International arbitration award for foreign company enforced by Federal Court
Coeclerici Asia (Pte) Ltd v Gujarat NRE Coke Limited [2013] FCA 882
This case involved enforcement of a foreign award in Australia. Orders were made in aid of enforcement to prevent dissipation of shares in Australian companies owned by the award debtors. The award debtors were not permitted to re-agitate as a ground for resisting enforcement, a ground unsuccessfully agitated by them before the court at the seat of the arbitration to set aside the award.
Facts
An award was made by an arbitral tribunal in London in favour of a Singaporean company against an Indian company and its managing director. Application was made to enforce the award in the Federal Court of Australia under section 8 of the International Arbitration Act 1974 (‘the IAA’).[1] The award debtors held shares in Australian companies. The award creditors sought orders, in aid of enforcement, appointing receivers over the shares in question, in order to avoid their dissipation.
Parties’ submissions
The award debtors sought to resist enforcement of the award on two bases. First, they submitted that they were not permitted a reasonable opportunity by the arbitral tribunal to put their case in the arbitration proceedings (s 8(5)(c) of the IAA). Second, and in the alternative, they submitted that the said failure by the arbitral tribunal meant that there was a breach of the rules of natural justice in connection with the making of the award and consequently it would be contrary to the public policy of Australia to enforce the award (under ss 8(7)(b) and 8(7A)(b) of the IAA).
Decision
Foster J found on a brief review of the facts that the award debtors had been given a reasonable opportunity to present their case. In doing so, he noted that the lex arbitri[2] and procedural rules chosen by the parties required speed, efficiency and a minimum of formality in the arbitral procedure.[3]
Separately, Foster J noted that an application had been made by the award debtors at the seat of the arbitration to set aside the award on the basis that it was infected by ‘serious irregularity’.[4] In doing so, the award debtors relied upon the same facts and matters relied on to resist enforcement of the award.[5] In the circumstances, his Honour held that there was an issue estoppel which precluded the award debtors from raising the same arguments to resist enforcement of the award.[6] Foster J proceeded to say:
“The English High Court of Justice is the court of the seat of the arbitration. Under the [New York] Convention and the IAA, any application to set aside the Award must be made in that Court. Even if there were no issue estoppel or res judicata, it would generally be inappropriate for this Court, being the enforcement court of a Convention country, to reach a different conclusion on the same question as that reached by the court of the seat of the arbitration. It would be a rare case where such an outcome would be considered appropriate.”[7]
Next, the Court, in aid of enforcement, appointed receivers over the shares in question. Foster J noted that the Court had power under section 57 of the Federal Court of Australia Act 1976 (Cth) to appoint receivers and that it may exercise the discretion to appoint receivers in aid of enforcement of a judgment provided ‘it can be shown that other methods of execution would be inadequate or extremely inconvenient’.[8]
Comment
This judgment is yet another arbitration-friendly judgment of the Federal Court applying arbitration principles consistently with international arbitration jurisprudence and norms.
However the above quoted passage is, with respect, aspirational and not strictly correct. The New York Convention does not, at least in express terms, recognise the concept of issue estoppel. Arguably an enforcement court has a discretion to enforce an award that has been set aside at the seat of the arbitration, albeit such decisions have attracted controversy.[9] Conversely, an enforcement court may refuse to enforce an award even if the court at the seat has rejected the same argument advanced by the award debtor as a ground for setting aside the award.[10] In short, it remains controversial in international arbitration jurisprudence whether the court at the seat has any special role to play, such that the enforcement court is bound to follow decisions of the court at the seat on disputed questions agitated before both courts.
[6]At [102].
[7]At [103].
[8]At [108].
[9] See Blackaby N, Partasides C et al, Redfern and Hunter on International Arbitration (5th ed, Oxford University Press, 2009) pp 649-654 referring, in part, to the 2007 French court decision in Putrabali. Contrast van den Berg AJ, “Enforcement of Arbitral Awards Annulled in Russia”, (2010) 27(2) J of Int’l Arb 179 at 187.
[10] A notable recent example of this is Dallah Real Estate v Government of Pakistan [2010] UKSC 46 where the UK Supreme Court refused to enforce an award made in France, accepting the argument by the award debtor (which was not a signatory to the arbitration agreement) that the Arbitral Tribunal had no jurisdiction over it, even though the French court at the seat of the arbitration had previously found that the Arbitral Tribunal did have jurisdiction over the award debtor and granted leave to enforce the award. See Grierson J and Taok M, “Dallah: Conflicting Judgments from the UK Supreme Court and the Paris Cour d’Appel” (2011) 28(4) J of Int’l Arb 407.
Albert Monichino QC – CommBar profile
