Sinocore International Company Ltd v RBRG Trading (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Phillips |
| Judgment Date | 17 February 2017 |
| Neutral Citation | [2017] EWHC 251 (Comm) |
| Docket Number | Case No: CL-2016-000098 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 17 February 2017 |
[2017] EWHC 251 (Comm)
>IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Phillips
Case No: CL-2016-000098
Nicholas Vineall QC and Neil Henderson (instructed by Holman Fenwick Willam LLP) for the Claimant
Neil Calver QC and Tom Pascoe (instructed by King & Spalding International LLP) for the Defendant
Hearing date: 5 October 2016. Further written submissions on 10 and 12 October 2016
Approved Judgment
On 2 March 2016 Burton J made an order ("the Order") pursuant to s.101(2) of the Arbitration Act 1996 ("the Act") giving the claimant ("Sinocore") permission to enforce a CIETAC 1 arbitration award dated 30 June 2014 ("the Award") against the defendant ("RBRG") and providing for judgment to be entered in the terms of the Award. The Order was sought and made under s.101(2) of the Act as the Award was made in China, a party to the New York Convention.
The Order, made on Sinocore's without notice application on paper, provided (as required by CPR 62.18(9) and (10)) that RBRG had liberty to apply to set the Order aside within 14 days after service and that the Award was not to be enforced pending any such application and its disposal.
By application notice dated 18 March 2016 RBRG applied to set aside the Order pursuant to s.103(3) of the Act on the grounds that recognition or enforcement of the Award would be contrary to public policy. The gist of RBRG's contention is that the Award gives effect to a claim by Sinocore which is " based on…. forged bills of lading".
The background facts
(i) The Sale Contract
On 15 April 2010 Sinocore agreed to sell 14,50MT (+/-10%, at sellers option) of prime newly produced cold rolled steel coils ("the Coils") to RBRG (then named Metalloyd Limited) at a price of US$870/MT CNF FO, shipped from any port of China to Tampico or Altamira in Mexico ("the Sale Contract"). The Sale Contract, governed by Incoterms 2000, required RBRG to open an irrevocable letter of credit for 100% of the contract price in strict conformity with the Sale Contract. The letter of credit was to allow shipment by July 2010 at the latest.
The Sale Contract contained a CIETAC arbitration clause and expressly provided that any dispute would be determined according to Chinese law, that the language of the arbitration would be Chinese and that the venue of arbitration proceedings would be Beijing, China.
On 7 May 2010 the Sale Contract was amended to permit RBRG to arrange an inspection of the Coils for quantity and quality, providing that such inspection might be carried out during and prior to loading. The quantity tolerance was also adjusted to +5/-10%.
(ii) The Letter of Credit
RBRG procured that, on 22 April 2010, a conforming letter of credit was issued by Rabobank Nederland ("Rabobank") in the sum of US$12,616,000 ("the Letter of Credit"), providing that the latest date of shipment was 31 July 2010. The Letter of Credit was subject to the UCP600.
On 12 June 2010, on the instructions of RBRG, Rabobank purported to issue an amendment to the Letter of Credit, changing the shipment period to read " 20th to 30th July 2010". It is common ground that that change was not agreed by Sinocore and was therefore ineffective (see Article 10 of the UCP600).
(iii) Shipment of the Goods
On 5 and 6 July 2010 the Coils were loaded onto the "Magic Striker" at Xingjang port, China. Genuine bills of lading were issued bearing the dates 5 and 6 July 2010. The vessel departed on 7 July 2010. That same day Sinocore sent a formal shipping advice to RBRG recording that the date of the bills of lading was 6 July 2010.
(iv) Request for payment under the Letter of Credit
On 22 July 2010 the Bank of Communications Beijing Branch ("BoC"), as collecting bank for Sinocore, requested payment from Rabobank under the Letter of Credit, presenting purported bills of lading bearing the dates 20 and 21 July 2010. As shipment in fact took place on 5 and 6 July 2010, it is plain (and Sinocore now accepts) that those bills were forgeries, being concocted so that documents were presented to Rabobank which, on their face, evidenced shipment within the period required by the purported amendment to the Letter of Credit referred to above. No explanation has been provided by Sinocore of how or by whom the forgeries were created and provided to BoC for presentation to Rabobank.
(v) Disputes and proceedings between the parties
On 26 July 2010 the Court of Amsterdam, on the petition of RBRG, granted a temporary injunction restraining Rabobank from making payment under the Letter of Credit.
On 13 August 2010 Sinocore commenced proceedings against Rabobank in the Beijing First Intermediate People's Court, claiming damages for Rabobank's alleged failure to make payment under the Letter of Credit pursuant to the request made by BoC on 22 July 2010. The claim was subsequently reduced by the amount Sinocore received on re-selling the Coils as set out in paragraph 14 below, but was dismissed on 26 June 2013 on the grounds that the presentation to Rabobank was fraudulent. Sinocore has appealed that decision and the appeal is still pending.
On 20 August 2010 Sinocore sent notice of termination of the Contract of Sale to RBRG, alleging that RBRG had repudiated the agreement and reserving its right to claim damages. RBRG accepted the termination without prejudice to its right to claim damages for breaches of contract.
(vi) Re-sale of the Coils
On 26 August 2010 Sinocore sold the Coils to another buyer, Chimay Industrial Inc ("Chimay"), at a price of US$535/MT, well below the price agreed with RBRG in the Sale Contract.
