In brief
The High Court of Australia recently upheld the Western Australian Court of Appeal's decision allowing for the WA Supreme Court to make freezing orders for a prospective judgment in Singapore. The core of the decision was a finding that the federal jurisdiction of state Supreme Courts to register overseas judgments under the Foreign Judgments Act is accompanied by an inherent power to make freezing orders in relation to a prospective judgment that, once made, may be registered under that Act. Partner Marshall McKenna and Associate Katie Gardiner report.
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How does it affect you?
- Parties seeking to preserve assets in relation to legal proceedings outside Australia can seek a freezing order within Australia on the basis that a prospective judgment in that overseas proceeding would be registrable under the Foreign Judgments Act 1991 (Cth).
- In order to obtain a freezing order, a party must still satisfy the requirements of the relevant Supreme Court Rule that governs the making of freezing orders in that jurisdiction.
The facts
BCBC Singapore Pte Ltd (BCBC) commenced proceedings in the High Court of Singapore against PT Bayan Resources TBK (Bayan) in relation to a dispute arising out of a joint venture agreement between the two parties.
BCBC sought and obtained freezing orders from the WA Supreme Court against Bayan and Kangaroo Resources Limited (KRL), an Australian company in which Bayan owned shares.
Bayan and KRL then commenced a separate proceeding under the original jurisdiction of the High Court of Australia seeking declaratory relief that the freezing orders made by the Supreme Court were beyond its power.
The High Court remitted the application for declarations to the Supreme Court, where it was heard before Justice Le Miere at the same time as an application brought by BCBC to continue the freezing orders. His Honour declined to make the declarations sought, continued the freezing order against Bayan and discharged the freezing order against KRL. The continued freezing orders prohibited Bayan from dealing with its shares in KRL in a number of ways (transferring them to a related entity, encumbering them, or disposing of, dealing with or otherwise reducing their value) without first notifying BCBC and its solicitors.
Relevantly, Justice Le Miere found that there was a material risk that any judgment emerging from the High Court of Singapore would be unsatisfied due to the fact that, aside from its shares in KRL, all of Bayan's assets were located in Indonesia, and Indonesian law would not execute a money judgment from the High Court of Singapore.
After unsuccessfully appealing to the WA Court of Appeal, Bayan obtained leave to appeal to the High Court of Australia.
The decision
The High Court unanimously held that:
- making the freezing order was within the jurisdiction of the WA Supreme Court; and
- the freezing order was consistent with the scheme in the Foreign Judgments Act.
Chief Justice French and Justices Kiefel, Bell, Gageler and Gordon did not find it necessary to revisit the scope of the inherent power of a Supreme Court and noted that it was 'well established' that the inherent power of the Supreme Court would extend to orders appropriate 'to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction' and that a freezing order was an accepted example of such an order.
The parties accepted that the Foreign Judgments Act vests federal jurisdiction to the Supreme Court to register judgments of overseas courts and therefore enable such judgments to be enforced. The making of a freezing order in relation to such a judgment was considered by the majority to be within the inherent power of the Supreme Court, and there was nothing in the Foreign Judgments Act that could prevent the Supreme Court from doing so.
Further, the majority noted that freezing orders are designed to protect 'a prospective enforcement process'. It was no impediment to the making of an order that the High of Court of Singapore had not yet handed down a judgment in favour of BCBC or that such judgment had not yet been registered by the Supreme Court in accordance with the Foreign Judgments Act.
Justices Nettle and Keane accepted the reasons for the majority's decision and made further observations in relation to scope of the Foreign Judgments Act and the inherent power of the Supreme Court to make a freezing order.
It therefore follows that freezing orders can be made in relation to assets of a company in Australia in relation to overseas proceedings, provided that the prospective judgment is registrable under the Foreign Judgments Act and the usual criteria for such an order are established.