A new set of rules for the Australian Centre for International Commercial Arbitration (ACICA) came into force on 1 April 2021. The 2021 Rules replace ACICA’s 2016 Rules, and unlike the new years’ resolutions we set for ourselves (and which we have already broken), these changes are here to stay – so it’s important to be across them.
With the primary rounds of drafting and consultation conducted during the height of Australia’s COVID-19 pandemic, the 2021 Rules both incorporate the flexibility and new ways of working in the provision of arbitration services spurred by the pandemic, and respond to innovation in rules and procedure from other international tribunals. The most important rule changes are those to multi-party and multi-contract arbitration, which are discussed in greater detail below.
These major rule changes only apply to arbitration agreements concluded after 1 April 2021. All other changes apply to arbitrations commenced from 1 April 2021 unless the parties to the arbitration agreement have agreed to apply an earlier version of the rules.[1]
Revised rules on joinder and consolidation: Multi-party arbitration
Previously, arbitrations could only be consolidated where those arbitrations were between the same parties.[2] The 2021 Rules have altered this requirement, allowing for claims arising out of more than one arbitration agreement to be consolidated into the same arbitration if the parties agree or where:
- there is a common question of law or fact that arises in both or all of the arbitrations; and
- the rights to relief claimed are in respect of, or arise out of, the same transaction or series of transactions; and
- ACICA finds the arbitration agreements to be compatible.[3]
Multi-party arbitration is attractive for industries where ‘chain’ contracts (for instance, subcontracting) are common. For example, in a construction dispute between a building owner and its main contractor over building defects, the main contractor may want to bring sub-contractors into the dispute to try and shift its liability. This saves the time and cost of multiple arbitrations, which is always a bonus.
The 2021 Rules now also permit the joinder of third parties who are not party to the arbitration agreement, but only where the existing parties (and the party to be joined) expressly agree to the joinder.[4]
New rules on multi-contract arbitration
The 2021 Rules now allow for parties to commence a single arbitral proceeding for claims arising out of or in connection with more than one contract, which we cleverly call ‘multi-contract arbitration’.[5] In order to take advantage of this procedure, the same three rules as with multi-party arbitration need to be met (outlined above), or the parties need to agree.
Using our construction dispute example, the building owner and the main contractor may have numerous contracts between them, e.g. financing agreements, direct agreements, and joint venture agreements. Each individual contract may have an arbitration clause within it. Multi-contract arbitration allows parties to skip proceedings under each individual contract and do them all in one, (hopefully) saving time, money, and a bit of sanity.
The 2021 Rules also introduce a new rule on concurrent proceedings. Tribunals may now conduct arbitrations concurrently or in succession or suspend proceedings in one arbitration pending the determination of another. Tribunals may only do so after consulting with the parties, and only where those concurrent proceedings are constituted by the same tribunal and share a common question of law or fact.[6]
Virtual arbitration and efficiency
Several other changes have also been made to the ACICA rules to reflect the radically new way we conduct arbitration:
- hearings held virtually are deemed to have been conducted at the seat of the arbitration unless otherwise agreed by the parties or directed by the Tribunal;[7]
- oral hearings, including preliminary meetings, may occur either in person or virtually at the direction of the Tribunal;[8]
- materials related to an arbitration may be delivered by any form of electronic communication.[9]
Even after the pandemic is behind us, our new style of conducting arbitration, at least in part virtually, is here to stay.
Together with the below, these changes make ACICA a particularly efficient choice of institute in the Asia-Pacific region:
- final awards are to be made no later than 9 months following the date the file was transmitted to the tribunal and no later than 3 months from the date the tribunal declared the arbitration proceedings closed (whichever date is earliest) unless the parties agree otherwise;[10]
- tribunals are now required to raise the possibility of the use of ADR to ‘facilitate the timely, cost effective and fair resolution of the dispute’;[11]
- tribunals can make an award granting early dismissal or termination of any claim, defence or counterclaim.[12]
No new ‘med-arb’ rules
ACICA’s Consultation Draft on the 2021 Rules proposed the introduction of ‘Arb Med’ rules. ‘Arb Med’ rules allow for arbitral proceedings to be stayed in favour of mediation, with the arbitrator acting both as mediator and arbitrator. These changes, which have become popular in other Asia-Pacific arbitration institutions, did not make it into the final draft.
Key takeaways for in-house counsel
In summary, if you’re involved in an arbitration in the international dispute resolution institution Down Under, there have been some significant rule changes you need to be aware of. Some of them are administrative and haven’t been covered in this post.
The most significant take away for in-house counsel wanting to take advantage of these new rules on multi-party and multi-contract arbitration is to try and make sure that the arbitration agreements are compatible. While this might be easier said than done, the best option is to, at the drafting stage, have identical arbitration agreements in each contract between each party. Failing this, in-house counsel should at least aim for consistency in the arbitral institution, seat, and governing law to have the best shot at successfully taking advantage of the new multi-party and multi-contract arbitration rules. In-house counsel might also want to record the consent of the parties to multi-party or multi-contract arbitration in the arbitration agreement itself, to avoid disputes occurring down the line.
Whether you’re a seasoned arbitration pro, a new practitioner, or just a keen onlooker, if you’re in the mood for some light reading you can view the entire new rule book here.
[1] 2021 Rules, art 2.4.
[2] 2016 Rules, art 14.1(c).
[3] 2021 Rules art 16.1(c).
[4] 2021 Rules art 17.1(b).
[5] 2021 Rules art 18.
[6] 2021 Rules, art 19.1.
[7] 2021 Rules, art 27.2.
[8] 2021 Rules, arts 25.3, 25.4.
[9] 2021 Rules, art 4.1.
[10] 2021 Rules, art 39.3.
[11] 2021 Rules, art 55.1.
[12] 2021 Rules, art 25.7.
