Author Archives: James McComish

Foreign State Immunity in Australia

The High Court of Australia has rejected Garuda’s appeal against the finding that it was not immune from Australian jurisdiction as a “separate entity” of a foreign state, namely Indonesia. The case arose from a proceeding brought by the Australian competition regulator (the ACCC) over alleged price-fixing in the air freight market to and from Australia. Our earlier posts on the case are here and here.

The decision turned on the meaning of the “commercial transaction” exception to state immunity in s 11 of the Foreign States Immunities Act 1985 (Cth), which may be of interest to British readers given the similar (but not identical) wording of s 3 of the State Immunity Act 1978 (UK).

Garuda argued that it did not fall within the “commercial transaction” exception either because the proceedings were not brought against it by a party to the transaction seeking private law relief; or because the transaction (the alleged price-fixing) was not contractual in nature.

The High Court rejected those arguments. The joint judgment of French CJ, Gummow, Hayne and Crennan JJ held that:

“The definition of “commercial transaction” fixes upon entry and engagement by the foreign State. It does not have any limiting terms which would restrict the immunity conferred by s 9 and s 22 to a proceeding instituted against the foreign State by a party to the commercial transaction in question. Further, it should be emphasised that the definition does not require that the activity be of a nature which the common law of Australia would characterise as contractual. The arrangements and understandings into which the ACCC alleges Garuda entered were dealings of a commercial, trading and business character, respecting the conduct of commercial airline freight services to Australia. The definition of a “commercial transaction” is satisfied.” [at [42]]

Heydon J agreed, and emphasised that the individual contracts with air freight clients were sufficient to engage the “commercial transaction” exception. “If a contract in contravention of [competition law] is capable of being a commercial transaction, non-contractual arrangements or understandings are capable of being “a commercial, trading … transaction … or a like activity”‘ within the meaning of s 11 [at [74].

P.T. Garuda Indonesia Ltd v Australian Competition & Consumer Commission [2012] HCA 33 (7 September 2012)

Comity and Overseas Witnesses in Australia

An interesting recent decision of the Full Court of the Federal Court of Australia, Joyce v Sunland Waterfront (BVI) Ltd [2011] FCAFC 95, considers the role of comity and the interrelationship of public and private international law in the context of taking testimony from a witness outside the court’s territorial jurisdiction.

The issue arose in civil proceedings in the Federal Court of Australia about misrepresentations said to have been made in Australia about the purchase of land in Dubai. Several witnesses (mainly Australian citizens) were located in Dubai, and although they were willing to testify, they were unable to travel to Australia to give evidence in person.

Under the Federal Court’s rules, the two options were either for the judge to travel to Dubai to take evidence on commission, or for the witnesses to give evidence by video link. Approaches through diplomatic channels revealed at best an ambiguous attitude on the part of the UAE government about whether either course would be acceptable to it, but UAE lawyers gave evidence to the Australian court that there were no local statutes prohibiting either means of taking evidence.

The trial judge was concerned, in the light of diplomatic correspondence placed before him, that there was no evidence “that the UAE government would permit the taking of evidence by video link” and that to do so “without that permission, … would be seen to be, or could be seen to be, a subversion of a refusal by a sovereign government to permit the taking of evidence on commission on its soil.” Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 9) [2011] FCA 832 at [40]

Referring to remarks in Yamouchi v Kishimoto (2002) 12 NTLR 32 and Bell Group Ltd (In Liq) v Westpac Banking Corporation (2004) 208 ALR 491, his Honour considered that to take evidence by video link was, in effect, to exercise the judicial power of the Commonwealth of Australia in the foreign country in which the witness was sitting; and that even if the witness testified voluntarily, the exercise of the Australian court’s powers could be viewed as an infringement of that foreign jurisdiction’s sovereignty in the absence of clearer consent than was available in the present case. Given the diplomatic involvement of the Australian Department of Foreign Affairs and Trade, his Honour was especially wary of being perceived by a foreign sovereign as having acted unilaterally. In that context, he refused to order that evidence be taken by video link from Dubai.

