利奇食品株式会社 (Rich Food 株式会社) v. 元春秋

At a glance

Parties

利奇食品株式会社 (Rich Food Co., Ltd.), Republic of Korea, v. 元春秋 (Yuan Chunqiu), an individual living in Tianjin, China

Case no.

(2018)津01协外认1号

Court

Tianjin No. 1 Intermediate People's Court (天津市第一中级人民法院)

Underlying award(s)

Korean Commercial Arbitration Board (大韩商事仲裁院) Award No. 16113-0017 of 13 April 2017, made by a sole arbitrator

Forum and rules

Application to recognise and enforce a foreign award under the New York Convention and Article 283 of the PRC Civil Procedure Law

Treaty

New York Convention 1958 (Article V)

Tribunal

Presiding Judge 魏迺莉 (Wei Naili); Acting Judges 苗佳 (Miao Jia) and 王颖鑫 (Wang Yingxin)

Sector

Restaurant franchising

Outcome

The court recognised and enforced the Korean award and rejected all of the respondent's objections under Article V(1) and V(2) (ruling of 4 March 2019).

Amount

Award: KRW 495,000,000 in damages (about RMB 2,950,695), plus 6% annual late-payment damages from 20 May 2016 until paid in full, plus KRW 13,115,000 in arbitration costs (about RMB 78,178.52). Court application fee of RMB 400 charged to the respondent.

The dispute

Rich Food, a Korean company, and 元春秋 (Yuan Chunqiu) had a master franchise agreement for restaurants. Article 19-2 of the agreement said that disputes could be arbitrated "through the trade arbitration commission" under Korean law. The Korean Commercial Arbitration Board (KCAB) appointed a sole arbitrator, who ordered Yuan to pay damages, late-payment damages and costs. Yuan did not pay, and Rich Food applied to the Tianjin court to recognise and enforce the award. Yuan objected on five grounds under Article V of the New York Convention: (1) the clause named no arbitral institution, so the KCAB lacked jurisdiction; (2) she had no proper notice of the appointment of the arbitrator; (3) the KCAB International Arbitration Rules were wrongly applied before the pre-hearing meeting of 9 August 2016; (4) a sole arbitrator breached Korean arbitration law, which provides for three arbitrators where the parties have not agreed, and breached the KCAB rules, under which she said sole arbitrators hear only disputes of KRW 200 million or less; and (5) enforcement would breach Chinese public policy and judicial sovereignty, given the context of the THAAD dispute.

Key holdings

1. The arbitration clause is valid (Article V(1)(a)). Article 19-2 clearly shows that the parties intended to arbitrate. Korean arbitration law does not make a clause invalid because it does not clearly name the institution. The KCAB had ruled on its own jurisdiction under Article 17 of the Korean Arbitration Act, and Yuan did not show that this ruling breached Korean law. pp. 4–5
2. Yuan had proper notice (Article V(1)(b)). A KCAB notice of 13 May 2016 told her that a sole arbitrator would hear the case and that she could agree on the arbitrator with Rich Food. On 8 July 2016 the secretariat informed her of the appointment. She and her representatives took part in the whole proceeding. p. 5
3. The sole-arbitrator tribunal and the procedure did not breach Korean law (Article V(1)(d)). Article 11 of the Korean Arbitration Act, which provides for three arbitrators where the parties have not agreed, does not forbid sole arbitrators and is not mandatory. Under Article 20(2) of the Act, the KCAB International Arbitration Rules applied: Article 11 of those rules makes a sole arbitrator the default, and the 13 May 2016 notice had stated that the rules would apply. Yuan also took part in the hearing without ever objecting to the number of arbitrators. pp. 5–6
4. No breach of public policy (Article V(2)). The dispute was an ordinary commercial dispute under a restaurant franchise agreement and did not involve public security. Enforcing the award does not offend China's basic legal system or its fundamental social interests. pp. 6–7
5. The court recognised and enforced Award No. 16113-0017 and ordered Yuan to bear the RMB 400 application fee. p. 7

Procedural history

1. 13 May 2016The KCAB notifies Yuan that the arbitration will be heard by a sole arbitrator under its International Arbitration Rules.
2. 8 July 2016The KCAB secretariat informs Yuan of the appointment of the sole arbitrator.
3. 9 August 2016Pre-hearing meeting of the arbitral tribunal.
4. 13 April 2017KCAB Award No. 16113-0017 is made in favour of Rich Food.
5. 12 January 2018The Tianjin No. 1 Intermediate People's Court registers Rich Food's application for recognition and enforcement.
6. 4 March 2019The court rules that the award is recognised and enforced.

Tribunal, counsel and experts

For the claimant

北京大成（天津）律师事务所 (Beijing Dacheng (Tianjin) Law Firm)

For the respondent

天津澍泽律师事务所 (Tianjin Shuze Law Firm)

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Keywords

• New York Convention
• recognition and enforcement
• Article V(1)(a)
• Article V(1)(b)
• Article V(1)(d)
• public policy
• Korean Commercial Arbitration Board
• KCAB International Arbitration Rules
• Korean Arbitration Act
• sole arbitrator
• number of arbitrators
• unclear choice of arbitral institution
• proper notice
• franchise agreement
• restaurant franchising
• China
• Korea
• THAAD

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