LLC BryanskAgrostroy v Mackies Asia Pacific Pty Limited [2021] FCA 1180

Commercial Arbitration Cases, International Arbitration Cases

[2021] FCA 1180, application allowed, application to enforce foreign arbitral award made in Russian Federation as judgment of Court, Arbitration, LLC BryanskAgrostroy, Mackies Asia Pacific Pty Limited, v, where arbitrators made award in favour of applicant, where dispute between parties referred to arbitration pursuant to arbitration agreement in contract, where no payment made by respondent in respect of award, whether requirements of s 9 of International Arbitration Act 1974 (Cth) met

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LLC BryanskAgrostroy v Mackies Asia Pacific Pty Limited [2021] FCA 1180

October 6, 2021

FEDERAL COURT OF AUSTRALIA LLC BryanskAgrostroy v Mackies Asia Pacific Pty Limited [2021] FCA 1180
Case Name:	LLC BryanskAgrostroy v Mackies Asia Pacific Pty Limited [2021] FCA 1180
Court:	FEDERAL COURT OF AUSTRALIA
Division:	General Division
Registry:	Western Australia
National Practice Area:	Commercial and Corporations
Sub-area:	International Commercial Arbitration
Medium Neutral Citation:	WAD 153 of 2021
Hearing Date(s):	29 September 2021
Judgment Date:	29 September 2021
Before:	COLVIN J
Catch-words:	ARBITRATION – application to enforce foreign arbitral award made in Russian Federation as judgment of Court – where dispute between parties referred to arbitration pursuant to arbitration agreement in contract – where arbitrators made award in favour of applicant – where no payment made by respondent in respect of award – whether requirements of s 9 of International Arbitration Act 1974 (Cth) met – application allowed
Decision:	THE COURT DECLARES: 1. Pursuant to s 8(3) of the International Arbitration Act 1974 (Cth), the applicant is entitled to enforce against the respondent a foreign arbitral award made in Bryansk, Russian Federation on 30 March 2021 as if the award were a judgment of the Court. THE COURT ORDERS THAT: 2. There be judgment in favour of the applicant against the respondent in the amount of AU$422,573.15. 3. Pursuant to s 52 of the Federal Court of Australia Act 1976 (Cth) the respondent pay interest at the rate prescribed by r 39.06 of the Federal Court Rules 2011 (Cth) from 28 September 2021. 4. The respondent pay the applicant’s costs of and incidental to the application to be assessed on a lump sum basis.
Cases Referenced:	Beijing Jishi Venture Capital Fund (Limited Partnership) v Liu [2021] FCA 477 Tianjin Jishengtai Investment Consulting Partnership Enterprise v Huang [2020] FCA 767
Legislation:	Federal Court of Australia Act 1976 (Cth) s 52 International Arbitration Act 1974 (Cth) ss 8, 9 Federal Court Rules 2011 (Cth)
Parties:	BETWEEN: LLC ‘BRYANSKAGROSTROY’ Applicant AND: MACKIES ASIA PACIFIC PTY LIMITED (ACN 132 762 091) Respondent
Representation:	Counsel for the Applicant: Mr V Lemaic with Ms L Welmans Solicitor for the Applicant: Clifford Chance & Counsel for the Respondent: Mr K Kelly Solicitor for the Respondent: Hilton Bradley Lawyers

REASONS FOR JUDGMENT

COLVIN J:

Australia has assumed obligations under the Convention for the Recognition and Enforcement of Foreign Arbitral Awards adopted in 1958 by the United Nations Conference on International Commercial Arbitration (Convention). It has taken steps to give effect to those obligations by enacting the International Arbitration Act 1974(Cth). By s 8 of the International Arbitration Act, an arbitral award made in pursuance of an arbitral agreement in a country other than Australia which is an arbitral award to which the Convention applies is binding for all purposes and may be enforced in this Court as if the award were a judgment or order of the Court.
The applicant has obtained an arbitral award in the Russian Federation against Mackies Asia Pacific Pty Limited (ACN 131 762 091) (MAP). The award has been issued by the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation (ICAC). The applicant seeks to enforce the award as if it were a judgment of this Court. It seeks a declaration that it is entitled to do so and a judgment in Australian dollars in this Court that includes interest and costs as determined in the arbitration. It also seeks orders for payment of interest until the amount of the judgment is paid and orders for the costs of the present application to be fixed on a lump sum basis in accordance with the practice of the Court.
MAP is incorporated in Australia. Its registered office is an address in Bankstown, New South Wales.
The following affidavits were filed and read on the application:

(1) Affidavit of Dr Samuel Luttrell dated 29 June 2021.

(2) Affidavit of Mr Vlada Lemaic dated 29 June, 16 August and 28 September 2021.

(3) Affidavit of Ms Irina Suspitcyna dated 3 September 2021.

The applicant also tendered an expert report from Ms Olga Boltenko, dealing with certain matters of Russian law.
In addition to the matters already described, the affidavits establish that:

(1) On or around 21 May 2019, the applicant as buyer and MAP as seller entered into a contract for the supply and installation of certain goods by MAP (Contract).

(2) The Contract was expressed in counterparts, one in English and the other in Russian.

(3) The Contract provided for payment by instalments in US dollars of a total amount of $584,420.00.

(4) The Contract provided for the payment of a penalty amount of 0.2% of the Contract value for every day of delay by MAP as seller.

(5) The Contract included an arbitration agreement by which the parties agreed to submit to arbitration any disputes not resolved through negotiations within one month. The agreement to arbitrate applied to ‘any dispute, controversy or claim which may arise out of or in connection with the present Contract, or the execution, breach or termination or invalidity thereof’.

(6) The arbitration was to be settled by the ICAC in accordance with its applicable rules and regulations.

