argue whenever possible that aspects are ambiguous â€“ and invite 46 | BRIEF DECEMBER 2015
the Court to favour the landowner as a result of the new words in subsection (1). However, this may not be such a significant change as statutory schemes for compensation are often already construed as beneficial legislation that should be given a "fair, large and liberal construction".22 Private Property Rights Charter for Western Australia 27. The Charter is a Premier's circular.23 28. The Charter does not in fact confer 'rights' on anybody. Rather, it sets out what the Premier considers to be the policy framework within which private property interests can legitimately be impacted by Government action. It says pretty much what one would expect it to say. (Printed over the page.) Claimant owning interest in adjoining land 29. The existing words of s241(7) explicitly limit adjoining land claims for injurious affection compensation to claimants who have a freehold interest in adjoining land. In its 2008 Report the Law Reform Commission reviewed the history and theorised why the provision might have been drafted this way.24 Whatever the reason - it is academic, as the text is quite clear. As the Commission concluded: this limitation makes little sense. 30. Section 4(3) of the Bill replaces the present subsection 241(7) with new subsections (7), (8A), (8B) and (8C). The principal change is to enable claims for injurious affection compensation to be made where any interest in land is taken from a claimant who is also the holder of an interest in adjoining land. This implements the Law Reform
32. The new subsection (8A) replaces the existing set-off provision in subsection (7), and implements a further two Law Reform Commission recommendations.27 This overcomes the present distinction between severance and injurious affection damage, which arguably encourages landowners to frame claims as severance that should properly have been put as injurious affection in order to avoid the set-off. Compensation for entry onto land 33. Section 203 of the Land Administration Act 1997 provides for the payment of compensation to a person holding an interest in land who suffers damage by reason of entry on, or occupation of, the land or removal of material under Division 4 of Part 9. In some compensation provisions the courts have been willing to infer a power to award interest, 28 but not for s203. 34. Section 4(4) of the Bill proposes to insert a new provision providing that where compensation is payable under s203 for entry into land, interest is to be calculated in a similar manner as where there has been a taking of an interest in land. Utility law changes 35. The Bill amends the Energy Operators (Powers) Act 1979 and the Water Agencies (Powers) Act 1984 to remove the existing impediment to claims for compensation for injurious affection in relation to the acquisition of interests in land by energy operators and water operators where there is a loss of enjoyment or amenity value, or a change in the aesthetic environment. These amendments are consistent with the intent of the Law Reform Commission's recommendations 28 and 29.29 36. The Bill also amends several statutes to require infrastructure operators to inform landowners of the rights and processes that would
exist if a compulsory acquisition takes place, so that they will be informed before agreeing to an acquisition by agreement. This implements recommendation 24 of the Law Reform Commission30 and the consistency principle articulated in the Private Property Rights Charter for Western Australia.31 37. Energy operators are required to acquire an interest in land only for transmission works of a particular size. The Bill reduces the threshold so that an interest in land must be taken where works are to operate from 200 000 to 132 000 volts. While the Parliamentary Committee in 2004 recommended that easements be obtained for all transmission lines on freehold,32 the Government is clearly treading carefully between the imposition of extra costs on energy operators and the interests of private landowners. Concluding comments 38. All of these amendments are to be welcomed. Some changes will be of immediate value, but the headline amendment – the 'just compensation' wording – will cause no immediately discernible change. In all likelihood the new words will be relied upon by the courts in statutory construction and some change may eventually occur. 39. However, it is clear that this Bill barely scratches the surface in addressing the concerns of the private property rights interest group.33 The private property rights interest group's concerns relate principally to environmental issues (such as native vegetation clearing,34 water rights, wetland preservation, sea-level rise forecasts), as well as heritage and planning laws. The Premier foreshadowed planning law changes and amendments to the Environmental Protection Act in his second reading speech on this Bill: so let's wait and see. 40. Many of the issues the interest group seeks to agitate relate to regulation rather than taking. This raises complicated legal questions, but it is at least clear that the Commonwealth constitutional obligation to pay just terms compensation applies only in respect of a proprietary interest or benefit in property: see the Plain Tobacco packaging case.35 It is not immediately apparent to me why a different result would occur under Western Australian law. 41. Will these amendments make any
real difference? That is in the eye of the beholder.
Private Property Rights Charter for Western Australia Legality Government action which adversely affects private property rights in land may only be taken as authorised by, and in accordance with, the law. Providing a community benefit Government action which adversely affects private property rights in land should endeavour to benefit the community or otherwise advance the public interest. Public officials should only take government action which adversely affects private property rights in land when they consider it to be justified, having regard to the appropriate balance between the public interest to be advanced by the action and the public interest in the protection of private property rights in land. Considering the interests of private land owners Cost, inconvenience and loss sustained by private property owners should be considered when contemplating government action which will adversely affect private property rights in land, so far as the applicable legislation permits. Public officials should resolve matters affecting private property rights in land, including any negotiations on acquisitions or compensation, without unreasonable delay. Whilst disputes should be attempted to be resolved by agreement in the first instance, public officials should initiate available legal processes to determine the dispute in order to avoid protracted delays. Considering alternatives Public officers should consider whether there are any alternative means by which the relevant community benefit or public interest could be advanced in a manner which avoids or reduces adverse effects on private property rights in land.
compulsorily acquired, where this will not unduly compromise the advancement of the relevant community benefit or public interest. Fair compensation, on just terms Laws for the compulsory acquisition of privately owned land should provide for compensation in an amount that will, having regard to all relevant matters, justly compensate the landowner for the acquisition of the land in a manner which is fair to the community and the landowner. Transparency and clarity Laws which provide for government action that adversely affects private property rights in land should endeavour to ensure that legislation and processes pertaining to the acquisition are clear and readily understood. Certainty and consistency Laws for the compulsory acquisition of privately owned land should endeavour to provide:
holders of interests in land with certainty as to the relevant rules and processes; and
consistent rules and processes across different laws, where this will not unduly compromise the advancement of the relevant community benefit or public interest.
Consultation Before taking government action that will have a direct adverse effect on private property rights in land, the land owner should be consulted where this will not unduly compromise the advancement of the relevant community benefit or public interest Independence and contestability Private land owners should be provided with the opportunity to have compensation for the compulsory acquisition of their land determined by an independent and impartial body. Private land owners should be provided with the opportunity to refer other matters concerning the administration of laws which adversely affect private property rights in land to the State Ombudsman. NOTES 1.
Peter Lochore BA LLB (Hons) (Murdoch) LLM (Hons) (Columbia). Barrister, Francis Burt Chambers. The author formerly worked in the State Lands Team in the State Solicitor's Office. All omissions and errors are the author's own.
Standing Committee on Public Administration and Finance, Legislative Council of Western Australia, The Impact of State Government Actions and Processes on the Use and Enjoyment of Freehold and Leasehold Land in Western Australia, Report 7 (May 2004), Executive Summary at .
