For Reference Only
XIAMEN MARITIME COURT
Civil Ruling
(2017) Min 72 Xie Wai Ren No.1
Applicant: Sea Dolphin Shipping Limited, with its domicile at Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands.
Respondent: Xiamen C&D Agricultural Products Co., Ltd., with its domicile at Unit A, 26th floor, C&D International Building, No. 1699 Huandao East Road, Siming District, Xiamen, Fujian Province, PRC.
Legal representative: Lin Mao, Chairman of the Board.
Entrusted agent ad litem: Wang Darong, lawyer of Beijing Dentons (Xiamen) Law Firm.
Entrusted agent ad litem: Wu Shaobo, lawyer of Beijing Dentons (Xiamen) Law Firm.
On 1st September 2017, the Court accepted the case between the Applicant, Sea Dolphin Shipping Limited, and the Respondent, Xiamen C&D Agricultural Products Co., Ltd., for recognition and enforcement of the foreign arbitration award, and thereafter formed a collegiate bench for review and organized parties involved for hearing according to laws. The case is now closed.
The Applicant, Sea Dolphin Shipping Limited, filed a petition to the Court for ruling: 1. the recognition and enforcement of the Final Arbitration Award made by Bruce Buchan, the sole arbitrator of the London Court of International Arbitration, on 16th May 2017; 2. the Respondent to fulfill the obligation under the Final Arbitration Award, that is, to pay the Applicant the arbitration fee of RMB 24,447.5 and interest (the arbitration fee is GBP 2,750, calculated at the exchange rate of 1:8.89 between GBP and RMB on the date of the Arbitration Award; the interest is compounded at the annual interest rate of 4.5% every three months, calculated from the date when the Applicant pays the arbitration fee), as well as other expenses and interests incurred by the Applicant due to the arbitration; 3. the Respondent to bear all petition fees and enforcement costs of the case.
Facts and reasons: ADM Asia-pacific Trading Pte. Ltd. (ADM Asia) signed a sales contract with the Respondent to sell 50,000 tons of US Golden Distillers Dried Grains/Solubles (GDDGS) to the Respondent. The vessel "Capetan Giorgis" owned by the Applicant is the one carrying out the voyage. The three Bills of Lading involved in the case were issued on 13th August 2015 and consigned "TO ORDER", and named ADM Export Co as the consignor and the Respondent as the notify party. The Bills of Lading involved in the case are on the North American Grain Bill of Lading form, and on the top of the face of each of the Bills of Lading, it clearly indicates "to be used with 'Norgrain' Charterparty 1973". On the middle of the face of each of the Bills of Lading, it clearly indicates "Charter party dated: 4th May 2015", that is, the charter party signed on 4th May 2015 shall be incorporated into and used with the Bills of Lading involved.
Article 8 of the Bill of Lading agreed on arbitration stipulates:
"Arbitration
The voyage charter party incorporated into the Bill of Lading is the main charter party signed by Polaris Shipping and Sinochart Beijing on 4th May 2015. Both parties agreed in the Confirmation of Chartering (Abstract) that "the arbitration/general average by the London Maritime Arbitrators Association shall be governed by English law". The format contract referred to in the Confirmation of Chartering (Abstract) is "North American Grain 1973 Charter Party", and Line 330 to 340 of the contract clearly chooses arbitration in the UK and the English law as the govern law.
On 22nd September 2015, the vessel involved arrived at Zhangzhou Port (Bill of Lading No. POLCGI0001001) and began to discharge. On 26th September 2015, the Respondent alleged that damaged cargo had been observed and requested to stop the discharge. Discharge of cargo carried under this Bill of Lading at Zhangzhou Port was completed on 27th September 2015. Soon afterwards, the vessel shipped to Nansha Port and began to discharge cargo carried under Bills of Lading No. POLCGI0001001 and POLCGI0001002 on 30th September 2015; the discharge at Nansha was completed on 16th October 2015.
On 17th February 2017, the Applicant initiated an arbitration in London in accordance with the arbitration agreement between the two parties, and proposed to appoint Mr. Bruce Buchan as the sole arbitrator. The Respondent did not respond to the arbitration notice. On 20th March 2017, the Applicant appointed Mr. Bruce Buchan as the sole arbitrator in accordance with the Arbitration Act 1996 and informed the Respondent in writing. On 16th May 2017, the arbitral tribunal issued the Final Arbitration Award, which ruled as follows: 1. the Applicant shall not be liable for the damaged cargo under Bills of Lading No. POLCGI0001001, POLCGI0001002 and POLCGI0001003 alleged by the Respondent; 2. in view of the Respondent's violation of the arbitration agreement between the two parties (initiating legal proceedings in China), the Respondent shall be liable for the costs incurred by the Applicant in dealing with the legal proceedings in China and the damages that may be paid to the Respondent due to the judgment of the Chinese court; 3. the Respondent shall pay the Applicant an arbitration fee of GBP 2,750 and other fees and interest incurred by the Applicant in connection with the arbitration, compounded at an annual rate of 4.5% every three months. Up to now, the Respondent has not fulfilled the arbitration award in this case.
