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Zhong Lun Wins Two Lawsuits on behalf of A World Famous Ship Power Equipment Supplier in Chinese Maritime Courts
Zhong Lun Wins Two Lawsuits on behalf of A World Famous Ship Power Equipment Supplier in Chinese Maritime Courts
The dispute resolution team of Zhong Lun Law Firm recently won two lawsuits for a world famous vessel main engine supplier in its disputes over some main engine supply contracts. Both cases were handled by partner Mr. Niu Lei and associate Mr. Xu Tao of Zhong Lun’s Shanghai Office.
The shipbuilding industry has been severely affected by the global economic crisis in the past few years. As a result, a large number of foreign shipbuilding orders placed with domestic shipyards have been cancelled, triggering a range of disputes. Ship equipment suppliers have also been faced the situation where many shipyards cancelled supply contracts and required refund of advance payments. The two cases won by Zhong Lun are in such nature. In one case, a trading house in Fujian province brought a lawsuit in Xiamen Maritime Court, claiming for cancellation of contract and refund of payment, with the amount in dispute being more than USD 6.2 million. In the other case which involved over USD 4.1 million in dispute, a Jiangsu shipyard brought a lawsuit in Shanghai Maritime Court, demanding cancellation of contract and refund of payment.
In the case handled at Xiamen Maritime Court, it was provided in the supply contract that any dispute should be “submitted for arbitration to the Swedish International Economic & Trade Arbitration Committee in accordance with the Provisional Rules of Procedures promulgated by the said Arbitration Committee. The Arbitration shall take place in Stockholm". As there was no such arbitration institution as agreed in the clause, the Buyer alleged that the arbitration clause was invalid. In response, Zhong Lun’s dispute resolution team sought the legal opinion of a Swedish law firm, which sufficiently demonstrated the validity of the arbitration clause in question. After an oral hearing, the court ruled that the arbitration clause was valid and accordingly rejected the lawsuit brought by the buyer and lifted the related property preservation measures. In the case submitted to Shanghai Maritime Court, the supply contract provided that the legal relationship between the parties should be governed by the Swiss substantive law. Zhong Lun’s dispute resolution team advised the client on ways to collect evidence in a foreign country and convincingly proved that the client had suffered losses due to the cancellation of contract and brought a counterclaim against the buyer. After more than two years’ hearing and deliberation, the court finally supported the position of the client by ruling that the client had no obligation to return the advance payment and the buyer should further compensate for the client’s losses.
The above ruling and judgment of the courts are both of great reference value to the juridical practice in China and indicate the increasing importance attached by Chinese courts on the arbitration agreements reached between parties. They also show Chinese courts’ juridical attitude of esteeming the validity of contracts and protecting the interests of parties. The successful resolution of these two cases by Zhong Lun’s dispute resolution team has boosted the client’s confidence in the Chinese market.