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Wednesday, 2 October 1974
Page: 1588


Senator Douglas McClelland (NEW SOUTH WALES) (Minister for the Media)

That the Bill be now read a second time.

The purpose of this Bill is to enable Australia to accede to the United Nations Convention known as the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The Convention facilitates the settling of differences by arbitration. To this end States that accede to the Convention are obliged to recognise and enforce foreign arbitration agreements and foreign arbitral awards. An arbitration agreement for this purpose is one by which the parties undertake in writing to submit their differences to arbitration. Usually such differences will relate to contracts, especially contracts of a commercial character, but it is sufficient under the Convention that a difference is in respect of a defined legal relationship. Arbitration is a relatively inexpensive, speedy and final method of settling differences in business dealings. It is often more adaptable to the complexities of international trade than ordinary court proceedings are. The parties to an arbitration can choose arbitrators with relevant technical knowledge. They can select a place for the arbitration proceedings which will minimise their costs and they can avoid the uncertainty associated with proceedings before foreign courts.

The effectiveness of international arbitration depends, however, on arrangements in the countries concerned for the legal recognition and enforcement of arbitration agreements and awards. Recognising this, the Economic and Social Council of the United Nations convened a conference, in June 1958, to work out a convention. Forty-five States, including Australia, attended the conference. A Convention was concluded and came into force on 7 June 1959. To date, 41 States have ratified or acceded to it. They include such major trading partners of Australia as

Japan, the United States of America, France, the Netherlands and the Federal Republic of Germany. Last December the General Assembly of the United Nations resolved to invite States which had not ratified or acceded to the Convention to consider doing so. This was done on the recommendation of the United Nations Commission on International Trade Law (UNCITRAL), the members of which were of the unanimous opinion that the Convention is of substantial benefit to international trade.

The present Bill deals with the matter on a national basis. This is desirable because the implementation of an international Convention is involved and because that Convention concerns trade and commerce with other countries. The Australian Parliament has the necessary power to proceed in this way and should exercise that power. The former Government had proposed that the matter be dealt with by State and Territory legislation, but that would have been unsatisfactory. The resulting multiplicity of legislative provisions would have been confusing, particularly to parties in other countries. Apart from that confusion, there would have been uncertainty as to when the necessary legislation in the eight different jurisdictions would have been passed.

The present position in Australia is that foreign awards such as those covered by this Bill are recognised and may be enforced in accordance with the State and Territory law that governs domestic awards. However, a party seeking to enforce a foreign award under that law has to adduce evidence to prove that the parties had duly submitted the matter to arbitration; that the arbitration was conducted in accordance with the submissions; and that the arbitration was valid according to the law that was applicable to it. To prove those matters, it will often be necessary to arrange for the attendance at the Australian court of witnesses from other countries. Enforcement is therefore likely to be a difficult and expensive task.

A better procedure for enforcement of certain kinds of awards is available under the State and Territory legislation that provides for the reciprocal enforcement of foreign judgments. However, that legislation is applicable only if the award in question was made in a country with reciprocal legislation and is enforceable in that country as a judgment of a specified court. The Bill I now present expressly preserves the existing procedures I have mentioned for the enforcement of awards. But it provides for an additional procedure that will be simpler, less expensive and generally more satisfactory. Under the Bill a party seeking to enforce a foreign award will need only to produce to the Australian court the duly authenticated original award or a certified copy of it plus the original or a certified copy of the arbitration agreement under which the award purports to have been made. If any of these documents are in a language other than English a certified translation will also be required. The onus will then be on the other party to establish any reason that may exist why the court should not enforce the award.

The Bill provides that a court will be able to refuse to enforce an award for any of the following reasons: Incapacity of the party against whom enforcement is sought; invalidity of the arbitration agreement under the relevant law; absence of proper notice of appointment of arbitrator or of arbitration proceedings or inability for some other reason of a party to present his case; scope of award outside the submission to arbitration; composition of arbitral authority or arbitral procedure not as required; award not yet binding or already set aside; subject matter not capable of settlement by arbitration under relevant Australian laws; and to give effect to the award would be contrary to public policy.

As well as providing for the enforcement of foreign awards, the Bill provides for the recognition of agreements to submit differences to arbitration. This recognition is in the form of a right given to a party to such an agreement to obtain a stay of any court proceedings that may have been instituted to determine a matter that had been agreed to be submitted to arbitration. On granting such a stay of proceedings the court is to refer the parties to arbitration. In this respect, the Bill will go somewhat further than the existing State and Territory legislation under which the question whether a stay of proceedings should be granted is left to the court's discretion.

Arbitration agreements will be recognised by the provision I just mentioned if the procedure is governed by the law of another Convention country; if there are Australian parties to the agreement, even though it is governed by the law of a non-Convention country; or if parties to the agreement are from a Convention country. The recognition and enforcement provisions in the Bill will be applicable in any State or Territory Court and also in the Superior Court of Australia when that Court has been established.

The Bill provides for Australia to accede to the Convention with a declaration that it is to extend to all our external Territories except Papua New Guinea. Two other declarations are permitted by the Convention but are not provided for in the

Bill. One possible declaration would be that the Convention shall only apply to awards made in the Territory of another contracting state; the other would be that the Convention shall only apply to differences considered to be 'commercial'. Neither of these 2 declarations would serve any useful purpose for Australia and in fact would detract from the usefulness of the Convention.

Mr Deputy President,the advantages of Australian accession are clear. As far back as 1959 all the Australian States had indicated their view that the Convention should be adopted. Regrettably it has taken until now for the necessary legislation to be introduced. On behalf of the Attorney-General (Senator Murphy), I commend the Bill to the Senate.

Debate (on motion by Senator Rae) adjourned.







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