Artificial Intelligence (AI) and International Arbitration

Timothy Chan, Dennis Wilson, Martin Polaine 17 Sep 2025

International arbitration has long been valued for its flexibility, neutrality, and adaptability. In recent years, however, the emergence of artificial intelligence (AI) has introduced a new set of opportunities and challenges that are likely to reshape arbitral practice. Unlike earlier waves of technological change, AI has a particularly pervasive impact: it is capable of touching almost every stage of the arbitral lifecycle; from pre-dispute planning and arbitrator selection to evidentiary and document review, hearings, award drafting, and enforcement.

AI in the Context of International Arbitration

AI in arbitration may be grouped into several broad categories:

• Language and speech technologies: real-time transcription, machine translation, speech analytics, and voice synthesis.

• Document and data analysis: technology-assisted review (TAR), document clustering, contract analytics, and predictive search.

• Reasoning and drafting support: summarisation, brief drafting, case law synthesis, and award-structuring tools.

• Forensics and authenticity: detection of manipulated evidence, such as deepfakes, and analysis of metadata.

• Decision support and analytics: outcome prediction, damages modelling, and arbitrator selection analytics.

Each class of AI raises distinct questions regarding admissibility, transparency, fairness, and due process, all of which are central to the credibility, integrity and legitimacy of arbitral proceedings.

Impact Across the Arbitral Lifecycle

Pre-dispute Planning and Arbitrator Selection

AI is increasingly shaping arbitration before disputes even arise. Contract drafters now anticipate AI-related risks by including specific provisions in arbitration clauses; for example, restrictions on uploading confidential information to public AI systems, or agreement on translation protocols.

In arbitrator selection, AI-driven analytics tools reveal past decision-making patterns, areas of expertise, and potential conflicts. These tools broaden candidate pools and might assist in promoting diversity. However, there is also a danger of over-reliance on statistical patterns, creating feedback loops that favour “safe” or well-documented profiles, while sidelining lesser-known but equally qualified candidates. The key future challenge might be ensuring that arbitrator appointments remain a human decision, informed (but not dictated) by algorithms.

Pleadings and Written Submissions

AI tools assist counsel in drafting, citation-checking, and issue-spotting, leading to faster production of submissions. However, they also raise the very real risk of ‘hallucinations’, in which non-existent cases or inaccurate authorities are cited. If not carefully verified, such errors may undermine the credibility of submissions and result in disciplinary and costs sanctions.

Tribunals may need to implement integrity protocols requiring parties to certify that authorities cited have been human-verified and that any AI-generated drafting has been carefully reviewed. In short, efficiency gains must not come at the expense of accuracy and reliability.

Evidence and Document Production

One of the most transformative effects of AI is in document review. TAR and clustering tools can reduce costs and streamline discovery, especially in multilingual disputes. But new problems may arise:

• Privilege risks: Uploading confidential or privileged documents into public AI systems may inadvertently waive privilege or breach confidentiality obligations.

• Authenticity concerns: The rise of deepfakes means tribunals must adopt more robust standards for authenticating video, audio, and photographic evidence.

Best practices include adopting AI evidence protocols that require disclosure of the tool used, validation steps, and an auditable chain of custody. Tribunals should also anticipate the need for forensic experts to test the reliability of AI-processed evidence.

Although AI can accelerate document production, it can also magnify risks of privilege breaches and fabricated evidence.

Hearings

AI is already embedded in arbitral hearings through transcription and machine translation. While these tools enhance accessibility, they introduce risks of misinterpretation that may unfairly affect witness credibility. More troubling is the possibility of covert AI assistance during testimony; for example, perhaps even the rather outlandish-sounding risk that a witness might receive real-time AI-generated prompts.

Tribunals should consider addressing these risks in their procedural orders by:

• approving specific transcription and translation tools,

• prohibiting generative assistance during testimony, and

• ensuring technological parity so that neither party has an unfair advantage.

Going forward, procedural fairness is likely to require careful management of AI use during hearings.

Deliberations and Award Drafting

AI may certainly help arbitrators structure factual chronologies or verify consistency within an award. However, using AI in deliberations themselves raises two fundamental risks:

• Breach of confidentiality: Uploading draft awards to external AI systems may compromise deliberation secrecy.

• Improper delegation: If arbitrators rely on ‘opaque’ algorithms to decide on questions of facts or law, the award may be vulnerable to challenge under the New York Convention.

