The Guangzhou Intermediate People’s Court of Guangzhou (3 December 2013)

(2013)Sui Zhongfa Minsi Chuzi No.12

Claimant: O’KEY Logistics Co., Ltd.

Legal Representative: Sokolov Evgeniy Vladimirovich

Attorney: Fu Jun, Beijing Yingke (Guangzhou) Law Firm.

Respondent: Guangdong South Fortune Import & Export Co., Ltd.

Legal Representative: Lu Yong, Chairman of board of directors.

Agents ad litem: Su Xiaojian and Tang Wei, employees of the company.

The case concerns the application of the recognition and enforcement of the foreign award between O’KEY Logistics LLC (“O’KEY”) and Guangdong South Fortune Import & Export Co., Ltd (“South Fortune”). After having accepted the case, in compliance of the law, the Court constituted a collegial panel and heard the case. The hearing in this case has now been concluded.

O’KEY claimed as follows: The dispute over the payment for goods between O’KEY and South Fortune was referred to arbitration before the International Commercial Arbitration Court (“ICAC”) of the Russian Federation Chamber of Commerce and Industry (“RFCCI”) and Award No. 982010 was rendered. However, South Fortune failed to perform its obligation under the Award. Pursuant to the Convention of the Recognition and Enforcement of Foreign Arbitral Awards, the Civil Procedure Law of the PRC and applicable judicial interpretations, O’KEY hereby applied as follows: 1. To recognize and enforce Award No. 98/2010 issued by the ICAC of RFCCI; 2. To order South Fortune to pay the arrears for USD 38,478.45 (RMB 243,183.80) and the arbitration fee for USD 5,448 (RMB 34,431.36); 3. To order South Fortune to bear the costs of the case.

South Fortune defensed as follows First, O’KEY is not a qualified claimant. The name stated in the Certificate Registration of the Legal Entity submitted by the claimant is “O’KEY Logistics Co., Ltd.”, but the name stated in the Application for Arbitration is “O’KEY Co., Ltd.’’, and the Application is not affixed with the corporate seal. The claimant failed to prove the said two companies are the same one. Therefore, South Fortune argued that the claimant should be O’KEY Logistics Co., Ltd. as stated in the Certificate Registration of the Legal Entity. Otherwise the claimant should be deemed to fail to submit the qualification document, and therefore should not be deemed as a party to the Award. Second, O’KEY had submitted an application for the recognition and enforcement of the Award on the same grounds before, but then withdrew the application for its own reason. O’KEY should be deemed to waive its own rights due to the withdrawal of its application in the previous case, so its application in the current case should be dismissed. Third, the application of the recognition and enforcement of the foreign awards should meet the requirement of a two-year time limit under the Chinese law. However, in the case, the application by O’KEY was made after expiry of the time limit. The Award was concluded on 8 December 2010, however, O’KEY submitted the application on 24 January 2013. In the event that O’KEY failed to prove that its application within the time limit, it should bear any unfavorable outcome thus caused. Fourth, the contract submitted by O’KEY is a photocopy, and Yu Chengquan (余承泉)’s signature on the contract was not signed by the person himself. Therefore, the arbitration agreement did not reflect South Fortune’s real intention. Fifth, South Fortune did not receive any notice from the ICAC of the RFCCI. Pursuant to the arbitration rules submitted by O’KEY, the statement of claims, the statement of defences, the notice of correction and none of the documents relating to the arbitral award have been served on South Fortune. Even if the post receipt submitted by O’KEY was true, since the receipt does not show any name nor the content of the materials mailed, it still cannot prove that all the arbitration documents had been delivered to South Fortune. In addition, the Notice of Arbitration submitted by O’KEY was a notice issued by the tribunal, it was insufficient to prove that the tribunal had notified South Fortune. Sixth, the composition of the arbitral tribunal violates the arbitration rules. According to Article 17.2 of the ICAC Rules, an arbitral tribunal shall consist of three arbitrators, unless in view of the complexity of the case, the amount of the claim (which shall not, as a rule, exceed USD25,000), and other circumstances, the ICAC Presidium determines, in its own discretion, that the case shall be settled by a sole arbitrator. According to the Law of the Russian Federation on International Commercial Arbitration, in the event the parties fail to appoint an arbitrator, the number of arbitrators shall be three (3). In this case, the amount claimed by O’KEY is far more than USD 25,000, and South Fortune did not appoint an arbitrator, therefore the arbitral tribunal should consist of three (3) arbitrators. Moreover, according to the arbitration rules, where a case is examined by a sole arbitrator, the ICAC Presidium shall appoint the sole arbitrator. However, in the case, the Award stated that the said arbitrator was appointed by the executive secretary. Therefore, the composition of the arbitral tribunal did not comply with the arbitration rules. Seventh, pursuant to the arbitration rules, any correction to an arbitral award shall be made within thirty (30) days. In this case, however, the correction made by the arbitral tribunal took place on 14 January 2011, which exceeded the time limit as set forth in the rules on arbitration. During the hearing of this case, South Fortune claimed it had not been properly notified to appoint an arbitrator or engage in the arbitration proceedings, so the composition of the arbitral tribunal and the arbitration proceedings were not in compliance with the law of the country where the arbitration took place. According to Article V (1) (ii) and (iv) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the recognition and enforcement of the arbitral Award should be refused.

