MR C.S. WARD, SC appears with MR P.F. SANTUCCI for the applicant. (instructed by K & L Gates)
MR B.W. WALKER, SC appears with MR J.A. HOGAN-DORAN, SC and MR C.W. BROWN for the respondents. (instructed by Norton Rose Fulbright Australia)
KEANE J: Yes, Mr Ward.
MR WARD: Thank you, your Honour. May it please the Court. Your Honours, we appear on this application for special leave to appeal in the context of and only for the purpose of seeking to continue to assert the sovereign immunity of the Kingdom of Spain.
A foreign State is not immune in a proceeding in which it has submitted to the jurisdiction in accordance with this section.
Then subsection (2):
A foreign State may submit to the jurisdiction at any time, whether by agreement or otherwise –
and the proviso is then not applicable to the present circumstances. Your Honours should also be aware - - -
EDELMAN J: Mr Ward, none of this is controversial, is it? Is not the controversial issue just really the operation of Articles 54 and 55, and whether those two articles amount to a submission within the Immunities Act?
MR WARD: Yes, subject to this, your Honour. We say that a narrow construction ought to be given to the Foreign States Immunities Act because of the context in which it arose. We say that is consistent with the decision of the New South Wales Court of Appeal to which we have made reference in a number of places in Li v Zhou (2014) 87 NSWLR 20, and in particular to the passage at paragraphs 36 and 37 – the application of the principle of respect for autonomy:
militates against the easy acceptance of the conclusion that any party to a treaty as acceded to the jurisdiction of other national courts through inadvertence or based on ambiguity or derived from uncertain inference."
So, that is the framework in which we seek to put the ICSID Convention.
Alternatively, provisions of the treaty - your Honours, it is significant, in our submission, that the submission to jurisdiction by agreement which is said to arise in this case is a piggyback submission, that is, it is said to be the mechanism of Article 26 of the Energy Charter Treaty, which entitled the investors to approach an ICSID Tribunal for arbitral relief. It is then of course the arbitral award from ICSID which considered jurisdiction as part of its ruling, which is the subject of the application for recognition and enforcement in this country. I will return to that at the conclusion of the submissions.
to submit to the jurisdiction of the Federal Court –
of Australia. If your Honours then turn to the text of the treaty itself, at page 143, there is little or no textual support, in our submission, for the proposition that Article 54 amounts to a submission by Spain to the jurisdiction of the Federal Court. In terms, Article 54 places obligations on contracting states to recognise awards rendered pursuant to the Convention as binding:
as if it were a final judgment of a court in that State.
In other words, the obligation that we say arises clearly on the text of Article 54 is an obligation upon Spain and other countries to recognise awards when they are presented to them. It is not a waiver of immunity by Spain in respect of awards against us. The obligation goes only so far as to say, if the party approaches the courts of Spain seeking to recognise or enforce an award, Spain would be subject to the considerations of immunity, obliged to, under Article 54, recognise that award.
EDELMAN J: Mr Ward, what is the role of Article 55, then?
MR WARD: Well, that is where the second of the issues arises, your Honour. It is at that point that we come to the real dilemma…..and the dichotomy that his Honour found between recognition and enforcement. The primary judge's approach, your Honour - and I think I need to deal with it by addressing both of the approaches that were taken - the primary judge - - -
EDELMAN J: Sorry, Mr Ward. My question was really the anterior point, which is, if you are right about your construction of Article 54, then Article 55 is not only redundant, but it is confusing.
MR WARD: With respect, no, your Honour. Article 55, on our construction, applies equally to the recognition and enforcement of awards under Article 54, because they are relevantly indistinguishable, that is, the enforcement of an award which applies throughout Article 54 is taken to be, or should be, on the – at least on the Spanish and French text, which his Honour Justice Perram, with whom the Court agrees, finds controls the interpretation, such that enforcement and execution are both the subject of the immunity in Article 55.
distinction between recognition, on the one hand, and enforcement and execution, on the other –
and his Honour reads Article 55, the immunity preservation:
as not applying to –
recognition, but does apply to enforcement and execution. The reason his Honour took that approach appears in paragraph 79, by reference to what the primary judge did. The primary judge took a different approach. The primary judge decided that "recognition and enforcement" ran together something in the nature of "executor", as known to the civil law system, but found that Article 55 applied or referred to execution only, not to "recognition and enforcement". That did not sit neatly, as his Honour Justice Perram found, with the inconsistency of the approaches of the Spanish and French texts, and therein lies the problem with the primary judge's approach.
