Arbitration of cross-border M&A disputes: Federal Court of Australia swiftly enforces London award and rejects "double recovery" challenge

Background

In September 2019, LandOcean HK and its Chinese parent New JCM agreed to acquire Range Resources Trinidad Ltd (RRTL), an oil producer, from West Indies Exploration and its affiliate Star Phoenix (Sellers), an Australian company based in Perth. A share purchase agreement was signed and subsequently amended by side letters (SPA). Under the terms of the SPA the parent companies were liable for their subsidiaries' obligations and bound to the same arbitration agreement.

After completion, the Sellers remained in control of RRTL and directed four payments for oil sales in 2020, totalling TTD4,924,951, to Range Resources Drilling Services Ltd (RRDSL), an affiliate of the Sellers. In a London-seated LCIA arbitration commenced in July 2021, which involved a wide range of claims, the tribunal ultimately held in its final award of 16 October 2024 that the transfer away breached the SPA, and ordered the Sellers, jointly and severally, to pay that sum plus interest and costs (LCIA Award).

Separately, RRDSL sued RRTL in Trinidad and Tobago for the balance of a loan. On 18 June 2026, the High Court of Justice of the Republic of Trinidad and Tobago held that the diverted payments had in fact repaid the loan and gave judgment for RRTL for the overpaid balance of TTD2,008,377. RRDSL appealed, with the appeal listed for 8 December 2026.

An application to enforce the LCIA Award was made in the Federal Court on 27 July 2026. On 14 August 2026, the Court made ex parte orders granting leave to enforce and entering judgment for the AUD equivalent of the amounts awarded, stayed in the usual way so the award debtors could apply to set them aside: [2026] FCA 1152. The award debtors applied to set aside the award enforcement and recognition orders on 16 September 2026. They argued that, because the same payments had been credited against the loan in Trinidad and Tobago, enforcement would allow the creditors' group to recover twice, contrary to public policy under s 8(7)(b) of the International Arbitration Act 1974 (Cth). Alternatively, they sought a further stay pending the appeal.

The Court's ruling

The Court heard the application on 20 October 2026 and dismissed it with costs two days later, lifting the stay. Applying TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd [2014] FCAFC 83, Justice Stewart confirmed that the public policy exception is confined to the fundamental principles of justice and morality of the state, and that enforcement will be refused only if an award is "so fundamentally offensive" to those notions that the objection cannot be overlooked. The award debtors bore the burden of establishing the exception.

His Honour held the challenge failed to reach the threshold citing among the reasons given:

1. The "overlap" complaint was premature. RRDSL's pending appeal in Trinidad and Tobago, which itself relies on the award, contended that the payments were wrongly credited to the loan. The court held that, should that argument succeed, there would be no overlap at all.

2. The claims were independent. The LCIA Award was held to be a contractual debt owed by the Sellers to LandOcean HK and New JCM; the Trinidad and Tobago judgment was instead a restitutionary liability under a loan owed by RRDSL to RRTL. The causes of action, debtors and creditors were found to be all different.

3. Double recovery was held to be an execution issue, not an enforcement issue. It was held that any double recovery could only arise once one of the debts has actually been paid - the proper time to raise account questions is at the execution stage, for example by resisting or seeking to set aside a writ of execution, not at recognition and enforcement.

4. The challenge was an impermissible attempt to relitigate the merits. The award debtors knew of RRTL's counterclaim (filed 12 December 2022) well before the arbitral hearing concluded on 29 March 2024 and final submissions on 7 June 2024. The "overlap" and "double recovery" arguments were available to them in the arbitration. The public policy exception does not provide a basis to relitigate matters determined in an award or to raise merits contentions that could have been raised before the tribunal, which is what the Court considered the Sellers' arguments before it on the application impermissibly amounted to.

For the same reasons, no further stay was granted.

Learnings for cross-border M&A disputes

Concluding remarks

LandOcean confirms Australia as an efficient, arbitration-friendly forum for enforcing foreign awards, with the public policy exception kept within narrow limits. For parties to cross-border M&A transactions with an Australian nexus, it underscores the value of a well-drafted arbitration clause binding all relevant entities, and of running all defences before the tribunal. Each case turns on its own facts, and this general guidance is no substitute for legal advice.