New International Arbitration Law: more than just an arbitrary change

Key Points

International Arbitration Act 2017 (“Act”) was passed by the Fijian Parliament on 15 September 2017.
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (‘New York Convention’) acts as the foundation for the International Arbitration Act 2017.
The Act is set to revolutionise dispute settlement in Fiji by creating cost-effective and private means to deal with complex international commercial issues outside of the courts.

Introduction

International arbitration is a form of alternative dispute resolution and is a useful tool used to assist parties to resolve a commercial disputes. Companies regularly include international arbitration agreements in commercial contracts, so that if a dispute occurs with respect to the agreement they are obliged to arbitrate rather than pursue traditional lengthy court litigation.

While, the Act is a new development in Fijian dispute resolution, it is not the first piece of legislation to deal with arbitration. The Arbitration Act Cap 38 which was passed in 1965, continues to apply to domestic disputes.

Prior to the passing of the Act, international commercial arbitration was left without any form of recognition within Fiji.

Fiji's Act is inspired by UNCITRAL’s Model Law on International Commercial Arbitration which is designed to assist States in reforming and modernising their laws on the arbitral procedure to take into account the particular features and needs of international commercial arbitration.

The Act, will allow Fiji to recognise its obligations under the New York Convention which Fiji assented to on 27 September 2010.

A Revolution In Fiji's Commercial Industry

Companies generally do not have time to engage in lengthy court litigation and are eager to engage in dispute resolution mechanisms which are efficient and cost effective.

The Act provides a legal framework for the fair and effective conduct of arbitral proceedings. The Act ensures that parties treat each other with equality and are given an opportunity to present their cases. Some notable provisions of the Act include:

Arbitration Agreements: Under the Act, the parties will be free to agree on the procedure to be adopted for an arbitration tribunal including (for example) the place and date of the arbitration proceedings and the language to be used. If the parties cannot reach a mutual agreement then the arbitration tribunal will decide an outcome.

Rules of Arbitration: The tribunal will be bound by the Act to decide the dispute in accordance with such rules of law as chosen by the parties as applicable to the substance of the dispute. Any designated law or legal system of a given state is to be construed unless otherwise expressed, as directly referring to the substantive law of the State and not to conflict with its law.

Recognition and Enforcement of Arbitral Awards: The Act provides for the recognition and enforcement of certain arbitral awards by the courts where the award is recognised and binding irrespective of the country in which it was made.[1]

This differs from the previous regime where judgements of foreign courts would only be afforded reciprocal treatment in Fiji by virtue of the Foreign Judgments (Reciprocal Enforcement) Act [CAP 40], the Reciprocal Enforcement of Judgments Act [CAP 39]. Meaning there was uncertainty as businesses were unable to ensure their rights from an arbitral award would be enforced in Fiji.

Appeals: The Act also reflects the minimal roles that the Fiji Courts will play in commercial dispute settlements. If the parties decide to challenge the decision of the arbitrator then they may do so.

If the challenge is rejected by the arbitrator then the parties may request the court within 30 days after receiving the rejection to decide on the challenge. The Act allows the Fiji Courts to only step in when there is an error of law or other issue calling for judicial oversight.

Next Steps?

The Act is a positive approach which will provide Fiji’s business community with stability, transparency and better investment conditions. This will bring Fiji into alignment with the laws of its closest trading partners, Australia, New Zealand, Singapore and Hong Kong. Hence, the Act provides uniformity in its application.

The Act also promotes confidence in doing business in Fiji by reducing the cost of dispute resolution, and through providing greater certainty on the procedures in relation to the enforcement of contracts.

By virtue of the Act, Fiji has the potential to become a regional hub for international arbitration being one of the first Pacific Island nations to comply with obligations under New York Convention.