The problem in a nutshell is this: wherever the word 'execution' appears in the English text, the French word 'l'execution' appears in the French text and the Spanish word 'ejecutar' (or variants of that word) appear in the Spanish text. By itself this does not cause a problem. What does cause a problem, however, is that wherever the word 'enforce' (or 'enforcement') appears in the English text, the self-same words - 'l'execution' and 'ejecutar' - appear in the French
and Spanish texts.
Now, that leads his Honour to the conclusion then at paragraph 95, page 99:
That having been said, one can well understand why the primary judge was driven to his approach of giving the different meanings to 'execution' and 'enforcement'. Since his Honour had characterised the proceeding as being for recognition and enforcement it followed that to have concluded otherwise would have resulted in Art 55 applying to the proceeding –
that is, the immunity provision:
and his Honour thereafter being forced to accept Spain's dyspeptic plea of foreign state immunity.
That rather sounds the bells, your Honours. That is indeed Spain's submission, and it does suggest that his Honour treated the conclusion as somewhat distasteful and decided that it was appropriate to apply reasoning to avoid that outcome, which Spain asserts as being well open, if not correct, on the texts of Articles 54 and 55.
a distinction between enforcement and execution cannot be sustained –
A triad of concepts ... is also not useful.
That is a passage which was cited with some approval by the United Kingdom Supreme Court in the case of Micula v Romania, to which we have made reference.
there are some parts of the ICSID Convention where 'enforcement' must include 'recognition'.
We additionally draw the Court's attention at appeal book 145 to the French text of the Convention, which uses the word "and", not "or", in Article 54(2). That is enforcement – recognition and enforcement – not recognition or enforcement, in the French language - - -
EDELMAN J: Mr Ward, on one view "enforcement" would always include "recognition", but "recognition" might not always include or require "enforcement"?
MR WARD: That is certainly possible, and the problem with that is that the International Arbitration Act section 35 does not seem to provide for a recognition procedure of the type relied upon by the Full Court or found by the Full Court. Section 35(4) of the International Arbitration Act, although appearing under a heading called "Recognition", provides that:
An award may be enforced in the Federal Court of Australia with the leave of that court as if the award were a judgment or order of that court.
Justice Perram's judgment at paragraph 26 seems to also reach the point that your Honour Justice Edelman just noted, which is that:
formal confirmation by a municipal court that an arbitral award is authentic and has legal consequences –
may, in a practical sense, amount to the execution of a judgment in ways that affect the substantive rights and obligations of the sovereign state. It is clear that recognition of an award carries with it obligations. Recognition carries with it, for example, the consequences of res judicata and issue estoppel and the like. Those are substantive problems which a state – a sovereign state which has not acceded to the jurisdiction of a domestic court, should not face, in circumstances where it is asserting its sovereign immunity.
disputes between a member state and an investor of another member state concerning –
investments. That is obviously a jurisdictional argument that went to the ICSID Tribunal's jurisdiction. We raise it simply for this purpose, to say that in circumstances where European law does not recognise the jurisdiction of ICSID in the circumstances of this case, it cannot be said that the jurisdiction – or that the ICSID Convention applies with such clarity and unambiguity so as to amount to a waiver of sovereign immunity before the courts of this country. Those are our submissions, your Honour.
KEANE J: Thank you, Mr Ward. Yes, Mr Walker.
MR WALKER: May it please your Honour. May I deal with that last….. It is simply not admissible in this Court, not least because of section 73, to put something which would require to be proved as a matter of fact, not simply by listing something in a supplementary list of authorities concerning the effect of what I am going to call the law of the EU. …..was no challenge to jurisdiction within the self-contained ICSID system made compulsory by the terms of the ECT, and it is for those reasons that that is a matter which does nothing to diffuse the clarity of the section 10 submission, constituted by the plain agreement to…..dispute resolution.
