Civil Ruling of Qingdao Maritime Court

(2015)Maritime Trial of Qingdao Maritime Court No.1552, 22 February 2016

Petitioner: Schiffahrts-GesellschaftMS "MENTOR" mbh & Co.KG.

Domicile: Astor Street, Hamburg, Germany.

Legal representative: Klausgerken, general manager.

Authorized agent: Wang Zhonghua，Zhu Xingwei, lawyers of Shandong Youhua Law Firm.

Respondent: Da Xinhua Shiping (Yantai) Co., Ltd.

Place of Domicile: Chefoo District, Shandong, Yantai.

Legal representative: Li Xiaolong, chairman of the board.

Authorized agent: Fang Shaoyong, Staff.

Authorized agent: Zhang Shunqi, staff.

The petitioner, Schiffahrts-Gesellschaft MS "MENTOR" Gmbh & Co. KG, filed an application for the recognition and enforcement of a foreign arbitral award against the respondent, the Da Xinhua Shipping (Yantai) Co., Ltd, requesting this court to recognize and enforce the final award rendered by the London tribunal on the disputes arising from the charter party of MENTOR ship, After the admissibility of this case, this court, according to the law, formed a collegial panel to hold a public hearing, Wang Zhonghua, Counsel for the petitioner, and Fang Shaoyong and Zhang Shunqi, counsel for the respondent, attended the hearing. The case is now closed.

The petitioner argues as follows. On 21 April, 2011, the petitioner, the owner, and the respondent, the charterer, concluded the charter party based on the revised NYPE 1946 with a series of additional terms, the "MENTOR" Contract ("Charter"). The charter provided that the term should be at least 12 months; and the rent was USD 15,650 per day, paid in advance every fifteen days. For the period less than one day, it should be calculated on basis of the proportion. On 9 May 2011, the petitioner delivered the ship to the respondent. However, fifteenth to seventeenth section of the rent was not paid in due course by the defendant. On 5 January 2012, pursuant to Article 41 of the charter, the petitioner gave a written notice to the respondent that it should pay the seventeenth section of the rent within 4 extended working days and the petitioner would reserve the right to recall the ship in accordance with article 5 of the charter upon non-payment. However, it had not been paid until then. On 12 January, the petitioner informed the respondent that its default had constituted a fundamental breach of the contract and the charter had also been terminated, and the ship should be returned on that day. The petitioner asked the respondent for the rent compensation in the amount of USD 70,650 and the loss arising from the fundamental breach in the amount of USD 1,200,000. On 27 January 2012, pursuant to article 52 of the Charter, the petitioner filed an arbitration application in the in London. And then the two sides reached a settlement agreement on 23 February, and the agreement provided that the respondent should pay a total of 1.25 million USD US in three installments as the settlement amount and the interest arising from the delay payment; and it also provide that British law and the relevant arbitration clauses should apply to the settlement agreement. On 28 February, after the respondent paid part of the settlement amount, the remaining USD 11,10000 was still not paid after reminder of payment. And the petitioner just filed the arbitration application requesting the respondent to pay the remaining sum and interest and expenses. On 1 September 2013, the arbitrator issued an award, deciding that the respondent pay the petitioner USD 11,10000 and the interest calculated from the date of 23 February, 2012, to the date on which the respondent made an actual payment at 10% of the annual interest rate; and the arbitration costs of GBP 1,900 was also decided to be borne by the respondent. The respondent has not fulfilled the payment obligation determined by the above decision until now. Accordingly, the petitioner applied for recognition and enforcement of the London arbitral award.

The respondent objected as follows. I. Qingdao Maritime Court has no jurisdiction over the case, and the case should be under the jurisdiction of the Qingdao Intermediate People's Court. II. The respondent did not receive the relevant services not only of the notice of the arbitral hearing but also the arbitral award. Therefore, the award should not be recognized. III. The award was rendered on 31 August, 2015, and it has exceeded the period of two years for application for recognition and enforcement. IV. Although the respondent recognized the fact that the two sides had signed a settlement agreement, it argued that article 8 did not provide decision by default.

After review, we found as follows. On 21 April 2011, the petitioner (the owner of the ship) entered into a time charter party (charter) with the respondent (charterer), who agreed that the "MENTOR" was chartered by time to the respondent for 12 months, and the lessee has the right to choose the exact 30-day floating period. The charterer shall pay the owner of the ship at a rate of USD 15650 per day, or at a rate, from the date of delivery of the ship, payable in advance every 15 days.

After the respondent has made a breach of contract in the process of performance of the charter party, on 27 January 2012, the petitioner filed an arbitration to the respondent in London and required it to agree within 28 days of the designation of the arbitrator. After that, the two sides had negotiated with each other and on 23 February, 2012,reached a settlement agreement, of which Article 8 provided “the British law applies to this agreement, any dispute arising from the settlement agreement should be submitted to London to be settled by a sole arbitrator under the 1996 Arbitration Act, and either party may notify the other party to cooperate in the designation of a sole arbitrator. If the parties don’t agree on the designation of the sole arbitrator within seven days from the date of receipt of the notice, either party may apply to the Honorary Secretary of the London Maritime Arbitrators Association via a written application for appointing a sole arbitrator.” On 28 February 2012, the respondent paid part of the settlement amount，but the remaining USD 11，100,000 of the principal and interest was still unpaid. Then, the petitioner had not been paid. The petitioner initiates the arbitration with the respondent according to Article 8 of the settlement agreement. On 30 May, 2012, the Chairman of the London Maritime Arbitrators Association appointed David Martin-Clark as the sole arbitrator in the arbitration. On 11 June, 20 1 2, the petitioner sent the claim to the arbitrator, and the copy was also sent to the respondent, and the respondent was required to submit the pleadings within 28 days, but until that date, the respondent had not submitted any documents. After that, the arbitrators sent the e-mail to the parties on 12 July 2012, 22/23 November and 29 November 2012, respectively, and ordered the respondent to submit the pleadings and supporting documents without receiving any feedback. On 14 August, 2013,the arbitrators ruled that the proceedings of the arbitration were closed.

