High Court refuses enforcement of partial award due to missing separate order for disputed sum.

Neutral Citation Number: [2001] IEHC 369

THE HIGH COURT

COMMERCIAL

2011 19 MCA

IN THE MATTER OF THE ARBITRATION ACT 2010, AND

IN THE MATTER OF AN ARBITRATION BETWEEN

DANISH POLISH TELECOMMUNCATION GROUP I/S

APPLICANT

AND

TELEKOMUNIKACJA POLSKA S.A.

RESPONDENT

JUDGMENT of Ms. Justice Finlay Geoghegan delivered on the 6th day of October, 2011

1. Danish Polish Telecommunication Group I/S (“DPTG”) seeks recognition and enforcement of an international arbitral award pursuant

to Article 35(1) of the UNCITRAL Model Law on international commercial arbitration (“the Model Law”) given force of law in the State

by s. 8 of the Arbitration Act 2010.

2. The Award sought to be recognised and enforced is the corrected Award set out in the dispositive section of the addendum dated

2nd November, 2010, and will, in this judgment, be referred to as “the Partial Award”. Nothing turns on the fact that it is a corrected

Award.

3. The Partial Award obliges Telekomunikacja Polska SA (“TPSA”) to pay the principal amount of DKK1,998,422,812.00

(€268,052,448.00). Further paragraphs of the Partial Award require payment of interest and costs.

4. The Partial Award was made in an arbitration which took place in Vienna, Austria pursuant to the UNCITRAL Arbitration Rules and

commenced in 2001. The Partial Award is an award made in respect of the first phase of the arbitration which deals with the first

period of relevant time (February 1994 to June 2004). It is common case that it is an award which may be the subject of recognition

and enforcement in the State pursuant to Article 35 of the Model Law unless recognition and enforcement is refused pursuant to

Article 36.

5. For the purposes of this judgment, the background to the dispute need only be briefly recorded. The dispute to which the

arbitration relates concerns a contract in writing of 17th April, 1991, between Polish Foreign Trade Company ELECTRIM S.A., acting on

behalf of the Polish PTT, and DPTG in relation to the construction in Poland of the North/South Link Optical Fibre System. TPSA is the

legal successor of the Polish PTT under the NSL contract.

6. A dispute arose between DPTG and TPSA regarding the amounts owed by TPSA pursuant to the revenue sharing provision in clause

8 of the NSL contract. Article 15 of the NSL contract provides for the settlement of disputes by arbitration in accordance with the

UNCITRAL Arbitration Rules, as follows:

“Article 15.

DISPUTES. APPLICABLE LAW.

1. Any dispute and/or difference between the Partie which could not be settled in an amicable way shall be finally settled,

without the recourse to the common courts of Law, by the arbitration in accordance with the UNCiTRAL Arbitration Rules.

The place of arbitration shall be Vienna, Austria. The language of the proceedings shall be English. The number of

arbitrations shall be three. The appointing authority shall be the President of the Federal Economic Chamber, Vienna,

Stubenring 12, Austria. The award of the arbitration shall be final and binding and the Parties agree to fulfil it voluntarily.

2. The Austrian Law shall apply to this contract. If any issue in question is covered by the International

Telecommunication Convention to which both Denmark and Poland are members, then this Convention will be

correspondingly applied.”

7. Three arbitrators were appointed in purported compliance with article 15. There have been changes to the composition of the

Arbitral Tribunal and two changes of chairman. The first phase of the arbitration has been lengthy and exceedingly complex. The

reasoned Partial Award dated 24th August, 2010, comprises 1,050 paragraphs. There were further hearings subsequent to the delivery

of that Award and the addendum delivered on 2nd November, 2010.

8. By proceedings issued in the Commercial Court of Vienna, Austria on 2nd December, 2010 (“the Austrian proceedings”), TPSA seeks

to challenge the Partial Award and requests that it be set aside. Those proceedings are being vigorously defended by DPTG. They are

relevant to the issues to be determined in this application.

9. This application commenced by originating notice of motion on 26th January, 2011, grounded on affidavit. It was admitted to the

Commercial List and case managed by directions in the usual manner. Further affidavits were filed by both parties and lengthy expert

opinions exhibited both in relation to the UNCITRAL rules and in relation to Austrian law, including the prospect of success and failure

of the Austrian proceedings. The Austrian experts expressed differing views on aspects of Austrian law, its application to the Austrian

proceedings and the probable outcome of the Austrian proceedings.

