Intermediate People’s Court of Rizhao, Shandong

(2014)Ri 3rd Civil first trial No. 10

Petitioner (Claimant of arbitration): Minaj Holdings Co.，Ltd. (“Minaj”).

Domicile: 1/F Fortune Towers, 27 / 29 Adeyemo Alakija St, Victoria Island, Lagos, Nigeria.

Legal Representative: MICHAEL NNANYEAJEGBO, Director. 

Agent ad litem: Han Chao, Lawyer ShandonQilu Law Firm.

Respondent (Respondent in the arbitration): Rizhao Qihan International Trading Co.,Ltd（“Rizhao Qihan”).

Legal Representative: Chen Hongguo, Executive Director. 

The Petitioner, Minaj, lodged an application before the Intermediate People's Court of Rizhao，Shandong (“Court”)，seeking the recognition and enforcement of a foreign arbitral award rendered by the International Chamber of Commerce International Court of Arbitration (“ICC International Court of Arbitration”）a dispute between Minaj Company and Rizhao Qihan Company. On 5 August 2014, the Court accepted the application and then established a collegial bench in accordance with Law to hear the case. The collegial bench is composed of judge Shan Shizeng as presiding judge, judge Wang Rong and acting judge Ren Zongchang. The hearing of the case has now been completed.

The Petitioner, Minaj, claims that: In order to settle the dispute in connection with the international sale of goods contract between Petitioner and Respondent, Petitioner requested for arbitration to the ICC International Court of Arbitration, while Respondent raised counterclaims in the arbitration. The place of arbitration is London. On 19 September 2012, the ICC International Court of Arbitration issued the final arbitral award No. 17808/ARP (“Arbitral Award”) concerning this dispute. Subsequently on 19 December 2012, the ICC International Court of Arbitration rendered an addendum to the arbitral award No. 17808/ARP/MD (“Addendum”).

However, after the arbitral award and its amendment came into effect, Respondent refused to fulfill its obligations in compliance with them. Meanwhile, Petitioner has not received any Notice of Arbitration or Action from Respondent regarding the “Zhong Xin Angel” Ship and the “NIKITAA” Ship till now. Therefore，Petitioner claims that Respondent should return the withheld security deposit to Petitioner at an amount of USD 2,052,000. Petitioner also reserves its right to apply for mandatory execution of recovery for security deposit regarding the “TAOKASWIDOM” Ship withheld by Respondent at an amount of USD 928,141.77.

Petitioner, in order to secure its lawful rights, in accordance with the Decision of the Standing Committee of the National People's Congress on Accession to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, as well as the Civil Procedure Law of the PRC, hereby requests the court to: 1) recognize the final arbitral award No. 17808 / ARP and its amendment issued by the ICC International Court of Arbitration. 2) enforce the final arbitral award No. 17808/ARP and its amendment issued by the ICC International Court of Arbitration. Specifically, 1) to order a mandate execution against Respondent upon its unfulfilled payment to Petitioner of the commission at an amount of USD 491,897.23; 2) to order a mandate execution against Respondent upon return to Petitioner of the security deposit withheld by Respondent at an amount of USD 2,052,000; 3) to order Respondent to pay double of interest on the debt for the deferred period after the expiration of the performance period designated by the arbitral award; 4) to order Respondent to pay the costs of application for mandate execution.

Upon the effective service of the Notice of Trial through public notice on Respondent, Respondent did not answer the suit, or come to hearing to defend its case.

Petitioner provides evidences as below to prove its assertions:

Evidence 1: Respondent Rizhao Qihan Company’s information registered by the industrial and commercial administration dated May 5, 2014. Source: Economic Development Zone’s bureau of Ri Zhao Industrial and Commercial Administration. Main content: name、domicile、legal representative、date of establishment and others. Factum probandum: Respondents domicile is— logistics center Room 418, bounded area, Rizhao South Linyi Road—so the Court shall have jurisdiction over this case.

Evidence 2: The Sales Contract No. QHGJ-X090606 signed by Petitioner and Respondent. Source: Petitioner. Content: the Contract was concluded by Petitioner and Respondent on July 23, 2009. Both parties agree that Respondent shall sell 420, 000 tons of concrete to Petitioner. Article 12 of the Contract provides that “All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one arbitrator appointed in accordance with the said Rules. The place of arbitration is London. The language of arbitration is English.” Factum probandum: there is arbitration clause in the Contract concluded by Petitioner and Respondent.

