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Defiant Directors Jailed in High Court Arbitration Dispute

Decisions of arbitrators are ultimately backed by the authority of the High Court and those who fail to abide by their awards can face heavy financial penalties and even loss of liberty. In one case, directors of a grain trading company were sentenced to 18 months' imprisonment for their deliberate defiance of court orders.

The company had fully participated in arbitration proceedings before the Grain and Feed Trade Association in respect of a dispute with an international rice supplier. However, following the arbitrator's decision, it had entirely turned its back on the dispute resolution process and refused to communicate or engage with the supplier.

The latter obtained court orders freezing the company's assets and requiring it to provide information. Those orders had been properly served on the company but had been ignored. It was a blatant case of a blanket refusal to comply with the orders and the Court found the company and two of its de facto directors in contempt.

The directors were each committed to prison for 18 months and the supplier was granted liberty to apply further to the Court to sequester the company's assets.

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