10. Prior to a directions hearing before Kelly J. on 3rd June, 2011, it appears that the parties agreed that the same approach should

be taken at the hearing of the application for recognition and enforcement herein to the disputes in relation to Austrian law, as had

been taken in relation to foreign law disputes in proceedings heard and determined by Kelly J. in Brostrom Tankers AB v. Factorias

Vulcano SA [2004] 2 I.R. 191. That was an application to enforce a New York Convention award in an international arbitration

pursuant to s. 7 of the Arbitration Act 1980. In the affidavits filed in those proceedings, there was conflict between Spanish and

Norwegian lawyers on questions of Spanish and Norwegian law. The approach suggested by Kelly J. and adopted by the parties in

those proceedings is recorded by Kelly J. in his judgment at p. 196 in the following terms:-

“Without, therefore, deciding any of these vexed questions of foreign law, I am now going to decide whether, even if they

were all decided in favour of the defendant, it would provide a basis for refusing enforcement of the award.

If I decide that it would, I will then have to hear the cross-examination of the foreign lawyers and decide whether as a

matter of fact the plaintiff or the defendant's experts are correct in their opinions as to the relevant legal questions.

If I decide to the contrary, then the matter is at an end. That is so because, even with all of the foreign legal questions

decided in favour of the defendant, it would not provide a basis for refusing enforcement under s. 9(3) of the Act of

1980.”

11. Unfortunately, what appears to have been overlooked by the parties in these proceedings at the time that they decided to adopt

this approach (which, may often make sense in relation to a decision on enforcement or refusal of enforcement), was that in these

proceedings, unlike in the Brostrom proceedings, TPSA seeks, in the alternative, an adjournment pursuant to Article 36(2) of the

Model Law pending the determination of the Austrian proceedings. Unfortunately, the potential complication of the Brostrom approach

to the adjournment application only became apparent towards the end of the hearing. It was decided between the parties that I

should hear the application, including the application for the adjournment upon the basis of the Brostrom agreement. Nevertheless,

counsel for TPSA submitted, at all times, that it was not necessary for this Court to actually determine questions of Austrian law for

the purposes of the adjournment application. I will refer to this further below.

Legislative Framework

12. Articles 35 and 36 of the Model Law govern the issues which must be determined on this application. They provide:

Article 35. Recognition and enforcement

(1) An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon

application in writing to the competent court, shall be enforced subject to the provisions of this article and of article 36.

(2) The party relying on an award or applying for its enforcement shall supply the original award or a copy thereof. If the

award is not made in an official language of this State, the court may request the party to supply a translation thereof

into such language.

Article 36. Grounds for refusing recognition or enforcement

(1) Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused

only:

(a) at the request of the party against whom it is invoked, if that party furnishes to the competent court where

recognition or enforcement is sought proof that:

(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not

valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country

where the award was made; or

(ii) the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the

arbitral proceedings or was otherwise unable to present his case; or

(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or

it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on

matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains

decisions on matters submitted to arbitration may be recognized and enforced; or

(iv) the composition of the Arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the

parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(v) the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in

which, or under the law of which, that award was made; or

(b) if the court finds that:

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or

(ii) the recognition or enforcement of the award would be contrary to the public policy of this State.

(2) If an application for setting aside or suspension of an award has been made to a court referred to in paragraph (1)(a)

(v) of this article, the court where recognition or enforcement is sought may, if it considers it proper, adjourn its decision

and may also, on the application of the party claiming recognition or enforcement of the award, order the other party to

provide appropriate security.”

13. There is substantial agreement between the parties on the proper approach of the Court to the construction and application of

these provisions. Most importantly, they indicate a pro-enforcement policy and should be so construed. Article 36 sets out

exhaustively the grounds upon which recognition and enforcement may be refused and it appears to be common case in accordance

with the authorities that those grounds should be construed restrictively. The public policy referred to in Article 36(1)(b)(ii) is that of

Ireland.

14. In summary, TPSA contends that this Court ought to refuse recognition or enforcement of the Partial Award in this jurisdiction

upon the basis that:-

(i) TPSA was unable to present its case (Article 36(1)(a)(ii) of the Model Law);

(ii) the composition of the Arbitral Tribunal and/or the arbitral procedure were not in accordance with the agreement of

the parties or, failing such agreement, with the law of Austria (Article 36(1)(a)(iv) of the Model Law);

(iii) it would be contrary to the public policy of Ireland to recognise or enforce the Partial Award (Article 36(1)(b)(ii)). The

factual basis of this ground is similar to those of (i) and (ii). It was submitted that an opportunity to present one’s case

to an independent Arbitral Tribunal forms part of the public policy in Ireland.

15. TPSA seeks, in the alternative, that the Court exercise its power under Article 36(2) to adjourn the decision on recognition or

enforcement of the Partial Award pending the determination of TPSA’s Austrian proceedings. Whilst its primary submission was that

this Court should first determine (in its favour) the issues raised by the substantive defences of TPSA to the application for

recognition or enforcement, it also submitted that on a proper construction of Article 36, it is open to the Court to determine that it

should adjourn its decision on the application for recognition and enforcement and the defences raised thereto pending the

determination of the Austrian proceedings.

