Federal Court of Australia

Qinao Lianchuang (Zhuhai) Development Co. Ltd v Shandong Yulong Gold Co. Ltd [2025] FCA 912

ORDERS

THE COURT ORDERS THAT:

1. The order entered is available on the Commonwealth Courts Portal.

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

REASONS FOR JUDGMENT

CHEESEMAN J:

INTRODUCTION

1 These reasons concern a contested hearing addressed to the continuation of ex parte freezing orders. The application for freezing orders was made in anticipation of the commencement of a proceeding in this Court. The relevant prospective proceeding in contemplation was an application for the recognition and enforcement of a foreign arbitral award under s 8 of the International Arbitration Act 1974 (Cth). The foreign arbitral award in issue was made in the People’s Republic of China.

2 This matter first came before me as the Commercial and Corporations Duty Judge on an urgent basis on 16 July 2025. On that occasion I made an interim ex parte freezing order (Interim Freezing Order), the purpose of which was to maintain the status quo until the First Prospective Respondent had an opportunity to be heard. The principal antagonists were companies domiciled in China.

3 The ex parte application was also made against four Australian companies. The Prospective Applicants sought ex parte orders against those companies in the nature of third party freezing orders. The First Prospective Respondent is a holding company or the ultimate holding company of those Australian companies. I will refer to these companies as the Australian Subsidiaries. Each of the Australian Subsidiaries has multiple directors. There is some but not a complete overlap in the directors serving on the boards of three of the four Australian Subsidiaries. I referred the Prospective Applicants’ counsel to a number of authorities which address the principles which apply in relation to third party freezing orders to which reference had not been made. Ultimately the application for a third party freezing order was only pressed against one of the four Australian Subsidiaries. I dismissed that application by reference to the principles set out by Stewart J in Viterra BV v Shandong Ruyi Technology Group Co Ltd [2022] FCA 215 at [102]-[107].

4 Before turning to an overview of what transpired at the return date, I will briefly address the relevant actors involved in this proceeding.

5 The First Prospective Applicant, Qinao Lianchuang (Zhuhai) Development Co. Ltd, is a Chinese domiciled corporation primarily engaged in the sale of minerals and metallic materials, including coal, high-performance non-ferrous metals and alloy materials, metal ores and chemical products.

6 The Second Prospective Applicant, Dahengqin (Zhuhai) Trading Co., Ltd, is also a Chinese domiciled corporation engaged in the sale of mineral and metallic metals and the provision of supply chain management and warehouse services.

7 Qinao and Dahengqin are ultimately owned by the same entity, Zhuhai Dahengqin Group Co. They were represented in the application before me by the same counsel and solicitor.

8 The First (and now only) Prospective Respondent, Shandong Yulong Gold Co., Ltd, is also a Chinese domiciled corporation. It is primarily engaged in the mining and processing of gold and other precious metal mineral resources, as well as mineral resources related to new energy and new materials, and in the trading of bulk commodities.

9 Qinao, Dahengqin and Yulong have from time to time entered various contracts for, among other things, the purchase by Yulong of mineral resources from Qinao and Dahengqin.

10 Relevantly for present purposes, Qinao and Dahengqin and Yulong have been opposing parties in two arbitration proceedings commenced by Qinao and Dahengqin against Yulong in the Zhuhai Court of International Arbitration in China. Each of the awards rendered in those arbitral proceedings has given rise to separate proceedings in this Court.

11 As mentioned, the ex parte application was also for third party freezing orders against the Australian Subsidiaries which are related to Yulong. Those companies were described as the Second to Fifth Prospective Respondents, being respectively:

(1) Yuxin Holdings Pty Limited, a company of which Yulong is the 100% shareholder;

(2) Yurain Gold Pty Ltd, a company of which Yuxin is the 100% shareholder;

(3) Auspin Exploration and Drilling Pty Ltd, a company of which Yuxin is the 100% shareholder; and

(4) NQM Gold 2 Pty Ltd, a company of which Yurain is the 100% shareholder.

12 There may be some confusion in the nomenclature used in Qinao and Dahengqin’s initiating application to describe the third party subsidiaries. Although they are described under the banner of “Prospective Respondents” as the Second to Fifth Respondents respectively, it does not appear that they will be named as respondents to the prospective proceeding foreshadowed by Qinao and Dahengqin. The only action against them appears to be the application for third party freezing orders. They do not appear to be parties to the foreign award that will likely be the subject of the recognition application in this Court.

13 On 16 July 2025, I set the date for return of the Interim Freezing Order for 18 July 2025 (Return Hearing). Yulong took up the opportunity to be heard at the Return Hearing and was represented at that hearing by senior and junior counsel who asserted that they appeared for Qinao and Dahengqin on a conditional basis to oppose the continuation of the Interim Freezing Order. Somewhat unusually they also announced their appearance for the Australian Subsidiaries as well, notwithstanding that Qinao and Dahengqin’s application against the Australian Subsidiaries had been dismissed. Qinao and Dahengqin did not further pursue the third party freezing orders against the Australian Subsidiaries at the Return Hearing. At the commencement of the contested Return Hearing, I formalised the position, to the extent it was necessary to do so, by formally dismissing the application filed on 15 July 2025 in so far as it related to the Australian Subsidiaries.

14 After I pronounced orders formally dismissing the application against the Australian Subsidiaries, Yulong’s counsel continued to appear to argue against the continuation of the Interim Freezing Order and the making of a fresh freezing order against Yulong, maintaining that their appearance for Yulong was on a conditional basis. Qinao and Dahengqin’s counsel placed on the record that Qinao and Dahengqin would contend that by appearing at the Return Hearing in the way in which it did, Yulong submitted to the Court’s jurisdiction. That debate is for another day.

15 At the conclusion of the contested Return Hearing, I made a new freezing order against Yulong in different terms to the Interim Freezing Order (18 July Freezing Order). Upon making the 18 July Freezing Order, I discharged the Interim Freezing Order. These are my reasons for making the orders I made on 18 July 2025.

APPLICABLE PRINCIPLES

Prospective Proceeding

16 As mentioned, the application for freezing orders was made in anticipation of the commencement of a proceeding in this Court, with Qinao and Dahengqin relying on r 7.01(1) of the Federal Court Rules 2011 (Cth).

17 Here, as mentioned, Qinao and Dahengqin propose to commence proceedings for the recognition and enforcement of a foreign award under s 8 of the International Arbitration Act (Recognition Application). Section 8 relevantly provides:

(1)     Subject to this Part, a foreign award is binding by virtue of this Act for all purposes on the parties to the award.

…

(3)     Subject to this Part, a foreign award may be enforced in the Federal Court of Australia as if the award were a judgment or order of that court.

…

18 A “foreign award” is defined under s 3(1) of the International Arbitration Act as being “an arbitral award made, in pursuance of an arbitration agreement, in a country other than Australia, being an arbitral award in relation to which the [Convention on the Recognition and Enforcement of Foreign Arbitral Awards] applies”. There is no dispute in relation to the fact that China acceded to the Convention on 22 January 1987 and has been bound as a contracting State since 22 April 1987.

Application under rr 7.32 and 7.33

19 Qinao and Dahengqin relied on the power conferred by r 7.32 of Rules for the freezing orders sought. The applicable principles are well established. There was no dispute between the parties as to those principles.

20 Rule 7.32 of the Rules provides:

(1)     The Court may make an order (a freezing order), with or without notice to a respondent, for the purpose of preventing the frustration or inhibition of the Court’s process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied.

(2)     A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets.

21 In Deputy Commissioner of Taxation v Huang [2021] HCA 43; 273 CLR 429, the plurality (Gageler, Keane, Gordon and Gleeson JJ) said at [17]-[18] in respect of the power conferred by r 7.32(1) of the Rules:

17     The power conferred by r 7.32(1) is expressly subject to two limitations: first, the purpose of the order must be “the purpose of preventing the frustration or inhibition of the Court’s process”; and secondly, the order must address that purpose “by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied”. The first limitation corresponds with the established scope of the Federal Court's general powers to grant a freezing order, being the power to make such orders as the Court may determine to be appropriate to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction. Rule 7.32 states explicitly the requirement, stated by this Court in relation to the Federal Court's general powers to grant a freezing order, that the power must be exercised for the purpose for which it is conferred. Where the order is made in proceedings in which substantive relief is sought against the defendant, that purpose is “to prevent a defendant from disposing of his actual assets (including claims and expectancies) so as to frustrate the process of the court by depriving the plaintiff of the fruits of any judgment obtained in the action”. More broadly, a freezing order is directed to dispositions “which are intended to frustrate, or have the necessary effect of frustrating, the plaintiff in his attempt to seek through the court a remedy for the obligation to which he claims the defendant is subject”.

