Victorian Supreme Court grants urgent enforcement of Formula 1 arbitration award

Submitted by James WS Peters QC and Tom Clarke

Giedo van der Garde v Sauber Motorsport [2015] VSC 80; [2015] VSCA 37

The Victorian Supreme Court and Court of Appeal granted urgent enforcement of a Swiss arbitral award obtained by a Formula 1 driver against his former team.

In the week leading up to the 2015 Australian Formula 1 Grand Prix, the Victorian Supreme Court was presented with an urgent application to enforce a Swiss arbitral award, under which the Sauber Motorsports team had effectively been ordered to reinstate its driver, Giedo van der Garde.

During 2014, Sauber had exercised an option retaining Mr van der Garde’s services as one of the team’s two race drivers for the 2015 season. In early November 2014, Sauber purported to terminate Mr van der Garde’s contract and entered into driver contracts with two other drivers for the 2015 season.

Mr van der Garde obtained emergency injunctive relief from an emergency arbitrator in early December 2014. His claim for a final injunction was fast-tracked and heard in London under the Swiss Rules of International Arbitration in early February 2015, so that a decision could be made in time for the start of the 2015 season. The arbitrator granted a final injunction in Mr van der Garde’s favour on Monday, 2 March 2015, less than 2 weeks before the 2015 Australian Grand Prix.

Mr van der Garde applied for urgent enforcement of the Swiss award in Victoria on Thursday, 5 March 2015. The urgency was two-fold: first, because the official track sessions for the Grand Prix were to commence on Friday, 13 March 2015; and secondly, because Sauber has no permanent presence in Australia, and its personnel and assets were due to leave Australia immediately after the Grand Prix. Croft J listed the application for hearing on the Labour Day holiday, Monday, 9 March.

At the hearing, Sauber argued that the Swiss award should not be enforced, because it dealt with matters outside the submission to arbitration, because Sauber had not been accorded natural justice and because it was otherwise contrary to public policy to enforce the award. In particular, Sauber alleged that enforcement of the award in Victoria would be futile, because requiring Sauber to reinstate Mr van der Garde urgently for the Australian Grand Prix would be to require Sauber to do the impossible, or to endanger the safety of race participants and pit crews. The newly-contracted drivers intervened in the application, to argue against enforcement of Mr van der Garde’s award.

After a full day’s argument on Monday, Croft J gave judgment on Wednesday morning, enforcing the Swiss award as a judgment of the court: [2015] VSC 80. Sauber immediately commenced an appeal, which the Court of Appeal heard urgently on Thursday morning, and gave judgment dismissing the appeal on Thursday afternoon: [2015] VSCA 37.

Both Croft J and the Court of Appeal followed and applied the reasoning of the Full Federal Court in TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 311 ALR 387, which confirmed the narrowness of the public policy and natural justice defences to enforcement under ss 8(7)(b) and 8(7A)(b) of the International Arbitration Act 1974.

Mr van der Garde then immediately issued a civil contempt application against Sauber Motorsports and its CEO, alleging that Sauber had disobeyed both the arbitral award and the Victorian court order. Croft J heard that application on Friday and Saturday, 13‑14 March.

On the Saturday morning, the parties informed the court that they had reached an amicable resolution of Mr van der Garde’s claims under the contract and the Swiss arbitral award. Justice Croft congratulated the parties on having resolved their dispute, and noted that it was unprecedented for an application to enforce an international arbitration award to have been heard at first instance and on appeal, and then to have been the subject of an application for further enforcement measures within less than one week.

The Supreme Court’s prompt handling of this urgent enforcement application sends a strong signal of the court’s willingness – and that of the Australian courts generally – to provide effective support to international commercial arbitration, in keeping with the objectives of the New York Convention.

Tom Clarke appeared for the driver, Giedo van der Garde, on the initial enforcement application before Croft J. James WS Peters QC appeared with Tom in the Court of Appeal and in the subsequent contempt application.

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