AUSTRALIA

Hilary Birks
Allens Linklaters
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Country Report: Australia

Public Policy and the Recognition and Enforcement of Arbitration Awards
(Hilary Birks)

Contents
1 How the concept of public policy is defined in Australian courts 2
2 Examples of Australian case law where public policy was raised in support of resisting
enforcement of an arbitral award 5
2.1 Sauber Motorsport AG v Giedo van der Garde BV & Ors [2015] VSCA 37 5
2.2 Armada (Singapore) Pte Ltd (Under Judicial Management) [2014] FCA 636 5
2.3 TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 311 ALR
387; [2014] FCAFC 83 6
2.4 William Hare UAE LLC v Aircraft Support Industries Pty Ltd (2014) 290 FLR 233 7
2.5 International Relief and Development Inc v Ladu [2014] FCA 887 10
2.6 Gujarat NRE Coke Limited v Coeclerici Asia (Pte) Ltd (2013) 304 ALR 468 10
2.7 Traxys Europe SA v Balaji Coke Industry Pvt Ltd (No 2) (2012) 201 FCR 535 11
2.8 Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd (2011) 277 ALR 415 12
2.9 IMC Aviation Solutions Pty Ltd v Altain Khuder LLC (2011) 282 ALR 717 13
2.10 Yang v S&L Consulting and Anor [2009] NSWSC 223 14
2.11 International Movie Group Inc & Anor v Palace Entertainment Corporation Pty Ltd
(1995) 128 FLR 458 15
2.12 Resort Condominiums International Inc v Bolwell & Anor (1993) 118 ALR 655 16
3 Examples of Australian case law where public policy was raised in support of an
application for an arbitral award to be set aside 16
3.1 Hebei Jikai Industrial Group Co Ltd v Martin [2015] FCA 228 16
3.2 Emerald Grain Australia Pty Ltd v Agrocorp International Pte Ltd (2014) 314 ALR 299;
[2014] FCA 414 17
3.3 Cargill International SA v Peabody Australia Mining Ltd (2010) 78 NSWLR 533 18
4 Other Australian case law relevant to the public policy question 19
Appendix 21
Country Report: Australia
Public Policy and the Recognition and Enforcement of Arbitration Awards
(Hilary Birks)

1 How the concept of public policy is defined in Australian courts

Public policy is a concept that may be relevant to the question of whether an arbitral award should be
set aside by an Australian court or whether an Australian court should refuse to enforce an arbitral
award.
By way of background, international arbitration in Australia is subject to the legislative framework of
the International Arbitration Act 1974 (Cth) (the Act). Section 2D of the Act provides that the objectives
of the legislation are:
(a) to facilitate international trade and commerce by encouraging the use of arbitration as a method
of resolving disputes; and
(b) to facilitate the use of arbitration agreements made in relation to international trade and
commerce; and
(c) to facilitate the recognition and enforcement of arbitral awards made in relation to international
trade and commerce; and
(d) to give effect to Australia's obligations under 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 New York Convention];
and
(e) to give effect to the UNCITRAL Model Law on International Commercial Arbitration adopted by
the United Nations Commission on International Trade Law on 21 June 1985 and amended by
the United Nations Commission on International Trade Law on 7 July 2006 [the Model Law];
and…

In giving effect to the New York Convention and the Model Law, the Act provides for the limited
circumstances in which an award in respect of an international arbitration may be set aside by a
competent court and in which the enforcement of an award may be refused (see sections 8 and 16 of
1
the Act). These circumstances include those in which the court finds that an award would be contrary
2
to public policy (see section 8(7)(b) and section 16 of the Act). In interpreting the meaning of 'public
policy' under the Act, sections 8(7A) and 19 provide that the enforcement of an award (or, in relation to
section 19, an interim measure) would be in conflict with or contrary to public policy if:
• the making of the award was induced or affected by fraud or corruption; or
• a breach of the rules of natural justice occurred in connection with the making of the award.

1
The regime applicable to domestic arbitration (rather than international arbitration) is subject to State and Territory legislation.
See, for example, Commercial Arbitration Act 2010 (NSW), Commercial Arbitration Act 2011 (SA) and Commercial Arbitration
Act 2011 (Vic).
2
Section 16 of the Act provides that the Model Law has the force of law in Australia. The relevant articles of the Model Law are
Article 17I (in relation to refusing recognition or enforcement of an interim award), Article 34 (in relation to the setting aside of an
award) and Article 36 (in relation to the enforcement of an award).
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Section 39 of the Act provides that where a court is considering the matters referred to in
section 39(1)(a) of the Act, which include exercising the power to refuse enforcement of an interim or
final award or to set aside an interim or final award, the court must have regard to:
(a) the objects of the Act [in section 2D]; and
(b) the fact that:
(i) arbitration is an efficient, impartial, enforceable and timely method by which to resolve
commercial disputes; and
(ii) awards are intended to provide certainty and finality.

The legislative framework therefore sets the scene in relation to the way in which an Australian court is
required to determine whether an interim or final award should be set aside or whether enforcement of
an interim or final award should be ordered.
The approach to the interpretation of 'public policy' and its application in Australia is generally similar in
respect of applications to set aside an award as well as arguments for the refusal of enforcement of an
award. There is a presumption that the same words used in legislation should be given the same
3
meaning, unless indicated otherwise. There is no indication in the Act that the meaning of 'public
policy' has a different meaning depending on whether the question relates to the setting aside of an
award or the enforcement of an award under the Act.
The Convention makes it clear that it is the public policy of the State (in this case, Australia) in which
the enforcement or recourse is sought, that is relevant to the determination of whether an award or the
enforcement of an award is contrary to public policy. Further, section 19 of the Act expressly provides
that, in relation to the Model Law, when considering questions of public policy, it is the public policy of
Australia that is relevant.
Australian case law has considered issues of public policy generally as well as alleged breaches of the
rules of natural justice as a basis for finding that an award is contrary to public policy. However, there
have not been a large number of cases regarding this question and the decisions reflect a mixed
4
approach. For an early example, the Court in Resort Condominiums International Inc v Bolwell & Anor
found the relevant award to violate public policy on the basis that, amongst other things, the award
included orders that the court would not make. As identified by Professor Richard Garnett and
5
Professor Michael Pryles, this approach was 'inconsistent with the narrow scope of the public policy
exception and the pro-enforcement policy underlying the [New York Convention] itself'. More recently,
Australian courts have adopted a more 'pro-enforcement' approach in determining whether an award
should be set aside or whether enforcement should be refused due to a breach of public policy.
In a 2014 decision, considering a submission that an award should be set aside on the basis that there
was a breach of the rules of natural justice and, therefore, that the award was contrary to public policy,
6
the Court of Appeal of the Federal Court of Australia held that (emphasis added):
[110]…The real question is whether an international commercial party has been treated unfairly or has
suffered real practical injustice in the dispute and litigation context in which it finds itself. Formalism in the
application of the so-called rules is not the essence of the matter: fairness and equality are. How
unfairness is revealed or demonstrated in any particular case will depend on the circumstances. The

3
Registrar of Titles (WA) v Franzon (1975) 132 CLR 611; Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd
(No 2) [2012] FCA 1214.
4
(1993) 118 ALR 655 (Resort Condominiums).
5
In Chapter 3 (Enforcement of Foreign Awards in Australia and New Zealand) of International Arbitration in Australia (2010),
edited by Luke Nottage and Richard Garnett, pages 76-77.
6
TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 311 ALR 387 at paragraphs 110 and 111 (TCL v
Castel).
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requirement of a fair hearing in an international commercial arbitration has been discussed in many
cases….
[111] The above leads one to the conclusion that Arts 34 and 36 [of the Model Law] should be seen as
requiring the demonstration of real practical injustice or real unfairness in the conduct of the reference or
in the making of the award. The rules of natural justice are part of Australian public policy. The
assessment as to whether those rules have been breached by reference to established principle is not a
matter of formal application of rules disembodied from context, or taken from another statutory or human
context. The relevant context is international commercial arbitration. No international arbitration award
should be set aside for being contrary to Australian public policy unless fundamental norms of
justice and fairness are breached. Each of Art 34 and 36 [of the Model Law] contains a form of
discretion or evaluative decision: “may be set aside” (Art 34), “may be refused only” (Art 36). It is not
profitable to seek to differentiate between the engagement of public policy under the Articles and a
supposedly separate and a later question whether to exercise the discretion; nor is it profitable, but only
likely productive of difficulty or error, to read into Arts 34 and 36 any precise notions of required prejudice
or other preconditions to the exercise of any discretion…
7
In Sauber Motorsport AV v Giedo van der Garde BV & Others, the Court of Appeal of the Supreme
8
Court of Victoria adopted the analysis of the Court in TCL v Castel, finding that:
In order to establish that the enforcement of an award would be contrary to public policy by reason of a
breach of natural justice what must be shown is real unfairness and real practical injustice.