18    The second limitation, that an order made under r 7.32 must serve the specified purpose “by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied”, also corresponds with the scope of the Federal Court's general powers to make a freezing order. Since Jackson v Sterling Industries Ltd [[1987] HCA 23; 162 CLR 612], it has been accepted in Australia, as a general proposition, that a freezing order could be granted if the circumstances are such that there is a danger of the defendant absconding, or a danger of the assets being removed from the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if successful in obtaining a judgment, will not be able to get it satisfied. The danger must be sufficiently substantial to warrant the freezing order. The need to identify a relevant danger was first articulated in Mareva Compania Naviera SA v International Bulkcarriers SA, where Lord Denning MR stated:

“If it appears that the debt is due and owing - and there is a danger that the debtor may dispose of his assets so as to defeat it before judgment - the Court has jurisdiction in a proper case to grant an interlocutory judgment so as to prevent him disposing of those assets.”

(Footnotes omitted.)

22 Rule 7.33 of the Rules empowers the Court to make an order ancillary to a freezing order or prospective freezing order as the Court considers appropriate for purposes that are ancillary to the making of a freezing order.

23 It is well recognised that the making of freezing orders is a drastic remedy which should not be lightly granted. The Court must be persuaded of the existence of a good arguable case, a danger that the processes of the Court will be undermined, and that in all of the circumstances the relevant discretion ought to be exercised.

Good arguable case

24 A good arguable case involves “something more than a serious question to be tried, but not necessarily rising so high as a prima facie case”: Ninemia Maritime Corp v Trave GmbH & Co KG (The Niedersachsen) [1984] 1 All ER 398 at 404 (Mustill J). It requires only that there be a claim “barely capable of serious argument”; it need not have a better than 50% chance of success: Ninemia Maritime at 404 (Mustill J); Samimi v Seyedabadi [2013] NSWCA 279 at [69] (McColl JA). The question is not whether a party opposing the making of a freezing order has an arguable defence to the case proposed to be pursued by the party seeking the order.

Risk of undermining the Court’s processes

25 Rule 7.32(2) of the Rules (extracted at paragraph [20] above) requires that an applicant or prospective applicant demonstrate that there is a danger that a prospective judgment of the Court would be left wholly or partly unsatisfied because the respondent’s assets would be disposed of, dealt with or diminished in value.

26 The fundamental purpose of freezing orders is to prevent the abuse or frustration of a court’s process in relation to matters coming within its jurisdiction: Jackson v Sterling Industries Ltd [1987] HCA 23; 162 CLR 612 at 623 (Deane J); Cardile v LED Builders Pty Ltd [1999] HCA 18;198 CLR 380 at 394 [26] (Gaudron, McHugh, Gummow and Callinan JJ); and Deputy Commissioner of Taxation v Shi [2021] HCA 22; 273 CLR 235 at [22] (Gordon J).

27 In UFC Enterprise Morley Pty Ltd v UFC Enterprise Northbridge Pty Ltd [2024] FCA 1396 at [13] (adopted with approval in Zirk-Sadowski v University of New South Wales [2025] FCAFC 64 at [46] (Snaden J, Wheelahan and McElwaine JJ agreeing)), Feutrill J summarised the principles to be applied in considering this risk relevantly as follows:

(2)    As a general proposition, a freezing order may be granted if the applicant demonstrates a prima facie or good arguable case for final relief and the circumstances are such that there is a danger of the respondent absconding, or a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with so that there is a danger that the applicant, if it gets judgment, will not be able to get it satisfied: Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014; 273 ALR 194 at [8] (Kenny J) and the authorities there cited.

(3)    The reference in r 7.32 to a ‘danger’ that a judgment or prospective judgment will go wholly or partly unsatisfied is a reference to a risk of that outcome. The risk must be real or substantial as opposed to a remote or speculative or theoretical possibility. The applicant must prove facts from which the Court can infer the existence of a real or substantial risk on the balance of probabilities: Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (in liq) [2018] WASCA 174; 53 WAR 201 at [42]-[43] (Buss P, Murphy and Mitchell JJA) and the authorities there cited.

(4)    It is not necessary to establish that judgment will be unsatisfied unless a freezing order is made. Nor is it necessary to demonstrate that a respondent has a positive intention to frustrate a judgment. However, there must be facts from which ‘a prudent, sensible commercial’ person can ‘properly infer a danger of default if assets are removed from the jurisdiction’. That may include facts concerning a lack of available information about a respondent: Hua Wang Bank Berhad at [9]-[12] (Kenny J) and the authorities there cited. See, also, Severstal Export GmbH v Bhushan Steel Ltd [2013] NSWCA 102; 84 NSWLR 141 at [59]-[60] (Bathurst CJ, Beazley P and Barrett JA agreeing); Trans Global Projects at [45].

(5)    The mere fact of removal or danger of removal of assets from the jurisdiction will not necessarily give rise to a danger or risk that a judgment will go unsatisfied. In this regard, it is necessary to take into account any reciprocal regimes for the registration and enforcement of judgments and other means by which a judgment may be enforced: Trans Global Projects at [47]-[48]; Severstal Export at [63]-[65].

(6)    Ultimately, it is a question for evaluation by the Court as to whether the degree of the danger or risk is sufficient to justify an order in the terms made. In making that evaluative assessment, the Court will bear in mind that a freezing order is a drastic remedy which imposes a severe restriction on a respondent’s right to deal with its assets, and that the purpose of the order is not to provide security for a judgment which the applicant hopes to obtain and fears might not be satisfied: Trans Global Projects at [44] and the authorities there cited.

28 A risk of dissipation of assets can be informed by evidence of past conduct, including that the respondent “has previously acted in a way which shows that his probity is not to be relied on”: Simmons v Giezekamp [2024] FCA 649 at [21] (Thawley J), citing Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014; 273 ALR 194 at [12] (Kenny J) and Ninemia Maritime at 406 (Mustill J). The risk of dissipation of assets to avoid a judgment may be established by inference: Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 325-326 (Gleeson CJ).

Discretionary exercise of power

29 The making of a freezing order involves a discretionary exercise of power the exercise of which the Court may refuse: Patterson at 321-322 (Gleeson CJ). The Court must be satisfied that no other remedy suitable to the circumstances and less extensive in scope is available, and that the balance of convenience favours the granting of relief: Spotlight Pty Ltd v Mehta [2019] FCA 1796 at [25] (Anderson J).

30 In KTC v Singh & Ors [2018] NSWSC 1510 at [4]-[8], White J summarised the relevant principles which inform the exercise of the discretionary power in the following way:

4     In Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 the plurality (at [51]) approved what was said by the Court of Appeal in Frigo v Culhaci [1988] NSWCA 88 in relation to the Court's inherent jurisdiction to grant a Mareva order; that the order is a drastic remedy not to be granted lightly, and its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The plurality lamented (at [52]) that a reason rarely adverted to for care in exercising the power to grant a Mareva order was that there may be difficulties associated with the quantification of recovery of damages pursuant to the undertaking of damages that is required for the grant of such an order should it turn out that the order should not have been granted. The plurality also referred to the importance of discretionary considerations, including whether the applicant seeking the order has proceeded diligently and expeditiously (at [53]).

5    The purpose of the grant of a Mareva order and its statutory counterpart under UCPR r 25.11 is to prevent the frustration of the processes of the Court by a defendant whom it is apprehended will seek to put his or her assets out of the reach of the plaintiff so as to prevent enforcement of a judgment. In Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 Gleeson CJ said at 321-322:

“The remedy is discretionary, but it has been held that, in addition to any other considerations that may be relevant in the circumstances of a particular case, as a general rule a plaintiff will need to establish, first, a prima facie cause of action against the defendant, and secondly, a danger that, by reason of the defendant's absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied.”

6    In TZ Limited v ZMS Investments Pty Ltd [2010] NSWSC 196 Barrett J said (at [26]):

“A general law freezing order is warranted only if, in the words of Bryson J in Acquasun Pty Ltd v Coverdale Ram Pty Ltd [2000] NSWSC 1146, there has been ‘conduct on the part of the defendants which can reasonably be interpreted as potentially having the effect of frustrating the ordinary processes of the court and the enforcement of its judgments or of being intended to do so or of being in any way evasive indicating dishonesty or otherwise indicating actually or potentially that the assets of the company have been or will be dealt with in an irregular way’.”

7    The respondents emphasise what was said by Mustill J in Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG (The Niedersachsen) [1984] 1 All ER 398 (at 406) that was approved in Frigo v Culhaci at 8 that:

“It is not enough for the plaintiff to assert a risk that the assets will be dissipated. He must demonstrate this by solid evidence. This evidence may take a number of different forms. … But the evidence must always be there.”

8    In many cases the risk of dissipation of assets to avoid a judgment will be evident from the plaintiff's strong prima facie case of the defendant's having fraudulently misappropriated assets or of serious dishonesty. As the Court held in Patterson v BTR Engineering (Aust) Ltd such evidence may establish that it can reasonably be inferred that the defendant is the sort of person who would, unless restrained, not preserve his or her assets intact so that they might be available to a judgment creditor (at 325-326).

