The driver, the racing team, the Grand Prix and the court - high-speed arbitration enforcement in the Victorian Supreme Court

In brief

In just over a week of fast-paced litigation, the Supreme Court of Victoria acted quickly and decisively to enforce an international arbitration award. Partner Duncan Travis and Associate Christopher Holland report on the litigation between Dutch driver Giedo van der Garde and Formula One racing team Sauber Motorsport AG, which was settled on the eve of the Australian Grand Prix.

What it means for you

• In just over a week, the Supreme Court of Victoria heard and resolved an application for enforcement of a Swiss arbitral award, an appeal against that decision, and commenced the hearing of contempt of court proceedings. The court showed that it can operate to protect legal rights in a remarkably short timeframe.
• The trial judge and the Court of Appeal dealt with the application to enforce the Swiss arbitral award in a robust and practical way. The court's decisions at first instance and on appeal reflect a preparedness to enforce an international arbitration award on its terms, consistent with the objects of the International Arbitration Act 1974 (Cth) (the Act).

Background

In January 2014, Mr van der Garde joined Sauber as its official reserve and test driver. He claimed that, in June 2014, he was guaranteed a position as one of Sauber's two nominated drivers for the 2015 Formula One season. In November 2014, he was informed by Sauber's chief executive officer that he would no longer be named as a driver for Sauber in 2015.

Mr van der Garde commenced arbitration proceedings against Sauber under the auspices of the Swiss Chambers' Arbitration Institution. On 2 March 2015, the sole arbitrator released a partial award (the award), ordering Sauber to:

…refrain from taking any action the effect of which would be to deprive Mr. van der Garde of his entitlement to participate in the 2015 Formula One Season as one of Sauber's two nominated race drivers.

On 5 March 2015, Mr van der Garde (and his management company) filed an application in the Supreme Court of Victoria to enforce the award in Australia. The court granted leave to the two named drivers for Sauber – Marcus Ericsson and Luiz Felipe de Oliveria Nasr (the other drivers) – to be represented and heard. They had not been parties to the arbitral proceedings.

The enforcement application

The application was heard by Justice Croft on 9 March 2015. His Honour delivered judgment on 11 March 2015, making orders enforcing the award.¹

Several arguments were advanced against enforcement, and rejected by Justice Croft:

• Sauber contended that Mr van der Garde did not have a personal contractual right enforceable against it (the contracting party being his management company), so the award went beyond the scope of the matters referred to arbitration. Justice Croft held that the relevant contractual arrangements were intended to facilitate Mr van der Garde's involvement as a driver for Sauber, and his rights were within the scope of the submission to arbitration.
• The other drivers argued that the dispute was not capable of settlement under s 8(7)(a) of the Act, because they were not involved in the arbitration and would be prejudiced. His Honour held that the provision referred to disputes where 'for reasons of public policy, jurisdiction is retained exclusively by national courts'.²  This was not such a case.
• Sauber and the other drivers argued that enforcement would be contrary to public policy, under s8(7)(b) or 8(7A)(b) of the Act. The principal argument was that there had been a breach of the rules of natural justice because the arbitrator had made findings not contended for by either party, and because the other drivers had not been heard in the arbitral proceedings. Justice Croft rejected these arguments, noting that arbitral proceedings are necessarily inter partes. Sauber's argument that enforcement would be futile was rejected on the footing that the court would impermissibly intrude upon the merits of the arbitrator's decision.

The appeal

Sauber appealed on 11 March 2015, and the appeal was decided on 12 March 2015. The Victorian Court of Appeal (comprising Justices Whelan, Beach and Ferguson) granted leave to appeal but dismissed the appeal.³ The Court of Appeal found no error in Justice Croft's approach.

The contempt proceedings

On 12 March 2015, Mr van der Garde issued an application seeking to force Sauber to comply with the court's orders and permit him to drive. His application sought a declaration that Sauber was guilty of contempt, that the team's CEO, Monisha Kaltenborn, be punished for contempt by imprisonment or a fine, and that sequestrators be appointed and permitted to seize Sauber's assets until Sauber complied with the orders. The argument before the court on 13 March 2015 focused on the alleged failure of Sauber to 'complete the paperwork' that would enable Mr van der Garde to race.

On the morning of 14 March 2015, the parties settled the dispute. Mr van der Garde gave up his claim to race in the Australian Grand Prix – allowing the other drivers to race for Sauber. 

Conclusions

This case provides a high-profile and practical example of the benefits of international arbitration, under which Mr van der Garde was able quickly to enforce his arbitral award in Australia. The decisions of the Supreme Court of Victoria and the Court of Appeal will enhance Australia's reputation as a jurisdiction prepared to facilitate the recognition and enforcement of international arbitration awards.

It remains to be seen how Sauber and Mr van der Garde will resolve their dispute in relation to the remainder of the 2015 Formula One season, with the Malaysian Grand Prix commencing on 27 March 2015.