招商银行股份有限公司厦门分行 v. MK离岸私人有限公司 (MK Offshore Pte Ltd)

At a glance

Parties

China Merchants Bank Co., Ltd. Xiamen Branch (招商银行股份有限公司厦门分行) (applicant) v. MK Offshore Pte Ltd and DBS Bank Ltd (respondents)

Case no.

(2019)闽72民特1042号

Court

Xiamen Maritime Court (厦门海事法院), People's Republic of China

Forum and rules

Application to recognise foreign arbitral awards under the New York Convention; underlying arbitration under the SIAC Rules, seated in Singapore

Underlying award(s)

SIAC Partial Final Award No. 023 of 2019 (22 February 2019) and Final Award No. 059 of 2019 (19 May 2019)

Treaty

1958 New York Convention (Articles III, IV, V)

Court

Chen Yanzhong (presiding judge), Liu Yurong, Hu Weifeng

Sector

Banking; refund guarantee for shipbuilding

Outcome

Both Singapore awards recognised (18 February 2020). Recognition only, no enforcement, at the request of the bank that had to pay under them.

Amount

Awards: USD 1,620,000 plus 5% simple annual interest; SGD 500,248.73 to MK Offshore; SGD 32,999.01 to DBS Bank; arbitration costs of SGD 286,730.66 borne by the bank. Court fee: RMB 500, borne by the applicant.

The dispute

On 7 January 2014 MK Offshore Pte Ltd signed contract No. XSI491N-2014 with Xiamen Shipbuilding Industry Co., Ltd. (厦门船舶重工股份有限公司) to build a 78-metre platform supply vessel. On 18 February 2014 China Merchants Bank's Xiamen Branch issued an irrevocable and unconditional on-demand refund guarantee to MK Offshore. The guarantee was governed by Singapore law and provided for SIAC arbitration in Singapore. MK Offshore made demands through DBS Bank on 10 April and 5 May 2017 for USD 1,620,000 plus 5% interest. On 10 May 2017 the bank replied that it was suspending payment, and MK Offshore started SIAC arbitration in June 2017. The SIAC awards went against the bank, which paid them. The bank then itself applied to the Xiamen Maritime Court for recognition only, so that the awards would have effect under Chinese law and could be used in related cases before that court. The respondents did not object.

Key holdings

1. The court had jurisdiction under Article 3 of the Supreme People's Court Provisions on Arbitration-Related Judicial Review Cases. The awards were linked to three independent-guarantee entrustment contract cases between Xiamen Shipbuilding Industry and the bank pending before the same court ((2019)闽72民初335号, 984号 and 2020号). Neither respondent was domiciled in mainland China or had property there. p. 4
2. The awards were made in Singapore, and China and Singapore are both parties to the New York Convention. Under Article 283 of the Civil Procedure Law, recognition is reviewed under the Convention and the relevant Chinese provisions. p. 4
3. The awards had been notarised, authenticated and translated as required. The application therefore met Article IV of the Convention and Article 6 of the Supreme People's Court Provisions. p. 5
4. The respondents raised no Article V(1) ground. On its own review, the court found no Article V(2) ground, including public policy. p. 5
5. A party that owes payment under an award, and has already paid in full, may apply for recognition alone. Such an application is voluntary, does not harm the other party or third parties, and does not breach public policy. Both awards were recognised. p. 5

Procedural history

1. 18 February 2014China Merchants Bank Xiamen Branch issued the on-demand refund guarantee to MK Offshore.
2. 10 April and 5 May 2017MK Offshore made payment demands through DBS Bank. On 10 May 2017 the bank replied that it was suspending payment.
3. June 2017MK Offshore filed for arbitration at SIAC.
4. 22 February 2019SIAC Partial Final Award No. 023 of 2019: the demand was valid and the bank was ordered to pay USD 1,620,000 plus 5% simple interest.
5. 19 May 2019SIAC Final Award No. 059 of 2019: the bank was ordered to pay SGD 500,248.73 to MK Offshore and SGD 32,999.01 to DBS Bank, and to bear arbitration costs of SGD 286,730.66.
6. 4 December 2019The Xiamen Maritime Court accepted the bank's application for recognition.
7. 18 February 2020The Xiamen Maritime Court recognised both awards.

Tribunal, counsel and experts

For the claimant

Incisive Law LLC (counsel in the arbitration) · Shook Lin & Bok LLP (counsel in the arbitration)

For the respondent

福建旭丰律师事务所 (Fujian Xufeng Law Firm) · 上海四维乐马律师事务所

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Keywords

• New York Convention
• recognition of foreign arbitral award
• recognition without enforcement
• SIAC
• Singapore
• refund guarantee
• on-demand guarantee
• independent guarantee
• shipbuilding
• platform supply vessel
• China Merchants Bank
• DBS Bank
• Xiamen Shipbuilding Industry
• related case jurisdiction
• Article V(2) public policy
• Article IV formal requirements
• award debtor application

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