A Federal Court decision confirms that international arbitral awards can be enforced not just as judgments, but through specific performance under section 8(3) of the International Arbitration Act.
Background
Roadpost Inc. (incorporated in Canada) (Roadpost) and Beam Communications Pty Ltd (incorporated in Australia) (Beam) entered into a Joint Venture Agreement (JVA) during March 2019 to regulate the parties’ collaboration in the development and marketing of satellite-based messaging devices and the provision of ancillary services through their joint venture company, Zoleo Inc (incorporated in Canada) (Zoleo).
Article 21.1 of the JVA provided for disputes regarding the JVA’s interpretation or implementation to be resolved via binding arbitration by a single arbitrator in Toronto, Canada. A dispute arose during June 2023 following a breakdown in the parties’ relationship, resulting in arbitration proceedings commencing during September 2023.
The arbitrator issued a final award on 21 October 2024, which ordered Beam to:
- Pay arbitration costs of CAN$2,369,502.86, which it complied with; and
- Sell its shares in Zoleo to Roadpost on the occurrence of a ‘Sale Event’ (a defined event of default, requiring the defaulting shareholder to sell all its shares in Zoleo to the other shareholder) under Article 11.1 of the JVA, with the purchase price being determined in accordance with Article 12 of the JVA (which provides a mechanism to determine the fair market value of the shares).
Roadpost initiated proceedings for recognition and enforcement of the arbitrator’s final award under section 8(3) of the International Arbitration Act 1974 (Cth) (International Arbitration Act), which notes that a foreign award may be enforced in the Federal Court of Australia as if the award were a judgment or order of that Court.
Issues for determination by the Federal Court
The parties reached an agreement on orders to be made by consent, as follows:
- Order 1: Whether the final arbitral award could be enforced as if it were a judgment of the Court;1 and
- Order 2: “It is ordered and declared that the Respondent is required to sell its shares of Zoleo Inc. to the Applicant, in accordance with the terms of Article 11.1 of the JVA [sic]…, with the purchase price to be determined in accordance with Article 12 of the JVA.”
Findings by the Federal Court
Although Justice Stewart granted Order 1, he raised concerns with enforcing Order 2 as it was initially phrased as a declaration of Beam’s obligation to sell its shares in Zoleo.
Referring to Tridon Australia Pty Ltd v ACD Tridon Inc2 and Margulies Brothers Ltd v Dafnis Thomaides & Co (UK) Ltd3 – which noted that making a declaration in the terms of an award is not “enforcement” of the award and not an appropriate or proper order to make under section 8(3) of the International Arbitration Act – Justice Stewart questioned whether the declaration included in Order 2 was an “enforcement” action under section 8(3) of the International Arbitration Act, but concluded that ‘the making of a declaration in terms of an award is not “enforcement” of the award and not an appropriate order to make…’.
In response to Justice Stewart’s query, the parties confirmed that they sought an order for specific performance enforcing the arbitrator’s award, not a declaration. The parties agreed to revise the wording of Order 2, deleting the words “and declared”.
After considering applicable authorities, Justice Stewart noted that:
- Arbitrators have the power to grant relief akin to that granted by courts;4
- The Federal Court has the power to grant an order for specific performance in enforcing arbitral awards5;
- Enforced arbitral awards operate of their own force as new obligations that are enforceable by court order;6 and
- If orders for specific performance are not complied with, there is a possibility that a damages order will follow.7
Following the additional deletion of the words “is required to” from Order 2, Justice Stewart was satisfied to grant Order 2 on the basis that (as amended) it no longer detracted from the force of the order for specific performance by introducing something akin to a declaration of rights. Accordingly, an order for specific performance was granted, compelling Beam to sell its Zoleo shares to Roadpost.
Conclusion
This decision reaffirms the Federal Court’s ability to give practical effect to the enforcement of international arbitral awards pursuant to section 8(3) of the International Arbitration Act not only by recognition as judgments, but also through orders for specific performance where appropriate. Legal practitioners are advised to take care when seeking enforcement of an arbitral award for specific performance that their application for enforcement is not framed in terms of an order seeking declaratory relief.
What’s next
Read our next case note on the recent decision in Clarke Energy (Australia) Pty Ltd v Power Generation Corporation (Trading as Territory Generation) and Robert Holt KC [2025] QSC 64, where we explore jurisdictional and contractual disputes in the energy sector.
For more information, please contact Veno Panicker or Elena Stojcevski.
1Pursuant to section 8(3) of the International Arbitration Act, the International Commercial Arbitration Act, 2017, S.O. 2017, b.2 and the Model Law on International Commercial Arbitration.
2Tridon Australia Pty Ltd v ACD Tridon Inc [2004] NSWCA 146 at [10]-[11].
3Margulies Brothers Ltd v Dafnis Thomaides & Co (UK) Ltd [1958] 1 Lloyd’s Rep 205 at 207.
4Government Insurance Office (NSW) v Atkinson-Leighton Joint Venture (1981) 146 CLR 206 at [246]-[247] per Mason J.
5Tianjin Jishengtai Investment Consulting Partnership Enterprise v Huang [2020] FCA 767 at [20] per Jagot T.
6TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia [2013] HCA 5; 251 CLR 533 at [32] per French CJ and Gageler J and [79] per Hayne, Crennan, Kiefel and Bell JJ.
7Xiamen Xinjindi Group Co Ltd v Eton Properties Ltd [2020] HKCFA 32; 23 HKCFAR 348 at [126].
