四川代雅澜贸易有限公司 v. 苏梅and 香港纽维电子有限公司 (HongKong New Wish Electronics Co., Ltd)

At a glance

Parties

四川代雅澜贸易有限公司 (Sichuan Daiyalan Trading Co., Ltd.) v. 向玉如 (Xiang Yuru), 苏梅 (Su Mei) and 香港纽维电子有限公司 (HongKong New Wish Electronics Co., Limited)

Case no.

(2021)京04民初52号

Court

北京市第四中级人民法院 (Beijing No. 4 Intermediate People's Court)

Forum and rules

PRC civil court proceedings; the court reviewed the validity of an arbitration clause in a sales contract

Treaty

None. Arbitration clause in the Sales Contract of 18 February 2020; the court referred to the New York Convention

Tribunal

赵佳 (presiding judge), 梅宇, 郝文婷

Sector

Medical supplies (face masks)

Outcome

Claim dismissed (19 March 2021): the court held the arbitration clause valid and the dispute must go to arbitration in Hong Kong.

Amount

Claimed: refund of USD 752,484.64 and RMB 500,000, with interest from 20 March 2020 at LPR plus 50%, and losses of RMB 1,080,462.95 (total stated as RMB 6,618,874.35). Nothing was decided on the merits.

The dispute

Sichuan Daiyalan, a Chengdu import-export trader, bought face masks during the 2020 epidemic. On 18 February 2020 it signed a Sales Contract for 3 million masks with HongKong New Wish Electronics. Xiang Yuru signed for New Wish as its agent. Daiyalan paid USD 800,000, USD 720,000 and RMB 500,000. It said that only 710,400 three-layer masks were delivered, and that the two-layer masks were of non-woven rather than melt-blown fabric and came without valid inspection reports, so its customers returned them. It sued New Wish, Xiang Yuru and Su Mei for a refund and damages. Xiang Yuru objected that the court lacked jurisdiction because the contract referred all disputes to the "Hong Kong Arbitration Commission". She supported the objection with a legal opinion from a Hong Kong barrister.

Key holdings

1. The parties to the sales contract are Daiyalan and New Wish. Daiyalan's evidence did not show that Xiang Yuru or Su Mei were contracting parties, so New Wish is the proper counterparty to the claim. p. 4
2. The clause names a "Hong Kong Arbitration Commission", which is not the exact name of any Hong Kong institution. The clause still shows a clear intention to arbitrate, and to arbitrate in Hong Kong. Relying on the Hong Kong barrister's opinion, the court held that the agreement can be performed: the parties may ask the Hong Kong International Arbitration Centre to decide the arbitrators and the rules. p. 4
3. Article 14 of the Supreme People's Court Provisions on arbitration judicial review applies where the parties chose no governing law. If the law of the institution's location and the law of the seat would lead to different results on validity, the court must apply the law that upholds the agreement. This reflects a pro-validity principle. p. 4
4. The court relied on the New York Convention, trends in international commercial arbitration and Chinese judicial interpretations. On that basis it held that requirements for the validity of arbitration agreements should be relaxed so that agreements are upheld where possible. It found the arbitration agreement valid. pp. 4–5
5. The claim was dismissed under Article 5 of the PRC Arbitration Law and Articles 124(2) and 259 of the PRC Civil Procedure Law. The parties could appeal to the Beijing High People's Court: within 10 days of service for the mainland parties, and within 30 days for New Wish. p. 5

Procedural history

1. 18 February 2020Daiyalan and New Wish (through Xiang Yuru as agent) sign the Sales Contract for 3 million masks.
2. 5 January 2021The Beijing No. 4 Intermediate People's Court registers Daiyalan's claim.
3. 19 March 2021Civil ruling: the arbitration agreement is held valid and the claim is dismissed.

Tribunal, counsel and experts

For the claimant

四川川蓉律师事务所

For the respondent

北京市中伦文德（成都）律师事务所

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Keywords

• validity of arbitration agreement
• non-existent arbitral institution
• Hong Kong Arbitration Commission
• Hong Kong International Arbitration Centre
• HKIAC
• pathological arbitration clause
• pro-arbitration
• New York Convention
• international sale of goods
• face masks
• COVID-19
• melt-blown fabric
• jurisdiction declined
• PRC Arbitration Law Article 5
• Article 14 SPC Provisions
• Hong Kong law expert opinion
• Beijing No. 4 Intermediate People's Court

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