Corvetina Technology Ltd v Clough Engineering Ltd - [2004] NSWSC 700

CITATION: CORVETINA TECHNOLOGY LTD v CLOUGH ENGINEERING LTD [2004] NSWSC 700 revised - 17/08/2004

HEARING DATE(S): 29/07/2004 (judgment given 29/07/04 and revised 2 August 2004)

JUDGMENT DATE:
29 July 2004

JURISDICTION:
EQUITY

JUDGMENT OF: McDougall J

DECISION: See para [20] of judgment

CATCHWORDS: PRACTICE AND PROCEDURE - INTERNATIONAL ARBITRATION - proceedings for enforcement of international arbitral award - where plaintiff seeks order that there be no discovery until preliminary question resolved - where defendant alleges that plaintiff performed contract in manner illegal in place of performance - where defendant says that enforcement of award based on that contract is therefore contrary to Australian public policy - whether defendant in claim for enforcement of international arbitral award can raise defence where facts relevant to illegality of performance said to have been raised and argued before and subject to decision of arbitrator - s 8(7)(b) International Arbitration Act 1974 (Cth) - whether Court should hear questions separately.

LEGISLATION CITED: International Arbitration Act 1974 (Cth)

CASES CITED: Soleimany v Soleimany [1999] QB 785 at 800
Resort Condominiums International Inc v Bolwell [1995] 1 Qd R 406
Westacre Investments Inc v Jugoimport-SPDR Holding Co Ltd [2000] 1 QB 288
Westacre Investments Inc v Jugoimport-SPDR
Holding Co Ltd [1999] QB 740
Tepko Pty Ltd v Water Board (2000) 206 CLR 1 at 55

PARTIES :
Corvetina Technology Limited (plaintiff)
Clough Engineering Limited (defendant)

FILE NUMBER(S): SC 50029/04

COUNSEL: M.A Pembroke SC/D.R. Meltz (Plaintiff)
Dr A.S Bell/ J.A.C Potts/ J.C Sheller (sol) (Defendant)

SOLICITORS: Mallesons Stephen Jacques (Plaintiff)
Clayton Utz (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

29 July 2004 Ex tempore (revised 2 August 2004)

ENGINEERING LIMITED

JUDGMENT

1 HIS HONOUR: By its notice of motion filed on 23 July 2004, the plaintiff seeks an order that there be no discovery ordered in these proceedings until a question, defined in the notice of motion, is resolved.

2 That question is as follows:

“Whether the Defendant is entitled to allege and seek to prove in these proceedings that the plaintiff performed, purported to perform or intended to perform its obligations under the contracts in a manner which:

(a) was contrary to the public policy and laws of the place of performance, namely, Pakistan;

(b) was contrary to Australian public policy;

by reference to the facts particularised in paragraph 4(b) of the Amended Defence and the matters alleged in paragraph 4(c) of the Amended Defence”.

3 The plaintiff's notice of motion is a successor to its notice of motion filed on 25 June 2004. In that notice of motion the plaintiff sought the following relief:

“ Pursuant to SCR Part 31 Rule 2 the following questions be determined separately and prior to all other matters in these proceedings:

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2004] NSWSC 700
Decision Date: 29 July 2004

CaseChat Overview and Summary

In the matter of Corvetina Technology Ltd versus Clough Engineering Ltd, the case before the court involved an application for enforcement of an international arbitral award. The plaintiff, Corvetina Technology Ltd, sought an order that no discovery be conducted until a preliminary question regarding the legality of the contract performance was resolved. The defendant, Clough Engineering Ltd, argued that the plaintiff had performed the contract in a manner that was illegal in the place of performance, and therefore, enforcing the award was contrary to Australian public policy. The court was required to determine whether the defendant could raise this defence in a claim for enforcement of an international arbitral award, given that the facts relevant to the alleged illegality had been raised and argued before the arbitrator and were subject to the arbitrator's decision. The court also needed to decide whether it should hear the questions separately.

The court examined the provisions of section 8(7)(b) of the International Arbitration Act 1974 (Cth) and considered the principle that questions of public policy should be assessed in the context of the law of the seat of arbitration, which in this case was the United Kingdom. The court found that the defendant's claim regarding the illegality of the contract performance was a matter that had been subject to the arbitrator's decision and was not a defence that could be raised in a claim for enforcement of the award. The court held that the defendant's defence was not permissible, and therefore, the plaintiff's application for an order preventing discovery until the preliminary question was resolved was dismissed. The court also found that it should not hear the questions separately, as doing so would undermine the principle of finality in international arbitration.

The court's decision in this case provides guidance on the scope of permissible defences in claims for enforcement of international arbitral awards and the importance of respecting the finality of arbitral awards. The court's ruling that the defendant's defence was not permissible reinforces the principle that questions of public policy should be assessed in the context of the law of the seat of arbitration, and that the court should not hear questions separately in such cases. The decision also highlights the importance of parties ensuring that all relevant arguments and evidence are presented to the arbitrator, as the court will not permit parties to raise new arguments or evidence in a claim for enforcement of an arbitral award.

Orders