Originially from: World Arbitration and Mediation Review (WAMR)

Hong Kong Court Refuses to Enforce
Chinese Arbitration Award
By Michael J. Moser, a partner at Baker & McKenzie in Hong Kong.
In an important decision handed down on January 15, 1993, the High Court of
Hong Kong has refused to enforce an arbitration award rendered by a tribunal sitting
in Beijing. Citing a “serious breach of due process” in the conduct of the
proceedings, the court based its decision on the New York Convention of 1958. The
decision marks the first time a Hong Kong court has denied enforcement to an award
issued by the China International Economic and Trade Arbitration Commission
(CIETAC), China’s main arbitration body.
Background
The case, Paklito Investment Limited v. Kockner East Asia Limited, arose out of a
contract for the sale of galvanized coil steel entered into in 1988 between the
plaintiff, as buyer, and the defendant, as seller. The goods, sourced in Turkey, were
shipped to the buyer’s customer in China in late 1988. Upon arrival some weeks
later, the goods were inspected by the Chinese state commodity inspection agency
The inspection reports issued by this agency concluded that the goods were defective
due, inter alia, to the presence of rust and corrosion.
In April 1989, claims were brought against the plaintiff by its subpurchasers. In
August, the plaintiff commenced arbitration proceedings against the defendant. The
proceedings were brought before CIETAC in Beijing in accordance with the
arbitration clause in the contract.
An oral hearing was held on April 15, 1990 at which both parties were present. At
the end of the hearing, the CIETAC tribunal directed the parties to provide further
written submissions within one month. The defendant submitted a defense on May
10, 1990. The plaintiff supplied additional evidentary materials on May 19, 1992. No
further oral hearing was convened by the tribunal.
CIETAC Appoints Independent Experts
On July 31, 1990, CIETAC notified the defendant that the tribunal had decided to
appoint its own experts to carry out an inspection of the goods. The power to
independently appoint such experts is specifically granted to CIETAC tribunals
under Articles 26 and 28 of the 1988 CIETAC Rules of Procedure. In a letter to