The appropriate role for AI should therefore be limited to clerical or stylistic support, with substantive determinations reserved for the tribunal. Arbitrators must ensure that their awards are demonstrably the product of human reasoning. AI should assist, but never replace, the tribunal’s independent judgment.

Post-Award Challenges and Enforcement

AI use in arbitration could foreseeably feature prominently in set aside and enforcement proceedings. Parties may challenge awards on the grounds that undisclosed reliance on AI deprived them of due process (New York Convention, Article V(1)(b)) or that the award violates public policy (Art. V(2)(b)).

Tribunals should mitigate such risks by keeping sealed records of any AI assistance used in drafting, limited to clerical tasks. This approach allows them to rebut speculative challenges without breaching deliberation secrecy.

Regulatory and Ethical Considerations

AI use runs the risk of introducing several cross-border tensions:

• Data protection: Rules such as the EU’s GDPR, China’s PIPL, and Brazil’s LGPD complicate the use of AI platforms that transfer or store personal data abroad.

• Confidentiality: Many consumer AI systems retain and train on user data, which conflicts with arbitration confidentiality obligations.

• Export controls and sanctions: Some AI technologies are subject to restrictions, which may impact their use depending on the seat of arbitration.

• Professional duties: Counsel must exercise competence and candour when using AI. Submitting unverified AI-generated content may breach professional ethics.

Regulatory compliance and ethical oversight are essential in order to safeguard the legitimacy of arbitration.

Costs, Time, and Environmental Impact

AI can reduce costs by streamlining document review and shortening timelines, but it can also generate inefficiencies if inappropriately used. For example, hallucinated citations may necessitate costly corrections.

From an environmental perspective, AI may reduce travel by enabling remote hearings, though large scale computation carries its own carbon footprint. It is likely that, in the future, tribunals will increasingly scrutinise whether parties’ AI-related expenditures are proportionate and recoverable as costs of arbitration.

AI can undoubtedly make arbitration faster and cheaper if deployed responsibly, but careless use can equally have the opposite effect.

Snapshot of Strategic Opportunities and Risks

Opportunities:

• More accurate multilingual proceedings through AI translation.

• Faster and more efficient document review

• Enhanced damages modelling and tribunal analytics.

• Broader and more diverse arbitrator lists.

Risks:

• Hallucinated citations and unreliable outputs.

• Privilege waivers from inappropriate AI use.

• Undisclosed reliance on AI during testimony or deliberations.

• Awards undermined by improper delegation to AI systems.

Some Recommendations for Good Practice

To integrate AI responsibly into international arbitration, tribunals and parties should adopt the following measures:

• Include explicit AI provisions in Procedural Order No. 1, covering use, disclosure, authentication, and sanctions.

• Require the use of enterprise-grade AI tools that do not train on confidential inputs.

• Approve common translation and transcription platforms to ensure parity.

• Mandate disclosure of method statements and validation for AI-processed evidence.

• Establish forensic protocols for ‘deepfake’ detection.

• Ensure that all substantive decisions remain with the tribunal.

• Maintain audit trails of AI usage for accountability.

• Allocate costs proportionately, rewarding efficient use and penalising misuse.

• Safeguard deliberation secrecy by prohibiting external AI in award drafting.

• Prepare enforcement-ready records to counter challenges under the New York Convention.

Key Contacts

Timothy Chan

Partner

Dennis Wilson

Senior Advisor

Martin Polaine

Senior Consultant

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Ad hoc and Institutional Arbitration

