Beijing Higher People’s Court,

Your Court’s Request for Instruction on the Recognition and Enforcement of a London Sugar Association Arbitral Award by the Beijing Higher People’s Court, from the Applicant, ED & F Man (Hong Kong) Co. Ltd. (reference number Jing Gao Fa [2003] No. 7) dated on 15 January, 2003 has been received. Upon discussion of the Judicial Committee of this court, we reply as follows:

China National Sugar & Wine Group Corporation (“China Sugar Group”) and ED & F Man (Hong Kong) Co. Ltd (“ED & F Man”) agreed in their contract (No. 8008) on 14 December, 1994 that any dispute arising from the contract should be settled by the London Sugar Association under the Association’s rules. The dispute between the two parties arose under the No. 8008 contract, therefore the London Sugar Association has requisite legal basis to settle the dispute according to said agreement. Upon investigation, we did not find any of the grounds laid down in Article V(1) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) applied to this case.

The dispute arising from the performance of the contract is a commercial contractual relationship. Under Chinese laws, parties can choose to settle disputes of this kind by arbitration. According to Chinese laws, domestic enterprises are not allowed to participate in offshore future transactions without official approval. The offshore future transaction conducted by China Sugar Group should be invalid under Chinese laws. However, the violation of compulsory rules under Chinese law should not be equal to breaking Chinese public policy. Therefore, neither of the two grounds laid out in Article V(2) of the New York Convention concerning the subject matter of the difference and the public policy are present this case.

According to Article 269 of the Civil Procedure Law of the People’s Republic of China (“Chinese Civil Procedure Law”) and Article V of the New York Convention, the people’s court should recognize and enforce the arbitral award in this case.

Above is the reply to your Court’s Request.