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[2020] FCA 767
Federal Court of Australia
2020-05-14
Jagot J
Original judgment source is linked above.
THE COURT ORDERS THAT:
JAGOT J: 1 These reasons for judgment concern an application under s 8(3) of the International Arbitration Act 1974 (Cth) (the International Arbitration Act) by which the applicant seeks enforcement of an award made in the People's Republic of China by the China International Economic and Trade Arbitration Commission on 3 September 2018 pursuant to ss 8 and 9 of the International Arbitration Act. 2 Relevantly, s 2D of the International Arbitration Act states the objects of the Act. These are, in effect, to facilitate international trade and commerce by encouraging the use of arbitration as a method of resolving disputes and to facilitate the use of arbitration agreements made in relation to international trade and commerce, as well as to facilitate the recognition and enforcement of arbitral awards made in relation to international trade and commerce. 3 By s 39 of the International Arbitration Act, the Court must have regard to the objects of the Act if a Court is considering exercising a power under s 8 to enforce a foreign award. A foreign award is defined in s 3 to mean an arbitral award made in pursuance of an arbitration agreement in a country other than Australia being an arbitral award in relation to which the convention applies, meaning the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted in 1958 by the United Nations Conference on International Commercial Arbitration at its twenty-fourth meeting (the Convention). A copy of the English text is set out in Sch 1 to the International Arbitration Act. 4 Section 8(3) provides that, subject to this part, a foreign award may be enforced in this Court as if the award were a judgment or order of this Court. Section 9 is relevant to the issues in dispute in this proceeding and its terms are set out below: (1) In any proceedings in which a person seeks the enforcement of a foreign award by virtue of this Part, he or she shall produce to the court: (a) the duly authenticated original award or a duly certified copy; and (b) the original arbitration agreement under which the award purports to have been made or a duly certified copy. (2) For the purposes of subsection (1), an award shall be deemed to have been duly authenticated, and a copy of an award or agreement shall be deemed to have been duly certified, if: (a) it purports to have been authenticated or certified, as the case may be, by the arbitrator or, where the arbitrator is a tribunal, by an officer of that tribunal, and it has not been shown to the court that it was not in fact so authenticated or certified; or (b) it has been otherwise authenticated or certified to the satisfaction of the court. (3) If a document or part of a document produced under subsection (1) is written in a language other than English, there shall be produced with the document a translation, in the English language, of the document or that part, as the case may be, certified to be a correct translation. (4) For the purposes of subsection (3), a translation shall be certified by a diplomatic or consular agent in Australia of the country in which the award was made or otherwise to the satisfaction of the court. (5) A document produced to a court in accordance with this section is, upon mere production, receivable by the court as prima facie evidence of the matters to which it relates. 5 There are two primary issues on which the respondent relies to oppose enforcement of the award. 6 First, the respondent relies on ss 9(1)(a) and (b) of the International Arbitration Act to put in issue whether there is a duly certified copy of the award, and duly certified copies of the original arbitration agreements under which the award purports to have been made. 7 Second, the respondent contends that the form of the orders which the applicant seeks do not reflect the form of the award. The award is in the following terms: The first respondent is liable for and shall pay to the claimant RNB 78753425 to acquire from the claimant a 32.43836 per cent stake in the second respondent. Other requests in the statement of claim are denied. The respondent shall pay the costs for the arbitration totalling 689475. As the claimant has paid an advance on costs to cover such amount, the respondent shall pay RNB 689475 to the claimant. 8 The agreements which provided for arbitration of disputes between the applicant and the respondent consist of a capital increase agreement, a shareholder agreement, and a supplementary agreement to the capital increase agreement. In written submissions for the applicant, reference is made to the decision in Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd [2011] FCA 131, (2011) 277 ALR 415 at [126] where Foster J said: The whole rationale of the [International Arbitration] Act, and thus the public policy of Australia, is to enforce [foreign] awards wherever possible in order to uphold contractual arrangements entered into in the course of international trade, in order to support certainty and finality in international dispute resolution and in order to meet the other objects specified in s 2D of the Act. 9 I have already referred above to the relevant provisions of the International Arbitration Act. In this regard, I accept the submissions for the applicant to the following effect: (1) the People's Republic of China is a country to which the Convention applies. In this regard, I refer to the s 10(1) certificate issued by the Department of Foreign Affairs and Trade which is annexed to an affidavit of Mr Shen; (2) an arbitration agreement is defined to include a purported or apparent agreement. There is no dispute that the award is an award within the meaning of the Act; (3) rule 28.44 of the Federal Court Rules 2011 (Cth) (the Federal Court Rules) sets out the requirements for the originating application and supporting documents. There appears to be no dispute that this rule has been complied with; and (4) rule 28.50 of the Federal Court Rules provides that a party who wants to rely on a document that is not in the English language must provide a certified English translation of the document to the Court and to any other party to the proceeding. In this regard, there are certified copies of the relevant documents translated into the English language.