16. DPTG, in summary, submits that:-

(i) Each of the grounds relied upon by TPSA pursuant to Article 36(1) are without foundation;

(ii) that this Court should refuse the application for adjournment pending the determination of the Austrian proceedings. It

submits that the expert opinions of TPSA’s Austrian lawyers, when properly analysed, do not establish reasonable or

substantial grounds in favour of TPSA succeeding to set aside the Partial Award in the Austrian proceedings;

(iii) DPTG submits that if this Court were to exercise its discretion to adjourn its decision on recognition and enforcement

pending a determination of the Austrian proceedings, that it should now

(a) make an order for the recognition and enforcement of part of the Partial Award; and

(b) should make an order requiring the provision of security.

Austrian Proceedings

17. The parties appear to be in agreement that the jurisdiction of the Austrian Courts to set aside the Partial Award is governed by s.

595.1 of the former Austrian Code of Civil Procedure (“the CCT”). This provides:-

“1. The award shall be set aside,

(1) if an arbitration agreement according to Section 577 does not exist, if the arbitration agreement has become

invalid before the making of the award or ceased to have effect for the particular case or if a party was unable to

conclude the arbitration agreement because of its status;

(2) if the party applying to have the award set aside was unable to present its case in the proceedings before the

arbitrators or if required by statute to be represented by an agent or guardian was not so represented in those

proceedings unless in the latter case the procedure has been subsequently properly ratified;

(3) if statutory or contractual provisions regarding the composition of the arbitral tribunal or the method of

reaching a decision have been infringed or if the original of the award has not been signed in accordance with the

provisions of Section 592(2);

(4) if a challenge to an arbitrator has been rejected unjustifiably by the arbitral tribunal;

(5) if the arbitral tribunal dealt with matters beyond those referred to it;

(6) if the award is incompatible with the basic principles of the Austrian legal system or if it infringes mandatory

provisions of the law, the application of which cannot be set aside by a choice of law of the parties even in a case

where a foreign contact according to Section 35 of the International Private Law Act is involved;

(7) if the conditions are present in which a request can be made under Section 530(1) figures 1 to 7 for a Court

judgment to be set aside and the case re-opened.”

18. Dr. Christian Aschauer, a lawyer representing TPSA in Austria, summarises at para. 36 of his first affidavit, the principal grounds in

the Austrian proceedings:-

“36. Below is a synopsis of the fundamental defects in the Award that make up the principal grounds for setting aside in

the Austrian Setting Aside Proceedings, along with the Austrian statutory grounds for the setting aside of the Award:

(a) The Award violates the prohibition of arbitrariness and thus also contradicts the basic principles of the Austrian legal

system (section 595 paragraph 1(6) of the CCP);

(b) The value of DPTG’s performance – DKK 126,369,487 (approximately €17 million) – is in such a gross disparity to the

alleged payment claim of DPTG – approximately DKK 4,600,000,000 (approximately €616 million) (which consists of the

amounts for Phase 1, Phase II and the amounts already paid by TPSA in the past) – that this amounts to usury under

Austrian law by reason of the lack of proportionality between the two sums and therefore must be considered a violation

of the basic principles of the Austrian legal system (section 595 paragraph 1(6) of the CCP);

(c) TPSA was unable to present its case (section 595 paragraph 1(2) of the CCP);

(d) The Tribunal dealt with matters beyond those referred to it by applying section 273 of the CCP (section 595 paragraph

1(5) of the CCP);

(e) The Tribunal was not properly composed when passing its decision, and TPSA’s challenges to the members of the

Tribunal were unjustifiably rejected, which means that, pursuant to section 595 paragraphs 1(3) and 1(4) of the CCP, the

Award has to be set aside.”

Dr. Aschauer, in his first affidavit in relation to each of the above grounds, expresses a view there is either, “at least a seriously

arguable case” or a “serious likelihood” that the Partial Award would be set aside by the Austrian Courts.

19. In response, Mag. Florian Haugeneder, a lawyer acting for DPTG in Austria, has sworn an affidavit in which he exhibits a detailed

joint legal opinion from Dr. Paul Oberhammer and Dr. Walter H. Rechberger, both highly renowned experts in the field of Austrian

arbitration and civil law. He summarises those opinions as confirming, “that no good legal basis exists for setting aside the Award”.

20. In response, the second affidavit of Dr. Christian Aschauer exhibits legal opinions in relation to the Austrian proceedings, one each

from Professor Gert Iro from the University of Vienna; Professor Marianne Roth from the University of Salzburg and Professor Bernd-

Christian Funk from the University of Vienna. Each of these persons appears to be a leading expert in Austrian civil and constitutional

law. Those opinions deal with different aspects of the challenge in the Austrian proceedings.