31 The task to be undertaken by the Court was summarised by Kenny J in Hua Wang Bank at [13]:

In summary, the Court must consider, on the whole of the evidence before it, whether to continue, discharge or vary the freezing order previously made. In deciding this matter, the Court must determine, first, whether the Commissioner has shown a good arguable case on an accrued or prospective cause of action that is justiciable in the Court. Secondly, the Court must consider whether, on the evidence before it, there is a danger that a judgment or prospective judgment will be unsatisfied because assets are removed from Australia, or disposed of, dealt with, or diminished in value. Finally, the Court must consider the overarching question, whether, in all the circumstances, the case is one in which it is in the interests of justice to maintain or continue the freezing order. Amongst other things, in this regard, the Court must consider the likely consequences to the applicant if the assets are removed and the hardship that such an order inflicts on the respondents. The rights of third parties who may be affected by the grant of the order must also be borne in mind.

EVIDENCE

32 Qinao and Dahengqin relied on the following affidavits:

(1) an affidavit of Chao He affirmed 14 July 2025, together with Exhibit CH-1 (494 pages in total) to that affidavit;

(2) affidavits of service of Ms He affirmed 16 July 2025 and 17 July 2025, in accordance with Interim Freezing Order; and

(3) an affidavit of Ms He affirmed 17 July 2025, in respect of the translation of the name of one of the Chinese entities referred to the evidence.

33 Qinao and Dahengqin also relied on two corporate structure diagrams for Yulong which were tendered in the related proceeding and are discussed further below. I granted a release from the Harman undertaking for the limited purpose of the ex parte hearing given the urgent circumstances and as Yulong had relied on the documents in the freezing order application in the related proceeding in which an earlier arbitral award between the relevant parties was in issue. The related proceeding and the earlier award are addressed below. In any event, these documents were relied upon by Yulong at the Return Hearing.

34 Yulong read the affidavit of Timothy Webster sworn on 18 July 2025, save for the word “Yulong” in the fourth line of paragraph 62, and exhibit TW-1 (1,810 pages in total) to that affidavit. Given the urgent nature of the application in reaching my decision, I focussed primarily on the documents to which I was expressly taken by the parties. Yulong also tendered a letter from K&L Gates to Ren Zhou Lawyers dated 17 July 2025 in relation to transaction documents relevant to this proceeding and the related proceeding before Owens J (marked as Exhibit 1).

CONSIDERATION

35 The factual background to this application was complicated. It fell to be considered in short order. A significant volume of materials was served on Qinao and Dahengqin’s legal representatives shortly before the commencement of the Return Hearing. Such is the nature of an application like this. The usual exigencies were exacerbated for two reasons. First, because the application was made before the commencement of the relevant proceeding of which it was brought in aid. Secondly, because a decision was required to be made before 4.30pm (AEST) on the day of the Return Hearing, because an Extraordinary General Meeting (EGM) of Yulong was set to commence at that time in China. In light of the Interim Freezing Order that had been made on 16 July 2025, the parties regarded it as necessary for the Court to determine the inter partes application before that EGM took place. The significance of the Yulong EGM is addressed in greater detail below.

36 The risk of dissipation and the related risk of this Court’s processes being undermined loomed large on this application. A central tenet which informed the dissipation risk alleged by Qinao and Dahengqin was that Yulong has entered into security agreements with Chinese companies that are, or were, related to it and in doing so has caused its Australian Subsidiaries to grant security over their assets with a view to diminishing the value of Yulong’s Australian assets against which an arbitral award recognised under the International Arbitration Act could be enforced.

37 To expose why I accepted that a relevant risk of dissipation had been established, it is necessary to address, to the extent the evidence permits, the complicated factual matrix which supplies the context in which to assess the application. That will involve consideration of the relationship between Yulong and the Chinese domiciled companies which hold, or have held, an interest in it at various times and who have (or will have) the benefit of the security arrangements which Qinao and Dahengqin point to as manifestations of the requisite risk of dissipation. It is next necessary to address the contractual dealings between Qinao, Dahengqin and Yulong that gave rise to two separate arbitrations and resulted in two separate awards, both of which went against Yulong. Qinao and Dahengqin contend that the requisite risk of dissipation is evident from the timing of the grant of various securities by Yulong and by its Australian Subsidiaries relative to the demands for payment made on Yulong by Qinao and Dahengqin and the steps taken in and in connection with the two arbitration proceedings in China. Significantly, the steps taken in connection with the arbitration proceedings include the commencement of a recognition proceeding in this Court in relation to the first award and the foreshadowed recognition proceeding in relation to the second award. I will address the relevant chronology as the third matter of background. I will then turn to explain, having regard to the relevant considerations that inform the grant of a freezing order, why I was satisfied that a freezing order should be made against Yulong.

Yulong’s corporate relationships and security arrangements

38 The corporate structure of Yulong’s holding companies, that is those companies above Yulong in its corporate hierarchy, is complex. The parties relied on a corporate structure diagram to demonstrate the various shareholdings between 14 Chinese companies and two government entities that directly or indirectly hold shares in Yulong (the Yulong upstream corporate diagram). Some of the documents upon which the Yulong upstream corporate diagram appears to be based were in evidence before me. For present purposes, I will proceed on the basis that the diagram is accurate as that is the way in which the parties proceeded before me. I note that the Yulong upstream corporate diagram shows that:

(1) Jigao (Jinan) Capital Investment Co Ltd (Jinan Capital) is the majority shareholder of Yulong, holding 86.71% of its shares;

(2) Jinan Gaoxin Shenghe Development Co., Ltd, also translated in the evidence before me as Jinan Hi-Tech Shenghe Development Co., Ltd, (Jinan Hi-Tech Development) is a direct holding company of Jinan Capital (with a 20% shareholding) and an indirect holding company of Yulong; and

(3) Jinan Hi-Tech Holding Group Co., Ltd is an indirect holding company of Jinan Capital, Jinan Hi-Tech Development and Yulong.  Jinan Hi-Tech Holding was formerly a direct holding company of Yulong. Mr Webster, Yulong’s solicitor, gave evidence on instructions and belief that in early July 2024, Jinan Hi-Tech Holding sold its shares in Yulong to Jinan Capital.

39 The relevant financing and security arrangements that were relevant in assessing whether Yulong was relevantly at risk of dissipating its assets are alleged by Yulong to be as follows.

40 First, on or about 24 September 2024, Yulong and Jinan Hi-Tech Holding entered into a Security Deed in relation to a series of loans described in Mr Webster’s evidence as the Jinan Loans (2024 Jinan Hi-Tech Holding Security Deed). A copy of that deed is in evidence. By the 2024 Jinan Hi-Tech Holding Security Deed, Yulong relevantly granted a charge over its shares in Yuxin and any dividends on those shares in favour of Jinan Hi-Tech Holding as security for the Jinan Loans. Yuxin is one of the Australian Subsidiaries. Mr Webster deposed on instruction that the only asset of Yulong in Australia is its shareholding in Yuxin. As mentioned, Yulong owns all of the issued shares in Yuxin. Yuxin owns 100% of the share capital in Yurain and Auspin. Yurain, in turn, owns 100% of the share capital in NQM. NQM is relevantly the main asset holding company.

41 The documents constituting the Jinan Loans were not in evidence. The evidence in respect of the Jinan Loans is limited. Mr Webster deposed on instruction that Yulong was the borrower under the Jinan Loans and the lenders were either Jinan Hi-Tech Holding or Jinan Hi-Tech Dongfang Small Loan Co Ltd (described by Mr Webster as an affiliate of Jinan Hi-Tech Holding). Jinan Hi-Tech Dongfang is not shown on the Yulong upstream corporate diagram and apart from Mr Webster’s affidavit, there is no evidence in relation to its related or affiliated corporate relationships. Mr Webster says that there were 14 individual loans which were made under contracts dating from 9 January 2024 to 2 July 2024.  The other evidence in relation to the Jinan Loans is a list of loan agreements which forms Schedule 1 to the 2024 Jinan Hi-Tech Holding Security Deed. Jinan Hi-Tech Holding’s security interest in the Yuxin shares arising from the 2024 Jinan Hi-Tech Holding Security Deed was registered on the Personal Property Security Register (PPSR) on 5 November 2024.

42 Secondly, Mr Webster deposed on instruction that during the period 2022 to 2024, Yulong (as borrower) had entered into various facility agreements with various banks which included:

(1) a facility with the Ping An Bank Co on 19 December 2022 in the total sum of RMB 540,000,000; and

(2) a facility with the Xingye Bank Co Ltd on 19 July 2024 in the total sum of RMB 180,000,00,

(together, the Yulong Facility Agreements).

