Intermediate People’s Court of Zhengzhou，Henan (26 June 2013)

Civil Ruling of Zhengzhou Intermediate People’s Court

26 June 2013 [2012] Zheng Minsan Chuzi No. 37

Claimant: “Angfohuapin” Co. Ltd

Legal Representative: Morrokova Salad Ekaterina Polisovna, general manager 

Attorney: Dong Chundao, Shanghai AllBright Law Office

Respondent: Henan Harvest Chemical Company 

Legal representative: Zhang Zhanwei, general manager

Attorney: Qing Chaoxian, Henan Tianji Law Firm

This case concerns an application made by “Angfohuapin” Co. Ltd (“Angfo”) to

recognize an award rendered by the Belarusian Chamber of Commerce and Industry (“BelCCI”). After accepting the case, the Court constituted a collegiate panel on 9 February 2012 to hear the case, Angfo ’s attorney, Dong Chundao, and Henan Harvest Chemical Company (“Harvest”) ’s attorney appeared before the Court Now the case is decided and closed.

According to Angfo, the contractual dispute between Angfo and Harvest was referred to BelCCI for arbitration. On 11 August 2009, BelCCI rendered award No. 796/01-09 and ordered: 1. Harvest shall indemnify Angfo for USD 61,115.04; 2. Harvest shall pay the arbitration fees and costs for EUR 3,286.74. However, Harvest refused to enforce the award. Then, Angfo applied to the court to recognize and enforce the award.

Harvest contended that:

First, the Court should not accept the case because the requirements for the case filing are not satisfied. The document used in Court to initiate the case - Application Form to Recognize and Enforce a Foreign Arbitral award (“Application Form”- was signed only by the lawyer, Dong Huachun, which does not comply with the requirements under the Civil Procedure Law of the PRC, because; 1) The Application Form is not affixed with the seal of Angfo, so it cannot proove the real intention of Angfo. 2) Dong Chundao was not authorized to represent Angfo to file the case. According to the authorization letter, Dong Chundao was not specifically granted the right to file the request to recognize the arbitral award as a lawyer. The Authorization Letter expressly states: "on behalf of Angfo, Dong Chundao is authorized the  rights  to apply the enforcement of the arbitration，including the right to recognize, abstain, and modify the enforcement, and withdraw the case...” We can infer that the authorization scope is limited in the enforcement of the arbitration and the rights to litigation after initiating the proceedings, excluding the right to initiate a proceeding. Though the authorization letter is valid, Dong Chundao is not entitled to represent Angfo to file the case in court.

Second, the arbitration clause invoked in the BelCCI award No. 796/01-09 dated 11 August 2009 is invalid. The contract signed between Harvest and Angfo on 25 August 2008 was in English and in Russian versions. According to Article 11.6 of the contract, the two versions have the same and equal validity. According to Article 10 of the Russian version, if the parties cannot resolve a dispute through consultations, then may refer the dispute to a Minsk arbitration institution under the Minsk arbitration rules. However, in Article 10 of the English version of the contract, if the parties cannot resolve a dispute through consultations, they will refer the dispute to a Minsk arbitration institution under the Belarusian Arbitration Rules. Both versions agreed that the arbitration will be referred to the Minsk arbitration institution. In fact, no arbitration institution has been set up in Minsk. Therefore, the versions of the arbitration clauses are both invalid. The parties have not agreed either to BelCCI as the arbitration institution. Moreover, after having signed the contract, the parties never discussed the differences in the two versions of the arbitration clause. Therefore, the arbitration clause should be deemed as invalid. Above all, pursuant to Article 258(1) of the Civil Procedure Law of the PRC, the award should not be enforced.

