Hankuk Carbon v. Energy World Corporation

Hankuk Carbon Co, Ltd v. Energy World Corporation Ltd

Nature of the proceedings:

International

Type of case:

Commercial Arbitration

Industry:

Metal

Manufacturing of fabricated metal products, except machinery and equipment

Date of introduction:

17 Dec 2020

Status of the case:

Concluded

Claimant’s country of origin:

South Korea

Respondent's country of origin:

Australia

Institution:

HKIAC (Hong Kong International Arbitration Centre)

Rules of arbitration:

HKIAC Administered Arbitration Rules 2018

Seat of arbitration:

Hong Kong

Documents of the case

• Final Award on Merits (Save as to Costs and Interest) - 19 Oct 2022
• Final Award on Costs and Interest - 3 Mar 2023
• Orders and Reasons for Judgment of the Federal Court of Australia [2024] FCA 232 - 12 Mar 2024
• Orders and Reasons for Judgment of the Federal Court of Australia [2024] FCA 366 - 12 Apr 2024

Updated at:

12 Mar 2024

Collected and published by Jus Mundi. HKIAC has not contributed to this publication.

HKIAC has not contributed to this publication.

Lawyers, other representatives, expert(s), tribunal’s secretary

• EN

Orders and Reasons for Judgment of the Federal Court of Australia [2024] FCA 232

ORDER MADE BY: STEWART J

DATE OF ORDER: 12 MARCH 2024

THE COURT ORDERS THAT:

1. Pursuant to s 8(3) of the International Arbitration Act 1974 (Cth), the applicant have leave to have the Final Award on Merits (Save as to Costs and Interest) dated 19 October 2022 (Merits Award) and the Final Award on Costs and Interest dated 3 March 2023 published and notified to the parties by Peter Yuen, Sole Arbitrator of the Hong Kong International Arbitration Centre, enforced as if they were judgments of the Court.

2. Judgment be entered for the applicant against the respondent in the amounts of:

(a) US$5,163,283.05 (damages for the Delivered and Undelivered Goods);

(b) US$1,625,081.25 (warehousing costs of the Undelivered Goods from 1 December 2017 to 12 March 2024);

(c) HK$2,321,691.16;

(d) US$459,026.38 (pre-award interest on damages for the Delivered Goods);

(e) US$1,046,419.17 (pre-award interest on damages for the Undelivered Goods);

(f) US$204,934.27 (pre-award interest on the damages for warehousing costs);

(g) US$165,343.01 (post-award interest on damages for Delivered Goods calculated to 12 March 2024);

(h) US$449,135.36 (post-award interest on damages for Undelivered Goods calculated to 12 March 2024); and

(i) US$177,073.08 (post-award interest on damages for warehousing costs calculated to 12 March 2024).

3. The applicant is entitled to damages for the further warehousing costs of the Undelivered Goods from 12 March 2024 to the date of payment at the rate of US$21,667.75 per month.

4. The applicant is entitled to interest on the money awarded in the Merits Award from the date of the Merits Award to the date of payment at the judgment rate pursuant to s 80(1) of the Hong Kong Cap. 609 Arbitration Ordinance from 12 March 2024 to the date of payment.

5. Interest be payable on the amounts owing under these orders at the interest rate prescribed by r 39.06 of the Federal Court Rules 2011 (Cth) from the date of judgment.

6. Pursuant to s 43(1) of the Federal Court of Australia Act 1976 (Cth), the respondent pay the applicant's cost of this proceeding as agreed or assessed.

7. Direct that the matter be listed as returnable on 12 April 2024 (Return Date).

8. Orders 1 to 6 of these Orders be stayed until 5:00 pm on the Return Date, or, if by 9 April 2024 the respondent files an application to set aside the orders, until the final determination of that application.

9. The applicant:

(a) Provide notice of these Orders to the respondent by 5:00 pm on Wednesday, 13 March 2024, and

(b) Inform the respondent that unless it files an application to oppose and set aside these orders by 9 April 2024, then upon an affidavit being provided establishing to the satisfaction of the Court that notice has been given to the respondent, the stay granted in Order 8 will expire.

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

STEWART J:

1.

The applicant, Hankuk Carbon Co Ltd, is a company incorporated in the Republic of Korea. It seeks orders for the recognition and enforcement of foreign arbitral awards against Energy World Corporation Ltd, an Australian registered company that is listed on the Australian Securities Exchange. The orders are sought pursuant to s 8 of the International Arbitration Act 1974 (Cth).

2.

At this stage, the applicant seeks orders on an ex parte basis as envisaged by r 28.14(4) of the Federal Court Rules 2011 (Cth). The applicant invokes the two-stage procedure provided for in the Commercial Arbitration Practice Note (CA-1).