The Full Court reversed that conclusion. Keane CJ, Dowsett and Greenwood JJ discussed the role of comity when taking evidence from witnesses overseas (whether on commission or by video link). Their Honours quoted a number of sceptical statements about the value of comity as a guiding principle, including the trenchant remark of Perram J in Habib v Commonwealth (2010) 183 FCR 62 at [27] that: “No doubt comity between the nations is a fine and proper thing but it provides no basis whatsoever for this Court declining to exercise the jurisdiction conferred on it by Parliament.”

Reviewing the Australian statute on taking evidence by video link, their Honours remarked that it:

does not require that the foreign state consent to a person within its borders giving evidence by video link to an Australian court. If the Parliament perceived any problem arising out of the concept of sovereignty or that of comity, then it seems to have overridden any obligation which Australia may have had in that regard. … We see no justification for imposing upon the exercise of the discretion conferred by [the statute] a requirement that the other state consent to the taking of evidence in that way. [at [60]]

Their Honours concluded that:

in exercising the discretion [to take evidence by video link], the Court is not hampered by any need to consider questions of sovereignty or comity between nations, at least absent any law forbidding such conduct, and subject to the question of whether an oath or affirmation should be required. To the extent that his Honour disposed of the matter upon the basis that questions of sovereignty and comity were relevant, he took into account irrelevant considerations. The exercise of the discretion miscarried. [at [62]]

Australian courts quite regularly take evidence by video link, and it is unusual for a party (in this case, the defendants) to have objected so vehemently, especially as the witnesses were themselves willing to testify. The subtext, it seems, was that one of the unavailable witnesses was the plaintiff himself: the defendants would have benefitted from a permanent stay or non-suit in the event of his inability to testify.

Perhaps of most interest to international readers is the sceptical attitude of the Full Court towards judicial comity in international litigation. This could perhaps be seen as part of a wider trend towards robust individualism on the part of the Australian courts when it comes to the exercise of their jurisdiction in cross-border cases (another example being the remarkable tenacity of Australian courts in forum non conveniens cases). It is also an example of the less deferential attitude taken by the Australian courts towards the executive government’s conduct of foreign relations in recent times (Habib v Commonwealth (2010) 183 FCR 62 being the most notable example).

Joyce v Sunland Waterfront (BVI) Ltd [2011] FCAFC 95 (19 August 2011)


Strike Out for Breach of Anti-Suit Injunction

What are the options open to a plaintiff where a foreign defendant, who files an appearance and a defence, subsequently commences and continues foreign proceedings in breach of an anti-suit injunction, where the defendant has no assets in the jurisdiction?  That was the circumstance that confronted the plaintiffs in the Supreme Court of Victoria in Cocoon Data Holdings Pty Ltd v K2M3 LLC [2011] VSC 355.  Among the counsel for the plaintiff was my Australian co-editor, Perry Herzfeld.

After filings its unconditional appearance and defence in Victoria, the defendant K2M3 commenced proceedings of its own in the USA, in response to which the Victorian court issued an anti-suit injunction. Significantly, the US court refused K2M3’s application for an injunction against Cocoon, and the US proceedings were  stayed on forum non conveniens grounds. K2M3 appealed against that decision, and it was that act of appealing and continuing to prosecute the appeal in the US that constituted the ongoing breach of the Victorian anti-suit injunction.

In the exercise of the inherent jurisdiction of the Victorian Supreme Court, Ferguson J struck out the defendant’s defence and gave judgment for the plaintiffs.  Her Honour quoted Derby & Co Ltd v Weldon [1990] 1 Ch 65 at 81 (CA), where Lord Donaldson of Lymington MR referred to the possibility of barring the right to defend of a defendant with no assets within the jurisdiction who breaches a Mareva injunction freezing those assets. Her Honour concluded (at [21]-[22]):

Non compliance with an anti-suit injunction is a grave matter. There must be compliance with such orders. If there is not, and no proper explanation for their breach is given, then severe sanctions may be warranted. Any such sanctions which are imposed are not aimed at punishing a defaulting party but rather are necessary to safeguard the administration of justice.

