PT Bayan Resources TBK v BCBC Singapore Pte Ltd

The High Court has dismissed an appeal against a decision of the Court of Appeal of the Supreme Court of Western Australia regarding Mareva asset freezing orders and prospective foreign judgments and whether the WASC’s powers are inconsistent with the Foreign Judgments Act 1991 (Cth) by the operation of s 109 of the Australian Constitution. The appellant and respondent companies, incorporated in Indonesia and Singapore respectively, established a joint venture in another Indonesian company, PT Kaltim Supacoal (KSC). Following a dispute between the two companies over obligations under the joint venture deed (which is governed by Singaporean law), in late 2011 BCBCS commenced proceedings against Bayan in the High Court of Singapore for breach of contract. Those proceedings are still ongoing. Concerned that if it obtains judgment in the High Court of Singapore it will not be able to enforce that judgment against Bayan in Indonesia, BCBCS applied for a freezing order against Bayan in Western Australia in relation to its assets in Australia: a 57% stake in an Australian company, Kangaroo Resources Ltd (KRL), the second respondent. The rule at issue, Order 52A r 5(1)(b)(ii), provides that the Supreme Court may make an order against a prospective judgment debtor or third party if an applicant has ‘a good arguable case on an accrued or prospective cause of action justiciable in … another court’ if there is a ‘sufficient prospect that the other court will give judgment in favour of the applicant’ and a ‘sufficient prospect that the judgment will be registered in or enforced by the [Western Australian Supreme] Court’ (r 5(3)). Bayan contends that, insofar as the rule purports to empower the WASC to make a freezing order in anticipation of a judgment by a court outside Australia, the rule is invalid. The primary judge and WASCA on appeal held that O 52A was supported by the court’s inherent jurisdiction to ensure the ‘effective administration of justice’ and ss 16(1)(d)(i) and 167(1)(a) of the Supreme Court Act 1935 (WA), and by s 17 of the Foreign Judgments Act (and, if it were not, that O 52A would not be inconsistent with the Foreign Judgments Act due to s 109).

The Court unanimously dismissed the appeal. The joint judgment (French CJ, Kiefel, Bell, Gageler and Gordon JJ) held that the Supreme Court has the inherent power to make a freezing order with respect to a prospective judgment of a foreign court that would be registrable under the Foreign Judgments Act, within its authority to adjudicate conferred by s 39(2) of the Judiciary Act. Order 52A regulates that power, and is validly made under the Supreme Court Act and is not inconsistent with the Foreign Judgments Act: at [2]. On the inherent power of the Court, the joint judges noted that it was well established that Supreme Courts had powers to make orders that they deem appropriate ‘to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction’ (at [43]), and rejected Bayan’s submission that that jurisdiction is limited when a proceeding is commenced or imminent (see [44]ff): the order can be designed to protect  a ‘prospective enforcement process’, and can be contingent on in addition to the proceeding immediately before the court ([46]–[47]). As to federal jurisdiction, the joint judgment clarified that freezing orders in relation to prospective judgments of a foreign court that would then be registrable under the Foreign Judgments Act is a matter arising under a law of the Commonwealth because that process depends on the existence of the Foreign Judgments Act (see at [55]). Keane and Nettle JJ agreed with the conclusion and reasons of the joint judgment, but added further observations on why Bayan’s argument fails, first for taking a too broad a view of the scope of the Foreign Judgments Act (see [62]–[63]), and secondly for taking too narrow a view of the inherent power to grant freezing orders (see [64]ff).

High Court Judgment [2015] HCA 36  14 October 2015
Result Appeal dismissed
High Court Documents PT Bayan
Full Court Hearing [2015] HCATrans 181  10 August 2015
Special Leave Hearing [2015] HCATrans 57 13 March 2015
Appeal from WASCA [2014] WASCA 178 25 September 2014
Trial Judgment, WASC
[2013] WASC 239 26 June 2013
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About Martin Clark

Martin Clark is a PhD Candidate and Judge Dame Rosalyn Higgins Scholar at the London School of Economics and Political Science and Research Fellow at Melbourne Law School. He holds honours degrees in law, history and philosophy from the University of Melbourne, and an MPhil in Law from MLS. While at MLS, he worked as a researcher for several senior faculty members, was a 2012 Editor of the Melbourne Journal of International Law, tutor at MLS and various colleges, a Jessie Legatt Scholar, and attended the Center for Transnational Legal Studies Program.