Altain Khuder LLC v IMC Mining Inc
[2011] VSC 1
•28 January 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
LIST G
No. 3827 of 2010
| ALTAIN KHUDER LLC | Plaintiff |
| v | |
| IMC MINING INC and IMC MINING SOLUTIONS PTY LTD | Firstnamed Defendant Secondnamed Defendant |
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JUDGE: | CROFT J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 August, 30 September and 4, 5 and 12 November 2010 | |
DATE OF JUDGMENT: | 28 January 2011 | |
CASE MAY BE CITED AS: | Altain Khuder LLC v IMC Mining Inc & Anor | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 1 | 1st Revision: 10 February 2011 – [7], [12], [105] and [108] |
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ARBITRATION – Recognition and enforcement of foreign arbitral award – Extent to which applicant for recognition and enforcement must establish existence of an arbitration agreement and a foreign arbitral award binding on the parties to the arbitration agreement in pursuance of which it was made – Extent of onus on a party resisting enforcement on the basis of the defences or grounds for resisting enforcement under the International Arbitration Act 1974 (Cth) and the Convention on the recognition and Enforcement of Foreign Arbitral awards, New York, 1958 (“New York Convention”) – Proper procedure, and appropriateness of ex parte application, applying for recognition and enforcement of foreign arbitral award under Supreme Court (Miscellaneous Civil Proceedings) Rules 2008, Order 9, and in accordance with Practice Note 2 of 2010 – Arbitration Business: International Arbitration Act 1974 (Cth), ss 2D, 3(1), 8, 9 and 39; New York Convention, Articles II, IV and V.
Dardana Ltd v Yukos Oil Co (also known as Petroalliance Services Co Ltd v Yukos Oil Co) [2002] EWCA Civ 543, [2002] 2 Lloyd’s Rep 326; Aloe Vera of America Inc v Asianic Food (S) Pte Ltd and Another [2006] 3 SLR(R) 174, [2006] SGHC 78; Dallah Real Estate and Tourism Holding Company v Ministry of Religious Affairs, Government of Pakistan [2010] 1 All ER 592 (Court of Appeal) and [2010] UKSC 46 (Supreme Court).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P. Megens, solicitor | Mallesons Stephen Jaques |
| For the Firstnamed Defendant | No appearance | |
| For the Secondnamed Defendant | Mr J. Digby QC with Mr N. McAteer | Allens Arthur Robinson |
HIS HONOUR:
Introduction and procedural matters
This is an application brought by originating motion dated 14 July 2010 for enforcement of a foreign arbitral award dated 15 September 2009 at Ulaanbaatar City, Mongolia, being Case # 12/09 of the Mongolian National Arbitration Centre at the Mongolian National Chamber of Commerce and Industry (“the Award”).
The Award named the parties and the Arbitral Tribunal as follows:
“Plaintiff
Altain Khuder LLC, Mongolia
Managing Director: Batdorj G.
Address: Tenggeriin tsag Center
Olympic Street 12,
Sub-district (Khoroo) 1, Sukhbaatar District
Ulaanbaatar, Mongolia
Tel: 11-324930, 11-327991, 99086630
Defendant
IMC Mining Inc., Australia
Director: Stewart Lewis
Tel: 0412 862018
Address: British Virgin Islands, of Level 40
Riverside Centre, 123 Eagle Street
Brisbane Qld, Australia
Fax: 0732269101
Tel: +61732269100, +6132269117
Email: [email protected]
Arbitral Tribunal
Arbitrator selected by the Plaintiff: Erdenechuluun D.,
Citizen of Mongolia, Lawyer
Arbitrator appointed by the Defendant: Altangerel T.,
Citizen of Mongolia, Lawyer
Presiding arbitrator: Idesh E,
Citizen of Mongolia, Lawyer”
It will be noted that only the first defendant in these proceedings is named as a defendant to the arbitration though, as discussed further below, IMC Mining Solutions Pty Ltd, the second defendant in these proceedings, is the subject of an award against it “on behalf of IMC Mining Inc. Company of Australia”.
This application was made by the plaintiff without notice to either of the defendants pursuant to Chapter II, Rule 9.04(1)(b) of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 (Vic) (“the Rules”). The Victorian Supreme Court’s Practice Note No 2 of 2010 (Arbitration Business) provides:
“10. An application to enforce a foreign award pursuant to the International Arbitration Act1974 (Section 8), should, as far as possible, comply with the requirements of Chapter II, Rules 9.04 and 9.05 [of the Rules]. …”.
Paragraph 13 of Practice Note No 2 provides for delivery of all affidavits, a copy of all exhibits, and a brief outline of argument in support of an application. These provisions were duly complied with in advance of the hearing of the plaintiff’s ex parte application on 20 August 2010. As I indicated in the course of the hearing on that date, I had read and considered the material provided by the plaintiff prior to that hearing and, consequently, then invited the plaintiff’s solicitor to take me through its submissions in support of the application, together with the supporting material as thought significant.
As a result of hearing the application on 20 August, I made orders for the enforcement of the Award, the subject of the application, and consequential orders in relation to interest and costs. I reserved to the defendants the right to apply to the court within 42 days after service of the order on them to set aside those orders. The effect of those orders was, consistently with the provisions of the International Arbitration Act 1974 (Cth) (“the IAA”), the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (“the New York Convention”) and the UNCITRAL Model Law on International Commercial Arbitration (1985, as amended in 2006) (“the Model Law”), to facilitate recognition and enforcement of the Award, but at the same time ensure that the defendants had a reasonable opportunity to be heard in opposition to the application.[1] Both the New York Convention and the Model Law are given effect to and applied in Australia, respectively, by, and subject to the provisions of, the IAA.
[1]Apart from being a procedure available under the Rules, and in accordance with the Practice Note, this procedure is similar to that adopted and applied under the provisions of the English Civil Procedure Rules (2E Arbitration Proceedings), Part 62 – Arbitration Claims, Rule 62.18; as to which, see Harris, Planterose and Tecks, The Arbitration Act 1996 (4th ed, Blackwell Publishing, London, 2007) 428 [101F] and 434 [103E], [103F]; and see Gater Assets Ltd v Nak Naftogaz Ukrainiy [2008] 1 All ER (Comm) (CA) 209, 228 at [74] (Rix LJ); and see Aloe Vera of America Inc v Asianinc Food (S) Pte Ltd and Another [2006] SGHC 78 (10 May 2006), [1] (High Court of Singapore, Prakash J).
The only response from the defendants was an application by the second defendant, IMC Mining Solutions Pty Ltd (“IMC Solutions”), an Australian registered company based in Brisbane. There was no response from the first defendant, IMC Mining Inc (“IMC Mining”), a company registered in the British Virgin Islands. The evidence indicated that IMC Mining also had premises in Australia, at the offices of IMC Solutions, in Brisbane. It also appears that at all relevant times Mr Stewart Lewis was the common director of IMC Mining and IMC Solutions.[2]
[2]See, transcript (30 September 2010), p 10; and see paragraph 85, below.
IMC Solutions applied by summons, dated 21 September 2010, to set aside the orders of 20 August 2010. This summons was heard, initially, on 30 September 2010. The grounds for the application by IMC Solutions were as follows:[3]
[3]Second Defendant’s Outline of Submissions (3 November 2010), paragraph 37.
“37. The grounds for IMC Solutions’ application are:
a. That the Award is not, vis-à-vis IMC Solutions, a foreign award binding on the parties to the arbitration agreement in pursuance of which it was made.
See sections 8(1) & (2) of the IAA and the definitions of ‘foreign award’ and “agreement in writing” in the IAA and the Convention.
b. That, in the alternative, the arbitration agreement is not, vis-à-vis IMC Solutions, valid under the law of Queensland.
See section 8(5)(b) of the IAA and clause 17.5 of the OMA.[4]
c. That, in the alternative, IMC Solutions was not given proper notice of the appointment of the arbitrators or of the arbitration proceedings and / or was unable to present its case in the arbitration proceedings.
See section 8(5)(c) of the IAA.
d. That, in the alternative, the Award deals with a difference not contemplated by, or falling within the terms of, the submission to arbitration and / or contains a decision on a matter beyond the scope of the submission to arbitration.
See section 8(5)(d) of the IAA.
e. That, in the alternative, the composition of the Arbitral Tribunal and / or the arbitral authority was not in accordance with the agreement of IMC Solutions and was not, vis-à-vis IMC Solutions, in accordance with the law of Mongolia.
See section 8(5)(e) of the IAA.
f. That, in the alternative, to enforce the Award would be contrary to public policy.
See section 8(7)(b) of the IAA.”
[4]A reference to the Operations Management Agreement: see below, paragraph 10.
IMC Solutions submitted that the plaintiff had, in making its ex parte application on 20 August 2010, failed in its duty of candour to the court that such an application required. Further, it submitted that in all the circumstances of the matter, the appropriate course for the plaintiff to have followed would have been to commence inter partes proceedings.
In relation to the duty of candour in these circumstances, IMC Solutions made reference to the following authorities:[5]
[5]Second Defendant’s Outline of Submissions (28 September 2010), paragraphs 21 and 22.
“21. The Plaintiff’s duty was to bring material matters ‘clearly’ to the Court’s attention. As noted in the Arab Business case [Arab Business Consortium International Finance & Investment Co v Banque Franco-Tunisienne [1996] 1 Lloyd’s Rep 485; see also Siporex Trade SA v Comdel Commodities Ltd [1986] 2 Lloyd’s Rep 428 at 437; Parola v Parola [2009] WASC 190] at 491, per Waller J:
The Judge who has to deal with an ex parte application is dependent on points which should be drawn to his attention being so drawn clearly. There should be no thought in the mind of those preparing affidavits that provided that somewhere in the exhibits or in the affidavit a point of materiality can de discerned, that is good enough.
22. As noted in Siporex at 437, the applicant must
summarise his case and the evidence in support of it … [h]e must identify the crucial points for and against the application and not rely on general statements and the mere exhibiting of numerous documents. He must investigate the nature of the cause of action asserted and the facts … which reasonably could or would be taken into account by the Judge in deciding … the application.”
It was submitted that the plaintiff had breached its duty of candour, in that it failed to clearly draw to the attention of the court “the threshold issue” raised by IMC Solutions in relation to the court’s jurisdiction under s 8 of the IAA; which, it was said, depended on the plaintiff affirmatively establishing, and discharging the burden of proving, the applicability of sub-s 8(1) of that Act. The central issue in this respect was said to be the fact that the relevant agreement to arbitrate did not name IMC Solutions as a party. The agreement to arbitrate is contained in a contract dated 13 February 2008 between the plaintiff and the first defendant, IMC Mining, styled the Operations Management Agreement (“the OMA”). The OMA includes terms whereby IMC Mining agreed to prepare mine plans, operations plans and budgets for a proposed iron ore mine at the Bulgan Altain Khuder Iron Project (also known as the Tayan Nuur Iron Ore Project), and to perform operational services in relation to that mine. Under the terms of the OMA, the plaintiff agreed to advance the sum of $US6.2 million to IMC Mining for the purpose of carrying out specified obligations under the OMA. The dispute the subject of the arbitration was, in broad terms, a claim by the plaintiff that these obligations had not been performed and that, consequently, the plaintiff was entitled to be repaid these moneys.
