CROSS-FERTILISATION IN
INTERNATIONAL COMMERCIAL
ARBITRATION, INVESTOR-STATE
ARBITRATION & MEDIATION:THE GOOD, THE BAD & THE UGLY?
Prof Luke Nottage PhD LLD
University of Sydney & Williams Trade Law
The ADC’s 6th Annual ADR Address, Supreme Court of New South Wales
2 November 2023

OVERVIEW
1. Introduction
2. The Explosion in International Arbitration [ICA then ISA]
3. The Resurgence of Costs and Delays [in both fields of IA]
4. The Fall of Arb-Med [ie with same neutral]
5. TheRise of Multi-tiered Dispute Resolution Clauses [egmediation before arbitration: different neutrals]

6. Conclusions

1. INTRODUCTION• ADR and litigation are part of anoverall system• For international DR, muchdiscussion on interface or crossfertilisation between IL & ICA• Focus here more on ICA & ISA• ie foreign investors arbitrating vs hoststates, usually now under BITs or FTAs
with home states (aka ISDS)• Plus interface with IM (limited,

but pushed also by DM)

Arb-Med with same neutral• Med-Arb with different neutrals•

2. THE EXPLOSION IN INTERNATIONALARBITRATION (IA)• Underpinned by the 1958 New York Convention• Art II stay of litigation: kickstarts the (foreign-seated) IA, ie first phase• Art V enforcement of awards (with limited exceptions … not: error ofsubstantive law): regulates the last phase•

Australia ratified in 1975 (Singapore 1986)• And by the UNCITRAL Model Law (1985, revised 2006 for IMs)
• Drawing on NYC concepts and especially (opt-in) 1976 UNCITRAL
Arbitration Rules, to regulate especially the middle phase at ICA seat
Australia quite quick to adopt, in 1989 like HK (Singapore 1994), then 2010-17 ascore also for domestic arbitrations• But still struggles to attract many ICA cases•• Spread “East” of ICA especially over last 20 years (Reyes & Gu ‘18):• Adopting first NYC, then ML• Emergence of pro-arbitration case law••

At least one dedicated int’l arb institution (or several, in PRC; cf India – ad hoc)••eg narrowing ‘public policy’ objection to awards, so ‘deference’ to arbitrators’ rulings onprocedure: US/UK  HK  Singapore  Australia (in: Ferrari & Rosenfeld eds, Kluwer ‘23)eg ACICA from ‘85 in Melbourne (rebooted in Sydney), SIAC  HKIAC, AIAC, KCAB, VIAC

Other supportive ‘infrastructure’ (including university-level & professional training)• Gradual increase in ISA involving Asian parties• More treaties, with full advance consent (eg PRC, Thailand)+ more FDI = disputes• Fewer “institutional barriers” (eg local experts), but not all ratify 1965 ICSID Convention

YET: 3. RESURGENT COSTS AND DELAYS• Déjà vu? Like 70s-80s,

leading from mid1990s to somecountermeasures (egRules reforms, revisedModel Law)

• But resurgent costs &delays this century is
not so obviously
driven by national(Anglo-American)
litigation style; IA ismore global

Eg Singapore International Dispute Resolution Academy (SIDRA) Survey 2022:¾ external lawyers (39% Singapore), ¼ internal lawyers or execs (57%)
https://sidra.smu.edu.sg/research-program/international-dispute-resolution-survey/sidra-survey-2022

EG SINGAPORE INTERNATIONALDISPUTE RESOLUTION ACADEMYSURVEY 2022

SO: WHAT NOW DRIVES COSTS & DELAYS?
• Transactions hence disputes are indeed more complex:•eg multi-party/contracts, IA does struggle to address these as rooted in consent(Garnett ‘23 MULR)• BUT also: (i) IA has no real competitor (especially ICA): NYC provides

worldwide enforceability of rulings•

cf even the new Int’l Comm Courts, or 2019 Singapore Mediation Convention (few)• (ii) Expansion of (large) law firms, especially ‘billable hours’ model• (iii) Conservatism around controls over legal fees: cf eg

Absolute caps based on dispute amount? (IAMA ‘14 = RI ‘16, no more!)• Calderbank ‘sealed offers’? Little practice/encouragement•• (iv) Confidentiality & (v) IBA ‘soft’ law? Double-edged (esp now ICA  ISA)•

Some pushback, eg Swiss Arb Association, Prague Rules ‘18, JCAA Interactive Arb Rules

4. THE FALL OF ARB-MED• As ICA spread East, the practice of the arbitrator acting asmediator attracted interest (notably, still, in PRC): efficiencies?

