3. Queensland
Level 23
127 Creek Street
Brisbane Qld 4000
Chair:
Khory McCormick
Administrator:
Alison Mahoney
P: (07) 3220 2122
F: (07) 3220 2133
E: qld.chapter@iama.org.au
Victoria
Level 13
200 Queen Street
Melbourne Vic 3000
Chair:
Jim Cyngler OAM
Administrator:
Isaac Inocencio
P: (03) 8648 5478
F: (03) 8648 6480
E: vic.chapter@iama.org.au
Western Australia
P.O. Box 208
Beechboro WA 6063
Chair:
Kim Doherty
Administrator:
Helen Goddard
P: (08) 6278 2022
F: (08) 6278 2033
E: wa.chapter@iama.org.au
New South Wales
Level 9
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Sydney NSW 2000
Chair:
Steven Goldstein
Administrator:
Ros Hunter
P: (02) 9241 1188
F: (02) 9252 2911
E: nsw.chapter@iama.org.au
Tasmania
PO Box 3076
Launceston TAS 7250
Chair:
Phillip Connors
P: (03) 6332 3700
F: (03) 6332 3720
E: tas.chapter@iama.org.au
Northern Territory
C/- Minter Ellison
P.O. Box 1134
Darwin NT 0801
Secretary:
Simon (Cris) Cureton
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F: (08) 8901 5901
Australian Capital Territory
P.O. Box 5013
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Chair:
Rosemary Dupont
Administrator:
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E: act.chapter@iama.org.au
South Australia
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Chair:
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National Functions
CEO:
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The Institute of Arbitrators & Mediators Australia
Registered Office
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E: national@iama.org.au
Chapter Offices and Contact Details
ii
4. President:
Rowena McNally, LLB, FIAMA, Grade 2 Arbitrator, Adjudicator, Mediator
Senior Vice President:
Neil Turner AM, RFD, BE, MEngSc, MConstLaw, FIEAust, MIAMA, CPEng
Grade 2 Arbitrator, Adjudicator, Expert Determiner, Mediator
Vice President:
Alysoun Boyle, BA, MIAMA, AIJA, AAAS, Mediator
Hon Treasurer:
Paul Bartley FPNA, ANZIIF, GAICD, MIMC, Grad Dip ICSA, AIAMA, CertIVTAA, AFAIM
Immediate Past President:
Warren Fischer, BE (Civil), RPEQ, FIAMA, FAICD, Grade 1 Arbitrator, Adjudicator, Mediator
Councillors:
Scott Ellis, B Juris, LLB, LLM, Dip Int Comm ARB, MIAMA, FCIArb
Norman Fisher, MIAMA, FAIQS, MRICS
Brian Naylor, MIAMA, FCIOB, MRICS
Graeme Robinson, B. Eng, MBA, M. Arch Sci, M. Constn, Law, FIE Aust, M. Ausimm, MIAMA,
Arbitrator, Adjudicator, Mediator
Rosemary Dupont, Cert Welfare Studies (Hons), BA (Politics), Cert IV TAA, MIAMA, MAICD,
Grade 3 Arbitrator, Mediator
Hildegard Lovegrove, MEd (Calgary, Canada);PhD (Bradford, UK), Grad Dip Family Law (Monash,
Australia); MIAMA.
Russell Thirgood, BA, LLB (Hons), LLM (Hons), MIMA
Honorary Fellows:
Hon Mr Justice John Batt, BA (Hons), LLB (Hons)
Hon Mr Justice David Byrne, BA, LLB (Hons)
The Hon Ian Callinan, AC QC, Hon LLD (Queensland), Hon D University (Griffith)
Hon Christopher Legoe, QC
Hon Barry SJ O’Keefe, AM, QC
Hon Mr Justice William Ormiston, LLB (Hons)
Hon Andrew Rogers, QC
His Honour Judge Frank J Shelton, BA, LLB
Rt Hon Sir Ninian Stephen, AK, GCMG, GCVO, KBE, KStJ, Hon LLD (Sydney & Melbourne)
Hon Sir Laurence Street, AC, KCMG, KStJ, Hon LLD, (Macquarie, Sydney & UTS), LLB (Hons)
iii
7. President’s Message
Rowena McNally National President
This edition of The Arbitrator and Mediator contains a number of articles and case notes written by
some of our leading ADR professionals, academics and prominent members of the ADR community.
We are proud to bring this edition to you.
Readers of The Arbitrator and Mediator will have observed that since it was launched in 1981, the
Journal has developed and maintained its authority as a learned publication.
This reflects the talents and diligence of our Editor, Russell Thirgood, and the Journal Committee and I
wish to thank them for all of their good work and efforts over the year.
At the annual general meeting held on 19 May 2012, I was once again voted in as National President. I
am honoured to have this opportunity to serve for a further two years.
During the past twelve months, a review has been undertaken of our national committee structure with
a new structure being put in place. This structure will see our services formally being delivered through
three separate streams:
• Determinative Stream – dispute resolution services provided by arbitrators and adjudicators and
other forms of decision-making services in the ADR context
• Facilitative Stream – which will focus on mediation, facilitation and other more facilitative ADR
processes;
• Preventative Stream – services such as probity advice and Dispute Resolution Boards.
Finally, I thank our National Councillors, Chapter Chairs and Chapter Committee members, past and
present, for their contributions. I also thank our hardworking administrative staff at National Office and
our Chapter Offices who have made such a valuable contribution to promoting the Institute as a national
organisation.
vi
THE ARBITRATOR & MEDIATOR MAY 2012
9. Editor’s Commentary
Russell Thirgood, Editor
Welcome to the May 2012 edition of the Arbitrator and Mediator.
Our first contribution this issue is from Professor Tania Sourdin, the author of Alternative Dispute
Resolution which is now in its fourth edition. She examines the science behind decision making, looking
at factors many of us would not even consider, such as when and what a person had eaten, the time of
day and how many other decisions a person has made that day. More importantly, and very usefully,
Professor Sourdin provides us with useful frameworks, such as a four-step process to reduce or eliminate
emotional bias. As arbitrators, adjudicators and experts we strive for excellence in decision making.
Understanding how our brains work in that process can be invaluable.
Michael Sweeney’s article focuses on the Victorian CommercialArbitration Act 2011. Victoria like other
jurisdictions has modernised its arbitration legislation. Like the Acts enacted in the mid 1980s, these
updated Acts (except for Queensland, the ACT and Western Australia) are uniform. In Western Australia
it is anticipated that the CommercialArbitration Bill 2011 will soon receive assent – leaving Queensland
and the ACT as the only jurisdictions still using the old Acts. Michael explores an understanding of the
paramount object of the Act in the context of party autonomy. The article has significance beyond the
Act. The paramount object in s1AC of the Victorian Act – to facilitate fair and final resolution of disputes
without unnecessary delay or expense – is fundamental to all mediation and arbitration. This article
offers a useful case study in how the underpinning rationale is carried through to practical application.
One of the most significant motivating factors behind electing to undertake arbitration is the savings in
time and cost. For domestic arbitration to prosper in Australia it must be more competitive than other
forms of final dispute resolution. To that end, Ian Nosworthy has contributed an article on how
practitioners can make arbitration more efficient. Even though Ian’s article is very practical, providing
useful, easy to remember advice – such as reducing everything to writing which can be reduced to writing
– he does not neglect to delve into the jurisprudential basis of his ideas.
A must read for arbitration practitioners, Albert Monichino SC has contributed a timely assessment of
the new Commercial Arbitration Act 2011 (Vic) which replaces the old 1984 Act and as noted above
forms part of a suite of modern uniform arbitration acts across the country (except for Queensland, the
ACT and for the time being, WesternAustralia).Albert puts the newAct in its context, that of a increasing
modernisation and harmonisation of Australia’s international and domestic arbitration law. He also
viii
THE ARBITRATOR & MEDIATOR MAY 2012
10. ix
examines the rationale of the updated laws – apart from the inherent benefits for Australian litigants,
they will make Australia more attractive as an alternative dispute resolution hub in the Asia-Pacific
region. President Rowena McNally and the IAMA Council look forward to working with the new
Queensland government so that Queenslanders might also benefit from modernisation and harmonisation
of its arbitration laws.
Dr. Penny Webster has contributed a paper on selecting a workplace ADR process. She provides us with
three Australian case studies, from diverse organisations. The case studies revealed that managers had a
relatively unsophisticated level of understanding of the nature of conflict, ADR process that could assist
in their workplaces and their potential applications. Dr. Webster also provides some useful
recommendations arising from her case studies to help shift institutional cultures toward embracing
internal ADR regimes.
AA de Fina AO gives us an in-depth analysis of the interrelation of public policy and arbitration in
Australia. He delves into the rationale behind legislation enacted to regulate and support arbitration and
grounds the concepts in concrete examples. I particularly recommend this article to readers who practice
in or are interested in intellectual property, as there is an examination of arbitration as a dispute resolution
mechanism in IP disputes.
Chinthaka Liyange has given us an analysis of the enforceability of online consumer arbitration clauses
in the context of the Competition and Consumer Act 2010 (Cth). Given the proliferation of online
transactions between business and consumers and the relatively new legislation regulating them, this is
a timely and interesting contribution. Chinthaka highlights problems with the Act and the vagueness of
the scope of standard form contracts. A working understanding of those problems is vital, because as
Chinthaka points out, the courts are an inappropriate avenue of redress for business to consumer e-
commerce disputes. I suspect that this is an entire body of work that will develop and mature with time.
Queensland Chapter Chairman Khory McCormick and I-Ching Tseng provide us with the first of two
case notes in this issue. In Sugar Australia Pty Limited v Mackay Sugar Ltd, the Supreme Court of
Queensland found that it amounted to misconduct for an arbitrator to not give the applicant an
opportunity to address a point not raised by the parties in their Points of Contention.
In the second case note, Brent Turnball looks at Traxys Europe SA v Balaji Coke Industry Pvt Ltd (No
2). The case dealt with the enforcement of an international arbitration award in Australia. Brent takes
two main points from the case. The first is that Australian courts follow the American example by
allowing international arbitration awards to be enforced unless they offend the principles underlining
the core of ‘morals and justice in Australia.’ The second point was that parties should ensure that the
seat of arbitration should be consistent with where the parties have assets against which execution can
be levied. I note that I am acting for one of the parties in these proceedings and I may, subject to
confidentiality restraints, be able to provide readers with further insights as this case progresses through
the Federal Court to a final hearing.
