Book Review – Dean Lewis, ‘The Interpretation and Uniformity of the UNCITRAL Model Law on International Commercial Arbitration'
Japan adopted the 1985 version of the Model Law of the United Nations Commission on International Trade Law as the basis for its revamped Arbitration Act of 2003, as outlined in my commentary co-authored with JCAA Arbitration Dept GM and erstwhile ANJeL Visitor Prof Tatsuya Nakamura. As such, it is instructive to compare how successful the Model Law has been in promoting uniformity in other Asia-Pacific jurisdictions, including Australia, Hong Kong and Singapore, as analysed in the book reviewed below. Other researchers may be inspired to adopt or adopt its approach to test uniformity in other Model Law jurisdictions such as Japan.
Book Review – Dean Lewis, ‘The Interpretation and Uniformity of the UNCITRAL Model Law on International Commercial Arbitration: Focusing on Australia, Hong Kong and Singapore’ (Kluwer Law International, The Netherlands, 2016) xix + 283pp, hardcover, US$200
By Prof Luke Nottage (Sydney Law School & ACICA Special Associate)
This very useful and exhaustively researched book, written by an experienced practitioner based in Hong Kong and based on PhD thesis completed part-time at the University of Leicester, compares the extent to which uniformity has been achieved in the UNCITRAL Model Law on International Commercial Arbitration (UML) regimes across three Asia-Pacific jurisdictions that adopted it quite early on. Chapter 2 defines uniformity (not seen as absolute and therefore more akin to harmonisation: p20) as ‘an approach which achieve[s] a degree of textual and applied uniformity with the latter divided into the adoption of an approach which ha[s] due regard to the objectives of the UML and the similarity of results’ (p88).
Chapter 3 compares textual uniformity in the UML, finding the most in the legislation as adopted in Hong Kong (from 1989), considerable uniformity in Australia (also since 1989) and the least in Singapore (since 1994). Singapore has still not incorporated Article 2A, added to the UML as revised in 2006 and most relevantly providing that in interpretation ‘regard is to be had to its international origin and to the need to promote uniformity in its application’. However, chapter 2 argues that is anyway a codification of principles applicable to uniform international instruments.
Chapter 2 also sets out criteria to test for applied uniformity in the sense of courts adopting an international approach, divided into:
(a) the ‘UML I-Norm’: whereby judgments expressly or impliedly reflect the principles of UML Article 2A (which may arguably also apply to cases applying the 1958 New York Convention or ‘NYC’);
(b) the ‘TP I-Norm’: whereby courts have regard to the UML’s travaux preparatoires;
(c) the ‘JC I-Norm’: whereby courts have regard to the UML ‘global jurisconsortium’, meaning case law from other jurisdictions applying the UML and scholarly writings.
Chapter 4 then tests the extent to which these norms are applied, based on a qualitative analysis of the most important case law, as well as a quantitative analysis of 358 cases from the three jurisdictions applying the UML or the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (NYC). (The time span for this case law is not immediately obvious, but seems to be all judgments rendered over 1997-2015, including appeal judgments; but excluding cases that apply a UML framework to domestic arbitrations, as in Australia in almost all states and territories sequentially from 2010.) Lewis also considers whether the judgments considered any relevant textual dissimilarities, and citations to English cases, although remarking that (pp89-90, citation omitted):
‘Nottage has criticised the lack of an internationalist approach (and thus reliance upon English cases) by Australian courts and that criticism may be justified to the extent that reliance primarily on English cases is unnecessary because there are relevant cases from UML jurisdictions. The analysis of cases for this book however suggests that many references to English cases relate either to enforcement decisions (where there is NYC overlap) or principles such as waiver and estoppel where UML jurisprudence is inevitably less developed. A continued reliance on English cases is not therefore determinative of a failure to adopt an internationalist approach although a finding that courts have largely stopped the practice would suggest a stronger internationalist approach’.
The result of the quantitative analysis across all cases is summarised in Table 2 (p203). He observes that Hong Kong judgments professed the most markedly internationalist approach over 1977-94, but this diminished over 1995-2003 (after Justice Neil Kaplan retired in 1996). Singaporean case law slowly started to emerge in this respect, but across all three jurisdictions there still ‘was no uniformity to any significant degree’ (p99). From 2004-2010, however, Singaporean courts began rendering much more internationalist judgments. (It could be added that this tracked the government’s strong push to promote Singapore as a hub for international arbitration, evidenced by the inauguration of premises at Maxwell Chambers followed by a significant increase in SIAC case filings.) From 2011-2015, Australian case law belatedly begins to ‘compete’ – a ‘significant development of the internationalist cause … [that] … continues the push toward making an Australia a centre for international commercial arbitration’ (p126) – although it remains a far less popular seat than Singapore and Hong Kong, despite the latter’s noticeably less internationalist case law. Lewis also acknowledges (p126, citations omitted) that:
‘inconsistency remains depending on the judge or court in Australia exercising jurisdiction. An example … is the question of public policy given a broad interpretation in New South Wales and Queensland and a narrow International I-Norm interpretation in the Federal Court in TCL.’