Accordingly, more recent cases indicate that in considering whether there has been a beach of natural
justice, and, therefore, there is a ground to refuse enforcement or to set aside an award as being
contrary to public policy, Australian courts are likely to take a restrictive approach in interpreting what
conduct amounts to a breach of natural justice.
More generally, in relation to questions requiring consideration of what conduct is contrary to public
policy, there is a trend in recent cases suggesting that courts will take a pro-enforcement approach.
9
This is reflected in cases including Traxys Europe SA v Balaji Coke Industry Pvt Ltd (No 2) in which
His Honour Justice Foster held:
[105]… the scope of the public policy ground of refusal is that the public policy to be applied is that of the
jurisdiction in which enforcement is sought, but it is only those aspects of public policy that go to the
fundamental, core questions of morality and justice in that jurisdiction which enliven this particular
statutory exception to enforcement. The public policy ground does not reserve to the enforcement court a
broad discretion and should not be seen as a catch-all defence of last resort. It should not be used to
give effect to parochial and idiosyncratic tendencies of the courts of the enforcement state. This view is
consistent with the language of s 8(7), the terms of s 8(7A), the text of Art V(2) of the [New York]
Convention, the fundamental objects of the [New York] Convention and the objects of the [Act]. This
approach also ensures that due respect is given to Convention-based awards as an aspect of
international comity in our interconnected and globalised world which, after all, are the product of freely
negotiated arbitration agreements entered into between relatively sophisticated parties.

The following sections of this report include summarises of cases relating to:
• the enforcement of arbitral awards where enforcement is resisted on the ground that
enforcement would be contrary to public policy;
• applications for an arbitral award to be set aside on the basis that the award is contrary to
public policy; and
• other case law relevant to the interpretation of the public policy issue.

7
[2015] VSCA 37.
8
Id at [7] and [8].
9
[2012] FCA 276.
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2 Examples of Australian case law where public policy was raised in support of
resisting enforcement of an arbitral award
The following cases are listed in order of most recent to oldest:

2.1 Sauber Motorsport AG v Giedo van der Garde BV & Ors [2015] VSCA 37
This was an appeal from a decision of the Supreme Court of Victoria (see Giedo van der
Garde BV & Giedo Gijsbertus Gerrit van der Garde v Sauber Motorsport AV [2015] VSC 80).
(a) Relevant Facts
Mr van der Garde claimed that he had been guaranteed a position as a nominated driver for
Sauber Motorsport AG (Sauber) for the 2015 Formula One season. He was subsequently
informed that he would not be so nominated. Mr van der Garde commenced arbitration against
Sauber and obtained a partial award which ordered Sauber to '…refrain from taking any action
the effect of which would be to deprive Mr van der Garde of his entitlement to participate in the
2015 Formula One Season as one of Sauber's two nominated race drivers'.
Mr van der Garde and his management company applied to the Supreme Court of Victoria to
enforce the award in Australia. The Court granted leave to the two named drivers for Sauber
to be represented and heard in the enforcement proceeding, even though they were not party
to the arbitration proceedings.
(b) First Instance Decision
Sauber and the other drivers resisted enforcement on several grounds, including that
enforcement would be contrary to public policy. They argued that there had been a breach of
the rules of natural justice because the arbitrator had made findings not contended for by
either party and because the other drivers had not been heard in the arbitral proceedings.
His Honour Justice Croft rejected these arguments. Sauber appealed the decision.
(c) The Appeal
On appeal, Sauber's arguments on public policy grounds and the Court of Appeal's findings
were as follows:
• Uncertainty: Sauber submitted that the award was too uncertain and, as such,
enforcement would be contrary to public policy. The Court referred to the award and
the trial judge's conclusions that all parties were well aware of the nature of the
dispute and its resolution. The Court found that the trial judge's conclusions were
well-founded and that the award was not uncertain.
• Futility: Sauber submitted that the command of the award was futile and contrary to
public policy. The Court of Appeal found that there was no error in the trial judge's
approach to this issue (which was that there was not a demonstrated lack of utility as
to render the award against public policy).
• Legality and safety: Sauber submitted that enforcement of the award, permitting
Mr van der Garde to race in circumstances which would pose an unacceptable risk
and danger would be contrary to public policy. The Court of Appeal rejected this
argument, agreeing with the trial judge that these concerns did not raise any public
policy issue.

2.2 Armada (Singapore) Pte Ltd (Under Judicial Management) [2014] FCA 636
(a) The Relevant Facts
Gujarat NRE Coke Limited (Gujarat) and Armada (Singapore) Pte Ltd (Under Judicial
Management) (Armada) were parties to a contract of affreightment pursuant to which Gujarat
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agreed to ship and Armada agreed to provide tonnage for the transportation of six cargoes of
coking coal annually for each year from 2008 to 2012 (inclusive). Armada commenced
arbitration against Gujarat for breach of the contract of affreightment in respect of the six
shipments in 2009 and the first three shipments in 2010. Armada also reserved its right to
allege further breaches in respect of future shipments.
The arbitral tribunal made three partial awards in favour of Armada, awarding damages for
past and future losses incurred. Armada sought to enforce these awards in Australia. Gujarat
challenged the enforcement proceedings on several grounds, including that, to the extent that
the second partial award (referred to in the judgment as the 'Second Award'), related to a
declaration as to future loss, it was contrary to the public policy of Australia under
section 8(7)(b) of the Act.
(b) The Decision
In considering the public policy argument, His Honour Justice Foster of the Federal Court of
Australia determined that it was not appropriate to give effect to a declaration in respect of
future shipments. However, Justice Foster recognised that the tribunal may have made
additional awards relating to actual losses suffered by Armada since judgment was reserved in
the enforcement proceedings. On that basis, Justice Foster granted Armada leave to amend
its application to include any such additional awards. Justice Foster further explained that his
decision in relation to the Second Award was not based on section 8(7) of the Act, stating that
(at 21):
The mere fact that enforcing such a declaration might not be consistent with principles
developed in Australia for the exercise of an Australian Court's discretion to make declarations
would not, of itself, be sufficient to constitute a reason for refusing to enforce the award on the
grounds that to do so would be contrary to public policy.

