嘉能可有限公司 v. 昆山立益纺织有限公司s

At a glance

Parties

Glencore China Limited (嘉能可有限公司), a wholly foreign-owned enterprise registered in the China (Shanghai) Pilot Free Trade Zone, v. Kunshan Lily Textile Co. Ltd (昆山立益纺织有限公司)

Case no.

(2019)苏05协外认2号

Court

Suzhou Intermediate People's Court, Jiangsu Province (江苏省苏州市中级人民法院)

Underlying award(s)

International Cotton Association (ICA) Award No. A01/2018/06 of 13 July 2018, made in Liverpool, England

Forum and rules

Application for recognition under the New York Convention and Article 283 of the PRC Civil Procedure Law

Treaty

New York Convention (Arts. I(1), III, V)

Court

Presiding judge 高小刚 (Gao Xiaogang); judges 丁兵 (Ding Bing) and 谢坚 (Xie Jian)

Sector

Raw cotton trade

Outcome

The court recognised the ICA award and rejected all of the respondent's objections (20 July 2020).

Amount

Award: RMB 5,394,797.34 unpaid amount, plus simple interest of RMB 3,165,933.12 (10.5% a year from 11 December 2012 to 13 July 2018), plus compound interest at 10.0% a year from 3 August 2018 until payment. Court fee of RMB 500 to be borne by the respondent.

The dispute

On 3 March 2011 Glencore China Limited, as seller, and Kunshan Lily Textile, as buyer, concluded a raw cotton sales contract. The cotton was US cotton imported by a Glencore affiliate and stored in the Nantong bonded warehouse. The contract was governed by Chinese law and sent disputes to ICA arbitration. An amendment in late June 2011 raised the price from RMB 35,500 to RMB 50,068 per tonne. Kunshan Lily performed only a small part of the contract. In December 2014 the parties agreed an invoice-back settlement, which Kunshan Lily did not pay. Glencore started ICA arbitration on 19 February 2018 and obtained an award on 13 July 2018. It then applied to the Suzhou court for recognition in China. Kunshan Lily argued that: (1) the arbitration agreement was invalid because a purely domestic dispute with no foreign element could not be sent to arbitration abroad; (2) it had not received proper notice of the appointment of the arbitrator or of the proceedings; (3) recognition would violate Chinese public policy; and (4) the claim was time-barred.

Key holdings

1. The court had jurisdiction because the respondent was domiciled within its district. The New York Convention applied because the award was made in England, a Contracting State, and the dispute arose from a commercial relationship, given China's reciprocity and commercial reservations. p. 7
2. No refusal under Article V(1)(b). The ICA sent the notices by DHL, including the notice to appoint an arbitrator, and they were signed for by Kunshan Lily's employee Liu Mingcai (刘铭财). The claim that the respondent had no proper notice was contrary to the facts. p. 7
3. No refusal under Article V(1)(a). The parties chose Chinese law, so the validity of the arbitration agreement is assessed under Chinese law. Article 9(2) of the Supreme People's Court Opinion on judicial safeguards for Free Trade Zones bars a party from later invoking the absence of a foreign element where one party is a foreign-invested enterprise registered in a Free Trade Zone and the party did not object to the arbitration agreement during the arbitration. Kunshan Lily raised no objection before the ICA. p. 8
4. The contract also had a foreign element in any case. The goods were raw cotton imported from the United States for resale to domestic buyers and were kept throughout in a bonded warehouse. pp. 8–9
5. The dispute concerned civil rights arising from the performance of a contract. It was capable of settlement by arbitration and did not conflict with Chinese public order. The award was therefore recognised, and the RMB 500 court fee was charged to the respondent. p. 9

Procedural history

1. 3 March 2011The parties conclude the raw cotton sales contract, which provides for ICA arbitration. The price is amended in late June 2011.
2. December 2014The parties agree an invoice-back price of RMB 18,100 per tonne and an instalment repayment, which is later not paid.
3. 19 February 2018Glencore files for arbitration with the ICA.
4. 1 March – 4 May 2018The ICA sends notices to Kunshan Lily by DHL: to appoint an arbitrator, informing it of the arbitrator appointed on its behalf, calling for submissions, and serving the claim. All are signed for by Liu Mingcai.
5. 13 July 2018ICA Award No. A01/2018/06 is made in Liverpool.
6. 12 March 2019The Suzhou Intermediate People's Court registers the application for recognition.
7. 20 July 2020The court issues its ruling recognising the award.

Tribunal, counsel and experts

For the claimant

北京市嘉和律师事务所 · 上海市金茂（昆山）律师事务所

For the respondent

江苏华峡律师事务所 · 江苏沉浮律师事务所

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Keywords

• New York Convention
• recognition of foreign award
• International Cotton Association
• ICA
• Glencore
• raw cotton
• Free Trade Zone
• foreign-invested enterprise
• foreign element
• Article V(1)(a)
• Article V(1)(b)
• proper notice
• validity of arbitration agreement
• public policy
• arbitrability
• China
• Suzhou
• Liverpool

Summary generated with AI from the published documents — refer to the award for the authoritative text.