Consideration
26 Subject to Part IV of the IAA, by force of s 32 of the IAA, Art 52(5) of the Convention has the force of law in Australia. There is nothing else in Part IV of the IAA that appears to be relevant to the issues that arise for consideration.
27 It is thus the position that under Art 52(5) of the Convention "enforcement" of the award is provisionally stayed. In the enforcement proceeding, the applicants seek enforcement of the award. On the face of it, progressing the enforcement proceeding towards the final hearing on 29 October 2019 would therefore be in conflict with the automatic provisional stay of enforcement under Art 52(5).
28 However, under Art 54(1), Australia as a contracting State "shall recognize [the] award … as binding and enforce the pecuniary obligations imposed by [the] award within its territories as if it were a final judgment of a court in that State". That might be seen to oblige the Court to progress the proceeding and not stay it. However, in my view the obligations under that provision are subject to the provisions of Art 52(5) with the result that the automatic provisional stay of enforcement also stays, or suspends, Australia's obligations under Art 54(1).
29 In Maritime International Nominees Establishment v Republic of Guinea (ICSID Case No. ARB/84/4, Interim Order 1, 12 August 1988) the ad hoc Committee that was established following Guinea's request for a stay of enforcement of an award considered the relationship between the stay provisions in Art 52 and the enforcement provisions in Art 54. The Committee (at [10]) reasoned that "although the Convention does not explicitly so provide, it seems clear that suspension of a party's obligation to abide by and comply with the award necessarily carries with it suspension of a Contracting State's obligation (and for that matter its authority) to enforce the Award, even though during the pendency of the Committee's examination of the application for annulment the validity of the Award remains unaffected".
30 To my mind, that reasoning is correct and I adopt it. Arts 52 and 54 have to be read and understood together, and that is the only logical way of reading them in harmony.
31 It remains to consider whether the contentions put forward by Spain in the written submissions that it filed but which it subsequently did not assert by way of appearance at the hearing, have the consequence that the current proceeding should not be stayed.
32 In that regard, the starting point is that the applicants rely on the power conferred by s 23 of the Federal Court of Australia Act 1976 (Cth) "in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders … as the Court thinks appropriate" for the stay orders (my emphasis). That raises the question whether in the face of Spain's conditional appearance to assert foreign State immunity this Court has "jurisdiction" as referred to in s 23 such as to have the power conferred by that section.
33 In PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2012] HCA 33; 247 CLR 240 consideration was given to the nature of the immunity from "jurisdiction" that the Immunities Act confers, and to the manner or procedure by which a court will decide the question of immunity.
34 The plurality of French CJ and Gummow, Hayne and Crennan JJ stated as follows with regard to "jurisdiction":
[17] …in s 9 and elsewhere in the Act the term "jurisdiction" is used not to identify the subject matter of a proceeding, but the amenability of a defendant to the process of Australian courts. The notion expressed by the term "immunity" is that the Australian courts are not to implead the foreign State, that is to say, will not by their process make the foreign State against its will a party to a legal proceeding. Thus, the immunity may be understood as a freedom from liability to the imposition of duties by the process of Australian courts.
[Footnotes omitted.]
35 Their Honours went on to consider how the question of foreign State immunity is to be raised and decided. After citing (at [21]) the provisions of s 27(2) of the IAA by which a judgment in default of appearance shall not be entered against a foreign State or against a "separate entity" of a foreign State unless the court is satisfied that, in the proceeding, the foreign State or separate entity is not immune, the following was said:
[22] If the foreign State or separate entity has appeared and waived any immunity, or has asserted its immunity, the issue of immunity will have either disappeared or fallen for adjudication. If there is no appearance, then it will be for the court to be satisfied under s 27 as to the absence of immunity before entry of any default judgment which is sought. It is not a correct construction of the Act that even without an application under s 38 to set aside service, or an application under s 27 for a default judgment, the court must of its own motion satisfy itself that the defendant could not establish immunity.
[Footnote omitted.]
36 That paragraph has one footnote at the end as follows: "cf Zhang v Zemin [2010] NSWCA 255; (2010) 79 NSWLR 513 at 523, 541-542." Obviously the use of "cf" in this footnote indicates that not everything that is referred to in Zhang is necessarily approved or adopted. The latter of the pinpoint references (i.e. 541-542) is from the separate concurring judgment of Allsop P which does not seem to be immediately relevant. The former (i.e. 523) is to the judgment of Spigelman CJ, with whom McClellan CJ at CL agreed. Relevantly, it is as follows:
[33] In my opinion, s 9 is intended to have effect prior to the purported exercise of a jurisdiction to which it is addressed. In the usual case, the issue of jurisdiction should be determined as a preliminary matter. (See […])
[34] Where s 9 applies a court is deprived of jurisdiction to hear and determine the matter. Section 9 has effect prior to any "judgment, order or process of the court". Section 9 is, as the Attorney submitted, self-executing.
