Despite some tentative and positive steps recently, the impact of COVID-19 will continue to be felt widely with new legal and regulatory measures impacting the way in which all businesses operate. As our previous updates have described, this impact is also being felt by courts across Australia with many adopting temporary changes to their operations in a bid to enforce social distancing and protect the health and safety of court staff and users. Some courts are limiting face-to-face contact by postponing hearings, prioritising urgent matters and where possible, utilising technology to conduct matters remotely. In a joint statement on 16 March 2020, Queensland's Supreme Court Chief Justice Catherine Holmes and District Court Chief Justice Judge Kerry O'Brien stated that an array of changes should be expected to court protocols as the courts continue to consider further adjustments to their procedures in order to deal with the challenges posed by COVID-19.1
These are unchartered waters for the courts and litigants alike and with the situation evolving daily, parties may experience significant delays in the resolution of their matters. In these uncertain times, it is ever more important for parties to consider alternative methods of dispute resolution. This holds true even for parties whose disputes may already be before the courts, but whose proceedings may be delayed in light of COVID-19.
Perhaps more than ever, arbitration is an attractive alternative to litigation. Here is why.
Litigation is governed by a number of procedural rules and regulations, many of which have tightened since the onset of COVID-19. For instance, many courts have moved to making decisions 'on the papers', which means that the judge's decision will be based of written materials filed by the parties as opposed to giving parties the opportunity to present verbal evidence or oral submissions. In the Queensland District Court, judges have discretion to stagger the hearing of particular matters where there is a significant number of matters listed for the same day. This means that times and dates of hearings may be subject to change or delay. These new procedures are being tightly enforced by the courts meaning that parties have very little flexibility or say over how their dispute is managed.
One of the key advantages of arbitration is flexibility. Unlike court proceedings where parties have little to no control over the process, parties to an arbitration can exercise control over different aspects of the arbitration process in order to suit their specific requirements. Parties may choose the procedure for the arbitration, including time frames for various steps in the proceeding and even stipulate by when an award must be delivered. Parties may also choose the background and qualifications of the arbitrator, where the arbitration is held, the language used, and the content and format of evidence taking.
The public filing of court proceedings in relation to a commercial dispute can have negative effects on the parties involved, and this is particularly true for companies whose reputational or commercial interests may be at stake. Parties to litigation should be aware that documents filed in court proceedings may become available to the public. If a litigated matter proceeds to trial, any member of the public, including the media, can attend a hearing (unless the court orders otherwise). One of the benefits of arbitration is confidentiality. Normally, arbitration proceedings are confidential and all documents and information are exchanged on a confidential basis. Arbitration hearings are generally held 'in camera', meaning they take place in private.
Australian courts are facing a backlog of cases which will likely increase as a result of the challenges posed by COVID-19. The consequence of this is that parties seeking a trial may risk waiting anywhere between a few months to a few years before a trial is set down and even more delay before a final decision is handed down. Even if the appealing party is successful in obtaining judgment in their favour, the other party may have recourse to appeal to a higher court and thus prolong the final determination of the proceeding. The appeal process can be drawn out with significant costs being borne by both parties.
In contrast, the decision of the arbitrator or arbitral tribunal is in the form of an award and is final and binding. There are limited rights to appeal or set aside an award. Under the uniform commercial arbitration legislation enacted in all states and territories in Australia, a party can only appeal an arbitral award in circumstances whereby the parties to the arbitration have agreed that an appeal may be made on a question of law. A party can only seek to set aside an arbitral award in circumstances including (but not limited to) when a party believes that the arbitrator has made an award outside the scope of the submissions to the arbitration, the arbitrator has failed to accord procedural fairness or act in accordance with the rules of natural justice, or the award is in conflict with public policy.
The most important feature of arbitration, especially in international arbitration, is enforceability. An arbitral award is recognised and enforceable in over 160 countries which are parties to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).2 A successful party, bearing an award in its favour, can seek to enforce its award against the losing parties' assets in any of the countries that are party to the New York Convention. When faced with an application for recognition and enforcement of an award, a court can only refuse on very limited grounds primarily related to procedural fairness, breaches of natural justice or if recognition or enforcement would be contrary to public policy.
If you have a dispute before the court you may consider arbitration as an alternative to facilitate a more efficient resolution of your dispute.
If you think a move to arbitration might be appropriate for your dispute, we can assist in advising in relation to any existing arbitration clauses you may have in your contract, or by assisting you to negotiate and draft an arbitration agreement that suits you, taking into account the above factors.
Please contact one of our experienced team members for guidance on how best to navigate your situation.
1 Queensland Courts, New jury trials suspended for the immediate future
2 New York Convention, opened for signature 10 June 1958, 330 UNTS 38 (entered into force 7 June 1959).
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.