2.3 TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 311
ALR 387; [2014] FCAFC 83
This case relates to a very lengthy dispute that involved several challenges to an arbitral
award as well as a challenge to the High Court of Australia in relation to the Federal Court of
Australia's jurisdiction to hear the matter on the basis that amendments to the Act were
constitutionally invalid. In TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the
Federal Court of Australia [2013] HCA 5, the High Court unanimously rejected the challenge.
(a) The Relevant Facts
TCL Air Conditioner (Zhongshan) Co Ltd (TCL) and Castel Electronics Pty Ltd (Castel) were
parties to a distribution agreement, pursuant to which Castel had exclusive rights to distribute
TCL-manufactured air conditioners in Australia. TCL began selling non-TCL branded air
conditioner products in Australia which gave rise to a dispute between the parties. The dispute
was referred to arbitration.
Following an initial challenge relating to the scope of the arbitration clause under the
distribution agreement, the tribunal rendered a final award in favour of Castel.
(b) First Instance Decision
TCL sought to resist Castel's enforcement of the award. TCL also sought to have the award
set aside. TCL's grounds for resisting enforcement and seeking to have the award set aside
were based on an argument that the arbitral award was contrary to the rules of natural justice
and, accordingly, in breach of the public policy of Australia under the Act.
At first instance, His Honour Justice Murphy dismissed TCL's application to set aside the
award. TCL appealed.
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(c) The Appeal

On appeal, TCL argued that:
• there was no evidence, or no probative evidence, for the three critical findings made
by the tribunal (the 'no evidence rule'); and
• the arbitrators could not reasonably make findings as to loss other than in accordance
with TCL's expert evidence, when the arbitrators accepted that Castel's expert witness
lacked expertise (the 'no hearing rule').
The Full Court unanimously rejected TCL's appeal, finding that 'The application was a
disguised attack on the factual findings of the arbitrators dressed up as a complaint about
natural justice' (at [54]).
The Full Court referred to relevant international case law and made the following observations
about the rules of natural justice (see [2014] FCAFC 83 at 35-39):
• The rules are part of Australian public policy and the essence of natural justice is
fairness. There can be no breach of any rule of natural justice unless there is real
unfairness and true practical injustice in how the dispute resolution was conducted.
• The content of the rules of natural justice vary according to the circumstances and, in
particular, the content of the dispute resolution process in question. In this case, the
relevant context is international commercial arbitration, where parties consent to a
private arrangement under which errors of law or fact are not legitimate bases for
court intervention.
• Articles 34 and 36 of the Model Law and sections 16 and 19 of the Act deal with
fundamental conceptions of fairness and justice, they are not technical rules that can
be invoked by minor, technical breaches.
• In maintaining the balance between swift enforcement of arbitral awards and
legitimate testing of those fundamental norms, the Model Law and the Act require the
demonstration of real unfairness, prejudice or practical injustice.
• In most, if not all cases, a party that claims to have suffered such unfairness or
injustice should be able to show it with tolerable clarity and expedition, without a
detailed re-examination of the facts or factual evaluation.
• There may be real unfairness or injustice if a party can demonstrate that it has been
denied an opportunity to be heard on an important and material issue that could
reasonably have made a real difference to the outcome of the arbitration.
The Full Court found that no rule of natural justice was breached.

2.4 William Hare UAE LLC v Aircraft Support Industries Pty Ltd (2014) 290 FLR 233
(a) The Relevant Facts
William Hare UAE LLC (the plaintiff) and Aircraft Support Industries Pty Ltd (the defendant)
were parties to an agreement which provided for the plaintiff to perform construction works at
Abu Dhabi International Airport. A dispute arose between the parties about the final amount
due to be paid to the plaintiff, as well as in relation to the payment of retention monies
pursuant to the terms of the agreement. On 10 May 2011, the defendant executed a corrected
version of an earlier letter that had been executed by both parties. The 10 May letter outlined
the agreement reached between the parties in relation to the outstanding payments, including
the payment of two instalments relating to retention monies.
The defendant failed to pay the second instalment of the retention monies. The plaintiff served
a request for arbitration which included a preliminary statement of relief sought, including an
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order for payment of the second instalment of the retention monies, as well as the sum of
US$50,000 representing the discount that the plaintiff applied for the purposes of settling the
final account as outlined in the 10 May 2011 letter.
The tribunal found that the plaintiff was entitled to an award for payment of the second
instalment of the retention monies as well as the US$50,000 representing the discount to the
final account, plus interest on the amounts awarded.
(b) The Decision
The plaintiff sought enforcement of the arbitral award in the Supreme Court of New South
Wales pursuant to section 8(2) of the Act. The defendant resisted enforcement, arguing that a
breach of the rules of natural justice occurred in making the award and that it was contrary to
public policy pursuant to section 8(7)(b) of the Act. The defendant relied on the following
grounds in supporting its claim that there was a breach of the rules of natural justice (at 236):
• Ground 1: The tribunal found that the plaintiff was entitled to US$50,000 even though
a claim for payment of that sum was not made in the plaintiff's Statement of Claim and
was not responded to by the defendant in its Defence, or otherwise and the tribunal
failed to give reasons why the plaintiff was entitled to the US$50,000.
• Ground 2: The tribunal failed to consider the defendant's contention that the alleged
agreement embodied in the 10 May 2011 letter had to be a permitted variation to the
agreement in order to be enforceable and the tribunal further failed to give reasons
why the alleged agreement was a variation, or if it was not, whether the agreement
operated in accordance with its terms.
• Ground 3: The tribunal refused to allow the defendant to rely upon certain
supplementary grounds of defence and proceeded with the hearing de bene esse prior
to its determination of whether the supplementary defences could be relied upon.
• Ground 4: The tribunal failed to give reasons for the rejection of each of the defences
relied upon by the defendant as originally propounded.
• Ground 5: The tribunal failed to give reasons why the sums claimed by the plaintiff
were due under the agreement.
• Ground 6: The tribunal failed to give reasons why the sums due under the agreement
were otherwise than as contended by the defendant.
His Honour Justice Darke reviewed the way in which the arbitral proceeding progressed in
some detail. His Honour then referred to recent case law including TCL Air Conditioner
(Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 311 ALR 387 and Traxys Europe SA v
Balaji Coke Industry Pvt Ltd (No 2) (2012) 201 FCR 535 in relation to the concept of natural
justice in international commercial arbitration.
 9

Justice Darke dealt with each of the defendant's grounds of objection as follows:
• Ground 1: His Honour found that although the reasons were 'very brief', the award
adequately disclosed the tribunal's essential reasons on the payment of the
US$50,000 and it was not for the Court to determine whether the tribunal was correct
or incorrect in that decision. His Honour added that in the content of an international
arbitration, the reasons given by the tribunal appeared adequate. However, Justice
Darke then considered there was a breach of natural justice in the tribunal's award of
US$50,000 in circumstances in which the claim was not included in the plaintiff's
Statement of Claim. In this respect, His Honour found that, in the circumstances in
which the arbitration was conducted, there had been a breach of the rules of natural
justice. His Honour held (at 249):
… fairness required the tribunal to give notice of its view to the parties (especially to
the defendant) and invite them to address the claim, including by the making of
submissions…
In my view, by reference to accepted principles of natural justice, real unfairness and
real practical injustice has been shown to have been suffered by the defendant to that
extent.

• Ground 2: Justice Darke found that there was no breach of the rules of natural justice
in relation to Ground 2. His Honour found that there was no discernible unfairness or
practical injustice to the defendant in the manner in which the tribunal dealt with this
aspect of the case. Further, there was no deficiency in the reasons provided for the
tribunal reaching its conclusion that the parties had reached a binding agreement.
• Ground 3: Justice Darke found that there was no discernible unfairness or practical
injustice to the defendant in relation to the manner in which the application for leave to
rely on supplementary defences was dealt with by the tribunal.
• Grounds 4, 5 and 6: Justice Darke addressed the defendant's submissions in relation
to the tribunal's alleged failure to give reasons together. His Honour concluded that the
defendant had failed to show that any particular defence was not considered by the
arbitral tribunal or that the defendant suffered real unfairness or prejudice was
suffered as a result.
His Honour then went on to consider whether the award could be enforced in part. After
reviewing case law from various jurisdictions and the legislative history of the Act, His Honour
concluded that (at 265):
In my opinion, s 8 of the Act should be construed so as to allow enforcement (pursuant to s 8(2)
or s 8(3)) of a part of an award, and allow refusal of enforcement (pursuant to s 8(7)) of part of
an award, where severance of the award is possible. That is to say, "the award" as it appears in
those sub-sections should be construed as including part of the relevant award.
It seems to me that this construction is not only available as a matter of language, it is
consistent with the objects of the Act, and promotes rather than hinders the efficient and fair
enforcement of international arbitral awards. Further, it accords with the approach taken
internationally in relation to similar legislation.

