Australian Courts continue to take an arbitration friendly approach to applications to recognise and enforce foreign awards.

In EBJ21 v EB021,[1] the Federal Court of Australia (“FCA”) considered whether to recognise or enforce a confidential arbitral award in circumstances where the award had been paid on time and in full.

Factual Background

The parties had entered into a confidential deed of settlement, with payment due one month later. Immediately, and prior to the due date of payment, the applicant applied to the FCA to enforce the award sum.  The respondent, who had paid the award sum before the deadline, claimed there was no entitlement to enforcement an award that had already been satisfied.

The applicants relied on Art 36 of the UNCITRAL Model Law, which enumerates limited exceptions to enforcement of an arbitral award which does not include prior payment.

The Decision of the Federal Court of Australia

The Court distinguished between enforcement and recognition of an award with reference to Article 35 of the Model Law, confirming that, while enforcement can only occur on application to a competent court, most awards are recognised at law as binding between the parties from the date of award and it was therefore, unnecessary for the Court to make any order for the agreed award to be recognised.

At the same time, with respect to enforcement, it would be pointless since, at the time the applicant commenced the proceedings, the pecuniary obligations of the award were not yet due and payable (so there were no rights or obligations to vindicate at that time) and, once the award had been paid, the pecuniary obligations were then discharged so there was nothing left to enforce.

[1] (2021) 395 ALR 310; [2021] FCA 1406.

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