Recent developments in court sup

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					Recent developments in court
support for international arbitration

Presented by Bronwyn Lincoln, Partner

• There are two aspects of effective international dispute
   – fair and conclusive processes for the determination or
     resolution of disputes; and
   – recognition and enforcement of the settlement
     agreement, arbitral award or judgment

• Without recognition and enforcement, the processes,
  whilst often having strategic value, do not offer fiscal or
  commercial reward.
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• Regime for enforcement of foreign arbitral awards in
• Circumstances warranting asset protection in advance of
• Procedures to protect assets prior to enforcement
• Recent authorities dealing with asset protection

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The New York Convention
• The New York Convention facilitates the recognition and
  enforcement of foreign arbitral awards in Australia (Article
        Each contracting State shall recognise arbitral awards
        as binding and enforce them in accordance with the
        rules of procedure in the territory where the award is
        relied upon, under the conditions laid down in the
        following articles. …

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Criteria for recognition and enforcement
• Production of duly authenticated award or copy thereof,
  the original arbitration agreement (or a certified copy) and,
  if necessary, an official translation (Article IV of the New
  York Convention)
• Procedural fairness has been observed in the arbitral
  process (Article V of the New York Convention)
• Subject matter of the arbitration was capable of
  settlement by arbitration under the law of the place of the
  arbitration + recognition and enforcement is not contrary
  to public policy of the country where enforcement is
  sought (also Article V)

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Applying for recognition and enforcement
• The procedure will vary depending on the State or
  Territory in which the application is made
• Application is made to the Supreme Court in each
  jurisdiction under the Rules of Civil Procedure applicable
  in that place

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Protecting assets prior to enforcement

                       • A party who has obtained a
                         foreign arbitral award may seek
                         to preserve assets against
                         which it might subsequently
                         enforce its award
                       • That party may otherwise have
                         no connection with an Australian
                         State or Territory
                       • Harmonised freezing orders
                         provide a mechanism to achieve
                         this end

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Freezing orders
• Harmonisation of procedures for the obtaining of freezing
  orders (formerly known as Mareva injunctions) across
  Australia occurred in 2006
• Purpose of freezing order is to preserve assets pending
  the determination of rights – the application does not itself
  determine those rights
• But, as the High Court stated in Cardile v LED Builders
  Pty Ltd (1999) 198 CLR 380:
     It requires a high degree of caution on the part of a
     court invited to make an order of that kind.

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Civil procedure - Victoria

37A.02 (1) The Court may make an order (a freezing order), upon or
  without notice to the respondent, for the purpose of preventing the
  frustration or inhibition of the Court’s process by seeking to meet a
  danger that a judgment or prospective judgment of the Court will be
  wholly or partly unsatisfied.

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Scope of freezing order
• A freezing order may:
   – restrain a respondent
      from removing assets
      located in or outside
   – restrain a respondent
      from disposing of,
      dealing with, or
      diminishing the value
      of, those assets

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Intent of provisions
• The procedural rules contemplate an application for
  freezing orders in anticipation of the registration or
  enforcement of a judgment of the Court

• Under s 33 of the Commercial Arbitration Act (Vic) 1984,
  an award made under an arbitration agreement may, by
  leave of the Court, be enforced in the same manner as a
  judgment or order of the Court to the same effect, and,
  where leave is so given judgment may be entered in
  terms of the award

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Application to international arbitration
                         • Freezing orders would be most
                           applicable where an award has
                           been rendered in a place other
                           than Australia, but assets
                           against which the award might
                           be enforced are located in

                         • Might also be relevant where
                           assets in Australia are about to
                           become the property of the
                           party against whom the award
                           was made

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To note
• The Court may make a freezing order:
   – before a cause of action has accrued (a prospective
     cause of action);
   – against a respondent whether or not the respondent is
     a party to a proceeding in which substantive relief is
     sought against the respondent;
   – in aid of foreign proceedings in prescribed
• Where there are assets in Australia, service out of
  Australia is permitted provided assets to which the Court
  order relates are within the Court’s jurisdiction.
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Some relevant authorities
• Davis v Turning Properties Pty Ltd [2005] NSWSC 742
• Dadourian Group International Inc v Simms [2006] 3 All
  ER 651
           (both concerning world wide Mareva orders)

