B&R Cases TM TM 一带一路案例 Siemens International Trading (Shanghai) Co., Ltd. and Shanghai Golden Landmark Company Limited, A Case of an Application for the Recognition and Enforcement of a Foreign Arbitral Award B&R Typical Case 12 Batch 2 Case 4 (Released by the Supreme People s Court on May 15, 2017) CHINA GUIDING CASES PROJECT March 27, 2018 Edition The citation of this translation of this Typical Case is: 西门子国际贸易 ( 上海 ) 有限公司与上海黄金置地有限公司申请承认和执行外国仲裁裁决案 (Siemens International Trading (Shanghai) Co., Ltd. and Shanghai Golden Landmark Company Limited, A Case of an Application for the Recognition and Enforcement of a Foreign Arbitral Award), STANFORD LAW SCHOOL CHINA GUIDING CASES PROJECT, B&R Cases TM, Typical Case 12 (TC12), Mar. 27, 2018 Edition, http://cgc.law.stanford.edu/belt-and-road/b-and-r-cases/typical-case-12. For the original version of this case, see 第二批涉 一带一路 建设典型案例 (Second Batch of Typical Cases Involving the Belt and Road Construction), 最高人民法院网 (WWW.COURT.GOV.CN), May 15, 2017, http://www.court.gov.cn/zixun-xiangqing-44722.html. This document was primarily prepared by Sean Webb and Dr. Mei Gechlik; it was finalized by Dimitri Phillips and Dr. Mei Gechlik. We thank Zhaoyi Song for his research assistance. Minor editing, such as splitting long paragraphs, adding a few words included in square brackets, and boldfacing the headings, was done to make the piece more comprehensible to readers; all footnotes, unless otherwise noted, have been added by the China Guiding Cases Project. The following text is otherwise a direct translation of the original text released by the Supreme People s Court. B&R Cases TM is a serial publication of the China Guiding Cases Project that provides full-text versions and high-quality English translations of court cases in China that are related to the country s Belt and Road Initiative.
Abiding by the Obligations of the New York Convention Regarding Enforcement of [Arbitral] Awards Creating an Excellent Rule-of-Law Environment for Pilot Free Trade Zones I. Basic Facts of the Case On September 23, 2005, Golden Landmark Company 1 and Siemens Company, 2 after [a process of] tendering, signed a contract for the supply of goods, stipulating[, inter alia,] that Siemens Company should transport [certain] equipment to a work site before February 15, 2006. If [any] dispute occurred, [the parties] were required to submit it to the Singapore International Arbitration Centre 3 for resolution by arbitration. In the course of performance of the contract, a dispute arose between the parties. Golden Landmark Company initiated arbitration [proceedings] at the Singapore International Arbitration Centre, demanding [an order] rescinding the contract and stopping payment for the goods. During the arbitration proceedings, Siemens Company raised a counterclaim, demanding payment for all of the goods, for interest, and for compensation for other losses. In November 2011, the Singapore International Arbitration Centre rendered an [arbitral] award rejecting Golden Landmark Company s arbitration claim and supporting Siemens Company s arbitration counterclaim. Golden Landmark Company paid a portion of the sum of money, but still owed a total of RMB 5,133,872.30 as an outstanding payment plus interest under the arbitral award. Based on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, i.e., the New York Convention, 4 Siemens Company made a request to the No. 1 Intermediate People s Court of Shanghai Municipality, [urging it to] recognize and enforce the arbitral award rendered by the Singapore International Arbitration Centre. Golden Landmark Company defended [its position], arguing that [the court] should not recognize and enforce the arbitral award, on the [following] grounds: both parties were legal 1 The original text reads 黄金置地公司, which is translated herein as Golden Landmark Company. In the case name, this party is referred to as 上海黄金置地有限公司, which is translated as Shanghai Golden Landmark Company Limited based on a name found on the record for the company in the National Enterprise Credit Information Publicity System, http://sh.gsxt.gov.cn/index.html. 2 The original text reads 西门子公司, which is translated herein as Siemens Company. In the case name, this party is referred to as 西门子国际贸易 ( 上海 ) 有限公司, which is translated as Siemens International Trading (Shanghai) Co., Ltd. in accordance with the name found in a prominent source of information on companies worldwide, at https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=22676128. 3 The original text reads 新加坡国际仲裁中心, which is translated herein as Singapore International Arbitration Centre in accordance with the name found on the Centre s website, http://www.siac.org.sg. 4 The original text reads 承认与执行外国仲裁裁决公约 即 纽约公约, which is translated here as Convention on the Recognition and Enforcement of Foreign Arbitral Awards, i.e., the New York Convention in accordance with the name found on the Convention s website, http://www.newyorkconvention.org, where the full text versions of the Convention can be found.
