There is a lack of available information on the prevalence of international arbitration as a method of dispute resolution in Vanuatu.

We are not aware of any industries in Vanuatu for which international arbitration is more or less popular. 

We are, however, aware that parties operating in the maritime sector (including salvage) routinely agree international arbitration clauses, which is standard practice.

Vanuatu is also an international finance centre with an active banking and insurance sector. As we know from other jurisdictions, those sectors are particularly well-suited to international arbitration but it remains to be seen whether participants are agreeing to arbitrate any disputes that may arise and, if so, where. 

Vanuatu is also a member of the WTO and a signatory to two bilateral investment treaties, with China and the UK, although these BITs appear not to have entered into force. In addition, as part of the Belt and Road Initiative, Vanuatu signed a series of agreements with China in 2018, although these do not appear to provide for arbitration.

There are no arbitral institutions established in Vanuatu.

There are no specific courts in Vanuatu that are designated to hear disputes relating to arbitration. However, the Supreme Court is Vanuatu’s court of general jurisdiction.

Vanuatu has no legislation that governs arbitration generally. However:

• The Trade Disputes Act 1983 permits arbitration of trade disputes in certain circumstances.
• The Judicial Services and Courts Act was amended in 2008 to introduce several provisions relating to arbitration:
1. The Supreme Court was given the power to refer disputes to an arbitrator with the consent of the parties (s 42B). There are also provisions relating to questions of law arising from such arbitrations (ss 42C  and 42D), and the immunity of arbitrators (s 42E).
2. Upon application, the Supreme Court may make an order in accordance with the terms of an award (regardless of whether that arbitration was conducted in accordance with an order under Section 42B), which “is enforceable in the same manner as if it had been made in an action in the Supreme Court” (s 42F).

The law applicable to arbitration in Vanuatu is therefore primarily to be found in the other sources of law in Vanuatu. Notably, Vanuatu is a Commonwealth nation, which gained its independence in 1980. The English common law in existence as at 1980 applies to the extent it has not been expressly amended by the Vanuatu Parliament. French law and customary law may also be relevant. It is beyond the scope of this guide to assess the English common law of arbitration in 1980. 

There have not been any significant changes to Vanuatu’s legal regime for arbitration in the past year.

The Asian Development Bank has been providing technical assistance to States in the South Pacific with the aim of establishing effective commercial dispute resolution regimes via international arbitration reform (principally, the ratification of the New York Convention and the adoption of legislation that reflects the UNCITRAL Model Law). It is unknown to us whether, and if so to what extent, Vanuatu is presently obtaining such assistance. We are not otherwise aware of any pending legislation that may change the arbitration landscape in Vanuatu.

There are no particular provisions of Vanuatu law governing the legal requirements for an arbitration agreement to be enforceable.

We have not identified any judgments of the Vanuatu courts relating to the basis on which a dispute will be determined to be arbitrable.

However, it is to be expected that, among other matters, disputes relating to rights and obligations under Vanuatu’s Constitution of 1980 are not arbitrable. For example, in Bebe v Republic of Vanuatu [2013] VUCA 36, the government had argued that a dispute relating to the treatment of a government employee ought to be arbitrated in accordance with the Trade Disputes Act. The Vanuatu Court of Appeal instead identified the issue for decision in that case as being “whether for the purposes of Article 58(2) of the Constitution a Director General is a ‘senior public servant’”, because Article 58(2) provides that “[s]enior public servants in Ministries may be transferred by the Prime Minister to other posts of equivalent rank”. The Court concluded that this issue was not “amenable to arbitration law” because it was “a legal issue which needs to be progressed with alacrity in a Court”.

There are no judgments of the Vanuatu courts relating to the determination of the law governing the arbitration agreement. However, given that the Vanuatu courts have referred to decisions of the English courts in relation to the enforcement of arbitration agreements (as described further below), it seems likely that the Vanuatu courts would follow the UK Supreme Court decision in Enka v Chubb [2020] UKSC 38.

In relation to the enforcement of arbitration agreements, the decisions of the Vanuatu courts are somewhat anachronistic and difficult to reconcile.

In SPIE-EGC Ltd v FIFA [2003] VUCA 11, the Vanuatu Court of Appeal considered a contract between two foreign parties, containing a clause in French that, as put by the Court, “appears to be an arbitration clause”. It was noted that “[t]he question whether or not the dispute should have been referred to arbitration before any relief was sought before a Court was not, apparently, argued before the Chief Justice [at first instance]”. The Court remitted this question to the Chief Justice for consideration.

In Dick v Property Ltd [2013] VUSC 2, the Vanuatu Supreme Court considered a contract providing for disputes to be decided as follows: “If any dispute, question or difference shall arise between the parties as to the meaning, operation or effect of any of the provisions of this Agreement or the rights or liabilities of any of the parties hereto, such dispute, question or difference shall be referred to the arbitration of an independent arbitrator to be appointed by the President or the person for the time being fulfilling the office of the President of the Law Institute of Victoria whose decision or award shall be conclusive and binding upon the parties…[A] reference to arbitration in accordance with the provisions hereof shall be a condition precedent to any action or other legal proceedings between the parties relating to such dispute, question or difference.”