43 Mr Webster further says that Jinan Hi-Tech Holding entered into various guarantee agreements pursuant to which Jinan Hi-Tech Holding agreed to provide a joint and several liability guarantee for the obligations of Yulong under the Yulong Facility Agreements (Guarantee Agreements). Mr Webster says, again on instruction, that as at the date of his affidavit the “total amount in principal currently owing under the Yulong Facility Agreements is approximately RMB 544,500,000”. The Yulong Facility Agreements and the Guarantee Agreements were not in evidence. Mr Webster said that his firm has not been able to obtain English translation copies of these documents in the time available. In his affidavit, he pointed to the listing of the “details of these transactions” in a schedule to a subsequent security deed, being the General Security Deed dated 25 June 2025 between Jinan Hi-Tech Holding, Yulong and the Australian Subsidiaries which is governed by Queensland law (2025 Jinan Hi-Tech Holding Security Deed), with the relevant listing being contained in Schedule 2. The security interests created by the 2025 Jinan Hi-Tech Holding Security Deed were registered on the PPSR on 13 June 2025, well before this deed was executed.

44 Thirdly, Mr Webster deposed on instruction that during the period 2022 to 2024, Yulong (as borrower) entered into three separate facility agreements with Jinan Hi-Tech Development under which a cumulative loan limit of RMB 1,400,000,000 was made available (Jinan Hi-Tech Development Facility Agreements). Mr Webster deposed that the total amount in principal owing under the Jinan Hi-Tech Development Facility Agreements as at the date of his affidavit was approximately RMB 627,300,000. Mr Webster said that his firm had not been able to obtain English translation copies of these documents in the time available. In his affidavit, he pointed to the listing of the “details of these transactions” in  a subsequent security deed, being the General Security Deed dated 25 June 2025 between Jinan Hi-Tech Development and the Australian Subsidiaries which is governed by Queensland law (2025 Jinan Hi-Tech Development Deed) , with the relevant listing being contained in Schedule 2. Yulong was not a party to this deed. The security interests created by the 2025 Jinan Hi-Tech Development Deed were registered on the PPSR on 12 June 2025, well before this deed was executed.

45 The 2025 Jinan Hi-Tech Security Deed and the 2025 Jinan Hi-Tech Development Deed were executed on the same day. I will address the timing of the execution of these deeds relative to arbitration proceedings below. I will refer to these two deeds collectively as the 2025 Security Deeds.

46 The other feature of the Yulong upstream corporate diagram which was raised on the present application was that the sole shareholder of Jinan Hi-Tech Holding appears to be a Chinese government-owned entity or related to a State-owned entity. The relevance of that potential government relationship, if established, was said by Yulong to be two-fold.

47 First, Yulong submitted that it weighed against an inference of a risk of dissipation arising from the close proximity in the timing of the grant of securities by the Australian Subsidiaries with the pronouncement of the final arbitral award on 3 June 2025 (Second Award), which was for a substantial amount and was adverse to Yulong.

48 Mr Webster in his affidavit deposed on the basis of “discussions between solicitors in my employ and Chinese legal advisers for [Yulong]” that:

(1) at some time between 1 July 2024 and 10 July 2024, Jinan Hi-Tech Holding sold its shares in Yulong to Jinan Capital, and therefore ceased to be a controlling shareholder of Yulong;

(2) under Chinese law, Jinan Hi-Tech Holding remained a “related party” of Yulong for 12 months after that transaction;

(3) Jinan Hi-Tech Holding is a State-owned enterprise governed by Jinan Hi-Tech Development Zone State-owned Assets Supervision and Administration Commission of the State Council (SASAC); and

(4) Shandong Province publishes regulatory guidance in respect of State-owned enterprises, such as Jinan Hi-Tech Holding.

49 I interpolate to note that in evidence as part of Ms He’s affidavit is a copy of an Announcement dated 5 July 2024 by Yulong to the Shanghai Stock Exchange which is titled “Announcement on the Progress of the Transfer by Agreement of Company Shares between Companies Controlled by the Actual Controller and the Completion of Transfer Registration.” By this Announcement, Yulong stated that Jinan Hi-Tech Holding signed a “Share Transfer Agreement” with Jinan Capital on 11 June 2024, and Jinan Capital acquired 230,070,000 shares of Yulong held by Jinan Hi-Tech Holding, accounting for 29.38% of Yulong’s total share capital. Yulong announced that the transfer of its shares had been completed and that its controlling shareholder had changed from Jinan Hi-Tech Holding to Jinan Capital, while the actual controller remained unchanged and continued to be the Management Committee of Jinan Hi-Tech Industrial Development Zone.

50 Mr Webster then deposed to the existence of a Chinese regulatory guidance known as the Administrative Measures for Securities provided by Shandong Provincial State-owned Enterprises (AMS), which he said was provided to his firm by Yulong in the original Chinese. Mr Webster caused solicitors in his employ to prepare a translated version of the AMS, which was tendered in evidence.

51 The AMS sets out the requirements for guarantees and counter-guarantees in relation to State-owned enterprises. The extracts below are derived from the translated version of the AMS. Article 4 of the AMS relevantly provides:

Provincial enterprises and their holding and actually controlling enterprises (hereinafter referred to as provincial enterprises and their controlled enterprises) shall not provide guarantees for enterprises with no property rights relationship (except provincial enterprises and their controlled enterprises); shall not provide guarantees for individuals; shall not provide guarantees for high-risk investment projects (including any form of entrusted asset management, buying and selling stocks, futures, options, etc.) and projects that do not comply with national industrial policies.

52 Article 7 of the AMS is to the effect that where a provincial state entity does not own a guaranteed entity, the guaranteed entity shall provide a cross-guarantee. Further, article 8 of the AMS provides:

Provincial enterprises and investment enterprises at all levels may sign a guarantee contract with the creditor only after the guaranteed enterprise has determined to provide counter-guarantee. The signing and performance of counter-guarantee contracts and guarantee contracts shall comply with relevant laws and regulations.

53 Mr Webster deposed on instruction that following the change in ownership, Yulong was requested by Jinan Hi-Tech Holding and Jinan Hi-Tech Development to provide cross-guarantees. Further, that notwithstanding that Yulong was not under any statutory obligation to provide such cross-guarantees, the commercial effect of Yulong failing to give such a cross-guarantee was that it would adversely impact Yulong’s reputation in the market and its dealings with its current financiers, Jinan Hi-Tech Holding and Jinan Hi-Tech Development. Mr Webster deposed that for this reason, the board of Yulong passed the resolution to approve the contemplated security arrangements on 20 June 2025. I note that the resolution of the Yulong board was not adduced in evidence by Yulong. Mr Webster said that his firm had not been able to obtain an English translation of the resolution in the time available.

54 Yulong submitted that in assessing whether the timing of the grant of the 2025 Security Deeds supports an inference that there is a relevant risk of dissipation, I should infer that it does not because the timing is explained by the change in the identity of the controlling shareholder of Yulong and the operation of the AMS. Accordingly, the proximity in time between the grant of securities pursuant to the 2025 Security Deeds and the Second Award is a coincidence from which an inference that assets are at risk of being dissipated ought not be drawn.

55 Secondly, Yulong submitted that in considering the balance of convenience, I would weigh in the balance the extent to which a defence may be raised by Yulong relying on the Foreign States Immunities Act 1985 (Cth), and whether the relevant transactions are commercial transactions within the meaning of the Foreign States Immunities Act. This submission was not developed on the application before me in any greater detail.

The First Award and related proceeding

56 On 1 April 2024, Qinao and Yulong entered into a sales contract pursuant to which Qinao agreed to supply, and Yulong agreed to purchase electrolytic copper (April 2024 Sales Contract). The terms of that agreement are not relevant for the purpose of the application before me, save to note that it contained an arbitration clause in the following terms:

This contract shall be governed by the laws of the People’s Republic of China. Any dispute arising out of the execution and fulfillment of this contract shall be resolved by the Parties hereto through their friendly negotiation; in case of failure to reach an agreement through negotiation, the dispute shall be submitted to Zhuhai Court of International Arbitration for arbitration in accordance with the arbitration rules of the Court. The arbitration award shall be final and binding on the Parties hereto.

57 On 6 November 2025, Qinao initiated an arbitration proceeding against Yulong in the Court of Arbitration for monies allegedly owed to it by Yulong arising from the April 2024 Sales Contract, plus interest, and associated costs and fees. A non-public hearing was held at the Court of Arbitration on 17 December 2024, at which both Qinao and Yulong appeared.

58 On 9 January 2025, Qinao obtained an arbitration award against Yulong in the amount of approximately $3.5 million awarded by a Tribunal constituted under the Court of Arbitration (First Award). The award was made in RMB. In these reasons, I will refer to the awards by the corresponding AUD sum that was used in the parties’ submissions.

