Papua New Guinea v Sandline - [1998] QSC 298

IN THE SUPREME COURT
OF QUEENSLAND OS No. 10110 of 1998
Brisbane
Before Mr Justice Ambrose
[Papua New Guinea v. Sandline]
In the matter of the Commercial Arbitration Act 1990
And

In the matter of an application pursuant to Section 38 thereof by
THE INDEPENDENT STATE OF PAPUA NEW GUINEA against SANDLINE INTERNATIONAL INC

REASONS FOR JUDGMENT - B.W. AMBROSE J.
Delivered the 22nd day of December 1998

This is an application by Sandline International Inc (“Sandline”) for an order that Independent State of Papua New Guinea (“Papua New Guinea”) provide security in the sum of $70,600 for costs of an application which Papua New Guinea brings against Sandline under s.38(4) of the Commercial Arbitration Act 1990 (Qld) for leave to appeal to the Supreme Court of Queensland against an interim arbitral award made at Cairns on 15 October 1998 holding that Sandline was entitled to recover from Papua New Guinea the sum of US$18 million together with interest at the rate of 8% from 9 March 1997 to the date of the award and thereafter at the same rate until payment. There were other orders made in the award but it is unnecessary for the purpose of this application to refer to them.
It is convenient to state very briefly the history of events which have led finally to this application which has been staunchly resisted by Papua New Guinea. On 31 January 1997, Papua New Guinea and Sandline agreed that Sandline should provide within the territory of that state the manpower, equipment and services specified in the agreement under Clause 2.
Under Clause 3, Sandline undertook to train a Special Forces Unit which was part of the Military/Special Constable Forces of Papua New Guinea in military and other skills to assist the Armed Forces of Papua New Guinea to overcome by military means a group referred to in the agreement as “the illegal and unrecognised Bouganville Revolutionary Army”. Under Clause 2.2, Sandline was required to have all of its personnel involved in the performance of its obligations under the contract enrolled as “Special Constables” of Papua New Guinea who should then carry appropriate ID cards “in order to legally undertake their assigned roles”.
Under Clause 2.1(g) it was provided:
“(g)A project co-ordinator who together with the strike force commander and his senior intelligence officer shall maintain liaison with and provide strategic and operational briefings and advice to the Prime Minister, Defence Minister, NEC, NSC, the Commander of the PNG Defence Forces and his delegated officers as may from time to time be required or requested.”
Clause 4.2 provided:
“The State will ensure that full co-operation is provided from within its organisation and that of the PNG Defence Forces. The Commanders of the PNG Defence Forces and Sandline shall form a joint liaison and planning team for the duration of this agreement. The operational deployment of Sandline personnel and equipment is to be jointly determined by the Commander PNG Defence Forces and Sandline’s Commander taking account of their assessment…

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: [1998] QSC 298
Decision Date: 22 December 1998

CaseChat Overview and Summary

In the Supreme Court of Queensland, the case of Papua New Guinea v Sandline International Inc involves an application by Sandline for an order that Papua New Guinea provide security for costs in the sum of approximately $70,000 in a form acceptable to the Registrar of the Court. The application arises out of an interim arbitral award made at Cairns on 15 October 1998 holding that Sandline was entitled to recover from Papua New Guinea the sum of US$18 million together with interest at the rate of 8% from 9 March 1997 to the date of the award and thereafter at the same rate until payment. Papua New Guinea brought an application for leave to appeal against the arbitral award under s.38(4) of the Commercial Arbitration Act 1990 (Qld). Sandline opposes the application for leave to appeal and seeks an order that Papua New Guinea provide security for costs of the application for leave to appeal. The legal issues include whether Papua New Guinea, as a friendly foreign state, should be required to provide security for costs and the considerations relevant to the exercise of the Court's discretion in this regard. The Court concluded that there is some prospect of Papua New Guinea failing to obtain leave to appeal against the arbitral award, particularly since its application is opposed by Sandline. If Sandline is left to recover such costs by relying upon the Reciprocal Enforcement of Judgments Act of Papua New Guinea read with the Claims By and Against the Government Act of 1996 of that State, there will be some risk, if not indeed an appreciable risk that Sandline may find it difficult to obtain an expeditious payment of any judgment for costs that it might obtain in this Court. The Court ordered that Papua New Guinea give security for Sandline's costs of the application for leave to appeal in the sum of $70,000. The application for leave to appeal will be stayed until the security is given.

Orders