[2010] JHFQZ No. 6

Updated : 2016-10-26

Tianjin Maritime Court

Civil Ruling

 

[2010] JHFQZ No. 6

July 12, 2012

 

* Commercial arbitration – LMAA arbitration and COA dispute – insolvency of respondent during arbitration – resignation of arbitrator – truncated arbitration – English court’s power of appointing arbitrator – English Arbitration Act 1996

 

Applicant: Western Bulk Pte Ltd.

 

Respondent: Beijing Zhonggang Tiantie Steel Trade Co., Ltd

 

With respect to the case in which the Applicant, Western Bulk Pte Ltd (hereinafter referred to as “Western Bulk”), applied to recognize and enforce foreign arbitral award against the Respondent, Beijing Zhonggang Tiantie Steel Trade Co., Ltd (hereinafter referred to as “ex-Tiantie Steel”), this Court accepted the same on October 19, 2010 and formed a collegial penal in accordance with law. Oral hearing was held by this Court on November 23, 2010. Western Bulk’s agents ad litem attended the court hearing, whilst ex-Tiantie Steel did not attended such oral hearing due to deregistration and its termination of qualification as a legal person. Trial of this case has now been finished.

 

I. Claim of Western Bulk

1. The Applicant Western Bulk stated that it concluded a Contract of Affreightment-Voyage Charter Party (hereinafter referred to as “COA Voyage Charter Party”) with ex-Tiantie Steel on August 1, 2008, and clause 39 of which was the arbitration clause. As ex-Tiantie Steel failed to perform the contract, Western Bulk sent an arbitration notice to it on March 13, 2009 and appointed arbitrator, thus initiating the arbitration proceedings. 

2. On March 27, 2009 ex-Tiantie Steel appointed Chen Bo as its arbitrator. However, Chen Bo resigned on May 5, 2009. Western Bulk notified on February 11, 2010 to ex-Tiantie Steel and required it to appoint new arbitrator within 14 days. But no response was received from Tiantie Steel. Pursuant to the arbitration clause, Mr. Michael Baker-Harber as the arbitrator appointed by Western Bulk served as the sole arbitrator and tried this case in London in accordance with English law. During the trial, the arbitrator required ex-Tiantie Steel twice to submit statement of defense and relevant evidences, but not response was received.

3. On June 2, 2010, Mr. Michael Baker-Harber as the sole arbitrator rendered the arbitral award, and such arbitral award had already come into legal force. Since ex-Tiantie Steel failed to satisfy such arbitral award, Western Bulk applied with this Court to:

(1) recognize the arbitral award rendered by Mr. Michael Baker-Harber in London on June 2, 2010 in respect of disputes under the COA Voyage Charter Party dated August 1, 2008;

(2) enforce the abovementioned arbitral award, and order Tiantie Steel to pay to Western Bulk for compensation in amount of USD37,327,533 with corresponding interest (including interest on such compensation amount at the rate of 5% per annum compounded with three monthly rests from May 9, 2009 to June 2, 2010; as well as interest on the above compensation amount and interest at the rate of 5% per annum compounded with three monthly rests from June 2, 2010 until payment of such sums. As at July 30, 2010, these sums of interests would be USD598,598.58). Total amount was added up to USD37,926,131.58, which is equivalent to RMB257,897,694.7;

(3) order the Respondent to pay the court fees for this case.

 

II. Defense of ex-Tiantie Steel

4. During the process of serving legal docs by this Court, Mr. Guo Yushan as the ex-legal representative of ex-Tiantie Steel stated that:

(1) The company handled the de-registration of corporation on April 21, 2009, and its qualification as a legal person had already been terminated as of the date of de-registration. Therefore, the arbitral award shall not be enforced. Although on January 25, 2010 the Beijing Administration of Industry and Commerce (BAIC) revoked such de-registration by an Administrative Punishment Decision, all the shareholders of the company were dissatisfied with such punishment decision and filed an administrative litigation. The first instance judgment for such administrative litigation had set aside the punishment decision, and trial of second instance has not been finished yet.

(2) Arbitration proceedings had never been activated officially due to the fact that although Western Bulk once required ex-Tiantie Steel to appoint arbitrator, ex-Tiantie Steel never received any official request for arbitration before handling the de-registration.

