AustraliaAsia Pacific Arbitration Roundup 2022
Kingdom of Spain v. Infrastructure Services Luxembourg S.à.r.l. Case No. S43/2022
In our 2021 publication, we covered the Full Federal Court decision of this case, which distinguished between the ‘recognition’ and ‘enforcement’ of an award. The decision concluded that it was clear that Spain had waived its immunity as to ‘recognition’ by reference to Article 54 of the ICSID Convention. It held that the ‘recognition’ contemplated by Article 54(1) and (2) does not extend to ‘execution’ from which there may be immunity under Article 55 of the ICSID Convention.
In March 2022, Spain appealed the decision to the High Court arguing that, inter alia, express words are required to waive foreign State immunity and that Spain did not waive its immunity expressly or by any implication because Article 54 of the ICSID Convention does not refer to immunity in terms, or at all. On the other hand, Infrastructure Services Luxembourg S.à.r.l. argued, inter alia, that the plain words of Article 55 confirm that Contracting States understood Article 54 as a waiver of immunity to the extent that an award is recognised as if it were a judgment of the court.
The appeal was heard on 10 November 2022 with a decision expected in the next few months.
The High Court of Australia serves as Australia’s highest court, and any decision made by the High Court is considered a significant precedent, setting a legal standard for all future cases in Australia. Thus, we can expect the Court to hand down an important precedent regarding the recognition and enforcement of awards under the ICSID Convention and the application of state immunity.
Tesseract International Pty Ltd v Pascale Construction Pty Ltd  SASCA 107
In this case, the South Australian Court of Appeal issued a ruling on the question of whether proportionate liability laws from state and federal legislation can be applied in arbitration. The South Australian Court of Appeal decided that these laws do not automatically apply to an arbitration unless there is a specific agreement to that effect in the arbitration agreement.
This decision is significant as it clarifies that proportionate liability laws, which often allow plaintiffs to join third parties in court proceedings, are not intended to apply to arbitration by default.
As domestic arbitration legislation in Australia is based on the Model Law, this decision is reflective of uniform best practice. As an intermediate appellate court decision, the principles established by Tesseract are likely to have wider implications and be followed in other Australian jurisdictions. This decision is particularly important for those involved in arbitration across Australia, especially in cases where duties of care may be an issue.
Siemens WLL v BIC Contracting LLC  FCA 1029
This case concerned an application for judgment enforcing two arbitral awards under s 8(3) of the IAA before the Federal Court of Australia. The awards arose from two arbitrations conducted under the London Court of International Arbitration (LCIA) Rules and the International Chamber of Commerce Arbitration (ICC) Rules.
In considering enforcement, the Court was faced with several procedural questions. First, the Court considered the adequacy of service. Ultimately, the Court was satisfied that serviced had been validly effected pursuant to orders allowing the service of the amended originating application and other documents in the proceedings on the respondent in the United Arab Emirates.
The Court next considered the sufficiency of evidence of the original awards. An issue arose because the applicants did not have authenticated or certified hard copy originals of the arbitration awards for the purpose of satisfying the requirement in s 9(1)(a) of the IAA. However, the arbitral awards were provided to the applicants by the secretariats of each of the LCIA and the ICC by email, and each award was apparently signed by all three members of the arbitral tribunals. The rules of both the LCIA and the ICC permit the transmission of awards by electronic means by officers of their secretariats. The Court was therefore satisfied that the awards relied on by the applicants fulfilled the requirement of authentication in s 9(1)(a) of the IAA with reference to s 9(2) of the IAA.
Finally, the Court considered what currency judgment should be awarded. The applicant sought judgment in Australian dollars. The Court held that it could issue a judgment in Australian dollars where such request has been made by the applicant. A question then arose as to what date the foreign currency amounts should be converted to Australian dollars. The Court held that the appropriate date for the conversion to Australian dollars was the date of judgment. However, it noted that there was some considerable impracticality in converting to Australian dollars at exchange rates on the date of judgment when, typically, the Court sits in the morning when exchange rates are not yet available. On that basis, the Court accepted the exchange rates from the day before the hearing as sufficiently closely reflecting the rates of exchange as at the date of judgment where, as in this instance, judgment was pronounced and entered on the date of the hearing.
This case heralds the continuing trend of Australian courts to enforce foreign arbitral awards in circumstances where procedural requirements are satisfied by the applicant.
