Originally from American Review of International Arbitration - ARIA

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I. INTRODUCTION

Australia, in common with many countries, has recently embraced arbitration as a desirable method for the settlement of disputes, particularly international commercial disputes. This is not to say that arbitration is new to Australia; it has long been practiced, and in some areas, such as labor disputes, is firmly entrenched. In the commercial sphere, arbitration made few inroads, except in relation to the building and construction industry. This situation is rapidly changing, however. An attitude of legal and judicial tolerance of arbitration has been transformed into one of positive encouragement.

Developments in other countries have influenced this change of attitude. For example, the uniform commercial arbitration legislation in the Australian states is to a large extent modeled on the English Arbitration Act of 1979. Moreover, international legislation, such as the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, has proved influential. Beyond these developments, the maturing of attitudes and perspectives in Australia has led to a realization that litigation should not be the only method of dispute resolution. There is now wide acceptance of the belief that parties should be free to devise their own framework for dispute resolution, and that alternatives to litigation can and must play a part.

As far as international commercial disputes are concerned, it is clear that litigation has severe limitations. Litigation takes place before a national court, usually that of one of the parties. Consequently, the other party will usually feel at a disadvantage. Given approximately equal bargaining power between the parties, it is unlikely that contractors would agree to a choice-of-forum clause in a contract, for each party might be reluctant to accept a choice of the other party’s court. Litigation in a “neutral” court may be a possibility, but this raises questions of the ability to enforce the resulting judgment. Indeed, difficulties with the international enforcement of judgments can be significant. If the defendant does not voluntarily pay a judgment and does not possess assets within the jurisdiction of the court, then the creditor must consider enforcing the judgment elsewhere/This in turn depends on the rules of private international law in force in the state where enforcement is sought.