Freezing Orders can Preserve Enforcement of International and Domestic Arbitral Awards
David Starkoff and Lee Carroll
The recent High Court of Australia decision in PT Bayan Resources TBK v BCBC Singapore Pte Ltd1 considered the doctrinal basis for freezing orders (also known as asset preservation orders, and, inaptly, 'Mareva injunctions'). In that decision, the High Court confirmed the potential breadth of such an order, in a way that assists parties to arbitrations.
The High Court confirmed that a freezing order is available in respect of an anticipated award in a domestic arbitration, and its reasons make clear that such orders are available in respect of anticipated awards in international arbitrations as well, regardless of the seat of the arbitration or underlying law of the dispute.
The decision puts another arrow in the quiver of parties who have agreed to resolve disputes by arbitration, and is a further demonstration of the Australian judiciary's support for arbitrations international and domestic.
THE DECISION IN BAYAN V BCBC
The fundamental issue in Bayan v BCBC was a short one: did the Supreme Court of Western Australia have the power to make a freezing order in anticipation of an enforceable money judgment in foreign proceedings?
Bayan and BCBC were both shareholders in a company incorporated in Indonesia, PT Kaltim Supacoal. Their rights and obligations as shareholders were the subject of a joint venture agreement governed by the law of Singapore. BCBC commenced litigation in the High Court of Singapore claiming (among other things) damages for breach of the joint venture agreement. Soon after commencing the Singapore proceeding, BCBC applied to the Supreme Court of Western Australia for a freezing order over shares owned by Bayan in an Australian company (Kangaroo Resources Ltd). There were no other proceedings on foot in Western Australia and there was no prospect of any before judgment in the Singapore litigation.
In the High Court, Bayan accepted that there was a factual foundation for the freezing order under the relevant Western Australian Court rules:
• BCBC had a good arguable case in its Singapore proceeding; • this gave rise to a sufficient prospect of obtaining a judgment in its favour; • this judgment could be registered in, or enforced by, the Supreme Court of Western Australia; and