21. Following the order of the grounds set out at para. 36 of the first affidavit of Dr. Aschauer, the views expressed by the experts

may be shortly summarised as follows.

22. Dr. Roth, at paras 171 to 175 inclusive, of her opinion, sets out her understanding of the principles relating to the contention that

the Award violates the prohibition of arbitrariness and, thus, also contradicts the basic principles of the Austrian legal system (s.

595(1)(6) CPC) and concludes at para. 175:

“175. The interpretation of the revenue sharing clause by the Arbitral Tribunal results in a Partial Award that is

unjustifiable and “objectively untenable” in light of the generally recognized principles of interpretation and therefore

results in an arbitrary decision that is to be set aside according to §595/1 (6) CPC.”

23. All three experts express an opinion in relation to ground (b) that the NSL contract, as interpreted in the Partial Award, is usurious

and in violation of fundamental principles of Austrian law within the meaning of s. 595(1)(6) CPC. The prohibition on usuriousness

appears to be contained in s. 879 of the Austrian Civil Code. Professor Iro, in his opinion, deals exclusively with this question and in

the most detail. At para. 133, he concludes:

“133. Thus, the conditions to assume that the NSL Contract, as interpreted by the Arbitral Tribunal, is usurious and a

violation of fundamental principles of Austrian law within the meaning of § 595, para. 1, no. 6 (old version) of the Austrian

Code of Civil Procedure, are clearly fulfilled.”

24. Professor Roth, in her opinion, expresses agreement at para. 98 with Professor Iro:

“. . . that the prohibition of usury is of a public policy character because it has the purpose of protecting the society and

its legal principles from the abuse of private autonomy.”

She then concludes at para. 99 on this issue:

“99. Therefore, the violation of the prohibition of usury is a violation of the public order and in case of arbitral awards

such a violation requires the setting aside of the award according to § 595/1 (6) CPC as well as a refusal to recognise and

enforce the arbitral award respectively. In the present case the delivery of DPTG and the awarded sum is of such flagrant

imbalance that the Partial Award constitutes a violation of the Austrian basic values and, accordingly, is to be set aside.”

25. Professsor Funk, at para. 24 of his opinion, expresses the opinion that:

“The prerequisites to a finding of usury under sec. 879(2)(4) Austrian Civil Code have likewise been met.”

26. Professor Roth discusses the ground based upon the allegation that TPSA was unable to present its case to the Arbitral Tribunal

in sections F.2 (paras. 120 to 138) and H. (paras. 176 to 193) of her opinion. At paras. 121 and 122, she summarises her view of the

present position in Austrian law in relation to setting aside an award pursuant to s. 595(1)(2) of CPC:

“121. According to §595/1 (2) CPC an award must be set aside if the party requesting the setting aside of the award was

not granted the right to be heard in the proceedings before the arbitrators. Therefore, violation of the right to be heard is

a ground for setting aside an award. The Austrian Supreme Court established with its RS0045092 a restrictive approach.

Accordingly, the arbitral award will only be subject to challenge where the parties were not granted their right to be heard

at all.

122. However, this approach has been heavily criticized by legal commentators. In terms of standards of Article 6 ECHR

the approach of the Austrian Supreme court appears outdated.”

Her conclusion on the alleged failure of the Arbitral Tribunal to give TPSA an opportunity to be heard in relation to the proposed

application of s. 273(1) CPC, is set out at para. 138:

“138. Therefore, the only proper way to eliminate the remaining uncertainties would have been to obtain a further expert

opinion. The surprise decision by the Arbitral Tribunal to apply §273/1 CPC constitutes a violation of the right to be heard

pursuant to Article 6 ECHR and thus renders the decision challengeable under § 595/1 (2) of the Austrian CPC and

unenforceable pursuant to Art. V/1, letter b, of the New York Convention.”

27. Professor Roth, in part in reliance upon facts set out in an opinion of Professor Born (exhibited, not in relation to Austrian law, but

in relation to the UNCITRAL trial model rules), refers to further contentions that the Arbitral Tribunal failed to deal with submissions

made by TPSA, in particular in relation to revenue sharing. Having referred to the restrictive approach, already set out, of the

Austrian Supreme Court in accordance with its current jurisprudence, and the criticism of same, at para. 193, she concluded in that

part of her opinion:

“193. Even if the Arbitral Tribunal addressed part of TPSA’s arguments, it did not properly examine TPSA’s main arguments

as well as TPSA’s alternative submission regarding the reduction of the revenue share. Pursuant to § 595/1 (2) and (6)

CPC a violation of the right to a fair trial and the right to be heard within the meaning of Art. 6 ECHR is also a ground for

the setting aside of an award. Therefore, there is a reasonable chance that the partial award, which is the consequence

of several violations of TPSA’s right to be heard and to obtain a fair trial, will be set aside.”

