International Relief and Development Inc v Ladu

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FEDERAL COURT OF AUSTRALIA

International Relief and Development Inc v Ladu [2014] FCA 887

Citation: International Relief and Development Inc v Ladu [2014] FCA 887
Parties: INTERNATIONAL RELIEF AND DEVELOPMENT, INC v GODFREY EMMANUEL LADU
File number: VID 522 of 2012
Judge: KENNY J
Date of judgment: 20 August 2014
Catchwords: ARBITRATION – Foreign arbitral award – Application to enforce foreign award – Opposition to enforcement on the basis of no proper notice – Whether absence of proper notice of appointment of the arbitrator or of the arbitration proceedings – Whether breach of the rules of natural justice – Whether no notice of the arbitration hearing – Consideration of grounds for refusing to enforce foreign award under ss 8(5)(c), (7) and (7A) of the International Arbitration Act 1974 (Cth) – Respondent failed to establish alleged absence of notice – Order for enforcement made.
Legislation:

International Arbitration Act 1974 (Cth)
Federal Court Rules 2011 (Cth)
Evidence Act 1995 (Cth)

Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature 10 June 1958, 330 UNTS 3 (entered into force 7 June 1959)

Cases cited:

 TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 295 ALR 596
Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd (2011) 277 ALR 415
Jones v Dunkel (1959) 101 CLR 298
Payne v Parker (1976) 1 NSWLR 191
Traxys Europe SA v Balaji Coke Industry Pty Ltd (No 2) (2012) 201 FCR 535
Minister for Immigration and Multicultural and Indigenous Affairs v QAAH of 2004 (2006) 231 CLR 1
Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (1998) 196 CLR 161
Povey v Qantas Airways Ltd (2005) 223 CLR 189
TCL Air Conditioner (Zhongshan)Co Ltd v Castel Electronics Pty Ltd [2014] FCAFC 83
Gujarat NRE Coke Ltd v Coeclerici Asia (Pte) Ltd (2013) 304 ALR 468
Text cited: Emmanuel Gaillard and Domenico Di Pietro (editors); Nanou Leleu-Knobil (reference editor), Enforcement of Arbitration Agreements and International Arbitral Awards.  The New York Convention in Practice (Cameron May, 2008)
Date of hearing: 4 – 6 September 2013
26 – 27 November 2013
Date of last submissions: 13 December 2013
Place: Melbourne
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 191
Counsel for the Applicant: D Crennan with K Popova (without fee)
Solicitor for the Applicant: Cornwall Stodart Lawyers (without fee)
Counsel for the Respondent: M Stirling
Solicitor for the Respondent: Zindilis Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 522 of 2012
BETWEEN:

INTERNATIONAL RELIEF AND DEVELOPMENT, INC.
Applicant
AND:

GODFREY EMMANUEL LADU
Respondent

JUDGE:

KENNY J

DATE OF ORDER:

20 AUGUST 2014

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.Pursuant to section 8(3) of the International Arbitration Act 1974 (Cth), the foreign arbitral award dated 21 July 2011 made pursuant to clause 14 of the employment agreement dated 14 September 2009 between the applicant and the respondent be enforced in the Federal Court of Australia as if that award were a…

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Details
Case
[2014] FCA 887
Decision Date

CaseChat Overview and Summary

In the matter of International Relief and Development Inc v Ladu, the primary dispute revolved around the enforcement of a foreign arbitral award made in the United States against Godfrey Emmanuel Ladu, who was formerly employed by International Relief and Development Inc (IRD). The Federal Court of Australia was tasked with determining whether the arbitral award should be enforced in Australia, given the respondent's opposition on the basis of alleged procedural deficiencies in the arbitration process. Specifically, Ladu contended that he had not received proper notice of the appointment of the arbitrator or of the arbitration proceedings, which he claimed breached the rules of natural justice and denied him the opportunity to be heard.