Accordingly, His Honour ordered that the award relating to the payment of the US$50,000
should be severed and that the award should otherwise be enforced pursuant to section 8(2)
of the Act.
 10

2.5 International Relief and Development Inc v Ladu [2014] FCA 887
(a) The Relevant Facts
The International Relief and Development Inc (the applicant) and Mr Ladu (the respondent)
were parties to an employment agreement, pursuant to which, Mr Ladu was employed as a
Program Manager in South Sudan.
Following concerns being raised by an employee of the applicant, a review was conducted
and Mr Ladu's employment was subsequently terminated.
As a result of further information that became available to the applicant following termination of
Mr Ladu's employment, the applicant learned that Mr Ladu had breached his employment
agreement and the applicant's Employee Code of Conduct by being the Managing Director,
Chairman and shareholder of a company called Ladu & Brothers Company Ltd.
Mr Ladu commenced proceedings in South Sudan, alleging unlawful termination of his
employment. The applicant commenced arbitration in Virginia, United States, in accordance
with the dispute resolution provision in the employment agreement.
The arbitration proceeded and Mr Ladu failed to take any part in it. The arbitrator found in
favour of the applicant. The applicant sought to enforce the award in the United States.
Mr Ladu unsuccessfully challenged the enforcement proceedings.
(b) The Decision
The applicant sought to enforce the award in Australia. In challenging the Australian
enforcement proceedings, Mr Ladu raised four issues:
• a question as to whether Mr Ladu was given notice of the appointment of the
arbitrator;
• a question as to whether Mr Ladu was given notice of the hearing of the arbitration;
• whether Mr Ladu was otherwise unable to present his case in the arbitration
proceedings; and
• whether enforcing the award would be contrary to public policy, in that a breach of the
rules of natural justice has occurred in connection with the making of the arbitral
award.
Counsel for Mr Ladu conceded that if he failed to make out any of the first three grounds, he
would fail to establish that enforcement would be in breach of public policy.
In considering the issues raised by Mr Ladu, Her Honour Justice Kenny of the Federal Court of
Australia held that Mr Ladu failed to establish that there was a breach of natural justice. Her
Honour referred to the objects of the Act, as specified in section 2D, noting that (at [168]):
… in determining [the applicant's] present application and in interpreting the [Act], the Court is
obliged to have regard to the objects of the [Act]… including, in this particular case, that effect
be given to Australia's obligations under the New York Convention…

Justice Kenny ordered that the award be enforced pursuant to section 8(3) of the Act.

2.6 Gujarat NRE Coke Limited v Coeclerici Asia (Pte) Ltd (2013) 304 ALR 468
(a) The Relevant Facts
Coeclerici Asia (Pte) Ltd (Coeclerici) and Gujarat NRE Coke Limited (Gujarat) were parties to
a contract of sale. The contract was governed by English law and provided for disputes to be
resolved by arbitration in England.
A dispute arose between the parties and an arbitration was commenced. Prior to the hearing,
the parties reached a settlement which provided that Coeclerici would be entitled to a 'consent
 11

award' if Gujarat failed to make any of the payments under the settlement agreement. Gujarat
defaulted.
The arbitral tribunal contacted Gujarat to request reasons why the tribunal should not make an
award in Coeclerici's favour the following day. Gujarat submitted that it did not have a
reasonable opportunity to present its position. The tribunal disagreed and made an award in
favour of Coeclerici.
Gujarat appealed to the English High Court of Justice, seeking to have the award set aside.
The application was dismissed.
(b) First Instance Decision
Coeclerici applied to the Federal Court of Australia for the award to be enforced under
section 8(3) of the Act: see Coeclerici Asia (Pte) Ltd v Gujarat NRE Coke Ltd [2013] FCA 882.
Gujarat resisted enforcement of the award on the basis that:
• Gujarat was not provided with a reasonable opportunity to present its case; and
• there was a breach of the rules of natural justice and enforcement would therefore be
contrary to public policy.
In considering the application, His Honour Justice Foster found that Gujarat had 'ample
opportunity and more than a reasonable opportunity in which to put their case before the
arbitrators'. His Honour also noted that similarity of the submissions and evidence in the
English High Court proceedings and held that there was an issue estoppel regarding the
'reasonable opportunity' question because it had already been determined by the English High
Court. His Honour also held that the matter may also be res judicata. Further, even if there
were no issue estoppel or res judicata, it would generally be inappropriate for an enforcement
court of a New York Convention country to reach a different conclusion on the same question
as a court at the seat of the arbitration.
(c) The Appeal
Gujarat unsuccessfully appealed to the Full Court of the Federal Court of Australia. In a
unanimous judgment, the Court agreed with His Honour Justice Foster's conclusion that
Gujarat had been given a reasonable opportunity to be heard and that it would generally be
inappropriate for an enforcement court of a New York Convention country to reach a different
conclusion on the same question as that reached by a court at the seat of the arbitration.

2.7 Traxys Europe SA v Balaji Coke Industry Pvt Ltd (No 2) (2012) 201 FCR 535
(a) The Relevant Facts
Traxys Europe SA (Traxys) and Balaji Coke Industry Pvt Ltd (Balaji) were parties to a
contract for the sale of metallurgical coke. Traxys was, in fact, a party interposed between a
sale contract between Balaji and Al Nasr Company to provide Balaji with a greater time frame
within which to pay for the coke delivery from Al Nasr Company. In the event, Balaji failed to
pay for the coke delivery. Traxys paid for the delivery, took control of the coke shipment and
resold the product to a third party. In the consequential arbitral proceeding, Traxys claimed
damages against Balaji for breach of contract, seeking the difference between the sale price of
the coke shipment under the contract and the amount realised under the subsequent sale
between Traxys and the third party.
The arbitral tribunal found in favour of Traxys and ordered Balaji to pay compensation of
£427,576. Both parties commenced proceedings as follows:
• Balaji commenced proceedings in India to set aside the award and restrain Traxys
from enforcing the award; and
 12

• Traxys commenced proceedings in England to recognise and enforce the award and
restrain Balaji from challenging the award in Indian courts.
Traxys succeeded in its applications in England.
(b) The Decision
Traxys then applied to have the award enforced in Australia under section 8(3) of the Act.
Balaji resisted enforcement on the basis that (amongst other things):
• it is a pre-requisite to enforcement and consistent with public policy under the Act that
Traxys first prove that there are assets within the enforcement jurisdiction, which
Traxys did not do; and
• to enforce the award in Australia notwithstanding the existence in India of the
proceedings to set it aside and an interim court order restraining Traxys from enforcing
the award would be contrary to public policy under the Act.
His Honour Justice Foster rejected Balaji's arguments and ordered the enforcement of the
award under section 8(3) of the Act. In doing so, His Honour held (at [105]):
[105]… the scope of the public policy ground of refusal is that the public policy to be applied is
that of the jurisdiction in which enforcement is sought, but it is only those aspects of public
policy that go to the fundamental, core questions of morality and justice in that jurisdiction which
enliven this particular statutory exception to enforcement. The public policy ground does not
reserve to the enforcement court a broad discretion and should not be seen as a catch-all
defence of last resort. It should not be used to give effect to parochial and idiosyncratic
tendencies of the courts of the enforcement state. This view is consistent with the language of
s 8(7), the terms of s 8(7A), the text of Art V(2) of the [New York] Convention, the fundamental
objects of the [New York] Convention and the objects of the [Act]. This approach also ensures
that due respect is given to Convention-based awards as an aspect of international comity in
our interconnected and globalised world which, after all, are the product of freely negotiated
arbitration agreements entered into between relatively sophisticated parties.