Issue 1: Duly certified copies 10 The primary submission of the respondent is that I cannot be satisfied in accordance with s 9(1) that I have duly certified copies of, relevantly, the award and the agreements under which the award purports to have been made. I do not accept this submission. There is in evidence, in exhibits 2, 3, 4 and 5, documents which are certified by a notary from the People's Republic of China in the following terms: This is to certify that the duplicate copy attached hereto is in conformity with the original copy of Arbitral Award in italics, showed by Wen Jianxin to this notary. The translated English text of the Arbitral Award is in conformity with those of the Chinese original copy of the document. 11 I accept the applicant's submission that this certification should be construed as meaning that Mr Wen showed to the notary the original arbitral award and that the translated English text of the award accords with the original. The same notification by the notary is contained in the evidence for each of the other agreements on which the applicant relies, namely, the capital increase agreement, the shareholder agreement, and the supplementary agreement to the capital increase agreement. 12 I accept the submission from the applicant that exhibits 2, 3, 4 and 5 of themselves are sufficient evidence to satisfy the terms of s 9(1) of the International Arbitration Act. In this regard, I take into account s 9(5) of the International Arbitration Act to the effect that a document is, upon mere production to the Court, receivable by the Court as prima facie evidence of the matters to which it relates. 13 If there were any doubt about satisfaction of s 9(1) of the International Arbitration Act, that doubt would also be resolved by the witness statement of Mr Wen dated 7 May 2020. This witness statement was in the form of an affidavit, but the affidavit had not been sworn or affirmed in accordance with s 45(2) of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act). 14 However, I admitted the witness statement into evidence in reliance upon s 190(3) of the Evidence Act 1995 (Cth) (the Evidence Act). In short, I was satisfied that in this civil proceeding I should order that the hearsay provisions of the Evidence Act which would have operated to preclude receipt of Mr Wen's affidavit did not apply in relation to that evidence because: (1) the matter to which the evidence relates was not genuinely in dispute; and (2) the application of those hearsay provisions would cause or involve unnecessary expense or delay. 15 As to (1), the position of the respondent was not that the respondent disputed the substance of the evidence in the witness statement. Rather, it was to the effect that that evidence was insufficient to meet the requirements of s 9(1) of the International Arbitration Act. 16 As to (2), in circumstances arising in light of the current Coronavirus crisis which has precluded international travel, I am satisfied that the application of the hearsay provisions of the Evidence Act would cause or involve unnecessary expense and delay if it were needed to have Mr Wen cross-examined in Australia. 17 I do not accept the respondent's submissions that I should have any concern about the form which exhibits 2, 3, 4 and 5 take. It is clear that those documents have been taken apart and clipped together. The evidence discloses that they have been taken apart for the purpose of photocopying. It is true that when they were re-clipped together, it appears that a stray photocopied page has made its way into each of the documents. The applicant placed no reliance upon that stray page. The stray page does not lead me to have any concern about the authenticity of the documents. 18 Accordingly, I am satisfied that the requirements of s 9 of the International Arbitration Act are met. 19 In these circumstances, having regard to the objects of the International Arbitration Act and the fact that arbitration is an efficient, impartial, enforceable and timely method by which to resolve commercial disputes, and that awards are intended to provide certainty and finality, I am of the view that there is no reason not to make orders enforcing the award.