To support its claims, O’KEY submitted the following evidence to the Court: Evidence No.1:O’KEY’s Business Registration Certificate and the identity certificate of the legal representative; Evidence No.2: the Arbitration Award and the Resolution on Arbitration Award issued by the ICAC of the RFCCI; Evidence No.3: the Sales and Purchase Contract and its supplementary agreement; Evidence No.4: The Rules of the International Commercial Arbitration Court (“ICAC Rules”); Evidence No.5: the four (4) successful delivery notes issued by UPS Company in Russia; Evidence No.6: the Notice of Arbitrator Appointment issued by the ICAC of the RFCCI; and Evidence No.7: the industry and commerce registration materials of Guangdong South Fortune.

Upon the examination of evidences, South Fortune challenged the evidences presented by O’KEY as follows: Evidence No.1, South Fortune challenged that O’KEY’s Business Registration Certificate, arguing that the name on the said certificate is “O’KEY Logistics Co. Ltd.’’ but the name in the Application and the arbitration Award were both “O’KEY Co., Ltd.”, without the word “Logistics”. South Fortune had no objection to the identification of the legal representative. Evidence No.2, South Fortune had no objection. Evidence No.3, South Fortune refused to admit the Sales and Purchase Contract and its supplementary agreement, arguing these documents were photocopies and the signature of “Yu Chengquan” was not signed by the person himself. Evidence No.4 - ICAC Rules, South Fortune had no objection. Evidence No.5, South Fortune challenged the four delivery notes of the arbitration documents for the reasons that it has not been served with any arbitration document, and none of the record shows that it has signed and accepted the said documents. Foreign arbitration documents shall be served by China’s diplomatic and judicial departments pursuant to the relevant provisions of the Treaty between the PRC and the Russian Federation on Mutual Legal Assistance in Civil and Criminal Matters. Evidence No.6, South Fortune challenged the Notice of Arbitrator Appointment issued by the ICAC of the RFCCI, arguing that in addition to the aforesaid reasons, no procedure of notarization has been completed. Evidence No.7, South Fortune had not objection.

Respondent has not submitted any evidence.

After hearing the case, the Court found that: On 16 May 2007, the buyer O’KEY and the purchaser South Fortune signed the Sales and Purchase Contract (“Contract”) of No. DCP-75/160507 in Saint-Petersburg, Russian Federation. According to the Preamble of the Contract, the registered address is: 3/F, Ramada Pearl Hotel, No.9 Mingyue Yi Road, Yuexiu District, Guangzhou, Guangdong, China. According to Article 1.12 - Arbitration and Governing Law: any dispute arising from performance of this Contract yet not included herein, shall be settled in compliance with the law of Russian Federation, and the governing law is the Russian Federation Substantive Law. Any dispute, objection or request arising from this Contract, or any issue regarding the performance, breach, termination or invalidation of this Contract shall be resolved through arbitration by the ICAC of the RFCCI under the ICAC Rules. This Contract is written both in English and Russian, with the company seal of “Guangdong South Fortune Import & Export Co., Ltd.” and the signature of Yu Chengquan affixed on each page. According to South Fortune, the Contract provided O’KEY is a photocopy rather than the original, and the signature of Yu Chengquan was not signed by the person himself. Yu Chengquan was once the legal representative of South Fortune, but retired at the end of 2008.