persons of China and the place for the performance of the contract was within China; thus, the civil relationship involved in the case did not have foreign-related elements; [therefore,] the parties agreement stipulating that disputes were to be submitted to a foreign arbitration institution for arbitration was invalid. Recognizing and enforcing the [arbitral] award involved in the case would violate China s public policy. II. Results of the Adjudication After reporting [the case] level by level [within the court system] to [reach] the Supreme People s Court and receiving [the highest court s] reply, 5 the No. 1 Intermediate People s Court of Shanghai Municipality opined 6 that [it should], based on the provisions of the New York Convention, rule to recognize and enforce the arbitral award involved in the case. On the issue of whether the arbitration clause stipulating that the dispute in this case would be submitted to a foreign arbitration institution for arbitration was valid, the key was to determine whether the contractual relationship at issue had foreign-related elements. If there were foreignrelated elements, the arbitrational clause was valid; otherwise, it was invalid. Looking comprehensively at the subjects involved in the contract in this case and the actual circumstances, such as the characteristics of [the contract s] performance and other aspects, the court, based on Article 1 Item 5 of the Interpretation (I) of the Supreme People s Court on Several Issues Concerning the Application of the Law of the People s Republic of China on the Laws Applicable to Foreign-Related Civil Relationships, 7 could determine that the contractual relationship at issue was a foreign-related civil law relationship. The specific reasons [for this determination] were: 5 最高人民法院关于西门子国际贸易 ( 上海 ) 有限公司申请承认与执行外国仲裁裁决一案的请示的复函 (Reply of the Supreme People s Court to the Request for Instructions on a Case of an Application by Siemens International Trading (Shanghai) Co., Ltd. for the Recognition and Enforcement of a Foreign Arbitral Award), issued on and effective as of Oct. 10, 2015, http://en.pkulaw.cn/display.aspx?cgid=295500&lib=law. 6 西门子国际贸易 ( 上海 ) 有限公司诉上海黄金置地有限公司申请承认和执行外国仲裁裁决一案一审民事裁定书 (Siemens International Trading (Shanghai) Co., Ltd. v. Shanghai Golden Landmark Company Limited, The First-Instance Civil Ruling of a Case of an Application for the Recognition and Enforcement of a Foreign Arbitral Award) (2013) 沪一中民认 ( 外仲 ) 字第 2 号民事裁定 ((2013) Hu Yi Zhong Min Ren (Wai Zhong) Zi No. 2 Civil Ruling), rendered by the No. 1 Intermediate People s Court of Shanghai Municipality on Nov. 27, 2015, full text available on the Stanford Law School China Guiding Cases Project s website, at https://cgc.law.stanford.edu/judgments/shanghai-2013-hu-yi-zhong-min-ren-wai-zhong-zi-02-civil-ruling. 7 最高人民法院关于适用 中华人民共和国涉外民事关系法律适用法 若干问题的解释 ( 一 ) (Interpretation (I) of the Supreme People s Court on Several Issues Concerning the Application of the Law of the People s Republic of China on the Laws Applicable to Foreign-Related Civil Relationships ), passed by the Adjudication Committee of the Supreme People s Court on Dec. 10, 2012, issued on Dec. 28, 2012, effective as of Jan. 7, 2013, http://www.chinacourt.org/law/detail/2012/12/id/146055.shtml. Article 1 Item 5 reads 可以认定为涉外民事关系的其他情形 ( other circumstances under which [the civil relationship] may be determined to be a foreign-related civil relationship ).