I recommend these articles to readers and thank all of the contributors for their hard work.
THE ARBITRATOR & MEDIATOR MAY 2012
11. THE ARBITRATOR & MEDIATOR MAY 2012
1
Decision Making in ADR: Science, Sense
and Sensibility
Tania Sourdin1
Abstract
Research about how we make decisions reveals that our decision-making is influenced by many factors.
We are conscious of some of these factors and unconscious of others. Some theorists suggest that the
processor of the brain is divided into two distinct systems that dictate how we think and make decisions.
One system is fast, intuitive, reactive, emotional and often unconscious. The other system is slow,
deliberate, methodical, rational and conscious.2 Other writers and theorists also suggest that the process
of decision-making is a combination of feeling and reason.3 While some theorists have talked about a
modularity, or specialisation, of brain function by area with particular reference to right-brain and left-
brain thinking, these approaches remain under investigation. Some past work suggests that cognitive or
other processes can be ‘lateralised' in parts of the brain and that conditions such as depression are
linked to a hyperactive right hemisphere, with particular parts of the brain more likely to be involved in
‘… processing negative emotions, pessimistic thoughts and unconstructive thinking styles’, and a
relatively hypoactive left hemisphere ‘specifically involved in processing pleasurable experiences’ and
‘relatively more involved in decision-making processes.4 This paper explores the way in which the brain
works and the making of decisions in Alternative Dispute Resolution (ADR) from a neurobiological and
neuroscience perspective by reference to some of these theories. It also considers emerging theory in
the decision-making area in the context of factors that can lead decision-makers in arbitral and advisory
processes astray.
Introduction
The logical stages involved in determinative and advisory ADR decision-making include the rational
gathering, analysing and considering of information, and the making and communicating of a decision.
However, some of what takes place in advisory and determinative decision-making is not rational, logical
or neatly divided into stages. The emphasis, approach and understanding applied to the determinative or
advisory decision-making process by the parties, their representatives (if present) and the decision-maker
as well as variations in the involvement and skills of all these players will determine the outcomes of
the dispute resolution process. For example, at the most basic level, in gathering information, the
processes used can vary according to the circumstances and can involve a decision-maker adopting a
facilitative stance and using many of the techniques of introduction, understanding and questioning that
1 Professor of Law, Monash University; Director, Australian Centre for Court and Justice System Innovation (ACCJSI).
Parts of this paper are drawn from T Sourdin, Alternative Dispute Resolution 4th ed (2012, Thomson Reuters, Australia)
with kind permission. The author also gratefully acknowledges the assistance of Sarah Russell who assisted with editing
of draft papers. Contact the author at Tania.Sourdin@Monash.edu
2. D Kahneman, Thinking Fast and Slow (2011, Farrar, Straus and Giroux, New York).
3 J Lehrer, How We Decide (2009, Houghton Mifflin Harcourt, New York).
4 D Hecht, ‘Depression and the hyperactive right-hemisphere’ October 2010, Neurosci. Res. 68 (2): 77–87.
12. THE ARBITRATOR & MEDIATOR MAY 2012
are more common in mediation processes and thus influencing outcomes by enlarging the material to
be gathered, reflected upon and even considered.
However, in most introductory stages of arbitral processes, there will generally be a greater focus on the
technical requirements, such as the available review processes, onus of proof and legislative requirements
than in other forms of decision-making for example decision-making in a management context. There
may also be reference to the way that written material is to be used as well an explanation of bias and
natural justice approaches. But this framework will not import a Vulcan-like response in the arbitrator
dealing with a dispute, and numerous commentators have remarked that accepting that a predominantly
rationalist approach exists in respect of determinative forms of decision-making is flawed in light of the
ever-expanding literature and research relating to neuroscience and cognitive perspectives.5
In determinative processes, the information-gathering stage can be protracted and have as its focus the
determination of rights rather than interests (or some other matter). Indeed in relation to judicial
processes, many experienced judges indicate that in complex matters the information-gathering stage
that occurs prior to any actual hearing process is essential in terms of managing process and assisting to
ensure that outcomes are determined promptly.6 However, no matter what information is being gathered,
the neurobiology of the decision-maker helps to sort, store, omit, rank and at times distort information.
In the later stages of determinative decision-making, both the brain and the body continue to influence
how material is analysed, considered and determined. The stages are not linear in that we constantly
gather, sort and analyse; however, in most determinative decision-making that is rooted in the adversarial
system, the final analytical stages may occur some time after the ‘in court’ or ‘in arbitration’ gathering
and sorting stages have taken place.
Gathering and Sorting
To ensure that decision-makers consider the relevant material required to make a complex decision,
decision-makers, advocates and parties ask questions at each stage of a determinative hearing process.
Within the formal litigation system, some aspects of the information-gathering process may be governed
by practice and procedure as well as rules of evidence. In arbitration, there is more scope to vary the
information-gathering process. This is specifically mandated in more recent arbitral legislation (discussed
in more detail below). However, it is increasingly the case that even within the litigation system judges
are varying the way in which they gather information.7
2
5 See J Drobak and D North, ‘Understanding … Judicial Decision Making: The Importance of Constraints on Non-Rational
Deliberations’, 26 Journal of Law and Policy (2008) 131 at p 132. The cognitive revolution is said to have taken place
over the past 30 years: ‘today the study of cognition dominates psychology in the same way that the study of behaviour
dominated the middle of the twentieth century’ at p 17. See L Burton, D Westen and R Kowalski, Psychology, 3rd ed
(Australian and New Zealand ed, Wiley, Queensland, 2012).
6 Justice N Owen, Dispute Resolution: Idle Musings on the Eristic, Exitispicy and the Exegesis, Conference Paper
(presented at the Institute of Arbitrators and Mediators National Conference, Western Australia, 12 April 2008).
7 See, for example, the growth in less adversarial trial (LAT) processes in the family area: Family Court of Australia, Less
Adversarial Trial Handbook (Attorney-General’s Department (Cth), 2009), available on
<http://www.familycourt.gov.au/wps/wcm/connect/FCOA/home/about/publications/Papers/Papers+and+Reports/LAT>
(accessed 8 May 2012).
13. THE ARBITRATOR & MEDIATOR MAY 2012
3
Within the judicial context, most decision-making has been considered by judges from the perspective
of the analysis of material, and there are a few significant cases that guide judges in terms of their
decision-making. The leading Australian case in this area is Markarian v R,8 which considered whether
or not judges making sentencing decisions should use an instinctive approach. Justice McHugh referred
to two main approaches to decision-making in sentencing as follows:
By two-tier sentencing, I mean the method of sentencing by which a judge first
determines a sentence by reference to the “objective circumstances” of the case. This is
the first tier of the process.The judge then increases or reduces this hypothetical sentence
incrementally or decrementally by reference to other factors, usually, but not always,
personal to the accused. This is the second tier. By instinctive synthesis, I mean the
method of sentencing by which the judge identifies all the factors that are relevant to
the sentence, discusses their significance and then makes a value judgment as to what
is the appropriate sentence given all the factors of the case. Only at the end of the process
does the judge determine the sentence.
The two-tier sentencer contends that using the instinctive synthesis is inimical to the
judicial process and is an exercise of arbitrary judicial power, unchecked by the giving
of reasons. …9
This form of decision-making was supported by the majority of the High Court, although the majority
in R v Markarian rejected the notion that instinctive synthesis means that judges do not have to give
transparent reasons. Some commentators have suggested that the High Court decision in Markarian v R
means that:
… from a neurobiological perspective, the court’s preferred consciously considered and
articulated methods of sentencing decision-making are those most likely to result in
rational and well reasoned, yet humane, sentences. All information is initially sorted
and prioritised at an unconscious level, a process of sorting reliant upon attaching
emotional significance to information on the basis of the previous experience of the
judge. Without this ranking system, the brain would become overloaded with
indistinguishable information. … Once this prioritising has taken place, however, the
judge is able to consider the individual case in the context of all relevant legal, social,
and personal considerations. Irrelevancies may be excluded and feelings and emotional
reactions scrutinised for appropriateness. 10
8 Markarian v R [2005] HCA 25.
9 Markarian v R [2005] HCA 25 at [51]–[52].
10 H Bennett and GA Broe, ‘Judicial Neurobiology, Markarian Synthesis and Emotion: How Can the Human Brain Make
Sentencing Decisions?’ (2007) 31 Criminal Law Journal 75 at 90, available on
http://www.njca.com.au/Professional%20Development/programs%20by%20year/2009/Judic%20reason%20public.htm
(accessed 8 May 2012).
14. THE ARBITRATOR & MEDIATOR MAY 2012
4
Despite the emphasis placed on instinctive synthesis by the High Court in Markarian v R, it is clear that
the court considered that this process involves an intuitive and careful sorting of all of the relevant factors.
This intuitive sorting requires a high level of awareness of self and others and raises issues about how
unwanted influences can be resisted.
There are many matters that can influence the effectiveness of the information-gathering stage in
decision-making. It is clear that the way in which the human brain works can influence decision-making,
and the structure and processes of the brain are influenced by a person’s innate characteristics and their
environment. It may be, for example, that someone with less well-developed orbitobasal/ventromedial
areas of the brain may find it difficult to choose between alternatives or make a decision when
information is incomplete (see below). This could mean, for example, that some of us are less likely to
be successful in a decision-making environment or may find it more difficult to gather information
(essentially, they may find it hard to stop the information-gathering process).
In addition, decision-making can be influenced by factors that may not only be related to brain structure.