(3) Tiantie Steel had never agreed to leave the case to be solely arbitrated by the arbitrator appointed by Western Bulk, and the arbitral award rendered by such sole arbitrator was illegal and shall not be recognized.

 

III. Evidences submitted by Western Bulk

Western Bulk provided the following evidential materials:

5. Evidence 1: COA Voyage Charter Party dated August 1, 2008, to prove that contractual relationship had been established between the parties and clause 39 regarding arbitration provides that all the disputes shall be referred to arbitration in London pursuant to English law;

6. Evidence 2: Arbitral award in respect of dispute under the COA Voyage Charter Party dated August 1, 2008;

7. Evidence 3: Statement made by the president of the London Maritime Arbitrators Association (LMAA) in respect of attestation for the qualification and identity of the sole arbitrator Mr. Michael Baker-Harber, to prove that the sole arbitrator who rendered the arbitral award was in compliance with the contract;

8. Evidence 4: Relevant arbitration documents served by INCE & CO International Law Firm London Office, as authorized by Western Bulk, upon ex-Tiantie Steel and all its shareholders as well as its lawyer for its liquidation team during the process of arbitration proceedings, to prove that Western Bulk had finished service of all arbitration documents and notices in accordance with LMAA arbitration rules and English law after activation of arbitration proceedings and Tiantie Steel’s de-registration dated April 21, 2009;

9. Evidence 5: Relevant arbitration documents served upon ex-Tiantie Steel by the sole arbitrator Mr. Michael Baker-Harber, to prove that the sole arbitrator had served all arbitration documents in accordance with LMAA arbitration rules and English law; also to prove that the arbitrator had given notification to ex-Tiantie Steel to exercise its rights and it was ex-Tiantie Steel itself that declined to use such rights;

10. Evidence 6: Relevant notarized documents in respect of the arbitration docs served by INCE & CO International Law Firm Shanghai Office, as authorized by Western Bulk, upon ex-Tiantie Steel and all its shareholders as well as the lawyer to its liquidation team, to prove that Western Bulk had notified ex-Tiantie Steel, as required by  LMAA arbitration rules and English law, after activation of arbitration proceedings in February 2010;

11. Evidence 7: Relevant proof documents certifying that Western Bulk entrusted Jun He Law Firm to serve to ex-Tiantie Steel, all its shareholders as well as its liquidation team lawyer, relevant arbitration documents (including service of documents on February 11 to 13, 2010 whereby ex-Tiantie Steel was required to appoint arbitrator; service of notification on March 4 and 5, 2010 in respect of sole arbitration; service of amended request for arbitration on March 25 and 26, 2010; service of the document on March 31, 2010 whereby ex-Tiantie Steel was required to submit its statement of defense within 28 days; service of the document on April 27 to 29, 2010 whereby ex-Tiantie Steel was required to submit its final statement of defense within 14 days; service of document on May 18 to 20, 2010 whereby the arbitrator was requested to render arbitral award and service of the expert report for loss assessment; service of arbitral award on June 10 to 13, 2010; summary of addresses of persons on whom the documents were served; proofs of service of documents by post; proofs of signed receipts for part of documents; on-site photos taken for service of documents; statement of facts for services in Hebei Province and Tianjin as well as duplicated copies of front covers of all served documents that were returned), to prove that Western Bulk had notified, as required by LMAA arbitration rules and English law, ex-Tiantie Steel in China and had also served upon related enterprises; it was ex-Tiantie Steel itself who declined to use its rights;

12. Evidence 8: Expert’s opinion issued by Professor Robert Merkin of the University of Southampton, saying that arbitration proceedings in this case were in compliance with law.

13. Evidences 3 to 8 is used to prove that rendering of the arbitral award in that way is in compliance with LMAA arbitration rules and English law. Notarization authentication formalities had been handled for Evidences 1 to 5 and Evidence 8.