Other, more particular, issues were raised by IMC Solutions, going to both its substantive argument in these proceedings, that the Award should not be enforced as not having satisfied the threshold requirement for the court’s jurisdiction under sub-s 8(1) of the IAA, and also going to issues of candour in relation to the ex parte application made by the plaintiff on 20 August 2010. In this respect, IMC Solutions submitted that it was critical that the Award lists the parties to it as being only the plaintiff and IMC Mining. Further, it submitted that “on the face of the Award”:[6]
[6]Second Defendant’s Outline of Submissions (3 November 2010), paragraph 34.
“a. There is no indication that an application was made to add IMC Solutions as a party to the arbitration.
b. There is no indication that an application was made to treat IMC Solutions as the “alter ego” of IMC [Mining] or that the Arbitral Tribunal considered any material before it, or argument, relevant to such a potential finding.
c. There is no indication that an application was made to regard IMC [Mining] and IMC Solutions as conducting a common enterprise or that the Arbitral Tribunal considered any material before it, or argument, relevant to such a potential finding.
d. There is no indication that an application was made to treat IMC [Mining] as the agent or representative of IMC Solutions in respect of the obligations under the OMA or in respect of the arbitration, or that the Arbitral Tribunal considered any material before it, or argument, relevant to such potential findings.
e. There is no indication that an application was made to make an order against IMC Solutions in the arbitration or that the Arbitral Tribunal considered any material before it, or argument, relevant to such a finding.
f. There is no indication that any notice was given to IMC Solutions that any applications of the type noted in sub-paragraphs (a) – (e) had been made or were being considered or might be considered.
g. There are no findings of the type noted in sub-paragraphs (a) – (d).”
Notwithstanding the above, IMC Solutions noted that the Award contains an order that it pay to the plaintiff the sum charged against IMC Mining, in the amount of US$5,903,098.20, plus the arbitration fee of US$50,257.70.
These points were raised repeatedly by IMC Solutions at the hearings on 30 September 2010 and 4, 5 and 12 November 2010. As I indicated in response, a number of times, I was, and am, of the view that the plaintiff quite properly instituted the proceedings under the IAA in accordance with the Rules and Practice Note to which reference has been made. I also indicated, a number of times, that I was satisfied that the plaintiff had discharged its duty of candour in the course of making the application on 20 August 2010, and that I was aware of the central threshold issue, as described and raised by IMC Solutions in relation to the application.
Additionally, and as I also indicated a number of times at these hearings, IMC Solutions was not prejudiced by the procedure adopted and the manner in which the plaintiff’s application was pursued on 20 August 2010. For the reasons, developed further below, IMC Solutions was, as a result of the 20 August 2010 orders, merely placed in the position of needing to respond within the time limited or the orders would “self execute” to produce a judgment in favour of the plaintiff enforcing the Award. The procedure adopted did not have the effect of varying the operation and application of the IAA with respect to either of the defendants, IMC Mining or IMC Solutions.[7] Consequently, there was no prejudice to IMC Solutions; it, as did IMC Mining, had every opportunity to have its arguments with respect to the application and operation of the IAA heard and determined in the usual way provided an application was brought within the time limited by the orders of 20 August 2010. IMC Solutions availed itself of this opportunity by issuing and pursuing its summons dated 21 September 2010.
[7]As with the English procedure; see above, paragraph 5, particularly footnote 1.
More generally, IMC Solutions appears to have largely equated the procedure applied with something in the nature of an application for an interlocutory injunction;[8] or an application for the extension of something in the nature of a statutory injunction, such as a caveat affecting real property.[9] This appears clearly from the nature of the cases referred to in its submissions.[10]
[8]See the reference to Orpen v Tarentello [2009] VSC 143 and Siporex Trade SA v Comdel Commodities Ltd [1986] 2 Lloyd’s Rep 428 at 437, which were referred to in the Second Defendant’s Outline of Submissions (28 September 2010), paragraph 20.
[9]See the reference to Parola v Parola [2009] WASC 190 in the Second Defendant’s Outline of Submissions (28 September 2010), paragraph 20.
[10]See the Second Defendant’s Outline of Submissions (28 September 2010), paragraphs 20-24; and note, particularly, the cases noted as having been referred to in the two preceding footnotes.
However, in my view, it is not appropriate to equate the procedure applied in relation to this matter with something in the nature of an application for interlocutory injunctive relief. A more appropriate analogy with the procedure applied with respect to the present application, under Rule 9.04(1)(b) of the Rules, is with the long-accepted order nisi procedure whereby the order sought would become effective, absolutely, unless the party to whom the order was directed showed cause why the order should not be made absolute. This procedure is explained in Daniell’s Chancery Practice as follows:[11]
“Where an order is made by which a particular act is to be done unless the other party shall within a certain time show cause to the contrary (which order is generally termed an order nisi (c)), the party obtaining the order must, after the expiration of the time limited by the order nisi, if no cause is shown, apply for another order to make absolute the previous order nisi. The application in this case requires no notice, but must be supported by the Registrars’ certificate of no cause having been shown, and an affidavit proving the due service of the order nisi, either upon the party himself, when such service is required to be personal, or in the prescribed manner (d), where personal service is not required, or has been dispensed with (e). The application is by motion or in chambers.”
[11](8th ed, 1914), 1347; and see Hall v Nominal Defendant (1966) 117 CLR 423.
The analogy with the order nisi procedure, as outlined above, is, of course, imperfect. It does, however, emphasise the difference with respect to applications for interlocutory injunctions, and similar proceedings. In those proceedings, the interlocutory order has an immediate effect to the prejudice of the defendant; but here, that is not the case. The orders of 20 August 2010 were an “invitation” to the defendants to make its or their submissions in opposition to the orders sought by the plaintiff. They did not impose an obligation on or prejudice either of the defendants. They merely invited the defendants to appear before the court and argue their position in relation to the effect of the Award and its enforceability under the New York Convention, applying the provisions of the IAA. Clearly, the effect of the orders would be adverse to the interests of the defendants if they did nothing in response, as would be the position if the proceeding had been commenced by writ and statement of claim.
IMC Solutions did not accept this sort of analysis and said, rather, that there was a primary onus on the plaintiff in seeking enforcement of the Award to satisfy the following five requirements before the court should make an order under s 8 of the IAA. IMC Solutions submitted that it is only if:[12]
[12]Second Defendant’s Outline of Submissions (3 November 2010), paragraph 61.
“a. The applicant has placed admissible and probative relevant factual material before the Court upon which it could decide that there exists a foreign award binding on the parties to the arbitration agreement in pursuance of which it was made; and
b. In an ex parte application, the applicant has explained to the Court the basis upon which the orders are sought and also any crucial points which are arguable against the application; and
c. The applicant has highlighted to the Court any unclear and/or difficult point which arises for consideration or determination in relation to the application; and
d. The Court has considered that material and is satisfied that it is appropriate to determine the issues on an ex parte basis; and
e. The Court is satisfied that there exists a foreign award binding on the parties to the arbitration agreement in pursuance of which it was made,
that the Court should make an order under section 8 and, therefore, require the respondent to satisfy the Court why the award should not be enforced. The Second Defendant again refers to and relies upon its Submissions dated 28 September 2010 as to why the Orders made on 20 August 2010 are impugnable on the basis of how the Plaintiff’s ex parte application was presented to the Court and as establishing further or alternative bases for setting aside the said Orders dated 20 August 2010.”
In my view, this argument depends on the proper construction of the IAA, particularly sub-ss 8(1) and (5), and s 9 of that Act, and the corresponding provisions of the New York Convention – all of which are discussed in further detail below.
The plaintiff responded to these sort of arguments on the part of IMC solutions, in the following terms:[13]
“20. The Second Defendant overlooks the key point that the Arbitral Tribunal had already decided what the Second Defendant likes to call the ‘threshold issue’. There was no non-disclosure by the Plaintiff. Further, as the Court properly concluded, the process prescribed by Rule 9.04 of Chapter II mandates that an award creditor may bring an ex parte application as a matter of course and an aggrieved award debtor may seek to set aside any enforcement order within the time period prescribed. This process was described by Lord Justice Rix in Gater Assets Ltd v Nak Naftogaz Ukrainiy [2008] 1 All ER (Comm) 209 as ‘a highly summary and essentially quasi administrative proceeding’[14] and ‘it is plainly the intent of the New York Convention to make Awards to which they apply enforceable with ease and, subject to the narrowly confined exceptions, almost as a matter of administrative procedure’[15] and it is ‘intended to be mechanistic.’[16] See also Moses LJ at p 238, para 95. It should also be noted that in Gater Assets, as here, one of the defences raised by the defendant after being served with the ex parte order giving leave to enforce the award was that there was no arbitration agreement.”[17]
[13]Plaintiff’s Outline of Argument (30 September 2010), paragraph 20.
[14][2008] 1 All ER (Comm) (CA) 209 at 231, [72].
[15][2008] 1 All ER (Comm) (CA) 209 at 228, [59].
[16][2008] 1 All ER (Comm) (CA) 209 at 228, [74].
[17][2008] 1 All ER (Comm) (CA) 209 at 216, [21].
For the reasons advanced by the plaintiff with reference to the Gater Assets case, for the preceding reasons and for those which follow in relation to the onus with respect to a party resisting the recognition and enforcement of a foreign arbitral award, I am of the opinion that there is no substance in the issues raised by IMC Solutions with respect to the nature of the originating procedure adopted by the plaintiff and its conduct at the ex parte application on 20 August 2010. As indicated, the procedure was correctly adopted by the plaintiff and was, in any event, appropriate in the circumstances of this matter - and I have no criticism in this respect. It also follows that resolution of the substantive matter in dispute – the enforceability of the Award under the New York Convention, applying the provisions of the IAA - disposes of all other matters raised by IMC Solutions, as the second defendant, in relation to the 20 August 2010 orders.
Background
In May 2009, the plaintiff commenced arbitration proceedings against IMC Mining pursuant to clause 16 of the OMA. Arbitration proceedings were triggered under these provisions by the plaintiff in respect of disputes concerning compliance with the terms of the OMA in respect of the Tayan Nuur Iron Ore Project in Mongolia.
The arbitration proceedings were administered by the Mongolian National Arbitration Centre at the Mongolian National Chamber of Commerce and Industry. The arbitration involved something in the nature of a preliminary hearing on 24 July 2009. The extent of IMC Solution’s involvement in this preliminary hearing is disputed, and is discussed further below.[18] At this stage, it will suffice to note that at the least, as between IMC Mining and the plaintiff, it was, as I have found, agreed that the Arbitral Tribunal had jurisdiction, the dispute would be resolved according to Mongolian law, and the arbitration hearing would be conducted in Ulaanbaatar City in the Mongolian language.[19]
[18]See paragraph 84.
[19]See paragraph 85, below.
