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The confirmation and execution of Foreign Arbitration Award which some content have modified by the court

2011-12-31

The confirmation and execution of Foreign Arbitration Award which some content have modified by the court

Time23.12.2011

----The case is that the North Shipping Co., Ltd. applyed for the confirmation and execution of Foreign Arbitration Award about a lawsuit against the Fu Shun Shipping Co. Ltd..

 

Abstract:

According to the Britain Law, the parties have the rights to appeal to the UK Court on the problem of the arbitration award. After investigation, the court can withdraw the award totally or partly, and it can also modify the content directly. That the parties apply for the confirmation and execution to our court on the Maritime arbitration award modified by the UK court will bring much more difference in procedure and consequence, when they decide to choose Foreign Court Judgment or Foreign Arbitration Award to investigate.

According to procedural problems in procedure law of the Private International Law principle, our court should judge on the relevant UK laws and regulations firstly. And according to the British "Arbitration Act 1996," the provisions of Article 71, if the arbitration award was modified by a court, the modified content should be regarded as a part of the Arbitral tribunal. Therefore, for such part of the recognition and enforcement of British arbitral awards modified by the court, the subject is an arbitration award, instead of a court judgment, which means it should be reviewed on the relevant regulations of "Recognition and Enforcement of Foreign Arbitral Awards".

 

Case:

Applicant: North Shipping Ltd., Co (hereinafter referred to as “North Shipping”)

Respondent: Fu Shun Shipping Ltd., Co (hereinafter referred to as “Fu Shun Shipping”)

The UK London Maritime Arbitration Committee, arbitral tribunal which is consist of Patrick O’Donovan and Christopher J.W. Moss, made the first arbitration award about the M/V “NAVIOS MERCATOR” chartering contract between North Shipping and Fu Shun Shipping in July 16, 2009. And then, the North Shipping applied for recognition and enforcement to Shanghai Maritime Court in November 26, 2009. In the course of trial, the Fu Shun Shipping filed an appeal to the UK Higher Court. In terms of this appeal, the UK Higher Court made the judgment that modified the content of Part A and Part B.

 

Judgment:

After the trail, the Shanghai Maritime Court regarded that the first arbitration award about the M/V “NAVIOS MERCATOR” made by the UK London Maritime Arbitration Committee didn’t violent our commercial conservative statement., which refers to the respondent failed to produce evidence to prove the arbitration award under the conditions listed in article 5.1 of the convention and recognized and enforced not only it was under the China's public policy  but also it was not under he conditions listed in article 5.2 of the convention. The statment was made when we join the “Recognition and Enforcement of Foreign Arbitral Awards Convention”. Therefore, this application complies with conditions in the recognition and enforcement of the foreign maritime arbitral award set by our laws. Above all, the court judged that to admit the legal effect of the arbitration award, and to enforce the judgment by the modified content of Part A and Part B, as a benchmark.

 

Comment & Analyzation:

In the maritime arbitration areas, most maritime arbitration case will choose to London for arbitration. The UK Arbitration Law sticks to the principle the strict supervision of arbitration, therefore, many maritime arbitral award appealed in British court will be modified directly. For example in this case, the content of recognition and enforcement of arbitration award applied by the applicant was modified after an appeal to the British court. For such part of the content modified by the court, the different between review standards of confirmation and execution and ordinary arbitration award is a difficult point. And whether this part regarded as the arbitration award or court decisions, it will directly influence the parties lawsuit rights to win in our country.

 

First, the different programs between recognition and enforce foreign judgments and foreign arbitration award in our law.

1. Rules of procedures in the confirmation and execution of foreign judgment

According to the Art.265 and Art.266 of our Civil Procedure Law the parties may directly to apply for recognition and enforcement of foreign court a legally effective judgment to the intermediate people's court. In accordance with the international treaty concluded or acceded to or principle of reciprocity, the People’s Court can rule its effectiveness only when we considered that it didn’t violate the basic principles of the laws in China or China's sovereignty, security and public interests. What needs to enforce or order is according to the relevant provisions of the law.

It is obviously that the international treaty and the principle of reciprocity is of the main legal basis of our confirmation and execution of foreign judgment. As long as the court find out the true treaty relationship between the two countries, according to the conditions in the treaties or agreements to examine, it can make “admit it” or “not admit it” sentence. In the condition that our country didn’t make any treaty with other countries, in principle to mutual beneficial relations for the premise, but in fact, the current law is strict to mutual beneficial relations. In general speaking, on one hand, at present we have treaty relationship with little county in the mutual recognition and execution area. On the other hand, China's legislation and judicial practice is basically on the tenet of "fact reciprocity" principle, namely in addition to the divorce rulling, other civil and commercial cases are demanded to have precedent in confirmation and execution in our court. And many countries in the world, including the UK, carry out the principle of factual reciprocity for the purpose of protecting the judicial sovereignty and strictly. So, it is difficult to build a mutually beneficial relation between our country and those that pursue the tenet that “If you don’t admit what I do, I won’t admit what you do, either. [1] In our case that apply for recognition and enforcement of foreign trial effective cases, once the court find out there’s no not only the relevant judicial assistance treaty or international conventions relation between these two countries in which the court made the judgment but also the precedent that the foreign country admitted our judgment, the application must will be rejected. That makes it difficult to confirm and execute the trial and judgment made in most foreign countries in ours.

 

2. Acknowledgement and enforcement of program regulations of foreign arbitral award

According to our "civil procedural law" Atc.267 regulation, if the award of the arbitration organization for foreign needs our courts’ the recognition and enforcement, the parties can apply directly to the execution whose domicile or where his property is located to the intermediate people's court. And the people's court shall, in accordance with the international treaties concluded or acceded to, or in accordance with the principle of reciprocity is dealt with.

