Arbitration is a special arrangement made to solve a commercial dispute without involving the court system. The resulting decisions are usually made by non-government citizens known as arbitrators 1. It is a good way of solving disputes because the members settling the case are usually of the same cadre hence creating a neutral forum as well as easing flexibility. Another great advantage of arbitration is the confidentiality of the matter to be solved. However, the process can be slow due to the selection of arbitrators. Despite all these, research has shown that most commercial disputes globally are solved through International commercial arbitration and among them is the Australian Granites Limited vs. Eisenwerk Hensel Beyreuth Dipl. Ing. Burkhardt GmbH [2002] 1. This was a case in Australia supposed to be settled through arbitration but instead used another method of settling cases. However, findings later showed that it was plainly wrong to solve the case in such a manner because of the following;
The affected parties in the case opted to follow the ICC rules instead of adopting the International Arbitration Act. The most disappointing thing was that it was only implied and not expressed in any way. It was also noted that both the plaintiff and defendant showed enough intention in the application of ICC rules and since both rules are not simultaneously applicable it was opted out. The Arbitration Act allows the parties to cop out Model Law instead of Act 2.
Articles 19 and 18 of the Model Law are important provisions of the Model Law and the great Charters of the Arbitral Procedure3. This is because Article 19 gives a chance to the affected parties to decide on a different procedure other than the default ones. In addition, this case was not among the cases in practice as in the first incident Fryberg J a High Court judge held that section seven clauses two had been overruled by article 8. The case’s stay proceedings also depended on section seven clause two of the Model law. From the aforementioned elements, this case can be referred to as bad law. This is major because it was not in accordance with the right procedures required in the settlement of a commercial dispute. The reason as to why it is termed as bad law is because it goes against the good Law hence cannot be used as a reference case.
Australia has modernized its International arbitration legislation through amendments passed by the Australian Federal Senate with the intention of ameliorating the efficacy of its arbitration proceedings4. Unlike in the past, the current amendments conform to the Model Law. The change is very significant as it states that in incidences where the Model Law employs arbitration then the arbitration Act does not apply to such arbitration4. The Australian Granites limited case is further seen to be bad law at the moment because it did not conform to the current objective of the novel legislation whose aim is to encourage Model Law.
Reference
- Jones, D. (2007). International Commercial Arbitration and Australia. Web.
- Kalderimis, D. (2010) Australia Reforms International Arbitration Legislation. Web.
- Trone, M. And Moens, G. (2007). Foundation for International Commercial Arbitration in Australia. Web.
- Zeller, B. (2010).Global Business Law. Web.