59 On 14 May 2025, Qinao commenced proceeding NSD 756 of 2025 seeking recognition and enforcement of the First Award under the International Arbitration Act. That proceeding began in this Court’s Arbitration List before Stewart J.

60 On 11 July 2025, Owens J, in his Honour’s capacity as the then Commercial and Corporations Duty Judge, made an interim freezing order preventing Yulong from disposing of, dealing with, further encumbering or diminishing the value of any Australian asset of Yulong up to the unencumbered value of $3,587,749.67. Yulong has in that proceeding foreshadowed its intent to rely on the defence of sovereign immunity under the Foreign States Immunities Act.

61 Also on 11 July 2025, Owens J made orders setting a timetable to bring forward the inter partes determination of the freezing order and ancillary relief allowing time for Yulong to file its evidence. As at the date of the argument before me in this matter, that application was to be listed before the docket Judge to whom the proceeding is allocated on a date to be determined by the docket Judge.

The Second Award and this proceeding

62 Between June 2023 and April 2024, Qinao and Dahengqin and Yulong entered into 12 sales contracts under which Yulong agreed to purchase mineral resources from Qinao and Dahengqin (12 Sales Contracts). The 12 Sales Contracts also contained arbitration clauses nominating the Court of Arbitration as the choice of jurisdiction for dispute resolution.

63 On 3 January 2025, Qinao and Dahengqin commenced arbitration proceedings against, among others, Yulong at the Court of Arbitration seeking recovery of monies alleged to be owed to them by Yulong under the 12 Sales Contracts. A closed hearing was held at the Court of Arbitration on 11 April 2025 at which Qinao and Dahengqin and Yulong appeared and were represented by legal counsel.

64 On 3 June 2025, the Tribunal constituted under the Court of Arbitration rendered the Second Award in favour of Qinao and Dahengqin in the amount of approximately $112.6 million. Again, the award was rendered in RMB. It is this award that is relevant to the freezing orders that are the subject of these reasons. On 12 June 2025, Qinao and Dahengqin obtained a certificate of entry into force in relation to the Second Award.

65 As outlined at the outset of these reasons, on 15 July 2025, Qinao and Dahengqin filed the urgent application that came before me on an ex parte basis on 16 July 2025.

66 Although the First Award and the Second Award (and the proceedings commenced in relation to each of them) are different, there is considerable overlap between the parties. There are common facts that underpin the cause for concern in respect of dissipation of assets relied on as the basis for the freezing order applications in both proceedings. If a defence of sovereign immunity is raised, it will likely be raised in each of the proceedings and be based on the same contentions in relation to the status of Jinan Hi-Tech Holding as a Chinese government-owned entity or being relevantly related to a State-owned entity.

67 Against that background, I now turn to address the reasons why I was satisfied that Qinao and Dahengqin have a good arguable case on the Recognition Application, that there was a danger that the processes of the Court would be undermined, and that in all of the circumstances the relevant discretion ought to be exercised in favour of making a freezing order against Yulong. In reaching that conclusion, I was cognisant of the drastic nature of the remedy sought and that it should not be granted lightly.

Qinao and Dahengqin’s good arguable case

68 Qinao and Dahengqin relied on the proposed Recognition Application as a good arguable case for the purpose of their freezing order application. Qinao and Dahengqin clearly have a good arguable case on their Recognition Application. The rationale which underpins the International Arbitration Act is to enforce foreign awards where possible and appropriate in order to uphold contractual agreements entered into in the course of international trade: Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd [2011] FCA 131 at [126] (Foster J). It is a feature of applications to recognise and enforce foreign awards that, in all but the most unusual of cases, what is involved is in essence a summary procedure: IMC Aviation Solutions Pty Ltd v Altain Khuder LLC [2011] VSCA 248; 38 VR 303 at [3] (Warren CJ), cited with approval in Liaoning Zhongwang Group Co Ltd v Alfield Group Pty Ltd [2017] FCA 1223 at [11] (Gleeson J). Yulong has not commenced any proceeding to seek to set aside the Second Award in China or elsewhere and there was no obvious defect in the Second Award that would render it liable to be set aside. Relevantly, Yulong did not seek to challenge Qinao and Dahengqin’s submission that they had a good arguable case for recognition of the Second Award. Accordingly, I was satisfied that this element was established.

Risk of undermining the Court’s processes

69 Under r 7.32(2) of the Rules, Qinao and Dahengqin were required to demonstrate that there was a danger that a prospective judgment of the Court would be left wholly or partly unsatisfied because Yulong’s assets would be disposed of, dealt with or diminished in value. If Qinao and Dahengqin are successful in their application to have the foreign award recognised, they will be able to enforce the award as a judgment or order of this Court: s 8(3), International Arbitration Act. That being so, the question on this application is whether there arises a danger that the recognition judgment would be wholly or partly unsatisfied because Yulong has disposed of, encumbered or otherwise caused its assets to be put beyond the reach of Qinao and Dahengqin as judgment creditors in this Court. The process that they contended would be frustrated was the ultimate enforcement of the Second Award once recognised as judgment or order of this Court, pursuant to s 8(3) of the International Arbitration Act.

70 Yulong’s submissions on this issue were tenuous. Yulong submitted that the present circumstances were not within the purview of r 7.32(2) of the Rules because the relevant risk of frustration was not in respect of the Recognition Application simpliciter but rather in relation to the usual enforcement processes of this Court when utilised to enforce the recognition of the Second Award as a judgment or order of this Court. Yulong submitted that when one focusses on the relevant process of the Court that is said to be at risk of being frustrated, namely the Court’s enforcement processes, no relevant danger is established. Yulong said that is so because in its contention as a general proposition the enforcement processes of this Court “would not be exercised so as to stop a Chinese company from moving value – to adopt that terminology – to the home jurisdiction of an arbitration.” Further, Yulong said “the processes of this Court to execute upon an award when it’s a secondary jurisdiction … are not ordinarily properly exercised in relation to assets situate[d] in the home jurisdiction.” Yulong submitted that this was a point peculiar to the International Arbitration Act. In doing so, Yulong recognised that in granting the relief the Court acts in personam, not in rem, and accepted that it was theoretically possible that the Court would exercise its enforcement processes in the context of recognition proceedings but maintained that there would have to be exceptional circumstances before the enforcement processes of the Court would be properly available. Yulong gave the example of a “whack-a-mole scenario” as being such an exceptional circumstance.

71 Yulong submitted that its submission on this aspect was relevant to both whether Qinao and Dahengqin had established that there was a risk of the Court’s processes being undermined and to the Court’s exercise of discretion as to whether to grant relief. I did not accept Yulong’s submission. That submission was not supported by reference to either the Convention or the enactment of Australia’s obligations under the Convention in the International Arbitration Act, and in particular, was inconsistent with the clear terms of s 8(3) of that Act.

72 As I apprehended Yulong’s submission, it was to the effect that because this Court was performing the role of a “secondary jurisdiction” it would not be concerned about transactions that moved the value of assets to China, when China was the seat of the arbitration. Yulong contended that, in circumstances where the Second Award was enforceable in all jurisdictions in which the Convention applies, it would not give rise to a risk of this Court’s relevant processes being frustrated if the value of any assets moved between those jurisdictions. Yulong’s submission was to the effect that there was a relevant constraint on the Court’s discretion in relation to relief in the present application because the Court was being called on to act as an enforcing or secondary court, and not as a court of the seat of the arbitration. Yulong submitted that as a matter of power and also as a matter of discretion it would not be proper for the Court to grant a freezing order against Yulong when the effect of the underlying conduct was merely to reduce the value of assets in the secondary jurisdiction (being Australia) and enhancing through the provision of security Yulong’s recourse to funds in the seat of the arbitration, namely China. Yulong’s submission misrepresents the effect of the Convention, and does not properly address the fact that once an arbitral award is recognised under s 8(3) of the International Arbitration Act, it has effect as if it were an order of this Court and the party who has had the award recognised is entitled to enforce that award in this jurisdiction, as Qinao and Dahengqin propose to do here. Accordingly, I did not accept Yulong’s submission.

73 Relatedly, to the extent that Yulong submitted that on a balance sheet analysis the relevant security transactions did not reduce the value of Yulong’s assets, I do not accept that submission. That submission was predicated on conflating the separate corporate identity of Yulong and that of its Australian Subsidiaries, particularly Yuxin. Yulong appears to have resolved to cause its Australian Subsidiaries to provide security for Yulong’s debts for which those companies were not previously liable as sureties. For the Australian Subsidiaries to do that results in an increase in their liabilities which is not counterbalanced by any increase in their assets. A reduction in the net asset value of the shares in each NQM, Yurain, Auspin and Yuxin is likely to reduce the value of Yulong’s direct and indirect interest in each of those companies to the benefit of the Jinan Hi-Tech Holding and Jinan Hi-Tech Development, each of which is or was related to Yulong.

