Hainan Higher People’s Court,

Your Court’s request for instructions about whether or not to recognize and enforce arbitral award No. 060/1999 rendered by the Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”) with the reference number [2001] Qiong Jing Fu Zi No. 1 has been received by this court. After deliberating the case, we reply as follows:

Hainan Textile Industry General Corporation (“Hainan Textile”) is a State-owned enterprise. Hainan Textile became liable for the debt owned by Mitsui Corporation (Japan) (“Mitsui”) without any foreign debt registration or the approval of the State Administration of Foreign Exchange. This violated Chinese law on the approval and registration of foreign debt as well as the Chinese policy on foreign debt administration. However, the violation of a compulsory regulation in administrative law does not necessarily constitute a violation of Chinese public policy. The grounds of refusal to recognize and enforce the arbitral award in this case are not properly founded. Therefore, the recognition and enforcement of the arbitral award in this case shall not be refused on the ground of violation of public policy.

Above is our reply.