For example, the following factors can impact upon information-gathering as well as the overall decision-
making process:
• when and what a person has eaten;11
• the time of day;12
• how many other decisions a person has made that day (decision fatigue);13
• personal values;14
• unconscious assumptions;15
• reliance on intuition;16
• the attractiveness of the individuals involved;17
11 See J Tierney, ‘Do You Suffer From Decision Fatigue?’, New York Times, 17 August 2011, available on
<http://www.nytimes.com/2011/08/21/magazine/do-you-suffer-from-decision-fatigue.html?_r=2&pagewanted=1>
(accessed 8 May 2012), referring to a study of parole board decision-making reported in S Danziger, J Levav, L
Avnaim–Pesso. ‘Extraneous Factors in Judicial Decisions’, Proceedings of the National Academy of Sciences of USA,
Vol 108 no 17 6889-6892, 26 April 2011.
12 See J Tierney, ‘Do You Suffer From Decision Fatigue?’, New York Times, 17 August 2011, available on
<http://www.nytimes.com/2011/08/21/magazine/do-you-suffer-from-decision-fatigue.html?_r=2&pagewanted=1>
(accessed 8 May 2012).
13 See J Tierney, ‘Do You Suffer From Decision Fatigue?’, New York Times, 17 August 2011, available on
<http://www.nytimes.com/2011/08/21/magazine/do-you-suffer-from-decision-fatigue.html?_r=2&pagewanted=1>
(accessed 8 May 2012).
14 R Chisholm, ‘Values and Assumptions in Judicial Decisions’, Unpublished Paper, National Judicial College Conference,
Judicial Reasoning – Art or Science 2009: see
http://www.njca.com.au/Professional%20Development/programs%20by%20year/2009/Judic%20reason%20public.htm>
(accessed 8 May 2012).
15 K Mason, ‘Unconscious Judicial Prejudice’ (2001) 75 The Australian Law Journal 676 at 680.
16 M Kirby AC CMG, ‘Judging: Reflections on the Moment of Decision’ (1999) 18 Australian Bar Review 4 at 4.
17 M Agthe, M Sporrle and J Maner, ‘Does Being Attractive Always Help? Positive and Negative Effects of Attractiveness
on Social Decision Making’ (2011) 37 Personality and Social Psychology Bulletin 1042. The researchers in this area
suggest that there may be a bias away from attractive same sex individuals and a bias towards attractive other sex
individuals.
15. THE ARBITRATOR & MEDIATOR MAY 2012
5
• emotion. 18
The extent to which these factors influence determinative decision makers such as arbitrators is unknown,
but it is likely that even if we become aware of these factors, we are likely to underestimate their impact.19
This is partly because we are more likely to exaggerate information about our own personal qualities
that we perceive as positive and less likely to accept information that raises any questions about our
positive characteristics.20
In the arbitral area, recent legislative changes mandate more arbitral control over the information-
gathering phase. For example, under s 17(3)(g) of the Commercial Arbitration Act 2010 (NSW), an
arbitrator may take a number of measures to manage the arbitration including ‘dividing, recording and
strictly enforcing the time allocated for a hearing between the parties (a ‘stop clock’ arbitration)’. This
change and the wider powers that arbitrators now have mean that it is even more important for arbitrators
to consider factors that may unconsciously impact upon their information-gathering.
Sorting Information
In arbitral and judicial decision-making (unlike some other areas of complex decision-making), it is
unusual for information to be gathered and sorted using a team problem-solving approach. It is therefore
less likely that decision-makers will be challenged to perceive the information in a different manner or
from a different perspective from their own. While advocates may attempt to persuade a judge or
arbitrator (with varying degrees of success), it is rare for any form of distributed decision-making to
take place. Essentially, the determinative decision-maker must choose one preferred approach and each
advocate will advocate for their own approach. The determinative decision-maker is ‘helped’ to make a
decision, but the options or potential outcomes are expressed in polarities.
This approach has important consequences in decision-making. For example, according to one theory,
a decision-maker could (particularly if rapid decision-making is required) adopt an approach of ‘take
the best, ignore the rest’.21 This means that a decision-maker weighs information quickly, makes a yes/no
judgment and ‘… if that works, they stop and assume their inference is good enough.’22 The adoption of
this type of inferential approach may mean that information is not necessarily weighed as carefully as it
might be with other more team-based approaches to decision-making.
18 H Bennett and GA Broe, ‘Judicial Neurobiology, Markarian Synthesis and Emotion: How Can the Human Brain Make
Sentencing Decisions?’ (2007) 31 Criminal Law Journal 75 at 84–86, available on
http://www.njca.com.au/Professional%20Development/programs%20by%20year/2009/Judic%20reason%20public.htm
(accessed 8 May 2012).
19 T Wilson and D Gilbert (2008) ‘Explaining away: A model of affective adaptation’. Perspectives on Psychological
Science, 3, 370–386.
20 For an interesting discussion of this phenomenon, see D Brooks, The Social Animal (2011, Random House, New York) at
p 220.
21 L Burton, D Westen and R Kowalski, Psychology, 3rd ed (Australian and New Zealand ed, Wiley, Queensland, 2012) at
313, referring to G Gigerenzer and DG Goldstein, ‘Reasoning the Fast and Frugal Way: Models of Bounded Rationality’,
Psychological Review (Vol. 103, No. 4, 1996), 650–669.
22 L Burton, D Westen and R Kowalski, Psychology, 3rd ed (Australian and New Zealand ed, Wiley, Queensland, 2012) at
313.
16. THE ARBITRATOR & MEDIATOR MAY 2012
6
There may be ways in which the information-gathering and sorting stages can better support
determinative decision-makers in their analysis. For example, concurrent evidence processes can assist
in decision-making in judicial as well as ADR determinative and advisory processes. Justice McClellan,
Chief Judge at Common Law of the New South Wales Supreme Court, has described the impact that
concurrent evidence processes can have on the information-gathering stage, suggesting that these
processes may reduce levels of tension in some circumstances. His Honour said that when these processes
are used:
Within a short time of the discussion commencing, you can feel the release of the tension
which normally infects the evidence-gathering process. Those who might normally be
shy or diffident are able to relax and contribute fully to the discussion. 23
This approach assumes that decision-making will not involve perfect information or rationality and that
the behaviour of those involved in the process can be improved by using group decisional processes in
some circumstances. Such processes may be helpful not only in the gathering and analytical stages but
also in the ‘sorting stage.’In this regard, group or team approaches could be used to discourage a sorting
‘bias’ (see below).
One particular and related issue in the sorting stage is how we may ignore, distort or reject information
because of conscious and unconscious bias. To prevent bias in the information-gathering and sorting
stages, Feigenson and Park suggest a four-step process to reduce or eliminate emotional bias: 24
1. Be aware of the unwanted influence.
2. Be motivated to correct the bias.
3. Be aware of the magnitude and direction of the bias.
4. Be able to adjust the response accordingly.
They also suggest that simply being aware of a person’s accountability for a decision ‘will attenuate the
effect of incidental emotional influence on decision-making’.25 According to Mason, attending to this
bias requires us to ‘expose, debate and contest generalised attitudes so as to appreciate their proper
influence upon judicial decision-making, and to remind all judges of the need to stand outside themselves
and to question their own certainties.’26
23 P McClellan, ‘Concurrent Evidence’, Effectius Newsletter (Issue 14, 2011) p 5, available on
http://www.effectius.com/publications (accessed 8 May 2012).
24 N Feigenson and J Park, ‘Emotions and Attributions of Legal Responsibility: A Research Review’ (2006) Law and Human
Behaviour (online issue), cited in H Bennett and GA Broe, ‘Judicial Neurobiology, Markarian Synthesis and Emotion:
How Can the Human Brain Make Sentencing Decisions?’ (2007) 31 Criminal Law Journal 75 at 89, available on
http://www.njca.com.au/Professional%20Development/programs%20by%20year/2009/Judic%20reason%20public.htm
(accessed 8 May 2012).
25 H Bennett and GA Broe, ‘Judicial Neurobiology, Markarian Synthesis and Emotion: How can the Human Brain Make
Sentencing Decisions?’ (2007) 31 Criminal Law Journal 75 at 89, available on
http://www.njca.com.au/Professional%20Development/programs%20by%20year/2009/Judic%20reason%20public.htm
(accessed 8 May 2012).
26 Justice Keith Mason, ‘Unconscious Judicial Prejudice’ (2001) 75 The Australian Law Journal 676 at 681.
17. THE ARBITRATOR & MEDIATOR MAY 2012
7
Another approach may require a rethinking of systemic approaches (rather than individual approaches)
to judging. The material on group decision-making suggests that the impact of belief systems might be
minimised if groups, rather than individuals, are involved in sorting at least in complex cases or disputes.
This is an interesting notion given that most arbitrators work alone, and even if they work together (for
example, in a panel environment), they may not necessarily share the sorting activity (although they may
share the writing up of a decision).
One significant and contentious change in the commercial arbitration area is related to the ability of
arbitrators to adopt a ‘med–arb’ model, which may impact upon the processes used to sort information
and therefore the quality of the decisions made. To some commentators, a combined med–arb model
enables disputants to have the ‘best of both worlds’.27 The amendments to the domestic Commercial
Arbitration Acts created a new section that is not contained in the UNCITRAL Model Law on
International Commercial Arbitration, which is intended to enable med–arb processes to be used by
consent. The new s 27D has, however, proved to be controversial and there has been considerable
discussion about removing it. An issues paper on this topic prepared by the previous Standing Committee
of Attorneys-General (SCAG) in 201128 has noted:
The consultation model Bill permitted an arbitrator to act as a mediator in proceedings
relating to a dispute if the arbitration agreement provided for this or both parties
consented in writing. Mediation is generally a dispute resolution process that involves
the mediator having separate, private meetings with the parties. Two issues were raised
relating to this, both concerning the situation where the alternative mechanism fails to
resolve the dispute and the arbitration proceedings recommence. Stakeholders raised
concerns about the potential for abuse of natural justice and the risk of bias.29
SCAG decided to retain the med–arb provision in s 27D, noting that:
Ministers noted that submissions to consultation on section 27D of the model
Commercial Arbitration Bill 2010 expressed different views on the formulation of the
section. Ministers agreed to clarify that consent to an arbitrator resuming arbitration
following mediation should be obtained after the termination of the mediation in the
form contained in the NSW Commercial Arbitration Act 2010.30
While the new provision may, on the one hand, increase the likelihood of an abuse of natural justice and
increase the risk of bias, it may on the other hand create a different and potentially more collaborative
decision-making environment – a group decision-making environment. However, the changes also
support the need for a more careful review of bias issues.