28. Professor Funk also deals with this issue, explains the jurisprudence of the Austrian Supreme Court and the application of Article 6

ECHR in relation thereto, and ultimately expresses his view in relation to all the issues he deals with, including the present issue, at

para. 30 of his opinion:

“30. The procedural irregularities asserted in the present case and the errors in the arbitral tribunal’s decision are so

severe, that, when taken together (both in and of themselves and in their impacts) they constitute infringements of

elementary principles of a fair trial and of the right to be heard, including in terms of the substantive decision, and the

arbitral award must be specifically regarded as incompatible with the fundamental values underlying the Austrian legal

system. For this reason, this arbitral award must be set aside in accordance with sec. 596 (1) (2) (3) (4) and (6) Austrian

CPC.”

29. Professor Roth primarily deals with this issue, as already stated, at section F.2 of her opinion. In addition to referring to the

application of s. 273 CPC in relation to the right to be heard, she also expresses the view that the conditions for the application of s.

273 CPC (para. 154) are not met and further expresses the view at paras. 155 and 158 that Article 33 of the UNCITRAL Arbitration

Rules only permits such an equitable decision (by application of s. 273(1) CPC) where the Arbitral Tribunal has been “expressly

authorized” to do so. She concludes that there is no such express authorisation on the facts herein and that the Arbitral Tribunal:

“ . . acted ultra vires so that the grounds for setting aside the Partial Award according to § 595/1 and (5) CPC are also

met.”

30. Professor Roth discusses the ground based upon the contention that the Arbitral Tribunal was not properly composed when

passing its decision (Section I. paras. 194 to 209) and concludes this issue at para. 209:

“209. For the reasons set out above, the improper composition of the arbitral tribunal leads to the legal consequence that

the award is to be set aside under § 595/1 (3) and (4) CPC.”

31. The overall conclusion of Dr. Roth, set out at para. 210 of her opinion, is:

“… [T]hat the Partial Award of 24 August 2010 is to be set aside in the proceedings currently pending before the Vienna

Commercial Court and in my view, there is a reasonable chance that it will be set aside.”

I have already set out the conclusions of Professor Iro and Professor Funk on the issues dealt with by them.

32. Each of the opinions of Professor Iro, Professor Roth and Professor Funk were given following the consideration of the joint opinion

of Professor Oberhammer and Professor Rechberger.

33. A second affidavit was then sworn and filed by Mag. Florian Haugeneder, in which he disputes many of the opinions and

conclusions expressed by Dr. Aschauer, Professor Roth, Professor Iro and Professor Funk. He does so, in part, in reliance on his own

opinion and, in part, on the joint opinion of Dr. Oberhammer and Professor Rechberger, already exhibited by him.

34. Having regard to the agreement of the parties as to the basis upon which I should firstly decide this application, I do not propose

referring, at this stage, to the opinion on Austrian law or on the likelihood of success of the Austrian proceedings, as expressed on

behalf of DPTG, save to the extent already set out.

Order of Decisions to be Taken

35. Both parties seek to have the court take a decision on the application for recognition and enforcement and TPSA’s defence that

recognition and enforcement should be refused in reliance upon Article 36(1)(ii) and (iv). TPSA presented its application for an

adjournment under Article 36(2) as an alternative.

36. In my judgment, on the facts herein, the court must firstly determine TPSA’s application for an adjournment of its decision on

recognition and enforcement pursuant to Article 36(2), for the following reasons.

37. What a court is permitted to do, under Article 36(2), is to adjourn its decision on enforcement, as distinct from placing a stay on

a decision in favour of enforcement already reached. Notwithstanding the pro-enforcement policy underlying Articles 35 and 36, this

appears to be the correct construction, having regard to the wording used in Article 36(2) and its interconnection with Article 26(1)

(b) which permits refusal of enforcement where the award, inter alia, has been set aside or suspended by a court of the country in

which, or under the law of which the award was made. The purpose of Article 36(2) appears to be to avoid the enforcement of an

award and then a subsequent decision of the home court that the award be set aside.

38. I am reinforced in the view I have reached that it is an adjournment of the decision of the Court rather than any stay on a

decision already made by the judgment of Charron J.A. in the Court of Appeal for Ontario in Dalimpex Ltd. v. Janicki and Others (30th

May, 2003) Case 509 on UNCITRAL’s Clout database, paras. 4 and 54 to 61, and an observation of Tomlinson J. in the High Court in

England in Ipco (Nigeria) Ltd. v. Nigerian National Petroleum Corp. [2009] 1 All E.R. (Comm.) 611, at para. 15. In each, the judge

made clear that it is the decision on enforcement which must be adjourned.