• Celtic Resources Holdings Plc v Arduina Holding BV
  (2006) 32 WAR 276
           (freezing order in conjunction with application to
           enforce foreign judgment)

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Davis v Turning Properties Pty Ltd
• Involved an application for Mareva orders in NSW in
  support of worldwide Mareva order
• Sought specifically an order that:
     The Order of the Supreme Court of the
     Commonwealth of the Bahamas made on 22 June
     2005 is given full force and effect in the State of New
     South Wales to enable its enforcement,
                         and a Mareva to restrain
                         defendants in NSW from
                         proceeding with dealing with assets
                         within NSW
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The Court’s reasoning
• The Court noted that it was common ground that the
  legislation relating to the registration and enforcement of
  foreign judgments does not enable the Bahamas Mareva
  order to be enforced in New South Wales
• With respect to the Mareva, the Court quoted extensively
  from the High Court in Cardile v LED Builders Pty Ltd
  (1999) 198 CLR 380, noting that a Mareva order should
  be seen as a remedy to protect the integrity of the
  processes of the Court, and not as a species of injunction.
• The Court then examined the facts of the case, including
  the risk of dissipation of assets the subject of the
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Recognition of the global economy …

• The administration of justice in New South Wales is not confined to
  the orderly disposition of litigation which is begun here, tried here and
  ends here. In circumstances where international commerce and
  international monetary transactions are a daily reality, and where
  money can be transferred overseas with sometimes as little as a click
  on a computer mouse, the administration of justice in this State
  includes the enforcement in this State of rights established elsewhere.
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Court’s decision in Davis

• Having considered the submissions and the factual matrix
  in which the application were made, the Court stated that
  it was satisfied that there was sufficient evidence of a
  threat to assets to justify the making, today, of a Mareva
  order of the freezing type.

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Celtic Resources Holdings v Arduina Holding
• Case concerned application for recognition and
  enforcement of an award made in the United Kingdom
  against Arduina and Mareva injunction in support thereof.
• Section 66 of Arbitration Act 1996 in the UK provided that
  the award may be enforced as a judgment with leave of
  the Court.
• Celtic obtained judgment in the UK courts requiring
  Aduina, inter alia, to pay to Celtic the sum of £916,338.28.
• However, under the relevant court rules, Celtic was not in
  a position to enforce the award in the UK at the time of its
  application in Australia.

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The Court’s findings regarding enforcement
• The judgment could not be
  registered in the Supreme
  Court of Western Australia
  because it was a judgment
  which could not at the date
  of the application be
  enforced in the country of
  the original Court.
• The judgment had the
  potential to be recognised
  and enforced in Australia.

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The Mareva order
• The Court observed that:
   – the purpose of the order sought was to ensure so far
     as possible, that the pool of assets against which a
     court order might be enforced in due course is not
     diminished in a manner which would be an abuse of its
     process; and
   – Recent authority suggested strongly that the order
     could be made against a person who is not
     necessarily a party to the proceedings presently
     before the Court and in circs where a claim for a
     nominated amount has not yet been commenced

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Findings on application for Mareva
• Court distinguished Davis.

     In my view it would circumvent and be inconsistent
     with the prescribed procedure in the country of origin if
     a Mareva order was made of the kind proposed which
     indirectly had the effect of enforcing the judgment in
     question or, putting it another way, made provision for
     the judgment to be enforced in due course by ensuring
     that the assets of the judgment debtor are not
     dissipated …

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• The Courts in Australia have for some time recognised
  the need for support in aid of foreign proceedings,
  including foreign arbitral proceedings
• The harmonised civil rules suggest that relief in the form
  of freezing orders in aid of a foreign arbitral award is
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