27 A Limbury, Getting the Best of Both Worlds with Med–arb (September 2010) Law Society Journal 62.
28 SCAG has now transitioned into a new body – the Standing Council on Law and Justice (SCLJ).
29 SCAG, Reform of the Uniform Commercial Arbitration Acts – Section 27D Mediation Clause, available on
<http://www.lawlink.nsw.gov.au/lawlink/SCAG/ll_scag.nsf/pages/scag_reform_sec27d_clause> (accessed 31 August
2011).
30 Attorney-General for Australia – The Hon Robert McClelland MP, Communiqué: Standing Committee of Attorneys-
General (SCAG decision of 21–22 July 2011), available on <http://pandora.nla.gov.au/pan/21248/20110723-
0001/www.attorneygeneral.gov.au/www/ministers/mcclelland.nsf/Page/MediaReleases_2011_ThirdQuarter_21-22July-
Communique-StandingCommitteeofAttorneys-General.html> (accessed 8 May 2012).
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8
Neurobiology and Decision-making
Clearly, decision-making is a complex process. Recent research on neurobiology and neuro-awareness
suggests that information-gathering and decision-making are likely to be governed by different parts of
the brain and may be influenced by factors that are neither rational nor logical. Using a conceptual model
of brain function, it seems that many different brain areas are involved in decision-making (summarised
below in tabular form and partly taken from Bennett and Broe)31 and in the information-gathering stage.
We constantly sort, ignore and add information before analysing, and our analytical processes are also
individual and linked to our individual brain structure and processes. An injury to one part of the brain
or alcohol and substance abuse can have more impact on some regions than others. In addition, as most
cognitive processes occur simultaneously, if brain connectivity is harmed, overall brain function may be
reduced. Considering these activities from a brain specialisation perspective, the areas of the brain
involved in the decisional processes are set out below:
Table 1. Decision-making and the Brain
Brain Area Function
Prefrontal regions, particularly Enable humans to make multi-attribute decisions based on explicit
orbitobasal/ventromedial and deliberation and integration of information from a wide range of
dorsolateral cortices sources.32
Limbic system Integral to neurological decision-making
Amygdala (part of limbic system) Essential to processing emotion33
Ventromedial region Associated with ability to see future consequences of decision-
making and also with instinctive and non-conscious decision-
making.
Dorsolateral cortex (DLC) Involved in working memory, thus plays a key role in:
• reasoning and deliberating
• making complex decisions from multiple sources of information
• comparing alternatives
• integrating input from previously learned and stored knowledge
together with externally derived information.
Ventromedial cortex (VMC) Involved with processing emotion and feelings and the relationship
of those states to reason and decision-making. Particularly involved
in processing stimuli that have a personal, social or moral focus, to
the extent that the VMC can associate incoming stimuli with
appropriate emotional reactions and feelings.
19. THE ARBITRATOR & MEDIATOR MAY 2012
9
One theory is that the VMC automatically activates previously learned information
whenever a person is presented with a situation similar to a previous experience, and
also activates the emotional disposition associated with the experience. This allows
activated facts to be recalled together with feelings and can be either conscious or
unconscious. When unconscious, the emotional association can act as a biasing element.
This process facilitates logical reasoning by allowing certain outcomes to be rapidly
assessed and rejected, also allowing relevant and selected information to be available for
further higher level processing by the DLC. According to Damasio,34 without this
element of ‘bias’ (instinctive/gut reaction), people would not be able to make any
decisions at all.
Once the DLC takes over the process of reasoning, the feelings that arose from the
somatic/emotional state are available to cognitive awareness. This allows for deliberate
rejection or suppression of a particularly inappropriate ‘emotionally charged’choice, as
long as attention is given to the fact that it was in conflict with the knowledge of legal
requirements.35
This approach to brain specialisation also supports the notion that the conscious and unconscious brain
are intertwined with a simultaneous reaction and response. However, many theorists suggest that the
unconscious brain is more powerful than the conscious part as it:
• has a vast implicit memory system;36
• has a higher processing capacity and can absorb data more quickly;37
31 H Bennett and GA Broe, ‘Judicial Neurobiology, Markarian Synthesis and Emotion: How Can the Human Brain Make
Sentencing Decisions?’ (2007) 31 Criminal Law Journal 75 at 84–86, available on
http://www.njca.com.au/Professional%20Development/programs%20by%20year/2009/Judic%20reason%20public.htm
(accessed 8 May 2012).
32 H Bennett and GA Broe, ‘Judicial Neurobiology, Markarian Synthesis and Emotion: How Can the Human Brain Make
Sentencing Decisions?’ (2007) 31 Criminal Law Journal 75 at 84–86, available on
http://www.njca.com.au/Professional%20Development/programs%20by%20year/2009/Judic%20reason%20public.htm
(accessed 8 May 2012), referring to D Krawczyk, ‘Contributions of the Prefrontal Cortex to the Neural Basis of Human
Decision-making’ (2002) 26 Neuroscience and Biobehavioural Reviews 631.
33 H Bennett and GA Broe, ‘Judicial Neurobiology, Markarian Synthesis and Emotion: How Can the Human Brain Make
Sentencing Decisions?’ (2007) 31 Criminal Law Journal 75 at 84–86, available on
http://www.njca.com.au/Professional%20Development/programs%20by%20year/2009/Judic%20reason%20public.htm
(accessed 8 May 2012), referring to R Wiener, B Bornstein and A Voss, ‘Emotion and the Law: A Framework for Inquiry’
(2006) (Apr–Jun) Law and Human Behaviour (online issue).
34 H Bennett and GA Broe, ‘Judicial Neurobiology, Markarian Synthesis and Emotion: How Can the Human Brain Make
Sentencing Decisions?’ (2007) 31 Criminal Law Journal 75 at 84–86, available on
http://www.njca.com.au/Professional%20Development/programs%20by%20year/2009/Judic%20reason%20public.htm
(accessed 8 May 2012), referring to A Damasio, Descartes’ Error: Emotion, Reason, and the Human Brain (Quill, New
York, 1984).
35 Table prepared by C Carter, Project Officer, Judicial College of Victoria 2011 as part of a working project into judicial
decision-making education workshop facilitated by the author.
36 See H Roediger, (September 1990). ‘Implicit Memory: Retention without remembering’. American Psychologist 45(9):
1043–1056. There are many studies relating to amnesiac patients on this point.
37 See http://www.mind-body.info/mind-body-information/consciousness/> (accessed 8 May 2012) and the references
noted.
20. THE ARBITRATOR & MEDIATOR MAY 2012
10
• can converse with all parts of the body and undertake complex tasks without thinking (for example,
being able to drive a car after learning the task);38
• is better at solving problems with many variables.39
This suggests that in the race to make a decision, the unconscious brain is more likely to dominate or at
least trigger the primary response. However, reason, which is acquired through study and the development
of reasoning and analytical skills, helps the brain to make ‘good decisions’ that involve more careful
risk calculation (that the unconscious parts of the brain may not support).
Reasoning
Clearly, brain structures have an impact on the information-gathering and sorting process, but how do
they have an impact on reasoning? To answer this question, it is necessary to consider reasoning processes
and how sensibility can conquer sense. Reasoning is generally defined as the processes by which we
generate and evaluate arguments and beliefs.40 Inductive reasoning enables us to consider and apply
understandings from specific observations to create general propositions.41 Deductive reasoning is the
logical reasoning that enables us to draw a conclusion from a set of assumptions based on logical rules.
Although deductive reasoning suggests that a decision-maker will be logical, there is much research to
show that the content of problems influences how they are solved.42 Another form of reasoning is
analogical reasoning; essentially, we understand a new situation by relating it to a familiar situation.43
When dealing with problem-solving or undertaking a reasoning process, there are some significant
barriers to rational decision-making. These can be described as:
• Functional fixedness – the tendency to rely on data or methodologies that have worked in the past
even when alternatives may work more effectively.
• Confirmation bias – the tendency to search for confirmation of what is already believed.
• Heuristic systems – essentially cognitive shortcuts where similarity matching is used to infer an
outcome.44
38 P Wolfe, Brain Matters: Translating Research into Classroom Practice 2nd ed (2010, ASCD, Alexandria, VA USA), see
Chapter 7.
39 See Dijksterhuis, A, ‘Think Different: The Merits of Unconscious Thought in Preference Development and Decision
Making’ Journal of Personality and Social Psychology, 2004. 87(5): p. 586–598 quoting Freud: ‘When making a decision
of minor importance, I have always found it advantageous to consider all the pros and cons. In vital matters however . . .
the decision should come from the unconscious, from somewhere within ourselves.’ See also Waroquier, L, Marchiori, D,
Klein, O, & Cleeremans, A, ‘Is It Better to Think Unconsciously or to Trust Your First Impression? A Reassessment of
Unconscious Thought Theory’. Social Psychological and Personality Science, 2010. 1(2): pp. 111–118.
40 L Burton, D Westen and R Kowalski, Psychology, 3rd ed (Australian and New Zealand ed, Wiley, Queensland, 2012) at 305.
41 L Burton, D Westen and R Kowalski, Psychology, 3rd ed (Australian and New Zealand ed, Wiley, Queensland, 2012) at 305.
42 L Burton, D Westen and R Kowalski, Psychology, 3rd ed (Australian and New Zealand ed, Wiley, Queensland, 2012) at 306.
43 L Burton, D Westen and R Kowalski, Psychology, 3rd ed (Australian and New Zealand ed, Wiley, Queensland, 2012) at 307.
44 L Burton, D Westen and R Kowalski, Psychology, 3rd ed (Australian and New Zealand ed, Wiley, Queensland, 2012) at
307–312.
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11
45 See J Drobak and D North, ‘Understanding … Judicial Decision Making: The Importance of Constraints on Non-Rational
Deliberations’, 26 Journal of Law and Policy (2008) 131 at p 145.
46 L Sharp, ‘Cognitive Heuristics and Law: An Interdisciplinary Approach to Better Judicial Decision-Making’ (1995) 20
Bulletin of Australian Society of Legal Philosophy 71 at 74.