Both the United Kingdom and China are members of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter referred to as the New York Convention). In addition, according to the provisions of Article 11 of the Special Maritime Procedure Law of the People's Republic of China, a petition for recognition and enforcement of a foreign maritime arbitration award shall be filed to the maritime court of the place where the property or the domicile of the person subjected to enforcement is located. The domicile of the Respondent is in Xiamen and the Court is the local maritime court for Respondent's property, so the Court has jurisdiction over the case according to law. The above petition is hereby filed.
The Respondent, Xiamen C&D Agricultural Products Co., Ltd., raised objections:
I. The petition of the Applicant in this case does not conform to provisions of the procedural law of China and cannot constitute a valid petition: 1. the Applicant entrusts a Chinese lawyer to act as the attorney of the lawsuit, and the identity certificates submitted by the Applicant and the power of attorney submitted to the attorney have not completed the notarization and authentication procedures in accordance with legal provisions, so the entrustment of the Chinese attorney is illegal, and the submission of the Applicant's identity certificates through a Chinese attorney is not in accordance with legal provisions; 2. the authenticity of the notarization and authentication procedures of the Applicant's identity certificates and the attorney's entrustment materials cannot be verified.
II. There is no valid arbitration agreement between the Applicant and the Respondent: 1. Article 8 Arbitration on the back of each of the Bills of Lading involved in the case is a standard clause, the Respondent's acceptance of the Bills of Lading is in a passive way, and the Respondent has not agree to and both parties have not discussed the clause yet, so the clause does not constitute a legal restraint on the Respondent; 2. the standard arbitration clause on the back of each of the Bills of Lading itself is not enough to constitute the arbitration agreement between the parties related; 3. whether there is a valid arbitration agreement between the parties related shall be determined by Chinese law as nonexistent; 4. the Charter Party is not effectively incorporated into the Bills of Lading involved in the case, which cannot be regarded as the confirmation and selection of the arbitration scheme; 5. the Applicant deliberately ignores the arbitration provisions of New York arbitration and the application of American Law in the arbitration clause, and arbitrarily chooses to apply for an anti-suit injunction and initiates a London maritime arbitration in an English high court according to the London arbitration clause, while neither the English high court nor the arbitral tribunal has made an analysis on the validity of the arbitration clause, so the anti-suit injunction and the arbitration award shall not be binding on the Respondent.
III. The composition of the arbitral tribunal does not conform to the agreement of the parties related: 1. the arbitration involved in the case ignores the agreement on arbitration clause, directly confirms the sole arbitration and makes the final arbitration award in accordance with provisions of the English arbitration law without the consent of the other party, which is not in conformity with the arbitration agreement; 2. the Applicant files the arbitration according to arbitration rules in 2012 of the London Maritime Arbitrators Association (LMAA), but directly refers to Article 17 of the Arbitration Act 1996 to change the composition of the arbitral tribunal, which lacks basis and obviously violates the autonomy of will of the parties to arbitration.
IV. The Respondent has not been properly notified in the arbitration proceedings: 1. the Respondent has not received any mails mentioned by the Applicant; 2. the notice sent by email by the Applicant is not made to the competent person of the Respondent, so it is an invalid notice.
V. The arbitration award involves matters outside the scope of the submissions to arbitration and those that cannot be arbitrated in China: 1. whether one party related violates the arbitration agreement and causes damages to the other party is not within the scope of the arbitration agreement, and the arbitration award involved in the case constitutes excess of authority; 2. the arbitration award involved in the case deals with matters that cannot be arbitrated in accordance with Chinese law.
VI. The recognition and enforcement of the arbitration award involved in the case will violate provisions of the New York Convention on public policy: 1. the arbitration award infringes jurisdiction of the people's court and damages judicial sovereignty of China; 2. the arbitration award orders the Respondent to compensate the Applicant according to the compensation liability recognized by Xiamen Maritime Court, which is actually a prior re-judgment of the future effective judgment of the court of China, which infringes jurisdiction of the people's court on substantive issues and also damages judicial sovereignty of China; 3. the arbitration award damages civil litigants' cognition on effectiveness of judgment of the people's court and affects authority and credibility of the law and the judiciary.
