Alert – The Supreme Court of Victoria enforces a Mongolian arbitral award under the New York Convention

The enforcement principles discussed by the UK Supreme Court in Dallah v Pakistan have been considered in a recent decision of the Supreme Court of Victoria, confirming the prediction expressed in our Alert from 25 November 2010.

In this instance, the Supreme Court of Victoria considered the enforcement of a Mongolian arbitral award under the New York Convention.

Altain Khuder LLC v IMC Mining Inc & Anor [2011] VSC 1

• Altain Khuder brought an application for the enforcement of a foreign arbitral award made by the Mongolian National Arbitration Centre at the Mongolian National Chamber of Commerce and Industry (Award) against IMC Mining Solutions Pty Ltd (IMC).
  
  
  
• The Award provided that IMC was liable to pay approximately US$6 million to Altain Khuder in relation to a dispute concerning compliance with the terms of an Operations Management Agreement (Agreement) in respect of the Tayan Nuur Iron Ore Project in Mongolia.
  
  
  
• The Agreement contained an arbitration clause and provided that the applicable law for the purposes of arbitration was Mongolian law. Notwithstanding that the Arbitral Tribunal had found IMC to be a party to the Agreement, in the proceedings before the Supreme Court of Victoria IMC claimed:
  
  
  • it was not a party to the Agreement and accordingly the Agreement was not binding on IMC;
    
    
  • the Tribunal had incorrectly selected and applied Mongolian law as the applicable law; and
    
    
  • enforcement of the award should therefore be refused.

The decision

Justice Croft held that the Award in favour of Altain Khuder was a final and binding award under Mongolian law and was capable of being enforced in Victoria under the New York Convention.

His Honour considered the UK Supreme Court's decision of Dallah v Pakistan and concluded that the decision did not permit the unconstrained reopening of issues which were before an arbitral tribunal. That case was distinguishable because while in Dallah v Pakistan the tribunal was required to determine the applicable law in deciding the question of jurisdiction, here the parties had specifically agreed that the law applicable to the Agreement for the purposes of the arbitration was Mongolian law.

The Court also considered this to be a case where the enforcing court, under common law principles, was bound by an issue estoppel as the Award had been tested and accepted in its home jurisdiction – the seat of arbitration. The evidence was that a court of Mongolia, a civil law jurisdiction, had been asked to verify the Award and had been satisfied by proper inquiry that the requirements of the Mongolian civil code had been made out. Accordingly, an issue estoppel arose and IMC was not entitled to re-litigate issues subject to the arbitration.