74 I now move to the chronology of events from which I drew the inference that a relevant risk of dissipation giving rise to a danger that the enforcement processes of this Court would be frustrated had been established at this interlocutory stage.

75 The following chronology is drawn from the evidence on this application which included a full copy of the Second Award as translated to English:

(1) on 1 July 2024, Yulong sent a letter to Qinao, requesting an extension of time to make payment. Yulong admitted the amount of outstanding payments and due dates under 10 of the 12 Sales Contracts, including nine of the sales contracts in issue on the second arbitration, and said that it would settle all amounts due for the goods and interest before 31 July 2024;

(2) from 28 June 2024 to 20 July 2024, Qinao sent five reminder letters to Yulong in succession regarding the outstanding payments under nine of the sales contracts involved in the second arbitration, urging Yulong to pay the outstanding payments as soon as possible. Yulong did not respond;

(3) on 7 August 2024, Qinao and Dahengqin’s lawyer sent a letter of demand to Yulong, urging it to make payment of the outstanding amounts as soon as possible;

(4) on 23 August 2024, Yulong replied acknowledging receipt of the letter of demand and once again acknowledged the outstanding goods payment under the relevant contracts. Yulong also stated that it would repay all the funds in September 2024;

(5) on 24 September 2024:

(a) Yulong proposed a payment plan in relation to the claims before the Court of Arbitration in relation to the 12 Sales Contracts; and

(b) on that very day, Yulong entered into the 2024 Jinan Hi-Tech Holding Security Deed under which it granted an “all present and after acquired property” security interest in relation to, amongst other things, its shares in its wholly owned subsidiary, Yuxin. The counterparty to that deed was Jinan Hi-Tech Holding which in Yulong’s submission was as a matter of Chinese law at that time a related party of Yulong. Under the 2024 Jinan Hi-Tech Holding Security Deed, Yulong is the grantor of security in respect of the Jinan Loans, a collection of loan agreements which it says it entered into as borrower and which are listed in Schedule 1 to that deed. As mentioned, none of those loan agreements were in evidence. The only evidence of the loan agreements is the listing of bare details in Schedule 1 of the 2024 Jinan Hi-Tech Holding Security Deed and Mr Webster’s evidence on instruction;

(6) by 28 October 2024, Yulong had made no substantial payment in respect of the debts that it had acknowledged. Qinao and Dahengqin sent a further letter of demand to Yulong again urging Yulong to pay all outstanding amounts with interest by 30 October 2024 at the latest;

(7) on 31 October 2024, Yulong issued a second Repayment Plan, again requesting an extension of the time for payment, and promising to pay in full by bank transfer all outstanding amounts and corresponding overdue interest under the relevant contracts before 31 December 2024;

(8) on 5 November 2024, the security interest granted by Yulong under the 2024 Jinan Hi-Tech Holding Security Deed was registered on the PPSR;

(9) on 6 November 2024, Qinao commenced arbitration proceedings in the Court of Arbitration in relation to the April 2024 Sales Contract (this being the proceeding that resulted in the making of the First Award);

(10) Yulong did not pay any of the outstanding amounts in relation to the claims in the second arbitral proceeding by 31 December 2024 (being the end date of its second proposed repayment plan);

(11) on 3 January 2025, Qinao and Dahengqin commenced arbitration proceedings in the Court of Arbitration that culminated in the Second Award;

(12) on 9 January 2025, the Court of Arbitration awarded the First Award in the amount of approximately $3.5 million in relation to the April 2024 Sales Contract;

(13) on 22 March 2025, Yulong announced its intention to seek delisting from the Shanghai Stock Exchange. The reason provided for seeking delisting was as follows:

Due to [Yulong’s] deteriorating operational performance, persistent cash flow difficulties, and significant business uncertainties, and in order to protect the interests of minority shareholders, in compliance with the Shanghai Stock Exchange Listing Rules and other relevant laws, regulations, and normative documents, [Yulong’s] controlling shareholder – [Jinan Capital] has proposed, and the Board of Directors has approved through deliberation, that [Yulong] intends to voluntarily withdraw its A-share listing from the Shanghai Stock Exchange via a shareholders’ resolution and apply for continued trading on the delisting sector of the National Equities Exchange and Quotations system …;

(14) on 14 May 2025, Qinao commenced proceeding NSD 756 of 2025 seeking to enforce the First Award;

(15) on 21 May 2025, Yulong announced the termination of its listing on the Shanghai Stock Exchange, with the delisting of Yulong’s stocks to take effect from 27 May 2025. Yulong’s shares were transferred to the National Equities Exchange and Quotations (NEEQ) which is designated for two-network companies and delisted companies;

(16) on 3 June 2025, the Court of Arbitration rendered the Second Award in the amount of approximately $112.6 million;

(17) on 12 June 2025, Qinao and Dahengqin obtained from the Court of Arbitration a certificate of entry into force in relation to the Second Award, which states that the Second Award was mailed to Qinao and Dahengqin on 4 June 2025 and to Yulong and the other respondent on 12 June 2025;

(18) by 12 June 2025, there is no suggestion that any security documentation had yet been entered into, the resolution of the Yulong board had not yet been passed, and the Yulong EGM had not been held. However, on 12 June 2025, financing statements recording “all present and after acquired property” security interests were registered on the PPSR in relation to security interests over the property of the Australian Subsidiaries. In addition, numerous other financing statements recording “financial property – investment instrument” and “intangible property – general intangible” security interests were registered on the PPSR in relation to Yuxin;

(19) similarly on 13 June 2025, although as at this date no security documentation had yet been entered into and related resolutions had not been passed, financing statements recording “all present and after acquired property” security interests were registered on the PPSR in relation to the Australian Subsidiaries. Financing statements recording “financial property – investment instrument” and “intangible property – general intangible” security interests were also registered on the PPSR in relation to Yuxin;

(20) on 20 June 2025, Yulong made three separate announcements to the Shanghai Stock Exchange, being announcement numbers 2025-006, 2025-007 and 2025-009 (together, the Announcements), translations of which were tendered in evidence before me by Qinao and Dahengqin. Each of the Announcements was endorsed to acknowledge that “[Yulong] and all members of its Board of Directors hereby guarantee that the contents of the Announcement are true, accurate and complete, and that there are no false records, misleading statements or material omissions, and shall bear individual and joint legal liabilities for the truthfulness, accuracy and completeness of its contents.”

(21) Announcement No. 2025-006 titled “Announcement on [Yulong's] Application for Loan Facility and Provision of Guarantee” relevantly said that:

(a) to meet the needs of daily operations and business development, Yulong proposed to enter into a new facility with Jinan Hi-Tech Development under which Jinan Hi-Tech Development had agreed to loan RMB 1.1 billion (approximately $233 million) to Yulong. Approximately RMB 327 million of which was said to have been loaned to Yulong as at that date “under this facility”;

(b) Jinan Hi-Tech Development had provided further loans totalling approximately RMB 300 million (approximately $63 million) to Yulong via other arrangements;

(c) Yulong “will sign a Guarantee Agreement with [Jinan Hi-Tech Development], intending to use the shares of [Yurain] and [Auspin] held by its wholly-owned subsidiary [Yuxin], as well as the relevant assets held by [Yuxin], [Yurain], [NQM] and [Auspin], to provide a pledge and mortgage guarantee for the [Yulong's] aforementioned RMB 1.1 billion loan facility and the previous RMB 300 million loan amount borrowed from [Jinan Hi-Tech Development], totaling [sic] RMB 1.4 billion of related debts”;

(d) Yulong and its Australian Subsidiaries would provide share and asset security in favour of Jinan Hi-Tech Development to secure repayment of the RMB 1.1 billion and RMB 300 million loans;

(e) under the subheading “II. Board Resolution”:

On 20 June 2025, the 27th meeting of the 6th session of the Board of Directors of [Yulong] reviewed and approved the Proposal on the Application for Loan Facility and Provision of Guarantee. All 7 directors attended and voted unanimously in favour of the proposal (7 votes for, 0 against, 0 abstentions). The Board acknowledged and approved retroactively the aforementioned loan arrangements and authorised the Company to enter into the Guarantee Agreement with [Jinan Hi-Tech Development]. This proposal is subject to approval at the general meeting of shareholders.

(Emphasis added.)

(f) the “key” or “main” terms of the loan agreement and the guarantee agreement were summarised;

(g) under the subheading “IV. Impact on [Yulong]”:

The loan is intended to support [Yulong’s] day-to-day operations and development needs. It is expected to facilitate business growth and will not have any adverse effect on [Yulong’s] normal operations or harm the interests of [Yulong] or its shareholders.

(h) the resolution of the board of Yulong was detailed under the heading “V. Documents for Inspection” – that document has not been adduced in this proceeding.

