Pemco Chemicals ITChUP v. Henan Harvest Chemical Co. Ltd.

 

Cite as: Pemco Chemicals ITChUP v. Henan Harvest Chemical Co. Ltd., The Supreme People’s Court (2 November 2012), in Fan Yang, Foreign-related Arbitration in China: Commentary and Cases, Part IV

Case identification

  • Date of Decision: 2 November 2012 

  • Court:

    • The Supreme People’s Court

    • The Higher People's Court of Henan Province

  • Arbitral Tribunal:

    • International Arbitration Court of the Belarusian Chamber of Commerce and Industry Arbitral Award No. 796/01-09 dated 11 August 2009

  • Case number / Docket number:

    • No. 42 of the Fourth Civil Tribunal of the Supreme People’s Court [2012]

    • Request of the Higher People’s Court of Henan Province (6 Aug 2012)

Classification of issues present

  • Application of the New York Convention: Yes

  • Key New York Convention provision(s) at issue: Article V(1)(b)

  • Other relevant conventions/treaties: <Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters>  and the <Treaty on Judicial Assistance in Criminal Matters between the People's Republic of China and the Republic of Belarus>

Descriptors: Arbitral award; Service of arbitration documents; Notice of appointment of arbitrators; Notice of arbitral proceedings; Burden of proof of inappropriate/ineffective notice; Burden of establishing grounds supporting refusal of recognition and enforcement under Article V(1) of the <New York Convention>; CISG; Counsel’s authority to represent the party in the enforcement proceedings; Invalid arbitration agreement; Applicable law to arbitration agreement; Time limit for application for enforcement    

Pemco Chemicals ITChUP v. Henan Harvest Chemical Co. Ltd. 

An arbitral award rendered under the Rules of the International Arbitration Court of the Belarusian Chamber of Commerce and Industry was recognized and enforced. In its Report to the Supreme People’s Court, the Higher People's Court of Henan Province applying the <Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters>  and the <Treaty on Judicial Assistance in Criminal Matters between the People's Republic of China and the Republic of Belarus> found that the award should be denied recognition and enforcement on the ground that the arbitration documents were not effectively served on the Chinese party; hence Pemco could not prove that the Chinese party had been given notice of the appointment of arbitrators and the arbitral proceedings. In its Reply, the Supreme People's Court disagreed and held that the aforementioned two treaties did not apply to the service of arbitration documents and that the service of arbitration documents should be in accordance with the Rules of the arbitration. Given that the party resisting recognition and enforcement did not provide sufficient evidence to prove that it did not receive appropriate notice, and in the absence of other grounds, the award should be recognized and enforced.

Case text (English translation)

(2 November 2012 No. 42 of the Fourth Civil Tribunal of the Supreme People’s Court [2012])

 

The Higher People's Court of Henan Province:

Your court’s <Request on instructions on Pemco Chemicals ITChUP’s application for the recognition and enforcement of an arbitral award by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry> submission has been received. Upon deliberation, our reply is as follows:

The issue here concerns whether the arbitral award in question constitutes the situation provided in Article V(1)(b) of the <New York Convention>, that the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings. For delivery in arbitration procedures, whether appropriate notice has been effective shall be determined pursuant to the parties’ agreement or applicable arbitration rules. The <Hague Service Convention> and the <Treaty on Judicial Assistance in Criminal Matters between the People's Republic of China and the Republic of Belarus> shall not be applicable. Pursuant to Chapter 20 of the <Rules of the International Arbitration Court of the Belarusian Chamber of Commerce and Industry>, the statements of claim, the statements of defence, notices, awards and other decisions of the International Arbitration Court at the BelCCI (“IAC”) must be communicated by registered mail with the acknowledgment of receipt or by physically delivered against signature. A written communication is deemed to be received if it has been delivered to the recipient personally or to the address of his permanent residence or location of his firm or his mailing address, unless otherwise provided by the agreement of the parties. Therefore, the IAC’s delivery of documents to the arbitration respondent’s domicile by mail did not violate the parties’ agreement and the Arbitration Rules.

For the evidence related to the documents delivered by mail, Pemco Chemicals ITChUP submitted the receipt and acknowledgement of the courier photocopied from the arbitration files, which were affixed with the seal of the International Arbitration Court of the Belarusian Chamber of Commerce and Industry and were duly signed by the chairman of the court. Considering that the two items of evidence were generated outside China, pursuant to Article 11 of the <Some Provisions of the Supreme People's Court on Evidence in Civil Procedures>, the court entertaining the case may stipulate a reasonable period for the applicant to seek notarial certification or apply for relevant certification processes through judicial assistance, to prove that the evidence conforms with the original copies in the arbitration files.