The Court held that:

• On the one hand: “agreements to refer matters in dispute to arbitration are sometimes regarded as attempts to ‘oust the jurisdiction of the Courts,’ and to that extent will not be specifically enforced. Thus, an agreement to refer to arbitration, though so far valid that an action can be maintained for its breach, will not be enforced, and does not oust the jurisdiction of the Court”.
• However, on the other hand: “Parties to a contract may, however, make arbitration a condition precedent to a right of action for breach of the contract, and such a condition is valid”.

In support of this distinction, the Court referred to the 19th century judgment of the House of Lords in Scott v Avery [1856] 10 ER 1121. That decision related to a contractual clause that was drafted to overcome the objection to ousting the courts’ jurisdiction that prevailed at the time. As put by Lord Campbell in that case, there was “no principle or policy of the law which prevents parties from entering into such a contract” containing a condition precedent because “no breach shall occur until after a reference has been made to arbitration”. That is, no breach could occur, and therefore no cause of action that might enliven the courts’ jurisdiction could accrue, until after the arbitral award had been rendered.

In Dick, the Vanuatu court concluded that the arbitration clause established a permissible condition precedent. In doing so, it also referred to the fact that the contract was governed by Victorian law, and to the earlier judgment in SPIE.

Several years later, in Sacksack v Vanuatu Investment Promotion Authority [2018] VUCA 35, the Vanuatu Court of Appeal considered the enforcement of the following clause: “Any dispute arising out of this contract shall be dealt with amicably by both parties, failure of which an independent arbitrator shall be agreed upon by both parties to consider the matter. The decision of the independent arbitrator shall be final”.

The Court stated that “[t]his type of clause is often referred to as a Scott v Avery clause”. That conclusion is doubtful: the clause did not provide for arbitration as a condition precedent to court proceedings; it provided for arbitration as the “final” means of resolving a dispute. Indeed, the error in the Court’s reasoning is made apparent later in its judgment, which states that: “It is also clear to us that in this case the words ‘condition precedent’ do not need to appear in the clause setting up arbitration in order for the requirement for arbitration to be considered as a condition precedent. On a logical construction of the clause under consideration, the parties intended first that they would try and deal with the dispute amicably between themselves and then if they failed in that endeavour, the parties would be required to use their best efforts to agree on an independent arbitrator to consider the matter”. That is, the Court appears to have been satisfied by identifying any condition precedent – albeit a condition precedent to arbitration – rather than an arbitration clause that was a condition precedent to court proceedings. It is, however, the latter that matters under the rule established in Scott v Avery.

The Court went on to refer to SPIE and Dick and observed that “[i]n neither case did the Court say that an arbitration clause was unlawful because it purported to oust the jurisdiction of the Courts”. In doing so, however, it expressly relied on the rationale set out in Scott and Dick, quoting from Dick as follows: “Parties to a contract may, however, make arbitration a condition precedent to a right of action for breach of the contract, and such a condition is valid”.

In sum, the judgments of the Vanuatu courts suggest that:

• The Vanuatu courts are likely to give effect to a clause that makes arbitration a condition precedent to court proceedings, in accordance with Scott v Avery.
• If a clause instead provides for arbitration to be final and binding, there is a real risk that the Vanuatu courts will not give effect to such a clause on the basis that it improperly ousts the jurisdiction of the courts.

We are not aware of any judgments of the Vanuatu courts that address whether the rule of separability applies to arbitration clauses contained in an otherwise invalid contract. However, given that this is a longstanding rule of English common law (see Heyman v Darwins [1942] AC 356), it seems likely that this rule would be applied by the Vanuatu courts.

There are no particular provisions of Vanuatu law that limit the parties’ autonomy to select arbitrators.

Vanuatu does not have a default procedure for the selection of arbitrators.

There are no particular provisions of Vanuatu law that set out the circumstances in which the courts may intervene in the selection of arbitrators.

There are no particular provisions of Vanuatu law governing the challenge or removal of arbitrators.

There are no particular provisions of Vanuatu law relating to arbitrator independence, impartiality or disclosure.

Notably, however, in Halliburton Company (Appellant) v Chubb Bermuda Insurance Ltd [2020] UKSC 48, the UK Supreme Court endorsed the English Court of Appeal’s conclusion that “[u]nder the common law, judges should disclose facts or circumstances which would or might provide the basis for a reasonable apprehension of lack of impartiality” (at [37], [115]). It is to be expected that the Vanuatu courts would follow this rule of common law.

We have not identified any judgments of the Vanuatu courts relating to the basis on which a dispute will be determined to be arbitrable. It is, however, to be expected that disputes relating to rights and obligations under Vanuatu’s Constitution of 1980 are not arbitrable.

