A US Arbitration Award Against a Chinese Supplier That No Chinese Court Would Enforce

An American food importer did most things right. Its contracts with a Chinese supplier had an arbitration clause. When the supplier failed to perform more than twenty contracts, the importer started arbitration in the United States, got an award in its favour, and applied to a Chinese court to enforce it against the supplier's assets in China.

The Chinese court threw out the application. The problem was a name.

The name on the contracts

The contracts named the supplier as "Adu International Group Corp. Ltd", with an address in Yantai and a stamp in that English name. The importer believed this was Yantai Rokxy Import & Export Co., Ltd., a Chinese company whose legal representative's name appeared as the signatory. It pointed to a website listing the same name and address, and to an earlier Chinese judgment showing that Rokxy staff had used email addresses on the same domain.

Rokxy said it had never set up that website, that its registered English name was different, that Adu was a separate Hong Kong company it had once used to make payments, and that the email accounts the arbitration notices were sent to did not belong to it. It said it had never received notice of the arbitration or the award. The award had been made without the respondent taking part.

What the court decided

The Yantai Intermediate People's Court reviewed the application under the New York Convention. An applicant must supply the award and the arbitration agreement, and both must bind the party it is enforcing against. The importer had produced an award and contracts, but had not proved that "Adu International Group Corp. Ltd" was Rokxy. So it had not produced an award or an arbitration agreement against Rokxy at all. The court dismissed the application.

Nothing was wrong with the arbitration itself. The award may have been perfectly valid against Adu. It just could not reach the company that had the assets.

The other side: when a party argues about the clause too late

A second case shows how the same system can work in a claimant's favour. A Chinese manufacturer won a CIETAC award against an individual buyer in an international sale. The buyer then asked the Beijing No. 4 Intermediate People's Court to set the award aside, arguing that the manufacturer's legal representative had never signed or sealed the agreement containing the arbitration clause.

The court refused. The buyer had not challenged the arbitration agreement during the arbitration, and Chinese law does not allow a party to raise invalidity of the agreement for the first time after the award (SPC Interpretation on the Arbitration Law, art. 27). The buyer's other complaint, that the manufacturer had hidden evidence, was not a ground on which a court reviews a foreign-related award.

What an overseas buyer should take from this

Your contract must name the Chinese company that holds the assets. Use its full registered Chinese name and its unified social credit code, and make sure the company stamp on the contract is that company's stamp. An English trading name, a Hong Kong payment vehicle or a website is not enough.

If there are two companies, sign with both. If a Hong Kong company invoices and a mainland factory produces, bring both into the contract and the arbitration clause, or take a guarantee from the one with the assets.

Serve notices where they can be proved. In the Yantai case the supplier's argument that it never received notice went unanswered. Send arbitration notices to the registered address as well as to email.

A foreign award can work in China. China is a party to the New York Convention, and a foreign award is enforced through the intermediate court where the respondent is based or has property (Civil Procedure Law art. 304). The route exists. It fails most often on facts the buyer could have fixed when signing.

Raise objections at the right time. If you are ever on the receiving end of an arbitration you think has no valid clause behind it, say so in the arbitration. Waiting until the award arrives may be too late.

Before you sign

• Registered Chinese name and credit code in the contract, matching the stamp.
• Signatory's authority, and which company they sign for.
• Arbitration clause naming one institution and seat, in both language versions.
• Registered address for notices, in Chinese.
• If a second company is involved, its name, role and signature.

Part of my guide to supplier disputes in China.

Buying from the Gulf? See China legal work for Gulf buyers.

If you have an award, or a contract you may one day need to enforce, send it to me and I will check whether it reaches the right Chinese company. Discuss your supplier dispute →