Freezing down under! Prospective freezing orders valid in Australia, November 2015
In a recent decision of the High Court of Australia (which is the highest appellate court in Australia), a freezing order in respect of a prospective foreign judgment has been unanimously upheld.
This is a significant decision as the High Court has confirmed the validity of prospective freezing orders, a point previously the subject of some uncertainty in Australia, thereby greatly improving the position of parties seeking security in Australia in respect of foreign proceedings.
The decision in PT Bayan Resources TBK v BCBC Singapore Pte Ltd1 concerned substantive proceedings in the High Court of Singapore, in relation to disputes under a joint venture agreement governed by Singapore law.
After the Singapore proceedings had commenced, but before judgment had been obtained, BCBC Singapore Pte Ltd (BCBC) applied to the Supreme Court of Western Australia (SCWA) for a freezing order in respect of shares owned by PT Bayan Resources TBK (Bayan) in an Australian-registered company.
The SCWA granted the freezing order on the basis that, if successful in the Singapore proceedings, BCBC would be entitled to register and enforce its judgment in Australia pursuant to the Foreign Judgments Act 1991 (Cth) (FJA).
The other usual requirements for obtaining urgent injunctive relief having been satisfied, Bayan’s appeal to the Court of Appeal was dismissed, and Bayan subsequently appealed to the High Court of Australia.
On appeal, Bayan argued that because there were no substantive proceedings commenced in the SCWA and no judgment had been obtained in the Singapore proceedings, the court did not have the power to grant such a freezing order as this would go beyond both the SCWA’s statutory and inherent jurisdiction.
In particular, Bayan contended that the SCWA’s power to grant a freezing order in respect of a prospective, as opposed to an actual, foreign judgment would be inconsistent with the FJA and therefore constitutionally invalid.
The High Court rejected Bayan’s arguments, holding that the SCWA had the power to regulate and safeguard the processes for the registration and enforcement of foreign judgments, and that its power extended to granting a freezing order in respect of a prospective judgment of a foreign court which would, if made, be registerable under the FJA and enforceable by the SCWA.
Bayan’s appeal was therefore dismissed, and BCBC was entitled to have its freezing order continued.
In Australia, certain foreign judgments may be registered under the FJA and subsequently enforced, usually in the case of countries having in place a reciprocal arrangement with Australia. Similarly, Australia is a signatory to the New York Convention and has enacted legislation providing for the recognition and enforcement of foreign arbitral awards to which the convention applies.
However, neither of these regimes expressly provides for the granting of anticipatory relief, to assist parties seeking to obtain security against assets located in Australia in respect of a prospective foreign judgment or arbitral award.
This High Court decision confirms that the SCWA – and most probably the Supreme Courts of the other Australian States and Territories - has the power to grant a freezing order in respect of a prospective foreign judgment that would be registerable under the FJA.
This is likely to be highly relevant for parties engaged in international litigation and dispute resolution, since the FJA provides for the local registration of judgments of the superior courts of for example,the United Kingdom, Hong Kong, Singapore, Canada, Germany, France and Japan.
Whilst the position is less clear with respect to countries outside the purview of the FJA, such as the United States, the High Court specifically noted that there is authority in some Australian courts for the granting of freezing orders in aid of pending foreign arbitral proceedings. Whilst this precedent, and the position in relation to non-FJA countries, has yet to be confirmed by the High Court, this recent decision provides a clear indication of the court’s willingness to assist foreign litigants with prospective rights against assets located in Australia.
The High Court’s ruling is therefore good news for parties seeking security against Australian assets, not only in the context of foreign court proceedings, but likely also in the fast-growing world of international arbitration.
For more information, please contact Simon Shaddick, Senior Associate, on +61 (0)3 8601 4554 or firstname.lastname@example.org, or your usual contact at HFW.
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