Evidence 3: a) the arbitral award No. 17808/ARP issued by the ICC International Court of Arbitration and its translation; b) the Addendum No. 17808/ARP/MD to the arbitral award issued by ICC International Court of Arbitration and its translation. Source: ICC International Court of Arbitration. Content: the ICC International Court of Arbitration has resolved the dispute in connection with the Contract between Petitioner and Respondent and issued the arbitral award and its amendment. Factum probandum: the objectives of Petitioner's application for recognition and enforcement to the Court, particularly the arbitral award and its amendment.

Evidence 4: the list of Contracting Parties to the New York Convention downloaded from China’s Arbitration Network (http://www.china-arbitration. com/news.phpid=2283). Content: Nigeria is a Contracting Party to the New York Convention, while the New York Convention came into force in respect of Nigeria on June 15, 1970. Factum probandum: the arbitral award in this case can be recognized and enforced in accordance with the New York Convention which China has acceded to and the Civil Procedure Law of the PRC.

Evidence 5: Company information of Respondent dated on March 9, 2015. Source: Economic Development Zone’s bureau of Ri Zhao Industrial and Commercial Administration. Content: Respondent’s legal representative was changed on February 6, 2015 from Song Qi to Cheng Hongguo, which happened before this hearing. Factum probandum: the change of Respondent’s industrial and commercial registration.

Respondent did not come to the hearing to examine these evidence provided by Petitioner.

The Court finds through hearing that: Petitioner (the buyer of the Contract) and Respondent (the seller of the Contract) concluded the No. QHGJ-X090606 sale contract. The first part of the Contract records Respondent's legal domicile as International Building 1304/04/001, Taian Road 179, Shandong Rizhao, PRC. Article 12 Paragraph 2 provides that: “Both parties agree that any dispute arising out of or in connection with the contract is to be settled through friendly consultation. In case no settlement can be reached, the dispute shall be submitted to the International Chamber of Commerce International Court of Arbitration to be arbitrated by one arbitrator under the Rules of Arbitration of the International Chamber of Commerce. The place of arbitration is London. The language of arbitration is English. The arbitral award is final and binding to both parties.”  The contract is set forth in both Chinese and English texts, and every page of the Contract bears the seal "Rizhao Qihan International Trading Co., Ltd” and the signature “Song Qi”.

On March 16, 2011, Petitioner submitted its request for arbitration to the ICC international Court of Arbitration to settle the dispute arising out of the Contract between Petitioner and Respondent, while Respondent submitted its answer and counterclaims. The ICC international Court of Arbitration issued No. 17808 / ARP arbitral award on September 19, 2012 and its amendment No. 17808 / ARP / MD on December 19, 2012. The arbitral award decides that: 1. Respondent shall pay unfulfilled commission to Claimant (Petitioner) at an amount of USD 692,288.23 immediately (the security deposit USD 243, 711.77 has been deducted). 2. Claimant shall pay symbolic compensation to Respondent at an amount of USD 1, 000 due to Claimant’s improper cancellation of the Contract. 3. Respondent shall withhold USD 2, 980, 141.77 as security deposit of damages which ship owners below may request for against Petitioner, provided that: a) If no claims for damages related to the “Zhong Xin Agel” Ship are filed before September 30, 2012 (6 months after the expiration of two-year limitation of action starting from March 2010) to any arbitration or court with jurisdiction, Respondent shall return USD 990, 000 back to Claimant, b) If no claims for damages related to the “NIKITAA” Ship are filed before October 31，2012 (6 months after the expiration of two year limitation of action starting from April 2010) to any arbitration or court with jurisdiction, Respondent shall return USD 1, 062，000 back to Claimant, c) If no claims for damages related to the “TAOKASWISDOM” Ship are filed before July 31, 2016 (6 months after the expiration of six-year limitation of action since January 2010) to any arbitration or court with jurisdiction, Respondent shall return USD 928, 141.77 back to Claimant, d) In case all claims above have been resolved with security deposit left, the left money shall be returned to Claimant. 4. Claimant shall afford and pay Respondent’s legal costs USD 89, 391. 5. Claimant shall afford and pay all the arbitration costs USD 220, 000 determined by the ICC International Court of Arbitration, thus Claimant shall pay Respondent USD 110, 000. 6. Other claims are dismissed.

Article 6 of No. 17808 / ARP / MD amendment (interpretation and explanation of final arbitral award No. 17808 / ARP) states that: “the final arbitral award has been served on Claimant and Respondent. Claimant received the arbitral award on September 25, 2012 and Respondent received the arbitral award on September 27, 2012”.