14. Upon required by this Court, Western Bulk submitted separately another two evidential materials: Evidence 1-Enquiry result information dated October 2010 from Beijing Enterprises’ Credit Website, showing the legal status of ex-Tiantie Steel was “in operation” that time; Evidence 2-Administrative Punishment Decision JGSJKFCZ (2010) No.1, content of such punishment decision was to cancel the de-registration of ex-Tiantie Steel. Western Bulk contended that the qualification of ex-Tiantie Steel as a legal person resumed based on such punishment decision.

 

IV. Evidences collected by this Court

15. In order to ascertain the changes to the qualification of ex-Tiantie Steel as a legal person, this Court collected, ex officio, relevant evidential materials from the lawyer Wei Qingyue of B & D Law Firm. Mr. Wei Qingyue was the legal counsel of liquidation team of ex-Tiantie Steel at the time of dissolution of company, and he was also the agent ad litem of the plaintiffs in the case of administrative litigation filed by ex-Tiantie Steel and all its shareholders against BAIC due to dissatisfaction with the Punishment Decision rendered by such government authority. Evidential materials collected by this Court are as follows:

16. Evidence 1: Resolution adopted on the 4th session of the 5th shareholders general assembly in respect of dissolution of the company; 

17. Evidence 2: Announcement of de-registration by ex-Tiantie Steel published on the newspaper Beijing Morning Post;

18. Evidence 3: Recording notice by BAIC, whereby the liquidator of ex-Tiantie Steel was filed with such government authority;

19. Evidence 4: Notice sent by the liquidation team of ex-Tiantie Steel to the legal representative of Western Bulk, notifying that it would not perform the involved COA Voyage Charter Party anymore; it had adopted a resolution to dissolve the company, and that the liquidation team should be contacted in respect of relevant matters;

20. Evidence 5: De-registration Verification Notice dated April 21, 2009 issued by the BAIC;

21. Evidence 6: Notice sent by the liquidation team of ex-Tiantie Steel to Western Bulk, Mr. Michael Baker-Harber and Chen Bo, notifying that the company ex-Tiantie Steel was de-registered on April 21, 2009;

22. Evidence 7: Administrative Punishment Decision JGSJKFCZ (2010) No.1, content of such punishment decision was that BAIC decided on January 25, 2010 to cancel the de-registration decision made in the JGSKZCQXZ (2009) No.0007103 De-registration Decision, thus revoking the de-registration of ex-Tiantie Steel;

23. Evidence 8: Administrative Judgment rendered by the People’s Court of Haidian District of Beijing;

24. Evidence 9: Administrative Judgment rendered by the First Intermediate People’s Court of Beijing. The said 1st and 2nd instance judgments decided to set aside the Administrative Punishment Decision JGSJKFCZ (2010) No.1;

25. Evidence 10: Consulting advices issued by three legal experts, saying that the aforesaid Administrative Punishment Decision should be set aside;

26. Evidence 11: Notarization for email sent by ex-Tiantie Steel to the two arbitrators (for content of such email, please refer to Evidence 6); 

27. Evidence 12: Enquiry result information from Beijing Enterprises’ Credit Website, showing the status of Tiantie Steel as “cancelled” and the date of de-registration was November 1, 2010.

28. All the above evidential materials are original.

29. Western Bulk recognized the authenticity of the evidences collected by this Court. However, it argued that:

(1) The date when the de-registration announcement was published was March 7, and the de-registration was conducted on the 44th day after such announcement, whilst the 45 days requirement is not satisfied;

(2) Content of consulting advices by the said three legal experts in the administrative case was irrelevant to this case. Because such consulting advices were personal opinions from legal theory point of view, and such advices could not prove facts of this case;

(3) In terms of Evidence 6, ex-Tiantie Steel confirmed, through email, the receipt of the notice requiring it to appoint arbitrator. Thus the arbitration proceedings were activated on March 13, 2009.

 

V. Findings of facts by this Court

After examination, this Court finds out that: 

30. On August 1, 2008, Western Bulk as the owners concluded the COA Voyage Charter Party with ex-Tiantie Steel as the charterer; the duration of such contract was 5 years; it was agreed to carry out 32 shipments, amongst which 2 shipments shall be finished in 2008; and clause 39 of the contract was arbitration clause.