3.

In January 2016, the applicant as seller and the respondent as buyer entered into a contract for the supply and delivery of goods, including insulation panels and stainless steel membranes to be used in the building of an LNG (liquefied natural gas) storage tank in the Philippines. The contract included an agreement that all disputes, controversies or differences which may arise between the parties out of or in relation to or in connection with the contract or for its breach shall be finally settled by arbitration.

4.

The applicant has produced a copy of the arbitration agreement in accordance with s 9(1)(b) of the Act. The applicant's solicitor has identified the agreement on affidavit and has confirmed on information and belief that it is a true copy of the arbitration agreement between the parties. On that basis, the agreement has been satisfactorily authenticated (s 9(2)(b)), but on the document being tendered it in any event amounts to prima face evidence of the arbitration agreement (s 9(5)). As the agreement is in English, no question of translation arises (s 9(3)).

5.

A dispute arose between the parties regarding the respondent's non-payment for completed shipments under the contract. The applicant claimed that the respondent had failed to pay for goods delivered under the contract, and that it had failed to accept other contracted-for goods, referred to as undelivered goods, which continued to be stored in a warehouse in Korea.

6.

The applicant commenced arbitral proceedings against the respondent by filing and serving a notice of arbitration dated 17 December 2020 pursuant to the 2018 Hong Kong International Arbitration Centre (HKIAC) Administered Arbitration Rules.

7.

That procedure ultimately produced two arbitral awards, a merits award dated 19 October 2022 and a costs award dated 3 March 2023. The applicant has produced copies of the awards in accordance with s 9(1)(a) of the Act. The applicant's solicitor has identified the copies on affidavit and has confirmed on information and belief that they are true copies of the awards. On that basis, the awards have been satisfactorily authenticated (s 9(2)(b)). The copies of the documents are in any event, on being tendered, prima face evidence of the awards (s 9(5)). The awards are in English.

8.

The merits award records that in its response to the applicant's notice of arbitration, the respondent agreed to adopt the 2018 HKIAC Rules for the conduct of the arbitration. The merits award also records that the parties agreed that "the legal place of the arbitration … shall be Hong Kong".

9.

By the merits award, the Tribunal ordered that the respondent pay the applicant:

(1) US$5,163,283.05 for the delivered and undelivered goods;

(2) warehousing costs at the rate of US$21,667.75 per month from 1 December 2017 up to the date of actual payment for the undelivered goods; and

(3) costs and interest to be determined.

10.

By the costs award, the Tribunal ordered that the respondent pay the applicant;

(1) HK$2,321,691.16 for costs and expenses of the arbitration;

(2) simple interest on the amounts awarded in the merits award at 1% above prime based on HSBC's Best Lending Rate in Hong Kong as at the date of the merits award;

(3) pre-award interest:

(a) on damages for the delivered goods accruing from specified dates for different shipments until the date of the merits award;

(b) on damages for the award in relation to the undelivered goods from 16 July 2018 until the date of the merits award and on the monthly warehousing costs from 1 December 2017 until the date of actual payment for the undelivered goods.

11.

On the basis of the above, I am satisfied that the applicant and the respondent were parties to the arbitration agreement, that the arbitration was convened pursuant to that agreement and that the applicant and the respondent are the parties to the merits award and the costs award.

12.

The applicant has produced evidence of the applicable interest rates and it has calculated the amounts payable for interest in accordance with the award. I am satisfied that the relief that it seeks is in accordance with the awards.

13.

For completeness it may be mentioned that the respondent brought proceedings at the seat of the arbitration, ie in Hong Kong, to set aside the awards but it was unsuccessful; its proceeding was dismissed. It was also denied leave to appeal. On the evidence, the awards are final in the sense that they are no longer subject to any revision or variation by the Tribunal, and they are also no longer subject to recourse at the seat.

14.

There is no apparent reason why the awards might not be enforced, with reference to ss 8(5) and (7) of the Act. Also, I am satisfied that this is an appropriate case for the two-stage procedure to be followed.

15.

The applicant seeks judgment in its favour for the various amounts awarded, and for the judgment to then be stayed. It further seeks that the stay of the judgment will expire if the respondent does not file an application to oppose and set aside the judgment within 28 days of being given notice of the orders.

16.

That form of order in the two-stage process already referred to, in entering judgment and then staying that judgment to give the respondent the opportunity to apply to set it aside, is slightly different from the form of order more commonly made in this Court. The more common form of order is to give the respondent notice that unless it files an application to oppose the making of orders to enforce the relevant award within a specified time, orders enforcing the judgment will be made. See StoneX Financial Inc v Ambrose[2023] FCA 1568 as an example.