Emirates Trading Agency (L. L. C.) v. Million Miles Shipping Ltd. & Others

 

Cite as: Emirates Trading Agency (L. L. C.) v. Million Miles Shipping Ltd. & Others, The Supreme People’s Court (24 October 2012), in Fan Yang, Foreign-related Arbitration in China: Commentary and Cases, Part IV

Case identification

  • Date of Decision: 24 October 2012 

  • Court:

    • The Supreme People’s Court

    • The Higher People's Court of Hubei Province

  • Arbitral Tribunal:

    • N/A

  • Case number / Docket number:

    • No. 48 of the Fourth Civil Tribunal of the Supreme People’s Court [2012]

    • No. 228 of the Higher People’s Court of Hubei [2012]

Classification of issues present

  • Application of the New York Convention: No

  • Key PRC law provision(s) at issue: Article 241 of the <Civil Procedure Law of the People’s Republic of China>.

Descriptors: Arbitration agreement; Formation; No common intention to arbitrate; No consensus; No agreement; Two versions of Charterparty; Charterparty signed and sealed by one party only; Applicable law to the arbitration agreement

 

 

 

 

Emirates Trading Agency (L. L. C.) v. Million Miles Shipping Ltd. & Others 

It was found that the parties did not reach any arbitration agreement. In its Report to the Supreme People’s Court, the Higher People's Court of Hubei Province found that although the Charterparty submitted by Emirates contained an arbitration clause, it was only signed and sealed by Emirates, but not by Million Milesre; and that on the other hand, the Charterparty submitted by Million Milesre contained a clause to submit certain disputes to Chinese court. Given that the two Charterparty submitted by the parties did not match, while the parties merely signed or sealed on their own version of the Charterparty, it was found that the parties failed to reach a consensus to submit disputes for arbitration. In its Reply, the Supreme People’s Court agreed.

Case text (English translation)

(24 October 2012 No. 48 of the Fourth Civil Tribunal of the Supreme People’s Court [2012])

 

The Higher People's Court of Hubei Province:

Your court’s <Request for instructions regarding the validity of an arbitration clause under the disputes over the Charterparty between Emirates Trading Agency (L. L. C.) and Million Miles Shipping Ltd. & Others> No. 228 of the Higher People’s Court of Hubei Province [2012] submission has been received. Upon deliberation, our reply is as follows:

This is a case concerning an objection over jurisdiction regarding a Charterparty. Million Miles Shipping Ltd. (Million Miles) initiated a lawsuit over disputes concerning the Charterparty and requested the court confirm that no contractual relationship exists between Emirates Trading Agency (L. L. C.) (Emirates) and Million Miles. Emirates objected to the court’s jurisdiction, arguing that the Charterparty between Emirates and Million Miles contained a clause which clearly provided that the parties shall arbitrate in London. According to the facts submitted by your court, although the Charterparty submitted by Emirates contained a clause that “Any disputes arising from the Charterparty shall be submitted for arbitration in London”, the contract was only signed and sealed by Emirates, but not by Million Miles.

In response to Emirates’ jurisdiction objection, Million Miles also submitted a copy of the Charterparty between it and Emirates. The dispute resolution clause contained in the copy provided that “Any disputes between the parties arising from the Charterparty shall be submitted for arbitration in London. Any disputes arising from the Charterparty due to the Dockyard shall be submitted to the Chinese courts pursuant to the Chinese laws.” However, the document was only signed by Million Miles and did not contain any signatures from Emirates. Therefore, our court affirms your court’s opinion that the parties failed to reach a consensus regarding resolving disputes by arbitration. It was appropriate for the Wuhan Maritime Court to exercise its jurisdiction pursuant to Article 241 of the <Civil Procedure Law of the People’s Republic of China>, on the grounds that the subject matter of the Charterparty in question was located in Nantong Harbour, China and that the delivery of the vessel was also made in Nantong Harbour, China.

It is to be noted however, that the parties’ jurisdiction objection relied on the existence of foreign-related arbitration clauses, the Wuhan Maritime Court failed to report to the superior authorities level by level as it is required to do, before delivering its judgment on jurisdiction. Please guide the Wuhan Maritime Court regarding this issue, so as to preventsimilar problems from occurring in the future.

It is so replied.

 

 

Enclosed:

Request for instructions regarding the validity of an arbitration clause under the disputes over the Charterparty between Emirates Trading Agency (L. L. C.) and Million Miles Shipping Ltd. & Others

(14 September 2012 No. 228 of the Higher People’s Court of Hubei [2012])

 

The Supreme People’s Court:

 

The case of Million Miles Shipping Ltd. v. Emirates Trading Agency (L. L. C.), Jiangsu Rongsheng Heavy Industries Co. Ltd. and Great Harvest (Holdings) Ltd, Hong Kong, concerning a dispute over a Charterparty and accepted by the Wuhan Maritime Court involved issues regarding validity of arbitration clauses. Pursuant to Article 1 of <Circular of the Supreme People's Court on the Relevant Issues Regarding the Handling of Foreign-related Arbitration and Arbitration of a Foreign Country by the People's Court> from your court, we hereby report the following:

 

I. The Parties

Appellant: Emirates Trading Agency (L. L. C.), (Emirates). Domicile: P. O. Box 5239, Dubai, U.A.E.