47 L Sharp, ‘Cognitive Heuristics and Law: An Interdisciplinary Approach to Better Judicial Decision-Making’ (1995) 20
Bulletin of Australian Society of Legal Philosophy 71 at 90.
The work on reasoning suggests that reasoning is essentially the struggle between sense and sensibility,
the unconscious and the conscious, and that our deductive, analogical reasoning processes must be tested
in the decision-making process. The ‘balancing act’ that is reasoned judging assists the conscious brain
to assess risk, while the unconscious brain attempts to hijack it by manipulating the information it
receives and sorts. Reasoning requires us to be aware of the ‘spark’45 or intuitive response, and then to
question it (not justify it) in judicial reasoning.
Personal qualities can impact on ‘decisiveness’ and reasoning capacity. Clearly, a person’s decisiveness
and reasoning capacity is not only linked to brain structure and connectivity, but also to other innate
factors and is a product of learned and other experiences. Some people may require a lot of detailed
information to make a decision, while others may require less. Some discuss the options available with
colleagues or others. Cultural factors in terms of individual and group decision-making might also be
relevant in relation to how completely options and alternatives need to be explored and framed. This is
important as the quality of the decision is a matter that is largely determined by those who are affected
by it. A clearly reasoned and well-thought decision may, for example, be open to criticism or invite an
appeal if it is imperfectly or clumsily framed.
Decision-making and Conveying a Decision
There has been some recent work on the ‘framing’ of decisions that reviews how decisions or options
are expressed. Much of this work has been considered in the context of cognitive heuristics,46 and there
has been limited work in the decisional domain. Sharp described the 1981 study by Tversky and
Kahneman that demonstrated how normatively inconsequential changes in the statement of a problem
dramatically affect preferences and choices.47 Tversky and Kahneman provided two groups of subjects
with the following scenario based on a hypothetical outbreak of a rare disease that was expected to kill
600 people: both groups were told that two alternative programs were being considered to deal with the
outbreak and asked which they preferred. The alternatives provided to group 1 were framed as follows:
(a) If program A is adopted, 200 people will be saved; or
(b) If program B is adopted, there is a one-third probability that all will be saved and a two-thirds
probability that none will be saved.
Of the 158 respondents in group 1, 76 per cent chose program A. In contrast, group 2’s alternatives were
framed as follows:
(a) If program A is adopted, 400 people will die; or
(b) If program B is adopted, there is a one-third probability that no one will die and a two-thirds
probability that all will die.
22. THE ARBITRATOR & MEDIATOR MAY 2012
12
Of the 169 respondents in group 2, only 13 per cent chose program A.48
The work on framing, anchoring and expressing options and outcomes therefore suggests that decision-
makers may support greater uptake of options and compliance with decisions if they express outcomes
by referring to:
• award rather than loss;
• assessing alternatives and both the positive and negative implications of each.
This work also suggests that good decision-making may also involve ‘good framing’and a closer analysis
of what framing is more likely to support compliance with outcomes. Work on anchoring and heuristics
is also relevant in the broader ADR environment as it suggests that it is more likely that lower or higher
outcomes will be accepted or adopted if the brain is primed to accept them.49 Other work on framing
suggests that information about a process as well as information about options and outcomes will all
impact on compliance with outcomes as well as the outcomes that are reached. This work has
implications for all forms of dispute resolution and supports the giving of procedural explanations
throughout an ADR process (this can prime disputants to provide higher quality information) as well as
ensuring that outcomes are canvassed before the conclusion of the dispute resolution process.50
Future Decision-making
In terms of future decision-making, it is clear that a revolution in technology is taking place, which will
have an impact on judging. Rule-based Artificial Intelligence (AI) approaches have functioned to support
games, decision-making, word processing, design and many human activities over the past two decades.
Judicial decision-making will not be immune from this revolution.
Decision-making can also be supported by technology. Increasingly, AI is used to support decision-
making in relation to decisions that require simple options and outcomes (consumer decision-making)
and more complex data-mining and team approaches (environmental, medical and social problems).51
AI refers to computer systems that perform tasks and/or solve problems that usually require human
intelligence.52 These processes have emerged over the past 50 years53 and have been directed at technical
48 See D Kahneman and A Tversky, ‘Choices, Values, and Frames’ (1984) 39(4) American Psychologist 341 at 343,
available on <http://webs.wofford.edu/pechwj/Choices,%20Values,%20and%20Frames.pdf> (accessed 29 August
2011).
49 See J Lehrer – The Frontal Cortex at [http://www.wired.com/wiredscience/frontalcortex] accessed 6 May 2012.
50 See D Weitz, ‘The Brains Behind Mediation: Reflections on Neuroscience, Conflict Resolution and Decision-Making’,
2011, V12 No 2 Cardozo Journal of Conflict Resolution at 6–7. Weitz refers to experiments by Bargh, which
demonstrated that students would be more polite if ‘primed’ and that subtle words used to prime can result in subjects
behaving differently in a range of ways (see J Bargh, What have we been priming all these years? On the development,
mechanisms, and ecology of nonconscious social behavior, V 36 2006, European Journal of Social Psychology, 147-
168.)
51 See Kaggle.com (accessed 8 May 2012).
52 R Susskind, The Future of Law: Facing the Challenges of Information Technology (Clarendon Press, Oxford, 1996), p
120.
53 For a history of the development of AI, see P Gray, Artificial Legal Intelligence (Brookfield, Dartmouth, United Kingdom,
1997), Ch 2.
23. THE ARBITRATOR & MEDIATOR MAY 2012
13
as well as legal analysis.54 They have the capacity to be blended with existing adjudicatory or non-
adjudicatory processes. However, it is most probable that their benefits will be greatest where
determinative and advisory processes are concerned.
Legal information and AI systems can use sophisticated ‘branching’ technology to create elaborate
decision trees that can suggest outcomes to disputes. This is done by a system that emulates human
intelligence. Essentially, what takes place is that the system asks the user a number of questions about
the dispute to enable an accurate description of it to be built up. The computer then forms a conclusion
by applying the law to the dispute description. It does this by applying rules for specific sets of facts.55
Finally, the computer can perform tasks based on the description given.56 This process may enable
indicative decisions to be expressed. However, there are many other factors that have an impact on
decision-making. The Australian Law Reform Commission (ALRC) has noted that such factors include
induction and intuition as well as the capacity to assess the social impact of decisions.57
Branching technology that is not rule-based was used in a project of the Intelligent Computing Systems
Research conducted by La Trobe University and Victoria University (called ‘Split-Up’). The project,
which determined that there are 94 factors relevant for a percentage split decision, was directed at
applying AI to assist in calculating the division of property in family law proceedings and led by
Professor John Zeleznikow.58 ‘Split-Up’, a hybrid rule-based neutral network system that grew out of
this research, offers advice on how a property is likely to be distributed if the matter is determined by a
court. It has been trialled by some judges, judicial registrars and registrars of the Family Court of
Australia as well as legal practitioners, mediators and counsellors. A more advanced approach, which is
oriented at supporting negotiation, is called Family_Winner.59
It is unlikely that these technologies will replace judges or decisional dispute resolvers; however, they
do have the capacity to help them – by checking logical rules and even by creating a community of
decision-making that can test the unconscious. As Keith Mason has noted – this will not lead to the
demise of human decision-making – or judging – as discretion is still a critical feature of all good judging
processes:
54 P Savasdisara, ‘Computer-assisted Legal Analysis Systems: Part 1: The Origins of Computer-aided Support Systems’
(1994) 5(2) Computers and Law 28.
55 See MJ Hall, D Calabro, T Sourdin, A Stranieri and J Zeleznikow, ‘Supporting Discretionary Decision-making with
Information Technology: A Case Study in the Criminal Sentencing Jurisdiction’ (2005) 2(1) University of Ottawa Law and
Technology Journal 1.
56 P Savasdisara, ‘Computer-assisted Legal Analysis Systems: Part 1: The Origins of Computer-aided Support Systems’
(1994) 5(2) Computers and Law at 28.
57 ALRC, Review of the Adversarial System of Litigation. Technology – What It Means for Federal Dispute Resolution,
Issues Paper 23 (ALRC, Canberra, March 1998) p 100.
58 See J Zeleznikow on www.vu.edu.au/about-vu/our-people/john-zeleznikow (accessed 8 May 2012).
59 See J Zeleznikow and E Bellucci, Family_Winner: Integrating Game Theory and Heuristics to Provide Negotiation
Support, available on <www.jurix.nl/pdf/j03-03.pdf> (accessed 8 May 2012); J Zeleznikow, E Bellucci, UJ Schild and G
Mackenzie, Bargaining in the Shadow of the Law – Using Utility Functions to Support Legal Negotiation (International
Conference on Artificial Intelligence and Law, 2007) pp 237–246.
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14
But it is men and women enjoying judicial independence who administer justice, not
automata or computers. In many areas judges are given broad discretions for a variety
of reasons. If legislators wish to guide, inform or limit those discretions they are generally
free to do so, but much room for movement is left – often deliberately. Within the rules,
judges “have the capacity, and sometimes the obligation, to exercise qualities of
judgment, compassion, human understanding and fairness.” 60
Conclusions
There are other relevant factors in the context of decision-making that influence the way that
determinative dispute resolvers make decisions and can be linked back to the overarching objectives of
the particular form of the decision-making. For example, objectives that relate to conventional
adjudication emphasise the importance of precedent setting and the development of law. These objectives
can be contrasted with broader objectives: will the decision be effective (complied with) or will the
decision promote respect for the arbitral system? It may be that ‘blended’ adjudicative processes can
meet these objectives more readily than traditional adjudicative processes, because there is an active
consideration of issues relating to how the decision is made and communicated (rather than only
considering whether or not the decision is ‘right’).
The objectives of any decision-making processes play an important role in framing the neurobiological
responses to those processes. They create a broader framework within which dispute information is
sorted, questioned and analysed. Procedural explanations by those involved in determinative and advisory
processes are critical in helping to ensure that this work is undertaken in an orderly and effective manner.