(7) The place of arbitration was specified to be Moscow, Russian Federation.

(8) The applicable substantive law was expressed to be ‘German law excluding conflict rules’ and the language of the arbitral proceedings was specified as English.

(9) The Contract specified the legal address of MAP which was the same address as the registered address of MAP.

(10) MAP did not supply the goods and a dispute arose between the parties.

(11) The applicant referred the dispute to arbitration before the ICAC.

(12) A Tribunal of three arbitrators was duly appointed.

(13) The applicant filed a statement of claim in the arbitration on or around 2 September 2020.

(14) MAP was notified of the commencement of the arbitration, the need to file a defence and the time and place of the oral hearing.

(15) MAP did not participate in the arbitration.

(16) An oral hearing took place before the arbitral tribunal on 27 January 2021 in the absence of MAP.

(17) The arbitral tribunal issued its award on 30 March 2021.

(18) The arbitral award is expressed in English. It deals with the applicant’s claim on the merits. It includes findings as to the jurisdiction of the arbitral tribunal, due notification of MAP of the arbitral proceedings, that the goods have not been supplied as agreed and the advance payment made by the applicant to MAP has not been returned to the applicant contrary to the terms of the Vienna Convention on International Sale of Goods 1980 to which both Germany and the Russian Federation are parties and the calculation of the penalty in accordance with the terms of the Contract.

(19) The arbitral award was for a total amount of $307,802.28 USD and was expressed in the following terms.

MACKIES ASIA PACIFIC PTY LTD, Bankstown, Australia, is ordered to return to LLC ‘BryanskAgrostroy’, Bryansk, Russian Federation, the advance payment under the Contract No. D0505-14131 dated 21 May 2019 in the amount of 233 768,00 USD and penalty in amount of 53 766,64 USD.
MACKIES ASIA PACIFIC PTY LTD, Bankstown, Australia, is ordered to reimburse to LLC ‘BryanskAgrostroy’, Bryansk, Russian Federation for its expenses caused by payment of the arbitration fee in the amount of 20,267,64 USD.

(20) MAP has been served with a copy of the award at its registered office.

(21) No payment has been made by MAP in respect of the award.

A duly certified copy of the award has been produced to the Court.
The Russian Federation is a party to the Convention.
On the evidence led by the applicant, the requirements of s 9 of the International Arbitration Actare met and I am satisfied that the award is a foreign award for the purposes of the International Arbitration Act.
MAP has filed a notice of opposition (Notice). It is expressed in the following terms:
The Respondent was not given proper notice of the appointment of the arbitrators or of the arbitration proceedings before the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation, which made the award dated 30 March 2021 which is the subject of the Applicant’s claim, and as a result the Respondent was unable to present its case in the arbitration proceedings.
The Respondent intends to make an application for the setting aside or suspension of the award dated 30 March 2021, and intends to make an application for the adjournment of these proceedings pursuant to s 8(8) of the International Arbitration Act 1974(Cth) to allow the application to be determined.
As was recently stated by Middleton J in Beijing Jishi Venture Capital Fund (Limited Partnership) v Liu[2021] FCA 477 at [16]‑[18], the party against whom a foreign award has been made must satisfy the Court that it should not enforce the award. As the Court may only refuse to enforce a foreign award in the circumstances mentioned in s 8(5) or s 8(7) of the International Arbitration Act, the relevant party, in this case MAP, must demonstrate by evidence the applicability of either of those provisions. MAP has not put on any evidence and therefore has not done so.
In addition, under s 8(8) of the International Arbitration Actthe Court has power to adjourn the application in the circumstances there provided which require the Court to be ‘satisfied that an application for the setting aside or suspension of the award has been made to a competent authority of the country in which, or under the law of which, the award was made’.
On the evidence, MAP has known about the award for a number of months. Yet, it has made no application to set aside the award and provides no explanation for its failure to do so. Counsel appearing for MAP did not seek to adduce any evidence or to advance any case in support of an adjournment.
In the circumstances, I am satisfied that the applicant is entitled to have the award recognised and enforced in Australia. Further, it may be enforced in this Court as if it were a judgment of this Court. The appropriate course is for a declaration to be made and in order to enable the award to be enforced as a judgment of this Court in accordance with the rights conferred by the International Arbitration Act, for judgment in the amount of the award to be ordered in favour of the applicant.
As the award is to be enforced in Australia, it is appropriate that the judgment be expressed in Australian currency: Tianjin Jishengtai Investment Consulting Partnership Enterprise v Huang[2020] FCA 767 at [22]‑[23]. That is the course pressed for by the applicant. On the evidence, using the foreign exchange rate published by the Reserve Bank of Australia on 27 September 2021 the total amount of the award expressed in Australian dollars is $422,573.15.
The applicant also seeks an order that there be interest payable on the amount for which judgment is entered from the date judgment is entered. It seeks an order that interest be paid at the rate of 6.10% pa based upon s 52 of the Federal Court of Australia Act 1976 (Cth). In accordance with that provision, a rate has been prescribed by the Federal Court Rules 2011 (Cth). The prescribed rate moves every six months and it is currently 6.10%.
There should also be an order for the applicant’s costs of and incidental to the application to be paid by MAP. The applicant seeks to have those costs fixed. The materials relied upon to support a lump sum costs order were only made available to the solicitors acting for MAP the evening before the hearing. It is appropriate for MAP to have an opportunity to consider and respond to those materials. In the circumstances, the appropriate order is for costs to be assessed on a lump sum basis. MAP will be given an opportunity to respond to those materials and I will determine the quantum of the costs on the papers.
For the above reasons, I made orders declaring that the applicant is entitled to enforce the award and for judgment against MAP in favour of the applicant in the amount sought, together with interest and an order for the costs to be paid by MAP such costs to be assessed on a lump sum basis.