Following a hearing on 15 September 2009, the Arbitral Tribunal made orders, as set out in the Award, against both the first and second defendants, IMC Mining and IMC Solutions, that:
(a)the First Defendant pay the amount of US$5,903,098.20 plus the arbitration fee amount of US$50,257.70 to the Plaintiff; and
(b)the Second Defendant is liable to pay, for and on behalf of the First Defendant, the amount of US$5,903,098.20 plus the arbitration fee amount of US$50,257.70 to the Plaintiff.
The Award has not been complied with to any extent by either of the defendants, IMC Mining or IMC Solutions. As these proceedings indicate, IMC Solutions, at least, does not intend to do so. The evidence indicates that the first defendant, IMC Mining, has not responded to correspondence addressed to its offices in the British Virgin Islands or, it seems, correspondence addressed to the offices of IMC Solutions which it occupied or occupies on some basis which is not entirely clear, in Brisbane (IMC Mining’s address, as expressed in the Award, is said to be “British Virgin Islands”, which is seemingly inconsistent with what follows: “of Level 40 Riverside Centre, 123 Eagle Street, Brisbane QLD Australia”). As indicated, the second defendant, IMC Solutions, has refused to comply with the Award for the reasons canvassed in this proceeding.
Both Mongolia and Australia have acceded to the New York Convention. Mongolia acceded to the Convention on 24 October 1994 and its provisions came into force in that country on 22 January 1995. Australia acceded to the Convention on 26 March 1975 and the Convention came into force in Australia on 24 June 1975.
Each contracting State is required by Article III of the New York Convention to recognise arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the articles that follow in the Convention. The conditions for enforcement contained in the New York Convention are reflected in substantially similar terms in ss 8 and 9 of the IAA.
In compliance with Article IV of the New York Convention and s 9 of the IAA, the first affidavit of Mr Batdorj, sworn 29 June 2010, exhibited:
(a)a certified copy of the original award which has been translated into English and certified as a correct translation by Mr Enkhtuvshin Bulgan, Second Secretary, a Consular Official from the Mongolian Embassy in Australia;[20] and
(b)a copy of the original arbitration agreement which has been certified by an officer of the Consular Department – Ministry of Foreign Affairs and Trade, Mongolia.[21]
[20]Affidavit of Mr Gendenpil Batdorj (29 June 2010) Exhibit GB-46.
[21]Affidavit of Mr Gendenpil Batdorj (29 June 2010) Exhibit GB-8.
Under sub-ss 8(2) and 8(3) of the IAA, a foreign arbitral award may, if it complies with the requirements of the New York Convention and the corresponding provisions of the IAA, be enforced in a court of a State or Territory, or the Federal Court, respectively, as if the foreign arbitral award were a judgment or order of the relevant court. Following amendments made to the IAA by the International Arbitration Amendment Act 2010 (Cth), sub-s 8(3A) of the IAA now provides that:
“The Court may only refuse to enforce the Final Award in circumstances mentioned in sub-ss (5) and (7)”.
Section 8 of the IAA makes provision for the recognition, and also enforcement, of a foreign arbitral award. The expression “foreign award” is defined in sub-s 3(1) as:
“Foreign award means an arbitral award made, in pursuance of an arbitration agreement, in a country other than Australia, being an arbitral award in relation to which the Convention applies.”
The reference to the “Convention” is a reference to the New York Convention.[22] The opening provision of s 8, which is headed “Recognition of foreign awards”, provides as follows:
“(1) Subject to this Part, a foreign award is binding by virtue of this Act for all purposes on the parties to the arbitration agreement in pursuance of which it was made.”
[22]See IAA sub-s 3(1).
The grounds for refusing enforcement of a foreign arbitral award are quite limited. Sub-section 8(5) of the IAA sets out the more general grounds upon which enforcement may be refused, and sub-ss 8(7) and (7A) make provision with respect to refusal of enforcement on the ground that the subject matter of the difference between the parties is not arbitrable according to the laws in force in the State or Territory in which the court is sitting or that enforcement would be contrary to public policy. The latter includes circumstances where there is found to be a breach of the rules of natural justice in connection with the making of the award.
Section 9 of the IAA is a procedural provision in many respects, though it is, nevertheless, the critical procedural step which puts in train the enforcement provisions of the IAA. The principal provision is sub-s 9(1) which provides:
“(1) In any proceedings in which a person seeks the enforcement of a foreign award by virtue of this Part, he or she shall produce to the court:
(a) the duly authenticated original award or a duly certified copy; and
(b) the original arbitration agreement under which the award purports to have been made or a duly certified copy.”
Sub-section 9(2) provides a deeming provision with respect to authentication or certification of an award or copies of the award, respectively. Sub-sections 9(3) and (4) provide for certification of any translation of the award.
The arbitration agreement relied upon by the plaintiff is that contained in clause 16 of the OMA. The plaintiff provided a duly authenticated copy of the OMA and a duly certified copy of the Award. There is no doubt that the Award was purportedly made under the arbitration agreement contained in clause 16 of the OMA, so that the provisions of sub-s 9(1) of the IAA were complied with, at least formally. That is not, however, the end of the matter because IMC Solutions submitted that these provisions must be read with the more substantive provisions of sub-s 8(1) of the IAA. IMC Solutions submitted that the result of so doing was, in effect, to read into sub-s 9(1) the requirement that the relevant award be made against, and only made against, persons who are “… parties to the arbitration agreement in pursuance of which it was made”. Having regard to this position, I turn now to consider whether there is an arbitration agreement in the relevant sense affecting the second defendant, IMC Solutions, for the purpose of s 8 and the related provisions of the IAA and whether this is a matter which is to be determined by the enforcing court, this court in these proceedings, or the Arbitral Tribunal. I then consider onus of proof issues, estoppel and, finally, whether any defences or grounds for resisting enforcement are made out by the second defendant, IMC Solutions.
Is there an arbitration agreement?
The arbitration agreement relied upon by the Arbitral Tribunal is contained in clause 16 of the OMA and is in the following terms:
“16. DISPUTE RESOLUTION
16.1 The resolution of any and all disputes under this Agreement shall first be addressed through good faith negotiations between Altain Khuder LLC and IMC Mining Inc. All disputes between Altain Khuder LLC and IMC Mining Inc arising under this Agreement shall be referred to and considered by arbitration in Mongolia according to Mongolian or Hong Kong law”
As noted previously, the OMA is expressed to be an agreement between the plaintiff and IMC Mining, which does not name IMC Solutions as a party.
In light of the above, the second defendant, IMC Solutions, contended that there is a “threshold issue” under sub-s 8(1) of the IAA in that these provisions require the plaintiff to satisfy the court that its requirements are satisfied before the plaintiff is entitled to seek to enforce the Award, as a “foreign award”. It follows, the second defendant contended, that the plaintiff must bear the burden of proof in this respect. In relation to this “threshold issue”, IMC Solutions asserted that the issue is whether there is a “foreign award” which is binding on IMC Solutions which has been made pursuant to an arbitration agreement in respect of which IMC Solutions is a party. The second defendant, IMC Solutions, maintained that it was never a party to the OMA and therefore there is no arbitration agreement in respect of which an arbitral award could be made against it. For the sake of clarity, I note that as I understand the position of the second defendant, IMC Solutions, its primary contention is that there is no “arbitration agreement” which affects it, rather than a contention that there is no “arbitration agreement” at all.
The plaintiff contended that the authorities in relation to similar or analogous provisions to sub-s 8(1) of the IAA, and more generally, indicate that the proper approach of an enforcing court is not to treat provisions of this nature as a threshold issue of the type argued for by IMC Solutions; and certainly not an issue casting any burden of proof on a party seeking enforcement, such as the plaintiff. In support of these submissions, the plaintiff made reference to a variety of decisions of courts in other jurisdictions in the context of legislation which reflects the language of provisions such as sub-s 8(1). Focusing on the distinction drawn in the authorities between the operation of provisions which reflect sub-ss 8(1) and (5) of the IAA, the plaintiff submitted that these authorities clearly demonstrate that all that is required on the part of the plaintiff in order to effect enforcement of the Award is, in the present circumstances, to comply with the requirements of sub-ss 8(1) and 9(1) of the IAA by providing duly certified copies of the Award and the arbitration agreement, being the OMA containing the agreement to arbitrate contained in clause 16 of that agreement. It was submitted that nothing else is required and there was no obligation or onus on the plaintiff to prove the validity of the arbitration agreement for the purpose of obtaining orders from the court granting leave to enforce the award on the basis provided for in the orders of 20 August 2010.
Further, the plaintiff submitted that the authorities demonstrate that the burden is clearly on the second defendant, IMC Solutions, to prove to the satisfaction of the court any allegation made by it that the arbitration agreement does not bind IMC Solutions on the basis of one of the allowable defences or grounds for resisting enforcement under sub-ss 8(5) and 8(7) of the IAA. It was said that the submission by the second defendant, IMC Solutions, that there is an initial onus on the plaintiff under sub-s 8(1) of the IAA to prove the validity of the arbitration agreement has been consistently rejected by courts in various jurisdictions. Further, it was submitted that there is abundance of authority which confirms that the onus is on the award debtor to make out or prove any of the limited defences or grounds available to it under the New York Convention for resisting enforcement. It would follow that this applies to the provisions of sub-ss (5) and (7) of the IAA insofar as those provisions reflect the defences or grounds provided for under Article V of the New York Convention for resisting enforcement.
These submissions require reference to the legislative context of sub-s 8(1) of the IAA, which is provided by ss 2D, 8, 9 and 39 of that Act.
The objects of the IAA are set out in s 2D, as follows:[23]
[23]Objects which are reflected in the Explanatory Memorandum for the International Arbitration Amendment Bill 2009 (House of Representatives), by which these provisions were added to the International Arbitration Act 1974 (Cth); and the Second Reading Speech on this Bill by the Hon Robert McClelland MP, Attorney-General of the Commonwealth of Australia (House of Representatives, 25 November 2009)
“Objects of this Act
The objects of this Act are:
(a) to facilitate international trade and commerce by encouraging the use of arbitration as a method of resolving disputes; and
(b) to facilitate the use of arbitration agreements made in relation to international trade and commerce; and
(c) to facilitate the recognition and enforcement of arbitral awards made in relation to international trade and commerce; and
(d) to give effect to Australia's obligations under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted in 1958 by the United Nations Conference on International Commercial Arbitration at its twenty‑fourth meeting; and
(e) to give effect to the UNCITRAL Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law on 21 June 1985 and amended by the United Nations Commission on International Trade Law on 7 July 2006; and
(f) to give effect to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States signed by Australia on 24 March 1975.”
The objects set out in paragraphs (a) to (e) are relevant in the present circumstances. The reference to the Convention in (f), however, is to disputes of a different nature.