Arbitration is an increasingly preferred alternative to traditional litigation, particularly in commercial and international disputes. For businesses engaged in cross-border transactions, especially within the Asia-Pacific region, choosing between institutional and ad hoc arbitration can significantly influence the efficiency, cost and enforceability of dispute resolution. This article outlines key differences and practical considerations to help parties make informed decisions. Institutional Arbitration Institutional arbitration is conducted under the rules of a recognized arbitral institution, such as the Singapore International Arbitration Centre (SIAC), Hong Kong International Arbitration Centre (HKIAC) or the Australian Centre for International Commercial Arbitration (ACICA). These bodies offer a structured procedural framework and dedicated administrative support. The benefits of institutional arbitration include clearly defined rules that reduce procedural uncertainty, experienced panels of arbitrators and stronger international recognition of awards. Importantly, parties do not need to negotiate fees directly with arbitrators, as institutional rules often prescribe a fee schedule or allow the institution to manage these arrangements. The presence of a secretariat or case management team ensures that timelines are monitored and adhered to, minimizing procedural delays. Institutions also handle logistical and ancillary services such as transcription, interpretation, and hearing room bookings, relieving parties of the administrative burden. While institutional arbitration is often associated with higher administrative costs and reduced procedural flexibility, many institutions now offer streamlined rules and expedited processes to balance efficiency with oversight. Some institutions even extend their facilities, such as venues and financial administration services, to support ad hoc arbitrations, providing a hybrid option that blends autonomy with professional support. Ad hoc Arbitration Ad hoc arbitration does not involve an administering institution. Instead, the parties themselves agree on procedural rules, nominate arbitrators and manage the process independently. This approach offers greater flexibility and can be more cost-effective in the right circumstances. The appeal of ad hoc arbitration lies in its autonomy and adaptability. Parties can customise procedures to suit their commercial needs, potentially achieving faster outcomes with reduced expense. However, without institutional support, parties must arrange all aspects of the process, including arbitrator appointments, fee negotiations and ancillary services. This lack of infrastructure can lead to delays, especially when parties are uncooperative or disputes arise about procedure. Additionally, enforcement of awards may be more difficult if procedural irregularities affect the arbitration’s perceived legitimacy. Strategic Considerations for PartiesFor businesses operating in the Asia-Pacific, selecting the right arbitration model depends on factors such as dispute complexity, anticipated costs, international enforceability and the likelihood of party cooperation. Institutional arbitration is generally better suited to large-scale, cross-border disputes where predictability, enforceability and reputational assurance are important. The procedural structure and secretariat support offered by institutions can be critical in managing complex cases and ensuring compliance with deadlines. In contrast, ad hoc arbitration may be appropriate for smaller claims or domestic matters where parties are aligned on process and cost considerations and may still benefit from certain institutional services when needed. Ultimately, well-drafted arbitration clauses are essential. Legal advice at the contract negotiation stage can ensure that the chosen arbitration method aligns with a company’s broader commercial objectives and mitigates legal risk. As arbitration continues to expand across the region, businesses would do well to engage counsel experienced in both institutional and ad hoc frameworks to guide their approach. ConclusionWhile both institutional and ad hoc arbitration have their respective merits, the growing preference for institutional arbitration, reflected in a 2015 survey where 79 per cent of users opted for institutional mechanisms, underscores its practical advantages in the context of international commercial disputes. Institutions offer procedural certainty, administrative support, and enhanced credibility of awards, which are crucial when dealing with complex, cross-border matters. Additionally, the elimination of direct fee negotiations with arbitrators and the availability of ancillary services contribute to a smoother and more reliable process. Although institutional arbitration can be more costly and less flexible, its structured framework often proves more dependable, particularly where cooperation between parties is limited. Ultimately, the decision between institutional and ad hoc arbitration should be informed by the specific needs of the parties, the complexity of the dispute, and the importance of enforceability and procedural support.

How Can International Arbitration Be Made Cost Effective?