(22) Announcement No. 2025-007 titled “Announcement on Providing Counter-Guarantee for [Yulong’s] Guarantor and Related-Party Transaction” relevantly said that:

(a) in December 2022 and July 2024, Yulong signed the Yulong Facility Agreements (as defined in paragraph [42] above) with loan principals of RMB 540 million and RMB 180 million and with loan terms ending on 18 July 2025 and 19 December 2026 respectively. Jinan Hi-Tech Holding provided a guarantee for the Yulong Facility Agreements;

(b) Yulong intends to provide a counter-guarantee for Jinan Hi-Tech Holding with the shares of Yurain and the shares of Auspin held by its wholly-owned subsidiary Yuxin, as well as the relevant assets held by Yuxin, Yurain, NQM and Auspin;

(c) Yulong’s board “reviewed and approved” the “Proposal on Providing Counter-Guarantee for the Company's Guarantor and Related-party Transaction” at the board meeting on 20 June 2025;

(d) Jinan Hi-Tech Holding was identified as being controlled by state instrumentalities and as a controlling shareholder of Yulong within the past 12 months;

(e) the reason for Yulong to provide a counter-guarantee was that Jinan Hi-Tech Holding was said to have provided a guarantee for Yulong’s bank financing business in “the early stage” and Jinan Hi-Tech Holding no longer holds Yulong’s shares;

(f) the “counter-guarantee matters” were described as “the normal business needs” of Yulong, which had been reviewed and approved by a special meeting of Yulong’s independent directors before being reviewed and approved by the Yulong board of directors;

(g) the resolution of the Yulong board and the “Review Opinion” of the “Independent Directors’ Special Meeting” were listed as “Documents for Inspection”. These documents were not adduced in evidence before me;

(h) under the heading the “Impact on the Company”:

The above counter-guarantee arrangement is provided as a counter-guarantee for the guarantor of the company, Jinan Hi-Tech Holdings. The counter-guarantee risk is relatively small. This guarantee constitutes an associated guarantee. The associated directors have abstained from voting. It will not affect the independence of [Yulong], and there is no situation that damages the interests of [Yulong] and shareholders. It will not have an adverse impact on the normal operation and business development of [Yulong].

(23) Announcement No. 2025-009 titled “Announcement on Convening the Third Extraordinary General Meeting of Shareholders in 2025 (Online Voting Provided)” relevantly disclosed that:

(a) the EGM had been convened by Yulong’s board of directors for the purpose of six proposals which together comprised the matters to be considered at the meeting;

(b) the EGM was scheduled to be held on 18 July 2025 (relevantly at 4.30pm AEST);

(c) the proposals to be considered at the EGM relevantly included each of the following, which were noted to be special resolution proposals:

(i) Proposal 1: proposal changing the company name, a matter that Yulong had announced on 20 June 2025 on the NEEQ official website;

(ii) Proposal 5: proposal on applying for a loan facility and providing guarantee as per Announcement No. 2025-006 (see paragraph [75(21)] above), disclosed on 20 June 2025 on the NEEQ official website;

(iii) Proposal 6: Proposal on Providing Counter-Guarantee and Related Party Transaction as per Announcement No. 2025-007 (see paragraph [75(22)] above), disclosed on 20 June 2025 on the NEEQ official website;

(d) The “reference documents” for this announcement included the Yulong board resolution made on 20 June 2025, which was also referred to in the other Announcements and was not adduced in evidence. The other reference document was a document described as the “Resolution of the 15th Meeting of the 6th Board of Supervisors of Shandong Yulong Gold Co., Ltd.”, which was not in evidence, but which appears to relate to the other proposals listed for consideration at the EGM.

(24) on 25 June 2025, the Australian Subsidiaries entered into the 2025 Security Deeds pursuant to which they appear to have granted the security interests the subject of the registrations on the PPSR on 12 and 13 June 2025 and which were the subject of the special resolutions scheduled to be put to the EGM on 18 July 2025;

(25) on 1 July 2025, enforcement proceedings commenced in China in relation to the Second Award; and

(26) the EGM (which had been announced in the Announcements) was scheduled to take place on 18 July 2025 shortly after the conclusion of the inter partes hearing. At the EGM, resolutions were proposed, among others, for approval to enter into the proposed transactions.

76 Qinao and Dahengqin submitted that the proposed transactions outlined in the Announcements in effect provided a mechanism for Chinese entities with a controlling interest in Yulong to move the value of assets held by Yulong through its direct and indirect Australian subsidiaries outside of Australia and in this way denude the utility of the enforcement action that Qinao and Dahengqin have foreshadowed bringing in this Court, the first step in which is the Recognition Application.

77 Yulong submitted that it could contextualise the evidence that was led at the ex parte hearing and which supported the grant of the Interim Freezing Order with evidence that it acknowledged had not previously been available to Qinao and Dahengqin. Yulong submitted that the premise of the Interim Freezing Order was that Yulong “loses an award, and loses big time in a second award, and then lo and behold, all of these transactions get entered into, and security is provided”, but in actual fact, the 2025 Security Deeds although proximate in time to the Second Award were properly assessed as being in the nature of a refinancing in the ordinary course of business.

78 Yulong submitted that the proposed transactions outlined in the Announcements had already been entered into and were governed by Australian law. Yulong submitted that the relevant security arrangements were part of a refinancing of financing that had occurred in the period from 2022 to 2024. Yulong submitted that although the security arrangements were entered into shortly after the Second Award was made against Yulong for approximately $112.6 million, that was a matter of coincidence. In Yulong’s submission, the transaction should be seen as a refinancing of Yulong’s existing liabilities in the ordinary course of its business. Yulong submitted that the relevant encumbrances occurred well before the Second Award was made against Yulong. Yulong submitted that the security arrangements that were put in place involving the Australian Subsidiaries in 2025 did not support an inference that there was a real risk of dissipation that would endanger this Court’s processes.

79 Yulong’s evidence in relation to the 2022 to 2024 transactions said to form the background to the relevant 2025 Security Deeds was thin. Evidence was given on this topic by Mr Webster. It was premised on Mr Webster being instructed as to the matters to which he deposed. Mr Webster’s instructions are at the level of assertion and are not supported by documentary evidence supporting the facility agreements said to underpin the 2022 to 2024 financing transactions. Mr Webster deposed that K&L Gates were not able to obtain English translations of the 2022 to 2024 transactions. Instead, Mr Webster refers to secondary references to these transactions in each of the relevant 2025 Security Deeds. The secondary references are scant on detail. The information contained in Schedule 2 to each of the 2025 Security Deeds is highly generalised – it comprises English text interspersed with what appears to be Standard Written Chinese text. At the relevant time in 2025, there appears to have been a substantial undrawn limit available and/or a substantial increase in the committed funding that was pending approval by the EGM or otherwise undrawn. In the event that that additional funds were drawn, it would materially increase the actual (as opposed to contingent) exposure of the Australian Subsidiaries which had provided security. In the context of the timing of the 2025 Security Deeds following closely on the Second Award which was for a very substantial sum, I place little weight on the internal references to the alleged earlier transactions in the absence of some cogent direct evidence.

80 It is a curious feature of the evidence that is repeated in relation to all three of the relevant security deeds, that Yulong has adduced evidence of the security documents but not of the underlying loan agreements or of the resolution of its directors or the resolution to be put to the EGM. I infer from the whole of the evidence that the alleged underlying loans on which Yulong relies to justify the securities were documented. Given the sums involved and the secondary references to a variety of the relevant terms, it would be expected that the underlying loans and the overarching facilities would be documented. The inference that the loans and loan facilities were documented is supported by the secondary references, including Mr Webster’s affidavit and the Announcements, particularly Announcement No. 2025-006 which describes the RMB 1.1 billion loan facility between Yulong and Jinan Hi-Tech Development and that a “loan of RMB 327.3 million under this facility” had already been provided. I would infer both the facility and the RMB 327.3 million loan were documented. That inference is bolstered by the statement that future loans under this facility would not be the subject of “[s]eparate loan contracts”. The absence of direct evidence of the underlying loan documents when taken together with the intersection of the chronology of events in the arbitration proceeding is a matter which weighs strongly against Yulong’s submission that the securities are legitimate transactions in the ordinary course of its business and part of an unexceptional refinancing.

81 Yulong sought to explain the timing of the 2025 Security Deeds as being an independent event that was not connected to avoiding an enforcement proceeding in Australia in relation to the Second Award. I have explained my reasons for rejecting this submission.