The objects of the IAA are to be given effect to by a court in accordance with the requirements of the provisions of s 39 of that Act. The relevant provisions of s 39 are as follows:
“Matters to which court must have regard
(1) This section applies where:
(a) a court is considering:
(i) exercising a power under section 8 to enforce a foreign award; or
(ii) exercising the power under section 8 to refuse to enforce a foreign award, including a refusal because the enforcement of the award would be contrary to public policy; or
(iii) exercising a power under Article 35 of the Model Law, as in force under subsection 16(1) of this Act, to recognise or enforce an arbitral award; or
(iv) exercising a power under Article 36 of the Model Law, as in force under subsection 16(1) of this Act, to refuse to recognise or enforce an arbitral award, including a refusal under Article 36(1)(b)(ii) because the recognition or enforcement of the arbitral award would be contrary to the public policy of Australia; or
…
…
…
(b) a court is interpreting this Act, or the Model Law as in force under subsection 16(1) of this Act; or
(c) a court is interpreting an agreement or award to which this Act applies; or
…
(2) The court or authority must, in doing so, have regard to:
(a) the objects of the Act; and
(b) the fact that:
(i) arbitration is an efficient, impartial, enforceable and timely method by which to resolve commercial disputes; and
(ii) awards are intended to provide certainty and finality.
…”
As ss 2D and 39 of the IAA indicate, the provisions of ss 8 and 9 of that Act must be interpreted and applied on the basis of the objects of the IAA, and having regard to the matters specified in s 39. Against this background, the relevant provisions of ss 8 and 9 are as follows:
“8 Recognition of foreign awards
(1) Subject to this Part, a foreign award is binding by virtue of this Act for all purposes on the parties to the arbitration agreement in pursuance of which it was made.
(2) Subject to this Part, a foreign award may be enforced in a court of a State or Territory as if the award were a judgment or order of that court.
…
(3A) The court may only refuse to enforce the foreign award in the circumstances mentioned in subsections (5) and (7).
(4) Where:
(a) at any time, a person seeks the enforcement of a foreign award by virtue of this Part; and
(b) the country in which the award was made is not, at that time, a Convention country;
this section does not have effect in relation to the award unless that person is, at that time, domiciled or ordinarily resident in Australia or in a Convention country.
(5) Subject to subsection (6), in any proceedings in which the enforcement of a foreign award by virtue of this Part is sought, the court may, at the request of the party against whom it is invoked, refuse to enforce the award if that party proves to the satisfaction of the court that:
(a) that party, being a party to the arbitration agreement in pursuance of which the award was made, was, under the law applicable to him or her, under some incapacity at the time when the agreement was made;
(b) the arbitration agreement is not valid under the law expressed in the agreement to be applicable to it or, where no law is so expressed to be applicable, under the law of the country where the award was made;
(c) that party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his or her case in the arbitration proceedings;
(d) the award deals with a difference not contemplated by, or not falling within the terms of, the submission to arbitration, or contains a decision on a matter beyond the scope of the submission to arbitration;
(e) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
(f) the award has not yet become binding on the parties to the arbitration agreement or has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made.
(6) Where an award to which paragraph (5)(d) applies contains decisions on matters submitted to arbitration and those decisions can be separated from decisions on matters not so submitted, that part of the award which contains decisions on matters so submitted may be enforced.
(7) In any proceedings in which the enforcement of a foreign award by virtue of this Part is sought, the court may refuse to enforce the award if it finds that:
(a) the subject matter of the difference between the parties to the award is not capable of settlement by arbitration under the laws in force in the State or Territory in which the court is sitting; or
(b) to enforce the award would be contrary to public policy.
(7A) To avoid doubt and without limiting paragraph (7)(b), the enforcement of a foreign award would be contrary to public policy if:
(a) the making of the award was induced or affected by fraud or corruption; or
(b) a breach of the rules of natural justice occurred in connection with the making of the award.
(8) Where, in any proceedings in which the enforcement of a foreign award by virtue of this Part is sought, the court is satisfied that an application for the setting aside or suspension of the award has been made to a competent authority of the country in which, or under the law of which, the award was made, the court may, if it considers it proper to do so, adjourn the proceedings, or so much of the proceedings as relates to the award, as the case may be, and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.
…
9 Evidence of awards and arbitration agreements
(1) In any proceedings in which a person seeks the enforcement of a foreign award by virtue of this Part, he or she shall produce to the court:
(a) the duly authenticated original award or a duly certified copy; and
(b) the original arbitration agreement under which the award purports to have been made or a duly certified copy.
(2) For the purposes of subsection (1), an award shall be deemed to have been duly authenticated, and a copy of an award or agreement shall be deemed to have been duly certified, if:
(a) it purports to have been authenticated or certified, as the case may be, by the arbitrator or, where the arbitrator is a tribunal, by an officer of that tribunal, and it has not been shown to the court that it was not in fact so authenticated or certified; or
(b) it has been otherwise authenticated or certified to the satisfaction of the court.
…”
As indicated previously, Article IV of the New York Convention reflects the provisions of sub-s 9(1) of the IAA. Article V of the New York Convention contains provisions in relation to enforcement of foreign arbitral awards, provisions which are reflected in substantially the same terms in sub-ss 8(5) and (7) of the IAA.
Reference was made by the plaintiff to the following statement by Gary B. Born in International Commercial Arbitration:[24]
“Article IV should not be interpreted as requiring the award-creditor to demonstrate the existence of a valid arbitration agreement, applicable to the parties’ claims. Rather, Article IV is concerned merely with the presentation by the award creditor of the instrument purporting to be the agreement to arbitrate, with issues of validity and scope of the arbitration agreement being subject to the exceptions permitting non-recognition under Article V. That is made clear by the language of Article IV, which refers only to the award-creditor’s obligation to ‘supply’ specified documents ‘at the time of the application’ (i.e., the arbitral award and the arbitration agreement), without suggesting that any affirmative showing must be made by the award-creditor as to the underlying legal validity of either; on the contrary, Article V(I)(a) makes it clear that questions as to the validity of the arbitration agreement are for the award-debtor to raise and prove.”
The plaintiff submitted that Born’s statement represents a summary of the position as supported by extensive authority and, further, that this is also an accurate statement of how ss 8 and 9 of the IAA are to be interpreted.
[24]Gary B. Born, International Commercial Arbitration (2009), 2705.
The plaintiff relied upon a number of authorities interpreting similar legislation in other jurisdictions, which was enacted to facilitate the recognition and enforcement of foreign arbitral awards for the purposes of the New York Convention. The first case relied upon was Dardana Ltd v Yukos Oil Co (also known as Petroalliance Services Co Ltd v Yukos Oil Co)[25] where Mance LJ said:
“10. I consider that the scheme of the Act is reasonably clear. A successful party to a New York Convention award, as defined in s 100(I) has a prima facie right to recognition and enforcement. At the first stage, a party seeking recognition or enforcement must, under s 102(1), produce the duly authenticated award or a duly certified copy and the original arbitration agreement or a duly certified copy. The arbitration agreement means an arbitration agreement in writing, as defined in s 5. Once such documents have been produced, recognition or enforcement may be refused at the second stage only if the other party proves that the situation falls within one of the heads set out in s 103(2). The issue before us concerns the content of and relationship between the first and second stages. The first stage must involve the production of an award which has actually been made by arbitrators. Mr de Garr Robinson accepted that it would not, for example, be sufficient to produce an award which had been forged. However, it must be irrelevant at that stage that the award is as a matter of law invalid, on any of the grounds set out in s 103(2), since otherwise there would have been no point in including s 103(2). The award so produced must also have been made by arbitrators purporting to act under whatever is the document which is at the same time produced as the arbitration agreement in writing. That, it seems to me, is probably sufficient to satisfy the requirement deriving from the combination of s 100(l) and s 102(l) to produce ‘an award made, in pursuance of an arbitration agreement‘. The words ‘in pursuance of an arbitration agreement’ could in other contexts require the actual existence of an arbitration agreement. But they can also mean ‘purporting to be made under’. Construed in the latter sense the overlap and inconsistency to which I have referred are avoided. Any challenge to the existence or validity of any arbitration agreement on the terms of the document on which the arbitrators have acted fails to be pursued simply and solely under s 103(2)(b).
11. Sections 100-104 of the 1996 Act give effect to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958. Articles I-V of that convention are not perhaps as clearly in favour of the conclusion that I have indicated as Mr de Garr Robinson would suggest. Articles I and I1 refer to two separate documents, namely an award and an agreement, and art. I11 requires the production of each as necessary to obtain recognition or enforcement. Once again, however, Art. V(l)(a) makes clear that, at all events where an agreement apparently complies with the requirements of Art. II, any challenge to its validity is a matter for the party resisting recognition and enforcement to raise and prove. Distinguished commentators on the Convention also take this view: see in particular van den Berg, The New York Convention of 1958 (Kluwer), pp 250, 284 and 312 and ‘The New York Convention of 1958, A Collection of Reports and Materials delivered at the ASA Conference held in Zurich on Feb. 2, 1996’, para 106.
12. … One cannot produce an agreement made otherwise than in writing. However, one can produce terms in writing, containing an arbitration clause, by reference to which agreement was (allegedly) reached, and one can produce a record of an arbitration agreement made in writing with (allegedly) the authority of the parties to it. That, it seems to me, is all that is probably therefore required at the first stage. That conclusion supports, rather than undermines, the further conclusion that, at the first stage, all that is required by way of an arbitration agreement is apparently valid documentation, containing an arbitration clause, by reference to which the arbitrators have accepted that the parties had agreed on arbitration or in which the arbitrators have accepted that an agreement to arbitrate was recorded with the parties’ authority. On that basis, it is at the second stage, under s 103(2), that the other party has to prove that no such agreement was ever made or validly made.
…
15. … Now, however, the standard procedure under Practice Direction - Arbitrations (Civil Procedure 2001, Vol. 2, Section 2B) is different. Unless the Court directs service on other parties under para 31.3, any application and order for recognition or enforcement is made without notice, with a proviso reflecting the respondent's right under para 31.9 to apply to set the order aside. By the time a respondent learns of the matter, therefore, it is too late for him simply to seek an adjournment of the actual application for recognition or enforcement. His only options are (a) to apply to set aside in England under s 103(2) and/or (b) to apply for a stay of the order for recognition or enforcement in England under s 103(5), pending determination of any application to set aside before the competent authority of the country (here Sweden) in which, or under the law of which, the award was made. A respondent may adopt the latter course alone and is under no duty to make any application to set aside in England. If a stay is granted and the foreign competent authority sets aside the award, the basis for the order recognizing or enforcing the award will have fallen away, and it can then be set aside on an application under s 103(2)(f).”
[25][2002] EWCA Civ 543, [2002] 2 Lloyd’s Rep 326. All references are to paragraph numbers in the medium-neutral citation.
Having regard to the references by Mance LJ to the English legislation, the Arbitration Act 1996, it is helpful now to say something about these provisions. Section 100 of the English Act deals with New York Convention awards. Sub-section 100(1) is a provision which, in the context of s 100 to s 104 of the English Act fulfils the same function and is, in substance, in the same terms as sub-s 8(1) of the IAA. Sub-section 100(1) provides:
“In this Part a ‘New York Convention award’ means an award made, in pursuance of an arbitration agreement, in the territory or state (other than the United Kingdom) which is a party to the New York Convention.”
