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Freezing Orders to Protect Foreign Judgments

In PT Bayan Resources TBK v BCBC Singapore Pte Ltd [2015] HCA 36, the High Court of Australia considered the scope of the inherent power of Supreme Courts to make freezing orders in respect of assets within their jurisdiction.

The appellant (Bayan) was an Indonesian company. The respondent (BCBC) was a Singaporean company. A dispute arose between them regarding a joint venture agreement and BCBC commenced proceedings against Bayan in Singapore. After commencing those proceedings, BCBC applied ex parte to the Supreme Court of Western Australia for a freezing order against Bayan to restrain it from dealing with assets it held in Australia, being shares in an Australian company (KRL). The Supreme Court granted the freezing order on the basis that (a) BCBC had a good arguable case that gave rise to a sufficient prospect of judgment in favour of BCBC in the Singaporean proceedings; (b) there was a sufficient prospect that judgment would be registered in or enforced by the Supreme Court, by application of the Foreign Judgments Act 1991 (Cth) (the Act); and (c) absent recourse to Bayan's interest in KRL, there was a real risk that any judgment obtained by BCBC in the Singaporean proceedings would remain unsatisfied.

The High Court confirmed the inherent power of a Supreme Court to make such orders as that Court may determine appropriate to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction. While, most commonly, the power will be invoked where the substantive proceedings have been commenced in that jurisdiction, the issue here was whether the power could be invoked to, in effect, protect a foreign company against having a judgment obtained in a foreign jurisdiction left unsatisfied. On these facts, the High Court held that it could. In doing so, the High Court held:

1. A freezing order is designed to protect "a prospective enforcement process";

2. The power to make a freezing order in relation to an anticipated foreign judgment, which when made would be registrable by order of the Supreme Court under the Act, is within the Supreme Court's inherent power; and

3. The making of the freezing order protects the process of registration and enforcement in the Supreme Court which is in the prospect of being invoked.

The take-away from this decision is that, provided the Act continues to operate as a means for the enforcement of foreign judgments in Australia, assets held in Australia may be the subject of an application for a freezing order in order to protect a prospective foreign judgment. This will have an impact on both Australian companies doing business overseas and also foreign companies with assets in Australia.

For more information, please contact us on (02) 9232 5977.

This is for general information purposes only. It is not intended to be legal advice and should not be relied on for that purpose. Formal legal advice should be obtained that is specific to your circumstances. To the extent permitted, Garland Hawthorn Brahe excludes all liability arising from reliance on this information.

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