Case Law
Hong Kong / 25 July 2011 / Hong Kong, Court of Appeal, In the High Court of the Hong Kong Special Administrative Region / Shandong Hongri Acron Chemical Joint Stock Company Limited v. PetroChina International Hong Kong Corporation Limited / CACV 31/2011
| Country | Hong Kong |
| Court | Hong Kong, Court of Appeal, In the High Court of the Hong Kong Special Administrative Region |
| Date | 25 July 2011 |
| Parties | Shandong Hongri Acron Chemical Joint Stock Company Limited v. PetroChina International Hong Kong Corporation Limited |
| Case number | CACV 31/2011 |
| Source |
[2011] 4 HKLRD 604 | http://www.judiciary.gov.hk (website of the Judiciary of the Hong Kong Special Administrative Region of the People’s Republic of China) |
| Languages | English |
| Summary | Shandong Hongri (a Chinese company) entered into an agreement with Petrochina (a Hong Kong company) and agreed to arbitrate any disputes in China under CIETAC rules. A subsequent dispute led to an arbitral award in favor of Hongri. The parties, however, disagreed about the terms of the award. Hongri sought leave to enforce the award in Hong Kong under the 2000 Arbitration Ordinance (Cap. 341), which implemented the NYC. It sought to enforce the entire award except for the portion ordering that it return certain goods. Petrochina, by contrast, considered its obligation of repayment to be conditioned on the return of the goods and objected to enforcement of the rest of the award and obtained letters from both the CIETAC Secretariat and the Tribunal supporting this position. The Court of First Instance, after several hearings and without relying on the letters, found that repayment was conditioned on return, and held that Petrochina was not obligated to pay until Hongri returned the goods. The Court of Appeal reversed the judgment of the Court of First Instance, holding that nothing in the arbitral award indicated that the obligation of repayment was conditioned on return and that the letters could not be used to modify the arbitration award. The Court emphasized that at the “recognition” stage — whereby the parties seek to convert the arbitral award into an enforceable judgment—courts should grant or deny leave to enforce the award on its terms, and may not modify the provisions or second-guess the reasoning of the tribunal. Here, the award clearly indicated independent rather than conditional obligations, and ruling otherwise would impermissibly alter, rather than enforce the award. The court also noted that the lower court incorrectly required the goods to be returned in the same “status and quality” as they were received because the item, sulfur, was likely to change over time and because the condition of the goods was an issue to be addressed at the execution rather than the recognition stage. Finally, the Court found that the letters did not provide a binding supplement to the award because (1) arbitral tribunals have no inherent jurisdiction to vary a final and binding award, (2) the parties did not raise the issue of reciprocal obligations before the tribunal and could not do so now, (3) the letters were not issued within the timeframe required by Chinese law and (4) Hongri did not have an opportunity to appear and respond, so it would be against public policy to allow the letters to modify the award. The Court also rejected Petrochina’s argument that only Chinese courts had the authority to resolve this issue. |
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Attachment (1)
 Original Language Adobe Acrobat PDF |