The Court also finds that: Petitioner clarifies its second claim in the 《application for recognition and enforcement of a foreign arbitral award》as follow: To enforce the No. 17808/ARP final arbitral award and its amendment issued by the ICC International Court of Arbitration. Specifically, a) to request for a mandate execution against Respondent upon the payment to Petitioner of the unfulfilled commission at an amount of USD 491,897.23 (according to the calculation of the amount of money in Articles 15 3 and 5 in the arbitral award. Calculation formula: commission USD 692, 288.23 shall be paid by Respondent to Claimant-symbolic compensation USD 1000 shall be paid by Claimant to Respondent-legal costs USD 89, 391 shall be paid by Claimant to Respondent- arbitration costs USD 110,000 shall be afforded by Claimant=USD 491,897.23); b) to request for a mandate execution against Respondent upon return of security deposit withheld by Respondent at an amount of USD 2,052,000 (according to the sum of money in Article 3 subsection a) and b), specifically the sum of security deposit USD 990, 000 shall be returned by Respondent due to no claims for damages related to the “NIKITAA” Ship are filed within limitation and security deposit USD 1, 062, 000 shall be returned by Respondent due to no claims for damages related to the “Zhong Xin Angel” Ship are filed within limitation. Meanwhile, since the limitation of claims for damages related to “TAOKASWISDOM” Ship has not expired, Petitioner reserves its right to request for a mandate execution against Respondent upon return of security deposit USD 928, 141.77 withheld by Respondent related to the “TAOKASWISDOM” Ship after the expiration of limitation).

Evidences supporting these facts are as follows: 1. two documents provided by Petitioner upon Respondent’s industrial and commercial registration information 、a copy of No. QHGJ-X090606 sale contract concluded by Petitioner and Respondent 、No. 17808/ARP arbitral award issued by ICC International Court of Arbitration and its translation. 2. No. 17808/ARP/MD arbitral award amendment issued by ICC International Court of Arbitration and its translation、 a list of Contracting Parties to the New York Convention downloaded by Petitioner from China arbitration website, documents authenticated by China’s embassy in UK、documents authenticated by China’s consulates general in Lagos,

The Court’s opinions are as follow:

This case is concerning the recognition and enforcement of the foreign arbitral award in PRC, so the applicable law shall be the Civil Procedure Law of the PRC and the New York Convention. Since Petitioner's domicile and place of main property are both within the Court's jurisdiction area, the court has jurisdiction over this case. Evidences submitted by Petitioner can prove that: the ICC International Court of Arbitration issued No. 17808 / ARP arbitral award on September 19, 2012 and No. 17808 / ARP / MD arbitral award amendment on December 19, 2012, deciding that Respondent shall pay commission to Claimant immediately and return security deposit to Claimant with certain conditions fulfilled. Petitioner requested for application to the Court on June 20, 2013, which did not exceed the request for mandate execution's time limitation of 2 years starting with the last day of performance period provided by legal documents in accordance with Article 239 of Civil Procedure Law of the PRC. The arbitral award and its amendment provided by Petitioner have also been notarized, authenticated and translated in accordance with legal procedure, meeting up with the requirements under Article IV of the New York Convention. In addition, China and Nigeria are both Contracting parties to the New York Convention, and there is an arbitration clause in parties' sale contract. Arbitral awards were also effectively served on both parties. Meanwhile, no situation under Article V(l) existed in this case for non-recognition and refusal of enforcement of the mentioned arbitral award and its amendment. There are no violations either against the Decision on Accession to the New York Convention promulgated on December 2, 1986, or against reservation declaration made by China upon its accession to the New York Convention. Based on above, the court decides to recognize and enforce the arbitral award except Article 3 c) and d) of the award. In respective of Article 3 c) of the arbitral award, Petitioner has not applied for recognition and enforcement since the limitation for arbitration or action upon damages of the “TAOKASWISDOM” Ship does not expire until July 31, 2016 (6 months after expiration of 6 year limitation for action after January, 2010). In respective of Article 3 d), it provides that: in case all claims above have been resolved with security deposit left, the left money shall be returned to Claimant. Since time limitation in Article 3 c) hasn't expired, it is unsure if there is security deposit left. So the Court decides not to enforce article 3 d) of the arbitral award, while Petitioner can request for enforcement of article 3 d) upon conditions in article 3 c) fulfilled.

