AED Oil Ltd v Puffin FPSO Ltd (No 2) - [2009] VSC 534

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

COMMERCIAL AND EQUITY DIVISION LIST B

No. 8380 of 2009

AED OIL LIMITED (ACN 110 393 292)	Plaintiff
v
PUFFIN FPSO LIMITED (COMPANY REGISTRATION NO.C37772) (INCORPORATED IN MALTA)	Defendant
PUFFIN FPSO LIMITED (COMPANY REGISTRATION NO.C37772) (INCORPORATED IN MALTA)	Plaintiff by Counterclaim
and
AED OIL LIMITED (ACN 110 393 292) AED SERVICES PTE LTD (INCORPORATED IN SINGAPORE)	Defendants by Counterclaim

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JUDGE:	JUDD J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	16 & 17 NOVEMBER 2009
DATE OF JUDGMENT:	1 DECEMBER 2009
CASE MAY BE CITED AS:	AED OIL LTD v PUFFIN FPSO LTD (NO. 2)
MEDIUM NEUTRAL CITATION:	[2009] VSC 534	FIRST REVISION 4 DECEMBER 2009

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Arbitration – Application for stay – International Arbitration Act 1974 (Cth) – Construction of arbitration agreement – Whether arbitration agreement “inoperative” - whether an applicant for stay waived its rights – Whether the dispute was “not capable of settlement by arbitration” – person claiming “through or under” a party – Urgent declaratory relief.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff and First Defendant by Counterclaim	Mr. J. Gleeson SC Mr. N. Pane	Corrs Chambers Westgarth
For the Defendant and Plaintiff by Counterclaim	Mr. P. Jopling QC Dr. J. Moore Mr. R. Garnett	Freehills
For the Second Defendant by Counterclaim	Mr. J. Digby QC Dr. M. Collins	Mallesons

HIS HONOUR:

On 17 August 2009 the plaintiff, AED Oil Limited, commenced a proceeding in this court against Puffin FPSO Limited, the defendant and plaintiff by counterclaim. Puffin is a company registered in Malta. AED Oil sought injunctions to restrain Puffin from taking any steps to enforce a registered Fixed Charge dated 20 May 2006 in favour of Puffin.

The charge secured the obligations of AED Oil as guarantor of performance by AED Services Pte Ltd, the second defendant to counterclaim, under a FPSO Charter Contract.[1] The parties to the charter contract were AED Services, a company incorporated in Singapore, and Puffin. AED Oil is the ultimate holding company of AED Services. Under the charter contract AED Services was, in defined circumstances, required to indemnify Puffin in respect of tax liabilities.
[1]The original FPSO charter contract, made between AED Oil Ltd and Puffin FPSO Ltd is dated 3 March 2006. It was amended on 25 January 2007 and on 17 May 2007 novated to a subsidiary of AED Oil, AED Services Pte Ltd.

The commencement of the proceeding followed demands made by Puffin, in notices sent to AED Services and AED Oil, for amounts referable to alleged income tax and goods and services tax liabilities of Puffin. There were also claims for unpaid invoices.

On 20 August 2009 an injunction was granted restraining Puffin from relying upon the events of default stipulated in the demands as the basis for exercising its powers under the charge. It was a condition of the injunction that AED Oil provide security for an amount estimated to be Puffin’s GST liability. Directions were made to facilitate an amended statement of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] VSC 534
Decision Date: 1 DECEMBER 2009

CaseChat Overview and Summary

The case of AED Oil Ltd v Puffin FPSO Ltd (No 2) involved a dispute between AED Oil and Puffin FPSO Ltd, centering on an arbitration agreement and the application for a stay of proceedings. The matter was heard in the Federal Court of Australia. The primary issue before the court was whether AED Oil had waived its rights to seek a stay of proceedings in the Australian courts, and if the dispute was "not capable of settlement by arbitration." The court was also required to determine whether AED Oil's claim was brought "through or under" a party to the arbitration agreement, as per the International Arbitration Act 1974 (Cth).

The court's analysis focused on the construction of the arbitration agreement and whether it was inoperative. It examined the concept of waiver in the context of arbitration proceedings and the circumstances under which a party might be considered to have waived its rights. The court considered whether AED Oil's actions in pursuing other legal remedies could be seen as a waiver of its right to seek a stay of proceedings in the Australian courts. Furthermore, the court deliberated on the scope of the term "not capable of settlement by arbitration" and whether AED Oil's claim could be considered as being brought "through or under" a party to the arbitration agreement.

The Federal Court held that AED Oil had not waived its rights to seek a stay of proceedings in the Australian courts. The court found that AED Oil's pursuit of other legal remedies did not constitute a waiver of its right to seek a stay. Additionally, the court determined that the dispute was not "not capable of settlement by arbitration" and that AED Oil's claim could be considered as being brought "through or under" a party to the arbitration agreement. The court ultimately granted the application for a stay of proceedings, pending the outcome of the arbitration.

Orders