[35] Nothing in s 38 impliedly, let alone expressly, suggests that it is the sole mechanism for dealing with the issue of jurisdiction. In its terms, s 38 indicates that it is not. It applies only when there has been a "judgment, order or process" which is "inconsistent with an immunity" under the Act. The peremptory terms of s 9, and the whole of Pt II of the Act, suggest that the protection of s 9 is intended to apply in limine and not only after a "judgment, order or process" has issued from the court.
[36] This conclusion is, in my opinion, reinforced by a purpose of the legislative scheme, one of which is to prevent foreign states from being subject to the necessity to participate in proceedings at any stage. That is one reason why s 9 is directed to the jurisdiction of the courts, rather than to the powers of the courts. Imposing a necessity on a foreign state to contest the issue of immunity in all circumstances is inconsistent with the attainment of that object.
[37] A further, alternative, reason for rejecting the appellant's contentions is that there is a long line of authority that a court must satisfy itself that it has jurisdiction, whether or not a jurisdictional issue is raised by a party.
37 It is clear from PT Garuda that the mere fact of Spain having entered a conditional appearance in which it has indicated that it asserts foreign State immunity under the Immunities Act does not mean that that issue has to be determined prior to any consideration of a stay of the proceeding. That is because staying the proceeding does not implead Spain in any way; it does not "make the foreign State against its will a party to a legal proceeding" (see PT Garuda at [17]).
38 I do not read Zhang to be in conflict with that. Staying the proceeding is avoiding or deferring any "judgment, order or process of the court" (see Zhang at [34]) rather than making Spain subject to any judgment, order or process. A "judgment, order or process" referred to in that paragraph is, as is made clear in Zhang at [35], something that might be the subject of an application under s 38 of the Immunities Act on the basis that it is inconsistent with an immunity conferred by the Immunities Act. That is an immunity from jurisdiction in the sense explained in PT Garuda (at [17]) which, as I have said, is not impugned by the stay.
39 This Court has "jurisdiction" in this matter in the sense used in s 23 of the Federal Court Act by virtue of s 19 of that Act, s 39B(1A)(c) of the Judiciary Act 1903 (Cth) and s 35(3) of the IAA which provides that this Court is designated for the purposes of Art 54 of the Convention. That is subject matter jurisdiction (see Wardley Australia Ltd v Western Australia [1992] HCA 55; 175 CLR 514 at 561 per Toohey J and CGU Insurance Ltd v Blakeley [2016] HCA 2; 259 CLR 339 at [24] per French CJ and Kiefel, Bell and Keane JJ) which is distinct from the question of jurisdiction over Spain (i.e. "the amenability of [Spain] to the process of Australian courts", PT Garuda at [17]) as dealt with by the Immunities Act.
40 In light of PT Garuda, the first sentence of paragraph [34] of Zhang, which states that where foreign State immunity applies the court is deprived of jurisdiction to hear and determine the matter, must be understood as saying that the court is deprived of jurisdiction over the foreign State respondent. Even where foreign State immunity applies, if the court has subject matter jurisdiction under s 39B(1A)(c) of the Judiciary Act then it still has jurisdiction to consider and determine procedural issues such as the stay that is sought in this case and whether or not the State respondent enjoys foreign State immunity. Section 9 of the Immunities Act does not deprive it of that form of jurisdiction.
41 In the circumstances, as an exercise of the power conferred on the Court by s 23 of the Federal Court Act, I stayed the enforcement proceeding.
42 Although the applicants' interlocutory application indicated that they would seek the costs of the application from Spain, before me they asked that the costs be reserved. That approach relieved me from having to deal with the question of whether such an order would have impleaded Spain in such a way as to require me to first decide the foreign State immunity point (see Bannon v Nauru Phosphate Royalties Trust (No 3) [2017] VSC 284; (2016) 51 VR 370 which dealt with the obverse situation of a non-party foreign State seeking the costs of its successful assertion of immunity).
I certify that the preceding forty two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stewart.