Civil Ruling of Shaoxing Intermediate People’s Court

[2015]Zheshaozhongquezi No. 3, 26 October 2015

Petitioner: Ostin Ltd.

Representative: V. A. Frolov, the Company's General Manager 

Attorney: Fei Han

Respondent: Zhejing Huateng Garment Co. Ltd.

Legal representative: Miaolian Zhu, the Company's Chairman of the Board

On May 29, 2015, the Petitioner Ostin Ltd. (“Ostin”) filed an application for recognition and enforcement of an arbitral award against the Respondent Zhejiang Huateng Garment Co. Ltd. (hereinafter referred to as “Huateng Co.”）to the Intermediate People’s Court of Shaoxing, Zhejiang (hereinafter referred to as “the IPC of Shaoxing”). After accepting the case on June 1, 2015, the IPC of Shaoxing formed a panel to review the application in accordance with law; and up to present, this case has been completed.

The Petitioner submitted that, on August 24, 2012, Ostin Co. and Huateng Co. signed contract No. OSN/128/CN/SS13, which was valid until August 24, 2014. Under the contract, Huateng Co. shall manufacture and deliver goods in accordance with the name, quantity, and price stipulated by eight specification sheets in the contract. The agreed delivery time was January 14，2013 and January 24, 2013. During the performance of the contract, on October 2, 201 2, the Petitioner paid $14,091 to Huateng Co. as advance payment as agreed in the contract. However, Huateng Co. failed to fulfill its delivery obligations, and therefore should folly refund the advance payment. The Petitioner repeatedly claimed but it was of no avail. On April 4, 2013, the Petitioner notified Huateng Co. that it would terminate the contract and claimed Huateng Co. to refund the advance payment within 15 days after receiving the notification, but Huateng Co. still did not do so. According to Clause 10 of the contract between the parties, the Tribunal of the International Court at the Russian Chamber of Commerce and Industry (“Tribunal”）has the jurisdiction over this dispute. On December 18, 2013, the Petitioner filed a notice of arbitration, claiming that Huateng Co. should refund the advance payment and bear the cost of the arbitration. Upon review, the Tribunal confirmed its jurisdiction and sent summons to the parties. After hearing, the Tribunal confirmed the basic facts of the case and rendered an arbitral award, No. 258/2013, in favor of the Petitioner, instructing Huateng Co. to refund cash of $14,091 to the Petitioner and bear the arbitration fee of RMB 2,607. Both of the parties have received the award, but Huateng Co. refused to perform. Therefore, based on Recognition and Enforcement of Foreign Arbitral Awards Convention (“New York Convention”)，the Petitioner filed an application to the IPC of Shaoxing, claiming that: first，the court should recognize and enforce the No. 258/2013 arbitral award rendered by the Tribunal on May 22, 2014; second, Huateng Co. should bear the cost of this application.

4. The Respondent did not submit its defence or arguments. The IPC of Shaoxing cannot deliver the relevant legal documents to Huateng Co.’s registered address successfully.

5.The Petitioner submitted the following evidence: (1) the Petitioner’s notarized company registration certification, notarized identification and service certificate of the Petitioner’s legal representative; (2) notarized contract between the parties (in English and in Russian, with its Chinese translation); (3) notarized No. 258/2013 arbitral award; (4) notarized delivery receipt, express bills, and signature certificate regarding the delivery of the notice of arbitration with relevant documents, the summons, and the award; (5) notarized certificate of the effectiveness of the arbitral award; and (6) the business registration documents of Huateng Co.

6.Upon review, the IPC of Shaoxing held that the evidence of the identification of the Petitioner was notarized, and therefore was accepted. Other evidence, including the arbitral award, the contract, and the certificate of the delivery of relevant documents, including the notice of arbitration, the summons, and the arbitral award, all satisfied the formation requirements under Article 29 of the Treaty on Mutual Judicial Assistance in Civil and Criminal Matters Treaty between the PRC and the Russian Federation (“PRC-Russian Federation Treaty”). Additionally, since the content of the evidence submitted by the Petitioner was relevant to this case, the IPC of Shaoxing accepted all the evidence mentioned above.

经审查查明：

Upon review, the IPC of Shaoxing found the following facts:

The Petitioner Ostin Co., is a company incorporated under the Russian Federation Law, whose registered capital is 12,xxx,507 rubles. The Respondent, Huateng Co., is a company incorporated under the law of the PRC, whose registered capital is $2.7 million.

