By Peter McQueen, FCIArb Arbitrator and Mediator
Successful enforcement of foreign arbitration awards requires the proper notice of arbitration proceedings being given and the proper appointment of the arbitral tribunal being made, as exemplified in the recent Federal Court of Australia decisions in Beijing Jishi Venture Capital Fund (Limited Partnership) v Liu & Ors [2021] FCA 477 (Jishi Fund) and Hub Street Equipment Pty Ltd v Energy City Qatar Holding Company [2021] FCAFC 110 (Hub Street).
These two 2021 Federal Court decisions highlight the importance of proper notice being given to the parties to the arbitration proceedings and of the proper appointment of the arbitral tribunal. In each the Court declined to enforce the foreign arbitration award, having determined in one decision that proper notice had not been given and in the other decision, that proper appointment had not been made. The relevance to Australian maritime operators is the fact that there are not infrequent applications made for enforcement in Australia of maritime related foreign arbitration awards.
The decisions
Jishi Fund: Mrs Elaine Lui was a respondent party who opposed the enforcement of an arbitration award made in China in favour of the Jishi Fund and against her and other respondents, all of whom took no part in the arbitration proceedings, which were governed by the arbitration rules of the China International Economic and Trade Arbitration Commission (CIETAC Rules ). The dispute which was the subject of the arbitration related to a shareholders agreement and a public offering in China.
Mrs Lui’s opposition to enforcement was on the grounds that she was not afforded proper notice of either the arbitration itself or the appointment of the arbitrators, and that this failure amounted to a breach of the rules of natural justice, such that enforcement of the award against her would be contrary to public policy. The Federal Court found in her favour noting that the Jishi Fund had failed to give notice in accordance with the parties’ agreement either in the manner specified in the shareholders agreement or under the CIETAC Rules.
Hub Street: a dispute arose between Energy City Qatar Holding (ECQ) , a Qatar company, and Hub Street Equipment (Hub), an Australian company, arising in a contract for Hub to supply and install street lighting equipment and furniture and their accessories in Doha. Albeit that the parties had agreed in the contract to refer disputes to arbitration in accordance with the rules of arbitration in Qatar, ECQ commenced proceedings in the Qatari Court and obtained orders from that Court appointing an arbitral tribunal in Qatar in a manner which was subsequently determined by the Full Federal Court not to have been in accordance with the agreement of the parties.
Hub neither participated in those Qatari Court proceedings nor in the arbitration proceedings which followed, despite notices being sent by that arbitral tribunal to Hub’s nominated address in Australia on six occasions. ECQ obtained an arbitration award in its favour against Hub and then obtained an order from the Federal Court at first instance enforcing that foreign award against Hub.
Hub appealed to the Full Federal Court, which found the award should not be enforced because the arbitral tribunal was not composed in accordance with the agreement of the parties, that being a proper basis to resist enforcement. Such failure to appoint the arbitral tribunal in accordance with the agreement of the parties was fundamental to the jurisdiction of that arbitral tribunal.
Comment
A fundamental objective of the parties, and also of the arbitral tribunal, when arbitrating a dispute is to ensure that all necessary procedural steps are taken in the arbitration proceedings in accordance with the agreement of those parties.
Paramount among these steps is the giving of proper notice of the arbitration proceedings and the making of the proper appointment of the arbitral tribunal.
As these two decisions demonstrate this will assist in making the award enforceable by the winning party against the losing party and not make it open for the losing party to oppose its enforcement.