The Full Court decision in TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd  FCAFC 83 is further described as ‘probably the most internationalist judgment of the courts in Australia’ (p115). However, it should be added that the extended delays in enforcing that rare Australia-seated international arbitration award – including the unusual but fortunately fruitless constitutional challenge to the entire UML enforcement regime – indicate the rough road still ahead in belatedly transitioning towards a more internationalist and therefore pro-arbitration mindset. A more recent sorry saga is the protracted litigation in the Federal Court, including Sino Dragon Trading Ltd v Noble Resources International Pte Ltd  FCA 1028, which Lewis briefly notes as demonstrating the ‘almost de rigueur internationalist approach of the Federal Court’ (p124).
Lewis further argues that Croft J’s decision enforcing an award from Mongolia in Altain Khuder LLC v IMC Mining Inc  VSC 1 ‘was probably the first Australian case where great care was taken to adopt an international approach in the engagement of all the I-Norms’ (p107), but goes on to acknowledge its reversal by the Victorian Court of Appeal. Lewis suggests this appeal case applying the NYC ‘demonstrates both an internationalist approach (the UML and JC I-Norms engaged) but with appropriate regard for textual dissimilarities’ in the Australian legislation (p108). Nonetheless, he acknowledges that some commentary and indeed subsequent case law have doubted the correctness of the appeal judgment – and as being insufficiently internationalist. (Indeed, albeit with disturbingly minimal consultation and fanfare, the Australian Government has introduced in Schedule 7 clauses 2-5 of the Civil Law and Justice Legislation Amendment Bill 2017 a retrospective amendment to IAA s8 that should overturn the Court of Appeal's decision in Altain Khuder that an award creditor has at least an evidentiary onus to prove that it was party to the arbitration agreement relied on. To reach this conclusion, Court had partly relied on s8(1) making reference to “the arbitration agreement in pursuance of which it was made”, but the Bill substitutes “the award”, thus bringing the IAA once again more explicitly in line with the NYC so that the burden should be on the award debtor - as with other objections allowed regarding enforcement.)
Chapter 5 turns to the uniformity in application of the UML, especially judgments concerning Article 34 on setting aside of awards at the seat. The analysis also extends to the (largely) ‘equivalent grounds in the NYC’ (p143), namely Article V – probably included also because otherwise the sample for Australia would have been disproportionately low. The focus is predominantly on the ‘international ratio decidendi’ or ‘I-Ratio’ influencing not only subsequent lower courts within each jurisdiction, but also potentially those in the other two jurisdictions (p144). The comparison first shows how an implicit principle in Article 34, that there should be no appeal to the courts on the merits of the award, was in tension in the Altain Khuder judgments but more clearly established in TCL. Similar pronouncements in Singapore and Hong Kong, albeit without cross-border citations, generates in a high degree of applied uniformity in this I-Ratio (pp 147-8). By contrast, there is little uniformity between those two jurisdictions regarding a possible discretion not to set aside an award even if a listed ground is established, and almost no case law discussion in Australia (p151).
The latter disappointing pattern is evident with respect to I-ratios generated by case law on the setting-aside ground of the award debtor having been unable to present its case, and only somewhat more uniformity in Singapore and Hong Kong regarding the ground that the award was outside the scope of submission to arbitration. There is even less uniformity regarding the grounds of party incapacity or an invalid arbitration agreement. The ground of procedural excess has instead produced multiple judgments but no I-Ratio that has crossed jurisdictions. This leaves only the public policy ground, which has generated the most case law (as depicted also in Table 7 on p216). He does uncover here some significant cross-border referencing, particularly of Hebei Import and Export Corp v Polytek Engineering Co Ltd  2 HKCFAR 111, albeit perhaps with some divergent strands recently emerging particularly in Singapore (pp 179, 183). Although Lewis does not specifically mention this when critically examining the reasoning of Mason NPJ in Hebei (at p95), the popularity of its leading judgment’s narrow formulation of the public policy ground may be related to it having been rendered by a former Chief Justice of Australia.
