The Intermediate People’s Court of Wuxi，Jiangsu (10 October 2014)

Civil Ruling of Wuxi Intermediate People’s Court

(2014)Xishangwaizhongshenzi No. 0004, 10 October 2014

(2014) Foreign Related Commercial Arbitration No. 0004

Gloria Johns Co. Ltd, (Petitioner)

Ostrovskaya M.B. (Legal Representative, CEO)

Wen Zhang, Jingjuan Zhang (Attorney, Shanghai Huayi Law Firm)

Dong Xiang Textile Co. Ltd. (Respondent)

Xiaoying Jiang (Legal Representative, Chairman of the Board)

Yunkai Ping (Attorney, Jiangsu Chenyang Law Firm)

Gloria Johns Co. Ltd. (Gloria Johns), Petitioner, filed a request for recognition of foreign arbitral award against Dong Xiang Textile Co. Ltd. (Dong Xiang), respondent. After the case was registered on 14 August 2014, this court established collegiate bench, and the case was heard on 22 September 2014. Wen Zhang, the counsel for Gloria Johns Co. Ltd., and Yunkai Ping, counsel for Dong Xiang, attended the hearing. The case is now closed.

Gloria Johns submitted: Dong Xiang failed to perform its contractual obligation of supplying the goods of $18,080.24，Gloria Johns referred the dispute to the International Commercial Arbitration Court at the Russian Federation Chamber of Commerce and Industry (ICAC at the RF CCI,“ICAC”）according to the arbitral clause signed between the parties. In the arbitral award No. 209/2013 rendered on 17 March 2014, the ICAC ordered Dong Xiang to return the goods payment of $18, 080.24, plus arbitration fees and taxes with the amount of $2,927. Gloria Johns applied to this court for recognition of arbitral award No. 209/2013.

Dong Xiang has argued in the first place that the Petitioner had never paid the $18,080.24. Secondly, respondent had not received the notice from the arbitral tribunal, respondent was thus unable to attend the tribunal hearing. And thirdly, even if the tribunal did send out the notice, the purpose of the notice had not been realized since it contained no Chinese translation of the notice.

In response to Dong Xiang’s arguments, Gloria Johns replied that the ICAC had sent the notice of arbitration through DHL, the document was received and signed by Dong Xiang. Secondly, the parties have agreed to refer disputes to ICAC arbitration, the arbitration rules of ICAC were therefore accepted by the parties as the rules governing the arbitral proceedings. The ICAC arbitration rules provided that the arbitration proceedings were to be conducted in Russian. Gloria Johns submitted Contract 408/KP-12 signed between the parties, the arbitral award 408/KP-12 rendered by ICAC, and the arbitration rules of the ICAC.

This court finds:

1. Facts pertaining to the contract and to the arbitration between the parties

On 11 March 2012, Gloria Johns and Dong Xiang concluded contract 408/KP-12, whereby Gloria Johns purchase knit and woven clothes, as well as hard tags from Dong Xiang for a total price of $5,000,000. Within 45 days after issuing the receipt of the goods that have been shipped to Russia, Gloria Johns is obliged to pay the full balance price of every shipment through wire-transfer according to the commercial invoice. Dong Xiang, on the other hand, is obliged to deliver the goods in accordance with the specifications of placed orders. Any disagreements, disputes or indemnity relevant or arising out of the contract or the performance, breach, termination or invalidity of the contract, shall be referred to the International Commercial Arbitration Court at the Russian Federation Chamber of Commerce and Industry (ICAC at the RF CCI) for settlement according to the ICAC rules.

On 4 October 2013, Gloria Johns commenced arbitral proceeding in ICAC, and appointed a sole arbitrator according to the ICAC rules. On 10 February 2013, the tribunal heard the case and found Dong Xiang had not performed its contractual obligation of delivering the goods of $18,080.24 under the contract 408/KP-12. The tribunal rendered the arbitral award 209/2013, ordering Dong Xiang to return the payment of the goods for $18,080.24, plus arbitration fees and taxes for the amount of $2,927.