It is true that sub-s 100(1) of the English Act does not use words which expressly stipulate that a foreign award is binding “on the parties to the arbitration agreement in pursuance of which it was made”. Nevertheless, in the context of the English provisions, I am of the view that this is implicit to the extent that it is not provided for, and that the authorities which deal with the provisions of the English Act approach those provisions as though they bear substantially the same meaning as sub-s 8(1) of the IAA. The provisions of sub-sections 103(1) and (2) of the English Act are reflected in sub-ss 8(3A) and (5) of the IAA, respectively.
Mance LJ in DardanaLtd v Yukos Oil Co[26] also said that if a contrary approach was adopted and the enforcing court was required to examine the validity of the award at the first stage of enforcement proceedings (under sub-s 8(l) and s 9 of the IAA as contended by the second defendant, IMC Solutions), this would lead to duplication and inconsistency with respect to the onus applicable in enforcement proceedings. In this respect, Mance LJ said:
“9. Mr Malek’s submission that ss 100 and 102 can assist in the present situation would lead to a curious duplication and, moreover, an inconsistency in onus. On the one hand, the respondents [in this case, the award creditor] would have to prove the actual existence of a valid arbitration agreement in writing, before the award could be recognised or enforced. On the other hand, under s 103(2), recognition or enforcement ‘may be refused’ if the appellants [being the award debtor] could prove one of the matters there listed, which include the absence of any valid arbitration agreement.”
In relation to s 102, to which Mance LJ referred, it should be noted that these provisions are in substance the same as the provisions contained in sub-ss 9(1) and (3). The provisions of sub-s 9(1) are set out above and in relation to sub-s 9(3) it need only be noted that this is a provision which requires a certified translation if the document produced pursuant to sub-s (1) is not in English. Sub-section 102(2) is in substantially the same terms as sub-s 9(3) of the IAA. Consequently, the same issues with respect to duplication and inconsistency would arise under the IAA provisions.
[26][2002] EWCA Civ 543, [9].
The question of what to do if the appellant in the Dardana case had not been able to show that one of the grounds for opposing enforcement of an award was made out was also addressed by Mance LJ. His Lordship indicated that the proper course was that the judgment debtor was to be considered to have failed to meet the burden of proof and that, as a consequence, the judgment debtor’s “application to resist enforcement in this country would have been determined against them, for good and all”.[27]
[27][2002] EWCA Civ 543, [18].
This question was also dealt with by his Honour Judge Chambers at first instance in Dardana Ltd v Yukos Oil Co (No 1).[28] In this respect, his Honour said:[29]
“31. The reason why I have been into all of this in some detail is because I think that the conclusion is fatal to Mr Malek’s submission, including the proposition that I should allow the reasoning in Cremer.
32. Once it is apparent that the submission involves an acceptance that precisely the same challenge to jurisdiction may be mounted both before and after one comes to s 103(2) (Art V of the Convention), but that in the former case the burden of proof is on the claimant and in the latter upon the respondent, the situation becomes a nonsense. It means that despite it being universally recognised that the purpose of the Convention is to assist with the enforcement of awards and that, in most instances where objection can be raised, the onus of proof is placed firmly upon the party making the challenge, all that such a respondent would have to do would be to assert that there was no arbitration agreement binding upon the parties, for the burden then to be upon the holder of the award to show that there was. I decline to follow that course. Article V makes it clear that only the challenge at the behest of the party against whom the award is invoked can only be made as provided in Art V(1). In all essentials, s 103 of the 1996 Act reflects that requirement.”
The plaintiff submitted that this statement of his Honour Judge Chambers accurately reflects the position of Australia under ss 8 and 9 of the IAA.
[28][2002] 1 Lloyd’s Rep 225.
[29][2002] 1 Lloyd’s Rep 225, 229.
A similar approach to the question whether or not an “arbitration” agreement existed for the purposes of the New York Convention was adopted by Justice Prakash of the High Court of Singapore in Aloe Vera of America Inc v Asianic Food (S) Pte Ltd and Another;[30] adopting the approach of the Court of Appeal of Manitoba in Proctor v Schellenberg.[31] Referring to this decision, Prakash J said:
“17 The Court of Appeal of Manitoba, Canada, in the case of Proctor v Schellenberg [2003] 2 WWR 621 had to consider an argument that a party seeking to enforce a foreign arbitration award had not satisfied the requirement of para 1 of Art IV of the Convention to supply the court with the ‘agreement in writing’ referred to in Art II of the Convention. In the course of his judgment, Hamilton JA stated at [18]:
The requirements of para 1 of Article IV of the Convention are mandatory requirements that an applicant must satisfy on an application under the Act. The issue here is whether an agreement was supplied to the court by the applicant, as required by para 1(b) of Article IV of the Convention. To answer this, one must first determine what ‘agreement in writing’ means. In doing so, one must give meaning to the words ‘shall include.’ These words make it clear that the definition is not exhaustive. It is also clear that written documentation is required. My reading of the definition is that written documentation can take various forms, including an arbitral clause within a contract signed by both parties; an arbitration agreement signed by both parties; an arbitral clause within a contract contained in a series of letters or telegrams; or an arbitration agreement contained in a serious of letters or telegrams. Because the definition is inclusive rather than exhaustive, the Legislature did not limit the definition to these articulated methods of documentation. What is important is that there be a record to evidence the agreement of the parties to resolve the dispute by an arbitral process. This flexibility is important in this day and age of changing methods of communication. In my view, communication by facsimile falls within the definition. This is in keeping with a functional and pragmatic interpretation of the definition to serve the Legislature’s intent to give effect to arbitral awards granted in other jurisdictions in this era of interjurisdictional and global business.
With respect, I endorse the attitude taken by the Court of Appeal of Manitoba in the above judgment and agree that one must take a pragmatic approach towards the definitions in the Convention and the Act in order to give effect to arbitral awards granted outside Singapore.”
[30][2006] 3 SLR(R) 174, [2006] SGHC 78 (10 May 2006). All references are to paragraph numbers in the medium-neutral citation.
[31][2003] 2 WWR 621.
The plaintiff in the Aloe Vera case, Aloe Vera of America Inc, took out an originating summons in the High Court of Singapore in order to obtain leave to enforce an arbitration award against Asianic Food and also against Chiew Chee Boon (also known as Steven Chiew), the second defendant. As noted in the judgment of Prakash J, “The application proceeded on an ex parte basis, as usual, and an order in terms was made against both defendants …”.[32] Mr Chiew applied to set aside the order, in relation to which Prakash J said:[33]
“7 Mr Chiew was upset to be named a party to the arbitration. He took the position that he was not a party to the Agreement and had not agreed to arbitration or to the laws of Arizona applying to him personally. He appointed a law firm called Sullivan Law Group to act on his behalf to object to the arbitration. On 21 July 2003, Sullivan Law Group sent a position statement to the Arbitrator in which it was made clear that Mr Chiew was not submitting to the jurisdiction of the Arbitrator and that he was not a party to the arbitration agreement. AVA’s lawyers responded and submitted that Mr Chiew was a party to the arbitration agreement pursuant to cl 13.7 of the Agreement and/or that he was the alter ego of Asianic. On 1 August 2003, the Arbitrator made a preliminary order. He found that he had jurisdiction over Mr Chiew pursuant to cl 13.7 of the Agreement because Mr Chiew was properly a party to the arbitration under the broad definition found in cl 13.7 of the Agreement. He also stated that he had reached that result without deciding whether Mr Chiew was also properly before the tribunal under the alter ego claim.”
In this context, the argument arose as to whether or not there was an “arbitration agreement” which would provide a basis for enforcement. Having reviewed various provisions of the Singapore legislation, the International Arbitration Act (Cap 143A), and the Singapore High Court rules, Prakash J noted that the whole debate in the Aloe Vera case was what was meant by the expression “the arbitration agreement” in these provisions and what was required in terms of the requirement to produce “the arbitration agreement”. A similar argument was raised in this respect on behalf of Mr Chiew, who was resisting enforcement, as was raised by the second defendant, IMC Solutions, in these proceedings. As Prakash J noted:[34]
“21 Mr Loh submitted that in view of the requirement for a copy of the arbitration agreement to be produced, when AVA was seeking to enforce the Award the first hurdle it had to overcome was to prove to the court that there was a written arbitration agreement signed between it and Mr Chiew. If the court found that there was no written agreement to which Mr Chiew was a party then there would be no need to proceed further. In effect, what Mr Loh was saying was that there should be, at a very early stage of the enforcement process, a two-step substantive examination of the foreign award for the purposes of enforcement in Singapore. Not only would the court have to see duly authenticated copies of the arbitration agreement and of the award but it would also have to be satisfied that although the award was in terms made against the person against whom it was sought to be enforced, it had been correctly made against that person in that such person was prima facie a party to the arbitration agreement.”
[32][2006] SGHC 78 at [1].
[33][2006] SGHC 78 at [7].
[34][2006] SGHC 78 at [21].
Justice Prakash then considered a number of decisions of various courts in relation to the approach applied to enforcement of arbitral awards under the New York Convention. Having done so, her Honour concluded that the approach of the US District Court for the Southern District of New York in the case of Sarhank Group v Oracle Corporation[35] should be accepted as the proper approach. Prakash J said:[36]
“33 The case of Sarhank Group v Oracle Corporation (‘the Sarhank case’) was a particularly interesting one. It was first heard by the US District Court for the Southern District of New York (see Yearbook Comm Arb’n XXVIII (2003) p 1043) and then on appeal by the US Court of Appeals for the Second Circuit, reported at 404 F 3d 657 (2nd Cir, 2005). The facts were that in 1991, Sarhank Group (‘Sarhank’), an Egyptian corporation, entered into a contract with Oracle Systems, Inc (‘Systems’), which provided for arbitration in Egypt. Systems was a wholly owned subsidiary of Oracle Corporation (‘Oracle’). The contract was governed by Egyptian law. In 1997, a dispute arose between Sarhank and Systems and Systems eventually terminated the contract. Sarhank then commenced arbitration proceedings against both Systems and Oracle at the Cairo Regional Centre for International Commercial Arbitration. Oracle objected to the arbitration, alleging that it was not a signatory to the contract. In 1991, the arbitral tribunal issued a unanimous decision against both Oracle and Systems. The arbitrators held that the arbitration clause in the contract between Sarhank and Systems was binding upon Oracle because Oracle was a partner with Systems in the relation with Sarhank. Oracle sought an annulment of the award before the Cairo Court of Appeal but the award was upheld.
34 Sarhank then sought enforcement of the Egyptian award before the US District Court for the Southern District of New York. The District Court granted enforcement. It dismissed Oracle’s argument that the court should decide whether the arbitration agreement between the parties was valid in order to determine whether it had subject-matter jurisdiction to enforce the award under the Convention. The court reasoned that it was not asked to compel arbitration, in which case it would need first to decide whether the parties had agreed to arbitrate. Rather, the court was asked to enforce a foreign award in which the validity of the arbitration agreement had already been established under the laws of Egypt. The District Court concluded that in such a case it had original subject-matter jurisdiction under the Convention and turned to consider whether Oracle could establish any grounds for refusal of enforcement. I should note here that this decision was relied on by AVA below. The reasoning of the District Court was in line with that in the Dardana case ([31] supra) and this authority was relied on by the assistant registrar when he reached his decision.”
