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Judgment of the Federal Court of Australia [2021] FCAFC 112

THE COURT ORDERS THAT:

1.
In lieu of the orders made by the Court at first instance on 24 February 2020 in NSD 602 of 2019 the following orders are made:

(a) The Court hereby and in these orders recognises as binding on the respondent (the Kingdom of Spain) the award of the International Centre for Settlement of Investment Disputes dated 15 June 2018 as rectified by the decision on rectification of the award against the respondent dated 29 January 2019 in Antin Infrastructure Services Luxembourg S.à.r.l. and Antin Energia Termosolar B.V. v the Kingdom of Spain (ICSID Case No. ARB/13/31) as certified by the Secretary-General on 11 July 2018 and 29 January 2019, respectively (the Award), and pursuant to s 35(4) of the International Arbitration Act 1974 (Cth) the Court orders that judgment be entered in favour of the applicants against the respondent for the pecuniary obligations under the Award in the sum of:

(i) EUR101,000,000 as compensation for the respondent's breach of the Energy Charter Treaty, opened for signature 17 December 1994, 2080 UNTS 95 (entered into force 16 April 1998);

(ii) Interest on EUR101,000,000 from 20 June 2014 to 15 June 2018 at the rate of 2.07% per annum, compounded monthly, and from 16 June 2018 to the date of payment at the rate of 2.07% per annum, compounded monthly;

(iii) USD635,431.70 as a contribution to the payment of the applicants' share of the costs of the arbitral proceedings; and

(iv) GBP2,447,008.61 as a contribution to the payment of the applicants' legal representation, costs and expenses in the arbitral proceedings.

(b) Nothing in Order 1(a) shall be construed as derogating from the effect of any law relating to immunity of the respondent from execution.

(c) The respondent pay the costs of the applicants of the proceeding as agreed or assessed.

2.
Subject to Order 3 below, the appellant pay the respondents' costs of the appeal.
3.
The European Commission pay such costs of the respondents to the appeal as are referable to the application to intervene and as are not referable to the matters raised on the appeal by the appellant.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

ALLSOP CJ:

1.
The parties are at issue as to what orders should be made properly to vindicate the Court's reasons of 1 February 2021: Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. [2021] FCAFC 3; 387 ALR 22. The argument as to the form of orders extended to matters canvassed in the earlier hearing, and decided by the earlier judgment. To a degree, the argument of the appellant (the Kingdom of Spain) mischaracterised the reasons of the Court. To the extent that my reasons may be seen to be apt for such (mis)characterisation, it is necessary for me to clarify what I said. Such lack of clarity may have been contributed to by the words in parentheses at the end of [7] in my reasons. The word “not” was omitted between “there” and “be”. If inserted (as it should have been) that reflects the argument put by the Kingdom of Spain of the equivalence of enforcement and execution. That correction will be made to the earlier judgment.
2.

As I said in [3] we are dealing here with Arts 54 and 55 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, opened for signature 18 March 1965, 575 UNTS 159 (entered into force 14 October 1966) (the ICSID Convention). We are also dealing with Pt IV of the International Arbitration Act 1974 (Cth) (the Act) and, in particular, s 35(4) of the Act.

3.

Words or expressions in Pt IV and in the ICSID Convention have (unless a contrary intention appears) the same meaning: s 31(2) of the Act.

4.

Articles 54 and 55 have the force of law in Australia as part of section 6 of chapter IV of the ICSID Convention: s 32 of the Act. Section 6 is in the following terms:

Recognition and Enforcement of the Award

Article 53

(1) The award shall be binding on the parties and shall not be subject to any appeal

or to any other remedy except those provided for in this Convention. Each party shall abide by and comply with the terms of the award except to the extent that enforcement shall have been stayed pursuant to the relevant provisions of this Convention.

(2) For the purposes of this Section, "award" shall include any decision interpreting, revising or annulling such award pursuant to Articles 50, 51 or 52.

Article 54

(1) Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State. A Contracting State with a federal constitution may enforce such an award in or through its federal courts and may provide that such courts shall treat the award as if it were a final judgment of the courts of a constituent state.