For examples of the interest group views see the
Compulsory acquisition as last resort Acquisition by agreement should be attempted before privately owned land is
statements of Murray Cowper MLA in his address to the party room in May 2014 and his media release after this Bill was tabled, each available at www. wa.liberal.org.au. See also the late Don Randall MP at www.donrandallmp.com (Grievance debate: Western Australian Property Rights, 23 June 2014), Pastoralists and Graziers Association Private Property Rights & Natural Resource Committee (www.pgaofwa.org.au), Family First at www.familyfirst.org.au, Lorraine Finlay, Strengthening property rights in Western Australia blog post at freedomwatch.ipa.org.au/2015/03/ strengthening-property-rights-in-western-australia (13 March 2015). 4.
Western Australia, Parliamentary Debates, Legislative Assembly, Thursday 27 November 2014, pp. 8992-8994 (Mr C J Barnett, Premier).
See the Taking of Property on Just Terms Bill 2014 available for download on at www.parliament.wa.gov. au. This private members Bill was introduced into Parliament in mid 2014. Interestingly, it was restored to the Legislative Assembly Notice Paper on 13 August 2015.
Commonwealth Custodial Services Ltd v Valuer-General (2007) 156 LGERA 186 at ;  NSWCA 365, citing his own words in Leichhardt Municipal Council v Roads & Traffic Authority (2006) 149 LGERA 439 at ;  NSWCA 353.
If it progresses as a Government Bill it should pass. However, one must question whether the fact that it has languished since late November 2014 reflects a continuing debate within the Government.
Grace Bros Pty Ltd v The Commonwealth (1946) 72 CLR 269, 280, affirmed (1950) 82 CLR 357.
Durham Holdings Pty Ltd v NSW (2001) 205 CLR 399.
Standing Committee on Public Administration and Finance, see above n 2, Recommendation 16.
A scan through the sources quoted at note 3 above will see the idea raised repeatedly.
Lenz Nominees Pty Ltd v Commissioner of Main Roads (2012) 186 LGERA 58;  WASC 6 ; Caltex Petroleum Pty Ltd v Commissioner for Main Roads  WASC 239  –; Cerini v Minister for Transport  WASC 309 .
Jacobs, Marcus, The Law of Resumption and Compensation in Australia (1998) at [14.11.2] commenting upon cases considering s63, ending with Cook v City of Stirling (1991) 4 WAR 469 at 476.
Leith v Western Australian Planning Commission  WASC 499, ; AB v The State of Western Australia  HCA 42; (2011) 244 CLR 390  (French CJ, Gummow, Hayne, Kiefel and Bell JJ); IW v City of Perth (1997) 191 CLR 1, 12 (Brennan CJ, McHugh J); Pearce DC and Geddes RS, Statutory Interpretation in Australia (8th ed, 2014) [9.2].
The Private Property Rights Charter for Western Australia is available at: http://www.dpc.wa.gov.au/ GuidelinesAndPolicies/PremiersCirculars/Pages/201404 PrivatePropertyRightsCharterforWA.
Lands Acquisition Act 1989 (Cth), ss55(1) and 93; Lands Acquisition Act 1994 (ACT) ss45(1) and 78.
Lands Acquisition Act 1979 (NT), ss5 and 66(4); Land Acquisition (Just Terms Compensation) Act 1991 (NSW), ss3(1) and 54; Land Acquisition Act 1969 (SA), s3.
Law Reform Commission of Western Australia, Compensation for Injurious Affection, Project 98 Final Report (2008), p21.
Quoted in by Jacobs, above n 13, [14.2].
Ibid, Recommendation 6.
Land Acquisition: an examination of the principles of law governing the compulsory acquisition or resumption of land in Australia and New Zealand (2009, 6th Ed) at [1.11]. Consider also that many resumption statutes use 'market value', but the lack of the phrase in the remaining jurisdictions has been found to be of no consequence: Emerald Quarry Industries Pty Ltd v Commissioner of Highways (SA) (1979) 142 CLR 351; 43 LGRA 316; 24 ALR 37; James v Swan Hill Sewerage Authority  VR 519; 42 LGRA 198.
Ibid, Recommendations 2, 3 and 4, pp. 19-20.
Ibid, Recommendations 11 and 12, pp. 31-32.
Marine Board of Launceston v Minister of State for the Navy (1945) 70 CLR 518, 532-533.
Above n 24, pp. 73-74.
See above at n 23, under the heading "Certainty and Consistency".
Above n 24, recommendation 11 (see also recommendation 6).
One might ask though, whether all the concerns of this interest group can be addressed without upsetting other powerful interest groups.
The clearing issue is neatly summarised by Lorraine Finlay in her Private Property Rights in Western Australia blog post - see above at n 2.
JT International SA v Commonwealth  HCA 43; (2012) 250 CLR 1 (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).
See above n 4.
Law Reform Commission of Western Australia, Compensation for Injurious Affection, Project 98 Final Report (2008), p16.
See above at n 15.
Interestingly, one of the most vocal proponents of reform in this area, Murray Cowper MLA, includes in his Taking of Property on Just Terms Bill 2014 provision that the formula in s241 is to be the default methodology for calculating just compensation. This appears to be an implicit acknowledgement by Mr Cowper that the formula in s 241 is a reasonable method of determining just compensation.
YLC Ten Pin Bowling 2015 Sarah Ozanne, Butcher Paull & Calder 11 September 2015, Rosemount Bowl
The fabulously retro decor of the Rosemount Bowl was the perfect backdrop for this evening of sporting (and social) achievement, held on 11 September 2015. The worries of the working week faded away, as young lawyers kicked off their shoes in favour of the oh so glamorous (and compulsory!) bowling shoes provided by the venue to enjoy a few games of friendly bowling. Once everyone had arrived and been kitted out, the punters were off and rolling. Inexperience or lack of proficiency was no obstacle to competitive spirit. No doubt employing skills gained in courtrooms and boardrooms, young lawyers traded wit and argued the finer points of the game with bravado truly unjustifiable in all of
Proudly sponsored by
48 | BRIEF DECEMBER 2015
the circumstances, and commiserated with their team mates when the ball just wouldn't go where it was supposed to go! It was a great chance to meet others from the profession, trade tales of the year so far, and catch up with friends and colleagues over some drinks and pizza. While everyone was a winner on the night, special mention goes to our first place team who walked away with the highest combined team total of 843 over two games at the end of the evening, and especially to Christopher Dowson who achieved the highest individual score over two games of 269!!!
The YLC was particularly pleased that the event was well attended by young lawyers from smaller firms, and hopes to increase participation from other smallfirm practitioners at future events. The YLC appreciated sponsorship from KBE, Centia and Bellanhouse for the first, but by no means final, annual YLC Bowling.