[35]404 F3d 657 (second circuit, 2005).
[36][2006] SGHC 78 at [33] and [34].
As a result of this analysis, Prakash J said:[37]
“47 Whilst I have noted Mr Chiew’s arguments that he was not a party to the arbitration agreement I do not think that it is correct for a court that is asked to enforce an award under the Convention to go behind the holding on the merits on this aspect that has been made by the Arbitrator except to the extent that this is permitted by the Convention grounds during the second stage of the enforcement process. It is indisputable that in holding that Mr Chiew was a party to the arbitration agreement, the Arbitrator was acting within his jurisdiction. It is an accepted principle of arbitration law that an arbitral tribunal has jurisdiction to determine whether a particular person is a party to an arbitration agreement. …”
And in the same vein:[38]
“61. First of all, it should be remembered that under s 31(2) of the Act, it is the party who wishes the court to refuse enforcement of the award who has the burden of establishing that one of the grounds for refusal exists. Sub-section 2(b) calls on the challenger to establish that the arbitration agreement in question is not valid under the law to which the parties have subjected it. In this case, the arbitration agreement was subject to the law of Arizona and therefore Mr Chiew bore the burden of establishing that it was not valid under the law of Arizona and that under the law of Arizona the clauses of the agreement could not have any application to him. …”
[37][2006] SGHC 78 at [47].
[38][2006] SGHC 78 at [61].
Sub-section 31(2) of the Singapore International Arbitration Act reflects the provisions of Article V of the New York Convention and is in similar terms to sub-s 8(5) of the IAA. Although the provisions of the Singapore International Arbitration Act differ from the provisions of the IAA, s 27 of the Singapore legislation defines the expression “arbitration agreement” as an agreement in writing of the kind referred to in para 1 of Article II of the New York Convention. Paragraphs 1 and 2 of Article II of the New York Convention read:
“1. Each Contracting State shall recognise an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject-matter capable of settlement by arbitration.
2. The term ‘agreement in writing’ shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.”
Consequently, as with sub-s 100(1) of the English Arbitration Act 1996, to the extent that the express provisions do not repeat verbatim or substantially identically the provisions of sub-s 8(1) of the IAA, the meaning of these provisions is, in my view, in context the same in substance. Consequently, the approach of the Singapore High Court in Aloe Vera and the cases to which reference has been made in support of that approach, make these decisions very significant persuasive authority in support of the approach to the interpretation of sub-s 8(1) of the IAA for which the plaintiff argued. The result is that a party resisting enforcement of an award bears the burden of establishing a ground for resisting enforcement under sub-s 8(5); as is the position with respect to sub-s 31(2) of the Singapore legislation.
Further support for this approach is to be found in the decision of Sir Anthony Mason, sitting as a judge of the ultimate Court of Appeal in Hong Kong, in Hebei Import & Export Corporation v Polytek Engineering Company Limited.[39] Though this decision canvasses the difference between the approach that a supervising court and an enforcing court should take in the context of an application made under the equivalent of sub-s 8(5)(c) of the IAA – that the party was not given proper notice of the appointment of the arbitrator and the like – and in the context of the public policy defence or ground for resisting enforcement of an award on the basis of sub-s 8(7)(b) (public policy) of the IAA – the approach, more generally, is significant in the present context. Sir Anthony Mason said:[40]
“Under the Ordinance and the Convention, the primary supervisory function in respect of arbitrations rests with the court of supervisory jurisdiction as distinct from the enforcement court (see s 44(5) of the Ordinance; art VI of the Convention; Westacre Investments Inc v Jugoimport-SPDR Holding Co Ltd [1998] 3 WLR 770 at 808). But this does not mean that the enforcement court will necessarily defer to the court of supervisory jurisdiction.
The Convention distinguishes between proceedings to set aside an award in the court of supervisory jurisdiction (arts V(I)(e) and VI) and proceedings in the court of enforcement (art V(1)). Proceedings to set aside are governed by the law under which the award was made or the law of the place where it was made, while proceedings in the court of enforcement are governed by the law of that forum. The Convention, in providing that enforcement of an award may be resisted on certain specified grounds, recognises that, although an award may be valid by the law of the place where it is made, its making may be attended by such a grave departure from basic concepts of justice as applied by the court of enforcement that the award should not be enforced.
It follows, in my view, that it would be inconsistent with the principles on which the Convention is based to hold that the refusal by a court of supervisory jurisdiction to set aside an award debars an unsuccessful applicant from resisting enforcement of the award in the court of enforcement. See Firm P v Firm F YB Comm Arbn II (1977) 241 (where a German Court of Appeal refused to enforce an award which had been declared to be enforceable by a United States District Court). Even if the proposition stated above should be subject to some limitations, it must apply to a case where the party resisting enforcement is doing so on the ground of public policy. That is because the ground is expressed in the Convention (art V(2)(b)) as 'contrary to the public policy of the country', that is, the country in which enforcement is sought. In the court of supervisory jurisdiction, the public policy to be applied would be a different public policy, namely that of the supervisory jurisdiction.
In Paklito Investment Ltd v Klockner East Asia Ltd [1993] 2 HKLR 39 Kaplan J expressed (at 48-49) the view that a party faced with a Convention award against him has two options. He can apply to the court of supervisory jurisdiction to set aside the award or he can wait to establish a Convention ground of opposition. In my view, such a party is not bound to elect between the two remedies, at any rate when, in the court of enforcement, he seeks to rely on the public policy ground, as the respondent did here.
It follows also that a failure to raise the public policy ground in proceedings to set aside an award cannot operate to preclude a party from resisting on that ground the enforcement of the award in the enforcing court in another jurisdiction. That is because each jurisdiction has its own public policy.
What I have said does not exclude the possibility that a party may be precluded by his failure to raise a point before the court of supervisory jurisdiction from raising that point before the court of enforcement. Failure to raise such a point may amount to an estoppel or a want of bona fides such as to a justify the court of enforcement in enforcing an award (see Chrome Resources SA v Leopold Lazarus YB Comm Arbn XI (1986) 538 at 538-542). Obviously an injustice may arise if an award remains on foot but cannot be enforced on a ground which, if taken, would have resulted in the award being set aside.”
[39][1999] 2 HKC 205.
[40][1999] 2 HKC 205 at 229.
Sir Anthony Mason continued:[41]
“It has become fashionable to raise the specific grounds in s 44(2) (art V(1)(b)) which are directed to procedural irregularities, as public policy grounds (art V(2)(b)). There is no reason why this course cannot followed. The principal difference between s 44(2) and 44(3), it is suggested, is that, under section 44(3), the court of enforcement can take the point of its own motion (AJ van den Berg The New York Arbitration Convention of 1958, p 299). If, what the respondent seeks to do is to raise a specific ground under section 44(2) under the guise of public policy, then it is only right that it should bear the onus of establishing that ground.
In some decisions, notably of courts in civil law jurisdictions, public policy has been equated to international public policy. As already mentioned, art V(2)(b) specifically refers to the public policy of the forum. No doubt, in many instances, the relevant public policy of the forum coincides with the public policy of so many other countries that the relevant public policy is accurately described as international public policy. Even in such a case, if the ground is made out, it is because the enforcement of the award is contrary to the public policy of the forum (AJ van den Berg The New York Arbitration Convention of 1958, p 298).
However, the objective of the Convention was to encourage the recognition and enforcement of commercial arbitration agreements in international contracts and to unify the standards of which such agreements to arbitrate are observed and arbitral awards are enforced (Scherk v Alberto-Culver Co 417 US 506 (1974); Imperial Ethiopian Government v Baruch-Foster Corp 535 F2d 334 (1976) at 335). In order to ensure the attainment of that object without excessive intervention on the part of courts of enforcement, the provisions of art V, notably art V(2)(b) relating to public policy have been given a narrow construction. It has been generally accepted that the expression ‘contrary to the public policy of that country’ in art V(2)(b) means ‘contrary to the fundamental conceptions of morality and justice’ of the forum. (Parsons and Whittemore Overseas Co Inc v Société Générale de l’Industrie du PapierRAKTA 508 F2d 969 (2d Cir 1974) at 974 (where the Convention expression was equated to ‘the forum’s most basic notions of morality and justice’); see AJ van den Berg The New York Arbitration Convention of 1958, p 376; see also Renusagar Power Co Ltd v General Electric Company YB Comms Arbn XX (1995) 681 at 697-702)).
The question then is whether the matters of which the respondent complains, namely the alleged refusal of the hearing and the communications to the chief arbitrator were contrary to the fundamental conceptions of morality and justice of Hong Kong. In this respect, the opportunity of a party to present his case and a determination by an impartial and independent tribunal which is not influenced, or seen to be influenced, by private communications are basic to the notions of justice and morality in Hong Kong.”
Sir Anthony Mason concluded that there had not been such a breach of notions of justice and morality in Hong Kong.[42]
[41][1999] 2 HKC 205 at 232.
[42]See Hebei Import & Export Corporation v PolytekEngineering Company Limited (1999) 2 HK 205 at 233.
Reference was also made by the plaintiff to the decision of the English Court of Appeal in Gater Assets Ltd v Nak Naftogaz Ukrainiy,[43] where Rix LJ commented:[44]
“The award debtor of a Convention award may be defending himself against enforcement, but he can only do [so] by destroying the formal validity of the award, either as a matter of substantive jurisdiction or serious irregularity or as a matter of public policy. His remedy, the burden of proof of which lies entirely on him, is to show that the award requires not to be enforced because it is not binding or is invalid, or is against public policy.”
[43][2008] 1 All ER (Comm) 209.
[44][2008] 1 All ER (Comm) 209, [77].
This passage and the headnote to the Gater Assets case serves to emphasise that the remedy of an award debtor seeking to resist enforcement of an award is to show that the award “requires not to be enforced”, the burden of proof lying on the award debtor, because it was not binding, was invalid or was against public policy. This, in my view, is the nub of the approach of Sir Anthony Mason in the Hebei case.[45]
[45]See above, paragraphs 52 and 53.