39. The difficulty which the Court is presented with, in the present application, is that the parties have agreed that all issues,

including the determination of the application for an adjournment should, in the first instance, be determined upon an assumption that

the statements of Austrian law, as set out by the experts retained on behalf of TPSA, is correct. It was further agreed that if I were

to decide to grant an adjournment based upon such uncontested statements, that there should then be cross-examination of both

sets of experts for the purpose of this court determining, as a question of fact, any relevant issues of Austrian law in accordance

with the approach of Kelly J. in Brostrom as set out above.

40. Notwithstanding this agreement, Mr. Gallagher S.C., on behalf of TPSA, submitted that it was neither necessary nor appropriate

for the court to determine questions of Austrian law in relation to the application for an adjournment under Article 36(2). Rather, he

submitted that the court need only be satisfied on the expert opinions adduced that there are reasonable or substantial grounds for

contending that the Austrian proceedings may succeed in having the Partial Award set aside by the Austrian courts.

41. That submission appears to me correct. A pro-enforcement construction of Article 36(2) of the UNCITRAL Model Rules suggests

that the mere existence of proceedings seeking to set aside an arbitration award would not normally of itself constitute grounds for

an adjournment. Correctly, Mr. Gallagher did not seek to so submit. I was referred to an observation to similar effect by Tuckey L.J. in

the Court of Appeal on the appeal from Tomlinson J. in Ipco (Nigeria) Ltd. v. Nigerian National Petroleum Corporation[2009] 1 All ER

(Comm) 611 at 661:

“. . . The mere fact that a challenge has been made to the validity of an award in the home court does not prevent the

enforcing court from enforcing the award if it considers the award to be manifestly valid (see Soleh Boneh International

Ltd v. Government of the Republic of Uganda and National Housing Corp [1993] 2 Lloyd’s Law Reports 208 at 212.”

42. Each of those decisions concerned a similar adjournment provision to Article 36(2) in the English legislation applicable to the New

York Convention . In Soleh Boneh, Staughton L.J stated at p.212:

“In my judgment two important factors must be considered on such an application, although I do not mean to say that

there may not be others. The first is the strength of the argument that the award is invalid, as perceived on a brief

consideration by the Court which is asked to enforce the award while proceedings to set it aside are pending elsewhere.

If the award is manifestly invalid, there should be an adjournment and no order for security; if it is manifestly valid, there

should either be an order for immediate enforcement, or else an order for substantial security. In between, there will be

various degrees of plausibility in the argument for invalidity; and the Judge must be guided by his preliminary conclusion on

the point.”

43. The above must be treated with caution, as the substantive appeal appears only to have related the security ordered rather than

the order for adjournment. However earlier in the judgment he gave some indication of the ‘brief consideration’ (albeit obiter) where

having referred to one of the grounds of invalidity contended for that the arbitrator was not validly appointed and to two opposing

opinions from Professor Goode QC and Professor Guest QC , he then stated at p.210

“What we are not asked to do is to decide the point ourselves, here and now. So I must be careful to express no opinion

on it, except to say that in my judgment it is seriously arguable although in a short compass. Indeed the very fact that

two such eminent teachers of commercial law take opposite views shows that to be the case.”

44. I find the judgment of assistance and respectfully agree with the approach. It is not a matter for this Court as the enforcement

court to decide any disputed issues of Austrian law in the context of the application for an adjournment pursuant to Article 36(2).

That is a matter for the Austrian Courts in the Austrian Proceedings. Hence, notwithstanding the agreement reached between the

parties, cross-examination will not be permitted prior to a decision on the adjournment application. Rather, what the Court must do is

engage in a ‘brief consideration’ of the materials before it and then decide whether TPSA has demonstrated that it has reasonable

grounds or a seriously arguable case for the setting aside of the Partial Award in the Austrian proceedings.

45. By reason of the agreement already reached and the reasons next set out, it appears to me that I must now give DPTG an

opportunity to consider whether there are any further submissions they wish to make to the Court in reliance upon the affidavits and

exhibits (including the joint opinion) already filed, but without an opportunity of cross-examining any of the experts in Austrian law

prior to making a determination as to whether or not TPSA have, on the affidavits already filed, satisfied the Court that they have

reasonable grounds or a seriously arguable case for contending that the Partial Award may be set aside in the Austrian proceedings.

