China – Procedural Arrangements For Absentee Arbitration Under The UNCITRAL Arbitration Rules.
It is not uncommon for the respondent to be absent from the arbitration proceedings in international arbitration. There are many reasons for this, including refusing to recognize the jurisdiction of the arbitral tribunal or adopting evasive tactics to delay the proceedings because the respondent believes that there is no possibility of a successful defense, or hoping to challenge the subsequent execution of the award on the grounds of defects in the arbitration procedure in the absence of the respondent. Regardless of the reason, in the absence of the respondent in the arbitration, the applicant and the arbitral tribunal need to handle the arbitration proceedings more carefully to ensure compliance with the applicable arbitration rules, the provisions of the New York Convention, and the laws of the place where the court for recognition and enforcement of the award is located. This article takes the case of an arbitration case managed by the Singapore International Arbitration Center (“SIAC”) successfully handled by Beijing Angel Shize (Xiamen) Law Firm in the joint construction of the Haisi International Law and Business Integration Service Base as an example to analyze the appropriate arbitration procedure arrangements in the absence of the respondent.
I. Basic Facts of the Case
This case is a dispute over an international goods sales contract. The applicant is China Company A, the first respondent is Pakistan Company B, and the second respondent is Pakistan Company C, which provided a guarantee for Company B. Company A did not receive payment after shipping the goods to Company B as agreed. During multiple reminders, Company B delayed payment on the grounds of force majeure, resulting in a dispute. Company A then filed an arbitration with SIAC in accordance with the dispute resolution clause stipulated in the contract.
II. Initiation of Arbitration Proceedings
The dispute resolution clause of the sales contract in question stipulated that the arbitration institution was SIAC, and the UNCITRAL Arbitration Rules 2021 were applicable. Company A submitted an arbitration notice to SIAC to initiate arbitration proceedings. Because the sales contract in question did not stipulate the delivery address clause, Company A notified the parties through various channels, such as previous transaction communication emails, credit investigation reports of companies B and C, company official websites, consignee addresses of cargo bills of lading, and social accounts of company leaders, etc.
When all parties to the arbitration participate in the arbitration proceedings, for the sake of convenience and efficiency, the relevant documents and letters from the arbitral tribunal are usually delivered to the parties by email. In this case, the respondent did not respond to the arbitration notice sent by the applicant. According to Article 2(2) and Article 2(3) of the UNCITRAL Arbitration Rules 2021 , electronic delivery of notices such as fax or mail can only be deemed to have been effectively delivered if the parties have agreed on the delivery address or the arbitral tribunal agrees to designate the delivery address. If the parties have not agreed on the delivery address, the relevant arbitration notice is actually handed directly to the respondent, and the other party is deemed to have received the notice; or the notice is deemed to have been delivered to the respondent’s place of business, habitual residence or correspondence address.
Taking this provision into consideration, after SIAC completed the formation of the arbitral tribunal in this case, in order to ensure that the service procedure met the requirements of the arbitration rules, the arbitral tribunal instructed the applicant to re-send the relevant arbitration notice paper materials to the respondent’s official address by express delivery. After the materials were successfully delivered, the arbitral tribunal determined that the arbitration proceedings were officially initiated and initiated the subsequent corresponding arbitration procedures and arrangements accordingly.
III. Appointment of Arbitrators
As the respondent did not respond to the arbitration notice, which meant that the parties could not reach an agreement on the composition of the arbitral tribunal, SIAC appointed the arbitrators on its behalf in accordance with the Practice Note on Case Administration, Appointment of Arbitrators & Financial Management for Cases rules. However, the respondent also refused to respond to the appointment of the arbitrators.
IV. Issuance of Arbitration Procedural Order
In international arbitration proceedings, after the arbitral tribunal is formed, it will usually hold a case management conference attended by all parties before the case is heard, and issue an arbitration procedural order after listening to the opinions of all parties on procedural arrangements such as material submission, evidence disclosure, witness testimony and trial. In this case, because the respondent did not attend the case management meeting, the arbitral tribunal notified all parties of the arbitration procedural order arrangements by email, and then mailed the paper materials of the arbitration procedural order to the respondent’s registered address. At the same time, in the procedural order subsequently issued by the arbitral tribunal, it is required that all written materials and related email communications generated in the arbitration proceedings should be sent to the respondent’s address stated in the procedural order within three working days to ensure that the arbitration proceedings comply with the applicable UNCITRAL Arbitration Rules 2021 arbitration rules.
