i-law

International Construction Law Review

ARBITRATION: CAN IT ASSIST IN THE DEVELOPMENT OF THE COMMON LAW – AN AUSTRALIAN 
POINT OF VIEW

Andrew Stephenson and Astrid Andersson

1. INTRODUCTION

Recent amendments to arbitration legislation in Australia have increased the demand for arbitration. Those amendments were directed to various matters, but importantly they were designed to increase certainty in the finality of arbitral awards by restricting the right to appeal, and to strengthen the confidentiality obligations associated with arbitrations.
These amendments have been greeted with significant enthusiasm by the commercial community, in particular those involved in the construction of major projects. In the past five years, in excess of AUS$200 billion has been spent on a range of energy and resources projects. As those projects reach completion, disputes are becoming apparent. Many will be resolved by arbitration. The scale and complexity of these disputes are unprecedented in Australian legal history. Many claims exceed AUS$1 billion. However, court processes are ill-equipped to deal with them.
There are many reasons parties choose to arbitrate. The most often cited are the ability to select an arbitrator with the requisite expertise, confidentiality, the adoption of a process that is more efficient than court processes and finality.
An unintended side effect of the increase in arbitration is the corresponding reduction in litigation, and as a consequence, new case law. There is a growing concern that this decrease in new jurisprudence is stunting the development of the common law. This problem is particularly pronounced in relation to construction law where final and binding arbitration is the default dispute resolution mechanism.
This article proposes a way to mitigate the impact of arbitration on the development of the law in Australia. Publishing awards with the parties’ identifying information removed, but containing the arbitrator’s name, the relevant facts (appropriately sanitised to maintain the parties’ confidentiality) and the legal reasoning, would have the potential to contribute to the development of construction law and lead to a more informed marketplace for consumers of arbitration services. As is discussed below, the arbitration award would never have precedential value, however, a well-reasoned arbitral award from a respected practitioner is likely to be just as persuasive as other non-precedential material regularly used by courts when considering novel or difficult issues.

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