46. Mr. O’Donnell S.C., on behalf of DPTG, made full submissions at the hearing that the expert opinions of Professor Roth, Professor

Iro and Professor Funk did not, even in their own terms, set out substantial or reasonable grounds for contending that the Partial

Award may be set aside by the Austrian courts. I do not accept that submission. The views expressed are by persons expert in the

relevant field of law and on my consideration appear to include reasonable grounds or a seriously arguable case for setting aside the

Partial Award. In expressing this view, I am not determining that each and every ground appears seriously arguable. However, it does

not appear that I should express a view on the individual grounds. The opinions expressed may of course be ultimately proven

incorrect by the decision of the Austrian courts as happens in relation to differing opinions properly held and expressed on the

outcome of proceedings. I have formed this preliminary view in the knowledge that the views expressed are disputed by relevant

experts retained by DPTG but without submissions relating to the content of the joint opinion. I am conscious that Mr. O’Donnell, in

making the submission, was limited in the material to which he could refer by reason of the agreement reached and did not have the

opportunity to refer to the differing views in the affidavits of Mag. Florian Haugeneder and the legal opinion from Dr. Paul Oberhammer

and Dr. Walter H. Rechberger. That is material before the court on the application for the adjournment and hence it appears to me

that DPTG should be given an opportunity to consider whether they wish to make any additional submission based on that material

and in the context of the approach set out in this judgment prior to my taking a final decision on the adjournment application. In

accordance with this decision, any assessment of any further submissions will not involve this Court in resolving disputes between the

experts on questions of Austrian law or even determining the relative strengths of the differing opinions. It will be confined to a

summary or ‘brief’ consideration as put by Staughton L.J.

47. I also consider that there may be additional factors which will be relevant to a judge exercising his or her discretion under Article

36(2) which will vary, having regard to the facts of the case. I have had regard to the fact that the proceedings in Austria were

commenced within a short time of the finalising of the corrected Partial Award. Also, that the Austrian proceedings have been pursued

expeditiously and preliminary hearings have already taken place before the Court of First Instance. Finally there is an overlap between

some of the grounds relied upon by TPSA in the Austrian proceedings and in this application which the Austrian Courts may be better

placed to resolve. In such circumstances, in my judgment, I should adjourn the decision of this Court on enforcement if satisfied that

TPSA have demonstrated that they have reasonable grounds or a seriously arguable case for the setting aside of the Partial Award in

the Austrian proceedings. Nothing turns on the different formulation of the criteria.

48. There are two further issues which were fully argued before me and which would become relevant in the event that I determine

that I should grant an adjournment pending the determination of the Austrian proceedings. I propose setting out my conclusions on

them now.

49. First, DPTG, in reliance upon the Ipco decision of the English courts already referred to, submitted that even if I decide to adjourn

the decision on the application for enforcement of the Partial Award, that by reason of the fact the TPSA, in the arbitration, had

acknowledged that there is money due to DPTG pursuant to the revenue sharing clause, and the dispute only related to the amount,

that this court should now make an order for enforcement of part of the Partial Award. This was referred in the Ipco judgment as

“partial enforcement”.

50. The factual basis of the submission is that the Arbitral Tribunal, at para. 214 of its Partial Award, records the response of TPSA to

the claim of DPTG as inter alia to :

“(c) Reject all principal claims which DPTG submitted with regard to the accounting periods November 1999 to June 2004

that are

- above the principal amount of DKK 313, 490,838 (in words: three hundred thirteen million four hundred ninety thousand

eight hundred thirty-eight Danish Kroner) in the aggregate; or

. . .”

DPTG submits that having regard to such acknowledgement recorded in the Partial Award, that this Court may and should now give

leave to enforce part of the Partial Award even if it adjourns its decision on the enforcement of the balance of the Partial Award.

51. Section 23(1) of the Arbitration Act 2010, is relevant to this issue as it governs the nature of the Order to be made by the High

Court when it gives leave to enforce an award pursuant to Article 35 of the Model Law. It provides:

“An award (other than an award within the meaning of section 25) made by an arbitral tribunal under an arbitration

agreement shall be enforceable in the State either by action or, by leave of the High Court, in the same manner as a

judgment or order of that Court with the same effect and where leave is given, judgment may be entered in terms of the

award.”

An award within the meaning of section 25 is one rendered pursuant to the Washington Convention and does not include the Partial

Award.

52. Accordingly, where the Court gives leave to enforce an award pursuant to Article 35, it then may (and normally will) enter a

judgment “in terms of the award”. This is the mechanism by which the award is enforced in Ireland. If leave is ultimately given to

enforce in these proceedings, then judgment will be entered in favour of DPTG against TPSA “in terms of the award”.

53. The Irish Court, as the enforcing court, is limited to entering judgment “in terms of the award”. In my judgment, the “award” for

the purposes of this provision is the order made by the arbitral tribunal. The Partial Award is a reasoned award running to 1050

paragraphs. It is only in the last of these that it makes its award and “orders as follows”. A similar view was taken in relation to the

Court’s jurisdiction being limited to enter judgment “in terms of the award” pursuant to a similar provision in the English legislation at

para. 18 of the judgment of Tuckey L.J. in the Ipco decision already referred to and upon which Mr. O’Donnell relies.