Issue 2: Form of orders 20 The second issue relates to the form of the orders which I should make. The issue is that paragraph 1 of the award provides that the first respondent is liable to pay a specific amount to acquire from the claimant a percentage stake in the second respondent to the arbitral award. I accept the submissions for the respondent that a part of the award in paragraph 1 is akin to an order for specific performance. I do not consider that this means I should not make an order for judgment in the relevant sum, but I consider that there needs to be a consequential order which would require the transfer of the relevant shares to the respondent. I will make a direction to the effect that the parties confer with a view to agreeing the appropriate form of the order. 21 I agree with the submissions for the applicant that the appropriate form of the order for enforcement is, first, by way of a declaration pursuant to s 8(3) of the International Arbitration Act that the applicant is entitled to enforce the award against the respondent as if the award were a judgment of the Court. 22 The applicant seeks in its primary case judgment in Australian dollars calculated at the official exchange rate. The applicant seeks judgment in the sum of $17,414,377.59 in Australian dollars calculated on the basis of the exchange rate on 1 May 2020. The applicant has drawn my attention to the decision in Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd (No 2) [2011] FCA 206; 277 ALR 441 at [20] to the effect that if an award is in foreign currency, then the Court may make its order in foreign currency. The applicant has also pointed to the decision in Ye v Zeng (No 4) [2016] FCA 386 at [16] in which an award was enforced in Australian dollars converted from a foreign currency. 23 In this regard, in circumstances where the judgment is sought in an Australian court and the award is sought to be enforced in Australia, I consider that I should accept the submissions of the applicant that the award should be converted, and am satisfied that the conversion provided for in Mr Shen's third affidavit should be relied upon. 24 The applicant also seeks an order for interest. The award did not provide for post-award interest. The applicant seeks interest pursuant to s 51A of the Federal Court Act with interest to be calculated from the date on which payment was due under the award, that is, within 30 days of the date of the award at the applicable or appropriate interest rates in the People's Republic of China. The applicant referred to the decision in Suzlon Energy Ltd v Bangad (No 2) [2014] FCA 1173 at [6]-[9] in support of its proposition that the calculation of the interest should be at the appropriate rate in the People's Republic of China as would be applicable from the date on which performance under the award was required. 25 I am not satisfied that there should be any order for interest in favour of the applicant. The reason for this is that the award does not provide for any interest. In these circumstances, and given the fundamental principle that the judgment should reflect the terms of the award (see Traxys Europe SA v Balaji Coke Industry Pvt Ltd (No 2) [2012] FCA 276; [2012] 201 FCR 535 at [72]), it seems to me that to make an award for interest would be to depart from the award in a material way which is not permitted.
Costs 26 The final matter which needs to be considered is costs. The respondent has sought that costs for certain issues be excluded. First, the respondent says that the costs associated with the production of earlier court books should be excluded. Second, the respondent says that given its success in relation to issue 2 which, in substance, I accept is the case, there should be a percentage reduction in the costs awarded to the applicant and no costs order should be made in relation to issue 2. 27 The applicant seeks an order for indemnity costs relying on the observations in Ye v Zeng (No 5) [2016] FCA 850 (Ye v Zeng (No 5)). I am not satisfied that I should make an order for costs on an indemnity basis. As observed in Ye v Zeng (No 5) at [21]-[23], there is an important issue of principle involved which it is not appropriate to resolve at the level of a first-instance decision. In those circumstances the starting point is that the applicant should be compensated on the basis of the usual order as to costs. In terms of the respondent's submissions, while I have accepted the substance of the respondent's submission in relation to issue 2, I do not see that it provides an adequate reason to depart from the usual order as to costs. 28 The respondent's primary case was not about the form of the order, but rather that there should be no order made whatsoever. If the only issue in the proceeding was the form of the order then I anticipate that the issue could have been resolved between the respondent and the applicant without the need for written submissions and the hearing. Otherwise, in relation to the court books, I do not have sufficient evidence on which to base a decision to reduce the amount of costs payable to the applicant. 29 Accordingly, I will direct the parties to confer about the appropriate form of orders. The appropriate form of orders, as already indicated, should provide for a declaration as to the enforceability of the award and judgment in a sum in Australian dollars. There should be no allowance made for interest and the usual order for costs should be made. In addition, there must be formulated a consequential order which provides for the transfer of shares as the award requires. I certify that the preceding twenty nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.
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