In respective of the specific money amount applied by Petitioner, the Court analyses as follow:

According to Article 1 of the arbitral award: “1. Respondent shall pay unfulfilled commission to Claimant (Petitioner) at an amount of USD 692,288.23 immediately (the security deposit USD 243,711.77 has been deducted).”Petitioner deducted security deposit from commission in accordance with this article and got the amount of USD 491,897.23. The Court considers that the amount is correct and decides to enforce it.

In respective of the security deposit that Respondent shall return, Article 3 of the arbitral award decides that: “3. Respondent shall withhold USD 2, 980，141.77 as security deposit of damages which ship owners below may request for against Petitioner, provided that: a) If no claims for damages related to the “Zhong Xin Agel” Ship are filed before September 30, 2012 (6 months after the expiration of two-year limitation of action since March 2010) to any arbitration or court with jurisdiction. Respondent shall return USD 990, 000 back to Claimant. b) If no claims for damages related to the “NIKITAA” Ship are filed before October 31, 2012 (6 months after the expiration of two-year limitation of action since April 2010) to any arbitration or court with jurisdictions Respondent shall return USD 1, 062, 000 back to Claimant, c) If no claims for damages related to the “TAOKASWISDOM” Ship are filed before July 31，2016 (6 months after the expiration of six-year limitation of action since January 2010) to any arbitration or court with jurisdiction, Respondent shall return USD 928, back to Claimant.” In this case, Respondent did not come to hearing or submit any evidences to prove that claims for damages related to the “Zhong Xin Agel” Ship are filed before September 30, 2012 (6 months after the expiration of two year limitation of action since March 2010) to any arbitration or court with jurisdiction, as well as claims for damages related to the “NIKITAA” Ship are filed before October 31, 2012 (6 months after the expiration of two year limitation of action since April 2010) to any arbitration or court with jurisdiction. So Respondent shall return corresponding security deposit complied with the arbitral award. Petitioner hereby requests for a mandate execution against Respondent upon return of security deposit withheld by Respondent at an amount of USD 2,052,000 under article 3 a) and b). The Court considers that the amount is correct and decides to enforce it.

In respective of the interest on the debt for the period of Respondent’s deferred performance, the Court’s analysis is as follow:

Firstly, according to Article 253 of Civil Procedure Law of the PRC, Where the party against whom enforcement is sought fails to perform any obligation of pecuniary payment during a period specified in a judgment, ruling or any other legal instrument, the party against whom enforcement is sought shall pay double interest for the debt for the period of deferred performance. So in this case, the Court approves Petitioner's request for payment of double interests on the debt for the period of deferred performance.

Secondly, Article 1 of the SPC's Interpretation No. 8 on Several Issues concerning the Application of Law to the Calculation of Interest on Debt for the Period of Deferred Performance in the Enforcement Procedure provides: “The interest on debt for the period of deferred performance, when doubled in accordance with the provisions of Article 253 of the Civil Procedure law, includes the ordinary interest on debt for the period of deferred performance and the double interest on debt.” The ordinary interest on debt for the period of deferred performance shall be calculated in accordance with the method determined in an effective legal instrument. Where it is not determined in the effective legal instrument that such interest should be paid, it shall be disregarded. The method of calculating the double interest on debt is: double interest on debt=debtor’s unpaid pecuniary debt determined in an effective legal instrument excluding the ordinary interest on debt x 0.0175% daily x period of deferred performance. Article 5 Paragraph 1 of the Interpretation Concerning the Calculation of Interests on Debt for the Period of Deferred Performance provides: "Where it is determined in an effective legal instrument that payment shall be made in a foreign currency, double interest on debt shall be calculated in the foreign currency at 0.0175% daily upon enforcement; however, if the enforcement petitioner proposes calculation in RMB, the people's court shall allow it.” In the present case, the arbitral award does not determine that Respondent shall pay the ordinary interest on debt for the period of deferred performance. In accordance with the stipulation above, the Court determines not to take ordinary interest on debt for the period of deferred performance into calculation. In respective of the doubled interest on debt, due to the debtor’s unpaid pecuniary debt determined in the arbitral award shall be paid in US dollar, double interest on debt shall be calculated in the US dollar at 0.0175% daily upon enforcement.