Summarizing the above, the burden of establishing grounds supporting refusal of recognition and enforcement under Article V(1) of the <New York Convention> lies with the respondent (the party resisting recognition and enforcement). Here, there is insufficient evidence to prove that the respondent had not been given appropriate notice. Therefore, the grounds for refusal submitted by the respondent cannot be established. If no other grounds supporting refusal of recognition and enforcement of the arbitral award in question exist, the arbitral award shall be recognized and enforced.

It is so replied.

 

Enclosed:

Request on instructions on Pemco Chemicals ITChUP’s application for the recognition and enforcement of an arbitral award by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry

(6 August 2012)

 

The Supreme People’s Court:

 

Pursuant to <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> (No. 18 of the Supreme People’s Court [1995]), the Intermediate People’s Court of Zhengzhou, Henan (Zhengzhou Intermediate Court) requested our court’s instructions regarding Pemco Chemicals ITChUP’s application for the recognition and enforcement of Arbitral Award No. 796/01-09 by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry dated 11 August 2009. Upon review, our court intends to affirm Zhengzhou Intermediate Court’s opinion, refusing recognition and enforcement of the arbitral award. For the purposes mentioned above, our court reports the case for your court’s instructions.

 

I. The parties

Applicant: Pemco Chemicals ITChUP. Domicile: Office 307, 5 Pobediteley Avenue, Minsk, Belarus

Respondent: Henan Harvest Chemical Co. Ltd. (Hereafter: “Henan Harvest”). Domicile: 24 /F, Building No.1, Forture Square, 32 Jing San Lu, Zhengzhou, Henan, the People's Republic of China

 

II. Basic facts of the case and arbitration proceedings

On 25 August 2008, Contract 0825-2008 was signed between Pemco Chemicals ITChUP, the applicant and Henan Harvest, the respondent, providing the sale of edible orthophosphate to the applicant, and that the applicant shall pay the purchase price totalled USD$ 86,688.00. Clause 3.1 of the contract stipulated that the applicant shall be responsible for making prepayments amounting to 10% of the invoice price from the respondent, and shall settle the remaining 90% in 3 days from the date of shipment according to the faxed shipping invoice received. Pursuant to Clause 4.1 and 4.2 of the contract, the respondent shall ship the goods in 15 days from the date of prepayment. The date of shipment shall be the date stipulated in the shipping invoice after the goods being loaded for shipment. Subsequently, the applicant transferred USD 4,334.40 to the respondent’s account in accordance with the contract (the amount being 10% of the invoice price under invoice PH1375 issued by the respondent dated 25 August 2008). The respondent sent the applicant the invoices for shipment through e-mail, certifying that the goods had been shipped on 8 October 2008. On 16 October 2008, the applicant transferred USD 39,009.60 to the respondent’s account in accordance with the contract (the amount being 90% of the price of the goods). Clause 4.3 of the contract stipulated that the place of delivery shall be CIF Port of Klaipeda (Lithuania). In Clause 3.53.6 of the contract, it was stipulated that in 3 days from the date of shipment, the seller shall fax an invoice to the buyer. Upon the buyer’s confirmation, the seller shall mail the full shipping invoice to the buyer. The respondent failed to send the full shipping invoice to the applicant in accordance with the contract, and failed to deliver the goods at the designated place. It is in the applicant’s opinion that the respondent failed to perform its obligations as stipulated in the contract in an extended period. Therefore, the applicant sent the respondent a notice terminating the contract (Notice No. 235) on 5 December 2008. It is in the applicant’s opinion that since its notice of termination delivered was not returned, the respondent shall be deemed to have received the notice.

