The English Court of Appeal has upheld the enforcement of a China International Economic and Trade Arbitration Commission (CIETAC) award in favour China-based steel supplier Sinocore and dismissed an appeal from an earlier UK Commercial Court decision in favour of a UK-based buyer, RBRG Trading.

The judgment is notable for its unusual endorsement by a London court of a Chinese legal decision rather than a lower UK court's decision.

L/C case

The case related to a contract to sell rolled steel coils shipped from China to Mexico.

Payment was to be made by an irrevocable letter of credit (L/C), but early on in the transaction it transpired that forged or misdated bills of lading were presented in order to comply with a purportedly amended shipment date under the L/C.

Payment under the L/C against the misdated bills of lading was prevented by an injunction.

Claims and counterclaims

Sinocore, the Chinese sellers of the rolled steel coil, terminated the deal due to breach of contract by the UK-based buyer, RBRG Trading.

RBRG commenced CIETAC Arbitration and Sinocore counterclaimed for damages claiming that the UK-based company breached the sale contract by their unilateral attempt to amend the shipment date under the L/C.

Court judgment

The CIETAC Award concluded that RBRG Trading had breached the sale contract in instructing the bank to issue an amendment to the L/C, which was itself not compliant with the terms of the sale contract. But a UK Commercial Court subsequently dismissed the CIETAC award and found in favour of RBRG.

But the English Court of Appeal has now dismissed the lower UK court's decision, awarded damages to Sinocore, dismissed the counterclaim against Sinocore and ordered RBRG to pay US$4.8 million in damages plus costs.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.