A recent Federal Court of Australia decision suggests a narrow approach to judicial support of international arbitrations, limiting access to evidence located in Australia for parties of foreign-seated arbitrations. Allens Partner Nick Rudge and Overseas Lawyer Caroline Swartz-Zern report.

Background

On 5 September 2017, Samsung C & T Corporation filed a request in the Australian courts under s23 of the International Arbitrations Act (the “IAA”) for a subpoena to obtain evidence for use in an arbitration currently on foot between Samsung and Duro Felguera Australia Pty Ltd. The arbitration is seated in Singapore and administered by the Singapore International Arbitration Center (SIAC) under the UNCITRAL Rules. Both parties have related Australian entities.

Decision

In assessing whether the Federal Court could grant Samsung's request, Justice Gilmour considered s22A of the IAA so as to determine whether the Federal Court of Australia counted as a relevant “court” for the purposes of the s23 request. S22A defines 'court' as:

a) in relation to arbitral proceedings that are, or are to be, conducted in a State – the Supreme Court of that State; and

b) in relation to arbitral proceedings that are, or are to be, conducted in a Territory: i.the Supreme Court of the Territory; or ii.if there is no Supreme Court established in that Territory – the Supreme Court of the State or Territory that has jurisdiction in relation to that Territory; and

c) in any case – the Federal Court of Australia.

Justice Gilmour held that he did not have jurisdiction to grant the request for a subpoena in Australia because:

• The words 'in any case' in the third limb of the definition of 'court' should be interpreted narrowly to be consistent with the intention of the IAA. Samsung had contended that the phrase extends the jurisdiction of the Federal Court to include foreign-seated arbitral proceedings but Justice Gilmore said such a meaning should not be read into the phrase unnecessarily. Consequentially, the Federal Court only has jurisdiction where an Australian state/territory court would have jurisdiction over an arbitration as the supervisory courts of the seats.
• The IAA only applies to arbitrations commencing or taking place in Australia for the following reasons:
• Article 1(2) of the Model Law provides that it applies only to international arbitrations seated in the state in which the Model Law has been adopted. When enacting the Model Law, a legislating state may expand on this provision;
• Part II of the IAA expressly relates to 'foreign awards', whereas Part III does not make a similar distinction to cover foreign arbitral proceedings;
• The intention of the IAA was to help develop Australia as a regional hub for international arbitration; and - when the Federal Government reviewed the Federal Court's jurisdiction over international arbitration matters in 2008, the Federal Court was given concurrent jurisdiction to state and territory courts, meaning that either a state or territory are the only jurisdictions for the IAA to apply.

Instead of using the IAA, Justice Gilmour suggested that parties in Samsung’s position should avail themselves of the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters of 18 March 1970 (the “Hague Evidence Convention”). To do so, a party must obtain permission from the arbitral tribunal, obtain a letter executed by the judicial authority in which the arbitration is seated, and then bring that letter before the courts of Australia for recognition and execution.

Comment: an impractical interpretation of the IAA?

Justice Gilmour's decision reflects a view held by some other jurisdictions, particularly those that have adopted the UNCITRAL Model Law. However, viewing s23 IAA – which provides that a party may apply for, and a court may issue, a subpoena requiring a person to produce documents to an arbitral tribunal provided that the tribunal gives permission (which it had in this case) – and other provisions in Part III of the IAA, alongside the practicalities that arise from his decision, could lead some to consider Justice Gilmour's interpretation as being at cross purposes with some of the key objectives of international arbitration.

By interpreting s23 (and, in turn, the purpose of the IAA) narrowly to only cover international arbitrations seated in Australia, Justice Gilmour permits a gap in the arbitral proceedings for foreign-seated arbitrations requiring evidence in another jurisdiction. For the approximately 60 jurisdictions that have adopted the Hague Evidence Convention, as Justice Gilmour suggested, a solution is available if an arbitration is seated therein, albeit parties should be made aware of the higher cost and lengthier process this route would likely entail. Where, however, it is proposed to seat a (foreign) arbitration in a non-Hague Evidence Convention State and it is known that important evidence is likely to be located in Australia, the restrictive approach of Justice Gilmore may mean that parties may wish to consider actions such as choosing Australia as a seat instead (if otherwise appropriate).

Allens is a leading Australian independent partnership, operating in integrated alliance with Linklaters LLP.