Making International Arbitration More Cost Effective International arbitration remains a preferred method for resolving cross-border disputes, especially in the Asia-Pacific. However, the process can be costly and protracted, often attracting criticism from commercial parties who seek timely and efficient outcomes. As arbitration continues to evolve in the region, cost effectiveness requires coordinated efforts from parties, arbitrators, institutions and legislators alike. Enhancing Efficiency Through Strategic PlanningMuch of the responsibility for controlling arbitration costs lies with the parties and their legal representatives. Early case assessment and a clear procedural strategy can significantly reduce inefficiencies. By developing a well-defined case theory from the outset, parties can better assess settlement options and avoid unnecessary procedural steps. Importantly, parties should give more thought to dispute resolution clauses before a dispute arises. Too often, these clauses are treated as boilerplate without due consideration of their strategic impact. This is the moment to agree to mechanisms that can streamline future proceedings, such as adopting the IBA Rules on the Taking of Evidence in International Arbitration, which typically provide for more limited disclosure than common law approaches. Likewise, agreeing on the preparation of core document bundles and the use of admissions, even where these may be unfamiliar in civil law jurisdictions, can help narrow the factual issues in dispute and avoid unnecessary fact-finding. Choosing the right arbitrator is equally critical. Opting for a sole arbitrator, particularly one with availability and relevant industry experience, can eliminate the risk of scheduling conflicts and streamline decision-making. This is especially important in the Asia-Pacific region, where access to experienced arbitrators is competitive. Technology also plays a key role in reducing costs. Remote hearings now offer a practical alternative to in-person appearances, eliminating travel expenses and enabling greater flexibility in scheduling. Additionally, focusing on essential evidence and narrowing the scope of issues helps prevent the arbitration process from becoming unnecessarily prolonged. Arbitrators as Drivers of Procedural Efficiency Arbitrators play a pivotal role in setting the tone for an efficient process. Active case management, through clear timelines, procedural orders and firm expectations, helps ensure alignment throughout the arbitration. A key efficiency measure is for arbitrators to clarify the live issues early on, either by preparing their own list for party comment or asking the parties to jointly define them. This can dramatically reduce the time spent arguing peripheral matters. While arbitration is, to some degree, the parties' process, arbitrators should not be overly deferential. Effective case management may require firm intervention. Arbitrators should feel confident using procedural tools such as bifurcation, summary dismissal, or early partial awards, and they should not be deterred by concerns that being prescriptive might affect future appointments or trigger challenges to the award. The tribunal has a responsibility not only to the parties but also to the integrity of the arbitral process. Limiting the volume of submissions and requiring parties to justify the relevance of their evidence are further levers that tribunals can use to ensure the arbitration stays focused and proportionate. Arbitrators should also remain alert to opportunities for early settlement. In jurisdictions such as Singapore and Hong Kong, where mediation is well integrated, they can encourage or facilitate early resort to alternative dispute resolution (ADR) mechanisms. Institutional Support and Legislative Reform Arbitral institutions in the region, including the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC), have taken steps to improve procedural efficiency. Many now offer expedited procedures that compress timeframes and reduce unnecessary steps, making them ideal for less complex or lower-value disputes. Institutions can go further by actively managing arbitrator availability, enforcing award delivery timelines, and promoting the use of ADR within the arbitration process. In countries such as Australia and New Zealand, where mediation is common, institutions could empower tribunals to stay proceedings to allow for meaningful settlement discussions. Legislation also plays a role. Clear statutory endorsement of summary procedures and expedited mechanisms can remove uncertainties about their enforceability and encourage broader adoption. Recent reforms in arbitration laws across the Asia-Pacific reflect a growing appetite for speed and economy in international arbitration. Practical Steps to Consider To maximise cost efficiency, parties and legal representatives should: • Carefully negotiate dispute resolution clauses during contract formation, considering procedural rules (e.g. IBA Rules) that limit scope and disclosure. • Include pre-arbitration settlement or ADR clauses in contracts. • Agree early on procedural matters such as timelines, core bundles and potential admissions. • Engage experienced arbitration counsel familiar with regional practices. • Limit evidence and witnesses to those strictly necessary. • Consider remote hearings wherever appropriate. Conclusion Cost effective arbitration is not achieved through isolated efforts. Instead, it requires a coordinated approach involving proactive parties, decisive arbitrators, supportive institutions and forward-looking legislation. By embracing efficient case management, agreeing procedural rules and issues upfront, leveraging technology and adopting expedited procedures, international arbitration can continue to serve as a reliable and commercially viable dispute resolution mechanism, particularly for businesses operating across the Asia-Pacific.

Are you at risk of being penalised for “vague” and “onerous” contractual terms?