KEANE J: Mr Walker, I am sorry to interrupt you, but can I ask Mr Ward - could you please mute yourself? We are getting feedback from you. Thank you. Sorry, Mr Walker. Please continue.
MR WALKER: Not at all, your Honour. So, if one looks at the terms of the order settled after further argument in this proceeding at pages 124 and 125 of the application book, you will see there that the – if I can call it this – the executive force of the court's order, choosing from the array of choices internationally and nationally that their Honours had noted in earlier reasons, was to express the term as being a recognition:
The Court hereby and in these orders recognises –
and then consistently with that:
orders that judgment be entered in favour –
in the specified sums. Then following debate concerning the propriety or wisdom of the matter, added at (b), on page 125 that:
Nothing ... shall be construed as derogating from the effect of any law relating to immunity of the respondent from execution.
So that what one can see here, the perfectly intelligible grappling with the various senses in which, out of context, or in general terms, the word "enforcement" might encompass both recognition and execution, and perhaps other things as well. Perhaps an award is enforced, for example, if it were – without any intervening step – able to provide the foundation for set-off or a res judicata.
EDELMAN J: Mr Walker, what do you say to the submission by the applicant that there is an unusual principle of interpretation that one applies to issues relating to waiver, where waiver is only possible if it is done without ambiguity?
MR WALKER: Your Honour, at the end of the day, the notion of requiring an absence of ambiguity is itself, I intend the jest, ambiguous. It cannot suffice that there are contrary arguments – that is opposed arguments concerning the meaning of something – to render it for all time thereafter ambiguous, notwithstanding the clear outcome of that argument by the tribunal in question. That is the first thing.
EDELMAN J: Mr Walker, what do you say then about the submission that "recognition" and "enforcement" are used interchangeably, and, potentially, I would infer from the applicant's submissions, also with "execution" throughout the Convention?
MR WALKER: It is plainly incorrect textually – I am just coming back to page 143:
A party seeking recognition or enforcement –
does not mean those words are interchangeable, even if, of course, they overlap or intersect. Their Honours below, convincingly and satisfyingly from the point of our domestic legal system, see "recognition" as an aspect of "enforcement", though "enforcement" can and does in an ordinary case not involving sovereign immunity, extend beyond mere recognition at least where there is not a voluntary compliance with judgments or orders. That is the first thing.
KEANE J: Thanks, Mr Walker. Yes, Mr Ward.
MR WARD: Just briefly, your Honours. For the purposes of section 35, the Full Court in the reasons for the pronouncement of orders, found at application book 114, paragraph 7, identified that:
For the purposes of s 35 the order ... gives the award the recognised status of a judgment and is enforceable as such.
That is, the court, having found a strict dichotomy to exist in the primary reasons, then recognised – as this Court has previously found in TCL, for example, that enforcement and recognition tend to be conceptually identified in the same way, in at least Australian courts, such that the distinction – the strict dichotomy – in truth does not exist.
KEANE J: Thanks, Mr Ward. The Court will adjourn for a moment to consider the course it will take in this matter.
AT 10.05 AM SHORT ADJOURNMENT
UPON RESUMING AT 10.08 AM:
KEANE J: There will be a grant of special leave in this matter. Mr Ward, what is your estimate so far as time is concerned?
MR WARD: Your Honour, I think I will take between two and three hours, not more.
KEANE J: Mr Walker?
MR WALKER: I think we would plainly finish within the day, your Honour.
KEANE J: It will finish within a day, notwithstanding Mr Ward's estimate of possibly three hours.
MR WARD: I will limit myself to two and a half, your Honour.
MR WALKER: I was about to say, I will probably discuss that with my learned friend. I have no doubt we can agree to finish it within a day.
MR WARD: I agree.
KEANE J: Very well. Special leave is granted.
Adjourn the Court, please.
AT 10.09 AM THE MATTER WAS CONCLUDED
Get access to the most extensive & reliable source of information in arbitrationREQUEST A FREE TRIAL
Already registered ?