Third, the case folly meets the ground to refuse the recognition and enforcement of a foreign award under the New York Convention, so the Court should reject Angfo’ s application. The BelCCI did not notify Harvest to attend the arbitration during the proceedings. According to the BelCCI award rendered on 11 August 2009, the arbitration institution accepted Angfo’s request for arbitration on 5 January 2009 and mailed Harvest the notice of arbitration, the request for arbitration and the attached materials. Harvest received these documents on 9 March 2009. Meanwhile, BelCCI notified Harvest of the time and place of the hearing, and this was received on 27 April 2009. However, by far, Harvest did not receive any documents and materials concerning Angfo’ s request for arbitration, not to mention any documents concerning the appointment of the arbitrators. Until the day Harvest received the notice of the Court, Harvest did not know the dispute had been referred to the BelCCI for arbitration. Article V (l)(b) of the New York Convention provides: “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”. In this case, the BelCCI tribunal has not properly notified Harvest to attend the arbitration proceedings, so Harvest was unable to defend its position before the tribunal. That is one of the reasons why the award should not be recognized and enforced by the Court.

Fourth, Angfo’ s application to recognize and enforce the BelCCI award No. 796/01- 09 exceeds the prescribed time limits. Pursuant to Article 267 of the Civil Procedure Law of the PRC, ''If an award made by a foreign arbitration institution needs the recognition and enforcement of a court of the People's Republic of China, the party shall directly apply to the intermediate people’s court located in the place where the party subject to the enforcement has its domicile or where its property is located. The people’s court shall deal with the matter according to the relevant provisions of the international treaties concluded or acceded to by the People's Republic of China or on the principle of reciprocity." However, there is no provision on time limits under the New York Convention. Therefore, the time limit for applying to recognize and enforce a foreign award shall be determined by the principle of reciprocity and follow the rules under the Civil Procedure Law of the PRC. Under Article 215 of the Civil Procedure Law, “the time period of applying the enforcement is two years.” In this case, the award for which Angfo applies for enforcement was rendered on 11 August 2009. Hence, according to the Civil Procedure Law, Angfo should have applied to recognize and enforce the award before 10 August 2011. In fact, Angfo applied to the Court on 10 November 2011. Obviously, Angfo’ s application has exceeded the time limit under Chinese law. Therefore, the award should not be recognized and enforced by the Court.

Fifth, as Harvest was not given notice of the arbitration and had no chance to present itself to the case, award No. 796/01-09 rendered by the BelCCI has errors on facts and in the decisions.

After the signature of the contract, Angfo paid the deposit amounting to 5% of the payment for the goods under the contract. But, according to the agreement, the deposit should be 10%. Nevertheless, Harvest still purchased two containers of products and delivered one of them to Angfo. Angfo did not pay the 90% of the payment for the goods within 3 days, and the rest 5% of the deposit in accordance with the contract. In addition, Angfo required Harvest to lower the price of the second container of products from USD 1720/ton to USD 1410/ton. Of course, Harvest could not accept this new request, and asked Angfo to pay another 5% of the deposit so they could continue to perform the contract and deliver the second container of products. But Angfo refused the request.

When the consultations with Angfo failed, Angfo breached the agreement and expressed it would not perform the contract under the original contract price. Harvest had no choice but to revoke the two containers back to China, and sought to further negotiate with Angfo. In March 2009, due to the longtime stock and the steep fall of the product price, Harvest had to sell the two containers of products at the price of 760 USD / ton to a company in Egypt.

Actually, Harvest suffered a huge loss: A. loss in the price difference of selling the 50.4 ton products: (1720-760) x 50.4= USD 48,384; B. the freight and costs of ports of the first container totaling USD8,700; C. expenses of storing phosphoric acid of 50.4 tons; D. interest incurred from October 2008 to March 2009 (six months in total), calculated at 1.5%per month which amounted to USD7,800 (USD1,720x50.4x1,5%x6). So, the total losses of the four items reached USD 72,384.

Based on the above, Angfo should be held responsible for the breach of contract. However, Harvest had no chance to defend itself and to present the above facts for the reason that it did not receive BelCCI’s notice for arbitration. Hence, Harvest applied to the Court to refuse the recognition and enforcement of the BelCCI award No.796/01-09.