ACTIVATE YOUR ESSENTIAL MEMBERSHIP OF THE LEGAL PROFESSION
Urgenda v The Dutch State Katja Saunders Volunteer Solicitor, Environmental Defenders' Office (WA)
INTRODUCTION The Netherlands is one of many countries that has not taken measures deemed necessary by the majority of scientific opinion to prevent the Earth warming by 2 or more degrees Celsius. In protest, Urgenda, a Dutch foundation which promotes sustainable living, and 886 Dutch citizens (Urgenda et al) sued the Netherlands in 2013 claiming that the Dutch State's failure to reduce greenhouse gas (GHG) emissions to the level necessary to confine global warming to less than 2 degrees constituted a breach of its duty of care. The International Court of Justice in The Hague agreed with Urgenda and in its judgment of 24 June 2015 ordered the Dutch State to reduce GHG emissions within its territory. The Urgenda case is the first of its kind. While it previously has been accepted by various courts in different jurisdictions that governments owe a duty of care to their citizens, the Court's decision that a state's failure to take adequate measures to protect citizens from the threat posed to their individual rights by climate change constituted actionable negligence, was groundbreaking. Commentators have suggested that a similar action would not be likely to succeed in many other jurisdictions. The Netherlands is a civil law country and there exist stark differences between the Dutch and, for example, the Australian common law system, but the concept of duty of care is surprisingly similar in each jurisdiction. Which begs the question; could an Urgenda-like case be successful here? URGENDA'S CASE The immediate issues that spring to mind as potential hurdles to a successful outcome of a climate suit in any jurisdiction are standing; the basis of the action, including causality; the evidence; the political aspects of the case; and costs. In the Netherlands, Urgenda was able to overcome all these hurdles. Standing Under Dutch law, a foundation like 50 | BRIEF DECEMBER 2015
Urgenda has standing in a court of law if its objectives as laid down in its bylaws correspond to the interests it seeks to protect by initiating the proceeding. Urgenda's by-laws state that its objective is to stimulate and accelerate the process of transition towards a sustainable community, starting in the Netherlands. The Court said that on the basis of the correspondence between the foundation's objectives and the interests sought to be protected by the action, Urgenda had standing. With respect to the claims made by the 886 individual plaintiffs, the Court ruled that they had insufficient interest in the claim, considering that Urgenda's claim was successful. The issue of whether they would have had standing and would have been successful in their own right was therefore not relevant and was not discussed by the Court. The basis of the action The action was based on the doctrine of tort1. Briefly stated, Urgenda argued that it is reasonably foreseeable that continuing to emit GHG will lead to serious damage in the future and that therefore, failing to reduce GHG emissions to a safe level is unlawful. Urgenda did not seek damages, but an order to prevent damage, which meant that Urgenda merely needed to establish that there was a real risk of damage in the foreseeable future. The relevant questions according the leading Dutch authority on negligence, the so-called "Kelderluik Arrest"2 (i.e. Kelderluik judgment) were how apparent is the danger; what is the chance that the danger will manifest itself; how serious is the danger, and is it possible and economical to take measures to prevent the danger from arising? The specific order sought was to compel the Dutch State to take action to reduce GHG emissions. Urgenda had to establish that this measure was necessary and that it would be effective, in order to have sufficient interest in the claim. The Court found, on the basis of Intergovernmental Panel on Climate Change (IPCC) reports received into evidence, that reducing GHG emissions is necessary and that it is the
only effective measure to combat climate change. The Dutch State failed to prove that alternative measures were available or effective. The Court agreed that the Dutch contribution to global GHG emissions was relatively small (0.4%) but noted that every reduction of GHG emissions helps towards not exceeding the IPPC threshold of 450ppm3. The Court also considered that there was no basis for the defence raised by the Netherlands that the participation of others (in this case other states) in conduct causing larger-scale detriment exonerated the party whose contribution was smaller. It is a fact that the emissions of no single country, including China and the United States, satisfy the "sine qua non" or "but for" tests in terms of causality. It is (only) the cumulative contribution from all countries that causes climate change. To overcome the causation hurdle Urgenda relied on a Dutch authority, the so-called Potash Mines decision4. In that case several actors in Germany, Luxembourg and France who were upstream of the Netherlands on the Rhine River had been dumping salt into the river. This caused the water to be polluted to the extent that downstream Dutch horticultural businesses, which used the river water for irrigation, suffered damages. None of the actors alone had polluted the river to the extent that it caused damage; the pollution and subsequent damage was (only) the result of their cumulative actions. The High Court of the Netherlands held that a decision finding none of the actors liable for the damage on that basis would be unacceptable. The High Court considered that the question whether certain conduct is unlawful is separate from the question of the extent to which a contributor is liable for damages. To answer the first question, i.e. whether the conduct is lawful, regard must be had to the effect of the cumulative actions. If the cumulative actions cause substantial damage, the conduct is unlawful. A coactor and thereby a contributor incurs liability for the damages by engaging in
Power plant, The Netherlands.
the unlawful conduct. The measure of the individual contribution is relevant only to the calculation (on a pro-rata basis) of damages payable by each individual wrong-doer. The International Court of Justice accepted Urgenda's submissions on this point. Urgenda also had to establish that the Dutch State had a positive duty to take action to prevent the dangers associated with climate change, i.e. that it owed its citizens protection from the adverse effects of climate change under its duty of care. This point was conceded and evidenced by the actions the Dutch State already had taken and continues to take to deal with climate change issues, such as dyke improvement and creating water storage facilities. Climate change mitigation and adaptation are acknowledged responsibilities of the Dutch State. Urgenda also had to establish that it was within the Dutch State's power to reduce the emissions whilst not being the actual emitter of GHG. This point was easily proven on the basis of the fact that the Dutch State, as a party to the United Nations Framework Convention on Climate Change (UNFCCC), obviously considers itself capable of effectively controlling GHG emissions in its territory. On that basis, Urgenda was able to succeed in its claim. EVIDENCE It is noteworthy that the evidence presented, in the form of the exhibits attached to the pleadings, consisted mainly of reports either approved or acknowledged by the Dutch State (such as the IPCC reports) or reports issued by government bodies (including reports from the Netherlands meteorological institute and the United Nations Environment Program (UNEP)). IPCC reports and the conclusions therein are based upon research submitted by scientists from all over the world, regardless of what
conclusions they support. The research submitted must have been subjected to peer review. The IPCC compiles the various reports5 and publishes a conclusion on a particular matter, qualified by reference to the relative level of consensus among contributing scientists. The Netherlands had acknowledged the IPCC reports and did not offer competing scientific evidence to the Court. The facts therefore were not in dispute and no experts were called upon to testify to the seriousness of consequences of climate change or the need to take immediate action. The court regarded the findings in the IPCC's and other reports as "agreed facts between parties". THE POLITICAL ASPECT DEFENCE The Dutch State argued at length in its defence that climate change is a topic that should be debated by politicians, not lawyers. This defence was used in an American climate change case, where it was dealt with as follows: Certainly, the political implications of any decision involving possible limits on carbon emissions are important in the context of global warming, but not every case with political overtones is non-justiciable. It is an error to equate a political question with a political case. (…) Given the checks and balances among the three branches of our government, the judiciary can no more usurp executive and legislated prerogatives than it can decline to decide on matters within its jurisdiction simply because such matters may have political ramifications.6 The Court answered the question as to whether an order requiring the State to reduce GHG emissions would constitute an interference with the distribution of powers in the Dutch democratic system, (which is based upon the Trias Politica (the division of government into three independent branches)), by reiterating that the distribution of powers is intended to establish a balance between state powers, namely the legislative, the executive and the judicial powers. The court, in that system, must provide legal protection and settle disputes when
requested to do so. Acts (or omissions) by a political body, such as the government, must be able to be assessed by an independent court, not on the basis of any political agenda but on the basis of the court's own domain, as to whether the act or omission is lawful. The court thus has a duty to fulfill and cannot shirk from it merely because its decision will have political ramifications. The defence of the Dutch State failed. COSTS The Court ruled in favour of Urgenda and, as is common practice in Australia, ordered the Dutch State to pay the costs of the proceedings. Some thirteen thousand euros in costs were awarded to Urgenda. The real costs were much higher, but Dutch law does not provide for recovery of party-party costs; rather, it awards costs based on a points system and fixed fees. Using its discretionary powers, and having considered the complexity of the case, the Court increased the costs recoverable by Urgenda. It awarded no costs against the 886 plaintiffs who saw their claim dismissed. These costs orders may seem unfair to some, but their practical effect is that injured parties are not prevented from seeking justice; nor are they forced to settle cases because of their potential liability for enormous costs awards, should they be unsuccessful. IN CONCLUSION The Dutch State decided in September 2015, after debate in Parliament, to appeal from the decision. It will be interesting to see on which grounds the Dutch State will base its appeal and the outcome of the re-hearing of the case. In the meantime however, it will have to comply with the court’s order and adjust its climate change policy. It will also be interesting to see whether other countries indeed will follow suit and what the ultimate impact will be of the Urgenda case on other national and international climate change policies. So far, it has been reported that cases have been started up in Belgium, Norway and the United States. Watch this space… NOTES 1.
