Uncitral Case Analysis

UNCITRAL MODEL CODES
CASE ANALYSIS
TRAXYS EUROPE SA V BALAJI COKE INDUSTRY PVT LTD (NO 2)
[2012] FCA 276 (23 MARCH 2012)
Submitted by: Srishti Nair
Division: A; 2017-22;17010224071; BBA LL. B
Symbiosis Law School, NOIDA
Symbiosis International (Deemed University), Pune.
February, 2022
Course-In charge: Mr. Arjun Chaudhari

TRAXYS EUROPE SA V BALAJI COKE INDUSTRY PVT LTD (NO 2) [2012] FCA 276 (23
MARCH 2012): WHY AND ON WHAT BASIS WAS THE CHOICE OF LAW ADOPTED IN
THE ARBITRAL CLAUSE?
FACTS
● In the present case, a contractual dispute between Traxys Europe SA and Balaji Coke had
arisen. There was a contract between the parties for the sale of low ash metallurgical
coke. Balaji breached the contract and Traxys invoked arbitration in London under the
London Court of International Arbitration. Herein, Traxys claimed the difference
between the amount realized from the substitute sale and the price that the company paid
to Balaji under its contract for the shipment of coke as damages for breach of the
contract.
● The same was allowed by the arbitrator and an order was passed against Balaji to an
amount in excess of three million dollars. Subsequently, a variety of independent actions
for the setting aside or enforcement of the award passed.
● This included seeking setting aside the award by the Alipore District Court, India by
Balaji Coke Industry Pvt. Ltd. interim stay was refused however, in the appeal to the
Kolkata High Court, an ex-parte order restraining enforcement of the award by Traxys
was passed. Traxys remained uninvolved in these proceedings.
● Parallelly, the English Commercial Court passed an interim injunction preventing BCI
from pursuing further action in the Alipore District Court while allowing Traxys to
enforce the Award. Herein, Balaji Coke Industry Pvt. ltd. was not involved in the
proceedings.
● No challenge was made against the award in the English Commercial Courts.
● Subsequently, Traxys applied to the Federal Court of Australia to recognize and enforce
the award in Australia under the IAA.
QUESTION TO BE DISCUSSED
● Why and on what basis was the choice of law adopted in the arbitral clause?
In the present case, both the parties entered into a contract for sale which contained an arbitration
clause which was as follows:
“Any disputes arising out of or in connection with this contract between Balaji and Traxys,
including any question regarding its existence, validity or termination, shall be referred to and
finally resolved by arbitration under the Rules of the London Court of International Arbitration
(LCIA), which Rules are deemed to be incorporated by reference to this clause. The seat, or
legal place, of arbitration, shall be London. The language to be used in the arbitration shall be
English.
This contract, including the arbitration clause, shall be governed by, interpreted and construed
in accordance with the substantive laws of England and Wales excluding the United Nations
Convention on Contracts for the International Sale of Goods of April 11, 1980 (CISG).”
It can be seen that the parties chose the seat, the law governing arbitration procedure as well as
the law governing their disputes in the said clause as London, Rules of the London Court of
International Arbitration and substantive laws of England &Wales respectively.
Party autonomy is an integral aspect of the arbitration procedure, which is primarily reflected in
the arbitration agreement. Parties to an arbitration proceeding have the liberty to determine the
major aspects of the arbitration process including the place of arbitration, procedural rules,
applicable laws, composition and powers of the tribunal, manner of conduct of hearings etc.
Parties have the freedom to make a choice between institutional and ad-hoc arbitration. Thus, it
can be concluded that the choice of law in the arbitral clause was rooted in the mutual consent
between parties to have laws of England and Wales be applicable on disputes between them.
Given that the parties belong to different jurisdictions, choosing third party rules to have their
issues addressed could probably be more suited and ideal for their situation as going with LCIA
will not allow them to seek institutional support but also have access to a neutral body thus,
preventing any issues relating to prejudice. Further, London is known to be a hub of commercial
arbitration given the availability of experts along with the expansive confidentiality that is
offered to the proceedings.1
Nonetheless, it must be noted that what complicated the matters in the present case was the fact
that while Traxys was able to get an award from the arbitral tribunal in London as determined in
their arbitration agreement, the counterparty did not possess any assets in England demonstrating
the need to consider different factors before zeroing in upon the choice of law in the arbitration
Contract.
In the present case, the choice of law or legal seat was not an issue between the parties for their
mutual choice was clearly reflected in the arbitration agreement which was drawn with the
consent of both parties. However, there were several other issues including whether a foreign
award could be enforced in Australia; whether the award creditor would be able to obtain a
judgment from the enforcing court in Australia as specified in the foreign award; whether proof
of the award debtor's Australian assets is required as a condition precedent for enforcement; and
whether the enforcement was contrary to public policy.
JUDGMENT
It was held that IAA did not restrict the enforcement to actual extension and in fact, the New
York Convention which is being reflected by the IAA refers broadly to both “recognition” and
“enforcement”. Accordingly, a technical approach was not recommended and enforcement could
only be denied under the exceptions explained in sec 8(5) and (7) of the Act.
1
Niece, R. M. (2015, March 20).Why Is London A Global Capital For International Arbitration? Ashfords
Solicitors. https://www.ashfords.co.uk/news-and-media/general/why-is-london-a-global-capital-for-international-
arbitration
Further, the Act does not prevent the Court from rendering a judgment or enforcing an order
based on the award even if there is evidence that at that time there are no assets in Australia
against which execution can be imposed.
Lastly, they held that there was no ground of public policy for the nonenforcement of the award
in the present case.

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UNCITRAL MODEL CODES

Submitted by: Srishti Nair

Division: A; 2017-22;17010224071; BBA LL. B

Symbiosis Law School, NOIDA

Symbiosis International (Deemed University), Pune.

Course-In charge: Mr. Arjun Chaudhari

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