Foreign arbitration awards in Australia: a ‘pro-enforcement bias’

Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd [2011] FCA 131 provides a recent example of the ‘pro-enforcement bias’ of at least some Australian courts when it comes to international arbitration awards. The Federal Court of Australia enforced a Ugandan arbitration award under the International Arbitration Act 1974 (Cth) (which applies the New York Convention), notwithstanding that the Australian corporate respondent did not participate in the arbitration. That Act was amended in 2010 to favour the enforcement of foreign arbitral awards even further than had previously been the case. There are two points of more general interest.

First, the Court considered that the arbitration clause at issue — which provided that ‘Any lawsuit, disagreement, or complaint with regards to a disagreement, must be submitted to a compulsory arbitration’ — was not void for uncertainty and nor was the dispute outside its scope or determined otherwise than in accordance with the procedure agreed by the parties. The Court was prepared to read the clause as meaning (at [63]): ‘All disputes under or in relation to the Contract must be referred to arbitration’. The Court thus effectively read the words ‘under or in relation to the Contract’ into the arbitration clause. The arbitral procedure adopted was in accordance with Ugandan arbitration legislation, which supplied any deficiencies in the parties’ agreement concerning procedure.

Secondly, the Court rejected the respondent’s submission that the award should not be enforced on grounds of public policy (s 8(7) of the Act). The respondent had sought to invoke this ground on the basis that the arbitrator made errors of law and fact when determining the award of general damages. The Court said (at [126]) that it was not:

against public policy for a foreign award to be enforced by this Court without examining the correctness of the reasoning or the result reflected in the award. The whole rationale of the Act, and thus the public policy of Australia, is to enforce such 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.

The Court approved United States authorities consistent with this narrow approach to the public policy exception (Parsons & Whittemore Overseas Co, Inc v Société Générale De L’Industrie Du Papier, 508 F 2d 969 (2d Cir 1974); Karaha Bodas Co, LLC v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F 3d 274 at 306 (2004)) and disapproved previous Australian authorities supporting a broader approach (Resort Condominiums International Inc v Bolwell [1995] 1 Qd R 406 at 428–432; Corvetina Technology Ltd v Clough Engineering Ltd [2004] NSWSC 700; (2004) 183 FLR 317 at [6]-[14], [18]).