Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. & Anor

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.