Enforcing Foreign arbitral awards in Australia
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As a follow up to our article in the January edition of this newsletter, this article will focus on the approach of Australian courts to the enforcement of arbitral awards in a "hands-off" or "pro-arbitration" manner.
The relative ease of enforcement of foreign arbitral awards in Australia
It is well established that in the context of cross-border transactions, arbitration is an increasingly popular method of dispute resolution. It is generally understood that Australian courts tend to take a pro-arbitration stance. That is, Australian courts have maintained that the court's role is to be limited to the enforcement of a contractual obligation to arbitrate.
The Legislative Framework
By way of background, the enforcement of international arbitration awards in Australia is subject to the legislative framework of the 1958 New York Convention on the Recognition and Enforcement of Arbitration Awards ("New York Convention"), which was enacted in Australia by the International Arbitration Act 1974 (Cth) ("Arbitration Act"). The Arbitration Act also provides that UNCITRAL Model Law on International Commercial Arbitration ("Model Law") has effect in Australia.
In recent years, provisions of the Arbitration Act giving effect to the Model Law were upheld against a constitutional challenge in the decision of the High Court in TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia1 ("TCL Case"). The High Court's decision was said to have resolved any lingering disputes about Australia's enforcement of foreign arbitral awards.
Both the New York Convention and the Model Law provide an exhaustive and discretionary set of circumstances in which a court can refuse to enforce a foreign arbitral award. However, if a foreign award meets the conditions of the New York Convention and the Model Law, then the Court's role is limited to the enforcement of that award. That is, once it is accepted that a foreign award creates a remedy in the place of the arbitral decision, the court should simply apply the procedural rules required for enforcement.
Recent Case Law
In 2017 the Federal Court once again demonstrated the generally uncomplicated way in which an award creditor may enforce an unopposed foreign award in Australia.
In Sanum Investments Ltd v ST Group Co., Ltd [2017] FCA 75, Foster J considered whether the applicant, an award creditor under a foreign arbitral award, should have leave to serve its petition to enforce a USD$200 million award issued by a Singapore tribunal against two companies based in the Lao People's Democratic Republic. Foster J held that court had jurisdiction to enforce the foreign award, as if it were a judgement or order of the Federal Court, because the foreign award is an arbitral award made in pursuance of an arbitration agreement, in a country other than Australia, and being an arbitral award in relation to which the New York Convention applied.
Foster J stated: "I am satisfied that the applicant has made out a prima facie case for all of the relief which it claims in this proceeding. Accordingly, I am satisfied that the applicant is entitled to relief substantially in accordance with the relief which it seeks in its Interlocutory Application."
In Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd [2016] VSC 326, the Victorian Supreme Court considered an application to set aside an arbitral award and the Court confirmed the principles of enforcement of foreign arbitral awards in Australia. In a discussion of the principles of limited intervention in arbitral matters, the Supreme Court referred to and upheld a series of cases in Australia, Hong Kong and Singapore which favoured a "policy of minimal curial intervention under the Model Law".
The case exemplifies the high threshold bar applicants seeking to set aside enforcement of an award will face.
Australian court's acknowledgement of the importance of adopting a policy of minimal intervention in arbitration matters by Australian courts is consistent with the limited nature of grounds for refusal of enforcement as set out in the New York Convention and the Model Law.
Parties wishing to enforce foreign arbitral awards in Australia should continue to feel comforted by Australia's pro-arbitration jurisprudence.
1 [2013] HCA 5.
This article is part of the Asia-Pacific Dispute Resolution update for April 2017. View the next article here.
