England and Wales Court of Appeal, 23 April 2018, RBRG Trading Limited v. Sinocore International Co. Ltd. [2018] EWCA Civ 838

The award under appeal was rendered on 30 June 2014 under the China International Economic and Trade Arbitration Commission (CIETAC) and ordered damages in amount of US$4,857,500 to Sinocore for the breach by RBRG of a steel coil sales contract. RBRG maintains that the recognition and enforcement of the award would be contrary to public policy and should therefore be refused under section 103(3) of the Arbitration Act of 1996.

Sinocore terminated the contract with RBRG for non-compliance with its contractual obligations after having encountered difficulties in obtaining payment with the bills of lading presented to the bank, which had meanwhile modified the terms of payment on the buyer’s instructions. RBRG justified the default of payment, arguing that the bills of lading were forged. Under the sales contract and its arbitration clause before CIETAC, RBRG brought an arbitration claim against Sinocore alleging the breach of the inspection of the goods clause and the forgery of the bills of lading. The arbitral tribunal has rendered its award by considering that the grounds were irrelevant and by holding that the buyer committed a contractual fault by unilaterally amending the term of payment.

In its judgment, the Court of Appeal held that the cause of the termination was the unilateral amendment of the term of payment; therefore, any loss attributed to RBRG. Moreover, the contract was not illegal: indeed, the falsification of the bills of lading could only be analysed as an attempt to fraud, since neither the buyer nor the bank were deceived. Thus, there is no breach of public policy in this case.

Consequently, the Court of Appeal dismissed RBRG’s appeal and refused to stay the enforcement of the arbitral award.

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