(2) A party seeking recognition or enforcement in the territories of a Contracting State shall furnish to a competent court or other authority which such State shall have designated for this purpose a copy of the award certified by the Secretary-General. Each Contracting State shall notify the Secretary-General of the designation of the competent court or other authority for this purpose and of any subsequent change in such designation.

(3) Execution of the award shall be governed by the laws concerning the execution of judgments in force in the State in whose territories such execution is sought.

Article 55

Nothing in Article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution.

5.
The heading of s 35 of the Act is “Recognition of awards”. That heading is part of the Act: s 13(1) of the Acts Interpretation Act 1901 (Cth). Section 35 is directed expressly to the implementation of Art 54. Subsections 35(1) and (3) make the express reference; the terms of subss 35(2) and (4) track and reflect the text in Art 54(1).
6.
That which can be sought under s 35(4) is what Australia, as a contracting state, promised under Art 54, and what is within Australian law by Art 54 and s 35(4): leave to enforce the award (from Art 54: the pecuniary obligations imposed by the award), as if it were a judgment or order of the Court.
7.

The immunity recognised by the ICSID Convention was as to execution. The recognition and enforcement contemplated by Art 54(1) and (2) does not extend to execution from which there may be immunity. For the purposes of s 35 the order to which the party is entitled is one which gives the award the recognised status of a judgment and is enforceable as such. So much was pellucid from [8] of my earlier reasons and from [54]–[61] of the reasons of Perram J.

8.

The entry of judgment in the terms of the pecuniary obligations in the award is the equivalent of the leave contemplated by s 35(4). The definition of “judgment” in s 4 of the Federal Court of Australia Act 1976 (Cth) includes “order”. However, if one were to follow, literally, the terms of s 35(4) and Art 54(1) the form of order would be as made by Gleeson J in Lahoud v The Democratic Republic of Congo [2017] FCA 982, as follows:

(1) The Court hereby and in these orders recognises the award of the International Centre for Settlement of Investment Disputes dated 15 June 2018 as rectified by the decision on rectification of the award dated 29 January 2019 in Case No ARB/13/31 against the respondent (the Kingdom of Spain) (the Award) as binding on the respondent and pursuant to s 35(4) of the International Arbitration Act 1974 (Cth) the applicants have leave to have the pecuniary obligations of the Award enforced as if they were a judgment of the Court.

(2) Nothing in Order 1 shall be construed as derogating from the effect of any law relating to immunity of the respondent from execution.

(3) The respondent pay the cost of the applicants of the proceeding as agreed or assessed.

THE COURT NOTES THAT:

(4) The pecuniary obligations of the respondent under the Award are:

(a) On account of the respondent's breach of the Energy Charter Treaty, opened for signature 17 December 1994, 2080 UNTS 95 (entered into force 16 April 1998) the applicants are awarded, and the respondent shall pay, EUR101,000,000 as compensation.

(b) The respondent shall pay interest on the sum awarded in (a) above from 20 June 2014 to 15 June 2018 at the rate of 2.07%, compounded monthly, and interest from 16 June 2018 to the date of payment at the rate of 2.07%, compounded monthly.

(c) The respondent shall pay the applicants USD635,431.70 as a contribution to the payment of their share of the costs of the arbitral proceedings and GBP2,447,008.61 as a contribution to the payment of their legal representation costs and expenses arising from the arbitration.