Key Takeaway Points: • There has been increasing scrutiny over the use of standard form contracts containing unfair contract terms. • Unfair contract terms are those that (a) cause a significant imbalance in the parties' rights and obligations; (b) are no reasonably necessary to protect a party’s legitimate interests; and (c) would cause detriment to the other party if given effect. • New and increased penalties (which could be up to $50 million) will start applying from 10 November 2023. On 4 April 2023, the Australian Securities and Investments Commission (ASIC), filed a case in the Federal Court against Auto & General Insurance Company Limited (Auto & General) over a contractual term which is alleged to have aided in Auto & General being able to unfairly reject consumer claims. Under the contract in question, customers were required to notify Auto & General “if anything changes about [the customers] home or contents”. ASIC came to the view that the clause: • imposes an obligation on customers to notify Auto & General if ‘anything’ changes about their home or contents, which would have been too onerous, vague and/or impractical; • suggests that Auto & General has a broader right to refuse claims or reduce the amount payable under claims if the customer does not meet the notification obligation, than is available under the Insurance Contracts Act 1984; and • could mislead or confuse the customer as to their true obligations and rights under the contract. Accordingly, ASIC alleges that the contract term is unfair under the Australian Securities and Investments Commission Act 2001 (ASIC Act). What are ‘unfair contract terms’? An ‘unfair contract term’ is unenforceable in an Australian court. Whether a term is “unfair” is determined by applying a 3-limbed test set out in the ASIC Act or the Australian Consumer Law (contained in Competition and Consumer Act 2010) (ACL) as follows: 1. The term will cause a significant imbalance in the parties’ rights and obligations under the contract; and 2. The term is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term; and 3. The term would cause detriment (whether this be financial or otherwise) to a party if the term was applied or relied on. The ACL specifically protects consumers and small businesses from unfair contract terms contained in ‘standard form contracts’. ‘Standard form contracts’ refer to those where there is an imbalance in parties’ bargaining powers, the contract is based on a template with little scope for negotiations or amendments, and/or are presented on a “take it or leave it” basis. There is a presumption that a contract is a standard form contract, in that the person who prepared the contract has the onus of proving that it is not. Recent amendments to the unfair contract term provisions The Auto & General case follows recent amendments which significantly expand the ambit of the unfair contract terms provisions contained in the ACL and the ASIC Act, both of which demonstrate the government’s focus on enforcement (and in turn the need for businesses to review their legal documentation). A key change is the introduction of civil penalties under the ACL and ASIC Act for breaches of the unfair contract term prohibition, reinforced by significant increases in maximum penalties for breaches under the ACL. These penalties will take effect from 10 November 2023, and addresses the issue of the unfair contract terms provisions having largely been “toothless” until now. A brief summary of the key changes to the law can be seen below: Current Law New Law The unfair contract terms protections apply to a small business contract where one party is a business employing less than 20 persons and the upfront price payable under the contract is under $300,000, or $1 million for contracts lasting more than 12 months. Under the ACL, the unfair contract terms protections will apply to a small business contract where one party is a business employing fewer than 100 persons or has a turnover for the last income year of less than $10,000,000. Under the ASIC Act, the protections will apply to a small business contract if the upfront price payable does not exceed $5,000,000, and one party employs fewer than 100 persons or has a turnover for the last income year of less than $10,000,000. No pecuniary penalties. For corporations, increased penalties up to the greater of: • $50,000,000; • 3 times the value of "reasonably attributable" benefit obtained; or • 30% of the corporation's adjusted turnover during the period it engaged in the conduct. $2,500,000 for individuals. Where a court determines a term in a standard form contract to be unfair, it is automatically void. The court can also make orders for the whole or any part of a contract or collateral arrangement, including that the contract is void. The orders can only be made when a person or class of persons has suffered, or is likely to suffer, loss or damage. The court can make orders for: • a whole contract or collateral arrangement, including to void, vary or refuse to enforce the contract, if this is appropriate to prevent loss or damage that is likely to be caused (i.e. there is no need for actual loss or damage). • on the application of the regulator, preventing a term that is the same or substantially similar in effect to a term that has been declared as unfair, from being included in any future standard form small business or consumer contracts; • on the application of the regulator, to prevent or reduce loss or damage which is likely to be caused to any person by a term that is the same or substantially the same in effect to a term that has been declared unfair. How does this affect you and how can we assist? Sarah Court, the Deputy Chair of ASIC, stated that: ‘Contract terms need to be proportionate, transparent and clear, so any obligations are easily understood and able to be realistically adhered to by customers. They must accurately describe the actual rights and responsibilities of the parties under the contract.’ It is not long until the amendments kick in. As such, we strongly recommend that you review your standard form contracts to ensure no issues arise regarding any unfair contract terms. Please contact us if you are unsure whether your contracts are standard form contracts containing unfair contract terms.

Security of Payment NSW - Know your right to receive progress payments for construction works and related goods and services