Angfo provided the following evidence to proof its claim:

(1)Registration Name List of the National United Legal Person and Individual Business and its Chinese translation (notarized), in order to proof the qualification of Angfo as a legal entity. (2) Application Form of the Enforcement Injunction (notarized), aims to proof Angfo had applied to the Court to recognize and enforce the award within the time limit prescribed by the Civil Procedure Law of the PRC. (3) BelCCI award No. 796/01-09 and its Chinese version (notarized) aims to proof: i) the foreign award subject to the application of recognition and enforcement; ii) BelCCI has jurisdiction over the dispute between Angfo and Harvest (please refer to the second page of the award in Chinese); iii) in the arbitration proceedings, BelCCI had sent Harvest through mails of the notice for arbitration, request to arbitration, attached materials, the notice of the time and place of the hearing. (4) The express mail receipts dated 11 March 2009 and its Chinese translation (not notarized), aims to proof that the BelCCI was notified by express company that the notice of arbitration, the request to arbitration and attached materials had been delivered to, and received by Harvest. (5) The express mail receipts dated 11 May 2009 and the Chinese translation (not notarized), aims to proof that the express company had notified BelCCI that the notice of the time and the place of the hearing had been delivered to, and received by Harvest. (6) The Notice and its attachment List of Registered Mails (Packages) Submitted to Post Office issued by BelCCI on 9 August 2011 and the Chinese translations (not notarized), aims to proof the arbitral award had been delivered to Harvest. Also, according to the BelCCI Arbitration Rules, the day of delivery or transmission should be deemed as the day of receipt.

Harvest had no objection to the Evidence 1. Harvest questioned the Evidence 2 as follows: the document does not comply with the law, so is not legally valid. Also, the Application Form is fixed with the company seal and the signature of the legal representative, indicating the Angfo’s attorney was clear that any application forms to the Court should not be solely fixed with attorney’s signature. At last, the Evidence 2 has no bearing on the case, so it cannot change the fact that application of the recognition and enforcement of the award had exceeded the permitted time limit.

For the objectiveness of the Evidence 3, Harvest had no objection. However, it contended that the statements of the tribunal’s jurisdiction were self-contradictory. The parties did not agree to refer the dispute to an arbitration institution in Minsk in accordance with the BelCCI Arbitration rules, so the arbitration tribunal should not determine it had jurisdiction over the dispute on the grounds that “Angfo is an Belarus company, and there is only one arbitration institution in the Republic of Belarus, i.e. Belarusian Chamber of Commerce and Industry”. Moreover, the procedures of delivering documents in the Award are not consistent with the evidence provided by Angfo.

For the Evidence 4, 5, and 6, Harvest contended that these materials were issued by BelCCI, and did not indicate the service documents were arbitration-related. In addition, the recipients of the documents indicated by Evidence 4 and 5 were not the employees of Harvest. Moreover, the three evidences were not notarized, so were not legally valid.

Angfo claimed that pursuant to Article 28 of the Treaty on Civil and Criminal Judicial Assistance between the PRC and the Republic of Belarus, "Documents issued or certified by the court or other competent authorities of each Party, upon affixed with the seal of the relevant authorities, shall be valid to be used in the court or other competent authorities of the other Party. The documents shall not require any further certification or authentication.” However, Harvest claimed that this article should not apply to documents issued by international arbitration institutions as arbitration institutions should be deemed to be organizations for resolving commercial disputes, not court nor other competent authorizations.

On 5 March 2013, Angfo submitted the following additional evidence: (1) Certificate [2012] Bai Ling Ren Zi No. 0000099 issued on 2 November 2012 by the Embassy of the PRC in the Republic of Belarus, to proof the mail No. 980737131 sent by BelCCI on 6 March 2009 to Harvest at 24/F, Fortune Square, 32 Jingsan Road, Zhengzhou City, Henan Province, China, was delivered on 9 March 2009 at 16:45 local time, and received by LI XIAO HUI. (2) Certificate [2012] Bai Ling Ren Zi No. 0000098 issued on 2 November 2012 by the Embassy of the PRC in the Republic of Belarus, to proof mail No. 251542757 sent by BelCCI to Harvest at 24/F, Fortune Square, 32 Jingsan Road, Zhengzhou City, Henan Province, China, was delivered on 27 April 2009 at 15:30 local time, and received by ZHAO RUI. (3) Certificate [2013] Bai Ling Ren Zi No. 0000007 issued on 15 February 2013 by the Embassy of the PRC in the Republic of Belarus and the translation of the Certificate issued by Tongyi Translation (Shanghai) Company, to prove the BelCCI had preserved the original copies of the mail No. 980737131 and mail No. 251542757 sent to Harvest at 24/F, Fortune Square, 32 Jingsan Road, Zhengzhou City, Henan Province, China, and to prove the two mails had been delivered and received. (4) Certificate [2012] Bai Ling Ren Zi No. 0000100 issued by the Embassy of the PRC in the Republic of Belarus on 2 November 2012, aims to prove the award No. 796/01-09 was served to Harvest on 12 August 2009, by registered mail with acknowledgement of receipt. However, BelCCI had not been informed at to whether Harvest had received the mail. Also, the Certificate aims to proof the award was rendered by the tribunal in accordance with the Law of the Republic of Belarus of July 9, 199[9] “On International Arbitration court” and BelCCI Arbitration Rules, was affixed with the signatures of the arbitrators, therefore the award entered into force from the date of issuance pursuant to Article 41 of the Law of the Republic of Belarus “On International Arbitration court”.