Reference was also made to the English Court of Appeal decision in Dallah Real Estate and Tourism Holding Company v Ministry of Religious Affairs, Government of Pakistan and also to the unsuccessful appeal to the Supreme Court of the United Kingdom.[46] Dallah was a case where a person, the Government of Pakistan, sought to avoid enforcement of an award made against it on the basis that it was not a party to the arbitration agreement. The case concerned an arbitral tribunal which applied “trans-national law” for the purpose of determining whether there existed any relevant arbitration agreement between Dallah and the Government. In the course of applying the provisions of sub-s 103(2) of the English Arbitration Act 1996 and Article V of the New York Convention (provisions which correspond with or are reflected in the provisions of sub-s 8(5) of the IAA), the English courts found that the tribunal had been bound to apply French law to the issue in dispute.[47] In Dallah, there was no express choice of lex arbitri. The English court, having heard evidence from French law experts, determined that as a matter of French law the aggrieved party, the award debtor, was not a party to the arbitration agreement and took no part in the arbitration proceedings save under full reservations to make submissions as to why it was not a party to the arbitration agreement. Unusually, there was in that case no “law to which the parties had subjected it” and the court therefore had to apply the second limb of the test under Article V(1)(a) of the New York Convention; provisions reflected in paragraphs 103(2)(a) and (b) of the English Arbitration Act and paragraphs 8(5)(a) and (b) of the IAA. In other words, the court in this case was concerned with defences or grounds to enforcement, rather than application of provisions equivalent to sub-s 8(1) of the IAA (provisions reflected in sub-s 100(1) of the English Arbitration Act).
[46][2010] 1 All ER 592 (CA); [2010] UKSC 46 (3 November 2010).
[47]See above, paragraph 43.
iii. “for all intents and purposes, it was [IMC Solutions] which was the proper party to the contract...and... the arbitration” (First Batdorj affidavit at paragraph 16);
iv. “that [IMC Inc] and/or [IMCM] was the alter ego of the second defendant” (First Batdorj affidavit at paragraph 17);
v. “it was both [IMC Inc and IMC Solutions] who entered into the Agreement” (First Batdorj affidavit at paragraph 22); and / or vi. to the extent that IMC Inc executed the agreement, “it did so as a representative for IMC Mining Solutions” (First Batdorj affidavit at paragraph 22).
b. Altain Khuder had or were intending to make an application for an order from the arbitration tribunal that IMC Solutions pay any sum charged against IMC Inc in the arbitration;
c. The arbitration tribunal were considering making an order that IMC Solutions pay any sum charged against IMC Inc in the arbitration.
83. Further, at no stage prior to that had IMC Solutions been given an opportunity to make oral or written submissions to the arbitration tribunal in relation to any such claims, applications or intended orders or to submit any evidence refuting the basis for such claims. Had IMC Solutions been given such an opportunity, it would have relied upon the matters discussed in and exhibited to this affidavit as demonstrating that the claims made by Mr Batdorj in his affidavit noted above were without foundation.”
It was further submitted that there is nothing in:
(a)the documents filed by Altain Khuder in the arbitral proceeding,[150] which were, as noted, devoid of any mention of IMC Solutions;
(b)the procedural steps taken by Altain Khuder in the arbitral proceeding, which were all conducted in the context of their claim against IMC Inc alone, and resulted in rulings from the Arbitral Tribunal naming IMC Inc as the only defendant and containing no reference to IMC Solutions;[151] and
(c)the applications Altain Khuder made to the courts of Mongolia for the freezing of funds in IMC Inc’s Hong Kong bank account, for information concerning the moveable or immoveable property of IMC Inc or the seizure of the passports of IMC Inc’s officers;[152]
that could even be said ought to have put IMC Solutions “on inquiry” that the arbitration put them at risk or that an application was to be, or had been, made that they pay the amount of any award made against IMC Inc. Mr Lewis deposed that, “At no time had IMC Solutions even considered that it was at peril in the arbitration proceeding …”.[153]
[150]Exhibits GB-31 and 33 to the First Batdorj affidavit.
[151]Lewis affidavit at [66]-[67] and [70]-[73], exhibits GB-38 and 39 to the First Batdorj affidavit, and SCL-27 and 28 to the Lewis affidavit.
[152]Lewis affidavit (14 October 2010) at [63]-[64], [69], and [74]-[75] and exhibits SCL-26 and 29 to the Lewis affidavit.
[153]Lewis affidavit (14 October 2010) at [122].
The plaintiff’s response to the evidence on behalf of the second defendant, IMC Solutions, in the form of the affidavits of Mr Stewart Lewis and Mr Bevan Jones, was that they were “both disingenuous and show a remarkable lack of candour”. It was said that the exhibits to both of these affidavits provide ample evidence of the role of the second defendant in the conduct of the arbitration and in relation to the performance of the OMA.[154] It was contended that both Mr Lewis and Mr Jones had been representing on the internet, as recently as two weeks prior to the hearing of this matter in the court on 4 November 2010, that the second defendant, IMC Solutions, was the moving party and the real contractor on the Tayan Nuur Iron Ore Project in Mongolia.[155] It was also submitted also that there is no direct credible evidence to support the second defendant’s case that it was only a sub-contractor. In particular, reference was made in the evidence of Mr Batdorj[156] to the evidence of Mr Lewis that Mr Bevan Jones “was not, and never had been, employed by IMC Solutions or engaged by them as a contractor or consultant, and was not authorised to act for IMC Solutions”. Mr Batdorj said that this was not correct and made reference to an exhibited document[157] entitled “Reporting of Resources / JORC Standard”, under which the name “Bevan Jones / IMC Mongolia” appears. At the foot of each of its twenty-five pages an “IMC” firm graphic or logo appears, as well as the company name “IMC Mining Solutions Pty Ltd”. Additionally, specific reference was made to the document titled: “IMC – Weekly Report for the WE 31-01-2009 to Altain Khuder LLC” bearing the name “IMC Mining Solutions Pty Ltd”.[158] Although Mr Lewis did concede that the defendants, IMC Mining and IMC Solutions, and IMC Mongolia, did use a common logo, it was said that this was “no more than a common marketing approach of the companies”.[159] This Weekly Report, on the other hand, appears to indicate more than merely a marketing aspect in relation to its use in common. In addition, the plaintiff submitted, the use of the term “IMC” in the “IMC Response to AKL Arbitration Claim” document constituted a reference to the second defendant, IMC Solutions.[160] If proven, this would indicate that IMC Solutions was aware of, clearly had notice of, and was involved in the arbitration from an early stage in the arbitral process. On its face, the “IMC Response to AKL Arbitration Claim” document appears to indicate that the term “IMC” is used in a manner consistent with it being a reference to both defendants, IMC Mining and IMC Solutions. IMC Mongolia is referred to specifically, as is IMC Mining, on two occasions (under the heading “Item 2 – Establishment of IMC Mongolia”), in contradistinction to the use of “IMC” otherwise. The evidence of the way in which the IMC logo and brand were used, in my opinion, supports the suggestion that IMC Solutions and IMC Mining acted as some form of common enterprise or operated under some other relationship of legal responsibility (or are estopped from asserting otherwise).[161] Such a characterisation is consistent with the conclusion the plaintiff asks the court to draw, and is congruent with the evidence below.[162]
[154]Stewart Lewis (exhibits SCL-2, SCL-6, SCL-8, SCL-12, SCL-13, SCL-14, SCL-15, SCL-17, SCL-18, SCL-19, SCL-20, SCL-21, SCL.22, SCL-23, SCL-25, SCL-27, SCL-28 and SCL-29) and Bevan Jones (exhibits BJ-l to BJ-8 inclusive).
[155]See affidavit of Gendenpil Batdorj (26 October 2010), [9] and [10] and [12]-[15] and Exhibits GB-54 and GB-55.
[156]See the second Batdorj affidavit (26 October 2010), paragraph 68.
[157]GB-55 to the second Batdorj affidavit.
[158]GB-56 to the second Batdorj affidavit.
[159]Affidavit of Stewart Charles Lewis (14 October 2010), paragraph 106(d).
[160]See paragraph 114 and 115 of the first Batdorj affidavit (29 June 2010); the document is exhibited as Exhibit GB-32.
[161]See below, paragraph 110.
[162]See paragraphs 106-110.
There was evidence that Mr Pat Kelly, a full-time consultant employed by IMC Mining, was significantly involved in the iron ore project and the drafting and performance of the OMA. Mr Lewis, in his affidavit, maintained on a number of occasions that Mr Kelly is not and was not engaged by the second defendant, IMC Solutions.[163] It is evident from his evidence that Mr Lewis was at pains to paint Mr Kelly as the moving mind of IMC Mining and not as a representative of the second defendant, IMC Solutions. Mr Jones did the same thing,[164] in spite of the fact that Mr Jones reported to Mr Kelly. It is also significant, in my view, that Mr Kelly did not provide an affidavit in these proceedings, even though he was a signatory to the OMA, which contains the arbitration clause, and was the director of mining operations on the iron ore project. Although Mr Kelly performed a central role in the account of both Mr Lewis and Mr Jones in relation to what happened with respect to the arbitration and was the author of many significant documents involved in many issues of significance for these proceedings, no information has been provided as to why Mr Kelly has not sworn an affidavit in these proceedings. Any references to Mr Kelly as an employee of IMC Solutions was simply described by Mr Lewis as “mistakes”.[165]
[163]See, for example, paragraphs 20, 24, 27, 28, 48, 106(h), 108 and 116 of the affidavit of Mr Stewart Lewis (14 October 2010).
[164]See, for example, paragraphs 4 and 5 of Mr Bevan Jones’ affidavit (16 October 2010).
[165]See also paragraphs 85 and 89, above.
The events surrounding the preliminary hearing before the Arbitral Tribunal on 24 July 2009 are also of some significance in relation to the present issue. It will be recalled that a document was apparently prepared as a record of the proceedings and agreements reached at the 24 July 2009 preliminary hearing.[166] Mr Jones signed this document which records the choice of Mongolian law, rather than the law of Hong Kong. Although both Mr Lewis and Mr Bevan Jones appear to seek to resile from any suggestion of an agreement to Mongolian law and to criticise that choice of law,[167] no explanation was provided by Mr Jones or anybody else as to why he signed the apparent record of minutes of the preliminary hearing of 26 July 2009, indicating the agreement of the parties to Mongolian law. Nor does he say why the Mongolian lawyers, half of both of the defendants, signed it.[168]
[166]See above, paragraph 84.
[167]See affidavit of Stewart Lewis (14 October 2010), at [73]-[74] and Bevan Jones’ email contained in Exhibit SCL-28.
[168]See Exhibits GB-39 to the affidavit of Gendenpil Batdorj (29 June 2010).
The second defendant sought to explain the departure of its personnel from Mongolia prior to the arbitration hearing on 15 September 2009. The plaintiff made submissions in relation to the state of the evidence in this respect as set out in the affidavits of Mr Jones and Mr Lewis.[169] In this respect, Mr Jones deposed that he managed the arbitration on behalf of IMC Mining until his employment ceased on 30 July 2009 but, as submitted by the plaintiff, nowhere does he rebut the evidence of Mr Batdorj that he was acting for both defendants and support the evidence of Mr Lewis that he did not have authority, nor purport to act on behalf of, the second defendant, IMC Solutions, in the arbitration.
[169]See Plaintiff’s Further Submissions (3 November 2010), paragraph 75.
