Mining Arbitrations – A Perspective from Australia

This article provides an overview on mining arbitration in Australia. It explains the different arbitration frameworks at both domestic and international level in Australia. It then considers the significance of Bilateral Investment Treaties (“BITs”) on arbitrations in the region, and how the Australian Centre for International Commercial Arbitration (“ACICA”) Arbitration Rules 2021 have provided the country with a modern and efficient approach to arbitration.

Read the AcICA Arbitration Rules 2021.

Australia’s wealth of natural resources makes it an attractive market for domestic and foreign investment. Its mining industry amounts to 75 percent of the country’s exports, with a total net worth of around AUD 160 billion. Given the significance of the mining industry to the Australian economy, and the importance of commodities such as lithium and copper to the energy transition, it is perhaps not surprising that many of Australia’s domestic and international disputes arise from mining activities and the trading of its commodities.

Navigating the Arbitration Landscape in Australia

1. Domestic v International

In Australia, domestic and international arbitrations are subject to different laws and regulations.  

Domestic arbitration is governed by the Commercial Arbitration Act (“CAA”) of each State or Territory. The provisions of each CAA are materially the same, creating a uniform domestic arbitration law throughout Australia.

International arbitration is governed by the International Arbitration Act 1974 (Cth) (“IAA”). The IAA designates the UNCITRAL (“United Nations Commission on International Trade Law”) Model Law on International Commercial Arbitration (2006) (the Model Law) as the exclusive, mandatory procedural law for all international arbitrations seated in Australia.

Accordingly, Australia provides mining and trading companies with a modern and transparent legislative framework for arbitration – whether their disputes are of a domestic or cross-border nature.

2. The ACICA 2021 Rules: Modernizing Arbitration in Australia

ACICA, as Australia’s international dispute resolution institution, seeks to promote and facilitate the efficient resolution of commercial disputes throughout Australia and internationally.

The ACICA 2021 Rules, which are based on the UNCITRAL Arbitration Rules 2021, set a modern and efficient procedure for the conduct of arbitrations through the adoption of technologies and effective case management. Tribunals have innovative powers to streamline procedures and ensure a cost-effective process in the resolution of disputes. Notable provisions include:

• Consolidation/multi-contract arbitration. Under Article 16, ACICA can consolidate proceedings arising out of the same transaction or series of transactions, or where claims in the arbitrations are made under the same arbitration agreement. Similarly, under Article 18, claims arising out of multiple contracts may be heard in a single arbitration and filed under one Notice of Arbitration, if the relevant conditions are satisfied.
• Joining additional parties. Contrary to established principles, Article 17.1 permits a tribunal to join an additional party to an arbitration where all parties expressly agree even if that party is not bound by the arbitration agreement.
• Virtual arbitrations. To avoid unnecessary delay or expense, Article 25 permits the tribunal to decide whether preliminary meetings, or the arbitration itself, should be conducted virtually.
• Time limits: Article 39.3 provides that the final award must be made no later than nine months from the date the file was provided to the tribunal, or no later than three months from the date the tribunal declares the proceedings closed.

ACICA’s 2020 Report into Australian Arbitration indicated that mining arbitrations made up approx. 12 to 13 % of all domestic arbitrations in Australia, to which ACICA was the preferred set of rules (albeit its earlier versions).

Bilateral InvestmentTreaties: Security for Mining Investments

BITs are agreements between two countries that include rules to promote and protect two-way investment. As our Polish colleagues noted in their recent article, BITs provide certainty and protections to foreign investors – both Australian investors overseas and foreign investors in Australia. They are particularly relevant to mining companies, whose activities can be impacted by the actions of the host state or a government entity.

A key component of the BITs framework is a right for investors to resolve disputes through international arbitration pursuant to a neutral forum – i.e. according to a set of rules that are not influenced by a particular jurisdiction or region. BITs commonly provide for a dispute to be referred to the International Centre for Settlement of Investment Disputes (“ICSID”), which is often preferable for foreign investors due to factors such as the ease of enforcement of awards under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) (“ICSID Convention”). Australia has entered into several BITs with various countries, including Poland and Papa New Guinea, which gives certainty to Australian mining companies operating in such regions that any potential disputes can be resolved under an internationally recognised set of rules – such as ICSID Arbitration Rules 2022 or the UNCITRAL Arbitration Rules 2021.

Australia v Singapore

While there are many advantages to resolving disputes by arbitration in Australia, including its political stability and clear legislative framework, it is common for international mining contracts to provide for Singapore as the seat of arbitration and for any disputes to be referred to arbitration governed by the SIAC (Singapore International Arbitration Centre) Arbitration Rules (2016).

Singapore’s prominence as an international commercial centre and its central location in the Asian-Pacific region means that a significant number of Australian mining disputes continue to be resolved within this jurisdiction.

This article was originally published on Daily Jus on Friday 10th January, with thanks to Jus Mundi & Jus Connect, and is available here.