Australia: Agreement for summary entry of arbitral award in event of default enforced - Australian court supports the flexibility of international arbitration under the New York Convention

Last Updated: 29 October 2013
Article by Michael Mitchell

Coeclerici Asia (Pte) Ltd v Gujarat NRE Coke Limited [2013] FCA 882

Judgment date: 30 August 2013

Jurisdiction: Federal Court of Australia1

In Brief

  • The Federal Court of Australia has enforced a settlement agreement by parties on the eve of arbitration in London, which provided for summary entry of an arbitral award in the event of default.
  • The award debtors sought to prevent enforcement of the summary award in both England and Australia. The English court declined to interfere. The Australian court did likewise and also held that it was bound by the decision of the English court, being the court of the seat of the arbitration.


Coeclerici Asia (Pte) Ltd (Coeclerici) was a Singaporean corporation. The first respondent, Gujarat NRE Coke Limited (Gujarat Coke) is a corporation incorporated under the laws of India. It is claimed to be the largest independent producer of metallurgical coke in India.

By a Purchase Agreement dated 15 September 2011 entered into between Coeclerici, as buyer, and Gujarat Coke, as seller (the Purchase Agreement), Coeclerici agreed to buy from Gujarat Coke 40,000 metric tonnes of metallurgical coke plus or minus 10% subject to shipping tolerance. Delivery was to take place within the first three calendar months of 2012. The Purchase Agreement contained a London arbitration clause2.

Coeclerici made a down-payment of USD 10 million. Additional terms could not be agreed and no coke was delivered. Coeclerici demanded the return of the down-payment, as well as USD 750,000 in liquidated damages. Gujarat Coke only repaid USD 2 million, in two instalments. Coeclerici invoked the London arbitration clause.

Before the arbitration could be heard, Gujarat Coke offered payment of an amount by instalments and Coeclerici accepted. The parties entered into a settlement agreement (the Payment Agreement), which provided for summary entry of an arbitral award in the event that an instalment was not paid. The Managing Director of Gujarat Coke was party to this agreement and guaranteed payment of the instalments.

Relevantly, clause 4 of the Payment Agreement provided:

"4. In the event that [Gujarat Coke] and the Guarantor fail to pay any of the Settlement Payments in accordance with this Payment Agreement, Coeclerici shall be entitled to resume the suspended arbitration proceedings and/or commence new arbitration proceedings in accordance with this Payment Agreement and the settlement in clause 3 shall be null and void. In that event, [Gujarat Coke] and the Guarantor expressly and irrevocably agree that Coeclerici will be entitled to an immediate consent award, without the need for any pleadings or hearings, for [the outstanding amounts, costs, expenses and interest]."

Failure to pay and entry of summary Award, over protests

Gujarat Coke and its Managing Director (the Respondents) failed to pay the first instalment, which was due on Friday, 1 February 2013.

On Monday, 4 February 2013, Coeclerici's solicitor sent an email to the arbitrators and to the solicitor for the Respondents, attaching the Payment Agreement and requesting that an immediate consent award be entered in accordance with clause 4. The solicitor for the Respondents replied the next day that he had not been able to get instructions as the principals of his client were "involved in a major international conference".

On 6 February 2013, Coeclerici's solicitor sent a further email request that an arbitral award be entered immediately. One of the arbitrators responded: "I confirm on behalf of the tribunal that it is now proceeding to an Award in this matter as requested by the Claimant. We hope to be in touch shortly with formal notice of publication of the Award."

However, on 7 February 2013, the solicitor for the Respondents sent a long email to the arbitrators which stated inter alia:

"... However we were surprised by the suggestion that the tribunal would proceed to its award without giving our clients a reasonable opportunity to put their case.

Our clients do not consider that they are in breach of the agreement. The sum claimed by the Claimant is very substantial. In our submission the tribunal simply does not have the power to proceed to an award at present. Our clients have a right to present their case and are in breach of no peremptory order. There are real issues for the tribunal to decide."

The email then went on to outline the submissions which the Respondents wished to make.

This email elicited a further exchange of detailed emails between the solicitors for each side which put further arguments for and against the entry of a summary award.

On 11 February 2013, the arbitrators sent an email to both solicitors, noting that:

"As the arbitrators see it, the Payment Agreement was a freestanding agreement made by sophisticated commercial parties who must/should have been aware of any possible complications arising from the need to obtain exchange control permission and who should therefore have made provision for any such contingency in that Agreement. ... The respondents appear to us to be in breach of the terms of the Payment Agreement and if we are correct in that conclusion then it seems to us that the claimants are entitled to the award which they now seek."