1. Siemens Company and Golden Landmark Company are both legal persons of China. However, their places of registration are both within the area of the Shanghai Pilot Free Trade Zone, 8 they are both wholly foreign-owned enterprises by nature, and they have close relationships with their investors outside the territory [of China]. 2. The characteristics of the performance of the contract in this case had foreign-related elements: the equipment involved in the [present] case was first transported from outside China s territory to the [Shanghai] Pilot Free Trade Zone [for the authorities] to carry out supervision of [these] bonded [goods]. 9 Then, in accordance with the needs for the performance of the contract, procedures for customs clearance were handled at appropriate times and [the goods] were transferred from inside the Zone to outside the Zone, and only at this point were the procedures for the importation of the goods [considered to be] complete. Therefore, the course of circulation of the subject-matter of the contract also had certain characteristics of an international sale and purchase of goods. Thus, the arbitration clause involved in the case was valid. Further, the content of the arbitral award did not conflict with China s public policy. Therefore, recognition and enforcement of the arbitral award did not violate China s public policy. At the same time, [in] the ruling, [the court] also pointed out that Golden Landmark Company had actually participated in all the arbitration proceedings, asserting that the arbitration clause was valid, and had, after the arbitral award had been rendered, partially performed obligations determined by the award. Under these circumstances, [Golden Landmark Company s] application, in which [the company] argued that [the court should] refuse recognition and enforcement of the arbitral award involved in this case because the arbitration clause was invalid, did not conform with the generally recognized legal principles of estoppel, good faith, and fairness and reasonableness. Therefore, [the court] did not support [Golden Landmark Company s] argument. III. Typical Significance Pilot free trade zones are foundational platforms, important nodes, and strategic footholds for China s promotion of the Belt and Road construction. Aligning [China s practices] with 8 The official name is 中国 ( 上海 ) 自由贸易试验区 ( China (Shanghai) Pilot Free Trade Zone ), http://www.china-shftz.gov.cn/homepage.aspx. 9 The original text reads 保税监管 ( supervision of bonded [goods] ). According to Article 100 of the Customs Law of the People s Republic of China, bonded goods are goods which, with the approval of Customs, have entered the territory without going through the tax payment procedures and will be reshipped out of the territory after being stored, processed, and assembled in the territory. ( 保税货物, 是指经海关批准未办理纳税手续进境, 在境内储存 加工 装配后复运出境的货物 ) 中华人民共和国海关法 (Customs Law of the People s Republic of China), passed and issued on Jan. 22, 1987, effective as of July 1, 1987, amended five times, most recently on Nov. 4, 2017, effective as of Nov. 5, 2017, http://www.npc.gov.cn/npc/xinwen/2017-11/28/content_2032717.htm.
common international practices, supporting the development of pilot free trade zones, and improving international arbitration and other non-litigation dispute resolution mechanisms will [all] help strengthen the international credibility and influence of China s rule of law. Against the backdrop of promoting reforms [within] pilot free trade zones for [increasing] the convenience of investment and trade, the ruling of this case gave necessary attention to the determination of [whether there were] foreign-related elements with respect to a contractual dispute between wholly foreign-owned enterprises within a pilot free trade zone, confirmed that the arbitration clause was valid, and clarified [the principle of] estoppel. [The ruling] has put into practice the concept of [rendering judgments] conducive to the enforcement of [arbitral] awards [stated in] the New York Convention and has reflected China s fundamental position of abiding by its obligations under international treaties. At the same time, this case, from points to surfaces, drives forward the groundbreaking reform of [allowing] enterprises within pilot free trade zones to choose arbitration outside the territory [of China]. [This case] is a successful example of judicial experience that can be replicated and extended to [other cases involving] pilot free trade zones. In January 2017, the Supreme People s Court issued the Opinions [of the Supreme People s Court] on the Provision of Judicial Safeguards for the Construction of Pilot Free Trade Zones, 10 [Paragraph 9 of] which provides: where wholly foreign-owned enterprises registered in pilot free trade zones mutually agree to submit a commercial dispute to arbitration outside the territory [of China], [a people s court] should not determine that the related arbitration agreement is invalid merely on the grounds that the [enterprises ] dispute does not have foreign-related elements. [Paragraph 9 of the Opinions] also provides for [two situations where] one or two of the parties are foreign-invested enterprises registered in a pilot free trade zone and [the two parties] have agreed to submit a commercial dispute to arbitration outside the territory [of China]. [The first situation is that] one party submits a dispute to arbitration outside the territory [of China] but, after the related [arbitral] award is rendered, argues that the arbitration agreement is invalid. [The second situation is that one party submits a dispute to arbitration outside China and] the other party does not raise an objection to the validity of the arbitration agreement during the arbitration proceedings but, after the related [arbitral] award is rendered, argues that the arbitration agreement is invalid on the grounds that [the dispute] does not have foreign-related elements. [In either situation, according to Paragraph 9,] a people s court shall not support [the argument]. [These provisions] are helpful for the construction of a more stable and predictable rule-of-law Belt and Road business environment. 10 最高人民法院关于为自由贸易试验区建设提供司法保障的意见 (Opinions of the Supreme People s Court on the Provision of Judicial Safeguards for the Construction of Pilot Free Trade Zones), issued on and effective as of Dec. 30, 2016, http://www.court.gov.cn/zixun-xiangqing-34502.html.