Federal Court of Australia

Guoao Holding Group Co., Ltd v Xue [2022] FCA 1431

ORDERS

THE COURT ORDERS THAT:

1.    Juying Xue be joined as the third respondent in the proceeding and the applicant have leave to file an amended originating application in the form reflected in the schedule to the interlocutory application dated 22 November 2022.

2.    By 7 December 2022, the first respondent file and serve any evidence in response to the applicant’s contempt application by way of interlocutory application filed 22 November 2022.

3.    The parties provide to the Associate of Stewart J by 5:00pm today agreed or competing timetabling orders with respect to the hearing of the originating application and the respondents’ interlocutory application to resist enforcement of the award.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Delivered ex tempore)

STEWART J:

1    On 31 August of this year I made, ex parte, freezing orders against the respondents and an initial arbitral award enforcement order against the first respondent. The award was made in China by a tribunal under the auspices of the Beijing Arbitration Commission against, amongst others, the first respondent for the payment of the sum of approximately RMB200 million (approximately $42 million). The relevant order, in accordance with [2] of Annexure B to the Commercial Arbitration Practice Note (CA-1), was that unless the respondents bring an application to oppose the making of an enforcement order within 28 days of receiving notice of the orders, the Court will make orders to enforce the award and for judgment against the first respondent in the amount of the award (less an amount of approximately RMB10 million previously recouped).

2    Those orders were served on at least the first respondent on 14 September 2022.

3    On 28 and 29 September 2022, the matter came before me for case management. I was advised on that occasion that the respondents would file an interlocutory application to oppose the enforcement of the arbitral award by way of judgment being entered. I was told by counsel for the respondents that the basis to oppose enforcement was that the opportunities for challenging the award in China had not been exhausted and that the award was, on that basis, not final. I listed the matter for hearing on 8 December 2022 and made orders that the respondents file and serve their interlocutory application and supporting evidence by 24 October 2022.

4    On 2 November 2022, the matter again came before me for case management. The respondents explained some difficulties that they had had in preparing their interlocutory application and evidence. Against the respondents’ request for a later date, I maintained the listing date of 8 December 2022 and ordered that the respondents file and serve their interlocutory application and supporting affidavits by 21 November 2022. That was, in effect, an extension of the time previously given by about four weeks.

5    An interlocutory application resisting enforcement of the arbitral award and two affidavits in support have now been filed. The interlocutory application indicates that the basis for resisting enforcement of the award is in reliance on ss 8(7)(b) and 8(7A)(b) of the International Arbitration Act 1974 (Cth). Those provisions provide for the Court to not enforce an arbitral award if to do so would be contrary to public policy which includes if a breach of the rules of natural justice occurred in connection with the making of the award.

6    The one affidavit indicates some difficulties or errors in the translation of the reasons for the award. In particular, it is said that the same Chinese characters are translated differently in different places, including as “dissolution”, “termination” and “rescission”. There is no suggestion in the affidavit that the operative part of the award, being the monetary amounts that must be paid, was wrongly translated. The affidavit is therefore not a promising start to any challenge to the award.

7    The other affidavit is by the first respondent in which she sets out the history of challenges to the award in China. The award was made in January 2021. In the intervening period, there have been challenges at various levels of the Chinese court hierarchy, all of which have resulted in the award remaining extant. Notwithstanding what I was previously told, there is no suggestion that there is any further opportunity for challenge available in the Chinese legal system. The first respondent also explains that she has had difficulty finding Chinese legal experts to assist in resisting the enforcement of the award. Finally, she says:

With all the above difficulties, I found two experts at the moment, who although have the above concerns but appear to be willing to do an expert report. Both of them have indicated that they would need at least four to six weeks to complete such report.

8    Notably absent from that evidence is any articulated basis as to establish the identified grounds on which it is said that the enforcement of the award will be resisted. It is not identified what the experts have been asked to advise on, nor has it been identified, even by way of outline, what it is that they might say in that regard. That is to say, at present there is no evidence at all that might reasonably be thought to support the respondents’ resistance to the enforcement of the award.

9    It has been explained to me by counsel that the difficulty with the award is that it orders the repayment of money in the undoing of a commercial relationship, but it does not deal with the return of the shares for which the money was paid. It is difficult to see on what has been put forward thus far how that could possibly give rise to a proper ground for resisting enforcement of the award, although I naturally keep my mind open in that respect against the event that evidence ultimately comes forward.

10    The short point is that despite the passage of more than two months, the respondents have not been able to identify in any meaningful way a reasonable basis for resisting the award. For that reason, I am not persuaded that putting off the hearing date on 8 December 2022 will change the position. As far as I can tell, the respondents have no basis to putting off the hearing date other than to delay the inevitable. I will, therefore, maintain the hearing date.

Associate:

Dated:    28 November 2022