Chinese court closes long-lasting foreign-related dispute in 27 days

( : 2020-10-22



The Nanjing Maritime Court settled a contract dispute with a five year history within a month by relying on internet technology and flexible mediation and trial methods.

The dispute was over three international ship building contracts involved a company named BO, the plaintiff company BBA and the defendant – a Nanjing-based shipbuilding company, in 2007 valued at more than $50 million.

According to the contracts, BO would pay the defendant progress payments in six stages. However, impacted by the financial crisis in 2008, it failed to do so and transferred its rights and obligations to the plaintiff by agreement between the three parties.

Both BO and plaintiff were Norwegian companies.

Later on Dec 8, 2015, the plaintiff and the defendant ceased cooperation as they could not reach agreement on contract fulfillment. The agreement between them remained in place for five years without settlement. They finally requested arbitration at the London Court of International Arbitration (LCIA) in accordance with the dispute resolution clause of the contract, which meant a one to two year wait and an extremely high arbitration fee.

The sudden COVID-19 outbreak aggravated the burden as many European countries took measures like locking down cities and imposing quarantines, making it hard to travel between the UK, Norway and China for the arbitration.

As China had introduced a mature pandemic prevention and control system and agents of both defendant and plaintiff were in Nanjing, capital of East China’s Jiangsu province, the two parties agreed to accept the jurisdiction of the Nanjing Maritime Court under the Chinese laws.

The attorney agent of the plaintiff registered the dispute at the litigation service center of the Nanjing Maritime Court on June 30, 2020.

However, the plaintiff's Chinese attorney agent had not notarized or authenticated the authorization materials, which is a must in foreign-related disputes.

According to the plaintiff’s attorney, the notarization and authentication was still proceeding and although impacted by the pandemic would be completed before July 30.

Considering the impact of the pandemic on the enterprises, the court decided to file the case on July 6 to avoid a waste of time waiting for the material. The court also required the plaintiff's attorney agent to provide the notarization and authentication material before trial.

Soon after the case was accepted, judges started talks with the defendant and learned that both parties intended to settle the dispute by mediation. Therefore, judges began mediation online after investigation of the evidence and the dispute’s focus.

Judges guided the parties to narrow the dispute range and focused on fair mediation of time, method and amount of payment.

The two parties had basically reached agreement by July 22 when the court received their supplementary materials. Before long, the court sent the draft reconciliation agreement to the two parties online and made several changes according to their suggestions.

Days later, the two parties arrived at the court, signing the mediation records and the final reconciliation agreement. The paper of civil mediation was sent to the parties and went into immediate effect, bringing closure to the five-year dispute. The entire settlement lasted for only 27 days.

Online investigation and trial became a main mode of the court during the outbreak. It was convenient for all parties to attend, particularly the foreign parties, meanwhile, it could prevent the risks associated with traveling and gathering.