On 1 September, 2013, the sole arbitrator, David Martin-Clark, made the final decision on the of the tenancy dispute of "MENTOR" on 21 April, 2011 The award was as follows. “A. The claimant won the claim in respect of the principal amount of USD 11,10000 ; and, B. the respondent shall promptly pay the above amount to the petitioner and the interest calculated at the rate of 10% or calculated proportionately from 23 February 2012, the date of the agreement, until the date of complete payment; and, C. The respondent shall bear the costs of the petitioner in this case, and the cost is estimated either by the British High Court or by the arbitrator under the request of the petitioner; and D. the respondent shall bear the cost of the award of GBP 1,900. If the owner has paid all or part of the costs of the award, it has the right to receive the part of the fee immediately from the respondent.” The petitioner provided a statement by the petitioner's agent in the arbitration proceedings that the petitioner had sent the award to the respondent by both e-mail and registered letter, but the respondent denied the receipt of the arbitral award. The obligation determined in the award has not yet been fulfilled by the respondent.

The petitioner has provided this court with a printed edition of the time charter party, a notarized original document of the settlement agreement which contained an arbitration clause, and a Chinese translation, a notarized London Arbitral award and a Chinese translation. The petitioner also provided other corresponding evidence to indicate the legitimacy of the arbitral proceedings.

The Court holds as follows. This case arises from the application for recognition and enforcement of a foreign arbitral award on a contractual dispute over a time charter party. According to the provisions of article 16 of Some Provisions of the Supreme People's Court on the Scope of Cases to be Entertained by Maritime Courts, disputes over a time charter party contract are within the scope of maritime courts and are tagged as maritime cases. Therefore, the arbitral award made by the London arbitration tribunal in respect of the disputes belongs to maritime arbitral awards. In accordance with the provisions of article 11 of the Special Procedure Law of the PRC on Maritime Proceedings, if the parties apply for the recognition and enforcement of foreign maritime arbitral awards, it shall submit the application to the maritime court of the place where the property subject to execution is or the place of domicile of the person subject to execution is. Because Yantai of Shandong, where the domicile of the petitioner is, is within the jurisdiction of Qingdao maritime court, this court takes the jurisdiction of this case, according to article 239 of the Civil Procedure Law of the PRC, and the provisions of article 547 of the Interpretation of Supreme People's Court on the Application of Civil Procedure Law of the PRC shall apply for a period of two years, calculated from the last day of the performance duration stipulated in the legal instrument. The arbitral award involved in this case was made on 1 September, 2013, and the petitioner applied to the court for the recognition of the decision on 31 August, 2015, the date of which did not exceed the provided duration. China and the United Kingdom both are States Parties to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter referred to as the "New York Convention"), and the arbitral award referred to in this case were made in London, the United Kingdom, in accordance with article 288 of the Civil Procedure Law of the PRC, accordingly, the case should be dealt with in accordance with the relevant provisions of the New York Convention. 

The objections on the relevant services of the notice of the hearing and the award are reasoned as follows. Article V(l)(b) of the New York Convention provides that "Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:”…(b) 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 respondent, after receiving the notice of the petitioner's submission of arbitration, negotiated with the petitioner and reached a settlement agreement. However, for the reason that the respondent fails to fulfill the obligation of payment, the petitioner initiated the arbitration procedure and designated the arbitrator; In the arbitration proceedings involved, the arbitrator has sent many e-mails to the respondent, requesting it to submit its pleadings, and the respondent did not respond to them; after the rendering of the arbitral award, the petitioner proved that the arbitrator had served the award to the respondent. Although the respondent denied receipt of the above-mentioned mails and the arbitral award, it did not provide corresponding proofs and there is no basis for such objection. Therefore, the Court does not support the objection.

In summary, the petitioner, for the application for recognition of the case involving foreign arbitral award，has submitted to this court of the printed edition of the time charter contract, the notarized original document of the settlement agreement which contains the arbitration clause and the Chinese translation and the notarized London award and the Chinese translation, which is in line with the requirements of Article IV of the New York Convention. There is no evidence supporting there is any ground of refusing recognition and enforcement provided in Article V of the New York Convention. And there are both enough evidence and reasons for the petitioner's application for the recognition and enforcement of a foreign arbitral award, which conforms the relevant provisions of the PRC Civil Procedure Law, the New York Convention and China's reservation on accession to the Convention. This Court makes a confirmation hereby.

In accordance with the relevant provisions of article 283 of the Civil Procedure Law of the PRC and the Convention on the Convention on Recognition and Enforcement of Foreign Arbitral awards, this court decides as follows.

This court recognizes the legal effect of the final award, rendered by David Martin-Clark on 1 September 2013, on the dispute over the MENTOR ship charter party on 21 April, 2011 and enforce it.

The case fee of the case is RMB 500, which shall be borne by the respondent, the Da Xinhua shiping (Yantai) Co., Ltd. 

Presiding JudgeLi Hua

Judge: Wang Keke

People’s Juror: Wang Donghong

22 February 2016

Clerk: Lei Xiaohong

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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.