How Do I Sign New York Banking Arbitration Agreement

How do i industry sign banking new york arbitration agreement

my name is david levin and I'd first like to correct mislead you in deceptive material which has been presented to you I'm not currently the chair of Victorian barge school resolution committee I'm afraid I was about four years ago okay so that's long long part are afraid and I also signed the bar role in 1997 but actually 1977 my youthful good looks ever cooked the live effort anyway we are here in interesting times for arbitration we've got a relatively new Act certainly in Victoria that's pretty new for practitioners we've got a judge in charge of the arbitration Liz the Honorable Clyde Croft who is enthusiastic when it comes to arbitrations and perhaps more important extremely knowledgeable and has had a background in practice in arbitration as a practitioner for parties and for an extended period as an international arbitration himself so that and he's established a working system in the Supreme Court which allows one to get a hearing on a procedural aspect of an arbitration which is going down the wrong path very quickly and that's extremely important to allow people to have confidence that if they embark on the arbitration path they're going to be able to get through it without lengthy delays if there are any problems and generally on the court there is of course enthusiasm and there has been for the past ten years or so for alternative disappear so arbitration is a limb on it if you can resolve your dispute outside the court generally speaking you ought to be able to get it resolved more quickly there's been a long time criticism of say the past 25 years of arbitrations in Victoria as being more and more judicial more discovering more of the core processes being adopted and assimilating the arbitration process perhaps there's a push back against that now because the courts themselves are pushing back now we've got the Civil Procedure Act general discovery is now not acceptable in the commercial lists and so arbitrators hope you're going to feel more confident in knocking back those sort of applications for why and expensive discovery and limiting matters so today we have two very experienced practitioners we've got some michael roberts who from his cv i won't go into it because it's there for you to read has been involved in many arbitration matters and matters arising from arbitral proceedings which had the misfortune to proceed into the court system and he will be able to provide a great deal of information and knowledge to us today and very Bailey they who was a member of the working group of the Commonwealth 80 on commercial arbitration and the new model law legislation so that he is a person who's had a real insight into how a new legislation was drafted and what it intended to achieve so without any more ado we're going to have time for questions because we've started promptly I think it's probably better to hear both papers and deal with questions at the end but if you've got any particular questions after one of the addresses and do indicate thank you very much aight aight it always seemed to be at sessions where there are more than one david which is very handy good morning everybody and thanks for coming in so early my focus might be thought to be a little bit trite in some ways that particularly with such and looking around the room people have got as much experience as i have i suspect but because of the new regime under the commercial arbitration act of 2011 in victoria which is based on the model law some of the things we've been taken for granted over the years services what an arbitration is an arbitration agreement is have been slightly altered and i think it's worth just refreshing our approach those those matters thought i started by the same by way of overview the importance of the agreement to arbitrate has at least four consequences the first one which is fundamental that is that it's the source of the jurisdiction of them the word jurisdiction might be a bit questionable some quarters but jurisdiction power or authority of the arbitrator or the tribunal to conduct the arbitration so without that the arbitrator is not clothes of any authority at all and secondly which is a corollary of that and that is just what range of disputes does the arbitrator have the agreement will direct the scope of the dispute and one hopes that it's wide enough to embrace the dispute which has arisen and that's some often a focal point for litigation the third matter is the primacy of the agreement that is that the what comes out of the model law and the earlier New York Convention is that the arbitration agreement is enforced by the court such that if one part he issues a proceeding in court the other party who would prefer to arbitrate may have applied a court to stay the proceeding well that principle is carried forward into the commercial arbitration act that it supports the arbitration agreement and finally and this is another area which is currently under some dispute ation what is the enforceability of the outcome of the arbitration that again goes right back to the agreement to arbitrate because one basis for setting aside an award is that the agreement had some invalidity just turning to those matters I won't deal them all in great depth but the first theme I address is the agreement itself and I pick up the definitions in section 7 of the the Victorian Act once these there that it's an agreement in writing and one of the in writing of course has been