Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. & Anor - [2022] HCATrans 195

[2022] HCATrans 195

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S43 of 2022

B e t w e e n -
KINGDOM OF SPAIN
Appellant
and
INFRASTRUCTURE SERVICES LUXEMBOURG S.À.R.L
First Respondent
ENERGIA TERMOSOLAR B.V.
Second Respondent

GAGELER J
GORDON J
EDELMAN J
STEWARD J
GLEESON J
JAGOT J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 10 NOVEMBER 2022, AT 10.00 AM

(Continued from 9/11/22)

GAGELER J: Mr Ward.

MR WARD: May it please the Court. Your Honour, at the outset, may I say that the parties have agreed that your Honours should have copies of some of the text of Professor Schreuer’s work, and so I think handouts have been prepared, which can be handed up. I think your Honour Justice Gordon may have had access to the second edition, so we are handing both the second edition and a very recent third edition. There is no material difference in the relevant parts of the text, save that in the third edition there is a reference to an additional recent decision involving Total Petroleum, but otherwise the text and the conclusions are relevantly the same. We are arranging an electronic copy as well as the hard copies we are handing up.

Could I start by inviting the Court, please, to turn to the text of the articles of ICSID at page 145, tab 3, volume 1. Your Honour Justice Gageler yesterday asked me a question in relation to what we say the affirmative content of Article 54 is. Could I first note that, and I will return to it, that his Honour Justice Perram in the Full Court focusses primarily on Article 54(2) as the source of implication. In our submission, with respect, that cannot be right, because Article 54(2) is a procedural or mechanistic provision.

If there is an implication said to arise anywhere, we say it must arise in Article 54(1), and so we just highlight that difficulty – and I will come back to the reasons of the Full Court in a moment. Your Honour Justice Gageler, though, asked me the question as to what do we say is the affirmative content of Article 54(1). And I gave the answer, but I will try to explain it again. We say that Article 54(1) operates in three distinct ways.

The first, if I might use Australia, perhaps as an example of the relevant State, if an investor in any contracting State approached the Australian courts with an award – I am sorry, if any other State approached Australia with an award against an investor, that is, a State had been successful in ICSID proceedings against an investor, Australia would be obliged to both recognise and enforce the pecuniary obligations of that award to the extent that there were any, because no question of foreign State immunity could arise. That is a positive obligation upon Australia as a contracting State to enforce within its territory an…

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

AGLC: Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. & Anor [2022] HCATrans 195
Case: [2022] HCATrans 195
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered a dispute between the Kingdom of Spain and Infrastructure Services Luxembourg S.à.r.l. and another party. The core of the dispute concerned the enforcement in Australia of an arbitral award made in favour of Infrastructure Services Luxembourg S.à.r.l. and its co-claimant against the Kingdom of Spain. The Kingdom of Spain sought to resist the enforcement of this award.

The High Court was required to determine whether the arbitral award was enforceable in Australia, specifically in light of the Kingdom of Spain's argument that the award was contrary to Australian public policy. This involved an examination of the scope of the public policy exception under the International Arbitration Act 1974 (Cth), which gives effect to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). The central question was whether the alleged breaches of the Energy Charter Treaty by Spain, which formed the basis of the arbitral award, rendered the award unenforceable in Australia.

The Court reasoned that the public policy exception in Australian law is narrowly construed and requires a high threshold to be met. It was held that the mere fact that an award might be based on an interpretation of a treaty that differs from Australia's own understanding, or that the treaty itself might be subject to different interpretations or challenges, does not automatically render an award contrary to Australian public policy. The Court emphasised that the enforcement of foreign arbitral awards is a matter of significant international importance, and the public policy exception should not be used as a vehicle to re-litigate the merits of the underlying dispute or to frustrate the purpose of the New York Convention. The Court found that the Kingdom of Spain had not demonstrated that the enforcement of the award would be manifestly contrary to the fundamental notions of justice and morality in Australia.

The High Court ultimately dismissed the Kingdom of Spain's application to set aside the order for enforcement of the arbitral award.

Orders