9.
The words “as if” have a well-known meaning, at least domestically. The basis of the meaning is that there is a hypothesis different from the fact: Union Fidelity Trustee Co of Australia Ltd v Federal Commissioner of Taxation [1969] HCA 35; 119 CLR 177 at 187. The phrase “as if” contains the command to treat the different as real: the award as a judgment, and the incidents and consequences that flow as if the award were a judgment: East End Dwellings Co v Finsbury Borough Council [1952] AC 109 at 132–133. The award is to be enforced as if it were a judgment. There is to be no difference in consequence and status between an award and a judgment. Thus, it is legitimate to perfect this statutory command to “enforce as if”, by entering judgment for the award debtor's pecuniary obligations under the award and thereby creating a judgment debt. This recognises the award in the manner contemplated by s 35(4) and Art 54(1): (to repeat what I said in [8] of my earlier reasons) such an approach “gives the required recognised status to the award in the domestic firmament: It is to be seen as (recognised as) equivalent to a domestic judgment and is to be enforceable as such.”
10.
There is a practical aspect to this. Article 54(1) and s 35(4) do not address legal theory, or legal philosophy, or abstracted analysis. They are about recognising the award to the point of having an enforceable status. The context of this is not abstracted theory, but a litigant or disputant being put in a position to obtain satisfaction: to be paid the debt now owing in domestic law by the recognition of the award as having the status of an enforceable judgment of the Court. Thus, the form of order should be that which is most convenient to vindicate the intensely practical purpose of Art 54(1) and s 35(4). There is no difference in legal theory between an order of the kind made by Gleeson J in Lahoud, by Foster J in Traxys Europe SA v Balaji Coke Industry Pvt Ltd (No 2) [2012] FCA 276; 201 FCR 535, or by Judge Keenan in Liberian Eastern Timber Corporation [LETCO] v Government of the Republic of Liberia 650 F Supp 73 (SDNY 1986). The form of order in Traxys, that is the entry of judgment in the amounts of the pecuniary obligations under the award, has the practical advantage of simplicity and clarity to those charged with the task of debt collection – for that is what execution is. Thus, I would favour a form of order as follows (referring to the position of the parties in the proceeding below):

(1) The Court hereby and in these orders recognises as binding on the respondent (the Kingdom of Spain) the award of the International Centre for Settlement of Investment Disputes dated 15 June 2018 as rectified by the decision on rectification of the award against the respondent dated 29 January 2019 in Antin Infrastructure Services Luxembourg S.à.r.l. and Antin Energia Termosolar B.V. v the Kingdom of Spain (ICSID Case No. ARB/13/31) as certified by the Secretary-General on 11 July 2018 and 29 January 2019, respectively (the Award), and pursuant to s 35(4) of the International Arbitration Act 1974 (Cth) the Court orders that judgment be entered in favour of the applicants against the respondent for the pecuniary obligations under the Award in the sum of:

(a) EUR101,000,000 as compensation for the respondent's breach of the Energy Charter Treaty, opened for signature 17 December 1994, 2080 UNTS 95 (entered into force 16 April 1998);

(b) Interest on EUR101,000,000 from 20 June 2014 to 15 June 2018 at the rate of 2.07% per annum, compounded monthly, and from 16 June 2018 to the date of payment at the rate of 2.07% per annum, compounded monthly;

(c) USD635,431.70 as a contribution to the payment of the applicants' share of the costs of the arbitral proceedings; and

(d) GBP2,447,008.61 as a contribution to the payment of the applicants' legal representation, costs and expenses in the arbitral proceedings.

(2) Nothing in Order 1(a) shall be construed as derogating from the effect of any law relating to immunity of the respondent from execution.

(3) The respondent pay the costs of the applicants of the proceeding as agreed or assessed.

11.
This course conforms in substance, though perhaps not precisely in terms, with the approach of the United States District Court for the Southern District of New York in LETCO where Judge Keenan signed an ex parte order described by his colleague Judge Weinfeld in the report as “directing entry of judgment for [the relevant sum] based on and as specified in the award issued by the ICSID arbitration panel”: see 650 F Supp at 75. The form of order set out in (1986) 2 ICSID Reports 383 at 384 was: “Ordered that the annexed arbitration award, as rectified, in favour of LETCO be docketed and filed by the Clerk of this Court in the same manner and with the same force and effect as if it were a final judgment of this Court.”
12.
The respondents did not seek to insert a description of the various sums in either their primary position or their alternative position on the appropriate form of orders. I do not consider that it changes in any way the nature of the monetary obligations, but, for convenience, it describes the sources of the monetary obligations which would otherwise be evident from a perusal of the award.
13.

