Having regard to the fact that the Defendant pleaded illegality in the arbitral proceedings and that the arbitrator rendered an award and made findings of fact and law that the contracts between the Plaintiff and the Defendant were not illegal and were not contrary to public policy according to their governing law (England) or according to the law of their place of performance (Pakistan) and were not performed in a manner which was contrary to public policy according to their governing law (England) or according to the law of their place of performance (Pakistan):-
(1) Whether the Defendant is entitled to allege and seek to prove in these proceedings that the Plaintiff performed, purported to perform or intended to perform its obligations under the contracts in a manner which:
(a) was contrary to the public policy and laws of the place of performance, namely, Pakistan;
(b) was contrary to Australian public policy;
by reference to the facts particularised in paragraph 4(b) of the Defence.
(2) If the answer to 1(a) is "yes":
(a) whether the Defendant is entitled to discovery, or
(b) whether the Defendant is entitled to discovery limited to the documents discovered in the arbitral proceedings, or
(c) whether the Defendant is entitled to discovery of additional documents, beyond those discovered in the arbitral proceedings, and if so, what documents.
(3) If the answer to 1 (b) is "yes":
(a) whether the Defendant is entitled to discovery, or
(b) whether the Defendant is entitled to discovery limited to the documents discovered in the arbitral proceedings, or
(c) whether the Defendant is entitled to discovery of additional documents, beyond those discovered in the arbitral proceedings, and if so, what documents".
4 The notice of motion of 25 June 2004 was argued in front of Bergin J on 1 July 2004. The transcript of the argument (to which the parties agreed I could refer) indicates that her Honour expressed the view that the notice of motion was "too early" (T 15 .21). Her Honour further said:
"There are a number of problems that have been thrown up, not the least of which is, albeit that Lord Justice Mantell has been described as robust, there is, it seems to me, a lacuna because of his fresh evidence point. Now, if there is to be that sort of thing occur in this case then I should not cut it off at its knees at the moment, and there is arguably a defence here prima facie. I am of the view that the matter should go forward. You can be protected for the moment, unless Mr Bathurst wants to be more robust about this, with having the application for a separate question not dismissed but adjourned, but I will hear what the has to say about that. It seems to me that because of the way in which the English court has approached it and the tantalising 7.11, I am of the view it should continue."
5 In the result, her Honour stood over the notice of motion and gave directions, among other things, for the filing of any amended defence.
6 An amended defence was filed on 14 July 2004, and a reply thereto was filed on 21 July 2004. The essential argument which is thrown up is whether it is open to the defendant, in the hearing of a claim for enforcement of an international arbitration award, to raise the defence of illegality (said to enliven the discretion set out in s 8(7)(b) of the International Arbitration Act 1974 (Cth)) in circumstances where, it is said, the relevant facts were argued before and were the subject of the decision of, the arbitrator.
7 The parties have suggested that this is a question of substantial practical importance. I am not sure that this is so.
8 The plaintiff founds its claim upon some remarks in Soleimany v Soleimany [1999] QB 785 at 800. The court said:
"It may, however, also be in the public interest that this court should express some view on a point which has been fully argued and which is likely to arise again. In our view, an enforcement judge, if there is prima facie evidence from one side that the award is based on an illegal contract, should inquire further to some extent. Is there evidence on the other side to the contrary? Has the arbitrator expressly found that the underlying contract was not illegal? Or is it a fair inference that he did reach that conclusion? Is there anything to suggest that the arbitrator was incompetent to conduct such an inquiry? May there have been collusion or bad faith, so as to procure an award despite illegality? Arbitrations are, after all, conducted in a wide variety of situations; not just before high-powered tribunals in international trade but in many other circumstances. We do not for one moment suggest that the judge should conduct a full-scale trial of those matters in the first instance. That would create the mischief which the arbitration was designed to avoid. The judge has to decide whether it is proper to give full faith and credit to the arbitrator's award. Only if he decides at the preliminary stage that he should not take that course does he need to embark on a more elaborate inquiry into the issue of illegality."
