Asset Preservation

Is is possible to get a Court to prevent the disposition of assets whilst an arbitration is pending?

Yes, see:

• Traxys Europe SA v Balaji Coke Industry Pvt Ltd (No 2) ¹⁾
• ENRC Marketing AG v OJSC “Magnitogorsk Metallurgical Kombinat” ²⁾
  • ex parte application for freezing orders under Art 17J of UNCITRAL Model Law on Commercial Arbitration
  • Model Law given force of law by International Arbitration Act 1974 (Cth), s16
  • international arbitration on foot
  • applicant seeking to prevent respondent transferring its shares in an Australian company which would put that asset beyond applicant’s reach
  • undertaking as to damages proffered in support of application
  • undertaking as to damages unsupported
  • applicant with no assets or presence in the jurisdiction
  • whether undertaking as to damages sufficiently substantial proffer of protection in circumstances
  • Court’s inherent or implied power to require security for undertaking as to damages
  • market volatility relevant consideration
  • possible effect of order on third parties relevant

However, query whether or not such powers extend to making orders which should otherwise be made by the Tribunal (by reason of all disputes being referred to the Tribunal on a proper construction of the agreement) and or otherwise go beyond preserving the rights of the parties.

• Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd³⁾
• International Arbitration Act 1974 s7

That said, the operation of 17J of the Model Law was not considered in this decision which reduces the persuasive weight of the decision⁴⁾