On May 11, 2021, the Federal Court of Australia issued a ruling refusing to enforce a foreign arbitration award against a defendant (one of four) who claimed to be completely unaware of the arbitration proceedings in China.
The court's ruling based on the ruling was that the specific defendant had not been given a proper notice of arbitration and therefore could not enforce the award against her. The court's decision highlights that proper notification is the key to the enforcement of foreign arbitral awards, and warns parties seeking to enforce foreign arbitral awards in Australia to ensure that the arbitration defendant is properly notified in any possible way.
What you need to know
When seeking to enforce a foreign arbitration award, please confirm with the applicant what steps have been taken at the initial stage to ensure that the notice of the proceedings is brought to the attention of the respondent. It is not enough for the foreign arbitration tribunal to be satisfied with the service of the notice, because the Australian courts will make their own judgments on whether the notice is appropriate. This is especially true in some jurisdictions (such as China under the rules of the China International Economic and Trade Arbitration Commission (CIETAC)) where arbitral tribunals in those jurisdictions are obliged to issue notices to the affected parties without transferring the responsibility to applicant. Even if the unsuccessful service is not the fault of the applicant, the applicant may still suffer the consequences. The applicant should also take measures to comply with the service and notification obligations in the contract, even if it contains new information, which may indicate that the information is no longer accurate.
In the Beijing Cornerstone Venture Capital Fund (Limited Partnership) v. Liu Yi case, the Chinese applicant sought to use the International Arbitration Act of 1974 (United States Federal) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly referred to as the New York Convention). "), to enforce the CIETAC arbitration award against the four defendants. Unfortunately, the notice issued by the arbitral tribunal was mislabeled and could not be effectively served in Australia. The applicant subsequently provided other alternative service addresses, which have been accepted by the Chinese arbitration tribunal.
The Australian courts will not accept that delivery services provided at other addresses (and most importantly, business addresses in China) are valid, or that the notice of service provided to the husband is sufficient to be deemed to have properly notified the wife. The court also accepted the wife's statement that the right of service is a "personal right" and held that there is no "technical or procedural failure" and that effective service is the "basic requirement for the integrity of arbitration." Therefore, the court refused to judge the enforcement of the wife in the lawsuit.
What's the next step?
Stakeholders are paying close attention to the Energy City Qatar Holding Company v. Hub Street Equipment Pty Ltd case, which has been appealed from the Federal Court and is currently awaiting judgments by all federal courts. In addition to other matters, the Energy City case also involved similar issues of proper notification and violation of natural justice. Before the federal courts issue a judgment, applicants are advised to carefully consider any rulings they want to enforce and what steps to take to ensure proper notification.
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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.