2.8 Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd (2011) 277 ALR 415
(a) The Relevant Facts
Uganda Telecom Ltd (UTL) and Hi-Tech Telecom Pty Ltd (Hi-Tech) were parties to a
Telecommunication Service Contract for the supply by UTL of telecommunications switching
services and facilities to Hi-Tech in order to facilitate conduct of its international
telecommunications traffic to UTL and to other destinations in Uganda.
A dispute arose relating to alleged breaches of the agreement by Hi-Tech and UTL
commenced arbitration proceedings. Hi-Tech did not take any part in the arbitration. The
arbitrator subsequently issued an award in UTL's favour for general damages, special
damages, interest and costs.
(b) The Decision
UTL applied to the Federal Court of Australian for the enforcement of the award pursuant to
section 8(3) of the Act.
Hi-Tech resisted UTL's application on a variety of grounds including that the award was
contrary to public policy because the amount of general damages awarded by the arbitrator
was arrived at by an erroneous reasoning process involving mistakes of fact and law.
His Honour Justice Foster rejected Hi-Tech's submissions, holding that (at 29-30):
Section 8(5) of the Act does not permit a party to a foreign award to resist enforcement of that
award on such a ground. Nor is it 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
 13

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.

Further, His Honour noted that (at 33):

Section 8(7)(b) preserves the public policy ground. However, it would be curious if that
exception where the source of some general discretion to refuse to enforce a foreign award.
Whilst the exception in s 8(7)(b) has to be given some room to operate, in my view, it should be
narrowly interpreted consistently with the United States cases. The principles articulated in
those cases sit more comfortably with the purposes of the [New York] Convention and the
objects of the Act.

2.9 IMC Aviation Solutions Pty Ltd v Altain Khuder LLC (2011) 282 ALR 717
(a) The Relevant Facts
IMC Mining Inc (IMC Mining) and Altain Khuder LLC (Altain Khuder) were parties to a mining
services agreement. A dispute arose in relation to IMC Mining's alleged non-performance of its
obligations. Altain Khuder commenced arbitration and obtained an award in its favour. The
award ordered that IMC Mining to pay a sum of money to Altain Khuder. The award also
ordered that a related party, IMC Aviation Solutions Pty Ltd (IMC Solutions), pay the sum on
behalf of IMC Mining.
(b) The Decision
Altain Khuder applied to the Supreme Court of Victoria for the award to be enforced against
IMC Mining and IMC Solutions on an ex parte basis. His Honour Justice Croft made orders for
the enforcement of the award but reserved the rights of the IMC Mining and IMC Solutions to
apply for the orders relating to enforcement to be set aside.
IMC Solutions applied for the orders relating to enforcement to be set aside on the following
grounds:
• that the award was not a 'foreign award', binding on the parties (as required by
sections 8(1) and (2) of the Act);
• in the alternative, the award was not, vis a vis, IMC Solutions, valid under the law of
Queensland;
• in the alternative, IMC Solutions was not given proper notice of the appointment of the
arbitrators or of the arbitration proceedings and/or was unable to present its case in
the arbitration proceedings (section 8(5)(c) of the Act);
• in the alternative, the award deals with a difference not contemplated by, or falling
within the terms of, the submission to arbitration and/or contains a decision on a
matter beyond the scope of the submission to arbitration (section 8(5)(d) of the Act);
• in the alternative, the composition of the arbitral tribunal and/or the arbitral authority
was not in accordance with the agreement of IMC Solutions and was not, vis a vis IMC
Solutions, in accordance with the law of Mongolia (section 8(5)(e) of the Act);
• in the alternative, to enforce the award would be contrary to public policy
(section 8(7)(b) of the Act).
IMC Solutions' submission regarding public policy was based on its assertion that, for the
reasons advanced in relation to the grounds for resisting enforcement under section 8(5) of
the Act, IMC Solutions was denied natural justice in the arbitration proceedings. As a result,
IMC Solutions did not have an opportunity to respond to the materials relied upon by Altain
Khuder in the arbitration.
 14

His Honour Justice Croft considered some authorities relating to public policy including Sir
Anthony Mason's findings in Hebei Import & Export Corporation v Polytek Engineering Co Ltd
[1999] 1 HKLRD 665, that there had not been a breach of any notions of justice and morality in
Hong Kong (at 70-72). Justice Croft held, amongst other things, that:
• IMC Solutions was not entitled to 'relitigate and revisit the issues the subject of the
arbitration' (at [69]); and
• IMC Solutions had failed to establish that enforcement of the award would be contrary
to public policy (at [116]).
In addition, IMC Solutions was ordered to pay Altain Khuder's costs on an indemnity basis.
IMC Solutions appealed to the Court of Appeal of the Victorian Supreme Court.
(c) The Appeal
The grounds of appeal did not include a challenge to the decision in relation to whether the
award was contrary to public policy. The main issue for the Court of Appeal was to determine
how the Act applies in circumstances in which the alleged award debtor (in this case, IMC
Solutions) is not expressly named as a party to the relevant arbitration agreement.
The Court of Appeal held that Altain Khuder had the legal burden of establishing before
Justice Croft, on the balance of probabilities, that IMC Solutions was a party to the relevant
arbitration agreement. The Court of Appeal held that the issue of whether IMC Solutions was a
party to the arbitration agreement as well as the issue of whether IMC Solutions was estopped
from resisting enforcement in Australia had to be re-decided according law.
Her Honour Chief Justice Warren considered that it was inappropriate in the circumstances of
the appeal to decide the two issues. However, the majority of the Court proceeded to do so
and allowed IMC Solutions' appeal, setting aside all of the orders of Justice Croft in so far as
they related to IMC Solutions.

2.10 Yang v S&L Consulting and Anor [2009] NSWSC 223

(a) The Relevant Facts
Mr Yang engaged a migration agent, Stephen Lee to assist with obtaining and Australian
residency visa application for Mr Yang and his family. After obtaining the visa, Mr Yang
entered into a contract with S&L Consulting, pursuant to which Mr Yang agreed to pay
$500,000 for shares in an Australian company that he would hold for three years. S&L
Consulting made certain guarantees under the contract, including that Mr Yang and his
family's permanent residency would not be revoked by the government unless they failed to
reside in Australia for a sufficient period during the three year period and to purchase all of
Mr Yang's shares if a third party purchaser was not found at the expiry of the three year
period.
As part of his permanent residency application, Mr Yang had made undertakings to the
Australian Government that, if he was granted a business skills visa, he would make genuine
efforts to actively participate as an owner or part-owner in the day to day management, at a
senior level, of a new or existing business in Australia.
Following the three year period, a purchaser for Mr Yang's shares had not been found and
S&L Consulting did not pay Mr Yang the $500,000. Mr Yang obtained an arbitral award
against S&L Consulting and Mr Lee (who was guarantor of S&L Consulting's obligations) for
the $500,000, plus penalties and costs.
(b) The Decision
Mr Yang applied to the Supreme Court of New South Wales to have the award enforced. S&L
Consulting opposed the application on public policy grounds, submitting that the guarantee
 15

relating to Mr Yang's (and his family's) permanent residency was contrary to the policy of the
law of Australia by providing an incentive to Mr Yang not to comply with the undertakings he
had made to the Australian Government.
His Honour Justice White held that public policy considerations did not prevent the
enforcement of the award. His Honour commented that:
• The guarantee granted to Mr Yang under the contract was not unlawful or for an
unlawful purpose. His Honour noted that if Mr Yang failed to be involved at a senior
level of a new or existing business, the Minister retained a discretionary power to
cancel his visa (at paragraph [18]).
• Even if the guarantee was for an unlawful purpose, it would not be contrary to public
policy to enforce an award in respect of it unless the guarantee was otherwise
unenforceable on the basis of relevant contract law principles (at paragraph [19]).
• In any event, if the guarantee was found to be unlawful, it could be severed and given
the award did not rely on the guarantee, severance would not impact on the award, or
its enforcement (at paragraph [24]).