Hancock v Hancock Prospecting  NSWSC 724
The case confirmed the application of the test where the impartiality of arbitrators is challenged. The case is significant given the domestic arbitration legislation in Australia is also based on the Model Law, and the Court’s decision reflects this.
In this case, the plaintiffs sought a declaration pursuant to s 13(4) of the Commercial Arbitration Act 2012 (WA) (“CA Act”), that there were justifiable doubts as to the impartiality of the Hon Mr Wayne Martin AC QC to act as an arbitrator in their arbitral dispute and a corollary order terminating Mr Martin AC QC’s mandate as an arbitrator in the proceedings.
Under s 12 of the CA Act, there are justifiable doubts as to the impartiality of a person with a possible appointment as arbitrator only if there is a ‘real danger of bias’ on the part of the person in conducting said arbitration. This reflects the test set out in R v Gough  AC 646. Whereas, the test for apprehending bias at common law is that set out in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337- that is, whether a fair-minded observer might ‘reasonably apprehend’ that the person might not bring an impartial mind (the reasonable observer test).
The Court confirmed that the relevant test is the higher standard set out in the CA Act of a real danger of actual bias, rather than the lower common law threshold of reasonable apprehension of bias. Further, the Court stated that the test in the CA Act is purely objective, in contrast to the common law test.
Ultimately the plaintiffs were unsuccessful, and the Court found that there was no real risk that Mr Martin AC QC would not be able to be impartial in the arbitration.
WCX M4-M5 Link AT Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd (No 2)  NSWSC 505
In this case, the Court considered a dispute between the two companies over a contract for the construction of a road linking the M4 and M5 motorways in New South Wales, Australia.
The underlying dispute arose under back-to-back contracts containing a multi-stage dispute resolution mechanism.
The dispute related to whether communications from the plaintiff to the contractor constituted directions to implement a solution to a contamination claim on the construction project. The plaintiff commenced court proceedings seeking to injunct the contractor from referring the dispute to expert determination. The contractor applied for a stay of proceedings under s 8 of the Commercial Arbitration Act 2010 (NSW) (“CAA”), on the basis that the dispute ought to be arbitrated. The domestic arbitration legislation in Australia is based on the Model Law.
While both parties agreed that the tiered dispute resolution clause contained an arbitration agreement, the plaintiff argued that the arbitration agreement was inoperative because neither party had issued a notice of dissatisfaction with the expert determination in order to trigger the next step of arbitration for the dispute.
The Court stayed the proceedings and confirmed that the parties’ failure to complete the preliminary steps in a tiered dispute resolution clause does not render the arbitration agreement ‘inoperative’ for the purpose of s 8 of the CAA. In other words, an arbitration agreement is not “inoperative” under the CAA s 8 merely because it has not yet been exercised.
Other key developments
On 7 November 2022, at the Australian Arbitration Week 2022, held in Melbourne, the Australian Centre for International Commercial Arbitration (ACICA) launched its publication, “Reflections on Ten Years of Activity Report”. Among other things, the report highlighted some interesting statistics and trends and made some observations, including the following:
- ACICA has been involved in arbitrations concerning a collective USD24 billion over the last 10 years, covering 100 arbitrations with over 60 of these from within the last 4 years;
- 54% of ACICA’s cases were resolved within 12 months;
- The industries which dominated ACICA cases were energy and resources, construction and infrastructure, and maritime. These made up around 69% of all ACICA-administered cases;
- In 2019, 27% of appointments in ACICA cases were female, increasing to 38% in 2020 and 40% in 2021;
- In 2022 the ACICA Diversity Committee was established, the Executive Committee reached gender parity, ACICA entered into a referral relationship with Dexus Place to offer world-class hearing venues across Australia, ACICA signed the ‘Green Pledge’ and signed the Equal Representation for Expert Witnesses Pledge;
- Australia provides ideal conditions for international arbitration due to its stable and transparent legislative framework, quality of the legal expertise of its practitioners and the leading internationalist approach of the judiciary; and
- Australia is in a unique position as a seat for arbitrations involving foreign parties, as it conducts significant trade with North and Southeast Asian countries, the US, UK and several South American jurisdictions. Australia also has strong relationships with countries new to the New York Convention such as Papua New Guinea and Fiji. As such, it offers a stable environment for parties based in the region to resolve their disputes.