31. On March 6, 2009, due to the world financial crisis, ex-Tiantie Steel adopted a resolution on the 4th session of its 5th shareholders general assembly meeting, deciding to: 1) dissolve the company in accordance with law; 2) set up a liquidation team; 3) engage lawyer Zeng Dangzhi and lawyer Wei Qingyue of B & D Law Firm as legal counsels of the liquidation team; 4) wind-up the company in accordance with regulations concerning liquidation of enterprises.

32. On March 7, ex-Tiantie Steel published the announcement of de-registration on the newspaper Beijing Morning Post.

33. On March 12, the liquidator of ex-Tiantie Steel was filed with BAIC.

34. On March 13, ex-Tiantie Steel sent an email to Western Bulk, saying that: after completion of performance of the agreed 2 shipments in 2008, following the spread of global financial crisis, as no consensus was reached between the parties in respect of such matters as the modification of freight of charter party and extension of performance of the contract, etc, the company has been out of business; the shareholder general assembly meeting has adopted a resolution to dissolve the company; liquidation team has been set up in accordance with Chinese law; and any and all outstanding businesses with Western Bulk shall be terminated.

35. March 13, 2009, Western Bulk sent an arbitration notice to ex-Tiantie Steel by serving such notice to the email addresses wanglp@csgctiantie.com and zgttgs@163bj.com as specified in the involved contract, appointing Mr. Michael Baker-Harber as its arbitrator in respect of dispute under the voyage charter party involved in this case, and requiring ex-Tiantie Steel to appoint its corresponding arbitrator or agree the appointment of Mr. Michael Baker-Harber as the sole arbitrator within 14 days.

36. On March 14, the liquidation team of ex-Tiantie Steel received this arbitration notice.

37. On March 27, ex-Tiantie Steel appointed Chen Bo as its arbitrator in respect of dispute under the voyage charter party involved in this case, and notified Western Bulk of such appointment.

38. On April 17, ex-Tiantie Steel’s liquidation team received Western Bulk’s email whereby Western Bulk applied to register its credit in such email.

39. On April 20, after examination and check of all materials provided by Western Bulk in respect of supplementary registration of its claim, the liquidation team of ex-Tiantie Steel did not confirm such claim, holding that such supplementary declaration of credit lacked corresponding basis.

40. On April 21, BAIC verified the de-registration of ex-Tiantie Steel. The Liquidation team of ex-Tiantie Steel then sent email to the two arbitrators, saying that the company’s business registration had been cancelled in accordance with law, liquidation had been finished, the company would have not title to act as subject party in litigation/arbitration, and all telephone numbers, fax numbers and email addresses were out of use.

41. On April 28, 2009, the arbitrator Chen Bo declared that ex-Tiantie Steel had terminated the appointment on her, she could not take any action, and she agreed officially on May 5 to resign from the appointment.

42. From February 11, 2010 to March 4, 2010, Western Bulk sent, by emails and courtier, the notice of appointment of arbitrator to members of liquidation team, the shareholders of the company as well as to the email addresses once used by ex-Tiantie Steel.

43. On March 30 and April 27, Mr. Michael Baker-Harber sent notice, through emails and fax, to the liquidation team, legal counsels of the liquidation team, shareholders of ex-Tiantie Steel, requiring submission of the statement of defense and all supporting documents. Lawyers of Western Bulk also sent arbitration documents, by post and by courier to ex-Tiantie Steel, but no response was received.

44. On June 2, 2010, Mr. Michael Baker-Harber acting as the sole arbitrator rendered the final arbitral award in respect of dispute between Western Bulk and ex-Tiantie Steel under the COA – Voyage Charter Party dated August 1, 2008 and sent such arbitral award to ex-Tiantie Steel’s two email addresses as specified in the COA – Voyage Charter Party.

45. It was awarded that: ex-Tiantie Steel shall pay to Western Bulk the sum of USD37,327,533 as well as interest on such sum at the rate of 5% per annum (compounded with three monthly rests from May 9, 2009 to the date of award; thereafter, the interest on USD37,327,533 at the rate of 5% per annum compounded with three monthly rests from the date of award until payment of such sums).

46. As ex-Tiantie Steel failed to fulfill the arbitral award, Western Bulk applied before this Court to recognize and enforce such arbitral award.

