Australia: Is an international commercial court for Australia a viable option?

Recently there have been a number of appeals calling for an international commercial court (ICC) to be established in Australia. Following the first decision of a newly established ICC in the Asia-Pacific arbitral-hub of Singapore, this becomes all the more relevant. But what are ICCs? Why do we need them? And are they a viable option?

WHAT ARE ICCS?

ICCs are distinct from normal courts because they have express jurisdiction to hear international cases.

Some key examples of ICCs worldwide include the London Commercial Court, and the newly established Singapore International Commercial Court (SICC).

While the London Commercial Court may be seen as the traditional home of international commercial litigation, the establishment of the SICC has shifted the focus to Asia. It remains to be seen whether its impact on international commercial litigation will be as significant as Hong Kong and Singapore's impact (as arbitral centres) on international commercial arbitration over recent years.

WHAT DOES THE ESTABLISHMENT OF THE SICC MEAN FOR AUSTRALIA?

The SICC was officially launched in January 2015, and like other international commercial courts, it is a companion, not a competitor to, international arbitration. Essentially, it provides disputing parties with an alternative method of resolving transnational commercial disputes.¹

Singapore is a leading arbitration centre in the Asia-Pacific region, and this court adds another string to its bow for international commercial dispute resolution.

Interestingly for Australia, the SICC recently handed down its first decision, BCBC Singapore Pte Ltd v PT Bayan Resources TBK [2016] SGHC(I) 01. The dispute concerned the construction of a coal processing facility in Indonesia and involved parties from three jurisdictions: Indonesia, Australia and Singapore. While disputes concerning complex cross border transactions of the type dealt with in this case are often resolved by international arbitration, the quality of the SICC's decision (which was decided by three decision makers including noted arbitrator Sir Vivian Ramsey) might lead to more parties resolving such matters through international commercial courts.

Our analysis of the case is available in our article: BCBC Singapore Pte Ltd v PT Bayan Resources TBK [2016] SGHC(I) 01.

SHOULD AUSTRALIA GET AN ICC?

There have been numerous appeals for an international commercial court to be established in Australia. A recent publication by their Honours Chief Justice Warren and Justice Croft of the Supreme Court of Victoria calls for one, by highlighting the need to embrace options beyond arbitration for international commercial disputes.² In the publication, their Honours note that establishing international commercial courts 'does not pose an existential threat to the practice of international commercial arbitration' as they simply 'add to the range of options available to parties involved in international commerce'.³

WHY DO WE NEED ICCS?

Arbitration can have limitations when it comes to international commercial disputes. While arbitration is very flexible and the parties can determine almost every aspect of the proceeding, there is a lack of regulation in the arbitration industry which can give rise to ethical issues (a point highlighted by their Honours).⁴ Further, enforcing awards in some countries is more difficult than in others. Arbitral proceedings also have limited appeal rights (although this may be a benefit for some). ICCs present an alternative option to arbitration for international commercial disputes: litigation.

According to their Honours, however, the most important reason supporting the need for an alternative option to arbitration such as ICCs, is that arbitration was intended to be an 'ad hoc, consensual, convenient and confidential method of resolving disputes' and will not, at least on its own, drive global commerce forward by harmonising substantive commercial laws, practices and ethics.⁵

WHAT ARE THE POTENTIAL DOWNSIDES OF ICCS?

The biggest advantage of arbitration is that arbitral awards are enforceable in the 156 signatory countries to the New York Convention. Court judgments, such as those that would be handed down in an ICC, do not enjoy the benefits of this Convention which requires signatory countries to ensure courts readily enforce arbitral awards without a merits review of the case.

Their Honours suggest that this might change with the Hague Choice of Court Convention which came into force on 1 October 2015. This convention principally tries to force signatory States to respect choice of jurisdiction clauses, thus facilitating international litigation. While only a handful of countries and the European Union have signed the convention, Australia has shown a willingness to become one of them.

Even if the Hague Choice of Court Convention becomes as universal as the New York Convention, arbitration is likely to be the preferred choice in circumstances where neither party wishes to subject themselves to the jurisdiction of courts of the other party or the publicity inherent in any court process.

IS THERE A PLACE FOR AN ICC IN AUSTRALIA?

An international commercial court in Australia would need to be supported by a legislative regime. There is nothing conceptually difficult with this suggestion though. Their Honours note that the SICC in particular provides a useful case study for Australia as it 'accommodates parties foreign to its sovereign jurisdiction,' and 'will not decline to assume sole jurisdiction solely on the ground that the dispute is connected to a jurisdiction other than Singapore'.⁶

If Australia wants to compete with the likes of Singapore and Hong Kong for a slice of the international commercial disputes resolution market, then it makes sense to establish an international commercial court in Australia. Like the jurisdictions mentioned above, Australia has a reputation for high quality judgments based on sound judicial reasoning. Whatever system is established, it must be an efficient docket and provide quick access to justice, much like the Fast Track list of the Federal Court.

Their Honours note that despite the legal landscape in Australia, including the federal system of government, an international commercial court would afford it the opportunity to 'present an integrated commercial court to the region and to the world'.⁷

Footnotes

¹Singapore International Commercial Court website.

²The Hon Chief Justice Marilyn Warren AC and The Hon Justice Clyde Croft, ' An International Commercial Court for Australia: Looking Beyond the New York Convention' - A paper presented by the Honourable Chief Justice Marilyn Warren AC and the Honourable Justice Clyde Croft at the Commercial CPD Seminar Series, Melbourne, 13 April 2016.

³ 16.

⁴ 15.

⁵ 15. (Their Honours refer to extrajudicial comments by the Chief Justice of Singapore – see Chief Justice Sundaresh Menon, "International Commercial Courts: Towards a Transnational System of Dispute Resolution" (Opening Lecture for the DIFC Courts Lecture Series 2015, Dubai, 2015) [14]–[15]).

⁶ 22.

⁷ 35.

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