Tort is codified in section 162 of Book 6 of the Dutch Civil Code as conduct or an omission that is unlawful by reason of contravention of a law, the norms of society, or a violation of a right, and causes damage, whilst committed or omitted without justification. The section covers actions based on a duty of care, whether under statute or according to the norms of society, and other species of torts such as negligence.
HR 5 November 1965, NJ 1966/136.
"Kalimijnen arrest", HR 23 September 1988, NJ 1989/743.
The number of reports submitted is around one thousand.
Connecticut v American Electric Power, 21 September 2009, 582 F.3d 309.
An Overview of the Australian Law Reform Commission's Recommendations to Reform Native Title Law and Practice Justine Clarke Australian Law Reform Commission
The Australian Law Reform Commission (ALRC) has made 30 recommendations for reform to native title law and practice. Its report, Connection to Country: Review of the Native Title Act 1993 (Cth), was released on 4 June 2015, during Reconciliation Week. The Report is the result of 21 months of extensive research and consultation across the country. The ALRC's recommendations were informed by 72 written submissions and 162 consultations with government agencies, judicial officers, Indigenous leaders and traditional owners, Indigenous organisations, industry representatives, and others. At the time the ALRC reported, there was exclusive native title over more than 800,000 square kilometres of land in Western Australia, and nonexclusive native title over more than 320,000 square kilometres in the state. The Report also noted that as at 1 April 2015, there were 77 registered claims in the state which covered 42.9% of the state's land area, and research was being undertaken with the purpose of lodging native title claims in the future. The Report noted that the Western Australian Government's settlement with the Noongar people will result in the withdrawal of six native title claims. THE TERMS OF REFERENCE The ALRC was asked to examine connection requirements relating to the recognition and scope of native title rights and interests. The ALRC was also asked to examine whether the Native Title Act should provide that native title 'can include rights and interests of a commercial nature'. The other specific areas for inquiry concerned any barriers imposed by the Act's authorisation and joinder provisions to claimants', potential claimants' and respondents' access to justice.
review of 'connection' in native title claims—a highly complex area of law. The definition of native title in s223 draws on Mabo v Queensland [No 2],1 but the requirements to prove native title have been interpreted in a number of subsequent cases in a way that has been criticised as overly technical and 'unduly harsh and unjust'.2 The ALRC's recommendations retain the framework of native title derived from Mabo [No 2]. For instance, it remains important for claimants to demonstrate that they have substantially maintained their connection to land and waters. However, the ALRC took the view that the requirements for proof of native title should be more flexible. The recommendations are directed to a specific range of connection requirements in order that the 'test' for proving native title better accords with the Preamble and objects of the Native Title Act. An approach that promotes a 'fair, large and liberal' interpretation of the definition of native title, rather than a 'literal or technical' one, also promotes efficiency in the native title system. Reducing technicality in interpretation of the definition will produce a concomitant reduction in the resources and time involved in bringing evidence to establish the existence of native title. Accordingly, the ALRC made a number of recommendations directed at the interpretation of native title in s223. Specifically, the ALRC recommended amendment of s223 so as to: •
provide that traditional laws and customs may adapt, evolve or otherwise develop;
provide that rights and interests may be possessed by a native title claim group where they have been:
transmitted or transferred between Aboriginal or Torres Strait Islander groups in accordance with the traditional laws and customs of those groups; or
otherwise acquired in
CONNECTION REQUIREMENTS The Inquiry afforded the first major 52 | BRIEF DECEMBER 2015
accordance with traditional laws and customs; and •
clarify that it is not necessary to establish that:
the acknowledgment of traditional laws and the observance of traditional customs have continued substantially uninterrupted since sovereignty;
traditional laws and customs have been acknowledged and observed by each generation since sovereignty; and
a society united in and by its acknowledgment and observance of traditional laws and customs has continued in existence since prior to sovereignty.
These recommendations are intended to •
address the complexities of proving native title;
acknowledge that, while retaining a focus on traditional laws and customs is important, the law should be flexibly applied to allow evolution, adaptation and development of those laws and customs and succession to native title rights and interests; and
expedite the claims process by removing the requirement to prove substantially uninterrupted continuity of acknowledgment and observance of laws and customs or the continuity of a normative society.