9 It is important to note that, before the court said what I have set out, it said on the same page "[w]e do not propound a definitive solution to this problem": a remark that I understand to indicate that the passage that I have set out was not intended to be definitive.
10 It is clear that, upon an application for an enforcement of an international arbitral award, the discretion that is conferred (in Australia) by s 8(7)(b) of the Act is wide. It may also be, although I express no concluded view, that there is, in addition, a general discretion: see Resort Condominiums International Inc v Bolwell [1995] 1 Qd R 406.
11 The plaintiff relies upon the remarks in Soleimany, to which I have referred, and upon the dissenting judgment of Waller LJ in Westacre Investments Inc v Jugoimport-SPDR Holding Co Ltd [2000] 1 QB 288. Although his Lordship was part of the court that decided Soleimany, his views did not find favour with Mantell LJ and Sir David Hirst . Indeed, of the passage in Soleimany that I have referred to and that Waller LJ relied upon, Mantell LJ said at 316-317:
"For my part I have some difficulty with the concept and even greater concerns about its application in practice, but, for the moment and uncritically accepting the guidelines offered, it seems to me that any such preliminary inquiry in the circumstances of the present case must inevitably lead to the same conclusion, namely, that the attempt to re-open the facts should be rebuffed."
12 In Westacre, the court, by majority, dismissed an appeal from Colman J. His Lordship's judgment is reported at [1999] QB 740. At pages 767-768 of the report, his Lordship summarised what he said was the effect of the authorities. He said:
"The effect of the authorities is in my judgment as follows.
(i) Where it is alleged that an underlying contract is illegal and void and that an arbitration award in respect of it is thereby unenforceable the primary question is whether the determination of the particular illegality alleged fell within the jurisdiction of the arbitrators. (ii) There is no general rule that, where an underlying contract is illegal at common law or by reason of an English statute, an arbitration agreement, which is ancillary to that contract is incapable of conferring jurisdiction on arbitrators to determine disputes arising within the scope of the agreement including disputes as to whether illegality renders the contract unenforceable. (iii) Whether such an agreement to arbitrate is capable of conferring such jurisdiction depends upon whether the nature of the illegality is such that, in the case of statutory illegality the statute has the effect of impeaching that agreement as well as the underlying contract and, in the case of illegality at common law, public policy requires that disputes about the underlying contract should not be referred to arbitration. (iv) When, at the stage of enforcement of an award, it is necessary for the court to determine whether the arbitrators had jurisdiction in respect of disputes relating to the underlying contract, the court must consider the nature of the disputes in question. If the issue before the arbitrators was whether money was due under a contract which was indisputably illegal at common law, an award in favour of the claimant would not be enforced for it would be contrary to public policy that the arbitrator should be entitled to ignore palpable and indisputable illegality. If, however, there was an issue before the arbitrator whether the underlying contract was illegal and void, the court would first have to consider whether, having regard to the nature of the illegality alleged, it was consistent with the public policy which would, if illegality were established, impeach the validity of the underlying contract, that the determination of the issue of illegality should be left to arbitration. If it was not consistent, the arbitrators would be held to have no jurisdiction to determine that issue. (v) If the court concluded that the arbitration agreement conferred jurisdiction to determine whether the underlying contract was illegal and by the award the arbitrators determined that it was not illegal, prima facie the court would enforce the resulting award. (vi) If the party against whom the award was made then sought to challenge enforcement of the award on the grounds that, on the basis of facts not placed before the arbitrators, the contract was indeed illegal, the enforcement court would have to consider whether the public policy against the enforcement of illegal contracts outweighed the countervailing public policy in support of the finality of awards in general and of awards in respect of the same issue in particular."
13 His Lordship's judgment was considered by the Court of Appeal in Soleimany. At 803, their Lordships said, of what Colman J had said: