The Role of Courts in Supporting Arbitration: a Review of Recent Developments in the Asia-Pacific
International Congress of Maritime Arbitrators ICMA XXI
Rio de Janeiro, Brazil
Paper presented by video
Good morning honoured guests, fellow judges and delegates to ICMA in Rio.
It is a great disappointment to me not to be with you in Rio for the Congress. I was at the ICMA Congress in Copenhagen and in Hong Kong before that, and I really wanted to be in Rio too. Please accept my apologies for being absent. I thank the organisers for inviting me to nevertheless present this paper by way of video.
Last year, the 60th anniversary of the New York Convention was celebrated in events around the world. The Convention came into force on 7 June 1959. Of 193 member countries of the United Nations, 159 state parties have adopted the Convention – an adoption rate of more than 80%. An example of the continuing worldwide reach of the New York Convention is its recent adoption by Australia's close neighbour and trading partner, Papua New Guinea, which acceded to the Convention on 17 July 2019. Another Pacific neighbour, the Maldives, acceded to the Convention on 17 September 2019.
The New York Convention is complemented by the UNICTRAL Model Law on International Commercial Arbitration. Together these instruments provide the framework whereby most national courts supervise arbitrations and enforce arbitral awards. Despite the worldwide consensus on key aspects of international arbitration represented by these instruments, national courts continue to interpret and apply the regimes in sometimes subtly different ways.
The Full Court of the Federal Court of Australia in TCL Air Conditioner v Castel Electronics in 2014 reiterated the necessity of paying "due regard" to "the reasoned judgments of common law countries in the [Asia-Pacific] region, such as Singapore, Hong Kong and New Zealand" in interpreting and applying the New York Convention and the Model Law. That is the underlying rationale to my consideration of cases from these jurisdictions in this paper. Some cases are maritime or shipping cases, but I will also draw upon general commercial arbitration cases. The principles in such cases are equally applicable to maritime cases.
As will be seen, differences in judicial methodologies between jurisdictions on the approach to arbitral supervision and enforcement continue to contract because of a growing internationalist tendency amongst domestic judges. As identified by the Honourable Murray Gleeson AC QC, former Chief Justice of the High Court of Australia, in a recent speech, forum neutrality is a powerful consideration for parties in choosing a seat of arbitration. Another relevant consideration may be whether the approach of the jurisdiction under consideration on key questions of supervision and enforcement conforms with the approach taken in other comparable and competing jurisdictions. By demonstrating a commitment to international principles developing in different jurisdictions, national courts will better serve the efforts of their national arbitration institutions to attract and support arbitration.
Recent Cases and Developments in Australia
Australia acceded to the New York Convention without reservation in 1975. The International Arbitration Act 1974 (Cth) (IAA) is the exclusive statute in Australia governing international arbitrations seated in Australia and the enforcement of awards in Australia. It is basically an umbrella law implementing both the New York Convention and the Model Law. It also implements the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, but that can be put to one side for present purposes. The IAA designates the Model Law as the exclusive, mandatory procedural law for all international arbitrations seated in Australia.
There has been a series of recent decisions in Australia which have influenced the course of international and domestic arbitration since the landmark decision of the High Court of Australia in TCL Air Conditioning v The Judges of the Federal Court of Australia in 2013. The judgment upheld the constitutional validity of giving force to the Model Law through the IAA by recognising that the quelling of a dispute by arbitration is not an exercise of judicial power but the enforcement of the binding result of the agreement of the parties to submit their dispute to arbitration. The following year in the resumed case in the Federal Court, the constitutional challenge having been dismissed in the High Court, the Full Court of the Federal Court referred to case law from Hong Kong, Singapore, New Zealand, the United States, Canada and the United Kingdom in finding that the public policy exception to recognition and enforcement under the Model Law is limited to the fundamental principles of justice and morality of the state.
An example of what could constitute a matter fitting that description is illustrated by the Victorian Supreme Court decision in Indian Farmers Fertiliser Cooperative Ltd v Gutnick in 2015.
Indian Farmers Fertiliser Cooperative v Gutnick
In Gutnick, the Court found that where an award allowed for double recovery it would likely be contrary to public policy. Importantly, Croft J recognised the policy of minimal curial intervention, which was adopted in the TCL case with respect to the public policy ground, to apply to all applications made under the Act and the Model Law.
His Honour ultimately found that the respondents had failed to establish that the award allowed for double recovery and that their reliance on public policy thus stumbled at the first hurdle. However in obiter, his Honour stated that he would be prepared to accept that "where an arbitral award allows for double recovery, or where enforcement would result in double recovery, fundamental principles of justice and morality may be engaged".
An application for leave to appeal was dismissed by the Victorian Court of Appeal which affirmed the decision and reasoning of Croft J. 
In 2018, in Mango Boulevard Pty Ltd v Mio Art Pty Ltd, a domestic commercial arbitration case heard by the Queensland Court of Appeal, the Court took a narrow view of what it means for a party to not be able to present its case in arbitration for the purposes of setting an award aside under Art 34 of the Model Law. The amount of leeway which the Court provided to the arbitrator by upholding the award is demonstrative of the pro-enforcement attitude now common in Australian courts.
Mango Boulevard and Mio Art had entered into a joint venture for the development of land. Under a share sale agreement, Mio Art agreed to sell a parcel of land at a cost of $22 million to the joint venture vehicle and then half of their shares in the vehicle to Mango Boulevard. The agreement contained a formula and process by which the price for the shares was to be determined. In the event of a dispute the parties were to submit to arbitration and the arbitrator was to use the valuation formula prescribed in the contract. This involved making an assessment of the likely income and development costs and then applying an agreed formula which was described as a "matter of calculation, rather than professional judgement". An agreed value would inevitably follow because of a required assumption of a profit on cost percentage return of 25 per cent.
However, in determining the price for the shares, the arbitrator used his own valuation methodology which was said to measure "all relevant market considerations". The arbitrator did not clearly inform the parties that he was considering using a different valuation methodology, but he had made indications throughout, especially during closing submissions.
Mango sought to set aside the award under ss 34(2)(a)(ii) (unable to present its case) and 34(2)(b)(ii) (conflict with public policy) of the Commercial Arbitration Act 2013 (Qld) which sections correspond with the Articles of the Model Law with the same numbering. Mango submitted that the arbitrator had prevented it from presenting its case because it was not advised of the departure from the prescribed formula until closing submissions and enforcement was against Australian public policy. The Court of Appeal rejected that argument, referring to the TCL Air Conditioner v Castel Electronics decision, a Hong Kong case and other Australian cases for the principle that there must be "real unfairness or real practical injustice" before a matter will be set aside on the Art 34(2)(a)(ii) basis.
Important to the Court's reasoning was the fact that months had passed between the time when the reasoning was raised with the parties and when the hearing was concluded in which Mango had an opportunity to address the point or recall expert evidence. This case therefore represents a relatively narrow approach to Art 34 set-aside applications.
Rinehart v Hancock Prospecting Pty Ltd
The question of the reach of arbitral clauses and their enforceability arose for decision by the High Court of Australia in Rinehart v Hancock Prospecting Pty Ltd; Rinehart v Rinehart last year.
In the settlement of disputes amongst family members concerning some of the most valuable iron ore deposits in Australia, deeds had been concluded which provided for the submission of any future disputes "under" the deeds to arbitration. Upholding the Full Court of the Federal Court, the High Court placed heavy reliance on the context in which the deeds had been concluded, including the value that the parties at that time placed on keeping the details of their disputes out of the public domain, to conclude that disputes "under" the deeds included the claims that were subsequently made that the deeds were unenforceable or invalid. On that basis court proceedings advancing those claims were stayed under s 8 of the Commercial Arbitration Act 2010 (NSW) which is the state-level analogue to Art 8 of the Model Law.
In reaching its conclusion, the High Court found it unnecessary to refer to the House of Lords decision in Fiona Trust & Holding Corporation v Privalov in which the difference between disputes "arising under" and those "arising out of" an agreement were considered. The essential point is that it is a matter of construction of the clause in question that turns not only on the language used but also the context. In this case it was the context that was decisive.
In cross appeals, the High Court also came to consider the claims by various companies in the family group of companies that the claims against them were also subject to the arbitration clauses even though they were not parties to the deeds containing those clauses. With reference to the definition of "party" to an arbitration agreement in the NSW statute which includes "any person claiming through or under a party to an arbitration agreement", the High Court stayed the court proceedings in favour of arbitration.
The extension of the right to rely on arbitration clauses to those claiming "through or under" a party to an arbitration agreement is also found in the Federal IAA (s 7(4)). The High Court held that when an essential element of a defence to a claim was or is vested in or exercisable by a party to the arbitration agreement, then the defendant to that claim can rely on the agreement. That is extraordinarily broad protection.
I should add that a very recent Singapore High Court case deals with the question when a non-party to an arbitration agreement can nevertheless hold the claimant to the agreement. I will canvass that case when I deal with other recent Singapore cases shortly.
The definition of "party" which was front and centre in Rinehart v Hancock does not have an equivalent in the Model Law so the decision on the cross appeals is not particularly pertinent to other jurisdictions, but the decision is another reflection of the High Court's strong support for arbitration.
With Australian courts steadily hearing more cases in relation to supervision and enforcement of arbitrations the courts will continue to define the boundaries of the public policy ground with reference to international jurisprudence, as was done in TCL Air Conditioner v Castel Electronics and Gutnick. It seems clear from the Mango Boulevard judgment that the pro-enforcement attitude cemented in TCL Air Conditioner v Castel Electronics will remain and keep Australia in line with our pro-arbitration neighbours, Singapore and Hong Kong.
New Zealand remains a minor player in international arbitration in the Asia-Pacific but is continuing to develop its position in the region. New Zealand acceded to the New York Convention in 1983. The Arbitration Act 1996 (NZ) (AANZ) by its Sch 1 corresponds for the most part to the provisions of the Model Law. While the AANZ applies to both domestic and international arbitrations, some parts apply by default to domestic commercial arbitrations only.
An interesting 2017 case on the provision of reasons by the arbitral panel is Ngāti Hurungaterangi v Ngāti Wahiao (Wahiao)in which the NZ Court of Appeal examined the requirement for a reasoned domestic arbitral award in complex cases. The Court found that the boundaries of the requirement to give reasons is delineated by the subject matter of the dispute, but that at a minimum engagement with the parties' submissions and the evidence along with a recital of the reasoning to justify the result based on that engagement is required. The reasoning of the Tribunal was contained in only five paragraphs despite the importance of the subject-matter, the amount of evidence to be assessed and the appointment of a former judge to the panel. The Court found that this was insufficient in the circumstances.
New Zealand will remain a jurisdiction to watch in the arbitration space as it increases its share of international arbitrations being held or enforced there.
Singapore is one of the world's leading centres for international commercial and maritime arbitrations. It acceded to the New York Convention in 1986 with a reciprocity reservation and adopted the Model Law by s 3 and Sch 1 of International Arbitration Act (SIAA). With regard to the grounds for setting aside of awards under Art 34(1) of the Model Law, s 24 of the SIAA expands the grounds to specifically include fraud and corruption or breach of the rules of natural justice.
Duncan v Diablo
A 2017 Singapore High Court case, Duncan v Diablo Fortune Inc, concerned the arbitrability of matters in that jurisdiction. An application to court was brought by the liquidators of Siva Ships International Pte Ltd. In a bareboat charter, Siva Ships had provided a lien to Diablo over sub-freights, sub-charter or sub-hire. The liquidators sought to establish that the lien was void for want of registration as a charge under the s 131(1) of the Companies Act. Diablo filed to stay these proceedings in favour of arbitration in reliance on the arbitration clause in the charterparty.
Reflecting Art 8 of the Model Law, s 11 (1) of the SIAA provides that "[any] dispute which the parties have agreed to submit to arbitration under an arbitration agreement may be determined by arbitration unless it is contrary to public policy to do so". The Court refused to grant the stay on the ground that the dispute did not fall within the scope of the arbitration agreement and was not arbitrable. The Court found that a dispute under s 131(1) of the Companies Act inherently relates to the statutory insolvency regime and was therefore not arbitrable. The Singapore courts (and legislature through s 11(1) of the SIAA) approach non-arbitrability from the same public policy perspective as outlined by Allsop J in his Honour's important judgment in Comandate Marine Corp v Pan Australia Shipping Pty Ltd in 2006.
RALL v AGMS
The case of Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd(RALL v AGMS) in 2019 was an appeal from a decision of the Singapore High Court rejecting an application by Rakna Arakshaka Lanka Ltd (RALL) to set aside a final arbitral award made in Singapore. The Court of Appeal found that a party which does not engage with arbitration proceedings does not lose its right to later apply to set aside the award on a ground which could have been relied on to set aside the proceeding at an earlier stage.
The question which ultimately came to be determined by the Court of Appeal was whether a defendant to arbitration proceedings, who declines to participate in those proceedings because it takes the view that the arbitration was wrongly started or continued due to a lack of jurisdiction, is entitled to stand by while the claimant proceeds with the arbitration without losing its right to challenge the jurisdiction of the tribunal in set aside proceedings before the supervisory court. Under Art 16(3) of the Model Law a party has 30 days to challenge a preliminary ruling of a tribunal on a jurisdictional matter in court. AGMS argued that RALL's failure to utilise that mechanism precluded it from later setting aside the arbitral award on a jurisdictional basis.
The Court of Appeal ruled that the preclusive effect of Art 16(3) does not extend to a respondent who has stayed away from the arbitration and not contributed to any wastage or additional costs. A party is entitled to avail themselves of all the remedies the law provides where the party is of the opinion that they are not subject to the jurisdiction and there is no duty to participate at any stage.
BXS v BXT
BXS v BXT was the first application to set aside an arbitral award heard before the Singapore International Commercial Court (SICC). The applicant sought to set aside the award and the respondent sought to strike out the application on the basis that it was brought two months outside of the three-month time limit for recourse against an arbitral award imposed by Art 34(3) of the Model Law.
The arbitration agreement stipulated that there were to be three arbitrators and that the Singapore International Arbitration Centre (SIAC) Rules applied to the arbitration without stating which edition of the Rules applied. Unlike the SIAC Rules at the time that the arbitration was commenced, the Rules at the time of the agreement did not provide for an expedited hearing before a single arbitrator. It might be considered surprising that the Court found that the later rules applied and that if the parties intended the earlier rules to apply that should have been more clearly indicated.
The Court found that once the three months in which to bring a set aside application have expired, the right to apply to set aside an award is extinguished and the Court could not make an order under its own primary legislation to remedy that. It followed that regardless of the merits of the set aside application, which the Court rejected in any event, the set aside should be struck out.
ST Group Co Ltd v Sanum Investments
In ST Group Co Ltd v Sanum Investments Limited the Singapore Court of Appeal held that an arbitral award that is made in a seat of arbitration not chosen by the parties will not be enforced. Sanum and some of the ST Group parties entered into a joint venture. The dispute resolution clause of the master contract stated that any arbitration was to be seated in Macau. Sub-agreements were made, one of which stated that the seat of the arbitration should be Singapore. Sanum commenced arbitration in Singapore after ST Group purported to terminate the agreement. The ST Group parties objected to the SIAC arbitration and did not participate further after their objection was dismissed. Sanum was awarded damages of US$200 million for breach of contract by the Tribunal. ST Group appealed against the leave order which was granted to Sanum to enforce the award in Singapore.
The Court first found that the dispute arose under the master agreement rather than any of the sub-agreements. Because of that, the Court found that the correct seat of the arbitration was Macau, not Singapore. The Court referenced RALL v AGMS for the principle that a party who objects to the jurisdiction of the tribunal but does not participate in the arbitration proceedings at all would still be able to set aside the award or oppose enforcement proceedings. The Court found that the choice of an arbitral seat is one of the most important matters for parties to consider when negotiating an arbitration agreement. As such, once an arbitration is wrongly seated, in the absence of waiver of the wrong seat, any award that ensues should not be recognised and enforced by other jurisdictions because the award had not been obtained in accordance with the parties' arbitration agreement. For that reason, the leave which had been granted to enforce the award in the lower court was set aside.
Hai Jiang 1401 Pte Ltd v Singapore Technologies Marine Ltd
In Hai Jiang 1401 Pte Ltd v Singapore Technologies Marine Ltdthe Singapore High Court allowed an anti-suit injunction (ASI) on the basis of what is called the 'quasi contractual' ground. The 'quasi contractual' ground arises in circumstances where the ASI claimant is claiming to not be a party to the contract which the ASI respondent is suing/arbitrating upon in a jurisdiction which is inconsistent with the arbitration clause of an arbitration agreement. An ASI can be granted to restrain the ASI respondent from bringing or continuing the proceedings abroad if the proceedings are inconsistent with the arbitration clause under the contract which the claims would inherently be subject to if any contractual relationship existed.
In this case Singapore Technologies, a ship yard, brought proceedings in the United Arab Emirates (UAE) against the vessel MV Seven Champion for non-payment of crane upgrade works. That vessel was owned by Hai Jiang, who had bare-boat chartered the vessel to a third party who entered into the repair contract with the yard. The repair agreement provided that it was governed by Singapore law and disputes were to be arbitrated according to the Singapore Chamber of Maritime Arbitration Rules. The third party had prima facie assigned the rights under the contract to Hai Jiang but it was later wound up and the vessel was sub-chartered again. This was when the vessel was arrested in the UAE by the respondent.
Hai Jiang applied for an ASI on the basis of the assignment and that the yard's claim was based on a contract with an exclusive Singapore arbitration clause. The assignment ground was successful  as was the 'quasi contractual' ground. The Singapore Court followed the Sea Premium Shipping Ltd v Sea Consortium Pte Ltd case to grant an ASI under the quasi contractual ground as an exercise of the court's equitable jurisdiction.
Singapore remains a jurisdiction which is committed to an internationalist approach and minimal curial intervention which are both approaches increasingly evident in Australia. The Singapore courts will nevertheless jealously enforce the parties' arbitration agreement.
Hong Kong remains a leading jurisdiction for arbitration in the Asia-Pacific. It is known as a pro-enforcement/pro-arbitration jurisdiction which cements its popular utilisation for arbitration proceedings. Hong Kong also has a deserved reputation as a jurisdiction with a strong rule of law, judicial independence and specialization in the arbitration arena.
Hong Kong's status as a Special Administrative Region and the Basic Law means that despite being a part of China, Hong Kong maintains its previous legal system. Hong Kong acceded to the New York Convention as part of the United Kingdom in 1975 and adopted the Model Law for both international and domestic arbitrations. The legislation giving effect to these instruments, the Hong Kong Arbitration Ordinance(HKAO), differs from the legislative mechanisms of Australia, NZ and Singapore. Unlike those jurisdictions, it does not extract all its provisions verbatim from the Model Law.
Astro Nusantara International BV v PT Ayunda Prima Mitrais a 2018 decision of the Hong Kong Court of Final Appeal. It concerns a long-running dispute between Malaysian broadcaster Astro Group and Indonesian media conglomerate Lippo Group. It is similar to the Singapore RALL v AGMS case in that the Court expounded the entitlement of the parties to use all their legal avenues to avoid an arbitral judgment.
Stated briefly, there were Singapore awards that the respondents did not seek to set aside in Singapore. They also did not apply within the prescribed 14 days to set aside the enforcement judgment in Hong Kong because they did not believe that they had assets in Hong Kong.
However, when the claimants obtained a garnishee order in respect of a US$44 million debt due to one of the respondents, that respondent applied for an extension of the 14 day period in order to apply to set aside the enforcement judgment.
The Court of Final Appeal held that the two remedies principle meant that the respondents could choose whether to apply to set aside the awards at the seat or to resist enforcement elsewhere. These options were independently available. The courts below had thus erred in treating the fact that no application had been made to set aside the awards in Singapore as significant.
The extension of time was thus granted.