Although our law basis to a foreign arbitration award of the recognition and enforcement is international convention and the principle of reciprocity as well, but China has acceded to the recognition and enforcement of foreign arbitral awards convention (hereinafter referred to as the New York convention), therefore, Chinese court acknowledgement and enforcement of foreign arbitral award is mainly based on the New York convention. According to the provisions of this convention, our courts review the foreign arbitration application procedures, mainly including the foreign arbitration award the written arbitration award, the arbitration agreement whether there is effective, in violation of the arbitration procedure, whether to give the proper whether not inform the arbitration tribunal, whether the arbitrariness of the content of the procedure and so on. Predictably, the law of our country foreign court decision, ruling and effective foreign arbitration institution of the arbitration award to the acknowledgement and enforcement of problems made different provisions. Compared with foreign court judgments and orders come into effect, the recognition and enforcement of foreign arbitral award regulation in China is more simple, and more likely to get admitted and execution as well. In the case of the change of original arbitration award for an appeal court, if still regarded as the arbitration award, the parties according to the New York convention to the maritime court for acknowledgement and enforcement, and only on the court programs will be examined. This means a lot to the party concerned.

 

Second, the provisions of the arbitration court change the decisions in English law

Compared with arbitration law on the history of law, although the British "1996" has reduced intervention from the arbitration court, still insists on the essence of supervision to the arbitration. The provisions of Art.69: “the parties shall have the right to legal issues in principle to court, unless, they expressly agreed by the appeal court ruled out jurisdiction, or the agreement with the arbitration tribunal make not the award of the reason... ; The court shall have the right to decide to maintain, alteration, all or part of the dissolution of the ruling, all or part of the arbitration tribunal after cutting back the original; To further appeal, that the court appeal this article is based on the decision shall be regarded as the court's decision. ” The provisions of Art.71: “if the arbitration award is changed, the changed content of the arbitration tribunal will be regarded as part of the ruling.” Predictably, the judgment to appeals for the parties to change the decision is the decision of the court. And the purpose is convenient for the change of the court appeal against the decision itself again; And the specific changed content of the original is still regarded as part of the arbitration award, instead of forming a new one which is different from the original arbitration court ruling.

Some scholars think that regard the arbitration as the court of arbitration award will against the conventions of folk. The parties choose to solve the dispute by arbitration way, showing that the arbitration tribunal is seeking the arbitration award and illegal court judgment or order, the court changes the arbitration award content violates the basic idea of arbitration. [2] But there are also scholars think, since if the parties agree to arbitrate in Britain, and it should be foreseen the possibility, when they does not expressly agreed to exclude the appeal of legal problem in the arbitration award. When court makes a change of an arbitral award after the verdict, they should accept the results. [3]

In fact, the British "1996" arbitration law Art.71 already makes clear a regulation, “if the ruling is change, the changed content will be a part of the arbitration award.” In accordance with the procedures of law problems principle, Britain should be regarded as the arbitration law is applicable to the whole process of arbitration of China. Therefore, can make it clearly is that according to English law, even if the arbitration award is changed by the court, its nature is still the arbitration award, not the court decision.

 

Third, arbitration award changed by the court should be adopted in the examination way

According to the place for arbitration law, the content of arbitration changed by the court is still the arbitration award, the recognition and enforcement of the theory should be based on the New York convention related provisions for review. The New York convention Art.5.1.4 points out: “If the composition of the arbitration organs or arbitration procedure and the agreement between the parties with discrepancies, or no agreement with this law and the place for arbitration is not matched, the arbitration award is not recognized and executed.” Therefore, if regard the content changed by the court after the final award as a result, the court will modified the content of ruling. And there will be no violation of laws provisions of the place for arbitration, and no violation of the agreement between the parties, this situation can not formed the conditions of not confirmation and execution. In addition, the New York convention Art.5.1.5 also rules: ruling is revoked or stopped the execution by the country according to law of the competent authorities, arbitration award is not recognized and execution. From this regulation we can see that the New York convention did not have absolute attitude to so-called personal, folk of arbitration, instead of court review itself the result of arbitration award shows the respect.

In conclusion, we believe, as according to the provisions of the place for arbitration law, the court can review and modified directly. What the court modified is still the arbitration award instead of judgment. Furthermore, confirmation and enforcement should be applied to the New York convention's standards. Considered to maximize the efficacy of arbitration and convenient to the largest extent to realize the parties’ rights, we will not regard the changed arbitration award as a judgment. But at the same time, what should be paid attention to is that the British court hearing in the case of the arbitration appeal and there are beyond legal authority to ruling of the phenomenon, [4] such as modified the arbitration award because of the problem of fact instead of law and so on. If the parties raise an objection, the court shall review in a different way from other award, and also shall review the behavior in the process. If the court made a judgment beyond its right, the award made by the court should not be confirmed and execute.

 

Writer: Shanghai Maritime Court ——Fang Yi

 

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Reference:

[1] Du Tao: "the principle of reciprocity and foreign judgments the acknowledgement and enforcement of", journal of global law review, 2007 (1), P115-112.

[2] Yang LiangYi, Mo ShiJie, Yang DaMing: the arbitration law from Great Britain in 1996-to international business arbitration law ", Law press, (2006), P367.

[3] Li Hong, Ma Jie, Cui Jiang: "the theory under British law of legal problems can appeal principle-mansion ship heavy industry analysis case", in the Beijing arbitration "2010 (2), P168.

[4] Li Hong, Ma Jie, Cui Jiang: "the theory under British law of legal problems can appeal principle-mansion ship heavy industry analysis case", in the Beijing arbitration "2010 (2), P171.

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