On 11 May 2021, the Federal Court handed down a decision which refused to enforce a foreign arbitration award against one respondent (of four) who wholly disclaimed any knowledge of the arbitration proceedings which had taken place in China. In its judgment, the Court relied on the finding that that particular respondent was not given proper notice of the arbitration and therefore could not enforce the award against her.
The Court’s judgment highlights the importance of proper notice being key to enforcement of foreign arbitration awards, and serves as a warning for parties seeking to enforce a foreign arbitration award in Australia to ensure that the respondent party to the arbitration is given proper notice by any means possible.
What you need to know
When seeking to enforce a foreign arbitration award, check with the applicant party what steps were taken at the initial stage to ensure that the notice of the proceedings were brought to the respondent’s attention. It is not enough that the foreign arbitration tribunal was satisfied as to service of the notice, as the Australian Court will be required to make its own judgment on whether the notice was proper.
This is particularly true in jurisdictions (such as China under the China International Economic and Trade Arbitration Commission (CIETAC) Rules) where the arbitration tribunal has the responsibility to give notice to the affected parties and does not pass that responsibility onto the applicant. Even if any miscarriage of service is not the applicant’s fault, the applicant may still suffer the consequences.
The Applicant should also take steps to comply with the service and notice obligations in the contract, even if it has come into new information which may suggest that this information is no longer accurate.
In the case of Beijing Jishi Venture Capital Fund (Limited Partnership) v Liu, the Chinese Applicants sought to enforce a CIETAC arbitration award against four respondents, using the process available under the International Arbitration Act 1974 (Cth), and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (more commonly known as the New York Convention).
Unfortunately, the notices sent out by the arbitral tribunal were mislabeled and unable to be effectively served in Australia. The Applicant then provided further alternative addresses for service which were accepted by the Arbitral Tribunal in China. The Australian Court did not accept that service at the alternative addresses (critically, a business address in China) was effective, or that service and notice to the husband was sufficient to give proper notice to the wife.
The Court also accepted the wife’s submission that the right to service is a “personal right” and found that there was no “technical or inconsequential failure of process” and effective service is a “fundamental requirement to the integrity of arbitration.” Consequently, the Court refused to award enforcement against the wife in the proceedings.
Interested parties are keeping an eye on the matter of Energy City Qatar Holding Company v Hub Street Equipment Pty Ltd which was appealed from the Federal Court and currently awaiting the judgment of the Full Federal Court. The Energy City case deals with, among other things, similar issues of proper notice and breaches of natural justice.
Until such a judgment is handed down, applicants are advised to carefully any awards they seek to enforce and what steps were taken to ensure that proper notice was given. Anyone with queries can contact Bo Zhou of Madgwicks on 9242 4742