To support its petition, Sea Dolphin Shipping Limited submitted the following evidences in accordance with laws: Evidence 1: Bills of Lading and arbitration clause; Evidence 2: Confirmation of Chartering and Charter Party; Evidence 3: Final Arbitration Award; Evidence 4: representation of Mr. Ian Jeremy Gaunt, chairman of London Maritime Arbitrators Association; Evidence 5: email about the initiation of arbitration proceedings and the appointment of arbitrators; Evidence 6: email about the service of arbitration petition materials and the petition for making partial arbitration award; Evidence 7: email on requiring the Respondent to submit a statement of defense and the petition for making an award; Evidence 8: email about the service of Final Arbitration Award.
To support its objection, Xiamen C&D Agricultural Products Co., Ltd. submitted an expert opinion on the Petition of Sea Dolphin Shipping Limited for Recognition and Enforcement of Foreign Arbitration Award issued by Mr. Chi Manjiao, a professor of the School of Law, University of International Business and Economics. According to the opinion, the Chinese court should refuse to recognize and enforce the London maritime arbitration award in the case in accordance with Article 5 rule 2(b) of the New York Convention.
After examination, it was found that when the Applicant entrusted Wang Jing & Co. Law Firm, Nansha Branch, to file a petition to the Court on 1st September 2017, the Firm submitted a petition signed by He Xiaohui, a lawyer of the Firm, without the Applicant's official seal. The Applicant submitted to the Court its company registration materials and the power of attorney entrusting Cao Yanghui and He Xiaohui, lawyers of Wang Jing & Co. Law Firm, Nansha Branch, to deal with procedures of the case. Details of company registration materials, legal representative certificate and entrustment notarization and authentication were as follows: the notary signed thereon was ATHINA MITROPOULOU, an honorary consul of the Republic of Marshall Islands, the authentication was carried out in Greece by the special agent of the Maritime Bureau of Republic of Marshall Islands and the Ministry of Foreign Affairs of Hellenic Republic, and then by the Chinese Embassy in the Hellenic Republic.
After the Court's explanation and a grace period, Sea Dolphin Shipping Limited additionally submitted to the Court on 8th October 2018 the petition sealed by it and signed by Konstantinos Kourkoulas, as well as the explanation on status of handling notarization and authentication issued by Konstantinos Kourkoulas as the legal representative, to prove that it had tried to go through notarization and authentication procedures in countries like the United Kingdom, the United States and Micronesia in strict accordance with relevant provisions of the Civil Procedure Law of China, but all of them were not successfully handled due to the reason which could not be attributed to itself. The explanation also stated that until recently (i.e. December 2017), documents of Marshall Islands could be notarized in the United States through diplomatic channels.
On the same day, Sea Dolphin Shipping Limited submitted to the Court the power of attorney issued respectively by Cao Yanghui and He Xiaohui, two lawyers of Wang Jing & Co. Law Firm, Nansha Branch,to sub-entrust Dai Yi, a lawyer of Shanghai Branch of the Law Firm, and Chen Xiangyong, a lawyer of Wang Jing & Co. Law Firm, to carry out procedures of the case.
The Court holds that the cause of action of the case is the petition for recognition and enforcement of foreign arbitration award. The Applicant, Sea Dolphin Shipping Limited, is a legal person registered and established in the Republic of Marshall Islands, so its petition to the Court for recognition and enforcement of the London maritime arbitration award belongs to the participation of foreign company in civil litigation activities in China, and shall strictly comply with relevant provisions of the Chinese civil procedure law. According to Article 523 of the Interpretation of the Supreme People's Court on the Application of the 'Civil Procedure Law of the People's Republic of China', Sea Dolphin Shipping Limited shall submit to the people's court identity certificates which shall be notarized by a notary organ of the country where it is located and authenticated by the embassy or consulate of the People's Republic of China in that country, or go through notarization formalities stipulated in relevant treaties signed between the People's Republic of China and that country. In addition, since Sea Dolphin Shipping Limited entrusts Chinese lawyers to participate in the lawsuit in the case, according to Article 264 of the Civil Procedure Law of the People's Republic of China, it shall also submit to the people's court materials, such as the representative's identity certificates and/or the agent's power of attorney, notarized and authenticated according to law. Since the country where the Applicant is located does not have diplomatic relations with the People's Republic of China, according to Article 524 of the Interpretation of the Supreme People's Court on the Application of the 'Civil Procedure Law of the People's Republic of China', the materials shall be notarized by a notary organ of that country, authenticated by the embassy or consulate of a third country who has diplomatic relations with the People's Republic of China in that country, and then authenticated by the embassy or a consulate of the People's Republic of China in that third country.