54. Insofar as s. 23(1) of the Act of 2010 permits this Court to enter judgment “in the terms of the award”, it is to enter judgment for

an amount which the Partial Award, on its face, directs TPSA to pay to DPTG. The dispositive part of the corrected Partial Award

directs the payment of specified money sums under five separate headings, for principal, interest and costs. If DPTG was now seeking

an order for the enforcement of one of those specified amounts, I am satisfied that the Court could give leave for enforcement of

that part of the Partial Award and enter judgment for one or more of the amounts specified and at the same time adjourn its decision

on the application to enforce the remainder of the amounts awarded. However, that is not DPTG’s application.

55. I have noted that in the Ipco judgment, the Court of Appeal was prepared to look beyond the actual formal dispositive part of the

award for payment of a total sum and to have regard to the summary specifying the individual amounts awarded to Ipco at para. 29.1

of the award under each head of claim. The dispositive part of the award ordered the payment of a single sum of $152,728,986.4355

being the total of the individual amounts referred to at paragraph 29.1. The Court of Appeal upheld a decision to enforce a partial

award being the amounts awarded in relation to claims 2 and 3 in the summary at paragraph 29.1 and to adjourn the decision on

enforcement of the amounts ordered to be paid in relation to the remaining claims

56. If this Court were to follow that approach, it might be permissible to have regard to the breakdown of the total amount for

principal of DKK1, 998,422,812 set out at para. 912 of the Partial Award as corrected under N912 in the corrected Award. It is

unnecessary for the purposes of this application to determine whether this Court, as enforcing court, could pursuant to s.23(1) of the

Act of 2010 enter a judgment for only one or more of the figures set out at N912 without entering judgment for the balance. I

propose leaving that issue for decision on an application where it is material to the facts. The part of the Partial Award which Mr.

O’Donnell submits should now be enforced and for which judgment would have to be entered is not an amount which appears in the

table at N912. It is an amount recorded by the Arbitral Tribunal as implicitly not in dispute. However, there is no order of the Arbitral

Tribunal in the Partial Award separately directing the payment of DKK 313, 490,838 such that any judgment in that amount could be

considered a judgment “in terms of the award” for the purposes of section 23(1) of the Act of 2010.

57. Accordingly, I have concluded that this Court does not have jurisdiction to give leave to enforce that part of the Partial Award in

respect of which DPTG contends there is no contest.

58. The second consequential issue is whether the Court should award security if it determines to grant an adjournment of its

decision on enforcement pending determination of the Austrian proceedings.

59. In my judgment, if I grant an adjournment, this is a case in which there should be an order for security. As already indicated, my

present view on the submissions made and materials considered is that TPSA has adduced evidence of reasonable grounds or a

seriously arguable case in favour of the setting aside of the Partial Award. However, I am also aware, from a consideration of the

affidavit of Mag. Florian Haugeneder, albeit without consideration of the content of the joint opinion referred to, that there exists a

joint opinion from two distinguished Professors, “that no good legal basis exists for setting aside the award”. In my judgment, the

evidence which I have considered does not permit me to conclude that the Partial Award is manifestly invalid as that term was used

by Staughton L.J. in Soleh Boneh, and hence I should consider the question of security. The period to which the award relates, the

duration of the arbitration and the response of TPSA as recorded at para. 214 of the Partial Award, the timing of proceedings in

Austria and the nature of TPSA’s assets in this jurisdiction, lead me to a conclusion that there should be security.

60. Mr. Cowey, solicitor for DPTG in this jurisdiction, in his affidavit delivered on 23rd February, 2011, states that the assets of TPSA

in this jurisdiction are monies receivable by it for “telephone traffic”. The then estimate of experts retained by DPTG was that the net

sum receivable was in excess of €3.3 million. He also refers to transfer of assets by TPSA from the Netherlands. Dr. Aschauer, in a

subsequent affidavit, does not appear to dispute either the nature of the assets nor the estimate given. Rather, he makes the point

that it is a very small sum relative to the principal amount of the Partial Award, and that DPTG would be fully compensated by the

payment of interest.

61. Having regard to the estimate and nature of the assets against which DPTG may ultimately seek to enforce the award if

successful in this application and the timescale of the decision of the Court of First Instance in Vienna, either at the end of this year

or early next year, if an adjournment is granted, I would propose ordering security in the initial sum of €1.5 million. I would also

propose granting liberty to apply in relation to the continuation of the adjournment pending the determination of any appeal and/or for

further security in the event that decision of the Court of First Instance in Vienna is adverse to TPSA. I will also hear the parties on

the nature of any security to be given.