Daewoo Shipbuilding & Marine Engineering Co Ltd v INPEX Operations Australia Pty Ltd [2022] NSWSC 1125

Supreme Court New South Wales

Medium Neutral Citation: Daewoo Shipbuilding & Marine Engineering Co Ltd v INPEX Operations Australia Pty Ltd [2022] NSWSC 1125 Hearing dates: 18 August 2022 Date of orders: 29 August 2022 Decision date: 29 August 2022 Jurisdiction: Equity - Commercial List Before: Rees J Decision: Application to extend interlocutory injunction dismissed. Catchwords: BANK GUARANTEE – shipbuilder builds floating production and storage offloading facility in Timor Sea for defendant – shipbuilder obliged to arrange bank guarantee for US$328.5 million – defendant claims liquidated damages and defects exceeding guarantee – nature of bank guarantee at [5]-[10] – nature of risk allocation device. INTERLOCUTORY INJUNCTION – defendant issues request for arbitration – shipbuilder obtains ex parte injunction restraining defendant from calling on bank guarantee – whether injunction should be continued – shipbuilder experiencing financial trouble due to sanctions on Russia following invasion of Ukraine – principles when injuncting call on bank guarantee at [70]-[87] – risk allocation device – defendant entitled to hold money while dispute resolved – application refused. INTERNATIONAL COMMERCIAL ARBITRATION – interim measures – section 7, International Arbitration Act 1974 (Cth) – Article 9, Article 17J, UNCITRAL Model Law – principles at [59]-[66] – whether sufficient to raise prima case that defendant not entitled to call on bank guarantee – whether Court can construe contract – reconciling CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd (No 2) [2017] WASCA 123 and Kawasaki Heavy Industries Ltd v Laing O'Rourke Australia Construction Pty Ltd (2017) 96 NSWLR 329; [2017] NSWCA 291 – Court to exercise power 'in accordance with own procedures' – entitled to form view of meaning of contract to extent necessary to determine application for interim measures – Court's view does not bind arbitral tribunal. Legislation Cited: Civil Execution Act of Korea, art 26(1) Civil Procedure Act of Korea, art 217(1) Commercial Arbitration Act 2010 (NSW) Foreign Judgments Act 1991 (Cth) Foreign Judgments Regulation 1992 (Cth) International Arbitration Act 1974 (Cth) s 7 UNCITRAL Model Law on International Commercial Arbitration (as adopted by the United Nations Commission on International Trade Law on 21 June 1985, and as amended by the United Nations Commission on International Trade Law on 7 July 2006), arts 9, 17J. Cases Cited: Austrak Pty Ltd v John Holland Pty Ltd [2006] QSC 103 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46 Bachmann Pty Ltd v BHP Power New Zealand Ltd [1999] 1 VR 420; [1998] VSCA 40 Bateman Project Engineering Pty Ltd v Resolute Ltd (2000) 23 WAR 493; [2000] WASC 284 Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1 Best Tech & Engineering Ltd v Samsung C&T Corp (No 3) [2015] WASC 459 Bond v Larobi Pty Ltd (1992) 6 WAR 489 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Brooks v Burns Philp Trustee Co Ltd (1968) 121 CLR 432 BS Mount Sophia Pte Ltd v Join-Aim Pte Ltd [2012] 3 SLR 352; [2012] SGCA 28 Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66; (2013) 298 ALR 666 Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334 Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd (No 3) [2018] QSC 60 Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd [2008] FCAFC 136; (2008) 249 ALR 458 CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd [2017] WASC 112 CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd (No 2) [2017] WASCA 123 Dobbs v National Bank of Australia Ltd (1935) 53 CLR 643 Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812 Guo v Xu [2021] NSWSC 460 Icon Co (NSW) Pty Ltd v Australia Avenue Developments Pty Ltd [2020] NSWSC 178 Kawasaki Heavy Industries Ltd v Laing O'Rourke Australia Construction Pty Ltd (2017) 96 NSWLR 329; [2017] NSWCA 291 KR & C Co Ltd v Soon Ok Hwang [2021] NSWSC 551 Ku-ring-gai Council v Ichor Constructions Pty Ltd (2019) 99 NSWLR 260; [2019] NSWCA 2 Laing O'Rourke Australia Construction Pty Ltd v Kawasaki Heavy Industries Ltd [2017] NSWSC 541 Leviathan Shipping Co Ltd v Sky Sailing Overseas Co Ltd [1998] 4 HKC 347 Lucas Stuart v Hemmes Hermitage Pty Ltd [2010] NSWCA 283 Marnell Corrao Associated Inc v Sensation Yachts Ltd (2000) 15 PRNZ 608 Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 NCC International AB v Alliance Concrete Singapore Pte Ltd [2008] 2 SLR (R) 565; [2008] SGCA 5 Novamaze Pty Ltd v Cut Price Deli Pty Ltd (1995) 128 ALR 540 P Co v R LLC [2021] HKCU 1199 Permasteelisa Japan UK v Bouyguesstroi [2007] EWHC 3508 (TCC) Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126; [2001] HCA 45 Pharmaceutical Processing Technology Inc v Sci-Chem International Pty Ltd [2021] NSWSC 1078 Reed Construction Services Pty Ltd v Kheng Seng (Australia) Pty Ltd (1999) 15 BCL 158 Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238; [2011] FCAFC 156 Scott v Avery (1956) 5 HLC 810 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Siemens Gamesa Renewable Energy Pty Ltd v Bulgana Windfarm Pty Ltd [2019] VSCA 318 Simic v NSW Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 Sino Dragon Trading Ltd v Noble Resources International Pte Ltd (2015) 246 FCR 479; [2015] FCA 1028 Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd (2010) 41 WAR 318; [2010] WASCA 222 Sugar Australia Pty Ltd v Lendlease Services Pty Ltd [2015] VSCA 98 Swift-Fortune Ltd v Magnifica Marine SA [2006] SGCA 42 TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533; [2013] HCA 5 Tech-System Design & Contract (S) Pte Ltd v WYWY Investments Pte Ltd [2014] 2 SCR 1309; [2014] SGHC 57 The Lady Muriel [1995] 2 HKC 320 Wood Hall Ltd v The Pipeline Authority (1979) 141 CLR 443 Texts Cited: UNCITRAL Secretariat, 'Independent Guarantees and Stand-by Letters of Credit: Discussion of Further Issues of a Uniform Law: Fraud and Other Objections to Payment, Injunctions and Other Court Measures: Note by the Secretariat' (1991) 22 Yearbook of the United Nations Commission on International Trade Law 352 Category: Principal judgment Parties: Daewoo Shipbuilding & Marine Engineering Co Ltd, a duly organised company under the laws of the Republic of Korea (Plaintiff) INPEX Operations Australia Pty Ltd (Defendant) Representation: Counsel: Mr TJ Breakspear SC / Dr SH Hartford Davis (Plaintiff) Mr M Ashhurst SC / Mr D Meyerowitz-Katz (Defendant)