Respondent: Million Miles Shipping Ltd (Million Miles). Domicile: Akara Bldg, 24 De Castro Street, Wickhams Cay I, Road Town, Tortola, British Virgin Islands.

Defendant at the original trial: Jiangsu Rongsheng Heavy Industries Co. Ltd. (Rongsheng). Domicile: 1 Shugang Lu, Rugao Port, Nantong, Jiangsu, China

Plaintiff at the original trial: Great Harvest (Holdings) Ltd, Hong Kong (Great Harvest). Domicile: 12/F, 200 Gloucester Road, Wan Chai, Hong Kong SAR.

 

II. The Facts

In November 2007, Million Miles underwent negotiations with Emirates regarding chartering of a bulk carrier under construction by Rongsheng. In 2008, Emirates sent a copy of the Charterparty document duly sealed via its agent to Million Miles for amendment and confirmation. Subsequently, Million Miles returned the amended and confirmed the Charterparty document to Emirates. Emirates’ Charterparty in writing provided that the vessel was constructed by Shanghai Rongsheng (Hull identification number of the vessel: 1085. The vessel was in fact constructed by Rongsheng in Nantong.). The Charterparty included that Million Miles’s performance guarantor was Great Harvest, and that the latest date of delivery was 31 December 2010. If any delay occurred due to situations described under Article 8 of the shipbuilding contract, it was stipulated that the latest date of delivery was to be 30 June 2011. The Charterparty also included that the shipbuilding contract was incorporated into the Charterparty. Any disputes arising from the Charterparty shall be submitted for arbitration in London.

Million Miles’s Charterparty in writing provided that the vessel was constructed by Rongsheng in Nantong Dockyards and that Million Miles’s performance guarantor would be Great Harvest. It included that the latest date of delivery shall be 31 December 2010, if any delay has occurred due to situations described under Article 8 of the shipbuilding contract, the latest date of delivery shall be 30 June 2011. The Charterparty also stipulated that the shipbuilding contract shall be incorporated into the Charterparty. Any disputes between the parties arising from the Charterparty shall be submitted for arbitration in London. Any disputes arising from the Charterparty due to the Dockyard shall be submitted to the Chinese courts pursuant to the Chinese laws. Million Miles submitted that since Million Miles and Emirates failed to seal or sign on the Charterparty document submitted by their counterparts and Rongsheng and Great Harvest were unable to seal or sign on the Charterparty, the Charterparty in writing was not deemed valid and so the description concerning submission of disputes for arbitration in London contained in the Charterparty in writing between the parties was not established. No performance of the contract had been made by Million Miles and Emirates and no contractual relationships had been established between the parties. Emirates however, demanded Million Miles perform in accordance with the Charterparty supplied by Emirates regardless of it not being duly sealed or signed by Million Miles. Due to this, Million Miles filed an application to the original court pursuant to relevant Chinese legal regulations, requesting the court confirm that the Charterparty and any contractual relationship between Million Miles and Emirates are not established.

Emirates filed a jurisdiction objection application on 28 March 2011, arguing that an effective arbitration clause existed between it and Million Miles, since the Charterparty clearly provided that the parties shall submit any disputes concerning the Charterparty for arbitration in London. Therefore the Wuhan Maritime Court had no jurisdiction over this case and so the court should dismiss Million Miles’s application.

 

III. Wuhan Maritime Court’s Opinion

It is in Wuhan Maritime Court’s opinion that the key dispute between Million Miles and Emirates lies in the validity of the parties’ Charterparty and so the case belonged to maritime commercial disputes. Since Million Miles and Emirates submitted different copies of the Charterparty respectively, the parties did not sign or seal the Charterparty submitted by the other party while the matters stipulated in the respective arbitration clauses were not the same. Therefore, it cannot be determined that the parties had reached a written consensus that any disputes arising from the Charterparty between the parties shall be submitted for arbitration in London. Any party may file a claim in the People’s Courts concerning the disputes in question. Notwithstanding Million Miles and Emirates are foreign entities, the subject matter of the Charterparty in question is built in Nantong Harbour, China and the delivery of the vessel was also made in Nantong Harbour, China. Nantong Harbour, China falls under the jurisdiction of the original trial court. According to this, the Wuhan Maritime Court may obtain jurisdiction over this case by referring to the location of the subject matter and the place of performance of the contract, pursuant to Article 241 of the <Civil Procedure Law of the People’s Republic of China>. Emirates’ jurisdiction objection cannot be established. Pursuant to Article 38 of the <Civil Procedure Law of the People’s Republic of China>, the Wuhan Maritime Court held that Emirates’ jurisdiction objection should be dismissed.

Emirates filed an appeal to our court against the judgment.

 

IV. Our Court’s Opinion

Upon review, it is in our court’s opinion that since the copies of the agreement submitted by Million Miles and Emirates did not match, while the parties merely signed or sealed on their own version of agreement, the parties therefore failed to reach a consensus to submit disputes for arbitration. Therefore, the Wuhan Maritime Court shall have jurisdiction over the dispute in question. Our court affirms the Wuhan Maritime Court’s judgment.

Please instruct whether the above opinions are correct.