AUSTRALIA AND INDONESIA SIGN COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT

On 4 March 2019, Australia and Indonesia signed the Australia-Indonesia Comprehensive Economic Partnership Agreement (“CEPA“). In this post, we briefly consider some of the noteworthy features of the CEPA chapter on investment and in particular its provisions regarding investor-State dispute settlement (“ISDS“).

Indonesia and Australia signed a bilateral investment treaty (“BIT“) containing ISDS provisions in 1992. Both States are also party to the ASEAN-Australia- New Zealand Free Trade Agreement (“AANZFTA”), signed by Australia in 2009 and Indonesia in 2012, which contains an investment chapter.

As we reported in a previous post, Indonesia announced in 2015 that it would seek to renegotiate and replace its older investment treaties with more modern agreements. The Australia-Indonesia BIT, however, will remain in force even after CEPA enters into force. This is in contrast to the Hong Kong-Australia Free Trade Agreement signed this week (see our post here) pursuant to which Australia and Hong Kong have agreed to terminate the Hong Kong-Australia BIT, which was signed in 1993 and became infamous in Australia after Philip Morris used the treaty to commence arbitration against Australia challenging the Tobacco Plain Packaging Act 2011.

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AUSTRALIA AND HONG KONG SIGN NEW TRADE AGREEMENT CONTAINING INVESTOR-STATE DISPUTE RESOLUTION PROVISIONS

On 26 March 2019, Australia and Hong Kong signed the Australia-Hong Kong Free Trade Agreement (A-HKFTA) and its associated Investment Agreement (Agreement).

These agreements were negotiated against the background of a heated political debate in Australia regarding the benefits and risks of investment treaties. This debate occurred as a result of an arbitration brought against Australia by Philip Morris in 2011 under the 1993 Hong Kong-Australia Bilateral Investment Treaty (1993 BIT), challenging the introduction of the Tobacco Plain Packaging Act 2011 (Cth).

The 1993 BIT will be replaced by the new Agreement once it enters into force, which is expected to occur after both countries complete their respective treaty-making processes and ratify the agreements. Accordingly, investors who may have a claim under the 1993 BIT should consider whether to pursue it before that treaty is terminated.

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Australia is the first state in the Asia-Pacific region to sign the Mauritius Convention

On 18 July 2017, Australia became the first state in the Asia-Pacific region to sign the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration, also known as the Mauritius Convention. Globally, Australia was the 21st signatory to the Mauritius Convention, joining a number of other major signatories such as the UK, the US, France, Germany and Canada. The Convention will come into force on 18 October 2017, six months after its ratification by the first three states.

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Inside Arbitration: Issue #4 of the publication from Herbert Smith Freehills’ Global Arbitration Practice

We are delighted to share with you the latest issue of the publication from Herbert Smith Freehills’ Global Arbitration Practice, Inside Arbitration.

In addition to sharing knowledge and insights about the markets and industries in which our clients operate, the publication offers personal perspectives of our international arbitration partners from across the globe.

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Anticipated arbitration reforms in Australia

The Australian International Arbitration Act 1974 (Cth) (Act) applies to all international arbitration proceedings in Australia. The Civil Law and Justice Legislation Amendment Bill 2017 (Bill) is an omnibus bill which proposes to make certain amendments to the Act (as well as other various Australian legislation).

The International Arbitration Act incorporates the United Nations Commission on International Trade Law’s Model Law on International Commercial Arbitration (Model Law) and, much like other Model Law jurisdictions, contains additional provisions supplementing the Model Law. The proposed amendments to the Act are another effort by Australia to improve and clarify the provisions of the Model Law by addressing issues which have arisen in jurisprudence.

The key proposed change will make it easier for foreign awards to be enforced in Australia. A number of other less significant amendments are also proposed.

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All Australian States and Territories are now Model Law jurisdictions

By introducing the new Commercial Arbitration Act 2017 (ACT), the Australian Capital Territory is the last Australian State to adopt the United Nations Commission on International Trade Law Model Law on International Commercial Arbitration (the Model Law). At the Federal and State level, the Model Law now applies to both international and domestic arbitrations seated in Australia.

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Australian Court provides guidance on Art 33(3) of the Model Law, the doctrine of functus officio and when a ‘Final Award’ is not ‘final’

In Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97, Croft J of the Victorian Supreme Court confirmed that a party is not required to rely on, or comply with the time constraint in, Art 33(3) of the Model Law to obtain a further Award in circumstances where the arbitrator has made ‘a conscious decision not to deal with an issue’.  The decision also provides useful commentary on the functus officio doctrine and the circumstances in which an Award labelled ‘Final Award’ is not, relevantly, a ‘final Award.’

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Australian Full Federal Court decision highlights the importance of explicitly binding all parties to an arbitration agreement

On 25 January 2017, the Full Federal Court of Australia dismissed Trina Solar US, Inc.’s (Trina) appeal from an earlier decision of a single Federal Court Judge not to exercise residual discretion to refuse Jasmin Solar Pty Ltd (Jasmin) leave to serve an originating application on Trina in the US, while arbitration proceedings were ongoing in New York. As discussed below, the decision highlights the importance of ensuring that all parties to a transaction are bound by the relevant arbitration agreement from the outset of the transaction.

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ACICA announces panel of tribunal secretaries, publishes guideline on the use of tribunal secretaries

On 1 January 2017, the Australian Centre for International Commercial Arbitration (ACICA) announced the launch of a panel of tribunal secretaries which will serve as a resource for tribunals and parties undertaking arbitration in Australia and the region. ACICA also published the ACICA Guideline on the use of tribunal secretaries to provide guidance.

This is a welcome initiative as the use of tribunal secretaries in ACICA arbitrations has been somewhat of a grey area. The Guideline should provide parties with clarity as to the procedure for appointment and removal of tribunal secretaries, their duties and their remuneration.

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