expanded a bit by what the model origins and so what it says there is quite helpful so that you may have an agreement that simply follows from some correspondence confirmation by email something of that nature and the other aspect I think that's important is this let's apply is that you've got an argument about whether the agreement to arbitrate is sufficiently clear as to some matter what happens if you use your notice of dispute and the dispute gets underway well the Act addresses that by saying in subsection 7 an arbitration agreement is in writing if it is contained in exchange of statements of claim and defense in which the existence of an agreement is alleged by one party and not denied by the other that's a very important provision because if as I say the arbitration gets underway then and there's no disputes raised about the content of the agreement it may become too late to argue later on that the disputed question was outside the scope of the arbitration agreement that's a very useful provision and I've had to consider it recently in relation to a matter where the parties have been in dispute ation about the scope of the agreement and the arbitration was constituted and Julie held now perhaps turning to the jurisdiction of the arbitrator as I've said the this rests entirely on the private agreement of the parties and an important corollary of that is that the jurisdiction is only enlivened in relation to the parties to the agreement not in respect of third parties I get rather striking illustration of the effective that proposition is the recent Court of Appeal case here in imc aviation solutions in ltown cooter he remembered that that was an arbitration conducted in Mongolia about a mining dispute there were basically two parties of Mongolian company and a company which allow it was operating out of australia i think was incorporated in another place the arbitration was held for mongolian arbitrator and an award was delivered and then the award another party I am C aviation solutions was found itself mentioned in the award as a as a co award debtor I suppose put it in any event the award was sought to be enforced in Victoria and the first instance on a summary application basically the way these things happen under the National Air Act the award was given effect now there was an appeal to the Court of Appeal and I MC aviation solutions were successful in taking the point that not only was it not a party to the agreement to arbitrate but it did not participate in the arbitration and thus it was not appropriate that the award be recognized or enforce against it so unless you're a party to the agreement then the arbitrator can do nothing now in relation of third party I would just one caveat i suppose is that that doesn't entirely removed from the range of remedies in an arbitration the ability to go to a court to get some sort of relief against the third party by way of injunction but that of course is only incidental to say preservation and assets or something of that nature and it doesn't really bear on the award which is given between the parties perhaps I might just say something about the way the award works is it issue as to why an arbitration is not contrary to public policy as a ousting the jurisdiction of the courts well the solution to that is that what happens when you agree to arbitrate is that you designate a third-party the arbitrator to resolve a matter between the parties in much the same way as you would mediate and support this view the effect of the award is like rather like an accord and satisfaction it replaces the original cause of action for breach of an agreement for argument's sake with a new cause of action which is the right to sue on the award and so all the arbitrator is doing is effectively helping the parties resolve their dispute by making a binding determination which replaces the original cause of action that was held in a high court decision some years ago dobbs in National Bank of Australasia in passing wasn't directly issue in the case but the court made it quite clear that an arbitration was not contradict policy as ousting the jurisdiction of the court so that's a little about the structure of the arbitration agreements and how it operates it it doesn't have to be a specific standalone agreement it's quite clear from the what is now in the commercial arbitration act that an arbitration agreement can be either an agreement to arbitrate made between the parties when a dispute arises or it may be and is probably most common a clause in an agreement a dispute resolution clause that provides through arbitration it may be part of a staged process involving mediation negotiate asian first followed by arbitration if that if the previous process doesn't work and it but whatever it is where it's in the main agreement or a separate agreement the the agreement is given primacy by a doctrine which is that the arbitration agreement stands separate from the main agreement it's a it has a life of its own in effect and the reason for that is that it enables the tribunal vested with the conduct the arbitration to determine matters such as whether the main contract has some vitiating problem such as misleading and deceptive conduct or in one case the United Kingdom fraud or bribery without affecting me all of the jurisdiction of the arbitrator to determine that dispute that's it come to be known as the concept of separable ax t and if you go to the modern law and the Victorian act you'll find it enshrined in the in the legislation itself in section 16 where it