In this case, the notarization and authentication of the Applicant's identity certificates and the power of attorney do not conform to the above provisions of Chinese laws: the authentication procedures were carried out in Greece by the special agent of the Marine Bureau of Republic of Marshall Islands and the Ministry of Foreign Affairs of Hellenic Republic, rather than the embassy or consulate of a third country with diplomatic relations with China in Marshall, and then by the embassy or consulate of China in that third country. The Applicant has not yet submitted the notarization and authentication materials in accordance with the law after the Court's explanation and a grace period for correction.
The Applicant provided supplementary explanation, arguing that its incapability to go through the notarization and authentication procedures in strict accordance with Chinese laws was due to reasons which could not be attributed to itself. The Court holds that the representation is in fact the testimony of Konstantinos Kourkoulas and shall not be accepted because he did not appear in court. Moreover, the representation fails to go through the notarization and authentication procedures in accordance with Chinese laws, so the identity of the issuer cannot be verified. If the testimony is true, it can also be inferred that at the time of petition for this case, there should be no obstacle to go through the notarization and authentication procedures in accordance with Chinese laws and regulations. It is the Applicant's own negligence to fail to comply with Chinese laws in time. As for the alleged failure to go through the notarization and authentication procedures for some reason thereafter, it is not because of force majeure, but the legal risk that there is no diplomatic relationship between the Republic of the Marshall Islands and the People's Republic of China. Such risks, if any, are reasonably foreseeable for the Applicant as a company incorporated in the Marshall Islands and shall be borne by the Applicant. In addition, the Civil Procedure Law of China allows other alternative procedures, but the Applicant still fails to do so due to its lack of diligence. Therefore, its demurrer will not be adopted.
The Applicant also argued that the Court had accepted the case and issued the summons to its agent ad litem, so its agent ad litem was summoned to appear in court through legal procedures. The Court holds that the hearing is not a necessary legal procedure, but a procedure held to respect and protect the Applicant's litigation rights and oral argument rights under special circumstances of the case, and the Court has clearly informed the Applicant that the Respondent had objections to the Applicant's identity information and entrustment procedures before and at the beginning of the hearing, and the Court would continue to review in accordance with the law, so it is neither proper nor reasonable to claim that the Court has recognized its lawsuit qualification and entrustment procedures. Moreover, the lawsuit qualification and the handling of entrustment procedures are based on the strict provisions of Civil Procedure Law of China, not within the scope of judge's power of discretion. The entrustment procedures of Cao Yanghui and He Xiaohui, lawyers of Wang Jing & Co. Law Firm, Nansha Branch, are neither in conformity with legal provisions, nor with validity of procedure law, so their entrustment to Dai Yi and Chen Xiangyong also has no legal force.
According to Article 6 of the Provisions of Supreme People's Court on Several Issues Concerning Trying Cases of Arbitration-Related Judicial Review, where an Applicant appeals to the people's court for recognition and enforcement of a foreign arbitration award, he shall submit the petition and original arbitration award or certified copy. And according to Articles 7 and 8, where the documents submitted by the Applicant do not conform to the provisions, if the documents submitted after interpretation of the people's court still do not conform to the provisions, the people's court will not accept them. If, after filing the case, it is found that the conditions for acceptance are not met, the petition shall be rejected by a ruling. In this case, the Applicant submitted the petition signed by He Xiaohui on 1st September 2017, but the entrustment procedure of the agent was not subject to the notarization and authentication procedures according to law, and not corrected after the interpretationand a grace period. Later, the Applicant re-submitted the petition sealed by it and signed by Konstantinos Kourkoulas to the Court on 8th October 2018, but the Applicant and Konstantinos Kourkoulas's identity certificates were not subject to the notarization and authentication procedures in accordance with Chinese laws. In view of the above, the Court holds that the petition submitted by the Applicant does not conform to provisions of Chinese law and judicial interpretation, and shall be rejected. The Applicant may appeal to the Court or other courts with jurisdiction after meeting the acceptance conditions.
To sum up, according to Article 154 rule 1 and Article 264 of the Civil Procedure Law of the People's Republic of China, Articles 523 and 524 of the Interpretations of the Supreme People's Court on the Application of the 'Civil Procedure Law of the People's Republic of China', and Articles 6 and 8 of the Provisions of the Supreme People's Court on Several Issues Concerning Trying Cases of Arbitration-Related Judicial Review, the ruling is as follows:
Reject the petition of the Applicant, Sea Dolphin Shipping Limited.
If not satisfied with this ruling, the Applicant, Sea Dolphin Shipping Limited, may, within thirty days from the date of service of the ruling, and the Respondent, Xiamen C&D Agricultural Products Co., Ltd., may, within ten days from the date of service of the ruling, submit an appellate petition and copies according to the number of people of the other party to the Court to appeal to the Fujian Higher People's Court.
Chief Judge Chen Yanzhong
Judge Hu Weifeng
People's Juror Zheng Xianyu
19th December 2018
Court Clerk Lin Sanhong