First ICSID award to be enforced by an Australian court

In an Australian first, in Lahoud v The Democratic Republic of Congo [2017] FCA 982, the Federal Court of Australia granted leave to two Lebanese investors to have two International Centre for Settlement of Investment Disputes (“ICSID”) awards recognised and enforced in Australia. While the relevant legislation is straightforward and the enforcement of the award unsurprising, it adds another limb of certainty to Australia’s legal framework for the enforcement of foreign arbitral awards.

Background

The applicant was the Lebanese shareholder (“Lahoud”) of an energy and logging company in the Democratic Republic of the Congo (the “DRC”). Following a measure allowing certain Congolese exiles to recover their property, Lahoud was evicted from sites it rented and had its property destroyed. An ICSID tribunal found that this occurred in breach of the DRC’s New Investment Code (which allowed disputes to be resolved via ICSID arbitration). It awarded Lahoud around US$2m in damages and costs. The DRC submitted a request to ICSID for the award to be annulled, which the ICSID annulment committee rejected in its entirety and awarded costs in Lahoud’s favour. Lahoud then made an ex parte application to enforce the awards, pursuant to the International Arbitration Act 1974 (the “IAA”), to the Federal Court of Australia (which is Australia’s designated court for enforcing ICSID awards).

Decision

Gleeson J applied the straightforward legislative provisions to enforce both awards. In doing so, her Honour made two important clarifications.

First, Gleeson J confirmed that the definition of “award” under s 35(4) of the IAA includes the decision of an ICSID annulment committee. This enabled the applicant to recover the costs awarded to it by the annulment committee.

Secondly, Gleeson J considered whether the DRC benefited from the general immunity of foreign states under s 9 of the Australian Foreign States Immunities Act 1985 (Cth) (the ‘FSIA’), which had earlier been considered (in the context of foreign judgments) in Firebird Global Master Fun II Ltd v Nauru [2015] HCA 43. In that context, it has been held that foreign states enjoy an immunity in proceedings to register foreign judgments, unless one of the exceptions in the FSIA apply. Gleeson J held, without much explanation, that, in the present context, the FSIA had “no relevant application, particularly where the decisions of the two ICSID tribunals demonstrated that the respondent had submitted to their jurisdiction”. Without stating so expressly, it appears that Gleeson J considered that submission to ICSID arbitration falls within s.17(2) of the FSIA, dealing with recognition and enforcement of arbitration awards.

Comment

While largely uncontentious, these findings help to clarify the approach of the Australian courts to enforcing ICSID awards. It may, however, be hoped that, in future ICSID enforcement proceedings in Australia, there will be an opportunity to expand on the reasoning concerning the FSIA.