Roadpost Inc v Beam Communications Pty Ltd

1. Pursuant to s 8(3) of the International Arbitration Act 1974 (Cth), the final award of Jeffery S Leon dated 21 October 2024 in the matter of an arbitration pursuant to a joint venture agreement relating to Zoleo Inc, and pursuant to the International Commercial Arbitration Act, 2017, S.O. 2017, b. 2 and the Model Law on International Commercial Arbitration against the respondent (the Award) may be enforced as if it were a judgment of the Court.
2. The respondent sell its shares of Zoleo Inc to the applicant in accordance with the terms of Article 11.1 of the Joint Venture Agreement between Zoleo Inc, the applicant and the respondent dated 22 March 2019 (the JVA), with the purchase price to be determined in accordance with Article 12 of the JVA. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

STEWART J: 1 The applicant, Roadpost Inc, is a company incorporated in Ontario, Canada. The respondent, Beam Communications Pty Ltd, is a company incorporated in Australia. 2 The applicant and the respondent are involved in the development, manufacturing and marketing of handheld satellite-based messaging devices and ancillary services. In March 2019, the applicant and the respondent entered into a Joint Venture Agreement (JVA) in respect of their joint venture company, Zoleo Inc, a company incorporated in Canada. Article 21.1 of the JVA provides for disputes relating to the interpretation or implementation of the JVA to be resolved by binding arbitration conducted by a single arbitrator in Toronto, Canada. 3 On 16 June 2023, the applicant commenced an arbitration against the respondent in relation to disputes under the JVA. The disputes arose from a breakdown in the relationship between the parties to the JVA. On 19 September 2023, the parties appointed Jeffrey S Leon as sole arbitrator. 4 After a lengthy hearing in May and June 2024, on 21 October 2024 the arbitrator issued a final award in the arbitration. The award ordered the respondent to pay the costs of the arbitration in the sum of CAN$2,369,502.86. The respondent has paid those costs. The arbitrator also ordered as follows: I order and declare that [the respondent] is required to sell its shares of Zoleo to [the applicant], in accordance with the terms of Article 11.1 of the JVA, with the purchase price to be determined in accordance with Article 12 of the JVA. 5 Article 11.1 of the JVA provides that on the happening of a "Sale Event", being a particular event of default as defined, the defaulting shareholder shall sell all of its shares in Zoleo to the other shareholder. Article 12 provides for a mechanism to determine the "Fair Market Value" of the shares by an independent business valuator for the purpose of such sale and purchase. 6 The applicant brings the present proceeding for recognition and enforcement of the award under s 8(3) of the International Arbitration Act 1974 (Cth). In the lead up to the final hearing listed for today, the parties reached agreement on orders to be made by consent as follows: 1. Pursuant to s 8(3) of the International Arbitration Act 1974 (Cth), the final award of Jeffery S. Leon dated 21 October 2024 in the matter of an arbitration pursuant to a joint venture agreement relating to Zoleo Inc. and pursuant to the International Commercial Arbitration Act, 2017, S.O. 2017, b. 2 and the Model Law on International Commercial Arbitration against the Respondent (the Award) may be enforced as if it were a judgment of the Court. 2. It is ordered and declared that the Respondent is required to sell its shares of Zoleo Inc. to the Applicant, in accordance with the terms of Article 11 .1 of the Joint Venture Agreement between Zoleo Inc., the Applicant and the Respondent dated 22 March 2019 (the JVA), with the purchase price to be determined in accordance with Article 12 of the JVA. 7 There is no issue with regard to Order 1 as sought. I am satisfied that it is the proper order to make in the circumstances. 8 However, I raised with the parties a query as to why Order 2 is justified and appropriate, in particular having regard to what was said in Tridon Australia Pty Ltd v ACD Tridon Inc [2004] NSWCA 146 at [10]-[11] and Margulies Brothers Ltd v Dafnis Thomaides & Co (UK) Ltd [1958] 1 Lloyd's Rep 205 at 207. On those authorities, the making of a declaration in the terms of an award is not "enforcement" of the award and not an appropriate or proper order to make under a statutory provision, such as s 8(3), which provides that an award may be "enforced" by the Court. It was not clear to me just what the Court was being asked to do by the proposed Order 2 - would it be ordering that something be done or would it be making a declaration of rights, and if the latter, what would the purpose be since the arbitrator has already made such a declaration and Order 1 would serve to recognise that order? 9 In response, the parties have explained that what they seek is an order for specific performance enforcing the arbitrator's award. They have proposed that the words "and declared" in their proposed Order 2 be deleted. 10 It is not in dispute that the arbitrator had the power to make the order that he did. That would be in accordance with the general proposition that the arbitrator has the authority to give the claimant such relief as would be available in a court of law having jurisdiction with respect to the subject matter of the arbitration: Government Insurance Office (NSW) v Atkinson-Leighton Joint Venture (1981) 146 CLR 206 at 246-247 per Mason J. 11 I do not doubt that the Court has the power to grant an order for specific performance in enforcing an arbitral award: Tianjin Jishengtai Investment Consulting Partnership Enterprise v Huang [2020] FCA 767 at [20] per Jagot J. After giving the parties the opportunity to formulate the terms of an award for specific performance as explained in that paragraph, her Honour made an order that "Upon payment of the judgment sum in Order 2 herein, the applicant is to do such things as may be reasonably necessary to transfer its shares comprising the 32.43836% stake in Zongshan Qianla Village Food Co., Ltd. to the respondent." Such an order by the enforcing court operates of its own force as a court order to create a new charter by reference to which the questions determined by the arbitrator are in future to be decided as between the parties to the application for enforcement: TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia [2013] HCA 5; 251 CLR 533 at [32] per French CJ and Gageler J and [79] per Hayne, Crennan, Kiefel and Bell JJ. 12 Insofar as authority in other countries is concerned, see Plaintiff v Eton Properties Ltd [2011] HKCFA 31 at [4]; Adamas Management & Services Inc v Aurado Energy Inc [2004] NBQB 342 at [31]-[36]; EGI-VSR LLC v. Coderch Mitjans, 963 F.3d 1112 (11th Cir. 2020) at 1124. If an order for specific performance is not complied with, it may be that a damages order will follow: Xiamen Xinjingdi Group Co Ltd v Eton Properties Ltd [2020] HKCFA 32; 23 HKCFAR 348 at [126]. 13 For those reasons, I am satisfied to make Order 2 as now sought, save that I will also delete the words "is required to" as they serve to detract from the force of the order for specific performance by introducing something in the nature of a declaration of rights. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.