82 Qinao and Dahengqin also relied on the delisting of Yulong from the Shanghai Stock Exchange, which was announced shortly after the First Award was rendered, as a factor concerning the risk of dissipation of assets. Qinao and Dahengqin submitted that the timing of the delisting process was highly unusual. On 22 March 2025, Yulong announced its intention to voluntarily withdraw its listing from the Shanghai Stock Exchange via a shareholders resolution in compliance with the Shanghai Stock Exchange Listing Rules. The rationale for the delisting was described in the announcement as due to Yulong’s “deteriorating operational performance, persistent cash flow difficulties, and significant business uncertainties, and in order to protect the interests of minority Shareholders”. On 20 May 2025, the Shanghai Stock Exchange resolved to terminate the listing of Yulong’s stocks. On 21 May 2025, Yulong announced the termination of its listing. Yulong’s shares were delisted on 27 May 2025, being within five trading days from the date of the announcement. As is evident from the Announcements, Yulong also was seeking to pass a special resolution to change its name at the EGM that was scheduled to take place on 18 July 2025. Coupled with the delisting, the name change is another matter which, when seen in the context of the arbitration proceedings, supports the inference that there is a relevant risk of dissipation.

83 Yulong also contended that I should not infer based on the Announcements that it was necessary, in the sense of being something in the nature of a condition subsequent, for the EGM to pass resolutions approving the transactions. Yulong relied on an English translation of its constitution which, at art 112, provided that certain types of transactions (including the proposed transactions outlined in the Announcements) were to be “submitted to the shareholders’ meeting for review after being reviewed and approved by the board of directors” (emphasis added). It submitted that the review function to be undertaken by the shareholders (as compared to the review and approve function undertaken by the board of directors) was consistent with its submission that the proposed transactions had already been approved and entered into and were effective regardless of the outcome of the EGM.

84 That submission invited me to conclude that, in circumstances where the proposed transactions had been approved and entered into, there was no relevant risk of dissipation of assets, and therefore no real risk of undermining the Court’s processes because Yulong and its Australian Subsidiaries had already entered into the relevant security transactions. I did not accede to that invitation for the following reasons.

85 The best evidence before me in relation to the role of the shareholders at the EGM was the Announcements. As noted above, the Announcements expressly noted that although the proposed transactions had been approved by the board of directors of Yulong, it remained “subject to approval at the general meeting of shareholders”. I therefore accepted for the purpose of this application that entry into the proposed transactions, and therefore that transaction taking effect, first required approval from the shareholders of Yulong. On the strength of the Announcements, it appears that the transactions were likely subject to a condition subsequent which required approval by the EGM.

86 It is not clear whether the minutes of meeting of the board of directors of Yulong on 20 June 2025, at which meeting the directors were said to have approved entry into the proposed transaction, would provide any clarification on this issue. As noted above, Yulong did not provide an English translation of the minutes from that meeting or the resolutions passed, despite Yulong successfully providing uncertified translations of various other documents (which were more peripheral to the application).

87 On the evidence before me, I was satisfied that Qinao and Dahengqin had established that there was a real risk that Yulong may dissipate or encumber its assets with the result that the enforcement processes of this Court were in danger of being frustrated. I did not accept Yulong’s submission that because in its contention the proposed transactions had already been concluded, there was no evidence from which a real risk of dissipation that would frustrate the processes of this Court could be inferred. That simply does not follow. It was clearly within Yulong’s ability to provide documentary evidence to support its contention that the EGM was no more than an elaborate form of shareholder notification. It did not do so. The resolution of Yulong’s board and the proposed resolution to be voted on at the EGM of Yulong were not adduced in evidence. The absence of these documents was conspicuous, particularly in the context of the clear language used in the Announcements made to the Shanghai Stock Exchange.

88 The coincidence of the steps taken to encumber the assets of Yulong’s direct and indirect Australian Subsidiaries relative to the course of the arbitral proceedings and the recognition proceeding in respect of the First Award in this Court was another feature of the evidence from which I inferred that there was a risk of dissipation in the requisite sense. So too, the registering of PPSR security interests well before the relevant securities were granted and the related board resolutions of the relevant parties to those securities were passed. I did not accept the submission made on behalf of Yulong that to register these interests on the PPSR at this time was in accordance with usual commercial practice. It was unusual. It was not satisfactorily explained in the evidence. The coincidence of the registrations with Qinao and Dahengqin obtaining from the Court of Arbitration a certificate of entry into force in relation to the Second Award weighed in favour of drawing an inference that requisite risk or danger exists. It was not satisfactorily explained in the evidence how the now secured parties believed on reasonable grounds that they did or were to hold that security interest so as to justify an early registration of a financing statement on the PPSR.

89 Yulong’s legal representative gave evidence on instructions and belief that in early July 2024, Jinan Hi-Tech Holding sold its shares in Yulong to Jinan Capital. Despite that disposition, Yulong maintained that as a matter of Chinese law, Jinan Hi-Tech Holding remained a “related party” of Yulong for a period of 12 month after the share disposition. That the security interests were granted in favour of entities that were or had hitherto been related to Yulong only compounds the unusual nature of the PPSR registrations.

Balance of convenience

90 For the following reasons, I was satisfied that the balance of convenience favoured the making of the 18 July Freezing Order, which will operate until further order of the Court.

91 First, in making the 18 July Freezing Order against Yulong, I was conscious that such an order is an extraordinary remedy that will inevitably cause prejudice to Yulong. Qinao and Dahengqin sought to emphasise that Yulong had not led any evidence of specific prejudice.  That may be so but in weighing the balance of convenience, I considered, as I have said, that given the nature of the order, some prejudice is inevitable. That prejudice is mitigated by the undertaking as to damages provided by Qinao and Dahengqin (see below), but it was nonetheless a relevant consideration.

92 Secondly, having considered the evidence at this interlocutory stage, I was satisfied that there was no alternative or less intrusive form of relief that would be appropriate in all of the circumstances.

93 Thirdly, the 18 July Freezing Order contains the usual carve outs for a freezing order of this nature, including that it does not prohibit Yulong from paying its proper legal expenses or prevent Yulong from dealing with or disposing of any of its assets in the ordinary and proper course of its business, including paying business expenses bona fide and properly incurred.

94 Fourthly, I was satisfied that the fundamental purpose for issuing a freezing order had been established, that is, to prevent the abuse or frustration of this Court’s process. In particular, I was satisfied at the interlocutory stage that the relevant chronology gave rise to an inference of a real risk that Yulong may dissipate or encumber its assets within the jurisdiction with the result that any enforcement processes of this Court are in danger of being frustrated.

95 Fifthly, Qinao and Dahengqin proffered the usual undertaking as to damages. Qinao and Dahengqin rightly acknowledged that the fact that they did not hold assets in Australia weighed against them on the balance of convenience. They nonetheless submitted that the strength of their application and that they were purporting to recover the Second Award outweighed any concern with regards to the adequacy of that undertaking. Relevantly, it was open to Yulong to apply to have the undertaking as to damages substantiated if it held a material concern with respect to its adequacy. Yulong did not do so, nor was the adequacy of the undertaking a matter that was pressed with any vigour at the Return Hearing.

96 Sixthly, Qinao and Dahengqin undertook to commence the Recognition Application within 14 days of the 18 July Freezing Order in accordance with r 7.01(3) of the Rules.

97 Seventhly, I was not persuaded by Yulong’s submission that the role of this Court as a “secondary jurisdiction” weighed against exercising the discretion in favour of granting the relief sought for the reasons I have given on this aspect of Yulong’s submissions in addressing the risk posed to this Court’s processes.

98 Finally, in determining that the balance of convenience weighed in favour of making the 18 July Freezing Order, I crafted the order so that if the freezing order is to be served on an Australian bank or financial institution, Qinao and Dahengqin must obtain leave of the Court. In making that reservation, I note that there was no suggestion in the evidence that Yulong operated any accounts with Australian banks or financial institutions. It is not necessary for the purpose of these reasons to address in detail why I made that reservation. Suffice to say my concern was that in practical terms, the manner in which an Australian bank may respond to a freezing order such as the present order in the context of the complex corporate structure and business operations in which Yulong is involved may result in unintended consequences. For that reason, as part of the balancing exercise, I concluded that if Qinao and Dahengqin seek to serve the 18 July Freezing Order on any Australian bank, they should seek leave to do so in the substantive proceeding when commenced.

Exercise of discretion

99 Having regard to the existence of the good arguable case, the very substantial potential liability to which Yulong is exposed and the evidence of the steps taken to encumber the assets of Australian companies of which Yulong is the holding company or the ultimate holding company relative to critical developments in the two arbitration proceedings, I decided that a freezing order should be made. Being satisfied in relation to the existence of the requisite factors which inform the making of a freezing order under r 7.32 of the Rules, and there being no lesser form of relief identified by Yulong which would militate against the danger that this Court’s processes would be frustrated, I concluded that it was in the interests of justice to make the 18 July Freezing Order.

CONCLUSION

100 For these reasons, on Qinao and Dahengqin giving the usual undertaking as to damages, I made orders in a form that departed from that proposed by Qinao and Dahengqin, but which in my view struck the appropriate balance between the parties’ competing interests and which should be sufficient in achieving the purpose to which the order was directed, namely preventing the risk of this Court’s processes being frustrated, without overreaching.

Associate:

Dated:    7 August 2025