47. This Court also finds that, on January 25, 2010, BAIC rendered the Administrative Punishment Decision JGSJKFCZ (2010) No.1, which decided to set aside the de-registration decision made in the De-registration Decision JGSKZCQXZ (2009) No.0007103, thus revoking the de-registration of ex-Tiantie Steel.

48. On March 9, being dissatisfied with the Administrative Punishment, all the shareholders of ex-Tiantie Steel lodged an administrative litigation.

49. On June 9, the People’s Court of Haidian District of Beijing adjudicated to set aside such Administrative Punishment Decision JGSJKFCZ (2010) No.1 based on the ground that BAIC failed to honor the administrative counterpart’s right of hearing during the administrative punishment procedure and that the administrative procedure was not in compliance with law.

50. The parties concerned lodged appeal. On October 20, the First Intermediate People’s Court of Beijing rendered a final judgment to reject all appeals and affirm the original judgment. The status of ex-Tiantie Steel as showed on the Beijing Enterprises’ Credit Website was changed from “in operation” to “de-registered”, with date of de-registration as showed on such website as “November 1, 2010” and ex-legal representative as Guo Yushan.

 

VI. Ruling of this Court 

51. This Court holds that in respect of cases of application for recognition and enforcement of foreign arbitral award, Art.267 of the Civil Procedure Law of the People’s Republic of China provides “if an award made by a foreign arbitral organ requires the recognition and enforcement by a people's court of the People's Republic of China, the party concerned shall directly apply to the intermediate people's court of the place where the party subjected to enforcement has his domicile or where his property is located. The people's court shall deal with the matter in accordance with the international treaties concluded or acceded to by the People's Republic of China or with the principle of reciprocity”.

52. The arbitral award involved in this case was rendered in London. Both China and UK are state parties to the Convention on the Recognition and Enforcement of Foreign Arbitral Award (hereinafter referred to as “1958 New Y

ork Convention”). Therefore, whether the arbitral award involved shall be recognized and enforced shall be subject to examination in accordance with the 1958 New York Convention.

53. With regard to the arbitration proceedings involved in this case, clause 39D of the COA Voyage Charter Party provides arbitration in accordance with LMAA arbitration rules in London; clause 40 stipulates that all aspects of the COA Voyage Charter Party shall be subject to English law and construed in accordance with English law. Therefore, the arbitration in this case shall proceed in accordance with the English Arbitration Act 1996 and the LMAA arbitration rules.

54. Art.14 (4) of the Arbitration Act 1996 provides that “where the arbitrator or arbitrators are to be appointed by the parties, arbitral proceedings are commenced in respect of a matter when one party serves on the other party or parties notice in writing requiring him or them to appoint an arbitrator or to agree to the appointment of an arbitrator in respect of that matter”.

55. On March 13, 2009, Western Bulk sent email to ex-Tiantie Steel’s email address as specified in the COA Voyage Charter Party, notifying ex-Tiantie Steel to appoint arbitrator in respect of dispute under such COA Voyage Charter Party. Therefore, the arbitration proceedings were commenced as of March 13, 2009.  Ex-Tiantie Steel’s allegation that the arbitration proceedings had not been commenced is untenable.

56. With regard to the composition of arbitral tribunal, ex-Tiantie Steel argued that it had never agreed to arbitrate this case by the sole arbitrator appointed by Western Bulk. As such, the said arbitral award rendered by such arbitrator was illegal, and that such arbitral award should not be recognized.

57. This Court holds that Article 39A of the involved COA Voyage Charter Party stipulates “the disputes shall be resolved by the sole arbitrator appointed by the two parties jointly; if the respondent does not reply to the applicant’s notice for appointing arbitrator, the applicant’s arbitrator shall be the sole arbitrator; if the two parties cannot reach an agreement for appointing sole arbitrator with 14 days after receiving the arbitration notice, the disputes shall be resolved by two arbitrators appointed by the two parties respectively; if the two arbitrators have different opinions, the third arbitrator shall be appointed.”