Despite a further protest from the solicitor for the Respondents, on 14 February 2013 the arbitrators made an award in favour of Coeclerici for USD 8.5 million plus interest and costs (the Award).

The Respondents fail to halt the Award in the English High Court of Justice

In England, the Respondents made an urgent application to the High Court of Justice, seeking to overturn the Award on the basis that it was "infected by serious irregularity"3 , as they were not given a reasonable opportunity to present their case. On 10 July 2013, Judge Mackie QC refused this application.

Enforcement against subsidiary in Australia

Gujarat Coke has a subsidiary in Australia which owns and operates two mines. Coeclerici moved to enforce the Award in Australia, by applying for an order under section 8(3) of the International Arbitration Act, which gives legal effect to the New York Convention in Australia4. Coeclerici also applied for an order appointing a receiver over the assets of the local subsidiary to effect the sale of its shares or otherwise to ensure that the Award debt was paid.

The Respondents appeared and vigorously opposed Coeclerici's application pursuant to section 8(5)(c) of the International Arbitration Act, on the basis that the arbitrators in London had not given them a reasonable opportunity to present their case. On this basis they also alleged that a breach of the rules of natural justice occurred in connection with the making of the Award, contract to section 8(7A) of the International Arbitration Act.


Foster J found against the Respondents on three distinct bases:

  1. Firstly, he found on the facts of the case that the Respondents had been given "more than a reasonable opportunity" to put their case before the arbitrators as to why a summary Award should not be made.
  2. Secondly, he found that the Respondents were estopped from raising these issues before him because they had already been decided by Judge Mackie QC in the English High Court. Although the precise details of the wording of the English and Australian Acts differed somewhat, nevertheless he noted:
  3. "... Gujarat Coke and [the Managing Director] ... submitted to that Court that they were shut out on 4 February 2013 by the arbitrators from making submissions in support of their opposition to the making of such an award. They also said that, thereafter, they were not afforded a reasonable opportunity to put their case. This last proposition was based upon the very same emails as were tendered before me in support of grounds 1 and 2 of the respondents' Amended Notice of Grounds of Opposition. Judge Mackie QC rejected all of these contentions. The issue has been determined by the English High Court of Justice and cannot be re litigated here. There is an issue estoppel. The matter is probably also res judicata."5

  1. Finally, he held as a separate ground that the English High Court of Justice was the court of the seat of the arbitration. Under the New York Convention, any application to set aside the Award should be made in that court:
  2. "Even if there were no issue estoppel or res judicata, it would generally be inappropriate for this Court, being the enforcement court of a Convention country, to reach a different conclusion on the same question as that reached by the court of the seat of the arbitration. It would be a rare case where such an outcome would be considered appropriate."6

Order to appoint receivers

Foster J agreed that a receiver should be appointed to the Australian subsidiary of Gujarat Coke in order to sell its shares or otherwise obtain payment of the Award debt:

"It seems to me that the Court may appoint receivers in aid of enforcement of a judgment at law if it can be shown that other methods of execution would be inadequate or extremely inconvenient. The guiding principle should be: What is just and convenient in all the circumstances of the case? ... The appointment of receivers ... is a convenient (and probably the most convenient) way of expeditiously effecting the sale of the relevant shares in aid of the judgment. In the end, it is likely to be less costly than proceeding down the charging order path."7


The Respondents have lodged an appeal against the decision. They applied for a stay of Foster J's judgment, but this was refused by Katzmann J on 6 September 2013. The present disposition of that appeal is unknown.


  • This decision emphasises the flexibility of international arbitral awards under the New York Convention, including as a means of enforcing agreements to settle arbitrated disputes.
  • Parties who are approaching an arbitration hearing may thus make a settlement agreement which provides for the enforcement of payment of liquidated sums by agreeing to a summary arbitral award in the event of default.
  • Whilst each case turns on its own facts, the readiness of both the English and Australian courts to quickly enforce this summary arbitral award will give parties to arbitration added confidence to enter into settlement agreements in appropriate cases, thus avoiding the necessity of a full arbitral hearing.


1Foster J
2To take place before three arbitrators in London under the auspices of the London Maritime Arbitrators' Association.
3Pursuant to section 68(1) of the Arbitration Act 1996 (UK)
4Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (the New York Convention).
5Judgment at [102]
6Judgment at [103]
7Judgment at [108-109]

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