• But concerns, especially if ‘caucusing’, over equal treatment

and neutrality - led to eg:•••

HK in ‘89  Singapore ’94 adding that if mediation fails, arbitrator must
disclose material information received in confidential caucusing•

Not used! So from ‘15 SIMC/SIAC Arb-Med-Arb, with separate neutrals (29 / 277)

•ACICA Arb Rules draft had similar model (plus ‘back-up arbitrator’): not adopted

CAA (NSW) 1990 innovation also not used, so 2010 revision adds above plus
requirement of second consent by parties if mediation fails – not used?
Japan adds practice of parties agreeing neutral will not use material
information in award, but doesn’t actively advertise Arb-Med (nor Korea)

Recall: SIDRA Survey 2022
• Significant experience

with Arb-Med-Arb - asmany Singaporeanrespondents!

• Also with Arb-Med –maybe as eg 5% oflawyer respondents fromPRC, 4% from Japan(and 10% of client userrespondents)?

• Cf much higher

experience with MedArb (especially amongclient users = corporate
execs and counsel,valuing especiallyconfidentiality) …

https://sidra.smu.edu.sg/sites/sidra.smu.edu.sg/files/survey-2022/4/index.html

5. THE RISE OF MED-ARB ETC• Instead, growing use of multi-tiered DR clauses (eg QMUL surveys)• Although regional variance: less in international contracts involving eg parties
from Korea, Japan, China … more if from the common law jurisdictions in Asia••more costs/lawyers leads to courts/legislatures promoting ADR domestically, so
commercially supplied mediation services / familiarity grow? But not eg India

This may also explain few ratifications of 2019 Singapore Mediation Convention• Also still rare for mandatory mediation before arbitration in ISDS
• Eg unusually in Australia-Indonesia FTA and HK-UAE BIT, but NOT in Australia-HK
BIT, all signed in 2019: with Ana Ubilava et al via
https://arbitrationblog.kluwerarbitration.com/author/luke-nottage/• Anyway, ISA tribunals have discussed whether pre-arb goodfaith negotiations step compliance goes to jurisdiction oftribunal (pre-condition to arb) or admissibility of the claim
If former, non-compliance could lead to award annulment• If latter (mostly), error of law so not reviewable by courts etc•• Influencing (?) debate now in domestic courts:• IRC 2012 SGHC suggested usually pre-condition, but recent doubts• C v D 2023 HKFCA presumed usually not (so arbitrator determinesadmissibility), seen as ‘pro-arbitration’ … but is this ‘anti-mediation’?
• Arguably should depend on: wording, type of pre-arb steps,

when issue arises (stays vs awards), how widespread is ADR?

6. CONCLUSIONS• ICA and then ISA have grown, spreading from West to East,with arbitrators, counsel and others moving between the fields• But costs and delays remain problematic in IA• So ISM is emerging, but especially for commercial disputes, injurisdictions with high litigation costs hence privately-supplied
domestic mediation; NOT yet for ISDS involving foreign investors• Some cross-overs among ICA, ISA and ISM (all influenced bydomestic litigation and DR) may be more productive thanothers, as with interfaces with international litigation

FURTHER READING:• Nottage, International Commercial and Investor-State Arbitration –Australia and Japan in Regional and Global Contexts (Elgar 2021)

https://japaneselaw.sydney.edu.au/2020/08/book-in-press-with-elgar/• Including eg: ‘A Weathermap for International Arbitration: Mainly Sunny,Some Cloud, Possible Thunderstorms’ (2015) 26 ARIA 496,
• ‘In/Formalisation and Glocalisation of International Commercial Arbitrationand Investment Treaty Arbitration in Asia’ in Zekoll et al eds, Formalisation andFlexibilisation in Dispute Resolution (Brill 2014)••

Those and others via http://ssrn.com/author=488525• Nottage et al (eds) New Frontiers in Asia-Pacific International

Arbitration and Dispute Resolution (Wolters Kluwer 2021)• Reyes & Gu (eds), Multi-Tier Approaches to the Resolution ofInternational Disputes (CUP 2022)