Tianjin Port Free Trade Zone International Trade Service Co., Ltd. v. Tiancheng International, Inc. USA

At a glance

Parties

Tianjin Port Free Trade Zone International Trade Service Co., Ltd. (China) v. Tiancheng International, Inc. USA (California)

Case no.

No. ED CV 17-2127 PA (SHKx)

Court

U.S. District Court, Central District of California (Judge Percy Anderson)

Underlying award(s)

CIETAC Arbitral Award of 9 October 2015 (default proceeding, Beijing)

Treaty

New York Convention; 9 U.S.C. §§ 201-208

Sector

Sale of goods (nutritional chemicals)

Outcome

Petition to confirm granted (18 September 2018). Tiancheng's forgery, fraud and lack-of-notice defences were rejected.

Amount

Award: USD 547,000.00 plus attorneys' fees, arbitration fees and interest

The dispute

Tianjin Port Free, a Chinese company, said it had sold Creatine Monohydrate, Betaine HCL and Betaine Nitrate to Tiancheng, a California company, for $547,000.00 under a contract of 5 March 2014. The contract required CIETAC arbitration. Tiancheng received the goods but did not pay. CIETAC heard the case in Tiancheng's absence and on 9 October 2015 ordered Tiancheng to pay $547,000.00 plus fees and interest. Tianjin Port Free then petitioned the U.S. court to confirm the award under the New York Convention. Tiancheng opposed confirmation on three grounds. It said no contract existed. It said the signature of "Lance" (its employee Xiaoling Ding) was forged and that prices up to 12 times higher than normal showed fraud. And it said it never received CIETAC's notices.

Key holdings

1. Whether the underlying contract was forged or obtained by fraud is a question for the arbitrator alone. It is not a New York Convention ground for refusing confirmation. The court distinguished this from fraud in obtaining the arbitration agreement or the award itself, relying on Europcar Italia v. Maiellano Tours. Conclusions of Law ¶¶ 6–7
2. Even if Tiancheng's evidence of forgery and fraud were accepted, it would not meet the substantial burden needed for a Convention defence. Tiancheng did not dispute receiving the goods. It gave no credible explanation for failing to contact the seller, and it had avoided the seller's attempts to obtain payment. Its denial that an agreement existed was therefore not credible. Conclusions of Law ¶¶ 8–9
3. Article V(1)(b) requires "proper notice", meaning notice reasonably calculated to inform a party of the proceedings. It does not require actual notice. CIETAC sent at least four notices by express mail to Tiancheng's correct address, and their service was verified. Tiancheng's claim that it never received them was not persuasive. Conclusions of Law ¶ 10
4. Testimony that Tiancheng did not actually receive the notices is irrelevant to the proper-notice standard. The court sustained Tianjin Port Free's objections to that testimony under Federal Rules of Evidence 401 and 402. Conclusions of Law ¶ 11
5. Tiancheng established no Convention defence, so the court granted the petition to confirm. It directed Tianjin Port Free to file a proposed judgment by 1 October 2018 and allowed objections until 9 October 2018. Conclusion, p. 9

Procedural history

1. 5 March 2014Sales contract with a CIETAC arbitration clause signed, according to the award.
2. 19 March 2015Tianjin Port Free applies to CIETAC for arbitration.
3. 26 August 2015Arbitration session held in Beijing. Tiancheng does not appear, and the arbitration proceeds by default.
4. 9 October 2015CIETAC award orders Tiancheng to pay $547,000.00 plus fees and interest.
5. 17 October 2017Petition to confirm the award filed in the Central District of California. Tiancheng's motion to dismiss is later denied.
6. 18 September 2018Court trial held. The court issues findings of fact and conclusions of law granting the petition to confirm.

Tribunal, counsel and experts

Decided by

• Percy Anderson Judge, U.S. District Court, Central District of California

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Keywords

• New York Convention
• Article V(1)(b)
• proper notice
• actual notice
• CIETAC
• confirmation of foreign award
• forgery
• fraud
• default award
• public policy
• 9 U.S.C. § 207
• sale of goods
• creatine
• burden of proof
• China

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