These explanations also help arbitrators and all participants to engage appropriately and promote the
more logical gathering and sorting of information. However, even when these frameworks are in place,
innate, learned and situational factors will impact on decision-making processes. Much of this article
has considered these neurobiological issues from the perspective of rational and irrational thinking
responses; and it is clear that sometimes these individual factors will enable the brain to be hijacked and
resist rational decision-making.
60 K Mason, ‘Unconscious Judicial Prejudice’ (2001) 75 The Australian Law Journal 676 at 766.
25. THE ARBITRATOR & MEDIATOR MAY 2012
Understanding the Paramount Object in
the Context of Party Autonomy
Michael JF Sweeney1
Commercial arbitration may succinctly be described as a private, determinative dispute resolution process
conducted by an impartial arbitrator constituted by the agreement of the disputant parties. The process
gives the parties autonomy and, together with the arbitral tribunal, allows them to determine the procedure
for the arbitration. In this sense and to date, the arbitral process is a two way compact between the parties
and the tribunal. Effective commercial arbitration is dependent on the proper organisation and certainty
of the arbitral process and the quality and character of the tribunal itself.
The reforms for the conduct of international commercial arbitration in Australia and reforms of domestic
commercial arbitration, presently rippling through the different State jurisdictions, seek to deliver greater
certainty of process and enhance the capacity of the arbitral tribunal to deliver a quality outcome.
Domestic commercial arbitration reform has been implemented through the passage of uniform
legislation based predominately on the United Nations Commission on International Trade Law, Model
Law (Model Law).2 However, one of the most notable and potentially far reaching reforms adopted in
the domestic legislative reforms does not spring from the Model Law. It is the provision of the ‘paramount
object’.
The paramount object in s1AC of the Commercial Arbitration Act 2011 (Victoria)3 (the Act) is ‘to
facilitate the fair and final resolution of commercial disputes … without unnecessary delay or expense’.
Fairness and finality capture the requirement to act in accord with natural justice and the objective that
arbitration be a conclusive and final hearing. The other aspect is to facilitate the arbitral process without
unnecessary delay and expense. What is required to be achieved is amplified in sub section (2) which
has two limbs. The paramount object is to be achieved by enabling the parties to agree on how the dispute
is to be resolved. The second limb is to provide procedures for resolution in a cost effective manner,
informally and quickly. The rider of seeking efficiency is a layer added to the traditional supremacy of
parties’self determination in deciding on appropriate arbitral procedures for the conduct of their dispute.
Sub section (3) introduces a quite revolutionary factor. It also introduces an additional characteristic to
the former traditional two way compact. This is the requirement, mandatory upon the arbitral tribunal,
for it to exercise its functions for the achievement of the paramount object. This new mandatory factor
is legislated policy which, at least in the Victorian Minister’s second reading speech, is intended to be
15
1 Michael JF Sweeney LLB, FIAMA, FCIArb, Chartered Arbitrator (UK), FACICA, Barrister, Victorian Bar, Arbitrator &
Commercial Mediator. Member WIPO and ACICA arbitration panels, WA Energy Review Board, Member Victorian Civil &
Administrative Tribunal. Director MEO Australia Ltd. Formerly, senior managing executive Mitsubishi and Mitsui joint
venture for the North West Shelf LNG Venture; consultant in Australian gas industry privitisations; Chair, Law Council of
Australia, Energy & Resources Committee.
2 United Nations Commission on International Trade Law, Model Law on International Commercial Arbitration 1985, as
amended to 2006.
3 Also Commercial Arbitration Act 2010 (NSW) s1C; Commercial Arbitration Act 2011 (Tasmania) s1C.
26. THE ARBITRATOR & MEDIATOR MAY 2012
promotional of commercial efficiency in the conduct of private dispute resolution. The paramount
object’s legislative enunciation in s1AC of the Act is unique.
This paper will:
(a) Provide background by recalling the recent Australian domestic arbitration environment and a
perceived need for cultural change;
(b) Consider the interpretation of the paramount object in the overall context of the Act, specifically,
its operation in relation to s18, equality and reasonable opportunity for presenting a party’s case;
s19, the parties’ freedom to agree on procedure or as the arbitral tribunal considers appropriate;
(c) Examine the extent to which the paramount object impacts on party autonomy and impacts on the
discretionary power of the tribunal to conduct the arbitration in such manner as it considers
appropriate; and
(d) Consider how the operation of paramount object from a practical perspective may serve to
reinvigorate a balance between party autonomy and fairness of treatment for all parties.
Recent Australian domestic arbitration environment
In 2008 at the Institute of Arbitrators & Mediators Australia (IAMA) National Conference in Fremantle,
Western Australia, I delivered a paper on the opportunities for domestic arbitration4 in the context of the
trenchant criticisms levelled by His Honour Justice Ronald Sackville over the extraordinary length and
cost of litigation in the case Seven Network Limited v News Limited & Others,5 known as the C7 litigation.
My chief argument was that, while domestic arbitration was capable of delivering more efficient and
less costly outcomes compared to litigation, it seemed that it was failing to do so and that the achievement
of this would require cultural change amongst practitioners, arbitrators and parties. If one could engineer
a change to the domestic arbitration environment, one could produce the necessary cultural shift.
I referred to the then recent change made by IAMA to adopt in its Arbitration Rules an overriding
objective. This was modelled on the Lord Woolf reforms of the United Kingdom subsequently
incorporated into the Civil Procedure Rules for the courts of England and Wales6 and later in practise
rules of court such as the New South Wales Uniform Civil Procedure Rules and the Victorian Supreme
Court Commercial Court Practise Note 2010. The objective adopted by IAMA reads at Rule 1: ‘that the
arbitration is conducted: fairly, expeditiously and cost effectively; and in a manner which is proportionate
to: the amount of money involved; the complexity of the issues, and any other relevant matter’.7 Of
course the IAMA rule for the overriding objective is just that, a rule and only given effect if adopted by
the parties.
16
4 Institute of Arbitrators & Mediators Australia, The Arbitrator & Mediator (2008) Vol. 27 (2) 11.
5 [2007] FCA 1062 (26 July 2007).
6 Civil Procedure Rules 1998, England & Wales – the White Book.
7 The IAMA Arbitration Rules, Institute of Arbitrators & Mediators Australia, 1 June 2007.
27. THE ARBITRATOR & MEDIATOR MAY 2012
Court rules, to the extent they stipulate a paramount or overriding objective of efficiency remain only
rules of procedure and as such are read down as servants and not masters of justice.8 In part recognition
of the limitation of court rules, Victoria enacted its Civil Procedure Act 2010. Section 7 provides an
overarching purpose for the operation of that Act and rules of court to facilitate the just, efficient, timely
and cost-effective resolution of the real issues in dispute. It provides that a court must seek to give effect
to the overarching purpose in the exercise and interpretation of its powers. It is beyond the scope of this
paper to examine the operation and interpretation of the overarching purpose of Civil Procedure Act.
However it should be noted that s9 sets out the court’s powers to further the overarching purpose. In
making any order or giving any direction, a court shall further the overarching purpose by having regard
to matters which include the public interest in the early settlement of disputes by agreement, the efficient
conduct of the business of the court, the efficient use of judicial and administrative resources and dealing
with civil proceedings in proportion to the complexity of the issues in dispute and the amount in dispute.9
The intent of the overarching purpose and the policy behind it may be informed by the Explanatory
Memorandum to the Civil Procedure Act.
The provisions of the Bill aim to ensure the appropriate use of the court system by
litigants and to prevent the wastage of court resources through inefficient processes or
tactical litigation that has the effect of reducing access to the courts for other litigants
with meritorious claims.10
The context of the reforms made by the Civil Procedure Act is the public interest in early settlement of
disputes and the efficient use of judicial and administrative resources. As will be discussed, the legislative
prescription for the paramount object under the new Commercial Arbitration Act is to be distinguished
as it intrudes into the realm of private arbitral dispute resolution and the attendant freedom of the parties
to set their procedures, none of which depends on the public purse.
In the same period as these other reforms were occurring, the movement for reform of domestic
arbitration across Australia gained considerable momentum. The approach generally agreed under the
auspices of Standing Committee of Attorneys General (SCAG) was that the several Australian
jurisdictions should adopt the Model Law for its domestic arbitration and so bring it into greater
alignment with the regime for the conduct of international arbitration in Australia. Going well beyond
discussions of several years ago however, the reforms include a paramount object superimposed on the
regulation of private parties’dispute resolution process. The paramount object is an expression of public
policy concerning aspects of a private dispute resolution process, now given legislative force by being
embedded in the new Act. Apart from recognising requirements of fairness, the public policy expressed
in the paramount object goes to the importance to be attached to finality and to the avoidance of
unnecessary delay and expense. The fact that the achievement of the paramount object is mandated upon
an arbitral tribunal, gives clear statutory force in the relevant Australian jurisdictions that the conduct of
private determinative dispute resolution must be cost effective and efficient. Whether the arbitrators of
Australia are making a cultural change in their approach to the conduct of domestic arbitration or not,
17
8 Harding v Bourke (2000) 48 NSWLR 589.
9 Civil Procedure Act 2010 (Victoria) s9(1)(a) – (g).
10 Civil Procedure Bill 2010, Explanatory Memorandum, 22 June 2010.
28. THE ARBITRATOR & MEDIATOR MAY 2012
the relevant law makers of this nation’s jurisdictions have certainly acted to impose their will upon the
private dispute resolution process.
Interpretation of the paramount object
The extent to which the paramount object will impact on and influence the future conduct of domestic
arbitration in Australia will depend on how s1AC is interpreted by the court’s when it may come before
them for consideration. For example, what is to be given primacy? Is it the age old and long cherished
principle of party autonomy, captured now in s19(1) of the Act, and coupled with the relatively free hand
of the arbitral tribunal to mould procedures as it sees appropriate, as per s19(2)? Or, in the interests of
minimising delay or expense, will primacy be given to the new added obligation of the tribunal to
interpret the Act, as far as practicable, to achieve the paramount object?
