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His Honour, Hall J, in the NSW Supreme Court, recently considered an application by a Singapore company, Transpac Capital Pte Ltd for leave to enforce a foreign arbitral award under section 8 of the International Arbitration Act 1974 (Cth). The arbitral award in question was a Final Award under the Singapore International Arbitration Centre (SIAC) for various amounts against three respondents, one of whom, the named defendant Buntoro, was domiciled in New South Wales.

Facts

The parties to the original dispute had entered into two agreements (a Bond Subscription Agreement and an Investment Agreement) which relevantly had provided for the resolution of disputes by arbitration in Singapore under the SIAC Rules as well as recognising the applicability of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

A sole arbitrator handed down a Final Award on 20 August 2007 in favour of the plaintiff, which Award it sought to enforce in New South Wales.

It was established that the defendant was domiciled in New South Wales, had been made aware of the proceedings and chosen not to appear, so the matter proceeded before Hall J as an undefended matter.

Decision

In order to determine whether to grant leave to the plaintiff to enforce the Award as if it had been made in New South Wales, Hall J considered the following questions:

• Should the Singapore Award be characterised as a “foreign award” for the purposes of the International Arbitration Act 1974 (Cth)?
• The answer to (1) depended in turn on the answer to the question, whether the Bond Subscription Agreement and Investment Agreement were arbitration agreements for the purpose of the referral of the dispute to SIAC.
• Having answered the previous two questions in the affirmative, the Court chose to consider whether there were any applicable grounds under section 8 of the International Arbitration Act 1974 (Cth) which might cause the Court to refuse to recognise and enforce the foreign award.

The court answered the first two questions in the affirmative and the final question in the negative. Therefore, Hall J granted leave to the plaintiff to enforce the Award.

This case raises an important issue as to what a plaintiff - seeking to enforce an arbitral award under the International Arbitration Act - must show in order for enforcement to be granted. The International Arbitration Act and the New York Convention are clear as to what a plaintiff is required to show but this decision leaves it unclear as to whether a court either is required, or ought as a matter of discretion, to investigate whether there are grounds for refusing enforcement. It is normally considered the defendant’s burden to raise any challenges to an enforcement action so the question remains what a court should do when the defendant does not appear. Should the court consider such matters of its own motion or simply enforce the award on the basis that the plaintiff has met the requirements under the International Arbitration Act and the New York Convention. This case suggests the answer is the former.

However, the latter approach was adopted by Einstein J in ML Ubase Holdings Co Ltd v Trigem Computer Inc [2005] NSWSC 244, where a plaintiff sought leave to enforce a judgment of a foreign award against a defendant that had similarly not appeared before the court. In that case, leave to enforce the award was granted. However unlike Hall J in Transpac, Einstein J did not make any reference to section 8 of the Act and there is nothing in his judgment that indicates that His Honour considered the court’s discretion under section 8 of the Act.

It is relevant that the words used in subsections 8(7) and 8(8) of the Act provide only that the court “may” refuse to enforce the award or adjourn the proceedings in particular circumstances. Therefore there is no obligation requiring the court to consider section 8 of the Act in the absence of an appearance by a defendant, but the court may use its discretion to consider section 8 of the Act.

What this means to you

The judgment is useful because it considers, in summary form, the relevant evidentiary questions concerning enforcement in Australia of foreign arbitral awards which a court can take into account where the party against whom enforcement is sought does not appear before the court.