58. After Western Bulk sent the arbitration notice and appointed Mr. Michael Baker-Harber as its arbitrator, ex-Tiantie Steel did not agree with Mr. Michael Baker-Harber to serve as the sole arbitrator. Instead, ex-Tiantie Steel appointed Chen Bo as its arbitrator. Therefore the situation of sole arbitration as agreed in the COA Voyage Charter Party did not emerge. Arbitral tribunal had been established by composing of two arbitrators.

59. Thereafter, the arbitrator appointed by ex-Tiantie Steel resigned, causing a vacancy in the arbitral tribunal. However, the arbitration clause in the COA Voyage Charter Party does not cover the issue on how to fill up such vacancy caused by resignation of arbitrator.

60. Pursuant to Art.27 (2) and (3) of the Arbitration Act 1996, if or to the extent that there is no such agreement in respect of the filling of the vacancy, provisions of sections 16 and 18 of the Arbitration Act 1996 apply in relation to the filling of the vacancy as in relation to an original appointment. Therefore, after the arbitrator appointed by ex-Tiantie Steel resigned, thus causing the vacancy, based on the procedure in relation to an original appointment, it shall be for the ex-Tiantie Steel to appoint another arbitrator to fill up such vacancy. However, in the arbitration proceedings involved in this case, ex-Tiantie Steel had handled the de-registration formality by the time when Chen Bo resigned. Thus ex-Tiantie Steel could not make re-appointment thereafter, which fell within the scope of failure of the agreed appointment procedure.

61. Art.16 (7) of the Arbitration Act 1996 provides “in any other case (in particular, if there are more than two parties) section 18 applies as in the case of a failure of the agreed appointment procedure.” Whereas Art.18 (1) provides “the parties are free to agree what is to happen in the event of a failure of the procedure for the appointment of the arbitral tribunal. There is no failure if an appointment is duly made under section 17 (power in case of default to appoint sole arbitrator), unless that appointment is set aside.” Art.18 (2) provides “if or to the extent that there is no such agreement any party to the arbitration agreement may (upon notice to the other parties) apply to the court to exercise its powers under this section.”

62. Depending on whether the parties have explicitly agreed on how to proceed under the situation of failure of the procedure for the appointment of the arbitral tribunal, Art.18 (1) or Art.18 (2) shall be applied respectively for the positive and negative result of such issue. As the arbitration clause in the COA Voyage Charter Party involved does not cover explicitly on how to proceed in case of the failure of the procedure for the appointment of the arbitral tribunal, Art.18(2) of the Arbitration Act 1996 shall apply and either party may apply to the court to exercise its powers.

63. Western Bulk required its appointed arbitrator to conduct sole arbitration without applying with the court to exercise its powers, and accordingly the composition of the arbitral tribunal in this case was inconsistent with arbitration clause in the COA Voyage Charter Party and the Arbitration Act 1996.

64. With regard to the procedural legality of arbitrator Mr. Michael Baker-Harber’s conducting of the sole arbitration, Professor Robert Merkin says in the legal opinion submitted by Western Bulk that: ex-Tiantie Steel “… appointed Chen Bo and then withdrew such appointment…actual result of such withdrawal is that it did not appoint any arbitrator”…Western Bulk was entitled to “define the arbitrator, appointed by Western Bulk, as the sole arbitrator”; the sole arbitrator “has discussed his limit of power and holds that he has been appointed effectively”.

65. This Court holds that on April 21, 2009, ex-Tiantie Steel handled the de-registration and Mr. Chen Bo resigned on May 5. As such, “ex-Tiantie Steel withdrew such appointment” as mentioned in the legal advice of Professor Robert Merkin lacks factual basis. Ex-Tiantie Steel appointed its arbitrator within 14 days limit after receipt of the notice of appointment of arbitrator from Western Bulk. The arbitral tribunal for this case had been established, and the vacancy caused by resignation of one of the two arbitrators shall not overthrow the effect of Tiantie Steel’s previous act in appointing Mr. Chen Bo as its arbitrator.