Whilst the remedy sought by [the plaintiffs] is drastic, in the circumstances, it is appropriate for orders to be made striking out the defence of K2M3. No practical alternative course is available. Such orders are necessary to maintain the authority of the Court. On the evidence before me, K2M3 has deliberately breached the terms of the orders on multiple occasions without explanation, despite opportunities being given to it to provide an explanation. It did so in circumstances where it had chosen to submit to the jurisdiction of this Court; it had taken steps in this proceeding by filing an unconditional appearance and defence; it had been represented by counsel on the application when the first anti-suit injunction was granted; it did not appeal from any of the orders made in the proceeding; after breaching the orders, it instructed counsel to appear on a further hearing but failed to instruct counsel as to the reason(s) for non-compliance with the orders; it has had notice of this application and chose not to be represented on either this occasion or when the application first came on for hearing.

State Immunity in Australia

A recent decision of the Full Court of the Federal Court of Australia considers an unusual area of private international law, namely the applicability of foreign state immunity to government-owned airlines in the context of civil proceedings for breach of competition laws. The case was brought by the Australian competition regulator against two airlines—Garuda Indonesia and Malaysian Airlines—in relation to a cartel for the fixing of air freight prices.

In Australia, the law of foreign state immunity is largely in statutory form by virtue of the Foreign States Immunities Act 1985 (Cth). That act extends immunity in some circumstances to a ‘separate entity’ of foreign states, defined as being an agency or instrumentality of the foreign State which is not part of that State’s executive government.

The Full Court considered that (contrary to the trial judge’s ruling) Garuda was such an agency or instrumentality of Indonesia, but that (in accordance with the trial judge’s ruling) Malaysian Airlines was
not such an agency or instrumentality of Malaysia. Nevertheless, because the conduct in question fell within the commercial transaction exception in s 11 of the Act, Garuda was not entitled to foreign state immunity.

Lander and Greenwood JJ considered that ‘agency’ and ‘instrumentality’ were two separate concepts. By contrast, Rares J declined to draw this distinction between the two terms. The joint judgment stated:

“We think the difference is in their constitution. An instrumentality is a body created by the State as an instrumentality for the purpose of performing a function for the State. … An instrumentality of the State cannot be created by an organ other than the State. A natural person or a corporation cannot create an instrumentality and certainly not an instrumentality of the State.

“An instrumentality is created by the State for the purpose of carrying out functions on behalf of the State and is not available to carry out any functions for any other State, person or corporation. …

“An agency may have the same characteristics as an instrumentality, but not necessarily so. An agency of the State, in our opinion, does not necessarily have to have been created by the State itself. It may be, but need not be. … [at [36]-[39]]

This distinction had one important consequence for the test to determine whether an entity was the instrumentality or agency of a foreign state, namely that the question of ownership and control was in their Honours’ opinion less important than the trial judge may have assumed:

“Ownership cannot be determinative of the question whether a person or corporation is an agency or instrumentality of a foreign State. A natural person will not have an owner. Australian law does not countenance ownership of a person. An instrumentality will usually be created by legislation. It may have “an owner”. In many cases it will not have “an owner” but will simply be a creation of statute. An agency may or may not be owned by the State. If it is then it is more likely to be found to be an agency of the State. But if it is not owned by the State that is not determinative of the question whether the person or corporation is an agency of the State. The agency might exist as a result of a contractual relationship between the State and the person or corporation. It follows that ownership cannot be the sole criteria in determining whether a natural person or a corporation is an agency or instrumentality of a foreign State. …

“Like Rares J, we do not, with respect, agree with the primary judge that the test whether a natural person or a corporation of the kind referred to in the definition is to be determined by reference to whether the foreign State has the day-to-day management control of the agency or instrumentality. We think, as we have said, such a holding is inconsistent with s 3(2), which contemplates that a separate entity may be the agency of more than one foreign State and, indeed, numerous foreign States, not all of which presumably would have the actual day-to-day control of that foreign entity.

“Ownership and control will be important in determining whether a natural person or a corporation is an agency or instrumentality of a foreign State. However neither, in our opinion, can be determinative factors. [at [44], [46]-[47]]

Rares J reached the same conclusion, but without the need to distinguish between ‘agencies’ and ‘instrumentalities’, since both connoted a ‘means to achieve some purpose or end of [the foreign] State’. For that reason,

“the primary judge erred in construing the definition of “separate entity” as containing requirements that the foreign State own and control a corporation to the point where it exerted a real or tangible level of day-to-day management control over it. Those requirements are not contained in express or implied terms in the Act. They are not necessary to give the Act effect. They are inconsistent with the express provision that an individual, who cannot be owned, can be a separate entity. They assimilate the position of a corporation to an organ of the foreign State, contrary to the exclusion of such a body in the express words of the definition. …