THE NATURE AND CONTENT OF NATIVE TITLE Section 223(2) of the Native Title Act provides a non-exhaustive list of some native title rights and interests. It lists a number of usufructuary rights. As enacted, the provision was intended to provide examples of native title rights and interests. The ALRC considered that the examples listed may unnecessarily
confine the scope of native title rights and interests that are recognised. The ALRC drew upon the approach to native title rights taken in Akiba v Commonwealth,3 recommending amendment of s223(2) to confirm that native title rights and interests may comprise a broadly-framed right that may be exercised for any purpose, including commercial or non-commercial purposes, where the evidence supports such a finding. The ALRC also recommended express inclusion of a right to trade in the nonexhaustive list in s223(2). A right to trade has been recognised in principle in Northern Territory v Alyawarr, Kaytetye, Warumungu, Wakaya Native Title Claim Group.4 The ALRC recommended that 'commercial purposes' and 'trading' should not be defined in the Native Title Act. It considered that a statutory definition may be inflexible and unhelpful, given the fact-dependent nature of native title claims. In its view, the application of the terms is most appropriately left to judicial exposition as a question of fact based on the relevant law and custom in each claim. The ALRC's reforms are not intended to disturb the illustrative function of s223(2). Further, the ALRC stressed that the list of native title rights and interests in its suggested s223(2)(b) is indicativeâ€” not exhaustive. It was not the ALRC's intention to preclude a finding on the evidence of other native title rights and interests that may be recognised in line with the adaptation of laws and customs. The ALRC recognises the important role that these recommendations may play in securing economic and cultural sustainability for Aboriginal and Torres Strait Islander peoples. While the ALRC heard some concerns about such reform, the recommended amendment to s223(2) would not affect mineral ownership rights, a point acknowledged by the Association of Mining and Exploration Companies in a submission to the Inquiry.5 The Terms of Reference for this Inquiry precluded a wider investigation of the operation of the Native Title Act with respect to statutory minerals. The ALRC explored potential for a native title right to protect cultural knowledge. The ALRC considered that the question of how cultural knowledge may be protected and any potential rights to its exercise and economic utilisation governed by the Australian legal system would be best addressed by a separate
in-depth inquiry. AUTHORISATION The authorisation provisions in the Act are intended to ensure that an application for a native title determination is made with the consent of the claim group. The ALRC made recommendations regarding the claim group's decision-making process, the scope of the applicant's authority, the replacement of a member of the applicant, and the duty of the applicant to the group. The recommendations are intended to reduce costs, strengthen the internal governance of the claim group by clarifying the functions, powers and duties of the applicant, and to streamline the process for removing a member of the applicant who is unable or unwilling to act. PARTIES AND JOINDER The native title claims process must accommodate the wide range of interests in the Australian community affected by a native title determination. The party and joinder provisions in s84 of the Act specify who is a party to native title proceedings, who may join native title proceedings, in what circumstances they may join, and when they may be dismissed. Effective and fair joinder provisions are important to ensure that native title law and legal frameworks achieve efficiencies and remain consistent with the beneficial purposes of the Act. Although consultations indicated that the provisions generally appear to be operating satisfactorily, several issues of concern were identified. The ALRC's joinder recommendations include amendments to allow respondent
parties to elect to limit their involvement in proceedings to questions regarding the interaction of their interests with native title interests, to clarify the law regarding joinder of claimants and potential claimants, and to clarify the law regarding dismissal of parties. The recommendations are intended to ensure access to justice for parties whose interests may be affected by a native title determination while also recognising the need for efficient and fair administration of justice. OTHER PATHWAYS The ALRC also acknowledged that native title is not the only path to land justice and reconciliation between Aboriginal and Torres Strait Islander peoples and non-Indigenous Australia. Both in Australia and in some other jurisdictions, progress is being made via settlements that encompass land, economic development opportunities and compensation for dispossession. For example, the Report notes the recently concluded settlement between the Western Australian Government and the Noongar people. The Final Report is available for free download in epub or PDF at www.alrc.gov.au/publications. NOTES 1.
(1992) 175 CLR 1.
Central Desert Native Title Service, Submission 48, referring to the 'generation by generation' requirement.
(2013) 250 CLR 209.
(2005) 145 FCR 442.
Association of Mining and Exploration Companies, Submission 54.
Family Law Case Notes Robert Glade-Wright, Former barrister and accredited family law specialist Property – No error in treatment of wife's redundancy entitlement as an initial contribution In Hearne  FamCAFC 178 (16 September 2015) the Full Court (Strickland, Ryan & Austin JJ) dismissed the husband's appeal in which he argued that Judge Harman at first instance mischaracterised the wife's redundancy entitlement as an initial contribution where she had no right to the redundancy when the relationship began. Strickland J (with whom Ryan J agreed) said (at ): There is no doubt that when a trial judge comes to identify the property of the parties, accumulated service cannot be treated as an item of property, but, that is not what the trial judge is doing here. He is assessing the initial contributions of the parties which can comprise items of property such as real estate or chattels or bank accounts, but which are not limited to items such as that. Relevant contributions can equally be the bringing of benefits by a party to the relationship, and those benefits need not be crystallised as at the commencement of cohabitation. Thus, it was quite open to his Honour here, and indeed it has been a common occurrence throughout the entire operation of the Family Law Act 1975 (Cth) for accumulated service, which ultimately leads to a redundancy payment, to be taken into account as an initial contribution of a party. The only rider to this is that 'double dipping' cannot occur … by also taking into account the pre-cohabitation service when assessing the receipt of the actual redundancy payment subsequently. Conflict of interest – Whether confidential information held – Waiver of objection In Osferatu  FamCAFC 177 (15 September 2015) the Full Court (Finn, Ainslie-Wallace & Aldridge JJ) allowed the husband's appeal from an injunction made by Foster J restraining Barkus Doolan from continuing to act for him, where a solicitor (Mr F) joined that firm having previously worked for the wife's solicitors, Watts McCray. It "was common ground that Mr F did not have any direct dealings with the wife" while he was a member of that firm (). The wife retained Watts McCray in 2011, Mr F left there in 2012 and the parties entered into final parenting orders in 2013 and final
54 | BRIEF DECEMBER 2015
property orders in January 2014. Mr F joined Barkus Doolan in May 2014. An undertaking by Mr F that he would not convey any information he may have had concerning the wife to anyone at Barkus Doolan nor involve himself in the wife's case was accepted by her on the basis that she would formally object if there were further proceedings between the parties (). In February 2015 the husband (as a litigant in person) applied for the re-listing of the case, as to which the wife emailed saying she had "no issue" with his re-engaging Barkus Doolan (). Upon his doing so, however, she objected, applying for an injunction restraining the firm from acting. The Full Court (at ) cited McMillan & McMillan  FamCA 1046 (FC) as to "the manner in which a client's confidential information is to be protected in family law proceedings", continuing (at -): In an unreported decision of Stewart & Stewart (unreported, Family Court of Australia … 17 April 1997) Lindenmayer J said: ... All that is necessary is that the wife swears that she has conveyed confidential information to the solicitors and that she believes, not unreasonably, that that information may be used against her, or at least to her disadvantage, in these current proceedings ... Of that passage the Full Court in McMillan said at : In other words, the client need only give evidence that he has provided confidential information to the solicitor (or in this case, the law clerk/secretary). The client does not have to divulge the content of that information. ( … ) ( … ) Because the applicants in those cases had given instructions to the solicitor about the very matter in issue, it follows easily that there would be a finding that the solicitor who had moved was in possession of confidential information which is or may be relevant to that matter. It is for that very reason that the passage of Lindenmayer J in Stewart commenced with the words 'All that is necessary is that ...'. His Honour was simply saying that, in such circumstances, the burden borne by the applicant was discharged by such evidence. Nothing that appears in Stewart, Thevanez or McMillan obviates
the need for an applicant seeking such relief from discharging his/her burden of proof by adducing cogent and persuasive evidence. This is particularly so where, as here, the circumstances differ from McMillan. In this case Mr F had never taken instructions from the wife. The Full Court concluded (at ): … for evidence to be persuasive and cogent [the wife] should have identified the nature of the information received or likely to have been received by Mr F … that was now, or could now be, relevant to the current proceedings. She did not do so. It is not sufficient to say that, as family law proceedings cover a range of matters, any information at all received by Mr F could have been relevant. This was especially so given that three years had passed since he could have received any information and both sets of substantive proceedings … had resolved. It was also held that the court below erred in giving no reasons as to why the wife's email (waiving objection) did not carry significant weight. Children – FCC lacks jurisdiction to make order after transferring case to Family Court In Janssen  FamCAFC 168 (4 September 2015) the Full Court (Strickland, Ryan & Aldridge JJ) allowed the mother's appeal against an order made by Judge Scarlett three months after transferring the proceedings to the Family Court. The mother argued () that the Court's jurisdiction was exhausted upon its transferring proceedings and that the subsequent interim parenting order was a nullity. The Full Court agreed, saying () that while "the Family Court has concurrent jurisdiction in relation to the matter types under consideration (save for the limited exceptions referred to in s19(2) of the FCC Act) [Federal Circuit Court of Australia Act 1999 (Cth)] there can only be one proceeding between the parties under the Act pending at the same time in the Family Court and Federal Circuit Court".