On 6 May 2010, due to the dispute arising out of the Contract, O’KEY applied to the ICAC of the RFCCI for arbitration, requesting the tribunal to order South Fortune to return the payment for goods in the amount of USD 38,478.45. On 8 December 2010, the ICAC of the RFCCI issued the Award No. 98/2010, ordering that South Fortune shall compensate O'KEY for the outstanding payment for goods in the amount of USD 38,478.45 and the arbitration fee of USD 5,448.

On 14 January 2011, the ICAC of the RFCCI issued the resolution No.98/2010 as follows: as the full name of South Fortune was not stated in the Award rendered on 8 December 2010, the ICAC decided to, in accordance with Article 43 (1) of the ICAC Rules confirm that “GuangDong South” as stated in the said Award shall be Guangdong South Fortune Import & Export Co. Ltd. This resolution shall be deemed as an integral part of the Award (No. 98/2010) rendered by the ICAC of the RFCCI on 8 December 2010.

This Court also finds the following facts,

A.According to the ICAC Rules (Chinese translation) submitted by O’KEY “§16. Mailing and Delivery of Documents”

1.The ICAC shall mail the documents in a case to either of the parties at the addresses given by the party for the documents to be mailed to it or to the other party. The parties shall immediately notify the ICAC of any changes in the addresses given previously.

2.All documents submitted by either of the parties to the ICAC shall be transmitted by the ICAC to the other party, unless these documents have been transmitted by such party to the other party during the arbitral proceedings. Any reports prepared by experts or other documents classified as evidence on which an arbitral award may be based shall be transmitted to the parties as well.

3.The statements of claim, statements of defence, notices of the hearing, arbitral awards, and orders shall be sent by registered mail with return receipt requested, or otherwise, provided that a record is made of the attempt to deliver the mail.

4.Other documents may toe sent by registered or ordinary mail, and notices and communications also may be sent by wire, fax, e-mail, or otherwise, provided that a record is made of the communication sent.

5.Any of the aforesaid documents may alternatively be delivered by courier against receipt.

6.A communication shall be deemed received on the day when it is received by a party or when it should have been received if sent as specified in the preceding subparagraphs of this paragraph.

7.Where a party appoints a representative, the documents in the case shall be sent or delivered to such representative, unless said party has notified the ICAC otherwise, and shall be deemed sent or delivered by said party.

§ 17. Composition of the Arbitral Tribunal

1.If the parties have not agreed otherwise, an arbitral tribunal in the case shall be established as required under subparagraphs 2 to 9 of this paragraph.

2.An arbitral tribunal shall consist of three arbitrators, unless in view of the complexity of the case, amount of the claim (which shall not, as a rule， exceed $25,000), and other circumstances, the ICAC Presidium determines, in its own discretion, that the case shall be settled by a sole arbitrator.

3.Where an arbitral tribunal is to be composed of three arbitrators, the claimant shall, within 15 days after receipt of a notice from the ICAC, give the ICAC notice of the arbitrator and reserve arbitrator appointed by him, unless the claimant has made such appointment in advance.

4.If the claimant does not choose an arbitrator and a reserve arbitrator within the period of time referred to in subparagraph 3 of this paragraph, the ICAC Presidium shall appoint an arbitrator and a reserve arbitrator for him.

5.Where an arbitral tribunal is to be composed of three arbitrators, the respondent shall, within 15 days after receipt of a notice from the ICAC that an arbitrator and a reserve arbitrator have been chosen or appointed by the claimant, give the ICAC notice of the arbitrator and reserve arbitrator chosen by him.