(vii) The arbitration proceedings
On 11 April 2012 RBRG commenced CIETAC arbitration proceedings against Sinocore in Beijing for damages caused by Sinocore's breach of the inspection clause added to the Sale Contract on 7 May 2010. In its skeleton argument for this hearing RBRG explained that the essence of its contention in the arbitration was that Sinocore had shipped the Coils early in order to prevent RBRG from inspecting the (presumably defective) Coils, and had then produced forged bills of lading to cover this up.
Sinocore counterclaimed for damages for breach of contract, claiming the difference between the sale price in the Sale Contract and the price obtained from Chimay.
RBRG and Sinocore each appointed an arbitrator, but failed to agree on the joint appointment of a chief arbitrator. CIETAC therefore appointed Ms Yan Siyi to that position. Oral hearings took place before the arbitral tribunal ("the Tribunal") in Beijing on 10 April and 9 August 2013. The Award was handed down in Beijing on 30 June 2014.
(viii) The Award
In its written Award, the English translation of which extends to 53 pages, the Tribunal determined (applying Chinese law) as follows:
i) that RBRG had not requested that it be permitted to arrange an inspection of the Coils before or during shipment, notwithstanding that Sinocore had given sufficient notice of shipment. Sinocore was therefore not in breach of the Sale Contract. Further, any such breach was not causative of any loss suffered by RBRG, the Tribunal holding that the termination of the Sale Contract had nothing to do with the quality of the Coils but with the failure of the parties to reach an agreement as to whether the amendment of the shipment period in the Letter of Credit was consistent with the Sale Contact.
ii) that, as Sinocore had not agreed to the revised shipment date, RBRG was in breach of the Sale Contract in procuring that Rabobank amended the Letter of Credit so that it was inconsistent with the terms of the Sale Contract in that regard. It was this breach of contract, the Tribunal found, which resulted in Sinocore not receiving payment and caused the termination of the Sale Contract and losses to be incurred.
iii) that the submission of forged bills of lading under the Letter of Credit was a deception of Rabobank, but did not mean deceiving RBRG. RBRG had actual knowledge of the true shipment dates, and its purported amendment of the Letter of Credit " was like a trap set by the buyer for the seller…".
The Tribunal therefore ordered RBRG to pay Sinocore damages of US$4,857,500, costs of RMB535,492 and a proportion of the arbitration fees. The tribunal declined to award Sinocore any interest.
On 24 December 2014 RBRG applied to the Beijing Second Intermediate People's Court to set aside the Award, but that application was dismissed on 18 March 2015. It is common ground that the Award is final and that RBRG has exhausted its rights of appeal.
(ix) The application for leave to enforce the Award
On 15 February 2016 Sinocore issued its application for leave to enforce the Award. The application was supported by witness statements from (i) Feng Jing, a partner in the firm of Chinese lawyers which acted for Sinocore in the arbitration and (ii) Marie-Anne Claire Smith, an associate of Holman Fenwick Willan LLP, Sinocore's Solicitors. As already stated, the Order was made on 2 March 2016.
The grounds of RBRG's challenge to the Order
The main ground on which RBRG seeks to set aside the Order is that recognition or enforcement of the Award would be contrary to public policy within the meaning of s.103 of the Act. That section provides, in so far as relevant, as follows:
" 103 Refusal of recognition or enforcement
(1) Recognition or enforcement of a New York Convention award shall not be refused except in the following cases
…
(3) … if it would be contrary to public policy to recognise or enforce the award."
RBRG contends that enforcement of the Award would be contrary to...
To continue reading
Request your trial
-
RBRG Trading (UK) Ltd v Sinocore International Company Ltd
...breach not tainting award — Arbitration Act 1996, s. 103, 103(3). This was an appeal by the appellant (RBRG) against a decision ([2017] EWHC 251 (Comm); [2017] 1 CLC 601) refusing to set aside an order granting the respondent (Sinocore) permission to enforce a Chinese arbitration award and ......
-
English Court Reviews The 'Fraud Unravels All' Principle In Enforcement Of CIETAC Arbitration Award, April 2017
...case Brian Perrott, Rachel Turner and Marie-Anne Boothroyd acted for the claimant/seller Sinocore International Co Ltd. Footnotes [2017] EWHC 251 (Comm). Full judgment can be found here: http://www.bailii.org/ew/cases/EWHC/Comm/2017/251.html In IPCO (Nigeria) Limited v Nigerian National Pet......
-
Update On Illegality In International Arbitration: RBRG Trading v Sinocore International
...3 RBRG Trading, supra at paras 10, 12. 4 RBRG Trading, supra at para 15. 5 Sinocore International Co Ltd v RBRG Trading (UK) Ltd, [2017] EWHC 251 (Comm) at para 16 6 Sinocore, supra at para 19. 7 Patel v Mirza, [2016] UKSC 42, [2016] 3 WLR 399 ("Patel"). 8 Patel, supra at para 21. 9 RBRG Tr......
-
International commercial arbitrator addressing money laundering sua sponte
...moneylaundering concerns on their own initiative are few.Moreover, recently, in Sinocore International Co Ltd vRBRG Trading (UK) Ltd. [2017]EWHC 251 (Comm.), the EnglishCommercial Court opined that the public interest in havingafinal arbitration award outweighsthe objection to enforcement ......
-
International commercial arbitrator addressing money laundering sua sponte
...moneylaundering concerns on their own initiative are few.Moreover, recently, in Sinocore International Co Ltd vRBRG Trading (UK) Ltd. [2017]EWHC 251 (Comm.), the EnglishCommercial Court opined that the public interest in havingafinal arbitration award outweighsthe objection to enforcement ......