Robert Glade-Wright is the founder, principal author and editor of The Family Law Book, a one-volume, loose-leaf and online subscription service. www.thefamilylawbook.com.au. He is assisted by family lawyer Craig Nicol.
Thomas Hurley Case Notes Thomas Hurley, Barrister, Melbourne, For the Law Council of Australia and its Constituents FEDERAL COURT Administrative law Delegable powers of the federal AttorneyGeneral – referral of petition for mercy to state court In Yasmin v Attorney-General of the Commonwealth of Australia  FCAFC 145 (21 October 2015) a Full Court concluded that the Attorney-General (Cth) was under a duty under the combined effect of s68(1) of the Judiciary Act 1903 (Cth) and s140 of the Sentencing Act 1995 (WA) to consider a request to refer a petition for mercy to the Court of Appeal in relation to a juvenile people smuggler. The Court also brought to the attention of the parties the provisions of s17 of the Law Officers Act 1964 (Cth) that operated to allow the Attorney to delegate the power under s140 of the Sentencing Act. Bankruptcy Leave to sue In Hudson v Sigalla  FCAFC 140 (24 September 2015) a Full Court concluded leave was not required under s58(3)(b) of the Bankruptcy Act 1966 (Cth) to sue a person who was previously bankrupt after the creditors have by special resolution accepted a proposal for a composition in satisfaction of the debts of the bankrupt. Discrimination Appeal In Vata-Meyer v Commomwealth of Australia  FCAFC 139 (22 September 2015) a Full Court allowed an appeal in proceedings in the Federal Circuit Court under the Racial Discrimination Act 1975 (Cth) where it was alleged the Commonwealth was vicariously liable for the acts of its employees. Consideration of what is an irrelevant consideration and the position where the primary judge had not considered all the elements in the legislation. Industrial law Breach of enterprise agreement – whether clause imposes binding obligation In National Tertiary Education Union v La Trobe University  FCAFC 142 (8 October 2015) a Full Court considered who had what onus in establishing breach of an enterprise agreement where it was contended the clause was aspirational. Migration Visas – cancellation for criminal conduct
In Brown v Minister for Immigration and Border Protection  FCAFC 141 (24 September 2015) a Full Court concluded the Minister did not make any jurisdictional error in ordering the visa of the appellant be cancelled under s501 of the Migration Act 1958 (Cth) on conviction for crimes that attracted a sentence of more than one year's imprisonment. HIGH COURT Constitutional law Implied freedoms – limitation on donations by property developers In McCloy v New South Wales  HCA 34 (7 October 2015) the High Court concluded that provisions in the Election Funding Expenditure and Disclosures Act 1981 (NSW) that placed a cap on the donations that property developers could make to political parties in NSW were not invalid as inhibiting the implied right to political discourse recognised in Lange v Australian Broadcasting Commission  HCA 25. The Court concluded the provisions did not impermissibly burden the implied freedom: French CJ, Kiefel, Bell and Keane JJ jointly; Gageler J; Nettle J; Gordon J sim. Answers to stated questions given. Contract Interpretation – background circumstances In Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited  HCA 37 (14 October 2015) the High Court considered a dispute in a 1970 written contract between iron miners in WA as to payment of royalties on ore extracted from different areas. The Court generally concluded the Court of Appeal (NSW) had adopted too narrow a construction of the agreement: French CJ, Nettle and Gordon JJ jointly; Kiefel and Keane JJ; Bell and Gageler JJ observed the matter did not raise the question on which intermediate courts were divided, namely whether ambiguity must be shown in a written contract before a court interpreting it can consider background circumstances as considered in Codelfa Construction Pty Ltd v State Rail Authority NSW (1982) 149 CLR 337. Orders accordingly. Courts Powers – power of state court to make freezing orders in anticipation of registrable foreign judgment
2015) the High Court concluded that the Supreme Court WA had inherent power conferred by s39(2) of the Judiciary Act 1903 (Cth) to make a freezing order under Supreme Court Rules (WA) o52A in respect of a prospective judgment that could be registered under the Foreign Judgements Act 1991 (Cth). The Court concluded this power was relevantly applied by s79 of the Judiciary Act and there was no inconsistency: French CJ, Kiefel, Bell, Gageler, and Gordon JJ jointly; Keane and Nettle JJ jointly. Appeal from Court of Appeal (WA) dismissed. Criminal law "Pervert the course of justice" In The Queen v Beckett  HCA 38 (23 October 2015) the High Court concluded that the offence of acting to pervert the course of justice found in s319 of the Crimes Act 1900 (NSW) could be established by proof of acts designed to pervert a contemplated or future curial "course of justice" and was not limited to existing court proceedings: French CJ; Kiefel, Bell and Keane JJ jointly; separately Nettle J. Appeal against decision of Court of Criminal Appeal (NSW) allowed. Limitation of actions Asbestosis – when cause of action accrued In Alcan Gove Pty Ltd v Zabic  HCA 33 (7 October 2015) Z was employed by the appellant between 1974 and 1977 and exposed to asbestos. To succeed in a claim for damages he had to establish that his cause of action in negligence had accrued before the commencement of the Worker's Rehabilitation and Compensation Act (NT) in January 1987. The primary judge found the cause of action accrued at the onset of malignant mesothelioma in about 2013 and the cause of action was barred. This conclusion was reversed by the Court of Appeal (NT) which concluded that the onset was inevitable after the fibres were inhaled between 1974 and 1977. The appeal by the employer was dismissed: French CJ, Kiefel, Bell, Keane, Nettle JJ jointly. Appeal dismissed.