On 24 December 2008, “Pemco Chemicals” (Now  Pemco Chemicals ITChUP) submitted a litigation application to the International Arbitration Court of the Belarusian Chamber of Commerce and Industry. On 5 January 2009, the chairman of the International Arbitration Court of the Belarusian Chamber of Commerce and Industry accepted the case “Pemco Chemicals” (a foreign-owned enterprise)(the Republic of Belarus) v. Henan Harvest Chemical Co. Ltd. (the People’s Republic of China) concerning a claim demanding compensation of USD$ 61,115.04 (Case number: 796/01-09). The notice regarding the arbitration proceedings in the International Arbitration Court of the Belarusian Chamber of Commerce and Industry, the application for litigation and the relevant annexure were sent to the respondent by express mail and were received on 9 March 2009. The notice regarding the time and the address for the hearing had also been sent to the respondent by express mail and were received on 27 April 2009. However, the respondent was absent from the hearing. Pursuant to Article 33 of the <Law of the Republic of Belarus "On the International Arbitration (Intermediate) Court"> and Article 32 of the <Rules of the International Arbitration Court of the Belarusian Chamber of Commerce and Industry>, if a party or its representative is absent from court without appropriate reasons where proper notices have been made as to the time and the address for the hearing between the parties, the party’s absence shall not impede the hearing of the dispute. Therefore, the Arbitration Court ruled that the hearing of the dispute shall continue in the absence of the respondent. The applicant participated in the hearing and insisted all its arbitration requests. It submitted that the applicant had performed its obligation to pay the goods, but the respondent violated the conditions for delivery of goods as stipulated in the contract. Due to the respondent’s failure to deliver the goods within the stipulated period, the applicant lost interest in the contract and decided to exercise the rights conferred from Article 49 of the <Vienna Convention> to terminate the contract. Since the notice regarding termination of the contract dated 5 December 2008 was not returned, in the applicant’s view the notice shall be deemed to be received by the respondent. The applicant calculated damages pursuant to the aforementioned date. The rights to terminate the contract originated from the Convention, while the right to claim compensation originated from the contract. Pursuant to The applicant’s requests and the matters heard in trial, the arbitral tribunal rendered Award No. 796/01-09 on 11 August 2009.

 

III. The award and the reasoning

The respondent shall pay the applicant damages USD$ 43,344.00, penalty USD$ 17,771.04 and arbitration fees EUR€ 3286.74. The sum totalled USD$ 61,115.04 and EUR€ 3286.74.

Reasoning:

1. When drafting the arbitration clause contained in the contract, the parties expressed an intention to resolve disputes in a permanent arbitration institution. The Russian version of the contract provided that disputes shall be resolved by an arbitration court situated in the applicant’s domicile, while Clause 10 of the English version of the contract provided that disputes shall be resolved by the Minsk Arbitration Court. Considering that the plaintiff the applicant is a business entity in the Republic of Belarus and that only one Minsk Arbitration Court exist in the Belarusian territory (that is, the International Arbitration Court of the Belarusian Chamber of Commerce and Industry), therefore the International Arbitration Court of the Belarusian Chamber of Commerce and Industry shall have jurisdiction over the dispute.

2. Pursuant to Article 49 of the <Vienna Convention> 1980, the buyer may declare the contract avoided if the failure by the seller to perform any of his obligations under the contract or this Convention amounts to a fundamental breach of contract. Pursuant to Article 25 of the <Vienna Convention> 1980, a breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract. Pursuant to Article 26 of the <Vienna Convention> 1980, a declaration of avoidance of the contract is effective only if made by notice to the other party. Pursuant to Article 27 of the <Vienna Convention> 1980, unless otherwise expressly provided in this Part of the Convention, if any notice, request or other communication is given or made by a party in accordance with this Part and by means appropriate in the circumstances, a delay or error in the transmission of the communication or its failure to arrive does not deprive that party of the right to rely on the communication. Therefore, the respondent committed a fundamental breach and so the applicant is entitled to compensation and the arbitration costs. In addition, evidence was submitted by the applicant to support this argument. Therefore, its arbitration requests were supported by the Arbitration Court.

 

IV. The respondent’s dispute

1. The conditions for accepting the case had not been met and so the court shall not entertain the case

The reasons are as follows:

(1) The application for recognition and enforcement of foreign arbitral award submitted by the agent of the applicant had not been duly sealed by the company. It is impossible to prove that the application represented the true intentions of the applicant.

(2) Dong Chundao had no authority to represent the applicant in this application:

Firstly, although the applicant’s letter of authorization submitted by Dong Chundao to the court had been notarized by two private notaries, pursuant to Article 240 of the <Civil Procedure Law>, the letter of authorization not only shall be certified by notarial authorities in Belarus, the certification by the Chinese embassy in Belarus is required. As the letter of authorization was merely certified by the notaries but not the Chinese embassy, it is not an effective authorization.