We cannot understand the importance to be assigned to the paramount object merely by looking at
individual words of the section and conducting an analysis through a process of logic. In the words of
Sir Owen Dixon CJ in the Commissioner for Railways (NSW) v Agalianos11: ‘the context, the general
purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than
the logic with which it is constructed’. Indeed, the meaning of the provision must be determined ‘by
reference to the language of the instrument viewed as a whole’ (Cooper Brookes (Wollongong) Pty Ltd
v Federal Commissioner of Taxation)12.
Reconciling conflicting provisions of any act will often require the court ‘to determine which is the
leading provision and which is the subordinate provision, and which must give way to the other’(Institute
of Patent Agents v Lockwood).13 The High Court stated in Project Blue Sky v Australian Broadcasting
Authority:14
Only by determining the hierarchy of the provisions will it be possible in many cases to
give each provision the meaning which best gives effect to its purpose and language
while maintaining the unity of the statutory scheme.
And further:
A legislative instrument must be construed on the prima facie basis that its provisions
are intended to give effect to harmonious goals. Where conflict appears to arise from
the language of particular provisions, the conflict must be alleviated, so far as possible
by adjusting the meaning of the competing provisions to achieve that result.
The task of interpreting a statute will of course also be directed by the interpretation of acts legislation
of the relevant State or Commonwealth15 which provide in materially the same way for the use of extrinsic
18
11 (1955) 92 CLR 390 at 397.
12 [1981] HCA 26; (1981) 147 CLR 297 at 320 per Mason and Wilson JJ.
13 [1894] AC 347 at 360 per Lord Herschell LC.
14 (1989) 194 CLR 355 at 381 per McHugh, Gummow, Kirby and Hayne JJ.
15 For example, Acts Interpretation Act 1901 (Commonwealth) s15AA, an interpretation that would best achieve the
purpose or object of the Act should be preferred.
29. THE ARBITRATOR & MEDIATOR MAY 2012
materials such as second reading speeches and explanatory memoranda as aids to interpretation.16
It is not intended to attempt an exhaustive statutory interpretation of the paramount object’s operation
in the new Act. It would in any event only be one interpretation and, as we have witnessed in respect of
the former uniform domestic commercial arbitration Acts, settled interpretation was the result of many
decades of judicial pronouncements. My reference to some of the material precepts that govern statutory
interpretation however, serves to remind us that the court will interpret the paramount object’s place in
the Act by giving effect to its purpose and at the same time maintaining the unity of the overall statutory
scheme of the Act.
Looking at the Act with these statutory interpretation precepts in mind, how might we consider the
operation of the paramount object itself and its relationship with other provisions of the Act, particularly
the engine house provisions of domestic arbitration, s18 and s19? What is the hierarchy of these
provisions as would give each provision a meaning which best gives effect to its purpose whilst
maintaining the unity of the commercial arbitration Act? And how is settling upon a hierarchy influenced
by a provision that is expressed to be paramount and mandatory?
Section 1AC of the Commercial Arbitration Act 2011 (Victoria) reads (emphasis added):
1AC Paramount object of Act
(1) The paramount object of this Act is to facilitate the fair and final resolution of commercial
disputes by impartial arbitral tribunals without unnecessary delay or expense.
(2) This Act aims to achieve its paramount object by—
(a) enabling parties to agree about how their commercial disputes are to be resolved
(subject to subsection (3) and such safeguards as are necessary in the public interest);
and
(b) providing arbitration procedures that enable commercial disputes to be resolved in
a cost effective manner, informally and quickly.
(3) This Act must be interpreted, and the functions of an arbitral tribunal must be exercised,
so that (as far as practicable) the paramount object of this Act is achieved.
The very designation of ‘paramount object’might be considered to speak for itself. There could be little
argument against the proposition that s1AC was intended by SCAG and the enacting legislatures to
express a consideration of utmost importance. However, the actual expression of the paramount object
is in less absolutist language. It is to ‘facilitate’a ‘fair’and ‘final’resolution without ‘unnecessary’delay
and expense. It is not, for example, to achieve final resolution in a quick cost effective manner. As noted
by Doug Jones in his most comprehensive work on the new domestic legislation,17 it is not expressed in
19
16 For example, Interpretation of Legislation Act 1984 (Victoria). S35.
17 Commercial Arbitration in Australia, 2011 Law Book Company, Doug Jones, page 40 [2.150].
30. THE ARBITRATOR & MEDIATOR MAY 2012
the earlier language of the SCAG 2009 Consultation Draft Bill which stated the object as being ‘to
facilitate the fair, quick and cost effective final resolution’. The express words of the paramount object
are ‘to facilitate’ not dictate; by means of a ‘fair and final resolution’, not by means of a resolution
whatever the cost to fairness or finality; and to achieve this without ‘unnecessary delay or expense’,
recognising that delay and expense can be unavoidable.
The facilitation of the paramount object is expressed in sub section 2 as being achieved by enabling the
parties to agree about how their dispute is to be resolved, echoing s19 which states that the parties are
free to agree on the procedure to be followed in the arbitration. But importantly and starkly, sub section
(3) effectively makes freedoms such as those in s19 subject to the arbitral tribunal being required to act
to achieve the paramount object. What is the reason for this stark language?
The responsible Ministers’ second reading speeches in both the NSW Legislative Council and the
Victorian LegislativeAssembly18 are in substantially the same terms. The second reading speeches recited
the first and main principle agreed on by SCAG (in April 2009) for guiding the drafting of the uniform
legislation based on the Model Law. The Ministers stated:
The bill is based on the text and spirit of the model law … However, the model law does
not provide a complete solution to the regulation of domestic commercial arbitration …
the bill should give effect to the overriding purpose of commercial arbitration, namely,
to provide a quicker, cheaper and less formal method of finally resolving disputes than
litigation.
Further the second reading speech stated:
Stakeholders advocated for and endorsed the inclusion of a paramount objective clause,
noting the absence of such a provision as a weakness in the existing uniform commercial
arbitration legislation.
Applying the principle in Heydon’s case,19 a court will consider the state of the law before the making
of an Act and the mischief to be remedied. The second reading speeches, highlighting as they do the
weakness in the previous legislative regime, are strong pointers as to the mischief intended by Parliament
to be remedied. The will of the Parliaments appears clear from the second reading speeches. It signals
intent for the operation of the paramount object to drive change, shifting the arbitral zeitgeist and
differentiating it from a commercial litigation culture associated, at least in the past, with traditional
procedures often mired in cost and complexity. It signals that arbitration should deliver quicker and final
outcomes without unnecessary delay and cost, subject of course to the requirements of fairness.
There is however a significant qualification to the mandatory language of the paramount object in sub
section (3). It is the words in brackets stating that the Act and the functions of the arbitrator must be
exercised ‘as far as practicable’to achieve the paramount object. This phrase is redolent of the expression
20
18 Hansard, New South Wales Legislative Council, 12 May 2010, The Hon. John Hatzistergos; Hansard, Victorian
Legislative Assembly, 17 August 2011, The Hon. Robert Clark.
19 (1584) 3 CO Rep 7a.
31. THE ARBITRATOR & MEDIATOR MAY 2012
used in the judgment of the High Court previously referred to in the Project Blue Sky:20 ‘Where conflict
appears to arise from the language of particular provisions, the conflict must be alleviated, ‘so far as
possible’by adjusting the meaning of the competing provisions to achieve that result’(emphasis added).
The qualifying expression ‘so far as practicable’ in s1AC(3) is a recognition of the inherent tension
between the paramount object and other provisions of the Act and gives an insight on the limit of the
mandatory nature of the paramount object. The qualifying expression draws a line that puts the limit to
an unbridled and literal interpretation of what may be meant by ‘paramount’. The expression gives force
to the valuable admonition of the Supreme Court of the United States:
But no legislation pursues its purposes at all costs. Deciding what competing values will
or will not be sacrificed to the achievement of a particular objective is the very essence
of legislative choice – and it frustrates rather than effectuates legislative intent
simplistically to assume that whatever furthers the statute’s primary objective must be
the law.21
The paramount object and party autonomy
As stated at the outset, the legislative requirement for fairness and for efficiency, coupled with a
mandatory requirement for the arbitral tribunal to achieve this paramount object, is unique. The question
is what is its impact on the fair and equal treatment of the parties and on party autonomy to agree on
procedure for the conduct of arbitration? In particular, how can the operation of sections 18 and 19 of
the Act be viewed in light of the paramount object?
S18 states that the parties must be treated with equality and given a ‘reasonable’opportunity of presenting
its case. The equality of s18 and the requirement for a ‘fair’resolution in the first part of s1AC(1) of the
paramount object is unlikely to be controversial. But, the section does vary from the Model Law by
using a ‘reasonable’ opportunity instead of a ‘full’ opportunity for a party presenting its case. Perhaps
not much turns on this difference as it seems to be reflective of the usage of those terms as understood
on the one hand in Australian jurisdictions and on the other through international practise where the
Model Law is used. However, the Model Law does not contain a paramount object. The use of the
expression ‘reasonable opportunity’ is to be understood in light of the paramount object and the
mandatory requirement on the tribunal to give effect to it. Thus, the extent to which a party may be
regarded as having been accorded a reasonable opportunity of putting its case will likely be determined
according to the dictates of efficiency and expense in a way that differs from international practise under
the Model Law and potentially may even diverge from the manner of applying common law principles
of natural justice.22 This is a significant difference. It is also an example of where the operation of the
paramount object and interpretation of the new domestic Acts will not necessarily achieve the promotion
of uniformity with international practice under the Model Law as contemplated by s2A of the Act.23
21
20 Supra, note 13.
21 Rodriguez v United States 480 U.S. 522 (1987), 23 March 1987.
22 The extent to which this may call into consideration the application of common law principles of natural justice or,
conversely, be limited to the statutory prescription for review under s34(2) is a matter for future resolution.
23 Commercial Arbitration Act 2011 (Victoria) s2A, International origin and general principles.
32. THE ARBITRATOR & MEDIATOR MAY 2012
But it is the interaction of s19 with the paramount object that produces a potentially revolutionary effect
on the conduct of arbitration in Australia. S19(1) states the time honoured and legally recognised right
of the parties to autonomy in agreeing on the procedures to be adopted. S19(2) states that failing
agreement of the parties, the arbitral tribunal may conduct the arbitration is such manner as it considers
appropriate. S19 purports to describe when and to what extent the arbitral tribunal has power to conduct
the arbitration.