Thomas Hurley is a Victorian barrister, phone (03) 9225 7034, email email@example.com. The full version of these judgments can be found at www.austlii.edu.au
In PT Bayan Resources TBK v BCBC Singapore Pte Ltd  HCA 36 (14 October
law council update
UN TO REVIEW AUSTRALIA'S TREATMENT OF INDIGENOUS AUSTRALIANS AND ASYLUM SEEKERS On Tuesday 10 November Australian Time, Australia's human rights record will be under the microscope in Geneva as part of its second cycle of the Universal Periodic Review (UPR). It is expected that Indigenous and asylum seeker issues will come under particular scrutiny. The UPR is a mechanism of the United Nations Human Rights Council which reviews the human rights records of all 192 United Nations Member States. On 23 March 2015, the Law Council made a submission to the Office of the High Commissioner of Human Rights to assist in the review of Australia's human rights record through the UPR. The Law Council's submission focuses on the most pertinent rule of law issues in Australia: equality, freedom from arbitrary detention, fair hearing rights and democratic freedoms. The Law Council has called on the Australian Government, in accordance with its previous UPR commitments, to implement measures to address the factors which lead to overrepresentation of Aboriginal and Torres Strait Islanders in prison. Indigenous Australians are imprisoned around 15 times the rate of non-indigenous. With respect to the rights of asylum seekers, the Law Council has called upon the Australian Government to ensure that, in accordance with its previous UPR commitments, the processing of claims are in accordance with the Convention relating to the Status of Refugees and that detention only occurs when strictly necessary.
to Duncan McConnel, President, Law Council of Australia: •
The Law Council calls for a bipartisan approach to the development of a national redress scheme for child sexual abuse survivors.
We welcome renewed attention placed on the important issue of redress as a way to ensure justice.
In supporting a national redress scheme as recommended by the Royal Commission into Institutional Responses to Child Sexual Abuse, the Law Council calls for the matter to be given priority by the Council of Australian Governments (COAG) in the spirit of bipartisanship.
This is an issue that requires coordination between the Commonwealth, state and territory governments as well as institutions.
A national redress scheme is an essential part of a broader response to ensuring justice for survivors of child sexual abuse. In implementing any redress scheme, survivors must not have any of their other legal rights restricted or removed.
The Law Council recognises there may be benefits in implementing civil law reforms, where appropriate, to limitation periods, vicarious liability and identifying defendants. The Law Council hopes to work with the Government and Opposition in the design of any compensation arrangements for survivors of child sexual abuse.
2015 AUSTRALIAN YOUNG LAWYER AWARD WINNERS ANNOUNCED
To date, the Australian Government has only fully implemented 10% of the recommendations that it accepted as part of the last UPR.
Kevin Kadirgamar has won the individual 2015 Australian Young Lawyer Award for his outstanding pro bono work in the areas of migration and refugee law.
The Law Council will be encouraging the Australian Government to progress the recommendations which will be arising from this second cycle of the UPR.
A full-time solicitor at Ward Keller in Darwin, Mr Kadirgamar has been tireless in his efforts to help some of the most vulnerable asylum seekers in Australia.
LAW COUNCIL CALLS FOR BIPARTISAN APPROACH TO A NATIONAL REDRESS SCHEME
Forming a professional relationship with Julian Burnside QC, Mr Kadirgamar has been pivotal in a broad range of pro bono cases, including winning a Federal Court appeal in June for an asylum seeker who
The following statement can be attributed
56 | BRIEF DECEMBER 2015
almost died after a 53-day hunger strike. Law Council of Australia President Duncan McConnel said Mr Kadirgamar's work had been extraordinary. "Kevin's indefatigable efforts have given some of the community's most vulnerable the ability to access justice and legal help," Mr McConnel said. "The Law Council is passionate about encouraging faith and confidence in the legal profession and Kevin is the kind of lawyer who boosts our cause immeasurably. "Kevin's work to date emphatically demonstrates how a lawyer's efforts can result in justice that can fundamentally change the course of a client's life." The 2015 Australian Young Lawyer Organisation Award has been taken out by the NSW Young Lawyers International Law Committee for its outstanding contribution, primarily through the publication of The Practitioner's Guide to International Law. First published in 2010, the Guide covers a diverse range of topics, including international dispute resolution, criminal law, environmental law, protection of cultural property, and international family law. Mr McConnel said the book was an extremely valuable practical resource for Australian legal practitioners looking to address the international legal issues arising in daily practice. "International issues and the internationalisation of the legal profession is one of the most significant emerging issues for the profession and this publication provides a unique and innovative perspective. "The Guide has been of significant benefit to a range of legal professionals and there is a huge amount of work that goes into its production," Mr McConnel said. "The NSW Young Lawyers International Law Committee does a tremendous job and I'm very pleased we are able to honour their valuable work." The Australian Young Lawyer Award is conducted annually by the Law Council's Young Lawyers Committee and recognises excellence in young lawyers and young lawyer organisation.
announcements and classifieds
Career moves and changes in your profession
MISSING WILL George Papamihail Barristers & Solicitors George Papamihail Barristers & Solicitors is pleased to announce the appointment of Martin Muk as Partner in their Perth Office. Martin Muk, George Papamihail Barristers & Solicitors 124 Aberdeen Street, Northbridge, WA 6003 Email: firstname.lastname@example.org Phone: (08) 9228 2794
Any person holding or knowing the whereabouts of the last Will and Testament of the late CHANTEL ROSE THORN of 33 Quickly Crescent, Hamilton Hill, WA or 2/7 Hong St, Alice Springs, NT, deceased-17.03.12, Please contact FourLion Legal Ground Fl, Suite 16, 185 High St, Fremantle WA – 9335 6643 or email@example.com within 1 month of the date of publication of this advertisement quoting ref: 15342
Caring for the Legal Profession in Western Australia
Any person or firm having knowledge of any Will made by THOEUN MOUNG born 3/4/1954 died on 16/09/2015 late of 81 Southmead Drive, Landsdale please contact Paul D’Angelo of D’Angelo Legal, PO Box 1953, West Perth 6872. Telephone: (08) 9381 1147
Professional, confidential and free counselling and information services to support the mental health and wellbeing of members.
• Free access to online resources for life, family and relationship; health and wellbeing; and education, work and career. • Members can also access up to three free counselling session a year. 24 hours phone support 1300 361 008 or lawsocietywa.asn.au/lawcare
LawCare(WA) is provided to members by
58 | BRIEF DECEMBER 2015
Services provided by Optum
Computer, Internet, and Telephony experts Civil and Criminal Matters. Expert Witness Services including all types of criminal prosecutions District Court and Federal cases including Customs prosecutions 15 years experience in Western Australian Courts Ph: 08 6280-0008 | aus-experts.com
SERVICED OFFICE Serviced office (will suit sole practitioner) available in Perth CBD close to Law Courts. Secretarial and phone services also available. Please call Genevieve on (08) 6180 3670 for more information.