provides that the tribunal can rule on its own jurisdiction including any objections with respect to the existence or validity of the arbitration agreement so that's a an important provision supporting not just the agreement but also the whole process now I'll turn to perhaps the main theme one of the main themes of today's talk and that is the arbitration agreement as to scope now this is becoming a bit of a battle but i suppose been a battleground for years but it seems not to have gone away and it think it just behaves us too perhaps have a bit of a refresher on how we got to where we are and what I'm saying that it as we all know there are two different regimes for arbitration there's a domestic regime for domestic arbitrations under the commercial arbitration act of Victoria and there's an international regime under the national arbitration act of the Commonwealth most of the decisions you find are dealing with international arbitrations but much of what has been said recently I think applies to both the interpretation of arbitration clauses or agreements in international and in domestic arbitrations but where there's a difference we can perhaps have a discussion about that later but the question of scope was recently given a fairly broad compass buy a house of lords decision premium NAFTA products and hilly shipping company which is a series of shipping disputes where it was alleged that the agreements have been obtained by bribery in the shipping industry and I think was out of Russia now the House of Lords had to consider whether the arbitration clause was wide enough to deal with the disputes as to the entry into of the agreement and the wording in the shipping charters referred to any dispute arising under this charter of course the argument what against the jurisdiction was well you couldn't have a charter if you had bribery which led to the entering two of the charter therefore didn't arise under the charter it arose before the charter or it meant the chartered would never have effect lord hoffmann wrote the leading judgment of the house and he made a number of important points about construction of the clause is that of course of scope of an arbitration clause is essentially one of construction but if the adding to that he said this businessman in particular are assumed to have entered into agreements to achieve some rational commercial purpose and an understanding this purpose will influence the way in which one interprets their language so he's put a bit of flavor there into why you would have an arbitration clause in the first place and he went on to say even arbitration clause was included in the parties contract you had to inquire into the purpose for the clause in his opinion by including such a clause the parties expressed the desire for the referred disputes to be dealt with by arbitration on the grounds of matters such as neutrality expertise and privacy they want a quick and efficient adjudication perhaps your underline those words in light of recent experience if the purpose of the clause is accepted on such basis basis then Lord Hoffmann went on to say these words its construction must be influenced by whether the parties as rational businessman were likely to have intended only some of the questions arising out of any relationship would have you submitted to arbitrators and others were to be decided by the national courts if there's no rational basis upon which businessmen will be likely to have wish to have questions of validity or enforceability of the contract decided by one tribunal and questions about its performance decide by another 11 we need to find very clear language before deciding and must have had such an intention now one can't argue with the sense of that why would you want to have disputes in two different tribunal or two different jurisdictions the trouble is how do you hit the now he also looked to the intent of the English Arbitration Act in supporting separuh bility which we just looked at a moment ago but the key thing I think he comes to when he turns to construction of this paragraph 33 upset it out he says in my opinion the construction of an arbitration clause should start from the Assumption the parties as rationalism are likely to her intended any dispute arising out of the relationship into which they've entered or purported winter to be decided by the same tribunal now that's I think the big jump in his in his reasoning which has led to a few issues as to just how we should approach interpreting arbitration clauses so I've posed the question will that approach be following in Australia now I think some of us thought that that might be the case however I think necessary to sort of just go through in a couple of steps what has happened going back to nineteen ninety-eight there was a another shipping case but it was an Australian case to do with shipping of wheat and what had happened was they had been a negotiations about whether or not the holds of the ship were free of the disease and the Charter was entered into and of course it turned out that the holds weren't clear of the disease and there was a case to sort out who is liable now the spirit revolved around pre contractual contract there was a misleading and deceptive conduct claim under the ol law section 5202 Trade Practices Act combined with claims under the under the contract itself and the federal court had to consider whether the wording any dispute arising from this charter picked up the arbitration of the pre contractual issue of misleading and deceptive conduct and the court