However, sub section (1) states that the party autonomy to agree on procedure is ‘subject to the provisions
of thisAct’. Equally sub section (2), allowing the arbitral tribunal to conduct the arbitration as it considers
appropriate, is expressed as ‘subject to the provisions of this Act’. Whilst these expressions of
conditionality are the same as that used in the Model Law, unlike the Model Law, these qualifications
also operate to make it clear that party autonomy and the exercise of an arbitrator’s discretion are subject
to the requirements, amongst other things, of equality in s18 and the dictates of the paramount object in
s1AC.
The interaction of these sections with the paramount object surely results in a check on and, thereby, a
departure from the previously enshrined principles both of broad party autonomy and, subject to that,
the more laissez faire discretion of the arbitral tribunal. It is a departure compared to the former Uniform
Acts where freedom to decide on procedure is expressed with the caveat: ‘unless otherwise agreed in
writing by the parties’.24 It is also a departure from an arbitral tribunal’s previous procedural powers25
which were not fettered by a mandatory requirement to achieve a paramount object. This is not to say
that restrictions of any kind on autonomy and on arbitral tribunal discretion are new. The freedom of
parties to set their procedure or indeed resolve a dispute by arbitration has always been subject to public
policy requirements such as acting in accordance with the rules of natural justice and providing for
supervisory powers of court.26 However, I repeat that the nature of entrenchment and enunciation of the
paramount object is unique. It witnesses that public policy has evolved, shifting arbitral norms of
behaviour, with demand for efficiency and avoidance of expense in the private domain of arbitration.
The closest relative and likely foundation of the words contained in the paramount object is the
ArbitrationAct27 of the United Kingdom (UK Act). In s1 of the UK Act, General Principles are described
as:
(a) the object of arbitration is to obtain the fair resolution of disputes by an impartial
tribunal without unnecessary delay or expense;
(b) the parties should be free to agree how their disputes are resolved, subject only to
such safeguards as are necessary in the public interest; …
22
24 Commercial Arbitration Act 1984 (Victoria) s19(3).
25 Commercial Arbitration Act 1984 (Victoria), s14.
26 Redfern & Hunter, Law and Practice of International Commercial Arbitration, 4th edition, paragraph 6.01 generally;
Commonwealth v Cockatoo Dockyard Pty Ltd, (1995) 36 NSWLR 662 as to powers of the court.
27 Arbitration Act 1996, United Kingdom, s1, General principles.
33. THE ARBITRATOR & MEDIATOR MAY 2012
The words of the Australian paramount object closely follow the General Principles contained in s1 of
the UK Act. However, the construction of s1 and its object and the procedural sections of 33 and 34,
operate so as to confirm the primacy of party autonomy by not subordinating it to the object expressed
in the General Principles. Consequently, this results in a quite different outcome compared to the usage
employed in new uniform Australian legislation. By s1AC(3) of the new Act, the arbitral tribunal has a
legislative duty, consistent with equality and fairness, to exercise its functions without unnecessary delay
or expense, suggesting a duty proportionate to the particular arbitration at hand, but a duty nonetheless.
Some commentators have noted that the paramount object gives the arbitral tribunal a discretion to direct
procedure contrary to a party or parties wishes so as to comply with the paramount object. However, in
my view, this states the position rather too lightly. As discussed, the authorities state that a legislative
instrument must be construed on the prima facie basis that its provisions are intended to give effect to
harmonious goals. In the majority of arbitrations, it is unlikely that a conflict will arise between behaviour
of parties in the exercise of their freedom to agree on procedure and the paramount object. However,
where there is a clear conflict between one party’s asserted procedural right (such as having detailed and
costly discovery) in proportion to the size of the arbitration in terms of efficiency, time and cost, it is
arguable that the arbitral tribunal does not have the ability to use its discretion under s19(2) to accept
that position. Instead it must act, so far as practicable, to achieve the paramount object. This duty of the
arbitral tribunal reflects the policy apparent in the second reading speeches that ‘… the bill should give
effect to the overriding purpose of commercial arbitration, namely, to provide a quicker, cheaper and
less formal method of finally resolving disputes than litigation’.
A further observation needs to be made concerning the interpretation of the paramount object. Whilst
the interpretation will become clearer over time as the courts have the opportunity to give it their
consideration, the avenues for seeking recourse to the courts to set aside an award or to appeal against
an award under the Act28 are greatly restricted compared to the old uniform Acts. The frequency of such
applications or appeals could reasonably be expected to diminish under the new regime. In respect of
opportunities for the courts to consider the operation of the paramount object, a party aggrieved by cost
and delay caused by the behaviour of a recalcitrant party will have little ability to seek review. It may
possibly seek review under s16(4) or s16(6), asserting that the tribunal is exceeding its scope of authority
and jurisdiction by its failure to act under s1AC(3) and thereby permitting unnecessary delay and cost.29
A more likely manner in which an application to set aside may come before the courts is, for example,
by a losing recalcitrant party arguing under s34(2) (ii) or (iv) that the award is to be set aside on the
basis that it was unable to or did not have a reasonable opportunity of presenting its case and that the
procedure adopted by the tribunal was not in accordance with the Act (such as not meeting requirements
of fairness). In exercising review of an award in these more limited situations, a Court will have the
opportunity to consider the mandatory nature of the paramount object and the extent to which this may
23
28 Commercial Arbitration Act 2011 (Victoria) s5, limits to court intervention; s34, setting aside an award; 34A, appeal
against award.
29 Also, Commercial Arbitration Act 2011 (Victoria) s17H and s17I coupled with s36(1)(a) or (b), application against
enforcement of interim measure, may possibly give rise to an argument that the interim award is incompatible with
s1AC(3).
34. THE ARBITRATOR & MEDIATOR MAY 2012
or may not have justified the course adopted by the tribunal in its management of procedures and the
making of its award. However, it is likely to take quite some time before a reasonable body of precedent
can be established.
Conclusion
The paramount object and duty under s1AC(3) upon the arbitral tribunal arguably serves to restore and
reinforce the contractual balance underlying the arbitration agreement when it was established at the
time of contracting; when at that time, by choosing arbitration, the parties had agreed to party autonomy
in deciding the dispute consistent with an efficient and commercial outcome. It is usually only at the
later stage when a dispute has arisen, that one party may become uncooperative and draw out the process.
Where this is permitted by the arbitral tribunal, all too frequently in the past, the other party to the
arbitration bargain is being treated in effect without equality and most certainly does not receive the
benefit of the dispute resolution process for which it originally bargained. It is the balance between
autonomy and efficiency that has arguably long been adulterated, either by tribunals’ timid conduct of
arbitration by indulging the recalcitrant party, or by courts in imposing judicial procedures or standards
on what was intended to be a ‘private’ arbitral process.
I have mentioned the operation of the paramount object and the arbitral tribunal’s duty under sub section
1AC(3) in terms of responding to the behaviour of a recalcitrant party. However, if in accordance with
the intent of the first limb of sub section (2) of the paramount object, both parties had agreed on
procedures, but these procedures were of a time consuming and costly nature, the arbitral tribunal can
be prevented from acting under its duty and seeking to enforce efficiencies on the parties. This results
from the operation of s32(2) and (3) of the Act where, should the parties agree to terminate proceedings,
the tribunal must do so with the consequence that the tribunal’s mandate is simultaneously terminated.
This suggests a limit to the tribunals duty under s1AC(3). A court would be guided by the scheme of the
Act which gives the parties, acting together, ultimate control over proceedings. It should be reasonable
to observe that, when the parties are acting in agreement, the paramount object constitutes little erosion
of their autonomy. In any event, an arbitral tribunal could not call upon a court to intervene or enforce
a procedure which has been rejected by both parties as it does not possess such a power under the new
Act.
From a practical perspective, the paramount object should serve to put a recalcitrant party on notice that
there is a real limit to using procedural tactics to delay and draw out an arbitration. It should also serve
as a real impetus for an arbitral tribunal to act with greater assuredness in conducting the arbitration and
controlling unnecessary delay and expense. But failing that, at the very least, the paramount object
should serve to make an arbitral tribunal aware that its power and discretion under s19(2) should not be
exercised in a way inconsistent with the requirements of the paramount object and that a non recalcitrant
party may with force insist that the tribunal act in accordance with its mandated duty to achieve the
object.
The difference between Australian jurisdictions that have the paramount object legislatively embedded
in the manner discussed and other jurisdictions that do not, can be further appreciated by referring to a
24
35. THE ARBITRATOR & MEDIATOR MAY 2012
colourful allegory from the international and UK arbitration world. Redfern & Hunter 30 describe the
balance between party autonomy in setting procedure and any overriding requirements of applicable law
by saying that an arbitration is like a ship. An arbitration may be said to be owned by the parties, just as
a ship is owned by shipowners, with the ship under the command of the captain arbitrator. The owners
may dismiss the captain if they wish and hire a replacement, but there will always be someone on board
who is in command.31 The allegory is fine so far as it goes. However, it is unhelpful in considering the
balance between party autonomy and any overriding requirements where it is only one of the parties, or
one of the shipowners, that is being recalcitrant. Should the ‘Good Ship Arbitration’stray into Australian
waters under the new uniform domestic arbitration Acts, if a procedural dispute arises between the co-
owners, captain arbitrator will be under a duty to achieve the paramount object, expected to rule against
the recalcitrant co-owner and so act to prevent driving the ‘Good Ship Arbitration’ onto the rocks.
I repeat my concluding remark at the 2012 IAMA National Conference. When anyone as arbitrator takes
their place at their next arbitration hearing under the new Act, take a moment to look about you. As
always, you will observe the disputant parties before you. However, in a new pew, sitting very quietly
but with fixed gaze, you will observe ‘Public Policy’ who will rarely announce his appearance, in most
instances having nothing whatsoever to say. But should he speak, listen well; for it will be to tell you
what you must do.
25
30 Redfern & Hunter, Law and Practice of International Commercial Arbitration, 4th edition.
31 Supra, paragraph 6.02.
