![China / 02 June 2008 / China, 中华人民共和国最高人民法院 (Supreme People’s Court) / Hemofarm DD, MAG International Trade Holding DD, Suram Media Ltd. v. Jinan Yongning Pharmaceutical Co. Ltd. / [2008] Min Si Ta Zi No. 11 ([2008] 民四他字第11 号)](./images/case-law.png)
China / 02 June 2008 / China, 中华人民共和国最高人民法院 (Supreme People’s Court) / Hemofarm DD, MAG International Trade Holding DD, Suram Media Ltd. v. Jinan Yongning Pharmaceutical Co. Ltd. / [2008] Min Si Ta Zi No. 11 ([2008] 民四他字第11 号)
| Country | China |
| Court | China, 中华人民共和国最高人民法院 (Supreme People’s Court) |
| Date | 02 June 2008 |
| Parties | Hemofarm DD, MAG International Trade Holding DD, Suram Media Ltd. v. Jinan Yongning Pharmaceutical Co. Ltd. |
| Case number | [2008] Min Si Ta Zi No. 11 ([2008] 民四他字第11 号) |
| Applicable NYC Provisions | V | V(2)(b) | V(2)(a) | V(1)(d) | V(1)(c) | V(1)(a) | V(1)(b) |
| Source |
Guide on Foreign-related Commercial and Maritime Trial, pp. 124-134 (People's Court Press, Vol. 1, 2009). |
| Languages | English |
| Summary | Hemofarm DD (Hemofarm), MAG International Trade Holding DD (MAG), Suram Media Ltd. (Suram) and Jinan Yongning Pharmaceutical Co. Ltd. (Yongning) entered into a joint venture contract, which was subject to Chinese law and where any dispute related to the contract was to be resolved by arbitration under the arbitration rules of the International Chamber of Commerce (ICC). A dispute arose between Yongning and the joint venture company, Jinan Hemofarm Pharmaceutical Company Limited (Jinan-Hemofarm), regarding its tenancy with Jinan-Hemofarm, which Yongning submitted for resolution before the Jinan Intermediate People's Court on 6 August 2002. The court rejected jurisdictional challenges raised by the other parties to the joint venture agreement holding that Jinan-Hemofarm was not a party to the joint venture contract and thus the arbitration agreement did not apply. The court ruled in favour of Yongning in the actions it brought, including a property preservation measure. These rulings were upheld by the Shandong Higher People's Court. Hemofarm, MAG and Suram jointly filed an arbitration with the ICC against Yongning on 3 September 2004. An award in favour of Hemofarm, MAG and Suram was received by Yongning on 16 March 2007. Hemofarm, MAG and Suram then applied in September 2007 for recognition and enforcement of the award before the Jinan Intermediate People's Court. Yongning challenged the application on the grounds that (i) the award exceeded the scope of the submission to arbitration according to Article V(1)(b) NYC and Chinese law, (ii) the arbitral tribunal's ruling on Yongning's property preservation measure before Chinese courts exceeded the scope for arbitration under the arbitration agreement and Yongning was not afforded an opportunity to object under Article V(1)(b) and Article V(1)(d) NYC, (iii) the award addressed issues non-arbitrable under Chinese law, namely its ruling on the justification of Yongning's property preservation measure and (iv) recognition and enforcement of the award would violate Chinese public policy under Article V(2)(b) NYC. The Jinan Intermediate People's Court opined that the award should not be recognised or enforced. In particular, the court opined that (1) Yongning's preservation measure was outside the scope of the arbitration agreement, (2) the tribunal's consideration of the issuance of the preservation measure was not arbitrable since the enforcement of such measures is the duty of the People's Courts and (3) the tribunal's decision to ignore the Chinese court's rulings on Yongning's actions and application for a property preservation measure violated Chinese public policy. The Jinan Intermediate People’s Court reported its opinion to the Shandong Higher People’s Court for review. The Shandong Higher People’s Court confirmed that the award should not be recognised or enforced under Articles V(1)(c), V(2)(a) and V(2)(b) NYC. In particular, the court opined that the award had addressed issues outside the scope of the arbitration agreement. In addition, the court opined that the award had addressed issues that are not arbitrable under the applicable law, Chinese law, such as the legality of the property preservation measure, which it had opined as unrelated to a contractual or commercial relationship and thus inconsistent with China’s commercial reservation to the NYC. Furthermore, the court opined that the award had violated Chinese public policy by failing to respect the finality of the domestic court’s decision on Yongning’s property preservation measure. The Shandong Higher People’s Court reported its opinion to the Supreme People’s Court (最高人民法院) for review in accordance with the Notice of the Supreme People's Court on the Adjudication of the Relevant Issues About Foreign-related Arbitration and Foreign Arbitral Matters by the People's Court. The Supreme People’s Court confirmed that the award should not be recognised or enforced. In particular, the court opined that, according to Article V(1)(c) and Article V(2)(b) NYC, (1) the award had decided matters beyond the scope of the arbitration under the arbitration agreement in the joint venture contract since the arbitration clause in that agreement had no binding force with respect to the dispute between Yongning and Jinan-Hemofarm as the dispute did not relate to the joint venture and (2) the arbitral tribunal had violated China’s judicial sovereignty and the jurisdiction of Chinese court when it arbitrated issues concerning the lease contract between Yongning and Jinan-Hemofarm when they had already been decided by Chinese courts. |
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Attachment (2)
 Original Language Adobe Acrobat PDF |
Unofficial Translation Adobe Acrobat PDF |