The orders proposed by the Kingdom of Spain were more limited. In its outline of submissions for the recent hearing, the Kingdom of Spain submitted that the following further orders should be made by way of recognition of the award and to give effect to the judgment of the Full Court:

(1) declare that the applicants are entitled to have the award in International Centre for Settlement of Investment Disputes Case No. ARB/13/31 dated 15 June 2018 as rectified by the decision dated 29 January 2019 in Case No. ARB/13/31, recognised by this Court, pursuant to Part IV of the International Arbitration Act 1974 (Cth); and

(2) order that the originating application be otherwise dismissed.

14.
The difficulty with this more limited form of order is that it does not make clear that, as is anticipated by s 35(4) and Art 54(1), the award is to be recognised as if it were a judgment of the Court. Further, such a limited form of order does not give effect to the Full Court's earlier reasons for judgment. Accordingly, the form of order set out at [10] above is to be preferred.
15.
The applicants (being the respondents to the appeal) should have their costs of the appeal and the proceeding below. Whilst the Court set aside the orders made by the primary judge, the debate in argument before the Court in 2020, and maintained in this argument, was whether the applicants were entitled to an order based on s 35(4) and Art 54(1) in the nature of exequatur that the award be enforceable with the status of a domestic judgment of the Court. They are entitled to that. They should have their costs.

Costs of the intervention

16.
The respondents to the appeal seek the costs relating to the intervention against the intervener: the European Commission (EC).
17.
In Hua Wang Bank Berhad v Commissioner of Taxation [2013] FCAFC 28; 296 ALR 479 at 495–496 the Court said the following at [64]–[65]:

[64] The Commissioner sought costs in respect of the dismissal of the application made by the Independent State of Samoa. The international relations ramifications of one sovereign state seeking costs against another, which are entailed in that application, are matters for the Executive Government, not the court, to weigh up. The Independent State of Samoa is not a party to the proceeding but we accept that the power to award costs extends to the awarding of costs against a non-party. There is an “event” in the sense that expression is used in relation to the exercise of the costs discretion in that the application of the Independent State of Samoa has been dismissed on each of the bases upon which it has been made. In resisting costs, the Independent State of Samoa pointed to the interest which it has arising from the International Banking Act and the reasons for the enactment of that legislation.

[65] Though we have classified its interest as indirect, that does not mean that the interest of the Independent State of Samoa was gratuitous. Further, as the iiNet Case nicely highlights, it does not invariably follow that costs follow the event in respect of intervention or amicus applications. That may well be a reflection of public interest considerations which can attend such applications. The public interest in the deciding of a case according to law can, at times, be facilitated by an amicus coming forward to offer assistance. That public interest would not be served if costs generally followed the event in cases where such an application was unsuccessful. Having regard to the criteria set out in r 36.32, public interest considerations also intrude in relation to whether to grant leave to intervene. We do not consider that these are served by an invariable application of a practice derived from inter partes litigation whereby costs usually follow the event. Rather, whether or not to award costs in such applications, if they are sought, calls for the making of a judgment in the circumstances of the particular case. In this case, as we have observed, the application of the Independent State of Samoa was not gratuitous. Its hearing occupied very little of the time allocated for the hearing of the leave to appeal application. In part, that was a reflection of the prior preparation and filing of written submissions and these did put the Commissioner to the expense of preparing written submissions in reply. The written submissions of the Independent State of Samoa were, however, succinct and the hearing of its application was efficiently conducted by its counsel, who did not engage in any repetition. In the circumstances of this case, we consider that the interests of justice are served by making no order as to costs.

18.
The respondents (the applicants at first instance) and the EC put their respective positions as follows: first, the respondents submitted that the issue was a non-issue between the parties and thus the EC was acting officiously, gratuitously and intermeddling. The EC submitted that nevertheless the point was relevant to Spain's apparent submission to jurisdiction.
19.
Secondly, the respondents submitted that it should have been apparent that the intervention would fail when the issue was not raised below. The EC submitted that it was not inevitable that this fact would be decisive. The discrete legal issues could have been heard.
20.
Thirdly, the respondents submitted that the intervention was made to vindicate the private rights of Spain which chose not to advance the issue at trial. The interest of the EC as a “guardian of treaties” for the European Union is not a matter of Australian public interest. The EC submitted that the intervention was not to vindicate Spain's private interests, but to represent the European Union's position. Whilst perhaps not a matter of Australian public interest it was relevant to the decision of the Court being made according to law.
21.
Fourthly, the respondents submitted that application was made close to the appeal and required substantial time to address new issues. The EC submitted that its intervention application caused little additional costs and the points were familiar to them.
22.
The EC submitted that it was only in special circumstances that the Court will order costs against an intervener. The EC relied on O'Toole v Charles David Pty Ltd [1991] HCA 14; 171 CLR 232 at 311. That, however, is to mis-state the effect of what the Court said in O'Toole. The full passage was:

