Key Points: The Michael Wilson & Partners Limited case will test
the operation of a foreign arbitral award made after an Australian
The High Court of Australia has a prime opportunity to provide
much-needed clarification of general principles of international
arbitration law. The opportunity comes at a time when there is a
significant movement in Australia to promote international
The High Court has granted a foreign law firm, Michael Wilson
& Partners Limited (MWP), special leave to
appeal from a decision of the NSW Court of Appeal on questions
regarding abuse of process and the status of foreign arbitral
awards in Australia.
The trial, which was heard in 2009, related to the alleged
diversion of profits and business opportunities by three
Australians employed by MWP to work on energy and resources
projects in Kazakhstan. The trial judge awarded MWP more than $8
million against two of the Australians, partly on the basis that
they were accessories to breaches of fiduciary duties by the third
man who the judge found to be the "backbone" of the
conspiracy. MWP pursued the third Australian separately in an
arbitration in London, where he was later found liable, but on a
more limited basis than the two Australians in NSW.
In 2010, the New South Wales Court of Appeal found that there
was an apprehension that the senior NSW judge who heard the trial
was biased and ordered that the matter be sent for a retrial in
which MWP would be prohibited from obtaining a better result
against the accessories in NSW than it obtained against the
principal in the London arbitration. The Court of Appeal found that
it would be an abuse of process and would bring the administration
of justice into disrepute if the accessories bore a greater
liability in Court proceedings than the principal bore in an
Accordingly, the focal point of the High Court appeal is whether
it is an abuse of process for MWP to commence proceedings in NSW
after commencing an arbitration in a foreign jurisdiction. This
will test the status of a foreign arbitral award against a judgment
obtained in Australia on similar facts and related issues against
The question has never been considered by the High Court.
However, if the High Court follows leading English authorities such
as Sun Life v Lincoln National, the legal result would be
clear: an arbitral award is not in its nature available to third
parties for any purpose, so the two Australians found by the NSW
Court to have accessorial liability could not rely on a private and
confidential arbitral award to which they are not party to later
defeat their judgment liability.
It is well recognised in England that arbitrations on similar
issues may be determined differently by the arbitrator in each
arbitration. Further, while it has been established law for many
years in Australia and England that it is an abuse of process for a
litigant to raise an issue which has already been determined in a
separate court proceedings, that doctrine of abuse
of process has never been applied in respect of private
That is hardly surprising: there are powerful reasons against
extending the abuse of process doctrine to arbitral proceedings,
one of which is that that the doctrine is predicated on the
assumption that any inconsistency between judgments could be
avoided by, for example, forced joinder of parties or hearing
separate proceedings together. However, the private and
confidential nature of arbitration means that these mechanisms are
not ordinarily available in arbitration, other than by consent of
The rapidly increasing popularity of arbitration suggests that
the inability to join third parties without their consent and the
possibility of inconsistent determinations is rarely so
inconvenient that it outweighs the perceived advantages of
arbitration, including confidentiality, speed and privacy.
In addition, the High Court will consider whether there was an
apprehension that the senior NSW judge who heard a trial was biased
and whether the defendants waived their opportunity to complain
about apprehended bias.
The High Court is expected to hear the matter in June this year.
Clayton Utz partner Sid Wang acts for MWP.
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