Secondly, the letter of authorization did not confer Dong Chundao the right of representation and the right to apply for recognition and enforcement of the arbitral award. The letter of authorization expressly provided that “with special authorization to participate in the case concerning the enforcement of an arbitral award against the respondent, including the power to confirm, waive or modify enforcements requests, and discontinue the application on behalf of the principal…”. Therefore, the matters authorized are merely related to enforcement, which is limited to exercise of litigation rights subsequent to the initiation of arbitration proceedings. The authorization did not include any rights to initiate proceedings. Thus, Dong Chundao had no authority to represent the applicant in this application.

 

2. The arbitration clause which the arbitral award relied on shall be deemed invalid

The contract between the applicant and the respondent signed on 25 August 2008 was “concluded in English and Russian”. Pursuant to Clause 11.6 of the contract, the two languages shall carry equal force. Pursuant to Clause 10 of the Russian version of the contract, if the parties fail to resolve disputes through negotiation, they may make an application to the Minsk Arbitration Court for resolution pursuant to its rules. Pursuant to Clause 10 of the English version of the contract, if the parties fail to resolve disputes through negotiation, they may make an application to the Minsk Arbitration Court for resolution pursuant to the Rules of the International Arbitration Court of the Belarusian Chamber of Commerce and Industry. (The clauses listed above being excerpts from the Arbitral Award). The two versions clearly provide that disputes are to be resolved in Minsk Arbitration Court. In fact, no arbitration court is established in Minsk, not only the dispute resolution methods stipulated in the two versions are different, they are also ineffective. No provisions requiring arbitration in the International Arbitration Court of the Belarusian Chamber of Commerce and Industry were made. In addition, subsequent to the conclusion of the contract, no communication had been made between the parties concerning the inconsistencies of the arbitration clause, and so it is impossible for the party to reach a consensus. Therefore, the arbitration clause shall be invalid and shall not be applicable. Apart from that, since the parties did not stipulate that disputes shall be resolved by an “Arbitration Court situated in Minsk”, the Award stated that “Considering the plaintiff Pemco Chemicals ITChUP is a business entity in the Republic of Belarus and that only one Minsk Arbitration Court exists in the Belarusian territory (that is, the International Arbitration Court of the Belarusian Chamber of Commerce and Industry)”. In our court’s view, the reasoning “the dispute arising shall be tried in our court” did not confirm with the parties’ agreement stipulated in the contract. Summarizing the above, pursuant to Article 258(1) of the <Civil Procedure Law>, the award shall not be recognized and enforced.

 

3. The conditions for refusal of recognition and enforcement provided in the <New York Convention> had been met and so the court shall dismiss the applicant’s application

No notices had been sent to the respondent for attending the arbitration had been made during the whole arbitration process by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry, depriving the respondent’s rights to submit its opinions. Therefore, the arbitral award rendered by the institution shall be refused enforcement due to procedural impropriety.

As indicated in the award rendered by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry dated 11 August 2009, the Arbitration Court accepted the case of a foreign-owned enterprise, the applicant, concerning a claim demanding compensation of USD$ 61,115.04 against the respondent and sent a notice regarding the arbitration proceedings, the arbitration application and the relevant annexure to the respondent by express mail. The respondent received the materials on 9 March 2009. The notice regarding the time and the address for the hearing had also been sent to the respondent by express mail and were received on 27 April 2009. Yet up to now no relevant documents and materials regarding the applicant’s application for arbitration to the International Arbitration Court of the Belarusian Chamber of Commerce and Industry had been received by the respondent, not to mention other important procedural documents including the appointment of arbitrators. Not until The respondent’s receipt of the notice from the people’s court concerning the applicant’s application to the Intermediate People’s Court of Zhengzhou for the recognition and enforcement of Arbitral Award No. 796/01-09 by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry dated 11 August 2009, it had come to the respondent’s knowledge that the trade dispute between the party had already been arbitrated by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry.