6.If the respondent does not choose an arbitrator and a reserve arbitrator within the period of time referred to in subparagraph 5 of this paragraph, the ICAC Presidium shall appoint an arbitrator and a reserve arbitrator for him.

7.Where an arbitral tribunal is to be composed of three arbitrators, the ICAC Presidium shall appoint a presiding arbitrator and a reserve presiding arbitrator from the List of Arbitrators.

8.Where an arbitral tribunal is to be composed of three arbitrators to arbitrate between multiple claimants and multiple respondents, the multiple claimants and the multiple respondents shall each choose one arbitrator and one reserve arbitrator.

9.Where the claimants or respondents have not reached an agreement, the ICAC Presidium shall appoint one arbitrator and one reserve arbitrator. The ICAC Presidium may also appoint an arbitrator and a reserve arbitrator for the other party as well.

10.Where a case is examined by a sole arbitrator, the ICAC Presidium shall appoint a sole arbitrator and a reserve sole arbitrator from the List of Arbitrators.

11.The ICAC Presidium may authorize the ICAC President to decide on the appointment of an arbitrator and a reserve arbitrator， including a presiding arbitrator and a reserve presiding arbitrator, and a sole arbitrator and a reserve sole arbitrator.

12.The duties of an arbitral tribunal and the presiding arbitrator thereof, in accordance with these Rules, shall apply to the sole arbitrator as well.

§ 20. Replacements in the Arbitral Tribunal

Where an arbitrator has declined to assume his duties, or has been challenged, or cannot participate in the proceedings in the case for any other reasons, he shall be replaced by the respective reserve arbitrator. Where such replacement cannot be made, a new arbitrator shall be appointed or chosen in accordance with these Rules. If the arbitrator was appointed by the ICAC, the ICAC shall make the new appointment as well. If the arbitrator chosen by a party has declined to assume his duties, or has been challenged, or his powers have been terminated for any other reasons, the ICAC may make a new appointment.

The provisions of this subparagraph shall apply where the parties have not agreed otherwise.

B.The Award No.98/2010 (Chinese translation) rendered by the ICAC of the RFCCI states as follows: (1) On 22 July 2010, the secretariat of the ICAC sent to South Fortune the Application for Arbitration, relevant documents and Notice on Arbitrators. In the Notice, the ICAC recommended South Fortune to submit to the ICAC an answer within thirty (30) days upon receipt of the duplicate of the Application for Arbitration. According to the notice from messenger service, the arbitral materials and the notice sent by the ICAC on 22 July 2010 were served on South Fortune on 26 July 2010. The time for arbitration decided by the secretariat of ICAC was 16:00 on 17 November 2010. In addition, Subpoena No. 1800— 98/2930 signed and issued on 22 September 2010 was sent to O’KEY, and was served on to South Fortune on 7 September 2010. (2) According to Article 17 of the ICAC Rules, the executive committee appointed Chet Wilt Cob A.M. as the sole arbitrator and Chaika V.I. as the reserve arbitrator.

C.South Fortune contended that the composition of the arbitral tribunal was not in compliance with the ICAC Rules on the following grounds: According to Article 17 (2) of the ICAC Rules, if the claimed amount exceeds USD 25,000, the arbitral tribunal shall consist of three (3) arbitrators. However, the arbitral tribunal in this case consisted only of a sole arbitrator; pursuant to Article 17 (9) of the ICAC Rules, the sole arbitrator shall be appointed by the ICAC presidium, but the sole arbitrator in this case was appointed by the executive committee. O’KEY replied that the possibility that a case where the claimed amount exceeds USD 25,000 may still be heard by a sole arbitrator is not excluded in Article 17 (ii) of the ICAC Rules. The sole arbitrator in this case was appointed by the ICAC presidium, and the expression of “ICAC presidium” in the Award in Russian was the same as that in Article 17 (ii) of the /C4C in Russian. In the Chinese translation of the Award, the expression that the sole arbitrator was appointed by executive committee was incorrect due to the translation error.