New Members New members joining the Society (October 2015)
Ms Nicole Ng
Mr Rhys James
Miss Consuelo Maturana
Ms Salome Mambo
Mr Ian Fox
Mr Kaday Conteh Flavell
King & Wood Mallesons
Mr Hameed Ahmad
Mr Nicholas Malone
Miss Gwynette Govardhan
Miss Alanna Jordan
Miss Ezhil Rajendran
Mr James Carpenter
Miss Jessie Spence
Ms Elmi Carlean
Miss Nadia Palermo
Miss Shelby Goh
Miss Stephanie Hewson
Mrs Jeanette De Klerk
Miss Stephanie Walker
Legal Aid of Western Australia Bunbury
Miss Tamlyn Jayatilaka
Mr Charles Bannister
Mr Yung Xing Leong
Mr Roger Jacobs
Parliamentary Counsel's Office
Miss Bo Yieng Chin
Miss Caitlin Reynolds
Miss Carla Italiano
Mr Tariq Rasool
Miss Melanie Noid
Ms Anna Dunn
Lawfield Legal Practice
Miss Nadine Elmowafy
Ms Rosa Cornell
Francis Burt Chambers
Reaching out for Knowledge, Expertise and Engagement
The Essential Legal Assistant 12 week course offering seven face-to-face and six online seminars to complete 13 units Commences Monday, 11 April 2016, 5.30pm â€“ 7.30pm Level 5, 160 St Georgeâ€™s Tce, Perth WA 6000 The essential legal assistant course is a must for legal assistants wanting to build meaningful skills and knowledge, necessary for working in a contemporary practice. lawsocietywa.asn.au
Events Calendar DATE
DECEMBER 2015 CPD SEMINARS Wednesday, 9 December 2015
Macquarie Business Insights Series: Stepping into the abyss: setting up a new practice
Conference Room, Ground floor, 235 St Georges Tce, Perth
Thursday, 10 December 2015
YLC: a view from the bench
The Law Society of Western Australia
FEBRUARY 2016 MEMBERSHIP EVENTS Wednesday, 17 February 2016
Sole practitioner and small firm forum
Joondalup Reception Centre
FEBRUARY 2016 CPD SEMINARS Monday, 15 February 2016
The Associations Incorporations Act 2015 (WA): A practical guide to changes to the laws governing incorporated associations
The Law Society of Western Australia
Tuesday, 16 February 2016
Conducting proceedings in the State Administrative Tribunal
The Law Society of Western Australia
Wednesday, 17 February 2016
Expert Evidence: potential career saving tips
The Law Society of Western Australia
Thursday, 18 February 2016
Building Disputes: Trouble in the suburbs
The Law Society of Western Australia
Friday, 19 February 2016
Work smarter not harder
The Law Society of Western Australia
Monday, 22 February 2016
The Law Society of Western Australia
Tuesday, 23 February 2016
YLC: A Review of 2015 High Court Decisions
The Law Society of Western Australia
Friday, 26 February 2016
Law Summer School 2016
The University Club, The University of Western Australia
MARCH 2016 CPD SEMINARS Wednesday, 2 March 2016
In House Practitioner Forum: A spotlight on In House Counsel
The Law Society of Western Australia
Wednesday, 2 March 2016
Pleas in Mitigation and Restraining Orders Essentials
The Law Society of Western Australia
Thursday, 3 March 2016
The Law Society of Western Australia
Thursday, 3 March 2016
Recent developments in Australian Consumer Law
The Law Society of Western Australia
Thursday, 10 March 2016
Hypothetical: An exploration of current issues in the medico-legal world
The Law Society of Western Australia
Friday, 11 March 2016
Albany – Country Roadshow
Dog Rock Convention Centre, Albany
Friday, 18 March 2016
Bunbury – Country Roadshow
Lord Forrest Hotel, Bunbury
Tuesday, 22 March 2016
The Law Society of Western Australia
Wednesday, 23 March 2016
Hiring the best people for your practice
The Law Society of Western Australia
Wednesday, 30 March 2016
Criminal practice in rush hour – advocacy in the Magistrates Court
The Law Society of Western Australia
Thursday, 31 March 2016
The art of delegation
The Law Society of Western Australia
For all CPD-related enquiries please contact firstname.lastname@example.org or (08) 9324 8614 For all membership-related enquiries please contact email@example.com or (08) 9324 8638 For all upcoming events and further information please visit lawsocietywa.asn.au
60 | BRIEF DECEMBER 2015
Are you looking for your next challenge? Do you have the skills to mentor the next generation of conveyancing professionals? Jimâ€™s Conveyancing is now accepting expressions of interest from lawyers and settlement professionals for Master Franchise rights in Western Australia prior to our launch in your state.
For more information call 131 546 or go to www.jimsconveyancing.com.au
08-146 | Hudson Global Resources (Aust) Pty Limited ABN 21 002 888 762
MAKING YOUR CASE AROUND AUSTRALIA AND THE GLOBE To experience the challenges and exposure for a satisfying career in law, you need a legal recruiter at the top of their game. You need Hudson Legal. We offer an expansive portfolio of public sector, private practice and in-house roles both locally and internationally. Backed by over twenty years of success, Hudson Legal has the industry insight and global coverage to deliver you career-defining opportunities. And our people know law. Our specialist consultants leverage years of expertise to understand your situation and find the perfect-fit role for you every time.
New vacancy in a construction team with a first class reputation. Disputes focussed role, under two market leading Partners. Candidates should have 5+ years of top tier construction experience. Fabulous opportunity to gain a challenging caseload of projects at the forefront of the construction industry. Ref: 6B/16197
Established, market leading litigation team seeking mid-level lawyer with general commercial disputes experience. Exposure to construction and/or insurance disputes highly desirable. Join a number of former top-tier peers who enjoy a genuine work-life balance and collegiate environment at this national firm. Ref: BX/44487
Work for leading a global law firm where the Perth office culture is built on collaboration, learning, communication and knowledge sharing. New vacancy for a Senior Associate with a proven track record in front-end construction and projects. Client facing role with some of the industry’s leading players. Ref: BX/44811
Premier top tier global firm seeking a mid level lawyer (3-5 years’ PAE) to join their leading dispute resolution team. Work with an enviable range of clients on a broad spectrum of commercial litigation matters, that sets the pace in the market. Genuine career progression opportunity. Ref: BX/45107
International firm with boutique Perth office seeking insurance lawyer with 2-4 years’ PAE. Work closely with a market-leading practitioner offering strong mentoring. Assist in the growth of the professional indemnity, D&O and public liability practice. Excellent salary and travel opportunities on offer. Ref: BX/44671
Due to increased workload, this leading global firm has opportunities for corporate lawyers with 2-5 years’ PAE. Working with market leaders, you will gain significant exposure to regulated M&A and capital markets work which will truly set you apart from your peers. Superb salary and genuine career progression on offer. Ref: 6B/16186
LAWYERS Multiple opportunities for defendant insurance litigation lawyers to specialise in the growth and demand areas of workers’ compensation and public liability. Enjoy direct client contact and manage your own challenging caseload, acting for insurance companies and other large corporates. Ref: BX/40742
SENIOR ASSOCIATE High quality corporate work for a lawyer at, or approaching, Senior Associate level. Enjoy direct exposure to a first class client base of public and private companies and support from two leading Partners in this award winning employer of choice, known for its friendly and collegiate environment. Ref: 6B/16062
These roles are just a few examples of many current opportunities that Hudson Legal can assist you with. For further information, please contact or email your CV to: Coralyn Kurecki on 08 9323 0215 or firstname.lastname@example.org
Aoife Stapleton on 08 9323 0200 or email@example.com