Brazil: Australian Court Recognises English Arbitration Award

A shipowner headquartered in Singapore entered into a contract of affreightment (COA) with an Indian company for the shipment of six annual cargoes of coal in the shipowner ´s vessels. 

In 2009, the shipowner went into liquidation and as a result since this year until the end of the contract the Indian company no longer mentioned the cargo shipments, as stipulated in the contract entered into between the companies. 

In view of the above scenario, the shipowner incepted  an arbitration proceeding in London, according to the rules set out  by the COA, requesting that the Indian company´s  breach of contract  were typified, and, as a consequence,  an award of damages for the  losses sustained by the shipowner.

The CoA stipulated that the Arbitral Tribunal were composed by arbitrators classified as "trade people". The Arbitral Tribunal was composed of two lawyers, who, in turn, called a third arbitrator. The arbitrators were members of the London Maritime Arbitrators Association – LMAA.

Upon judging the dispute, the Arbitral Tribunal understood that the shipowner ´s arguments were grounded having adversely judged the Indian company to pay a considerable compensatory amount.

In order to enforce his right, the shipowner filed an execution action in Australia whose country the adversely judged company has sufficient assets to satisfy the debt.

It is worth emphasizing that Singapore, India, Australia and the United Kingdom adopted the International Arbitration Act of the British Community of Nations, a provision that allows to enforce an arbitration award rendered by one of these nations in another nation of referred organization.

The Indian company upon filing a motion to stay execution upheld lack of validity of the arbitration, under the allegation that the arbitrators were not "trade people", but instead, lawyers, being such a allegation the heart of the matter to be decided in court.

Upon judging the case, the Australian court judge understood that the LMAA´s arbitrators, who devote themselves entirely to judge maritime arbitrations are considered by the shipowner companies throughout the world as "trade people".  The curricula of both arbitrators who judged the dispute were of individuals of renowned expertise in the judgment of commercial arbitrations, as well as lawyers of stellar reputation in London. The court also pointed out that the umpire was nothing less than the London Maritime Arbitrators Association´s president and that time, and this latter was not a lawyer.

The court emphasized that if the Indian company disagreed with the appointment of the arbitrators,  this company, since the beginning of the arbitration proceeding,  should have contested the arbitrators´ appointment, and that such statement of defence is not valid after issuance of the arbitral award.

The decision of the court is of particular importance for disclosing the recognition of the Legislative and Judiciary branch of the British Community of Nations to disputes resolutions by means of arbitration.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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