The Australian International Arbitration Act, the Fiction of Severability and Claims for Restitution

Abstract

THE CONCEPT of arbitration as a method of dispute resolution is not a recent phenomenon. In 350 BC Plato observed: > In the first place there shall be elected judges in the courts who shall be chosen by the plaintiff and defendant in common; they shall be arbiters rather than judges.1 The agreement of the parties, while elementary, is also fundamental: > An arbitrator on a reference by consent out of court derives his authority from the terms of the private contract made between the parties.2 The arbitrator will determine the issues put before him or her by the parties' private contract, and will make a decision after hearing the parties to that contract. Generally, the arbitrator will be required to act in a judicial manner.3 Toward the close of the 1950s, the United Nations recognised that arbitration was more malleable to the complexities of international trade than local, ordinary, court proceedings. On 7 June 1959 the Economic and Social Committee of the United Nations concluded and ratified a convention for the legal recognition and enforcement of arbitration agreements and awards (‘the New York Convention’). The New York Convention gave effect to the recognition and enforcement of arbitration agreements and awards. However, despite international recognition of the usefulness of arbitration to resolve disputes,4 Australia has traditionally been reluctant to embrace arbitration.5 For example, it was not until 1974 that Australia ratified the New York Convention when the Commonwealth Parliament exercised its constitutional powers to enact the Arbitration (Foreign Awards and Agreements) Act.6 Part I of that Act dealt with preliminary matters. Part II gives effect to the New York Convention. In 1989 Part III was introduced into the Act giving effect to the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Arbitration.7 …