The High People’s Court of Zhejiang recently publicized ten typical cases in relation to international (Hong Kong, Taiwan and Macao included) commercial dispute resolution. Two of these cases have been represented by Dacheng senior partners Dang Yiheng and Yuan Bin from the Ningbo office.
Attorney Dang Yiheng represented a Ningbo-based state-owned bank in terminating payment by letter of credit in a case in which a group of people led by a man surnamed Shi aimed to cash in huge amount of money from financing for fictitious trading. In the case, Mr. Shi made up a story of copper cathode trading together with Ningbo Shengtong Co. and an offshore company under his control. By continually splitting and converting warehouse receipts, Shi let Shengtong commission a number of import-export agencies to apply for letter of credit from Chinese banks and cashed in hundreds of millions of dollars from January to October of 2008 with the help of ANZ Bank Shanghai office, the negotiating bank. Later, due to the rupture of Shi’s capital chain, the import-export agencies charged Shengtong, the offshore company and ANZ Bank Shanghai of letter of credit fraud and brought the case to the Intermediate People’s Court of Ningbo, seeking termination of payment contained in the letter of credit. The Ningbo-based bank participated in the litigation as third party. The court ruled that the issue of letter of credit was not intended to be a means of payment in international trade, but to pool money, with not real trading taking place, so Shi’s behavior constituted letter of credit fraud. Besides, ANZ bank Shanghai, as the negotiating bank, should have known Shi’s intention of fundraising and fabrication of trade and should have shown more diligence and case; its behavior was not a display of good faith and therefore could not be relieved of liability. The court required ANZ to terminate payment involved in the letter of credit. ANZ, refusing to accept the court’s ruling, appealed to the High People’s Court of Zhejiang, who, after reviewing the case, maintained the initial ruling from the first trial.
Attorney Yuan Bing represented Royal Food Import Corp., a Boston-based company, in pushing the Intermediate People’s Court of Ningbo to recognize and execute an arbitration award issued by America’s Association of Food Industries. In the case, the food import company had signed an agreement with NingBo Youngor International Trade & Transportation Co., Ltd. that it would buy green beans from the trade company and that the Association of Food Industries would arbitrate disputes if any. Following the execution of the goods purchasing contract, Royal Food Import Corp entrusted a third party to examine the goods and found that part of it was sub-quality and inedible. In May 2010, the importer applied for arbitration in the Association of Food Industries against Ningbo Youngor International Trade & Transportation Co., Ltd., who denied the arbitration agreement and resorted to a court in New Jersey to require termination of the arbitration and confirmation of the invalidity of the agreement. The court’s two-day trial made the trade company withdraw its claim and agree on arbitration. Thus, in July 2011, the Association of Food Industries ruled that Youngor should pay Royal Food Import Corp. $560250.61 in compensation. And in September 2012, the food import company applies to the Intermediate People’s Court for recognition and execution of the arbitration award. The court, after careful consideration, adopted the trial record and the ruling made by the afore-mentioned American court and dismissed the possibility of fraud. Following three cross-examinations and trials, the Ningbo court finally confirmed the validity of the arbitration agreement and decided that the arbitration award could not meet conditions listed in “Convention on the Recognition and Enforcement of Foreign Arbitration Awards” (“New York Convention”) that entitle a court not to recognize or enforce an award. The intermediate court’s opinion was also adopted by the High People’s Court of Zhejiang. Attorney Yuan Bin has previously represented clients in another six such cases in which foreign arbitration awards were all successfully enforced by Ningbo Intermediate People’s Court.