 

4. The applicant’s application for recognition and enforcement of Arbitral Award No. 796/01-09 by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry exceeded the limitation period prescribed by law

Article 267 of the Chinese <Civil Procedure Law> provides that “if a legally effective judgment or written order made by a foreign court requires recognition and enforcement by a people’s court of the People’s Republic of China, the party concerned may directly apply for recognition and enforcement to the intermediate People’s court of the People’s Republic of China which has jurisdiction. The foreign court may also, in accordance with the provisions of the international treaties concluded or acceded to by that foreign country and the People’s Republic of China or with the principle of reciprocity, request recognition and enforcement by a people’s court”. Considering that no limitation periods are stipulated in the <Convention on the Recognition and Enforcement of Foreign Arbitral Awards>, Article 215 of the <Civil Procedure Law> clearly stipulates that “the time limit for the submission of an application for execution shall be two years”. The judgment of the Intermediate People’s Court of Zhengzhou for the applicant’s application for recognition and enforcement was made effective on 10 August 2009. Therefore, pursuant to the <Civil Procedure Law>, the applicant shall make an application to the Chinese courts for the recognition and enforcement of the arbitral award by 10 August 2011. The applicant’s actual application made on 10 November 2011 was clearly out of the limitation period prescribed by the Law of the People’s Republic of China. Therefore, the award shall not be recognized and enforced by the Chinese courts.

 

5. As the respondent was not notified to participate in the arbitration, it failed to submit opinions concerning the case, causing the determination of facts and responsibilities from Arbitral Award No. 796/01-09 by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry dated 11 August 2009 completely erroneous

Subsequent to the conclusion of the contract, the applicant paid the respondent deposits amounting to 5% of the contract price. The deposits did not amount to 10% of the contract price as agreed, The respondent purchased two containers of goods in accordance with the contract and shipped one container to the applicant. Yet the applicant failed to pay the remaining costs of goods (amounted to 90% of the contract price) as well as the remaining deposits (amounted to 5% of the contract price) within the stipulated time (in 3 days), while demanding the respondent reduce the price for the goods in the second container from USD $1,720.00 per ton to USD $1,410.00 per ton. Regarding the applicant’s unreasonable demands, the respondent did not consent, the respondent demanded the applicant to settle the deposits outstanding (amounted to 5% of the contract price) before its continuance to ship the second container, but the demand was rejected by the applicant. Due to failed negotiations, the applicant’s breach of contract and its explicit declaration that it did not wish to perform under the original contract price, the respondent had no choices but to retrieve the two containers pending further negotiations with the applicant. In March 2009, due to prolonged storage and plummeting market prices, the respondent sold the two containers of goods to an Egyptian company at the market price of USD $760.00 per ton to mitigate further losses. Therefore, the respondent suffered huge losses: (1) Loss arising from the difference in contract price: (1,720 – 760) x 50.4 = USD$ 48,384.00; (2) The freight rate and port handling costs for the first cargo container equivalent to USD 8,700.00; (3) The storage costs for the 50.4 tons of orthophosphate for the period between 2008 and 2009 equivalent to USD$ 7,500; (4) Interest accrued from the capital employed calculated at the rate of 1.5 per month for the 6-month period between October 2008 to March 2009 amounting to USD$ 7,800 (= USD$1,720 x 50.4 x 1.5% x 6). By estimation from the four heads of losses, the loss to the respondent had reached USD$ 72,384.00.

 

V. The opinions of the Zhengzhou Intermediate Court

The application for recognition and enforcement shall be dismissed. The reasons are as follows:

Arbitral Award No. 796/01-09 by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry dated 11 August 2009 constituted the situation supporting non-recognition and enforcement as stipulated in Article V(1)(b) of the <Convention on the Recognition and Enforcement of Foreign Arbitral Awards>. Pursuant to Article 267 of the <Civil Procedure Law> and Article V(1)(b) of the <Convention on the Recognition and Enforcement of Foreign Arbitral Awards>, the applicant’s application shall be dismissed.