It is only in special circumstances that it is appropriate for the Court to make an order for costs against an intervener or, at all events, an order which would have the result that an intervener pay to one of the parties more than the amount by which the costs of that party have been increased by the intervention. However, it appears to us that such special circumstances exist in the present case. As has been said, it was the Commonwealth which obtained the removal of the cause into this Court so that it could intervene and challenge the correctness of the answers favouring the respondent. It has failed in that challenge. In our view, it is appropriate that an order be made that the Commonwealth pay the costs of the respondent of the proceedings in this Court, including the costs of the present application. In so far as the proceedings in the Federal Court are concerned, the appropriate order is that the Commonwealth pay the costs of the respondent of those proceedings to the extent, if at all, to which they were increased by the intervention of the Commonwealth in that court.

23.
The reticence reflected in the first part of the paragraph by the reference to “special circumstances” was to ordering that the whole of the costs be paid by the intervener. There was no such qualification to payment of the costs to the extent they were increased by the intervention.
24.
The judgment of Kirby P in Australian Postal Commission v Dao (No 2) (1986) 6 NSWLR 497 at 506–508 posited three possible alternatives in circumstances of an intervention of the Commonwealth: the first was casting the burden on the Commonwealth of litigation involving the Constitution and its interpretation; secondly, imposing a risk of costs but confined to the marginal or additional costs caused by the intervention; thirdly, to confine any costs order to cases where the intervention unduly prolonged the intervention.
25.
The first alternative can be put to one side.
26.
In City of Burnside v Attorney-General (SA) [1994] SASC 5136; 63 SASR 65 at 68 Debelle J said the following:

… If the hearing was slightly longer than it would have been but for the intervention, it might not be appropriate to order the intervener to pay costs. It will be a question of fact and degree in every case whether the intervener's participation has resulted in the trial being substantially longer than it would have been but for the intervention. In determining whether the intervener should be liable, it would be appropriate to have regard also to such factors as whether the interest which the intervener sought to protect was adequately protected by an existing party. Depending on the nature of the issues in the action, it might be a relevant factor that the intervener has assisted the parties and the court in identifying or elucidating the issues. It is not unrealistic to suppose that, although the intervention has prolonged the trial, the intervener's participation has been of substantial assistance. In such a case, it might be inequitable to order the intervener to contribute to the costs of the successful party.

27.
In that case Debelle J ordered the unsuccessful intervener to pay the costs representing the prolongation of the hearing, which he assessed broadly as the cost of a refresher for junior counsel and attendance of a solicitor for half a day.
28.
Here, in my view, it is just that an unsuccessful international body should pay the costs of private parties who are seeking to enforce an arbitral debt against a member of the international body to the extent that the costs of the appeal were increased by the intervention. This is so in particular when the point is not live between the parties. This is not a criticism of the EC, but private litigants' costs have been increased to a degree by the EC seeking (unsuccessfully) to vindicate the European public interest. Why, one asks rhetorically, should the private parties pay for that?
29.
I would order that the EC pay such costs of the respondents to the appeal as are referable to the application to intervene and as are not referable to the matters raised on the appeal by the Kingdom of Spain.
I certify that the preceding twenty nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice Allsop.

PERRAM J:

30.
I have had the advantage of reading in draft the reasons of the Chief Justice for the orders he proposes. I agree with those reasons and orders.
I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment of the Honourable Justice Perram.

MOSHINSKY J:

31.
I have had the considerable benefit of reading in draft the reasons for judgment of the Chief Justice. I agree with his Honour's reasons and with the orders he proposes.
I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment of the Honourable Justice Moshinsky.
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