D.O’KEY also provided four delivery notes issued by UPS Company in Russia to prove that the tribunal mailed relevant arbitration materials and the Award to Guangdong South Fortune Import & Export Co. Ltd at the address of 3/F, Ramada Pearl Hotel, 9 Mingyue Yi Road, Yuexiu District, Guangzhou, Guangdong on 26 July 2010, 7 September 2010, 26 January 2011 and 27 January 2011，respectively. The four notes are marked respectively “Decision 98/10”, “Resolution 98/10”, “Agenda 98/10” and “Decision (litigation) 98/10”. These marks, according to O’KEY, are explanatory notes of the case citation of the arbitration.

E.South Fortune also argued that the name of O^EY on the Registration Certificate of Legal Entity is “O’KEY Logistics Co., Ltd.’’, but the name of O’KEY on the Application for Arbitration is “O’KEY Co., Ltd.”; that O’KEY failed to prove the said two companies are the same one company, therefore, O’KEY is not a qualified claimant in this case. However, O’KEY contended that the inconsistency in company’s name was caused by mistranslation, and the two said companies are the same. Upon examination, this Court finds that the names of the Claimant on the following identity documents in Russian are the same: the Registration Certificate of Legal Entity, the Sales and Purchase Contract, the Award and the Letter of Authorization. But as for the Chinese counterparts of the said documents, only the Registration Certificate of Legal Entity records the name of the Claimant as “O’KEY Logistics Co., Ltd.’’， and the other three documents states the name of the Claimant as “O’KEY Co., Ltd.”. During the hearing, South Fortune refused to provide additional Chinese translation to prove the companies as stated in the aforementioned documents are different.

  F.  O’KEY once applied to this Court to recognize and enforce the Award on 19 April 2012. This Court accepted such application and filed the case as (2012) Sui ZhongFa Min Si Chu Zi No.101. Later, on 5 November 2012, O’KEY withdrew the application for the reason that it would take a long time to get the relevant evidence certificated and notarized, and it would rather submit another application once such evidence was ready. On 5 November 2012, the Court sustained the application for withdrawal.

This Court held as follows: the case concerns a dispute arising from the application for recognition and enforcement of a foreign arbitration award, and the domicile of South Fortune is within the jurisdiction of this Court. According to Article 283 of the Civil Procedure Law of the PRC, this Court has jurisdiction over this case. The Award was issued by an arbitration institution within the territory of the Russian Federation. China is a member state to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (which became effective in China on 22 April 1987). In accordance with Article 21 of the Treaty between the PRC and the Russian Federation on Mutual Legal Assistance in Civil and Criminal Matters, two parties shall mutually recognize and enforce the arbitral awards made in other contracting party’s territory pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards signed in New York on 10 June 1958. Accordingly, this dispute shall be resolved pursuant to the relevant provisions of the Convention on the Recognition and Enforcement of Foreign Arbitration Awards and the Civil Procedure Law of the PRC.

Regarding South Fortune’s challenge over O’KEY’s qualification of being a claimant, this Court finds as follows: the names of the Claimant in Russian on the Registration Certificate of Legal Entity, the Sales and Purchase Contract, the Arbitration Award and the Letter of Authorization are the same. Although the names on these documents in Chinese are inconsistent with that on the original in Russian, South Fortune failed to prove that the subject on the Chinese version and that on the Russian originals are not the same one. The Court supports South Fortuned claim that the inconsistency of the Chinese names was caused by translation errors. Also, the Court refused to support South Fortune’s claim that O’KEY is not qualified to be a claimant in the case.

Regarding the issues whether or not O’KEY, after withdrawing the application for recognition and enforcement of foreign arbitral awards， may submit the same application again, and whether or not such application has exceeded the time limit, this Court finds as follows: O’KEY withdrew the application for recognition and enforcement of the arbitral award after submitting it, which was merely an exercise of its own right of litigation, not in violation of any mandatory and prohibitive provisions of laws and regulations, thus, shall be sustained. Therefore, O’KEY shall not be deemed to have waived its substantive right to submit such application again. The ICAC of the RFCCI rendered the Award on 8 December 2010. The first time O’KEY submitted the application was 19 April 2012, not exceeding the time limit as set forth in Article 239 of the Civil Procedure Law of the PRC. On 5 November 2012, O’KEY withdrew the first application for recognition and enforcement, and this Court sustained the withdrawal on the same day. Thus, the provision on the suspension of time limit for enforcement application shall be applicable. Accordingly, O’KEY submitted the second application on 24 January 2013, did not exceed the two-year time limit for the application for enforcement.