The central legal issues before the court were whether Ladu had indeed been deprived of proper notice of the arbitration proceedings, and if so, whether such deficiencies warranted refusing to enforce the arbitral award under sections 8(5)(c), (7) and (7A) of the International Arbitration Act 1974 (Cth). The court had to weigh Ladu's assertions against the evidence presented by IRD regarding the steps taken to notify Ladu of the arbitration. The court found that IRD had made diligent efforts to contact Ladu through various means, including emails sent to addresses known to be used by him. However, these efforts did not meet the statutory criteria for deeming a person "unavailable" under the Evidence Act 1995 (Cth), thus preventing certain statements from being admitted as evidence.

In its reasoning, the court meticulously examined the evidence and determined that Ladu had not convincingly established that he lacked notice of the arbitration proceedings. The court noted that IRD had clearly communicated its intention to arbitrate the dispute in multiple communications to Ladu and his legal representative, Dr. Mulla. Despite Ladu's claims, the court found that IRD had sufficiently demonstrated that it had taken reasonable steps to ensure that Ladu was aware of the arbitration process. Consequently, the court concluded that there was no valid ground under the International Arbitration Act for refusing to enforce the arbitral award. The final order mandated the enforcement of the arbitral award in the Federal Court of Australia and directed Ladu to pay IRD's costs of the application. However, this cost order was later vacated on 20 August 2014.

Orders

Orders of the court

1. Pursuant to section 8(3) of the International Arbitration Act 1974 (Cth), the foreign arbitral award dated 21 July 2011 made pursuant to clause 14 of the employment agreement dated 14 September 2009 between the applicant and the respondent be enforced in the Federal Court of Australia as if that award were a judgment or order of that Court.

2. The respondent pay the applicant’s costs of this application.

Note: On 20 August 2014, Order 2 above was vacated.

Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Even in this Court, the matter has not had a straightforward history. IRD’s application was originally made ex parte on the basis that the award was enforceable under s 8(3) of the IAA, without notice to Mr Ladu. Middleton J in fact made orders registering the Award as a judgment on 31 August 2012. On 21 March 2013, however, these orders were set aside by consent. IRD renewed its application, this time on the basis that Mr Ladu had notice of the hearing in this Court and opposed the relief it sought.BACKGROUND FACTS The following paragraphs set out the circumstances that led to the Award and IRD’s current application to enforce it.Mr Ladu’s employment by IRD On 14 September 2009, IRD and Mr Ladu entered into an employment agreement (Employment Agreement), pursuant to which Mr Ladu worked in Warrap State, South Sudan as a Project (or Program) Manager for IRD’s South Sudan Sustainable Foods and Livelihoods Initiative (Initiative). The Initiative was established for the purpose of increasing local food security, economic opportunities and sustainable resettlement in Warrap State. As Program Manager, Mr Ladu was to “take overall charge of the programmatic and operational deliverables, including programme implementation, accounting, financial management and reporting needs of the sub-office”. He was to report directly to IRD’s South Sudan Country Director. Mr Ladu’s responsibilities included procuring seeds for distribution to local beneficiaries in South Sudan. In early 2011, Mr Mor Gueye, IRD’s South Sudan Country Director from November 2010 until July 2011, became concerned about irregularities relating to the procurement of seeds by IRD from an entity known as Sunspace Construction and Supply Company Ltd (or Sun Space Construction & Suppliers) (Sunspace Construction). Mr Gueye recorded his concerns in an email dated 14 January 2011, which he sent to IRD’s staff in the United States. As a result of these concerns, IRD conducted a review process, with the assistance of Mr Solomon Ngoze, a senior IRD officer. Mr Ladu was not involved in the IRD review process. Following the review, IRD decided to terminate Mr Ladu’s employment, which under cl 3 of the Employment Agreement was terminable “at will”. IRD’s HR Director at Arlington, Virginia, Jennifer Yi, prepared a letter of termination dated 1 April 2011, which Mr Gueye received in South Sudan via email the same day. Mr Gueye’s evidence was that, as directed, he did not tell Mr Ladu about the letter but held it pending the arrival of Mr Alan Calder. I accept his evidence on this point: it was consistent with the evidence of Mr Calder, a security and investigation consultant for IRD, and the evidence about the termination event that followed.IRD’s termination of Mr Ladu’s employment On 6 April 2011, IRD notified Mr Ladu that his employment with IRD was terminated. As Mr Ladu put it, this was “because of [an] allegation of mismanagement and damaging IRD programs in Sudan”. The notification was given to Mr Ladu by Mr Ngoze, in the presence of Mr Calder, at IRD’s office in Juba, South Sudan. Mr Gueye was also present at the Juba office that day, although he was not present when Mr Ngoze gave the termination letter to Mr Ladu.

