Nauru may get access to its frozen Australian bank accounts within a matter of days, after a court win.
The New South Wales Court of Appeal has dismissed an attempt by a US investment fund to make Nauru pay $31 million for bonds it defaulted on.
The court dismissed the appeal by Firebird Global Master Fund and set aside a garnishee order on Nauru’s bank accounts held in Australia.
The garnishee order had prevented Nauru’s government from accessing its bank accounts held with Westpac in Australia.
That had caused Nauru’s administration to warn that it was about to run out of cash with which to pay for essential goods, such as generator fuel, and public servant salaries.
The court stayed the order to unfreeze Nauru’s bank accounts until 5:00pm (AEDT) on Monday to give Firebird time to decide if it will seek leave to appeal to the High Court.
The Court of Appeal also ordered Firebird to pay Nauru’s costs for the case.
The court dismissed an application by the Australian Government which opposed Australian aid money in a Nauru Government bank account being paid to Firebird and Japanese creditors if the investment fund won the case.
Firebird sued Nauru in the Tokyo District Court and was awarded damages in 2012 of $US37 million in compensation for a default on Nauru Government bonds plus interest.
Nauru did not pay the damages and Firebird is now seeking to have that judgement upheld in other jurisdictions.
The Court of Appeal upheld a judgement earlier this month by the NSW Supreme Court that the court did not have jurisdiction over the case because Nauru had sovereign immunity under Australian law as a foreign state.
The original judge set aside the registered judgment of the Tokyo court and the garnishee order over the bank accounts and the Court of Appeal upheld the primary decision.
“The bank accounts are immune from execution of the garnishee order … as the evidence and the individual circumstances of Nauru establish that the funds were set aside for purposes other than commercial purposes,” the NSW Court of Appeal judgment said.
The garnishee order covered 30 bank accounts held by Westpac on behalf of Nauru with a combined balance of $32.5 million.
Representatives from the Nauru Government and Firebird did not make any comment after the judgment.