“The correct approach is to consider, on the whole of the evidence, whether the person is acting for, or being used by, the foreign State as its means to achieve some purpose or end of that State in the relevant circumstances.” [at [124], [128]]

Significantly, the Court held that a dealing did not cease to be a ‘commercial transaction’ simply because it was unlawful. This was relevant because the ‘transaction’ in question was the formation of an anti-competitive cartel. As the joint judgment remarked:

“It would be curious if the effect of s 11 is to except from the
general claim for immunity a lawful transaction for the provisions of
services but provides an immunity for a contract, arrangement or
understanding which is unlawful” [at [63]]

Or, as Rares J expanded:

“The exception provided in s 11(1) is not for a commercial transaction, as that expression is defined in s 11(3). Rather, the subject-matter of the exception from immunity is the proceeding “in so far as [it] … concerns a commercial transaction”. The airlines were carrying on business, offering for sale and selling air freight services. The proceedings concerned the allegation that the cartel conduct was an activity that affected the ordinary market price setting mechanisms. That allegation concerned what was inherently an activity of a commercial, trading or business kind.” [at [205]]

PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2011] FCAFC 52 (19 April 2011)

Forum Non Conveniens and Foreign Law in Australia

A recent judgment of the New South Wales Court of Appeal contains a number of points of interest, even if the ultimate conclusion is routine and unsurprising: an Australian court refused an application for stay of proceedings on forum non conveniens grounds in a case concerning an Australian-resident plaintiff.

The facts in Fleming v Marshall [2011] NSWCA 86 were complex and multi-jurisdictional. An Australian man was killed in a plane crash in the State of South Australia. His dependent survivors, apparently based in the State of New South Wales, brought tort proceedings against the manufacturers of the aircraft and its engines who were located in the State of Pennsylvania, USA. To do so, the survivors engaged a New York firm of attorneys (who in turn engaged Pennsylvania agents) whose services were partly paid for by a litigation funder and partly by a contingency fee arrangement. The manufacturers ultimately reached a settlement with the claimants, out of which the New York attorneys claimed a success fee, and to which the attorneys attached conditions before they would pay the claimants in Australia.

The present litigation before the NSW courts was brought by the dependent survivors against the New York attorneys, as they were dissatisfied with the deductions and conditions attached to the settlement. They claimed that this amounted to breach of the contract of retainer, breach of duty of care in tort (a claim abandoned on appeal) and breach of fiduciary duty, as well as allegedly the tort of conspiracy. Significantly, the plaintiffs conceded that if New York law applied, their claim was time-barred by a now-expired 3 year limitation period, whether the claim was heard in New York or NSW.

The primary judge rejected the defendant’s application for a stay on forum non conveniens grounds [[2010] NSWSC 86]. His Honour observed that ‘there is no one cause and no one applicable law’, and that each of the laws of South Australia, NSW and New York might be implicated. He also placed some importance on the lex loci contractus of the contract of retainer, which he considered to be most likely to be that of NSW.

On appeal, the defendants submitted that the case ‘principally concerns the professional standards of lawyers practising in New York’ and that the trial judge was wrong to emphasise the importance of the place of contracting at the expense of the jurisdiction with which the contract had ‘the closest and most real connection’ [Bonython v Commonwealth of Australia (1950) 81 CLR 486; [1951] AC 201]. The plaintiffs resisted those contentions, and also emphasised the fact that (on their account of the facts) the New York attorneys had acted through Australian agents—therefore performing at least some of the retainer in Australia.