As a direct or indirect result of the COVID-19 pandemic and uncertainty in a global economy, various issues have been adversely impacting the construction industry, such as an increase in raw material price and supply chain disruption. Particularly, contractors and subcontractors are struggling with their cash flow due to their outstanding payments for the works carried out. Accordingly, security of payment legislation in each state has played a role in ensuring that anyone carrying out construction work, and supplying related goods and services under a construction contract gets paid promptly. This article discusses and explains your rights under the NSW Security of Payment Act, and each state has its own security of payment legislation, which may differ from each other in detail. Know Your Rights In New South Wales, the relevant security of payment legislation is the Building and Construction Industry Security of Payment Act 1999 (NSW) (“SOPA”). The significance of the SOPA is that it grants contractors rights to receive progress payment even if there is no formal written contract or even if a contract says that you are only allowed to receive a payment at the end of works, i.e., after the completion of works. Fundamentally, the SOPA entitles a person or a company, who carried out construction work or supplied construction related goods and services, to receive progress payment. A progress payment means a partial payment for works as the project progresses even if the assigned works are not completed. Therefore, the progress payment facilitates cash flow for contractors and suppliers in the construction industry. Under SOPA, the following rights are granted to you: A right to receive a progress payment at least on a monthly basis; Maximum time limits to respond to claims for progress payments; Maximum payment terms; A right to suspend work in the event of non-payment; No ‘pay when paid’ clause: No need to wait until a contractor you worked for gets paid by a head contractor or principal; and Interest rates applicable on unpaid progress payment. Who is entitled to receive a progress payment? A person or company who, under a construction contract or any other construction arrangement, has undertaken to carry out construction work or supply construction related goods or services in New South Wales is eligible to receive a progress payment under the SOPA.[1] The “construction work” is broadly defined, including construction, alteration, repair, maintenance or demolition of buildings or structures forming part of land.[2] The “related goods and services” also include various related goods and services such as materials for construction or plant for use in construction work, labour service, design or engineering service.[3] While the SOPA is drafted to cover contractors, subcontractors, suppliers and service providers as broadly as possible, it should be noted that there are also exceptions such as those engaged in the extraction of oil, natural gas or minerals. Payment Claims The procedure for receiving a progress payment is triggered by a person entitled under the SOPA (Claimant) making a Payment Claim in writing to the other person who is responsible to make a payment under a construction contract (Respondent) In making a Payment Claim, Claimants must ensure that the following requirements are met:[4] 1) The construction work related to the progress payment must be identified; 2) The amount of the progress payment must be indicated; 3) A statement that a Payment Claim is made under this SOPA must be inserted; 4) A Payment Claim must be served on the Respondent within 12 months after the construction work was last carried out; and 5) A Payment Claim is only made one (1) time in a month on and from the last day of each month in which the construction work was carried out. How to respond to a Payment Claim? The Respondent is required to respond to the Payment Claim by providing a Payment Schedule to the Claimant within 10 business days after receipt of the Payment Claim. By failing to do so, the amount claimed in the Payment Claim is fixed and Respondents are liable for such amount on the due date. In issuing a Payment Schedule, Respondents also are required to comply with the following requirements:[5] 1) A Payment Claim related to a Payment Schedule must be identified; 2) The amount of the payment the Respondents propose to make must be indicated; and 3) If applicable, reasons why the amount in the Payment Schedule is less than that in the Payment Claim and reasons for withholding payment must be identified. Maximum payment terms One of the most important benefits available under the SOPA is that there are statutory deadlines for a progress payment to be made.[6] If the Respondents fail to pay the progress payment by the deadline in the diagram below, such amount is deemed due and payable, and interest on the unpaid amount is also payable at the prescribed rate. Your rights to suspend works A Claimant also has a right to suspend construction work or supply of related goods and services if a Respondent fails to pay the amount by the due date for payment as described above.[7] At least two (2) business days prior to the suspension, the Claimant must serve on the Respondent a Notice of Intention to Suspend Work in writing. As the date on which the Notice is given is not counted, the Claimant is eligible to suspend work on and from the fourth day of the Notice. Please see the above diagram. Once the work is suspended under SOPA, the Claimant is not liable for any loss or damage suffered by the Respondent as a result of such suspension. However, once the whole outstanding amount is paid, the Claimant must resume the work within three (3) business days from the payment date. Don’t wait until a head contractor gets paid The SOPA expressly prohibits and invalidates any clause in a construction contract that the payment of money is contingent on a milestone or an event in other contracts including a head contract.[8] A common example of these clauses is that a payment under a subcontract is made upon the payment by a principal under a head contract or upon the practical completion of a head contract. Such clauses are deemed unenforceable under the SOPA, and you have a right to claim the progress payment regardless of the operation of other contracts. Adjudication A person eligible under the SOPA also can start an adjudication process for unpaid or disputed progress payments. Adjudication is an informal and independent process which an issue or issues are determined by an independent adjudicator regarding the payment claims. The adjudicator’s determination can be enforced as if it is a judgment rendered in a Court. However, the Claimant must file an adjudication application in writing by the following deadlines:[9] Type Deadline When: 1) Respondent issues a Payment Schedule, and 2) the amount in a Payment Schedule is less than the amount in a Payment Claim Within 10 business days after a Payment Schedule is issued When: 1) Respondent issues a Payment Schedule; and 2) Respondent fails to pay the amount in the Payment Schedule by the due date Within 20 business days after a Payment Schedule is issued When 1) Respondent fails to issue a Payment Schedule; 2) Respondent fails to pay the amount in a Payment Claim by the due date; 3) Claimant serves written notice of intention to apply for adjudication of the payment claim on Respondent within 20 business days from the due date; and 4) Respondent has been given an opportunity to provide a Payment Schedule within 5 business days after receiving notice of intention to apply for adjudication of the payment claim Within 10 business days after the end of the 5 business days for Respondent to provide a Payment Schedule after receiving notice of intention to apply for adjudication of the payment claim Detailed procedures, requirements for adjudication and enforcing the adjudicator’s determination will be discussed in future articles. Payment Withholding A subcontractor who has made an adjudication application for a progress payment is also entitled to request a principal contractor to retain money owed to a head contractor to cover the claimed amount.[10] This is called a ‘payment withholding request’. Upon receipt of the payment withholding request, the principal must retain the amount of money to which the payment claim relates.[11] When a successful outcome is given in the adjudication process, a subcontractor is able to recover the withheld money from the principal through the procedures set out in the Contractors Debts Act 1997 (NSW). How can we assist If you are involved in construction work in New South Wales, the SOPA entitles you to claim the progress payment and have protections accordingly. However, your rights under SOPA may vary depending on your satisfactory fulfilment of requirements and on whether you took proper actions in a timely manner. Although the SOPA sets out a statutory regime for prompt payment for construction work, there are still a number of disputes arising from unpaid progress payments in a construction contract, which ends up with unsatisfactory outcomes for unpaid contractors and suppliers. If you are unsure what rights you have in your construction payment issues, H & H Lawyers will be happy to review your case to check whether it might fall within a case protected under the Security of Payment Act or other relevant laws. We can further assist in finding a way to enforce your rights. Disclaimer: The contents of this publication are general in nature and do not constitute legal advice. The information may have been obtained from external sources and we do not guarantee the accuracy or currency of the information at the date of publication or in the future. Please obtain legal advice specific to your circumstances before taking any action on matters discussed in this publication. [1] SOPA ss4 and 8. [2] SOPA s5 [3] SOPA s5 [4] SOPA s13 [5] SOPA s14 [6] SOPA s11 [7] SOPA s27 [8] SOPA s12 [9] SOPA s17 [10] SOPA s26A [11] SOPA s26B