2.11 International Movie Group Inc & Anor v Palace Entertainment Corporation Pty Ltd
(1995) 128 FLR 458
(a) The Relevant Facts
International Movie Group Inc (IMG) and The Movie Group Inc (TMG) were related entities,
one of which was party to thirteen separate contracts with either Palace Films Pty Ltd or
Palace Entertainment Corporation relating to the licensing of motion picture distribution rights
in Australia and New Zealand. Palace Entertainment Corporation Pty Ltd, the defendant in the
proceeding, was not named as a party to any of the thirteen contracts.
A number of disputes arose in relation to the thirteen contracts and they were referred to
arbitration. The arbitrator rendered an award in favour of IMG, including a nominated sum of
damages, as well as an order providing that if IMG sold or licensed a particular film in Australia
or New Zealand in the future, 'any net sums received by [IMG] from such sales shall reduce
the amount due'.
(b) The Decision
IMG sought to have the award enforced in the Supreme Court of Victoria and Palace argued
that enforcement of the award would be contrary to public policy based on:
• Inevitable practical difficulties of interpretation or enforcement. In this respect, Palace
relied on an assumption that the contracts were made with different entities. The Court
found that, on the facts, there was nothing to suggest that any other legal entity other
than the defendant was a party to any of the contracts. Further, the Court found that
there was no force in an argument that findings in the favour of the plaintiffs
collectively, would affect the operation or validity of the award (at 23) and dismissed
the other aspects of the defendant's submissions on the issue (at 24).
• The submission that the award was not final as it did not finally determine the rights of
the parties. The Court held that the award was uncertain on its face on the basis that
10
the damages may have required an adjustment by reference to future events (at 24).
To the extent that the award was unenforceable, it was severable.

10
As Pryles, M and Garnett, R in 'Recognition and Enforcement of Foreign Awards under the New York Convention in Australia
and New Zealand' Journal of International Arbitration(2008) 25(6): 899-912, at 905-906, have commented, the parties and the
Court appeared to accept that uncertainty was a legitimate ground for refusing enforcement of the award.
 16

2.12 Resort Condominiums International Inc v Bolwell & Anor (1993) 118 ALR 655
(a) The Relevant Facts
Resort Condominiums International Inc (RCI) entered into a licence agreement with the
second respondent, RCI Australia, pursuant to which RCI granted RCI Australia rights to the
RCI Exchange Program. RCI Australia and Mr Bolwell (the Managing Director and Principal of
RCI Australia) agreed to pay RCI a royalty.
RCI alleged that RCI Australia breached the agreement by failing to pay the annual royalty fee
and breaching other conditions of the licence agreement.
A Judge of the United States District Court granted a preliminary injunction against RCI
Australia and made certain procedural orders, including a direction that all further orders be
stayed pending arbitration in accordance with the licence agreement. Two days later, an
arbitrator made an interim arbitration order and award in essentially similar terms to the order
of the District Court Judge. The orders were interlocutory and procedural and did not resolve
the dispute between the parties.
(b) The Decision
RCI sought enforcement of the award in Australia and RCI Australia opposed enforcement on
the grounds including that enforcement should be refused in the court's general discretion or
on public policy grounds.
His Honour Justice Lee accepted RCI Australia's arguments and refused enforcement. In
relation to the public policy argument, His Honour found that (at 20):
Many of the orders of the present kind are contrary to the public policy of Queensland not only
in the sense that many of them as drafted would not be made in Queensland, particularly
without undertakings as to damages and appropriate security and in certain other respects, but
also because of possible double vexation and practical difficulties in interpretation and
enforcement …
In my view, even if it be correct that the [interim arbitral award was] in fact an "arbitral award"
within the meaning of the Convention and a "foreign award" within the meaning of the Act I
would refuse the application on the grounds referred to in s 8(7)(b) of the Act (art V(2)(b) of the
Convention), or alternatively in the exercise of my discretion.

3 Examples of Australian case law where public policy was raised in support of
an application for an arbitral award to be set aside
The following cases are listed in order of most recent to oldest:

3.1 Hebei Jikai Industrial Group Co Ltd v Martin [2015] FCA 228
This case relates to an application for an arbitral award to be set aside pursuant to Article 34
of the Model Law.
(a) The Relevant Facts
In 2012, Hebei Kikai Industrial Group Co Ltd (Hebei) and Mr Martin were parties to
commercial proceedings in the Supreme Courts of New South Wales and Queensland. The
proceedings also involved RUS Holdings (Australia) Pty Ltd (RUS Holdings), of which Mr
Martin was a director and both Hebei and Mr Martin were shareholders.
The parties agreed to settle their disputes and discontinue all relevant proceedings. The
settlement was recorded in a Deed of Settlement which provided a mechanism to finally
resolve an issue in relation to whether Mr Martin had breached his duties as a director of RUS
Holdings, or its subsidiary, RUS Mining Services Pty Ltd (RUS Mining). The procedure
involved appointing an auditor to prepare a report disclosing the basis for a breach of duty by
Mr Martin. Mr Martin could dispute the finding by referring the matter to arbitration. The
 17

arbitration would determine if a breach occurred and the amount of any loss suffered by RUS
Holdings or RUS Mining. The amount of any loss was to be deducted from $500,000 of
retained funds, with the balance to be paid to Mr Martin. If the report did not disclose a basis
for a breach, the retained funds were to be released in full to Mr Martin.
The auditor subsequently appointed produced a report. Mr Martin disputed the report and an
arbitrator was appointed. A question arose as to whether the report disclosed a basis for a
breach of duty by Mr Martin. The arbitrator determined that the report did not disclose a basis
for a breach of duty and that it could not be said to have that Mr Martin caused any loss.
Hebei applied to the Federal Court of Australia for an order setting aside the award, or a
declaration that the report was not an audit report for the purposes of the Deed of Settlement.
Mr Martin sought an order that the retained funds be paid to him. Hebei's submission in
relation to the setting aside of the award was that it involved a breach of natural justice and
that the arbitrator failed to conduct the arbitral procedure in accordance with the agreement of
the parties.
(b) The Decision
His Honour Justice Wigney held that the terms of Article 34 of the Model Law were critical to
the judgment. His Honour considered Hebei's submissions that it was unable to present its
case (relying upon Article 34(2)(a)(ii) of the Model Law) and that the arbitral procedure was not
in accordance with the agreement of the parties (relying upon Article 34(2)(a)(iv) of the Model
Law). Justice Wigney dismissed Hebei's arguments in this respect.
Turning to the submission in relation to the award being contrary to public policy, Justice
Wigney held (at 24) that:
The only breach of the rules of natural justice alleged by [Hebei] is that [Hebei] was unable to
present its case because it was denied a full hearing on the merits. For the reasons already
given, [Hebei] was able to present its case in connection with the making of the relevant award;
the relevant award being the award determining the threshold issue. There was no breach of
the rules of natural justice and therefore no basis for concluding that the award is in conflict with
the public policy of Australia. It follows that [Hebei's] attack on the arbitral award under
Art 34(2)(b)(ii) of the Model Law has no merit and must be dismissed.

In the event, Justice Wigney dismissed Hebei's application and ordered in favour of Mr Martin.