66. Applying Art.27 of the Arbitration Act 1996 to fill the vacancy in accordance with the original appointment procedure is not to draw back the proceedings to March 13, 2009 when Western Bulk sent arbitration notice to ex-Tiantie Steel. Instead, in the situation whereby ex-Tiantie Steel had responded to the arbitration notice in appointment of arbitrator and chosen to refer the dispute to an arbitral tribunal composing of two arbitrators, it shall be for ex-Tiantie Steel to appoint another arbitrator; or if ex-Tiantie Steel failed to appoint an arbitrator, pursuant to the arbitration clause and Art.18 (2) of the Arbitration Act 1996, Western Bulk shall apply with the (English) court to exercise its powers.

67. Western Bulk has no right to require its appointed arbitration to conduct sole arbitration without applying to the court to exercise its powers. The arbitrator Mr. Michael Baker-Harber wrote in the involved arbitral award that: “(Western Bulk) also notified, to the necessary extent and limit, the Respondent (ex-Tiantie Steel) that it has appointed me as the arbitrator; Meanwhile, it required ex-Tiantie Steel to appoint arbitrator within 14 days. Otherwise, I will serve as the sole arbitrator for this case. As the Respondent failed to appoint arbitrator, I then served as the sole arbitrator of this case.”

68. Mr. Michael Baker-Harber took ex-Tiantie Steel’s failure in responding to the notice dated February 11, 2010 in respect of appointment of arbitrator as the basis for establishment of an arbitral tribunal composing of sole arbitrator. However, the arbitral tribunal had already been established in March 2009, and the only issue involved thereafter was the vacancy in such arbitral tribunal and the filling thereto. Western Bulk has no right to re-activate the procedure of appointment of arbitral tribunal without applying with the (English) court to exercise its powers. Therefore, the notice dated February 11, 2010 sent by Western Bulk in respect of appointment of arbitrator has no legal effect, and such notice shall not be taken as the legal basis for establishment of the sole arbitrator arbitral tribunal. Hence, Western Bulk’s allegation that the establishment of the arbitral tribunal involved in this case was in compliance with law is untenable.

69. From what has been discussed above, after Western Bulk notified ex-Tiantie Steel of the appointment of Mr. Michael Baker-Harber as its arbitrator, ex-Tiantie Steel did not agree with the proposal of Mr. Michael Baker-Harber to serve as the sole arbitrator. Instead, ex-Tiantie Steel appointed its own arbitrator. Thus, the arbitral tribunal for this case was established, composing of two arbitrators.

70. With regard to the vacancy in the established arbitral tribunal caused by resignation of ex-Tiantie Steel’s appointed arbitrator, since de-registration formality had been handled for ex-Tiantie Steel, it was impossible to proceed as per the agreed procedure of appointment of arbitral tribunal. In the situation whereby the arbitration clause in the COA Voyage Charter Party involve does not cover explicitly on how to proceed in case of the failure of the procedure for the appointment of the arbitral tribunal, Western Bulk did not apply, in accordance with Art.18(2) of the Arbitration Act 1996, with the court to exercise its powers. Instead, Western Bulk required its appointed arbitrator to serve as the sole arbitrator for arbitration.

71. Accordingly, composition of the arbitral tribunal in this case is inconsistent with the agreed arbitration clause and the Arbitration Act 1996. Pursuant to Article V(1)(D) of the 1958 New York Convention, situation of this case falls within the scope of “the composition of the arbitral authority or the arbitral procedure was not in accordance with agreement of the parties, or failing such agreement, was not in accordance with the law of the country where the arbitration took place”.

72. Pursuant to Art.267 of the Civil Procedure of the People’s Republic of China and Article V(1)(D) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the ruling is given as follows:

(1) Arbitral award dated June 2, 2010 rendered by the arbitrator Mr. Michael Baker-Harber in respect of disputes between Western Bulk Pte Ltd. and Beijing Zhonggang Tiantie Steel Trade Co., Ltd under the COA Voyage Charter Party dated August 1, 2008 shall not be recognized or enforced.

(2) Case acceptance fee for this case in amount of RMB500 shall be borne by the Applicant Western Bulk Pte Ltd.

73. This ruling is final.

 

Presiding Judge: Liu Fengwu

Acting Judge: Guo Jianjun

Acting Judge: Zhang Lina

July 12, 2012

Court Clerk: Wang Ying