Considering buying off-the-plan? Purchasers beware.

H & H Lawyers successfully defends a vendor developer against claims brought by the purchaser of an off-the-plan property in the Supreme Court of NSW. While the benefits of buying an off-the-plan property are often highlighted to a purchaser, the decision in Xu v Lindsay Bennelong Developments Pty Limited & Ors [2020] NSWSC 1692 confirmed the importance of having any terms that are “non-negotiable” for the purchaser to be clearly expressed in writing in the contract for sale of land. Facts In this case, the plaintiff was a purchaser of an off-the-plan property. During the handover inspection of the completed property, the purchaser discovered that there was only one car space attached to her property despite the representation being made prior to entering the contract for sale of land that there would be two car spaces. Subsequently, the purchaser brought a claim against the former vendors of the subject property and the substituted vendor, to whom the contract for sale was novated to, after exchange of contracts. Other relevant facts include: 1. prior to purchasing the property, the agent made representations to the purchaser that there would be two car spaces attached to the property; 2. prior to purchasing the property, the purchaser’s solicitor inquired and the former developer confirmed in writing that the property had two car spaces; 3. the front page of the contract of sale of land did not specify how many car spaces were attached to or formed part of the property; 4. the draft floor plan and draft strata plan of the property which were attached to the contract of sale marked that there are two car spaces allocated to the property; 5. there was no other mention of there being two car spaces attached to the property in the special conditions to the contract or anywhere else in the contract; and 6. it was a special condition to the contract for sale that the purchaser acknowledges and agrees that the vender may make alterations, from time to time, and vary the building floor plan or the draft strata plan, as it sees necessary or desirable. The plaintiff claimed that the defendants breached the fundamental term and purposes, or alternatively, an implied term of the contract, by only transferring one car space with the property instead of two car spaces. The plaintiff also claimed that, in doing so, the defendants engaged in misleading and deceptive conduct or false representation under sections 18 and 30(1)(e) of the Australian Consumer Law (“ACL”) and sought specific performance for the defendants to transfer one more car park under sections 237 and 243 of the ACL. The then Chief Judge in Equity, Ward CJ dismissed the plaintiff’s arguments and held that: 1. the contract was for the sale of a unit with a single tandem car space. However transferring two car spaces was neither a fundamental term nor an essential implied term of the contract; and 2. the representations that the plan would include a space for two cars were clearly made. Nonetheless, such representation does not amount to misleading or deceptive conduct in circumstances where the developer had reasonable grounds to make such representation at the time and the plaintiff suffered no loss by relying on the promise. Key takeaways While this case is not to be generally applied to all circumstances in relation to off-the-plan purchases, a purchaser of an off-the-plan property should be mindful of standard special conditions attached to contracts for sale of off-the-plan properties which are designed to allow a vendor developer to make changes (to a degree) to a draft floor plan or draft strata plan. As in this case, even if the court finds that the draft plan which formed part of the contract was varied, such variation may not constitute a breach of a fundamental or essential term of contract. Thus, a purchaser of an off-the-plan property must scrutinise the terms and conditions before entering into the contract for sale. Further, if the purchaser seeks to rely on any representations made by an agent or vendor prior to entering into the contract, such representation should be expressly and unequivocally included in writing in the contract to make sure the vendor makes good on the promise. The purchaser should also be mindful that the contract would generally provide a limited time to seek rescission. A vendor should also consider the litigation risks associated with the sale of off-the-plan properties. Even if the vendor is successful such as in this case, being involved in court proceedings is costly and time-consuming, and may impact its reputation as a developer as well as open the gate for other purchasers to bring a similar claim against the developer. Disclaimer: The contents of this publication are general in nature and do not constitute legal advice. The information may have been obtained from external sources and we do not guarantee the accuracy or currency of the information at the date of publication or in the future. Please obtain legal advice specific to your circumstances before taking any action on matters discussed in this publication.