took the view that no you couldn't but even though those words are fairly wide they didn't comprehend claims under the trade practices act that might arise out of pre contractual conduct and that was regarded I think at the time as as being a bit out of step with an earlier decision Francis marketing channel on Virgin Atlantic Airways however it was a very carefully reasoned decision and we considered that well that was the way it was going now going forward a bit too 2006 the full federal court had the decision in commandant a Marine Corp and pan Australia shipping and the leading judgment that cases of Justice also now president also he wrote what I think is one of the leading expositions of international arbitration in Australia it's a wonderful decision in that it covers a whole range of aspects but turning to construction of the arbitration clause he had to look at just where we were having regard to international practice and and what a transfer hired elsewhere including the houses that's after the house of lords sorry I just let me make sure I got my chronology right the House of Lords was 2007 I think so he's a bit before but here in any event justice also had to again consider the words arising out hold he noted the trend of authorities was towards a liberal approach to interpretation of such clauses underpinned by the scent sensible presumption the parties didn't intend the inconvenience of having their dealt with in two different places however I think it's fair to say he was not prepared to go so far as to say there was some presumption you started off with all you that you had to adopt a liberal construction so I don't think from that he's going as far as the house of lords however he was not prepared to be as confining as the earlier federal court decision in in the high third and kooky own traders the one about the shipping of wheat he considered that the words arising out of could cover wider disputes then than the previous decision now so we get to a point where we're looking at more generous view of interpretation of the scope of arbitration clauses then come to recent decisions which I don't think they make a trend backwards but they do make us look to the question of construction more carefully and I think they they they teach us not to interpret all the bases any particular presumption or assumption the first of those was a case of justice Hargreaves in TCL air conditioner and castiel electronics now I speak from the background of having been involved in that case so there's some things I probably can't say but I've set up that there for you the clause justice Hargreaves was at pains to point out that this was an agreement that had not been drafted or didn't appear to have been drafted by lawyers was an agreement drafted between two sets of Chinese parties son based in China and some bass in Australia and it wasn't it particularly elegant agreements and the dispute arose as to what disputes could be dealt with under the agreement it was a distribution agreement appointing one part he'd have an exclusive distributorship for Australia and shield to that agreement the parties had entered into a course of dealings whereby products were imported from China and obviously under the authority of the agreement that and of separate orders and which led to separate sales now the question was all those disputes swept up under the auspices of this clause and the arbitral tribunal and taken it very large view of the interpretation and said they could but just as hargrave took a once I took a microscope the clause would he took it the view that the of the words if you look at the clause there paragraph fifty-one of my paper in case there is any breach of the provisions under this agreement by either party they were the words and and he says at paragraph 53 of my paper the scope of a referral for arbitration depends on the proper construction of the relevant arbitration clause according to roll the court NASA telescope involves giving meaning to the words chosen by the parties in that task where the words of the claws are sufficiently elastic in general or capable of broad and bless elini that should be given a liberal construction the justification for this is the presumption of commercial parties are unlikely to intend the inconvenience home to and started having possible to shift from the transaction being heard in two places he also makes the comment liberal approaches Justice five where the parties are operating in national mark and come from different countries so that's fine so far and all those conditions of course was the some extent satisfied in terms of the parties being from different countries and they might have been presumption if they wanted their disputes to be all held the one place but his honor was not prepared to go so far as what have been it what had happened in the House of Lords decision he went out of his way to say this in my opinion the statements by all soft and austin-ji that there's no legal presumption of work are correct and have not been altered by anything said by all SocGen command data or by Lord Hoffmann in premium NAFTA so justice Hargreaves is saying look there is a limit to how far you can go with presumptions or implications or large interpretations and the so they gave the words under this agreement he said this didn't importantly arbitrators to interpret the clause as operating as if it was some umbrella to draw in the disputes under the collateral sales agreements now so that but I think I was a correct decision and I think it just sounds