Harvest, however, had questions about the additional Evidence 4. The evidence did not provide the original receipt of the registered mail, nor indicate the content of the documents. Meanwhile, Harvest wad dubious about weight of mailed parcel, which should not be the arbitral award.

Harvest has not submitted any evidence to the Court.

The Court holds that: The Authorization Letter (certified and notarized) can proof that Dong Chundao was authorized by Angfo to “sign and received relevant documents on behalf of Angfo”, “to handle other matters relating to the litigation on behalf of Angfo”, so Dong Chundao has right to apply to recognize and enforce the foreign award on behalf of Angfo.

Harvest argued that the arbitration clause of the contract is invalid, so BelCCI had no jurisdiction over the case. However, Harvest did not invoke the relevant laws of Belarus, nor BelCCI Arbitration Rules to prove that the arbitration clause hereof was invalid. So we would not accept Harvest ’s claim.

A core issue here is whether the arbitral award is subject to Article V(l)(b) of the New York Convention, i.e., whether 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. Document service in arbitration is subject to the arbitrations rules agreed by the parties, not to the Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters nor to the Treaty on Civil and Criminal Judicial Assistance between the PRC and the Republic of Belarus. Pursuant to Article 20 of the Rules of International Arbitration Court of BelCCI, the statement of claim, the statement of defence, notices, awards and other decisions of the International Arbitration Court must be communicated by registered mail with an acknowledgment of receipt or physically delivered against signature. A written communication is deemed to be received if it has been delivered to the recipient personally or to the address of his permanent residence, or location of his firm or his mailing address, unless otherwise provided by the agreement of the parties. So, the additional evidence provided by Angfo-Certificate [2012] Bai Ling Ren Zi No. 0000099, the Certificate [2012] Bai Ling Ren Zi No. 0000098, Certificate [2013] Bai Ling Ren Zi. No. 0000007, Certificate [2012] Bai Ling Ren Zi No. 0000100, are sufficient to prove that the way arbitration documents were mailed to Harvest complies with the agreement of the parties, as well as with the applicable arbitration rules. Therefore, pursuant to Article 41 of the Law of the Republic of Belarus “On International Arbitration court” the award entered into force from the date of its issuance.

Above all, according to Article V(l) of the New York Convention, the burden of proof for refusing the recognition and enforcement is the duty of Harvest. The evidence in this case are not sufficient to prove that Harvest was not given proper notice of the arbitration proceedings. Therefore we do not support Harvest’s allegations. As China and Belarus are contracting States to the New York Convention, based on Article 283 of the Civil Procedure Law of the PRC and Article IV of the Notice of the Supreme People's Court on Implementing the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Acceded to by China, we decide to recognize BelCCI award No. 796/01-09 rendered on 11 August 2009 in the arbitration case Angfohuapin Co. Ltd v. Henan Harvest Chemical Company.

The fees will be 500 RMB, and shall be borne by Harvest.

Presiding Judge: Liang Xiaozheng

Judge: You Qingbo

 Judge: Zhao Lei

26 June 2013

Clerk: Liu Pan

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*The original text is Chinese and has been translated into English for reference only. If there is any inconsistency or ambiguity between the Chinese version and the English version, the Chinese version shall prevail.