09.10.1996
This reference began on 19 July 1995, arising out of concerns about the effectiveness of the legal remedies available when commercial transactions cross international borders. In particular, insolvencies relating to Australian corporate identities Alan Bond and the late Christopher Skase, and the late British media magnate Robert Maxwell, had highlighted problems.
Disputes that involve the laws or courts of more than one country are often marked by intolerable levels of cost, complexity and delay. In many cases the law fails to provide the support Australian firms need in their international commercial transactions.
It was also recognised that the growing involvement of the Australian economy in regional and international trade and investment was creating challenges, which the Australian legal system was having difficulty in meeting.
The ALRC was asked to review the civil remedies available under Australian law and under multilateral or bilateral instruments or arrangements when commercial transactions cross international borders.
The key finding of the report was that Australian firms are exposed to international legal problems that cost them money and inhibit business development opportunities. The final report examines these risks in detail and canvasses legal and non-legal remedies.
Key recommendations
The ALRC’s inquiry was, in essence, a feasibility study. The report contains a detailed outline of contemporary Australian law on international litigation and arbitration. It also addresses the extent of international commercial transactions, the potential legal problems, and canvasses the options for reform. The ALRC approached these issues in the report from a practical business perspective.
The ALRC recommended the establishment of a business advisory committee (the International Commercial Law Advisory Committee) to advise the government on options, priorities and timing for reforms in relation to cross border legal issues.
A number of short-term reforms, including amendment of existing legislation and rules of court, were proposed. The Commission also identified long-term reforms, such as international judicial cooperation, emphasis on bilateral arrangements, and further involvement in work of organisations such as UNCITRAL.
The ALRC also recommended a high priority be given to involvement in the UNCITRAL Working Group on Insolvency, and to the work of the Hague Conference on a multilateral convention on the recognition and enforcement of foreign judgments, while continuing Australia’s bilateral negotiations on the recognition and enforcement of foreign judgments.
A recommendation was made for the federal Attorney-General to commission a further reference by the ALRC into Australia’s laws and regulatory practices relating to cross border financial transactions.
The report suggests the Attorney-General should also commission a comprehensive review of the legal implications of electronic commerce and that a working group be established to design and test a ‘safe haven’ model for the development of online electronic trading and investment facilities in Australia.
Most of the recommendations arising from the report also call for further consultation and consideration of particular proposals and issues.
Implementation
There has been no formal government response to the ALRC report.
Electronic commerce
In July 1997, the Attorney-General established the Electronic Commerce Expert Group to consider legal issues arising from the development of electronic commerce. The Expert Group’s report, released in April 1998, was consistent with the ALRC Cross Borders report.
The Electronic Transactions Act 1999 (Cth), based on recommendations of the Electronic Commerce Expert Group, clarifies that a transaction is not invalid merely because it took place wholly or partly by means of electronic communications rather than paper documents. Under the Act, electronic transactions are recognised as meeting traditional legal requirements of writing, signature, the production of original documents and the retention of records. However, the Act only applies to business and consumer transactions with Commonwealth Departments and agencies. All States and Territories have implemented uniform legislation based on the Electronic Transactions Act 1999 (Cth).
The Attorney-General’s Department e-Commerce homepage provides up-to-date information on electronic commerce issues.
Cross-border insolvency
ALRC Report 80 was completed before the UNCITRAL Model Law on Cross-Border Insolvency was finalised. The ALRC recommended that a high priority be given to involvement in the UNCITRAL Working Group on Insolvency with a view to adoption. UNCITRAL finalised and adopted its Model Law on Cross-Border Insolvency in May 1997.
The Cross-Border Insolvency Act 2008 (Cth), which incorporates the Model Law into Australian law, received assent in May 2008. The Act provides for a foreign representative commencing an insolvency proceeding in Australia in relation to a debtor that is subject to a foreign proceeding and provides for a foreign representative participating in an Australian insolvency proceeding in relation to that debtor. The Act also provides that foreign creditors have the same rights regarding the commencement of, and participation in, insolvency proceedings occurring in Australia as creditors domiciled in Australia.
Hague Service Convention
The ALRC also recommended that the Attorney-General should review the proposal that Australia should accede to the Hague Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters 1965 (Hague Service Convention) (Rec 9). The Convention makes serving documents in foreign countries quicker and cheaper by enabling them to be provided to a designated Central Authority in participating countries.
On 25 June 2009, the Hague Service Convention was tabled in the Australian Parliament, together with National Interest Analysis proposing that Australia become a party to the Convention. This represents the first step in the formal process for Australia’s accession to the Convention.