2. Facts pertaining to Dong Xiang’s receipt of the notice of arbitration:

According to the ICAC award No. 209/2013,“the tribunal's summon was mailed to respondent’s latest address (Postal No.1800-209/3933, 23 December 2013), and respondent received the mail on 27 December 2013. The DHL Postal information provides further evidence. The mail 1800-209/3933 specified the name, address of Dong Xiang in English, the information is in accordance with Dong Xiang’s registration information. The mail was signed in hand writing with the name of “Yiqing Gu”, the tribunal’s summon was in Russian language.

 3. Facts pertaining to the ICAC arbitration rules:

The ICAC rules set forth the rule of “mailing and delivery of documents” in Chapter IV, Article 16. “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.” “a communication shall be deemed received on the day when it is received by a party”. Chapter VI, Article 23 “Language of the arbitral proceedings” specifies that "the arbitral proceedings in a case shall be conducted in the Russian language. By agreement between the parties, the ICAC may conduct the arbitral proceedings in a different language.”

This court holds:

According to Article 283 of the Civil Procedure Law of the PRC, “[w]here an arbitral award of a foreign arbitral institution requires recognition and enforcement by a people's court of the People's Republic of China, a party shall apply directly to the intermediate people's court at the place of domicile of the party against whom enforcement is sought or at the place where the property thereof is located, and the people's court shall process the application in accordance with an international treaty concluded or acceded to by the People's Republic of China or under the principle of reciprocity.” Article 21 of the Treaty on Civil and Criminal Judicial Cooperation Between China And Russian Federation stipulates that the contracting parties shall recognize and enforce arbitral awards rendered within the territory of each other according to the New York Convention. The arbitral award involved in this case is rendered in the Russian Federation, China and the Russian Federation are both contracting states of the New York Convention, the recognition of the arbitral award is therefore subject to the relevant provisions in Article V of the New York Convention.

According to the New York Convention, ICAC arbitral award 209/2013 rendered on 17 March 2014 regarding the contract 408/KP-12 is recognized.

Firstly, Dong Xiang’s argument that no payment of the USD 18,080.24 had ever been made by petitioner is within the substantial issue of this case, and does not fall within the scope of review under Article V of the New York Convention, this court will therefore not re-examine this issue.

Secondly, Article V(b) (sic) allows a court to refuse recognition and enforcement of an award when “[t]he 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” The Court finds that Article 16 of the ICAC rules provides that the documents regarding the arbitration 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” Arbitral award 209/2013 submitted by Gloria Johns contained the record of the mailing of the tribunal’s summon. The DHL record information further proved that the tribunal's summon had been mailed to Dong Xiang’s address. Dong Xiang was therefore properly informed of the arbitral proceeding. This court denies Dong Xiang's second argument.

Thirdly, Article V(d) (sic) sets the ground for refusing recognition and enforcement of an award when “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 the arbitration took place”. Contract 408/KP-12 provided by Gloria Johns shows that the parties consented to refer to ICAC arbitration under the ICAC rules, which stipulates Russian as the language of the proceeding, and the parties had not agreed otherwise. The ICAC’s tribunal summon in Russia does not violate its arbitration rules and does not constitute a ground for refusing recognition of the arbitral award.

For the above reasons, this court does not uphold Dong Xiang’s arguments in its defense, since no grounds in Article V of the New York Convention invokes refuse of recognition of the arbitral award. According to Article 2 of the Treaty Criminal Judicial Cooperation Between China and Russian Federation, Article V of the New York Convention and Article 154, Clause 1 (11) of the Chinese Civil Procedure Law, this court rules:

The arbitral award 209/2013 rendered by the ICAC on 17 March 2014 is recognized.

The legal cost of RMB 500 is borne by Dong Xiang Co. Ltd.

This ruling is final.

Presiding Judge Chao Lu

Acting Judge Fang Feng, Qiang Su

10 October 2014

Engrossment Clerk Xi Yang

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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.