Implementation of the New York Convention in Papua New Guinea

Justice Jeffery Shepherd of the Supreme and National Courts of Justice of Papua New Guinea (PNG) briefly addressed the draft Arbitration Bill discussed by Dr. Eric Kwa in Session 2. The PNG judiciary expects this bill to revolutionize the arbitration regime in the country. The PNG legislation, when enacted, will deal with both domestic and international arbitration.

He then focused on the challenges faced by the PNG judiciary in terms of addressing arbitration-related issues, such as whether public policy considerations can justify the court’s refusal to enforce international arbitration agreements. Since the country gained independence in 1975, PNG courts have often stayed court proceedings and referred disputes to arbitration. However, since 2005, a line of cases raised issues which went far beyond the parties’ arbitration agreement: Were there good reasons for parties to not go to arbitration? What was the attitude of the parties to arbitration? Was the defendant still ready and willing to go to arbitration? Has the defendant filed a defense in the court proceedings? Did the arbitration agreement make it mandatory for the parties to refer their dispute to arbitration? Has the plaintiff approached the court? These cases ignore the fundamental principle of arbitration: once the parties have agreed, through their commercial arrangements, to submit their dispute to arbitration, they have decided to waive the courts’ jurisdiction to resolve their dispute.

Justice Shepherd shared a 2019 PNG Supreme Court decision, penned by Justice Kandakasi, which held that the parties had disregarded their obligation to refer their dispute to arbitration by going to court. Thus, the Supreme Court remitted the case back to the national court, before which the case was first brought, and directed that the entire proceedings in the national court be stayed pending the parties’ arbitration. In Justice Shepherd’s opinion, PNG courts will now start to overturn earlier decisions that introduced extraneous factors into whether the court should enforce domestic and foreign arbitral awards.