On August 24, 2012, the Petitioner Ostin Co. and the Respondent Huateng Co. signed a contract, No.OSN/128/CN/SS13, under which Ostin Co. agreed to order and Huateng Co. agreed to manufacture and deliver the clothing and accessories in accordance with the specification sheets in the contract. Ostin Co.t is the orderer, and Huateng Co. is the manufacturer. Clause 3 of the contract stipulated the conditions of payment, and section one of Clause 3.1 provides that, the manufacturer shall send a notification of ready-to-produce and a scanned copy thereof to the orderer through e-mail within 10 days from the receipt of orderer’s specification sheets; within 20 working days from the receipt of the notification of ready-to-produce, the orderer shall pay advance payment equal to 15% of the amount of the total value of the goods stipulated in the notification. Clause 10.1 of the contract provides that, all disputes arising out of or in connection with the contract shall be settled amicably; if no amicable approach cannot be reached, all dispute arising out of or in connection with the contract, including the performance of the contract, breach, termination or invalidity thereof, shall be submitted to the Tribunal under its arbitration rules; the arbitral award is final and binding on the parties. Clause 10.2 provides that，any issues that are not stipulated or covered in the contract, such as the parties，rights and obligations, shall be dealt with in accordance with the laws of the Russian Federation. Clause 11.10 provides that the contract shall be effective upon the signature date and expire upon August 24, 2014; but at any time the parties should fulfill their obligations under the contract. Clause 11.11 provides that, parties may revoke the contract under the circumstances that unable to perform their contractual obligations if the contract does not have other stipulations; if a party revokes the contract, it shall give a written notification to the other party 20 days in advance. Clause 11.14 provides that, either party may change its registered address, registered name, bank information or among others, provided that the new information shall be notified to the other party in writing within 10 days of the change; the written notification shall be an integral part of this contract. Clause 12.1 provides that Huateng Co.’s registered address is its domicile. Additionally, parties have agreed upon the following terms, such as quantity, price, quality requirements and claims, payment conditions, terms of delivery, packaging and marks.

After dispute arose, Ostin Co. submitted the dispute to the Tribunal on December 18, 2013. On March 12, 2014, the Tribunal delivered the notice of arbitration and relevant documents as well as the notification of sole arbitrator to Huateng Co.5 which was signed by “Miaolian Zhu” on March 17. On the same day, the Tribunal delivered the hearing summons to Huateng Co., which was signed by “Miaofu Zhu” on March 20. On May 22, the Tribunal rendered an arbitral award；No. 258/2013, providing that Huateng Co. shall pay cash of $14, 091 to Ostin Co. and bear the arbitration fee of $2,607. This arbitral award was delivered on May 23 and was signed by “Miaofu Zhu” on May 28. This arbitral award has come into force.

The Court also found that, the documents aforementioned were all delivered by DHL company to Huateng Co.’s location stipulated in the contract，that is “Matsushita industrial zone, Shangyu city, Zhejiang provice, PRC”. The numbers of the documents on the express bills were in consistent with the arbitral award.

The IPC of Shaoxing held that this case is about the recognition and enforcement of a foreign arbitral award, and according to Article 283 of Civil Procedure Law of the PRC (“Civil Procedure Law of the PRC”)，the IPC of Shaoxing has jurisdiction over this case. Since the relevant arbitral award was rendered by an arbitration institution in the Russian Federation, this case shall be reviewed under the New York Convention and Civil Procedure Law of the PRC for the following two reasons. First, the PRC and the Russian Federation are both contracting states to the New York Convention; second, pursuant to Article 21 of the Treaty between PRC and Russian Federation, both contracting parties shall recognize and enforce the arbitral award rendered in each other’s territory in accordance with the New York Convention signed on June 10, 1958.

According to Article V of the New York Convention, recognition and enforcement of an arbitral award may be refused in two circumstances: first，the enforcing court found the subject matter of the dispute is not capable of settlement by arbitration under the domestic law or the recognition and enforcement of the award would be contrary to the public policy of the country; second, the respondent proved the existence of the grounds stipulated under the first clause of this article. In this present case, the Respondent, Huateng Co., did not submit any defense.

When becoming a contracting state to the New York Convention, the PRC made two reservation declarations. First, the New York Convention is applicable to the recognition and enforcement of arbitral awards rendered by another contracting state inside its territory on the basis of reciprocity. Second, the New York Convention is only applicable to disputes on contractual and non-contractual commercial legal relationships according to the laws of the PRC. In this case, the dispute referred to arbitration is a dispute on contractual commercial relationship between equal parties and is capable of settlement by arbitration under the PRC law; additionally, the recognition and enforcement of the award is not contrary to the public policy of China. Therefore，in this case,  there are no circumstances that may refuse recognition and enforcement of the award under Article V(2) of the New York Convention.

Given the above, the IPC of Shaoxing holds that the arbitral award should be recognized. First, the Petitioner, Ostin Co., has provided the relevant application documents in accordance with Article IV of the New York Convention. Second, no grounds under Article V (2) of the New York Convention existed that may refuse recognition and enforcement of the arbitral award. Third, the recognition of the arbitral award did not violate the reservation declarations of the PRC. After the recognition of the arbitral award becomes effective, the Petitioner can further apply for the enforcement. Therefore, according to Article IV and Article V of the New York Convention, Article 29 of the PRC-Russian Federation Treaty, as well as Article 283 and Article 154 (1) subpoint 11 of the Civil Procedure Law of the PRC, the IPC of Cangzhou ruled as follows:

Recognize the No. 258/2013 arbitral award rendered by the Tribunal of the International Court at the Russian Chamber of Commerce and Industry on May 22, 2014.

The Respondent, Zhejiang Huateng Co., shall bear the application fee of RMB 500. This civil ruling shall be effective immediately.

Presiding Judge: Xiaoliang Yuan

Judge: Ying Zhou

Judge: Wanjiang Zhang

October 26, 2015

Clerk: Qing Xu

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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.