Thirdly，as for the period of deferred performance，the arbitral award has determined that the commission shall be paid to Claimant immediately, so it shall be paid on the second day after the date when Respondent received the arbitral award. Thus, the period of deferred performance of commission is from September 28, 2012 till the day the commission is performed completely. As for the period of deferred performance on the return of withheld security deposit, it shall be determined in consistent with the arbitral award and the Interpretation Concerning the Calculation of Interests on Debt for the Period of Deferred Performance. Article 2 of the Interpretation provides: Double interest on debt shall be calculated as of the day when the performance period determined in an effective legal instrument expires. Where performance in installments is determined in the effective legal instrument, double interest on debt shall be calculated as of the day when each performance period expires. Where no performance period is determined in the effective legal instrument, double interest on debt shall be calculated as of the day when the legal instrument becomes effective. The Court finds that, Respondent has not submitted evidence to prove that it had, before September 30, 2012，filed its claims against the “Zhong Xin Agel” Ship by arbitration or in a court which had jurisdiction, so Respondent shall return USD 990,000 to Petitioner on the next day of September 30, 2012. Nor has Respondent submitted evidence to prove that it had, before October 31, 2012, filed its claims against the “NIKITAA” Ship by arbitration or in a court which had jurisdiction，so Respondent shall return USD 15 062, 000 to Petitioner on the next day of October 31, 2012. So the period of deferred performance on return of withheld security deposit shall be calculated separately: the period of deferred performance on return of withheld security USD 990, 000 is from October 1, 2012 till the day when it is completely fulfilled. The period of deferred performance on return of withheld security USD 1,062,000 is from November 1, 2012 till the day when it is completely fulfilled.

Based on all above, the Court determines that Respondent shall pay the interest for debt on the period of deferred performance as: interest for commission=USD 491, 897.23×0.0175% daily × period of deferred performance from September 28, 2012 till the day of commission fulfilled; interest for security deposit USD 990, 000= USD 990, 000× 0.0175% daily × period of deferred performance from October 1, 2012 till the day of USD 990, 000 fulfilled; interest for security deposit USD 1，062，000= USD 1，062, 000× 0.0175% daily x period of deferred performance from November 1, 2012 till the day of USD 1, 062, 000 fulfilled.

Pursuant to Articles 144, 239, 253 and 273 of the Civil Procedure Law of the PRC, Articles III, IV and V of the New York Convention, Articles 2 and 3 of the Supreme People’s Court Regulation on the charges and examination period of recognition and enforcement of foreign arbitral award, as well as Articles 1, 2, 3 and 5 of the Interpretation Concerning the Calculation of Interests on Debt for the Period of Deferred Performance, the court hereby determines that:

I. Recognize the validity of the final arbitral award No. 17808/ARP rendered between Petitioner and Respondent issued by ICC International Court of Arbitration on September 19,  2012 and its amendment No, 17808/ARP/MD issued by the ICC International Court of Arbitration on December 19, 2012.

II. Respondent Rizhao Qihan International Trade Co.3 Ltd shall perform its obligations under the said arbitral award  within 30 days after the service of this ruling, otherwise the court will enforce the ruling through mandate execution. The specific obligations are as follow:

1.Respondent Rizhao Qihan International Trade Co., Ltd shall pay unfulfilled commission USD 491，897.23 to Petitioner Minaj Holdings Co.，Ltd within 30 days after the service of this ruling;

2.Respondent Rizhao Qihan International Trade Co., Ltd shall return security deposit USD 2,052,000 to Petitioner Minaj Holdings Co., Ltd within 30 days after the service of this ruling;

3. Respondent Rizhao Qihan International Trade Co., Ltd shall pay Petitioner Minaj Holdings Co., Ltd within 30 days after the service of this ruling the interest for debt on the period of deferred performance as: interest for commission=USD491,897.23 × 0.0175% daily × period of deferred performance from September 28, 2012 till the day of commission fulfilled; interest for security deposit USD990,000=USD 990, 000× 0.0175% daily × period of deferred performance from October 1, 2012 till the day of USD 990, 000 fulfilled; interest for security deposit USD 1,062,000= USD 1, 062,000 × 0.0175% daily × period of deferred performance from November 1, 2012 till the day of USD 1,062,000 fulfilled.

Respondent Rizhao Qihan International Trade Co., Ltd shall pay the application fee RMB¥ 83368.

The ruling is final.

Presiding Judge: Shan Shizeng

Judge: Wang Rong

Judge: Ren Zongcang

18 May 2015

Court Clerk: Hou Yongxia

Related Links:
Minaj Holdings Limited、日照奇晗国际进出口贸易有限公司等国际货物买卖合同纠纷、申请承认和执行外国仲裁裁决民事裁定书

*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.