Regarding South Fortune’s argument that it did not properly served on the no notices on arbitrator appointment or arbitration procedures, this Court finds as follows: according to the Award, the Application for Arbitration, relevant documents and the Notice on Arbitrators were delivered to South Fortune by the secretariat of the ICAC on 22 July 2010, and had been received by South Fortune on 26 July 2010; the subpoena was served on South Fortune by the ICAC on 7 September 2010. The statements in the Award can be supported by such evidence as the four successful delivery notes issued by UPS Company in Russia and provided by O’KEY. In addition, the address on the delivery notes is the same as the address of O’KEY on the Contract. Therefore, according to Article 16, Provisions on Mailing and Delivery of Documents, of the ICAC Rules, it shall be deemed that the tribunal had performed its obligation of delivering South Fortune the notices on arbitrator appointment and arbitration procedures. Therefore, this Court dismisses South Fortune’s argument that it refuses to recognize and enforce the Award because the arbitration-related notices had not been. properly served thereon.

Regarding South Fortune's argument that the composition of the arbitral tribunal was not in compliance with the rules on arbitration, this Court finds as follows: According to Article 17, Provisions on Composition of Arbitral Tribunal, of the ICAC Rules, the ICAC presidium has the right to appoint a sole arbitrator to settle a case in view of the specific circumstances of the case. In addition, according to the Award in Russian, the sole arbitrator for this case was appointed by the ICAC presidium. South Fortune had no evidence to prove that the composition of the arbitral tribunal violated the provisions of the Law of the Russian Federation on International Commercial Arbitration. Thus the composition of the arbitral tribunal complied with the provisions of the ICAC Rules. This Court thus dismisses South Fortune’s argument that it refused to recognize and enforce the arbitral award in question because the composition of the arbitral tribunal was not in compliance with the rules on arbitration.

As to the following issues: the contract submitted by O’KEY was a photocopy, the signature of “Yu Chengquan” was not signed by the person himself, the arbitration agreement failed to reflect South Fortune's true intention, and the resolution on the Award made on 14 January 2011 by the tribunal exceeded the time limit of thirty (30) days as set forth in the ICAC Rules, this Court finds that these issues are not covered by Article 5, Matters for Refusing the Recognition and Enforcement of Foreign Arbitral Tribunal, of the Convention on Recognition and Enforcement of Foreign Arbitral Awards, therefore this Court decides not to make any further examination on these matters.

Above all, O’KEY, according to Article IV of the Convention on Recognition and Enforcement of Foreign Arbitral Awards, has submitted the certified original copy of the arbitration award, the duplicate of the resolution on arbitral award, and their corresponding Chinese translations. South Fortune failed to prove that the Award No.98/2010 rendered by the ICAC of the RFCCI on 8 December 2010 meets the requirements for refusing to recognize and enforce an arbitral award as set forth in Article V of the Convention on Recognition and Enforcement of Foreign Arbitral Awards. O’KEY requests are in compliance with the Decision on Acceding to The Convention on Recognition and Enforcement of Foreign Arbitral Awards, and are not in violation of the saving clauses declared upon the PRC’s accession to the Convention. Therefore, the Award shall be recognized and enforced. In accordance with Articles IV and V of the Convention on Recognition and Enforcement of Foreign Arbitral Awards, and Article 283 of the Civil Procedure Law of the PRC, this Court hereby decides as follows:

The Award No. 98/2010 rendered by the ICAC of the RFCCI on 8 December 2010 shall be recognized and enforced.

The application and enforcement fees for this case in the amount of RMB 4064 shall be borne by South Fortune.

This ruling shall take effect upon service.

Presiding Judge: Cheng Jinghui

Judge: Xu Baoyu

Acting Judge: Luo Yi

3 December 2013

Clerk: Fang Zhuodi

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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.