Evidence

Evidence Before The Court

Neither IRD nor Mr Ladu called Mr Lado to give evidence. I accept Mr Sogora’s evidence that he took the steps as described in his evidence to contact Mr Lado. Mr Crennan, counsel for IRD, argued that Mr Sogora’s statements about what Mr Lado said to him, whether about the delivery of documents to Dr Mulla in the Juba Court on 14 June 2011 or about the delivery of the letters to Dr Mulla on or about 11 April 2011, 11 May 2011 and 9 June 2011, should be admissible as an exception to the hearsay rule (as set out in s 59) on the basis that the maker was not available within the meaning of s 63 of the Evidence Act 1995 (Cth) (Evidence Act). Mr Stirling submitted that the relevant s 63 matters were not established and that Mr Sogora’s statements were not admissible on this basis, as IRD contended. Section 63 of the Evidence Act provides that the hearsay rule does not apply in civil proceedings to evidence of a previous representation by an unavailable person if it is given by a person who saw, heard or otherwise perceived the representation being made: s 63(2)(a). It was not submitted that s 67(1) was not satisfied. A person is “unavailable”, as defined in the Evidence Act Dictionary, Pt 2, cl 4(1), where all reasonable steps have been taken by the party seeking to prove unavailability to find the person or secure his or her attendance. At the hearing on 26 November 2013, the Court ruled that Mr Matechak’s evidence as to the steps he took to locate Mr Lado did not satisfy the statutory criterion. In substance, Mr Sogora’s evidence was that he tried unsuccessfully to telephone Mr Lado on the telephone number he had for him and he “asked around” in efforts to locate him, but could not locate him. Even in the circumstances existing in South Sudan at the relevant time, as shown in the evidence, this does not satisfy the statutory criterion; and the truth of Mr Lado’s statements are not admissible on the basis for which IRD contended. Notwithstanding this, as stated in [156] above, I am satisfied that Dr Mulla received copies of IRD’s letters dated 11 April 2011, 11 May 2011 and 9 June 2011 on or around those dates. Citing Jones v Dunkel (1959) 101 CLR 298, Mr Crennan further submitted that, in so far as the parties invited the Court to draw competing inferences in relation to Mr Lado, IRD’s inferences should be preferred on the basis that the respondent in fact knew of Mr Lado’s whereabouts and failed to call him. I interpolate at this point that, on the final day of the hearing (27 November 2013), Dr Mulla gave evidence that he had seen Mr Lado “last week” and that he knew Mr Lado’s current firm, Nile Basin Advocates, to be about “10 metres away” from where his own firm was currently located, at Mahata Yui, in Malakia Street. I would not, however, draw any relevant Jones v Dunkel inference against either party. I accept that Mr Matechak and Mr Sorgora took the steps they described to locate Mr Lado. It does not follow from the fact that these steps were insufficient to permit reliance on s 63(2)(a) that I reject their evidence that they did not know Mr Lado’s whereabouts. I accept their evidence that they did not.