a bit of a word of warning in terms of where we got to with the House of Lords now more recently hi in the litigation between gina rinehart and her and three of her children case came before the new south wales called an appeal what happened there was that they've been early a family dispute about the family trust and that have been resolved by the entry into of a deed and in further speech as we know broken out between the children and their mother and question was whether those disputes thought all be confined to an arbitration hearing to be held confidentially ism this is an example of how things can blow up and not be confidential the question was similar wording to what Justice Hargraves looked at in this in the Reinhardt case the words used were under this D now what's interesting is how Chief Justice Bathurst looked at it and he went out of his way to distance the court from the English decision and paragraph hadn't pretty one of his judgment said not appropriate for this court to adopt what Lord Hoffmann described in at the own corporation as a fresh start and construed clauses irrespective of the language in accordance with the presumption of parties are likely to intended any dispute arising out of the relationship into a subpoena to be decided by the same tribunal unless the language makes it clear certain questions were intend to be excluded the approach suggested by Lord Hoffmann it's contrary my opinion the approach laid down by the high court as to the construction of commercial contracts and he went on to say the expression under this deed has consistently been given a narrow construction than phrases such as arising out of the other members of the court justice of Hilma cold just feel young livid short concurring judgments expressly adopting the same interpretation approach so that we we reach a situation where if we're instructed to assist in drafting an arbitration agreement be very careful as to the definition of what disputes or the description of what disputes are covered if they're to be fairly specific then the language must be used accordingly on the other hand if all sorts of disputes are to be included including pre contractual disputes or umbrella type disputes and other other dealings of the part which arise out of the contract in some way or have some connection with it then you need a much broader assembly of words and one needs to be say take a step back and be very careful taking into account those recent decisions I referred to I also make the point that one needs not just to look at the clause itself but the overall agreement to see that it sits in the right setting so there's nothing in the main agreement which might confuse the meaning of the arbitration clause the other another aspect the other side of the coin in relation to the agreement is that and as most of us in our practices are have a situation where client comes in and a dispute has arisen and you're called on to draft the notice of dispute or perhaps a statement of claim if you're looking at a dispute that might be arguably outside the dispute resolution clause well then you need again to look very carefully the dispute resolution clause and if you come to the view that the dispute falls outside the scope of the clause then you need to adopt a bit of a strategy do you approach the other side to see if they're prepared to include it that's probably it maybe you could naive do you simply draft a notice and dispute on a wide basis and and hope the other side will not demur from that how do you go about well I think these are matters of obviously practice at degree there's a lot of sense i think in trying to persuade the other side if the if the clause is very tight to include all disputes to avoid the problem of going to two different places to resolve two different sets of disputes but be as it's may I think you just need to address that question in a way which protects your clients interest also doesn't waste a lot of money and disputation as to sorry how wide the clause is I say I'm getting wound up people with 11 last topic I think which is associated with the scope and that's the question of arbitrability which is a very curious concept it has its life from comes originally out of the New York Convention it's in the world law and it comes down to this the wording I think which is used in those places is whether the dispute is whether it's capable of being determined in an arbitration now that initially I think was regarded as being confining and the point came up again in the Reinhardt case as to whether disputes under a trust might be dealt with by an arbitrator Chief Justice Bathurst engaged in a very lengthy review of arbitrability came to the view that there was no difficulty so long as you didn't ask from the courts ultimate questions that understand you the court must decide and he also noted a recent decision of justice hamerschlag in the New South Wales supreme court in a case called locked and annoyed energy systems where there was a dispute about a patent and it's to do with royalties being paid and so forth one party said well no you're an arbitrator can't decide to speeds about the patrons because they're matters that arise under statute will Harris like correctly in the view of Chief Justice feathers looked at what the arbitrator of English sight it was society on was not deciding the validity of a Peyton he was deciding simply the rights to use the patent by contract and he said there was no problem in an arbitrator dealing with that I just leave it there we can pursue you