Overall, in contrast to the internationalist approach perceived through the quantitative analysis in chapter 4, Chapter 5 therefore shows that adoption of I-Ratios across borders is ‘fairly limited’ and usually then results in reformulations in each jurisdictions. This indicates that ‘the convergence necessary for an acceptable level of uniformity for achievement of UNCITRAL’s objective of uniformity is still some time away’ (p190). Lewis also concedes that, to make matters worse, one jurisdiction’s court may ‘adopt an internationalist approach, to also adopt an I-Ratio (possibly from another jurisdiction) but then apply that I-Ratio to the facts in such a manner to be quite different to another’s jurisdiction’s application’ (p194). This opens the scope for ‘interventionism’, contrary to the UML’s for uniformity and underlying support for arbitration. However, Lewis argues that such interventionism is not readily apparent from the low success rates when award debtors resist enforcement (pp184-5), ranging from 11-21% over the three jurisdictions for 116 judgments since 1995 (and even somewhat less for the subset of 50 setting-aside judgments).
Nonetheless, these outcomes are achieved often after extensive (and no doubt expensive) appeals. Anyway, it should be remembered that such statistics are heavily influenced by the post-2010 pro-enforcement case law particularly from the Federal Court of Australia (and involving mainly enforcement of foreign awards). Lewis also acknowledges that restrictions on reporting arbitration case law in Singapore and especially Hong Kong mean that the underlying sample is not complete. Indeed, more generally, he suggests that such an extension of confidentiality may impede future principled development of arbitration law and indeed the promotion of Hong Kong as an international arbitration venue (p192).
In addition, Lewis reiterates calls for Australia to address its ongoing ‘significant challenges’ if ‘it really wishes to join the arbitration club’, by having the Federal Court assume exclusive jurisdiction. He views counter-arguments as appearing ‘parochial and unconvincing at first blush’ (p192), although the cited reference acknowledges that there may be constitutional objections where the relevant arbitration case deals with matters solely of private law (without any substantive law questions arising from federal legislation).
Lastly, Lewis urges other measures to promote uniformity, particularly by UNCITRAL, including a more user-friendly UML Article 2A, and either a codification of Article 34 in terms of significant I-Ratios or a modified UNCITRAL Digest of UML case law (pp192-3). In this reviewer’s opinion, it would also be useful to encourage national reporters for UNCITRAL’s CLOUT database, which contain summaries of judgments world-wide applying the UML and NYC, to refer to such I-Ratios. More broadly, it is quite disturbing that there is hardly any reference in the Australian case law to the current iterations of UNCITRAL resources – and therefore probably in submissions by counsel.
In sum, despite the book’s somewhat pessimistic conclusions as to the degree of uniformity achieved so far across these three UML jurisdictions, it provides relatively reassuring reading for those based in Australia. It highlights some significant improvements made particularly since the 2010 revisions to the UML. Yet it also shows how much work is still to be done by courts and legislators – well beyond the two minor amendments in 2015 (not mentioned in this book) – as Australia obviously comes from behind. Australian readers may be particularly comforted that Hong Kong case law seems to have become much less overtly internationalist since the ‘Kaplan era’. However, another reading could be that Hong Kong courts have been able to continue down an internationalist line by referring instead to such earlier cases. By contrast, Australian courts have only recently begun to break the bounds of earlier precedents. Or perhaps, for Lewis based in Hong Kong and this reviewer in Australia: the grass seems greener on the other side of the jurisdictional divide.
As a footnote, there are a few quibbles about style – especially in fact the footnotes. Unusually, the footnotes are numbered consecutively, ending with footnote 1423 on p194, rather than recommencing consecutively chapter-by-chapter. Thus, for example, when checking for the year and other citation data for the work by Bachand and others mentioned in footnote 1420 on p193, the reader needs to flick way back to the cross-referenced footnote 86 (p14). This is hardly user-friendly, especially as the book is only available in an (expensive) hard-cover version. There are also throughout some distracting problems with punctuation, including the lack of quotation marks for the final paragraph citing the Chief Justice of the Federal Court of Australia (on p194, citing to (2015) 81 Arb 169). Nonetheless, that quotation by James Allsop marks an appropriate way to finish off this review, as well as this rich and very important book:
‘The development of skill and consistency in and among the major legal centres of the region is critical to the creation of a self-conscious and coherent law area and justice system, based on shared values reflected in the Model Law and upon shared experience as judges and arbitrators’.