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Meanwhile IRD made it clear in its written Defence dated 14 June 2011 to Mr Ladu’s complaint in the Juba County Court and in letters to Mr Ladu’s legal representative, Dr Mulla, that IRD relied not only on cl 13 but also on cl 14 of the Employment Agreement. Clause 14 provided that:Disputes. If any dispute arises out of this agreement or any aspect of the employment relationship between you and IRD that cannot be resolved amicably, IRD may, at its sole discretion, bring such dispute to arbitration before a single arbitrator in Arlington, Virginia, in accordance with the rules of the American Arbitration Association. Judgment upon any award rendered by an arbitrator in accordance with this provision will be final and binding upon you and IRD, and may be entered in any court of competent jurisdiction.(Emphasis added) The Defence of 14 June 2011 made it clear to Mr Ladu that IRD was exercising its discretion to arbitrate the dispute between him and it, as cl 14 contemplated. The Defence relevantly stated:This court has no competent Jurisdiction to try this case as the plaintiff is still being waited [on] in Arlington Virginia for Arbitration with pending demand letters dated 11th April, 2011 and June 9th 2011 … Even before the Defence was filed, IRD made it clear to Mr Ladu’s legal representative in Juba, Dr Mulla, that it was requiring arbitration pursuant to cl 14 of the Employment Agreement. On 11 May 2011, Mr Matechak, for IRD, sent a letter headed “Re: Mr Godfrey Emmanuel Ladu – DEMAND FOR ARBITRATION” via email to Dr Mulla (again, at rkebi2002@yahoo.com) in which IRD advised that, since there had been no reply to the 11 April 2011 letter –… it seems that we have no choice but to invoke the dispute resolution provisions contained in Mr Ladu’s employment contract with IRD. See ¶¶ 13 and 14 of Mr Ladu’s employment contract. We trust that Mr Ladu will cooperate with these proceedings to be held in Arlington, Virginia and that no judicial compulsion will be necessary.The letter advised that “IRD’s basic claims” were as set out in IRD’s earlier letter of 11 April 2011 and added:Since Mr. Ladu’s termination, IRD has also learned that he violated ¶6(b) of his employment contract arising from his undisclosed ownership of Ladu & Brothers Company, Ltd. in Atlabala – Juba, South Sudan. By express agreement, Mr Ladu is liable to IRD for an additional $25,000 in liquidated damages.(Whilst the letters of 11 April 2011 and 9 June 2011 (see below) indicated that they were to be copied to ladubrotherscompany@yahoo.co.uk, the email that accompanied them did not show that this had been done; and Mr Matechak agreed in cross-examination that no arbitration notifications went to that email address prior to the 14 June 2011 email (see below).) A further letter was sent by Mr Matechak, for IRD, on 9 June 2011, via email to Dr Mulla (at rkebi2002@yahoo.com), headed “Re: Mr Godfrey Emmanuel Ladu – 2nd DEMAND FOR ARBITRATION”. This letter read as follows:It has been nearly a month since International Relief & Development (“IRD”) demanded that Mr Godfrey Emmanuel Ladu appear for arbitration in accordance with ¶¶ 13 and 14 of Mr Ladu’s employment contract previously provided. It has now been nearly an additional 30 days and we have yet to hear back from you or Mr Ladu.Our position remains firm. IRD rejects Mr Ladu’s demands and counter demands that Mr Ladu return approximately $70,000 in ill-gotten gains plus administrative costs related to the review and audit of Mr Ladu’s impropriety, plus $25,000 in liquidated damages as per ¶6(b) of his employment contract.We, after not hearing from you, have no confidence that Mr Ladu will cooperate with these proceedings to be held in Arlington, Virginia. If we do not hear from you within 5 days confirming Mr Ladu’s participation, we will seek judicial measures and compel his participation at his expense in Arlington, Virginia. If Mr Ladu fails to appear we will seek a default judgment against him.