3.2 Emerald Grain Australia Pty Ltd v Agrocorp International Pte Ltd (2014) 314 ALR
299; [2014] FCA 414
This case relates to an application for an arbitral award to be set aside pursuant to Article 34
of the Model Law.
(a) The Relevant Facts
Emerald Grain Australia Pty Ltd (Emerald Grain) and Agrocorp International Pte Ltd
(Agrocorp) were parties to a performance contract. Under the contract, Emerald Grain was
required to sell a quantity of canola in bulk for delivery in Bangladesh.
Agrocorp commenced arbitration in Australia against Emerald Grain, claiming that it had
incurred costs and lost profits as a result of Emerald Grain's failure to load the full shipment,
as well as a result of delays relating to import permits. Emerald Grain cross-claimed for breach
of contract and in negligence.
The tribunal found substantially in favour of Agrocorp.
 18

(b) The Decision

Emerald Grain applied to the Federal Court of Australia for the award to be set aside pursuant
to section 19 of the Act on the basis that it conflicted with the public policy of Australia by
breaching the rules of natural justice. Emerald Grain submitted that:
• there was no probative evidence before the tribunal to allow it to make certain
findings; and
• the tribunal made findings based on its own opinions and ideas without providing
Emerald Grain with adequate notice.
His Honour Justice Pagone refused to set aside the tribunal's award and made three points
regarding the interpretation of arbitral awards:
• Clear evidence is required to show that an award is in conflict with public policy
([2014] FCA 414 at paragraph [41]).
• There is no right of appeal to challenge a tribunal's findings of fact ([2014] FCA 414 at
paragraph [10]).
• It is significant that courts in other New York Convention countries are reluctant to find
that an award conflicts with public policy and have held that only meaningful breaches
of the rules of natural justice will be remedied ([2014] FCA 414 at paragraph [13]).

3.3 Cargill International SA v Peabody Australia Mining Ltd (2010) 78 NSWLR 533
(a) The Relevant Facts
Cargill International SA (Cargill) and Peabody Australia Mining Ltd (previously known as
Excel Coal Ltd and referred to in the judgment as Excel) were parties to a Standard Coal
Trading Agreement, pursuant to which Excel agreed to supply coal to Cargill.
A dispute arose between the parties which was referred to arbitration, in which Excel claimed
payments allegedly owing to Excel in respect of deliveries made in 2009. Cargill
counterclaimed for demurrage relating to the late delivery of shipments in mid-2007.
The arbitrator found in favour of Excel and dismissed the whole of Cargill's counterclaim. For
the purposes of the counterclaim, the arbitrator made certain findings relating to a period of
force majeure that arose during the term of the contract. The duration of the force majeure
was an issue in dispute between the parties.
(b) The Decision
Cargill applied to the New South Wales Supreme Court, challenging the arbitrator's award.
Cargill's challenge was based on one of two alternatives, depending on an initial jurisdictional
question, being whether the arbitration was governed by the Commercial Arbitration Act 1984
(NSW) or the Act.
Cargill sought an order that if the Commercial Arbitration Act 1984 (NSW) did not apply, the
award should be set aside pursuant to Article 34(2)(b)(ii) of the Model Law on the basis that
the award was in conflict with public policy due to the failure of the arbitrator to address
Cargill's alternative argument (amounting to a denial of natural justice).
Her Honour Justice Ward found that the Act applied. Her Honour was not satisfied that there
had been a denial of natural justice, stating (at 545):
I think there is some force in the suggestion by Excel that what is now sought to be put by
Cargill is a modification or reformulation of the alternative submission that was in fact put before
the arbitrator… The arbitrator appears to have addressed the thrust of the Alternative Argument
put to him in his Partial Award, even if he did not frame his reasons in the way in which the
 19

argument is now put. Cargill cannot in my view be said to have been deprived of a fair hearing
in that regard.

Ultimately, Justice Ward found that, on the evidence, she was not satisfied that Cargill's
argument was clearly articulated before the arbitrator, which disposed of Cargill's claim that
there was a breach of natural justice. Further, to the extent that an argument was put, the
evidence suggested that it had been heard by the arbitrator who had reached a conclusion
which rejected it. Her Honour was not satisfied that this amounted to a denial of natural justice.

4 Other Australian case law relevant to the public policy question

The Supreme Court of New South Wales judgment in Corvetina Technology Ltd v Clough
Engineering Ltd [2004] NSWSC 700 was not a case relating to the enforcement of an award or
the setting aside of an award. However, the Court did have regard to the interpretation of what
amounts to 'contrary to public policy' under the Act.
In that case, the defendant, Clough Engineering Ltd (Clough) had pleaded illegality in the
arbitral proceedings. The arbitrator made findings of fact and law that the contracts between
Clough and Corvetina Technology Ltd (Corvetina) were not illegal and were not contrary to
public policy according to the law of England (the governing law) or the law of Pakistan (the
place of performance). The arbitrator also found that the contracts were not performed in a
manner that was contrary to public policy.
The question arising in the proceeding was whether, given the findings of the arbitrator on the
issues of illegality and public policy, Clough was entitled to discovery (and if so, to what
extent) in seeking to prove that Corvetina performed, purported to perform or intended to
perform its obligations under the contracts in a manner which was either contrary to the public
policy and laws of Pakistan or contrary to Australian public policy.
His Honour Justice McDougall was referred to Soleimany v Soleimany [1999] QB 785 in
relation to evidence of the illegality of a contract. In the judgment, His Honour noted that the
Court in Soleimany v Soleimany prefaced its comments on the issue with the statement that
the Court was not making a definitive decision (at 3). Justice McDougall continued (at
paragraph [10]):
It is clear that, upon an application for an enforcement of an international arbitral award, the
discretion that is conferred (in Australia) by s 8(7)(b) of the Act is wide. It may also be, although
I express no concluded view, that there is, in addition, a general discretion: see Resort
Condominiums International Inc v Bolwell [1995] 1 Qd R 406.

Then, at paragraph [14] of the judgment, Justice McDougall held:

It seems to be clear… that it is open in principle to a defendant, in the position of the present
defendant, to seek to rely on illegality, pursuant to s 8(7)(b), or its equivalent, even if the
illegality was raised before and decided by the arbitrator…

His Honour then responded to a suggestion that if the Court did not accede to Corvetina's
notice of motion, it would send a warning signal in relation to the enforcement of international
arbitral awards in Australia. His Honour held (at paragraph [18]):
… I do not agree. The very point of provisions such as s 8(7)(b) is to preserve to the court in
which enforcement is sought, the right to apply its own standards of public policy in respect of
he award. In some cases the inquiry that it required will be limited and will not involve detailed
examination of factual issues. In other cases, the inquiry may involve detailed examination of
factual issues. But I do not think that it can be said that the court should forfeit the exercise of
the discretion, which is expressly referred to it, simply because of some "signal" that this might
send to people who engage in arbitrations under the Act. There is, as the cases have
recognised, a balancing consideration. On the one hand, it is necessary to ensure that the
mechanism for enforcement of international arbitral awards under the New York Convention is
not frustrated. But, on the other hand, it is necessary for the court to be master of its own
 20

processes and to apply its own public policy. The resolution of that conflict, in my judgment,
should be undertaken at a final hearing and not on an interlocutory application.

This case is not referred to in the table in the Appendix as it was not an application for
enforcement of an award, or for an award to be set aside.