Macfarlan JA (with whom Spigelman CJ and Sackville AJA agreed) criticised the primary judge’s treatment of the lex loci contractus:

“The primary judge correctly treated the identification of the proper law of the contract of retainer as relevant to the question of whether New South Wales is a clearly inappropriate forum for determination of the disputes between the parties. However in determining what was the proper law of the contract (that is, that with which the transaction had “the closest and most real connection”: Bonython ) his Honour in my view placed undue emphasis upon the place where it was concluded. If read on its own, paragraph [38] of the primary judgment (see [43] above) would suggest that his Honour regarded the place of contracting as determining, rather than simply being relevant to, the identity of the proper law.”  [at [61]]

That being the case, the Court of Appeal proceeded to decide for itself the question of whether NSW was a clearly inappropriate forum, but ultimately reached the same view as the primary judge. Along the way, they emphasised:

  • the unavailability of New York as an alternative forum because of the statute bar;
  • the fact that it was ‘not appropriate that at this stage of the proceedings a final determination be made as to the identity of the proper law of the contract of retainer’, despite their Honours’ ‘provisional view’ that it was New York law;
  • the fact that, even if foreign law applied, this was ‘not of itself a reason for granting a stay’;
  • the irrelevance of the lawyers’ professional indemnity insurance cover being limited to proceedings brought in the US or Canada.

These conclusions are entirely within the mainstream of Australian private international law. As repeated decisions demonstrate, the practical reality is that Australian courts will never under any circumstances relinquish jurisdiction in a case concerning an Australian-resident natural plaintiff.

One topic referred to in the judgment which was not of direct importance to the case at hand is nonetheless likely to be of wider interest to non-Australian readers, namely the reference of questions of foreign law by the forum court to a court of that foreign jurisdiction. This was of potential future relevance to the case since the NSW forum was likely to end up applying New York law. The Supreme Court of NSW and the Supreme Court of New York have recently entered into a bilateral arrangement to facilitate such references, and Chief Justice Spigelman has recently published an article on the topic: J J Spigelman “Proof of Foreign Law by Reference to the Foreign Court” (2011) 127 Law Quarterly Review 208. More details of the NSW-New York bilateral arrangements can be found here on the NSW Supreme Court’s website.

In the context of the case at hand, the Chief Justice remarked that:

“It is by no means clear whether the present case is one in which this mechanism for deciding such an issue would be more cost effective than the customary means of determining a question of foreign law by expert evidence. However, the determination of an issue of professional practice is one of the kinds of legal issues for which there is unlikely to be a single correct answer. Advice from three serving appellate judges of the foreign jurisdiction is much more likely to be accurate than an Australian judge choosing between contesting expert reports.” [at [10]]

Foreign Law and Public Policy in Australia

A recent case in the Supreme Court of Victoria provides a good opportunity to point out the new statutory provisions in the State of Victoria for the proof of foreign law, and to discuss the public policy reasons for the non-enforcement of foreign law.

Paradise Enterprises Inc v Kakavas [2010] VSC 25 (16 February 2010) concerned a loan for gambling entered into in the Bahamas which the creditor (a Bahamas casino operator) then sought to enforce in Victoria as a debt claim against the Australian-resident debtor. Both parties agreed that the claim was governed by the law of the Bahamas, and expert evidence was received on that law.

Since the hearing of that case, the Evidence Act 2008 (Vic) has come into force, which contains the same fairly liberal provisions for the proof of foreign law as apply in New South Wales, Tasmania and Commonwealth courts (ss 174-6 of the respective uniform Evidence Acts). Previously, Victoria was alone among Australian jurisdictions in not having any statutory provisions for the proof of foreign law, apart from a curious provision enabling judicial notice to be taken of the statutes of the United Kingdom, New Zealand and Fiji: Evidence Act 1958 (Vic) ss 59–61, 77.

The Australian defendant unsuccessfully sought to resist the claim on a number of bases. The first was that the gambling contract was the product of unconscionable conduct (namely, the alleged exploitation of the debtor’s pathological gambling). Two curiosities arise from the evidence taken on that point: first, in an equitable claim of that kind it is not clear whether foreign law would generally apply at all; and second, there was in any event a false conflict (Australian law being identical to Bahamas/English law on point).

A second defence concerned the lawfulness under Bahamas law of gaming and the enforceability of gambling loans.

A final defence to the claim was that the enforcement of the debt would be contrary to the public policy of the forum. That received short shrift from the judge:

The short answer is that the agreement was governed by the laws of the Bahamas. Reference to the law in Victoria governing the conduct of gambling here is not apposite to determining whether a gaming loan made in another country in which it is lawful and recoverable would be unenforceable as being against public policy in Victoria. (at [93])

This reasoning seems unsatisfactory. Whatever the proper law of the gaming loan contract (or of the debt), the law of the forum can nevertheless intervene in the case of a mandatory rule or a public policy reason for non-enforcement of foreign law. Indeed, a public policy claim presupposes that foreign law would otherwise govern the matter. Of course, this is not to say that the judge should ultimately have reached a different conclusion about the enforceability of the debt, but a few more steps of reasoning were needed before one could reach that view.

