A recent decision from the Federal Court provides a reminder about the usefulness of international arbitration in resolving disputes between contracting parties in different jurisdictions.

The case

In Uganda Telecom Limited v Hi-Tech Telecom Pty Ltd [2011] FCA 131, Uganda Telecom (located in Uganda) entered into a Telecommunication Service Contract with Hi-Tech (located in Australia).  The contract included a clause that required disputes to be submitted to arbitration.

Shortly after the contract was signed, Uganda Telecom complained that Hi-Tech had breached by the contract by failing to pay amounts due.  After Hi-Tech failed to respond to Uganda Telecom's attempts to contact it, Uganda Telecom commenced arbitration proceedings in Uganda.  Both Uganda Telecom and the appointed arbitrator remained unsuccessful in obtaining a response from Hi-Tech, and the arbitration proceeded ex-parte. 

An award of damages was made against Hi-Tech, which Uganda Telecom sought to enforce in Australia.  Hi-Tech argued that the award should not be recognised for several reasons, including because Hi-Tech had not received any of the notices sent to it, and because the arbitration clause was void for uncertainty.

The Court rejected Hi-Tech's arguments that it had not received the various emails, letters and courier packages sent to it in relation to the dispute (a useful reminder of the need to carefully follow the required notice provisions, and of retaining evidence to this effect!).  On the issue of the arbitration clause being void, the provision was certainly the briefest arbitration clause we can imagine.  The Federal Court was satisfied, however, that the relevant arbitration legislation in Uganda provided comprehensive procedures governing the conduct of the arbitration, that applied where the parties have not specified them.  The Court commented that those procedures were "meticulously" followed in this case, and granted Uganda Telecom's application to recognise the arbitral award.

International arbitration generally

International arbitration can be a very effective method for resolving disputes between contracting parties in different jurisdictions.  We frequently recommend the use of international arbitration in our client's contracts. 

International arbitration can be used in contracts where the parties are located in countries that are signatories to the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards.  Signatory countries are required to enact domestic laws that give effect to the Convention, including the ability to domestically enforce foreign arbitration awards.  Australia is a signatory to the convention, as are many of its major trading partners.

International arbitration is particularly useful because it is flexible.  Among other things, the contracting parties can specify the location and language of arbitration, the number of arbitrators and the method for their appointment, and the governing law to be applied.  As a result, international arbitration can be a good way of resolving otherwise difficult negotiations regarding governing law and forum.

Kind regards

Tim Gole