Hilary Birks
30 May 2015
Appendix
Key:
Act International Arbitration Act 1974 (Cth)

ALR Australian Law Reports

FCA Federal Court of Australia

FCAFC Federal Court of Australia - Full Court

NSWSC New South Wales Supreme Court
NSWLR New South Wales Law Reports

VSC Victorian Supreme Court

VSCA Victorian Supreme Court of Appeal

No Identification of Summary of the public policy argument Substantive Procedural Enforcement Enforcement Comment / Other
the decision denied accepted Order
(citation)

1 Giedo van der At first instance, Sauber argued that there had been a X X
Garde BV & Giedo breach of the rules of natural justice because the arbitrator
Gijsbertus Gerrit had made findings not contended for by either party and
van der Garde v because the drivers (the other parties to the enforcement
Sauber Motorsport proceedings) had not been heard in the arbitral
AV [2015] VSC 80 proceedings (the drivers were not party to the arbitral
proceedings). Accordingly, enforcement would be contrary
AND, on appeal:
to public policy under s 8(7)(b) or s 8(7A) of the Act.
Sauber Motorsport
On appeal from the first instance decision, the applicant
AG v Giedo van
argued that:
der Garde BV &
Others [2015] • the award was too uncertain and, as such,
VSCA 37 enforcement would be contrary to public policy;
• the command of the award was futile and therefore,
contrary to public policy; and
• in permitting Mr van der Garde to race in
circumstances which would pose an unacceptable
risk and danger, enforcement would be contrary to
public policy.
No Identification of Summary of the public policy argument Substantive Procedural Enforcement Enforcement Comment / Other
the decision denied accepted Order
(citation)

2 Hebei Jikai The applicant sought to have an arbitral award set aside on X This decision was in
Industrial Group Co public policy grounds because the award 'involved a relation to the setting
Ltd v Martin [2015] breach of natural justice' and the arbitrator failed to conduct aside of an award
FCA 228 the arbitral procedure in accordance with the agreement of rather than
the parties. enforcement. The
application to set aside
the award was denied.
3 Armada That insofar as an arbitral award related to a declaration as X (Subject to His Honour granted
(Singapore) Pte Ltd to future loss, it was contrary to the public policy of further order Armada leave to
(Under Judicial Australia and enforcement of the award should be refused – see amend its application to
Management) pursuant to s 8(7)(b) of the Act. comment) include any awards
[2014] FCA 636 made since His Honour
had reserved judgment
in the proceeding.

4 Emerald Grain Emerald Grain applied to the Court to have the award set X This decision was in
Australia Pty Ltd v aside under s 19 of the Act on the basis that it was in relation to the setting
Agrocorp conflict with the public policy of Australia as it breached the aside of an award
International Pte rules of natural justice in two ways: rather than
Ltd [2014] FCA enforcement. The
• There was no probative evidence before the arbitral
414; (2014) 314 application to set aside
tribunal to permit it to make certain findings.
ALR 299 the award was denied.
• The arbitral tribunal made findings based on its own
opinions and ideas without providing Emerald Grain
adequate notice.
5 TCL Air TCL submitted that the Federal Court's first instance X X
Conditioner decision failed to find that the rules of natural justice were
(Zhongshan) Co breached and the arbitral award was in conflict with the
Ltd v Castel rules of natural justice (relating to procedural fairness) and
Electronics Pty Ltd the award was in conflict with the public policy of Australia
[2014] FCAFC 83 / under the Act.
(2014) 311 ALR
387
No Identification of Summary of the public policy argument Substantive Procedural Enforcement Enforcement Comment / Other
the decision denied accepted Order
(citation)

6 William Hare UAE William Hare UAE LLC (the plaintiff) applied for the X X (in part) X (in part) His Honour Justice
LLC v Aircraft enforcement of an award in Australia. Aircraft Support Darke found that there
Support Industries Industries (the defendant) resisted enforcement of the was a breach of the
Pty Ltd (2014) 290 award on the basis that to enforce would be contrary to rules of natural justice
FLR 233 public policy as a result of a breach of the rules of natural in respect of one part of
justice. the Award. His Honour
held that the Award
could however, be
enforced in part (by
severing that aspect
that was in breach of
the rules of natural
justice).
7 International Relief The respondent resisted an application for enforcement of X X
and Development an arbitral award on the grounds that to enforce the award
Inc v Ladu [2014] would be contrary to public policy as the respondent had
FCA 887 not been given notice of the arbitration.

8 Gujarat NRE Coke Gujarat appealed to the Full Court of the Federal Court X X
Limited v Coeclerici from a decision of the Federal Court which rejected
Asia (Pte) Ltd Gujarat's argument that, amongst other things, there was a
(2013) 304 ALR breach of the rules of natural justice, such that enforcement
468 of the award would be contrary to public policy (s 8(7)(b)
and s 8(7A) of the Act): Coeclerici Asia (Pte) Ltd v Gujarat
NRE Coke Ltd [2013] FCA 882.

9 Traxys Europe SA Balaji resisted Traxys' application to enforce the arbitral X X X

v Balaji Coke award on the basis, amongst other things, that:
Industry Pvt Ltd
• it is a pre-requisite to enforcement and consistent
(No 2 ) (2012) 201
with public policy under the Act that the applicant first
FCR 535
prove that there are assets within the enforcement
jurisdiction (which Traxys failed to do); and
• to enforce the award in Australia notwithstanding the
existence in India of the proceedings to set it aside
and an interim court order restraining Traxys from
No Identification of Summary of the public policy argument Substantive Procedural Enforcement Enforcement Comment / Other
the decision denied accepted Order
(citation)
enforcing the award would be contrary to public policy
under the Act.
10 Uganda Telecom Hi-Tech argued that the court can inquire as to the X X The court held that
Ltd v Hi-Tech correctness of an arbitral tribunal's decision in order to public policy does not
Telecom Pty Ltd determine whether the award is contrary to Australian provide a basis for
(2011) 277 ALR public policy, or under the court's general discretion to reopening the merits of
415; [2011] FCA refuse enforcement. In this instance, Hi-Tech submitted an arbitration. Public
131 that errors of fact or law could amount to a breach of public policy and the purposes
policy. of the New York
Convention require
Australian courts to
apply the
pro-enforcement bias.

11 Altain Khuder LLC The second defendant sought to have orders enforcing an X X Note: The decision was
v IMC Mining Inc & arbitral award against it set aside on several grounds reversed on appeal in
Anor (2011) 276 including that enforcement would be contrary to public relation to the burden of
ALR 733 policy as it was denied natural justice in the arbitration an award debtor to
[Reversed on proceedings. prove a defence under
appeal: IMC Article V of the New
Aviation Solutions York Convention (such
Pty Ltd v Altain as lack of a valid
Khuder LLC (2011) arbitration agreement).
282 ALR 717 (see
comment).]

12 Cargill International Cargill International SA challenged an arbitral award in X This decision was in
SA v Peabody favour of Peabody Australia Mining Ltd, seeking to have relation to the setting
Australia Mining the award set aside on the basis that, amongst other aside of an award
Ltd (2010) 78 things, the arbitrator had failed to consider one of its rather than
NSWLR 533 arguments and that this amounted to a denial of natural enforcement. The
justice (and therefore was a breach of public policy). application to set aside
the award was denied.
No Identification of Summary of the public policy argument Substantive Procedural Enforcement Enforcement Comment / Other
the decision denied accepted Order
(citation)

13 Yang v S&L The defendants submitted that the arbitral award should X X
Consulting & Anor not be enforced because the agreement the subject of the
[2009] NSWSC award was against public policy. The defendants argued
223 that the agreement was 'contrary to the policy of the law
found in the Migration Act and Regulations by providing an
incentive to the plaintiff not to comply with the undertakings
he had given'.
14 International Movie The defendant (Palace Entertainment) resisted X X (in part) X (in part) The Court found that to
Group Inc & Anor v enforcement of an arbitral award obtained in California on the extent that part of
Palace the basis that, amongst other things, enforcement would be the award was to be
Entertainment contrary to public policy due to: reduced by an
Corporation Pty Ltd unspecified sum, it was
• 'inevitable practical difficulties of interpretation or
(1995) 128 FLR unenforceable. The
enforcement';
458 Court severed that part
• the submission that the award was not final (as it did
of the award.
not finally determine the rights of the parties); and
• the submission that the 'award contains orders
drafted in terms which cannot be complied with and
would not have been made in this jurisdiction as they
could not be enforced in the terms in which they are
made'.
[Note: the decision was appealed in relation to the question
of whether an award was severable: ACN 006 397 413 Pty
Ltd v International Movie Group (Canada) Inc & Anor
[1997] 2 VR 31.]
15 Resort The respondents argued that an 'interim arbitration order X X
Condominiums and award' was incapable of enforcement or, alternatively,
International Inc v that enforcement should be refused on public policy
Bolwell & Anor grounds.
(1993) 118 ALR
655