In response to the respondent’s submission that it was unable to submit opinions regarding the dispute due to the International Arbitration Court of the Belarusian Chamber of Commerce and Industry’s failure to notify it to participate in the arbitration proceedings through legitimate means, the applicant submitted Evidence 4, Evidence 5 and Evidence 6 to prove that the International Arbitration Court of the Belarusian Chamber of Commerce and Industry had notified the applicant to participate in the arbitration proceedings, appointment of arbitrators and undergo arbitration procedures through mail. Pursuant to Article 11 of the <Some Provisions of the Supreme People's Court on Evidence in Civil Procedures>, “if the evidence submitted by the parties concerned is formed beyond the territory of the People's Republic of China, the evidence shall be subject to the certification of the notarization organ of the country concerned and shall be authenticated by the embassy of the People's Republic of China stationed in the country, or shall be subject to the certification formalities as provided in the relevant treaties concluded between the People's Republic of China and the country”. Although the applicant submitted that pursuant to Chapter IV, Article 28 of the <Treaty on Judicial Assistance in Criminal Matters between the People's Republic of China and the Republic of Belarus> stipulates that “documents created or certified by the courts or other relevant authorities by any signatory to this Treaty may be used in the courts or other relevant authorities of the other signatories without notarization”, the evidence submitted did not require notarization or certification. It is in the Zhengzhou Intermediate Court’s opinion that considering that the International Arbitration Court of the Belarusian Chamber of Commerce and Industry does not belong to the courts or other relevant authorities of the Republic of Belarus, the provisions shall be not applicable. Even assuming that the International Arbitration Court of the Belarusian Chamber of Commerce and Industry belongs to the courts or other relevant authorities of the Republic of Belarus, the delivery of documents and materials during arbitration proceedings by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry shall be governed by the <Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters> where China is one of the signatories. China expressly made a declaration that it does not recognize foreign judicial authorities’ delivery of judicial documents to Chinese parties directly by postal channels. In addition, the <Treaty on Judicial Assistance in Criminal Matters between the People's Republic of China and the Republic of Belarus> does not stipulate that the judicial authorities of Belarus may effect delivery of judicial documents to Chinese parties directly by postal channels. Instead, the Treaty provides that delivery shall be made by communication of the parties’ central authorities and mutual judicial assistance. Therefore, the International Arbitration Court of the Belarusian Chamber of Commerce and Industry’s delivery of materials to the respondent through mail carried no legal force. Similarly, the Award in question was not legitimately delivered to the Chinese party. Hence, the conditions supporting the legitimacy of Evidence 4, Evidence 5 and Evidence 6 submitted by the applicant had not been met and so they shall be inadmissible. Considering that the applicant failed to prove that appropriate notice as to the appointment of arbitrators and arbitration proceedings were given to the respondent by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry, pursuant to the conditions constituting non-recognition and enforcement from Article V(1)(b) of the <Convention on the Recognition and Enforcement of Foreign Arbitral Awards>, that “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”. The Zhengzhou Intermediate Court supports the submission by the respondent.

Therefore, Arbitral Award No. 796/01-09 by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry dated 11 August 2009 constituted the situation supporting non-recognition and enforcement as stipulated in Article V(1)(b) of the <Convention on the Recognition and Enforcement of Foreign Arbitral Awards>.

 

VI. The opinions of our court

Upon discussion, it is in the collegial panel of our court’s view that the determination of whether Arbitral Award No. 796/01-09 by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry in dispute shall be recognized and enforced shall be made pursuant to Article 267 of the <Civil Procedure Law> and conditions for non-recognition and enforcement provided in Article V of the United Nations <Convention on the Recognition and Enforcement of Foreign Arbitral Awards> (the <New York Convention> 1958) where China is one of the signatories. Here, to determine the effectiveness of service of the arbitration documents, the <Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters> where China is one of the signatories shall apply. China expressly made a declaration that it does not recognize foreign judicial authorities’ service of judicial documents to Chinese parties directly by postal channels. In addition, the <Treaty on Judicial Assistance in Criminal Matters between the People's Republic of China and the Republic of Belarus> does not stipulate that the judicial authorities of Belarus may effect service of judicial documents to Chinese parties directly by postal channels. Instead, the Treaty provides that service shall be made by communication of the parties’ central authorities and mutual judicial assistance. Therefore, the International Arbitration Court of the Belarusian Chamber of Commerce and Industry’s delivery of the documents to the respondent through mail had no legal effect. Therefore, the Arbitral Award in question had not been effectively served on the Chinese party. Hence, the applicant would be unable to prove that appropriate notice as to the appointment of arbitrators and arbitration proceedings were given to the respondent by the International Arbitration Court of the Belarusian Chamber of Commerce and Industry. Regarding this important issue, the Arbitration Court failed to take due care, in clear violation of the fairness and justice principle in arbitration, causing to procedural impropriety. Therefore, the Arbitral Award conforms to the conditions constituting non-recognition and enforcement under Article V(1)(b) of the <Convention on the Recognition and Enforcement of Foreign Arbitral Awards>. Therefore, the Arbitral Award shall not be recognized and enforced.

Please reply whether the above opinions are correct.