The Court of Appeal has upheld the enforcement of a Chinese arbitration award in a decision that should provide reassurance that the UK can retain its reputation as a popular destination for international dispute resolution.
In RBG v Sinocore the Court of Appeal dismissed a challenge by trading company RBRG.
According to solicitors acting for Sinocore, a Chinese steel trading company, the decision is one of the first instances of an English appeal court ruling on the enforcement of a Chinese arbitral award.
Today’s judgment upheld an award handed down in 2014 by a tribunal at the China International Economic and Trade Arbitration Commission (CIETAC).
The dispute dates back to 2010, when Sinocore agreed to sell $1.2 million of rolled steel coils to UK-based RBRG. But the deal broke down after it emerged that Sinocore had forged the bills of lading – a key shipping document that is required to transport goods. Sinocore changed the shipment dates on the bills in order to comply with amendments RBRG had made to the letter of credit without Sinocore’s consent.
The forged bills did not go into circulation and Sinocore obtained no benefit from its attempted wrongful act, today’s judgment noted.
Both companies sought damages at the CIETAC for breach of contract. The CIETAC tribunal found in favour of Sinocore and ordered RBRG to pay $4.8 million (£3.4m), in damages plus costs.
Sinocore applied to the High Court to enforce the award. RBRG challenged its enforceability on the grounds that it would be contrary to public policy for a court to enforce an award that was ‘tainted’ by fraud.
The High Court was able to rule on the award as the CIETAC’s ruling was made under the New York Convention. Under the convention, to which China and the UK are both party, courts of contracting states are able to recognise and enforce arbitration awards made in other contracting states. In a 2016 ruling, the High Court dismissed the challenge on the grounds that the CIETAC had already rejected RBRG’s argument.
In today’s judgment, the Court of Appeal unanimously upheld the High Court’s ruling.
Writing the lead judgment, Lord Justice Hamblen concluded that there was in fact no fraud; only an attempt at fraud. ‘There is no public policy to refuse to enforce an award based on a contract during the course of the performance of which there has been a failed attempt at fraud,’ Hamblen wrote.
Brian Perrott, commodities partner at international firm HFW, which represented Sinocore, said: ‘This is quite possibly the first time that the Court of Appeal has ever had to deal with the issue of enforcing a Chinese arbitration award. This judgment confirms the robust pro-enforcement stance of the English court towards arbitration awards, and serves as a timely reminder, given the spectre of Brexit, of why the UK remains such a popular destination for international dispute resolution’.
HFW instructed Nick Vineall QC and Neil Henderson of 4 Pump Court. RBRG was represented by King & Spalding which instructed Brick Court Chambers members Neil Calver QC and Tom Pascoe.
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