The enforcement of international arbitral awards in Australia is governed by the International Arbitration Act 1974 (Cth) (IAA).
The IAA reflects Australia’s obligations as a signatory under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and the UNCITRAL Model Law on International Commercial Arbitration (Model Law).
Role of the National Courts
Australian Courts play a crucial role in the enforcement of arbitration awards and have generally taken a ‘pro-arbitration’ stance, demonstrated by their reluctance to interfere in ongoing arbitration proceedings and their commitment to enforcing foreign awards.
For international awards made within Australia, Article 35 of the Model Law applies. It provides that:
"An arbitral award, irrespective of the country in which it was made, shall be recognised as binding and, upon application in writing to the competent court, shall be enforced subject to the provisions of this article and of article 36."
The 'competent court' includes the Federal Court of Australia, which is the jurisdiction in which enforcement applications of foreign awards under the New York Convention and IAA are to be brought.
Key Provisions of the IAA
Recognition and Enforcement
Section 8 of the IAA states that a foreign award is binding by virtue of the IAA for all purposes on the parties to the award and may be enforced in the Federal Court of Australia, as if it were a judgement or order of that court.
Grounds for Refusal
The court may only refuse to enforce the foreign award under specific grounds.
Sections 8(5) of the IAA outlines specific grounds on which enforcement of an arbitral award may be refused, including, but not limited to:
- Incapacity of the parties at the time the agreement was formed.
- Invalidity of the arbitration agreement under the law expressed in the agreement.
- Lack of proper notice to a party of the appointment of an arbitrator.
- The award contains a decision on a matter beyond the scope of the arbitration agreement. An improper composition or procedure of arbitral tribunal.
- The award has not yet become binding, been set aside, or suspended by a competent body under the law expressed in the agreement.
For example, in Hub Street Equipment Pty Ltd v Energy City Qatar Holding Company [2021] FCAFC 110, an arbitral award was set aside under section 8(5)(e) of the IAA, as the composition of the arbitral tribunal was not in accordance with the parties’ agreement. Although the court acknowledged its discretion to enforce the award, it deemed the procedural defect pertaining to the notice to be fundamental, thus denying the enforcement of the award.
Section 8(7) of the IAA provides that an award may also be refused if it is contrary to the public policy of Australia. Section 8(7A) clarifies that the enforcement of a foreign award would be contrary to public policy if induced or affected by fraud or corruption, or where there was a breach of the rules of natural justice. This public policy exception is generally interpreted narrowly (see TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia [2013] HCA 5).
Interim Measures
Similar to Article 17J of the Model Law, section 16 of the IAA allows for the recognition and enforcement of interim measures granted by arbitral tribunals. This ensures that parties can secure relief, such as freezing orders over assets, subject to ongoing arbitral proceedings (see ENRC Marketing AG v OJSC “Magnitogorsk Metallurgical Kombinat” [2011] FCA 1371).
Setting Aside an Award
Under the IAA, there is no right of appeal against an arbitral award. However, a party may apply to set aside an award under section 19 of the IAA and Article 34 of the Model Law for reasons that it is in conflict with the public policy of Australia because the making of the award was induced or affected by fraud or corruption, or if there is a breach of the rules of natural justice in connection with the making of the award. These grounds are limited, and generally do not mandate the review or analysis of the merits of the award.