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Factual Summary:

The Plaintiff and Defendant signed a sales contract of styrene on Nov.17, 2014 . The Plaintiff prepared goods as per the contract. However, since the Defendant did not issue the letter of credit as agreed in the sales contract, the Plaintiff had to terminate the contract.

According to the contract, in case of dispute, the disputes should be submitted to Singapore International Arbitration Center for arbitration award according to its arbitration rules in effect and the jurisdiction is Singapore laws and is subject to the interpretation of Singapore laws.

On Jan.22. 2015, the Plaintiff initiated arbitration request from Singapore International Arbitration Center seeking for compensation of losses, interests and related charges caused thereby.

On Jan.27, 2015, Singapore International Arbitration Center forwarded emails to both parties requiring them to nominate an arbitrator within 14 days upon receipt of the notice, stating that otherwise, the chair of the arbitration tribunal shall make the nomination according to the Singapore International Arbitration Center Arbitration Rules.

On Mar.14, 2016, Singapore International Arbitration Center made the arbitration award in favor of the Plaintiff.

According to the arbitration award made by Singapore International Arbitration Center on March 14, 2016, the Defendant constitutes material default and should compensate the Plaintiff for USD924,000 plus interests, legal fees, arbitration fees and etc. It also stated that the Defendant did not response as required nor nominate any arbitrator.

However, since the Defendant did not compensate according to the arbitration award, the Plaintiff petitioned from Nanjing Intermediary People’s Court for its recognition and enforcement of the Arbitration Award made by Singapore International Arbitration Center.

The court entered in judgment for the Plaintiff.

1
Jun Xu, Deputy General Manager, Bank of China, Jiangsu Branch, China; Member of ICC Banking Commission’s Executive Committee

Legal Analysis:

Legal Analysis:

1. Foreign Arbitration Recognition and Enforcement

Nanjing Intermediary People’s Court states:

“... the arbitration award was made in Singapore, and both China and Singapore are the contracting countries of the Convention on the Recognition and Enforcement of Foreign Arbitration Awards, according to Article 283 of Civil Procedure Law of the People’s Republic of China, when determining whether the arbitration award should be recognized and enforced, the relative rules in Convention on the Recognition and Enforcement of Foreign Arbitration Awards shall be applied. Only under the circumstances where the evidence provided by the Defendant indicates that the arbitration award falls within the scope of Convention on the Recognition and Enforcement of Foreign Arbitration Awards Article V 1, the people’s court may decline to recognize and enforce the arbitration award at the request of the Defendant”.

Convention on the Recognition and Enforcement of Foreign Arbitration Awards Article V.1 stipulates:

“Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where recognition and enforcement is sought, proof that:

  • a) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon under the law of the country where the award was made; or
  • b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or
  • c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or
  • d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or failing such agreement, was not in accordance with the law of the country where t he arbitration took place; or
  • e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

2. Arbitration rules

The court noted that, according to Article 3 of the Singapore International Arbitration Center Arbitration Rules, the initiator should forward a copy of the arbitration notice to the respondent. Article 4 requires the respondent to respond in writing to the initiator within 14 days upon receipt of the arbitration notice. Article 8(2) stipulates that the party failing in the nomination of arbitrator within 14 days upon receipt of the arbitrator nomination notice or according to the agreed methods, the chairman of the center shall nominate on that party’s behalf.

The court determined that according to the contract agreed between both parties, the disputes should be submitted to Singapore International Arbitration Center for arbitration, the Defendant’s arguments that the Plaintiff did not notify them of the arbitrator, arbitration time etc were not supported by the court since they did not nominate an arbitrator within 14 days upon receipt of the arbitration notice, and the court considered that the appointment of arbitrator by the arbitration tribunal was in compliance with the arbitration rules.

Comments by Jun XU:

1. Recognition and enforcement of foreign arbitration award

Following the case of Kolmar Group AG v Jiangsu Textiles Industry (Group) Import & Export Ltd. [2016](Su 01 Xie Wai Ren No.3) (P.R.China), Nanjing Intermediary People’s Court made judgment in this case recognizing Singapore’s arbitration award, however, based on different legal basis, Article 283 of Civil Procedure Law of the People’s Republic of China.

Article 283 stipulates: “ If an award made by a foreign arbitral organ requires the recognition and enforcement by the people’s court of the People’s Republic of China, the party concerned shall directly apply to the intermediate people’s court in the place where the party subject to enforcement has his domicile or where his property is located. The people’s court shall deal with the matter in accordance with the international treaties concluded or acceded to by the People’s Republic of China or with the principles of reciprocity”.

Despite the fact that the recognition and enforcement of foreign judgment or arbitration is a case by case issue, it is still a step forward for the courts in China in that aspect and is an indication of the court’s openness.

3. Contract

The court was not in favor of the Defendant’s arguments that the contract based upon which the arbitration award was made was in violation of the laws of P.R. China.

The court considers that both parties had agreed in the contract that the contract was to be interpreted according to Singapore laws, and the Defendant did not provide sufficient evidence proving that the recognition and enforcement would be against the public policies of China. It is an indication that the court in China respects the parties’ choice of jurisdiction, which is also an important basis the judgment was made.

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The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of the ICC or Coastline Solutions.