High Court Clarifies Definition of Casual Employee

As one of the most significant decisions by the High Court in 2021, the High Court has determined the meaning of a casual employee in Workpac Pty Ltd v Rossato [2021] HCA 23. Mr Rossato was employed as a production worker by Workpac’s labour-hire company under a series of six contracts, or assignments, to perform work for one of Workpac’s clients. While Mr Rossato was required to work regular and full-time hours according to a fixed pattern of work, Workpac treated Mr Rossato as a casual employee, such that Mr Rossato was not paid the leave or public holiday entitlements under the Fair Work Act 2009 (Cth) (the Act) and the enterprise agreement. The Court confirmed that the question of whether a person is a casual employee is to be determined by considering the express terms of a written employment contract, and not on the basis of any subsequent conduct of either party. To this extent, the court held any such commitment to further work must be contained in an enforceable agreement to be recognised. The High Court held that a casual employee is an employee who has no “firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work” and provides no reciprocal commitment to the employer. In considering the nature of the commitment, the court held that ‘the existence or otherwise of a “firm advanced commitment” must be for enforceable terms’, and should not be held to exist from expectations or understandings borne from the manner in which the parties have performed their agreement. The High Court held that a mere expectation of continuing employment on a regular and systematic basis is not sufficient for the purposes of the Act. Mr Rossato’s employment was expressly on an “assignment by assignment basis”. Mr Rossato was entitled to accept or reject any offer of an assignment, and at the completion of each assignment Workpac was under no obligation to offer further assignments. The High Court also held that it was not the role of the courts to “moderate a perceived unfairness resulting from a disparity in bargaining power between the parties”. In relation to the employment relationship, it should be noted that the High Court held in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 that: 1. while mutual undertakings may not always be express, where there are express terms of the contract between the parties, they must be given effect unless they are contrary to statute; 2. if the mutual undertakings are said to be implied in what has been agreed, they cannot be inconsistent with the express terms of the contract; and 3. if the mutual undertakings are to be inferred from the conduct, then they may take effect as contractual variations. This decision by the High Court in Workpac v Rossato is important for both employers and employees as it reinforces the importance of specifying the terms of the contract in writing, taking into account the key features of the High Court’s decision. It is also important that casual contract terms and employer’s policies are carefully reviewed to ensure that they do not create any unintentional implied mutual obligations or variations inferred from the conduct. It is also worth noting that a new provision of s 66B of the Act has been introduced which requires employers to offer casual employees to become permanent employees if they have been employed for 12 months and have worked regular and systematic patterns in the last six months. Disclaimer: The contents of this publication are general in nature and do not constitute legal advice. The information may have been obtained from external sources and we do not guarantee the accuracy or currency of the information at the date of publication or in the future. Please obtain legal advice specific to your circumstances before taking any action on matters discussed in this publication.