An issue which might be said to go, at least in part, to the question of proper notice is the evidence in relation to the second defendant’s knowledge of the making of the Award on 15 September 2009. This is also of significance in relation to the failure of the second defendant, IMC Solutions, or, for that matter, the first defendant, IMC Mining, to appeal to annul the arbitration award in the courts of Mongolia pursuant to Article 40 of the Mongolian Arbitration Law. In this respect, the plaintiff made the following submissions, referring to the affidavit of Mr Jones to which reference has previously been made:[170]
“76. It is not until paragraph 13 that Bevan Jones deals with the IMC Mining Solutions’ allegations. It is interesting to note that he acknowledges that he is aware of the final award made in this matter ‘at a date I cannot recall’. Presumably this refers to a date prior to 20 August 2010 (which is when Mr Lewis says he first became aware of the award when he was served with a copy as part of this proceeding (see Stewart Lewis, paragraph 82) - as otherwise Bevan Jones would have referred to the recent date. It appears Mr Bevan Jones concedes he was aware of the award at some time prior to 20 August 2010 which makes Stewart Lewis' assertion that he only became aware of the award on 20 August 2010 highly unlikely to be true. It is highly unbelievable that Bevan Jones would have known of the award prior to 20 August 2010 and not told Lewis. In fact the likelihood is that if he did know then he did tell Lewis. It is therefore unlikely that Lewis first knew of the award on 20 August 2010. He must have known of it well prior to then and in all probability when it was originally sent by courier to IMC in October 2009. Mr Lewis’ assertion in paragraph B of his affidavit that from 4 September 2009 he rejected all communications directed at his Brisbane address to the First Defendant is hardly likely to be true. This evidence of Bevan Jones corroborates that the award was served on, and received by, the IMC Defendants. Bevan Jones then sets out a general series of denials in paragraph 13 about knowledge of certain general matters involving IMC Mining Solutions Pty Ltd in the arbitration. Despite the detail which the Plaintiff’s witness, Mr Batdorj, deposes to in relation to these matters in the June affidavit, and the detail which Mr Stewart Lewis purports to know about these matters (and Stewart Lewis says he knows about these matters from Bevan Jones primarily), Bevan Jones himself does not directly rebut any of the detail or allegations made by the Plaintiff.”
In this respect, and more generally, it is noted that the evidence is that the first defendant, in spite of its British Virgin Islands registration, is shown in a variety of documents as having the same office address in Brisbane as the second defendant. The second defendant’s evidence was that it occupied separate space in its offices, but this is not apparent from any of the documents in which the Brisbane address for the first defendant appears. The evidence was also that the same applied to email addresses.
[170]See Plaintiff’s Further Submissions (3 November 2010).
In light of the evidentiary matters already considered and the matters set out in the plaintiff’s submissions, to which reference has been made, I accept them as an accurate analysis of the state of the evidence. I am also assisted by the extensive submissions extracted and summarised above,[171] which largely also apply to the issue of whether the second defendant received proper notice; particularly the evidence which goes towards establishing that IMC Solutions and IMC Mining were, for all intents and purposes treated as the same entity, or are estopped from asserting otherwise. In my view, on the basis of the lack of persuasive and complete evidence presented by the second defendant, and the fact that it bears the onus of establishing a defence or ground against enforcement of the Award, I accept the evidence of the plaintiff’s witness, Mr Batdorj. I note, again, the direct and very specific nature of Mr Batdorj’s evidence; given by a party who was employed by the plaintiff during the relevant period, and who attended the hearings in question. This stands in stark contradistinction to the lack of evidence adduced by the second defendant that directly and specifically challenged the evidence of Mr Batdorj, or provided an objective basis of proof of the contrary position. Thus, in the circumstances of the evidence presented, I am not satisfied that the second defendant has discharged the onus of proof it bears in resisting enforcement of the Award. Further, though the plaintiff does not bear the burden in this respect, on the basis of the evidence which I accept, it is, in my view, more probable than not that the second defendant was well aware of the nature and progress of the arbitration proceedings and was well able to present its case in the arbitration proceedings. As a result, it is not open to the defendant to rely on the defence or ground that it did not receive proper notice, nor a chance to be heard, given the state of the evidence, and the overall evidentiary onus it faces. Consequently, I am of the opinion that the second defendant, IMC Solutions, has failed to establish this defence or ground against enforcement.
Section 8(5)(d) of the IAA: Award deals with extraneous matters – the award deals with a difference not contemplated by, or not falling within the terms of, the submission to arbitration, or contains a decision on a matter beyond the scope of the submission to arbitration
[171]See, particularly, paragraphs 89 and following.
The second defendant, IMC Solutions, submitted that the submission to arbitration was constituted by the plaintiff’s claim document, which it responded to with a document headed “IMC Response to AKL Arbitration Claim”.[172] It was said that neither refers to IMC Solutions and does not submit to arbitration any “difference” as to whether or not IMC Solutions should be ordered to pay the sum charged against IMC. Accordingly, it was submitted, that even if the court concludes that Arbitral Tribunal did decide that IMC Solutions was the proper party to the arbitration agreement and the arbitration and, therefore, that it was amenable to an order that it pay the sum charged against IMC Mining, such a decision would be manifestly beyond the scope of the submission to arbitration. Further, it was submitted that this is not the type of situation in which the court is being invited to “second-guess” the arbitrator’s construction of the agreement between the parties or to usurp the arbitrator’s role.[173] Rather, it was said, the situation in the present case involves the complete absence of any agreement between the parties on the submission of a dispute to arbitration followed by a “decision” by the Arbitral Tribunal that was in no way within the scope of the dispute submitted to it. It was submitted by the second defendant that, on this basis alone, the court ought to refuse to enforce the Award insofar as it relates to IMC Solutions.
[172]The documents, respectively, are exhibited to the affidavit of Gendenpil Batdorj (29 June 2010) as Exhibits GB-31 and GB-32.
[173]Referring to the discussion and cases set out in Allan Redfern & Anor, Law and Practice of International Commercial Arbitration (2004), 449-450.
In my opinion, the submissions and argument of IMC Solutions on this defence or ground for resisting enforcement is both unmeritorious and, in any event, circular. For the reasons indicated previously, it was, in my opinion, open to the Arbitral Tribunal under Mongolian law to find that the OMA and the arbitration agreement contained in clause 16 of that agreement applied to and extended to IMC Solutions. On that basis, IMC Solutions was a party to and bound by the arbitration agreement. Even if a proper construction of the submission to arbitration is that the dispute or difference as raised initially extended only to IMC Mining, the first defendant, it does not follow that as a result of the subsequent conduct of the arbitration proceedings the dispute or difference was not extended by agreement or applied as a result of an estoppel against IMC Solutions, the second defendant, as a result of its participation in the arbitration proceedings and, notably, in the preliminary hearing held on 24 July 2009.[174] As indicated previously, I am of the opinion that the second defendant has failed to establish that it was not involved in any relevantly significant way in the arbitration or that it was not a party to the arbitration agreement or the arbitration proceeding. Consequently, I am of the opinion that the second defendant, IMC Solutions, has failed to establish this defence or ground against enforcement.
Section 8(5)(e) of the IAA: Composition of Arbitral Tribunal or Arbitral Procedure – the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place
[174]See above, paragraph 85.
It was submitted by IMC Solutions that this defence or ground against enforcement was also available to it because it had no role in the selection of the Arbitral Tribunal[175] or the arbitral procedure. This submission was on the basis that IMC Solutions was not involved in any way in the arbitration and was not, for the reasons previously noted in these second defendant’s submissions, a party to the arbitration agreement or the arbitration proceeding. As indicated previously, I am of the opinion that the second defendant has failed to establish that it was not involved in any relevantly significant way in the arbitration or that it was not a party to the arbitration agreement or the arbitration proceeding. Consequently, I am of the opinion that second defendant, IMC Solutions, has failed to establish this defence or ground against enforcement.
Section 8(5)(f) of the IAA: Award note yet binding or set aside – the award has not yet become binding on the parties to the arbitration agreement or has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made
[175]It is noted in the Second Defendant’s Outline of Submissions (3 November 2010), at [185] that “…even IMC [Mining’s] nominee for the Arbitral Tribunal was removed and replaced by someone else whom they did not nominate and objected to – see Lewis affidavit at [66], [68] and [71] and exhibit SCL-28 to the Lewis affidavit.”
This defence or ground for resisting enforcement was not relied upon by the second defendant, IMC Solutions.
Section 8(7)(b) of the IAA: Enforcement of the Award would be contrary to public policy
As submitted by the second defendant, IMC Solutions, the term “public policy” in the context of sub-s 8(7)(b) is the public policy of Australia. Reference was made in its submissions to the decision of McDougall J in Corvetina Technology Ltd v Clough Engineering Ltd,[176] where it was held that:[177]
“[the] very point of provisions such as s 8(7)(b) is to preserve to the court in which enforcement is sought, the right to apply its own standards of public policy in respect of the award.”
It was submitted that this is consistent with Article V(2)(b) of the New York Convention, which expressly refers to the public policy of the country where enforcement of the relevant award is sought. Further, it was submitted that sub-s 8(7A) makes it clear that the enforcement of an award would be contrary to public policy if “a breach of the rules of natural justice occurred in connection with the making of the award”.
[176](2004) 183 FLR 317.
[177](2004) 183 FLR 317, 322.
On this basis, it was submitted that the second defendant, IMC Solutions, is entitled to avail itself of this defence or ground for resisting enforcement of the Award because, for the reasons advanced with respect to the defences or grounds for resisting enforcement available under sub-s 8(5) of the IAA, particularly sub-s8(5)(c) (and also sub-ss 8(5)(d) and (e)), IMC Solutions was denied natural justice in the arbitration proceedings. The IMC Solutions complaint, as raised in other respects in its submissions, was that it was in no way, formally or informally, notified that the plaintiff had applied to the Arbitral Tribunal for an order requiring IMC Solutions to pay its sum charged against IMC Mining or that the Arbitral Tribunal was considering such an application. Consequently, it was said, IMC Solutions had no opportunity to put before the Arbitral Tribunal material in response to the material relied upon by the plaintiff in its application to the Tribunal, and no opportunity to address written or oral submissions to the Tribunal. For the reasons indicated previously, I am of the opinion that the second defendant, IMC Solutions, has failed to establish that it was not involved in any relevantly significant way in the arbitration or that it was not a party to the arbitration agreement or the arbitration proceeding. Consequently, I am of the opinion that IMC Solutions, the second defendant, has failed to make out any basis for relying upon this defence or ground for resisting enforcement of the Award against it.
Summary and conclusions
For the preceding reasons, I find that the plaintiff complied with the extent of its obligations under ss 8 and 9 of the IAA (and the corresponding provisions of the New York Convention) for the purpose of seeking enforcement of the Award against the second defendant, IMC Solutions, and that IMC Solutions failed to establish any defence or ground for resisting enforcement of the Award against it under the provisions of s 8 of the IAA or the corresponding provisions of the Convention.
Consequently, the second defendant’s summons to set aside the orders of 20 August 2010 is dismissed.
I reserve the question of costs and will hear the parties further on this issue.
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CERTIFICATE
I certify that this and the 81 preceding pages are a true copy of the reasons for Judgment of Croft J of the Supreme Court of Victoria delivered on 28 January 2011.
DATED this twenty-eighth day of January 2011.
Drossos Stamboulakis Associate
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