V. Some Implications for International Commercial Arbitration
1. Pay attention to the provisions of the delivery clause during contract negotiation and consultation
In order to avoid the lengthy arbitration process in dispute resolution, in addition to the dispute resolution institution, the service clause is also an important clause, but it is often easily overlooked by the parties to commercial transactions. Once a dispute occurs, in order to comply with the requirements of the applicable arbitration rules, the New York Convention and the laws of the court of recognition and enforcement, effective service will become an important basis for ensuring the due process and ensuring that the award is recognized and enforced. When the respondent responds negatively to the arbitration process for whatever reason, the applicant and the arbitral tribunal need to pay more attention to the procedural arrangements in the case of the respondent’s absence, and the arbitral tribunal will also be more cautious when reviewing the service of materials, although this will inevitably cost more time and money to advance the arbitration process.
(II) Pay attention to and comply with the procedural requirements for service under the arbitration rules, the New York Convention and the law of the place where the award is recognized and enforced
When the respondent is absent from the arbitration and there is no service clause in the contract, the applicant and the arbitral tribunal need to pay special attention to the requirements of the arbitration rules on service during the arbitration proceedings, mainly based on the following two considerations.
First, ensure that the arbitration procedure complies with the provisions of the applicable arbitration rules and the provisions of the New York Convention. According to Article 24 of the International Arbitration Act of Singapore and Article V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, a party may apply to the court to set aside an arbitration award for failure to receive proper notice of the appointment of an arbitrator or the arbitration procedure, or other circumstances that may prevent it from participating in the presentation of the case.
In Glencore Agriculture BV v Conqueror Holdings Limited [2017] EWHC 2893 Comm , the English High Court held that the Claimant’s sending of notices (including the arbitration notice) to the email address of a junior employee of the Respondent failed to meet the requirements for effective service on the Respondent and the arbitral award should be set aside.
Second, it is to remove obstacles to the recognition and enforcement of arbitration awards in the courts of the respondent’s location. Regardless of the method chosen to resolve the dispute, the goal is the same, that is, to obtain an enforceable judgment (award). According to Article 5.1 of the New York Convention , if a party to an arbitration award proves that it has not received proper notice of the appointment of an arbitrator or the arbitration proceedings, or other circumstances that affect its participation in the case, the arbitration award may be refused recognition and enforcement.
In China’s judicial practice, there are many cases where the court refused to recognize and enforce the arbitration award due to service defects. In G v. P [2023] HKCFI 2173 , the Hong Kong High Court refused to enforce the arbitration award on the grounds that the service of the arbitration notice was invalid. In this case, the respondent did not participate in the arbitration and did not submit any defense. The Hong Kong High Court held that the arbitration notice was equivalent to a summons in court proceedings, and the service of the arbitration notice was an important step in ensuring that the respondent was aware of the arbitration proceedings. The arbitration notice was not effectively served on the respondent, and the respondent did not receive the arbitration notice and thus had no opportunity to state the case. Therefore, the court revoked the enforcement order based on the arbitration award. In the case of (2016) Gui 05 Xie Wai Ren 1 in mainland China, the Beihai Intermediate People’s Court of Guangxi Zhuang Autonomous Region held that the address of the Vietnam International Arbitration Center (VIAC) for mailing arbitration documents was inconsistent with the address agreed in the contract and the actual residence of the respondent, depriving the respondent of the right to defend himself and ruling to refuse to recognize and enforce the VIAC arbitration award.
6. The rest
In the complex international trade environment and cultural differences, disputes in cross-border trade, investment and business dealings often occur. According to the international arbitration report released by Queen Marry University and White & Case, international arbitration has been called the preferred way to resolve cross-border disputes. The primary reason for respondents to choose international arbitration as a way to resolve cross-border disputes is also based on the global enforceability of arbitration. In the arbitration proceedings of this case, according to the subsequent understanding of the applicant’s business personnel, the respondent received emails and materials in the arbitration proceedings, but never responded. Because the arbitration tribunal and the applicant carefully considered the arrangements of various arbitration procedures, the respondent finally had to return to the negotiation table, reached a settlement agreement and resolved the dispute by means of a consensual ruling, successfully claiming nearly 10 million yuan in payment for goods for China Company A.
For further information, please contact:
Shouzhi An, Partner, Anjie Broad Law
anshouzhi@anjielaw.com
1.If an address has been designated by a party specifically for this purpose or authorized by the arbitral tribunal, any notice shall be delivered to that party at that address, and if so delivered shall be deemed to have been received. Delivery by electronic means such as facsimile or e-mail may only be made to an address so designated or authorized.
2.In the absence of such designation or authorization, a notice is:(a) Received if it is physically delivered to the addressee; or(b) Deemed to have been received if it is delivered at the place of business, habitual residence or mailing address of the addressee
3.Despite Article 34(1) of the Model Law, the General Division of the High Court may, in addition to the grounds set out in Article 34(2) of the Model Law, set aside the award of the arbitral tribunal if —the making of the award was induced or affected by fraud or corruption; or (b) a breach of the rules of natural justice occurred in connection with the making of the award by which the rights of any party have been prejudiced.
4.Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: … (b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or …
5.2021 International Arbitration Survey.