There are no particular provisions of Vanuatu law that concern the principle of competence-competence. Nor are we aware of any judgments of the Vanuatu courts on this subject.

There are no particular provisions of Vanuatu law that concern the circumstances in which courts may intervene in relation to the jurisdiction of an arbitral tribunal. For the reasons give above, however, there is good to reason to believe that the Vanuatu courts would be more ready to intervene than the courts in a jurisdiction with arbitration legislation that reflects the Model Law.

There are no particular provisions of Vanuatu law that address the timing of any challenge to the jurisdiction of an arbitral tribunal.

There are no particular provisions of Vanuatu law that address the standard of judicial review for questions of admissibility and jurisdiction.

It appears that the Vanuatu courts (a) may be willing to stay court proceedings that are commenced in breach of certain types of arbitration agreements, but (b) are likely to be more willing to allow such proceedings than are courts in jurisdictions with arbitration legislation that reflects the Model Law.

There are no particular provisions of Vanuatu law that address the position of third parties in relation to arbitration.

There are no particular provisions of Vanuatu law that address the availability of preliminary or interim relief.

There are no particular provisions of Vanuatu law that address the role of the courts in relation to preliminary or interim relief in arbitral proceedings.

There are no particular provisions of Vanuatu law that address the ability of the courts or arbitral tribunal to order security for costs.

There are no particular provisions of Vanuatu law that govern the procedure of arbitration in Vanuatu.

There are no particular provisions of Vanuatu law that require particular procedural steps.

There are no particular provisions of Vanuatu law that address the powers and duties of arbitrators.

Under Section 31 of the Legal Profession Act 2005, it is an offence for a person to practise law in Vanuatu unless that person is admitted to legal practice. Neither “practise law” nor “legal practice” is defined in the Act. In any event, pursuant to Section 21 of the Act, foreign lawyers may be admitted to legal practice in Vanuatu on a temporary basis, “if in the opinion of the Admissions Committee it is in the public interest for the person to be so admitted”.

There are no particular provisions of Vanuatu law that address the collection or submission of evidence in arbitrations in Vanuatu.

There are no particular provisions of Vanuatu law that address the applicable rules of evidence in arbitral proceedings seated in Vanuatu. Notably, the Civil Procedure Rules only apply to “civil proceedings in the Supreme Court and the Magistrates’ Court” (Rule 1.6).

There are no particular provisions of Vanuatu law that address the powers of compulsion or court assistance for arbitrators.

There are no particular provisions of Vanuatu law that address the confidentiality of arbitration.

There are no particular provisions of Vanuatu law that address the legal requirements for an arbitral award.

There are no particular provisions of Vanuatu law that address the types of remedies that an arbitral tribunal may award.

There are no particular provisions of Vanuatu law that address the recovery of interest or legal costs in arbitration.

There are no particular provisions of Vanuatu law that address the parties’ entitlement to appeal an arbitral award, or the applicable procedure (except for references to arbitration made by the Supreme Court by consent of the parties, as set out in 2.1 Governing Law).

There are no particular provisions of Vanuatu law that address whether the parties are entitled to exclude or expand the scope of appeal or challenge to an award.

There are no particular provisions of Vanuatu law that address the standard of judicial review.

Vanuatu has not signed or ratified the New York Convention.

As set out in 2.1 Governing Law, upon application, the Supreme Court may make an order in accordance with the terms of an arbitral award. That order “is enforceable in the same manner as if it had been made in an action in the Supreme Court” (s 42F of the Judicial Services and Courts Act).

There are no particular provisions of Vanuatu law that address the impact on enforcement in Vanuatu of an award being set aside, or of pending setting-aside proceedings. Nor have we identified any judgments of the Vanuatu courts on that subject.

In relation to sovereign immunity, it is likely that the common law doctrine continues to apply in Vanuatu.

There are no particular provisions of Vanuatu law that address the standards for recognising and enforcing arbitral awards, including in relation to public policy. Nor have we identified any judgments of the Vanuatu courts on that subject. It is notable, however, that Section 42F of the Judicial Services and Courts Act goes no further than that the Supreme Court “may” make an order in accordance with the terms of an arbitral award.

There are no particular provisions of Vanuatu law that address class action or group arbitration.

There are no specific ethical rules that apply to counsel and arbitrators conducting arbitration proceedings in Vanuatu. As set out in 7.4 Legal Representatives, lawyers may require special temporary admission to conduct arbitral proceedings in Vanuatu.

Third-party funding in Vanuatu may be restricted by the doctrines of champerty and maintenance, which were part of the English common law.

There are no particular provisions of Vanuatu law that address the consolidation of separate arbitral proceedings.

There are no particular provisions of Vanuatu law that address the circumstances in which third parties can be bound by an arbitration agreement or award, or by the courts in aid of arbitration.