Paradise Enterprises Inc v Kakavas [2010] VSC 25 (16 February 2010)

Recent Australian Journal Articles

Martin Davies, ‘Reflections on the Past Decade of Transnational Litigation’ (2009) 10 Melbourne Journal of International Law 46

The brief article begins:

The past decade of transnational litigation has seen a consolidation of the trend towards disputes about venue. Increasingly, transnational litigation takes the form of a battle about where the battle is to be fought.

Cameron Sim, ‘Non-Justiciability in Australian Private International Law: A Lack of ‘Judicial Restraint’?’ (2009) 10 Melbourne Journal of International Law 102

The abstract reads:

The involvement of foreign states in domestic courts sits at the intersection between private and public international law. Whilst courts are becoming increasingly prepared to defer underlying notions of sovereignty and territoriality to protect private rights, they remain at times hesitant in adjudicating on matters concerning foreign states. The doctrine of non-justiciability affords protection to both foreign states and the forum executive in determining that courts will not adjudicate on the transactions of foreign states. This article examines the doctrine as adopted in the United Kingdom and applied in Australia, as well as the political questions doctrine of the United states and the merits-based approach followed in Canada. The article argues that foreign states are no longer sacrosanct in Australian courts, and a correct understanding of executive certification and the Australian executive’s prerogative in foreign affairs ameliorates the need for the doctrine.

Peter Handford, ‘Edward John Eyre and the Conflict of Laws’ (2008) Melbourne University Law Review 822

The abstract reads:

In 1865 Edward John Eyre, the Governor of Jamaica, in the course of suppressing a revolt, caused a leading activist to be tried and executed under martial law. Over the next three years, a group of leading politicians and thinkers in England attempted to have Eyre prosecuted for murder. When the criminal process failed, they attempted to have him sued for trespass and false imprisonment. Though this case, Phillips v Eyre, was mainly concerned with constitutional issues, Willes J laid down a rule for choice of law in tort which endured for nearly a century before it was finally superseded. In this article, the author illuminates the case by reference to its background. The author speculates on why the decision, which initially occasioned little notice, became the subject of academic and judicial controversy many years afterwards.

Substance and Procedure: The Statute of Frauds in Australia

A recent decision of the Western Australian Court of Appeal is apparently the first Australian decision to address the correctness of the decision in Leroux v Brown (1852) 12 CB 801; 138 ER 1119 after the High Court of Australia’s decision in John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503, which adopted a wider definition of ‘substance’ for the purposes of characterisation than had previously been the case. Leroux v Brown had determined that s 4 of the Statute of Frauds (UK) was procedural, and that an oral agreement made in France was not enforceable in England despite being enforceable under its proper law.

The recent case concerned an oral contract of guarantee whose proper law was in dispute: if the law of Western Australia applied, an equivalent to s 4 of the Statute of Frauds would bar the plaintiff’s claim; whereas no such bar existed under the law of New South Wales. Characterisation and choice of law were therefore of equal practical importance: if the proper law were that of NSW and Leroux and Brown were not good law, the plaintiffs would succeed.

As it turned out, McLure JA (with whom Wheeler and Newnes JJA agreed) decided that the proper law of the contract was the law of WA, and that Leroux v Brown was no longer good law in Australia after the decision in John Pfeiffer. Thus, the Statute of Frauds applied as substantive law, and plaintiff’s claim was barred.

Tipperary Developments Pty Ltd v The State of Western Australia [2009] WASCA 126 (22 July 2009)

Foreign-Domiciled Testators: Jurisdiction over Family Maintenance Claims

In each of the Australian states, legislation exists to recognise that testators have a moral duty to make provision in their wills for certain kinds of dependents and other claimants, and to empower such claimants to make claims upon the estate of testators who failed to make appropriate provision in their wills. The relevant NSW legislation is now ch 3 of the Succession Act 2006 (NSW) (but the Family Provision Act 1982 (NSW) continues to apply to the estates of testators dying before 1 March 2009),which is similar to its interstate equivalents, although the precise details and the width of the category of eligible claimants vary from state to state. Complicated jurisdictional and choice of law questions can arise depending on the domicile of the testator and the location of the relevant property.

