It's the tragic echo of Michael Bolton's plea to
start over that has struck a chord with generations of fans. The
truth is sometimes people just don't want to start over if the
fighting never ends.
Imagine if parties agree to lower their guns and sign a
settlement agreement to resolve an arbitration before it begins,
but then one party doesn't honour the bargain. Would you want
to start an arbitration over again? Well if you're clever
you'll agree that if the other party doesn't honour the
settlement, the arbitral tribunal will make an award in your favour
without hearing any argument. It's a quick,
cheap and just solution, we reckon. And, after a decision on
Monday, it looks like the Full Court of the Federal Court of
Australia (including the Chief Justice) will have your back
(Gujarat Coke v Coeclerici  FCAFC 109). It's a
good sign for the enforcement of foreign arbitral awards in
In that case the parties suspended their arbitration in London
by signing a settlement agreement. Gujarat agreed to pay up within
15 days, or else Coerlerici would 'be entitled to an immediate
consent award, without the need for any pleadings or hearings'.
Gujarat didn't pay, so the tribunal in London made an award in
favour of Coerlerici. Then Coerlerici came to Australia to enforce
the award. What did the Australian court think of all this?
Well to enforce a foreign arbitral award in Australia the courts
don't hear the case again, they just check that both sides had
a chance to be heard and that the arbitration followed fair
procedure (s8, International Arbitration Act 1974).
Gujarat tried to argue that they didn't get a chance to be
heard – but that argument failed. The court took a practical
approach and wouldn't let Gujarat escape the express words of
its settlement agreement, and their consent to an award if they
We think this is a sensible decision. Arbitration only exists
because parties agree to it. And courts in Australia are showing a
tendency to leave arbitral awards alone if that's what the
parties have chosen.
We do not disclaim anything about this article. We're
quite proud of it really.
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Peter Sise explores how your contractual clause for recovery of legal costs might not do what you think it does.
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