Hong Kong continues to maintain its reputation as a pro-enforcement jurisdiction, but the Astro Nusantara case shows that the jurisdiction equally values the rights of parties to utilise all available mechanisms to avoid enforcement. This is a similar outlook to that taken in Singapore.
 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature 10 June 1958, 330 UNTS 3 (entered into force 7 June 1959).
 Wayne Martin, '60 Years of the New York Convention – The Role of the Courts' (2018) 6 (2) The ACICA Review 14, 14.
 UNCITRAL Model Law on International Commercial Arbitration (as adopted by the United Nations Commission on International Trade Law on 21 June 1985, and as amended on 7 July 2006). Available at <https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration>.
 TCL Air Conditioner (Zhongshan) Company Ltd v Castel Electronics Pty Ltd  FCAFC 83; 232 FCR 361 ('TCL v Castel'), 383-384  (Allsop CJ, Middleton and Foster JJ).
 Dean Lewis The Interpretation and Uniformity of the UNCITRAL Model Law on International Commercial Arbitration (Wolters Kluwer, 2016) 139-142.
 Murray Gleeson, 'Advocate, Judge and Arbitrator: Perspectives on Commercial Law' (2018) 34 BCL 82 (presented at New South Wales Bar Association: Commercial Law Section, Inaugural Bathurst Lecture: 3 May 2018).
 Lewis (n 7), 68.
 Deborah Tomkinson and Jun Won Lee, 'Australia as a seat for international commercial arbitration — a secure neutral option in the Asia-Pacific region' [March 2015] Australian Alternative Dispute Resolution Law Bulletin 5, 5.
 Lewis (n 7), 68.
 International Arbitration Act 1974 (Cth) ss 16 and 21(1).
 TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia  HCA 5; 251 CLR 533.
 Ibid 544 , 575  (Hayne, Crennan, Kiefel and Bell JJ).
 TCL v Castel (n 6) .
  VSC 724 ('Gutnick').
 Ibid .
 Gutnick (n 16) .
 Gutnick v Indian Farmers Fertiliser Cooperative Ltd  VSCA 5; 49 VR 732.
  QCA 39 ('Mango Boulevard').
 Ibid  (McMurdo JA).
 Mango Boulevard (n 20)  (McMurdo JA).
 TCL v Castel (n 6) .
 Mango Boulevard (n 20)  (McMurdo JA).
 See Mango Boulevard (n 20)  (McMurdo JA) for the full list.
  HCA 13; 366 ALR 635.
  4 All ER 951.
 Fiona Tregonning, 'Update from New Zealand: International Arbitration in the Region is Full Steam Ahead' MinterEllison (Web Page, 8 March 2018)
 Jan van den Berg (n 3).
  NZCA 429; 3 NZLR 770.
 Jan van den Berg (n 3).
 (Singapore, cap 143A, 2002 rev ed).
  SGHC 172 .
 (Singapore, cap 50, 2006 rev ed).
  FCAFC 192; 157 FCR 45.
  SGCA 33.
 Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Private) Ltd  SGHC 78.
  SGHC(I) 10 (Anselmo Reyes IJ). See also Sharma v Military Ceramics Corporation  FCA 216 which references this case and considers whether time can be extended.
  SGCA 65.
  SGHC 20.
  EWHC 540 (Admlty).
 Craig Edwards, 'Australia and Singapore – Differences in Applications to Set Aside an Arbitral Award?' (2019) 29 Australian Dispute Resolution Journal 234, 236.
 Shahla Ali, 'Balancing Procedural and Substantive Arbitration Reforms: Advancing International Arbitration Practice in Hong Kong' in Anselmo Reyes and Weixia Gu (eds), The Developing World of Arbitration (Hart Publishing, 2018) 39, 43.
 Lewis (n 7), 63.
 (Hong Kong) cap 609.
 Jaclyn Smith, 'The enforcement of international arbitral awards in the Asia-Pacific region – a comparative study of recent cases' (2014) 30 Building and Construction Law Journal 151.
  HKCFA 12; 21 HKCFAR 118.
 Smith (n 48), 164.
(Justice Stewart gratefully acknowledges the assistance of his associate, James King, in the preparation of this paper.)