A recent case before Brereton J in the NSW Supreme Court concerned the application of Family Provision Act to the estate of a couple who died domiciled in Malta, leaving real and personal property in Malta and in NSW. The couple’s adult children made a claim under the Family Provision Act to real property situated in NSW. In his Honour’s usual style, the judgment contains a helpfully concise summary of the applicable law (at [26]):

“In those circumstances the relevant law is, as stated by Scholl J in Re Paulin [1950] VLR 462 at 465, that in connection with the application of testator’s family maintenance legislation, first, the Courts of the domicile alone can exercise jurisdiction under the testator’s family maintenance legislation of the domicile in respect of movable and immovable property in the place of domicile; secondly, the Court’s of the domicile alone can exercise such jurisdiction in respect of movable property of the deceased outside the place domicile; but thirdly, Courts of the situs alone can exercise such jurisdiction in respect of immovable property of the deceased out of the place of domicile, and Courts of the place of domicile cannot exercise such jurisdiction [see also Pain v Holt (1919) 19 SR (NSW) 105; Re Sellar (1925) 25 SR (NSW) 540; Re Donnelly (1927) 28 SR (NSW) 34; Re Osborne [1928] St R Qd 129; Re Butchart [1932] NZLR 125, 131; Ostrander v Houston (1915) 8 WWR 367; Heuston v Barber (1990) 19 NSWLR 354; Balajan v Nikitin (1994) 35 NSWLR 51]. It follows that any order made by this Court can affect only immovable property of the deceased in New South Wales; it cannot affect movable property in New South Wales, nor any property outside the State. However, in deciding what order should be made affecting immovable property in New South Wales, the Court is entitled nonetheless to take into account assets beyond the reach of its jurisdiction which inform the extent to which eligible persons and beneficiaries and others having claims on the deceased’s testamentary bounty have and will receive provision. The Court can also take into account assets beyond the reach of the jurisdiction in deciding what order to make in respect of costs relating to the assets in the jurisdiction [see Re Paulin and Re Donnelly].”

Taylor v Farrugia [2009] NSWSC 801 (5 June 2009)

Dirty Dancing and Stays of Proceedings

A recent judgment of the NSW Supreme Court is as noteworthy for its name and subject-matter as it is for the legal principles involved; namely stay of proceedings on the basis of a foreign exclusive jurisdiction clause.dirty-dancing

Dance With Mr D Limited v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332 concerned a dispute between producers of, and investors in, the musical “Dirty Dancing” (based on the film of the same name). The dispute turned on the interpretation of two contracts, one of which contained English choice of law and exclusive jurisdiction clauses; the other containing an Australian arbitration clause, the interpretation of which was also in dispute.

In granting a stay, the judge observed that:

“Where parties to a contract have agreed by an exclusive foreign jurisdiction clause to submit to the exclusive jurisdiction of a foreign court, such a clause does not operate to exclude the forum court’s jurisdiction. However, the courts of this country will hold the parties to their bargain, and grant a stay of proceedings, unless the party seeking that the proceedings be heard can show that there are strong reasons against doing so. In considering such an application the court should take into consideration all the circumstances of the particular case, but the application is not to be assimilated to cases where a stay is sought on the principle of forum non conveniens, nor is it a matter of mere convenience. See Huddart Parker Ltd v The Ship “Mill Hill” (1950) 81 CLR 502 at 508 – 509; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197; FAI General Insurance v Ocean Marine Mutual Protection and Indemnity Association; Akai Pty Ltd v People’s Insurance Co; Incitec Ltd v Alkimos Shipping Corporation and Anor; Owners of cargo on vessel Eleftheria v Owners of Ship Eleftheria [1969] 2 All ER 641 at 645.”

The Dirty Dancing decision is especially noteworthy in light of the reluctance of Australian courts to stay proceedings on forum non conveniens grounds. It also seems to stand in contrast to the apparently more tepid attitude towards the grant of stays exhibited the High Court in Akai Pty Ltd v People’s Insurance Co.

The Australian newspaper has more details of the commercial and personal background of the dispute here.