SPC Clarifies the Standard for Fair and Impartial Treatment and Equal Opportunity of Statement

In a voyage charter dispute between Jiarui Shipping Co., Ltd. ("Jiarui") and Sichuan Beifang Qinyuan Biological Engineering Co., Ltd. ("Qinyuan"), shanghai branch of China Maritime Arbitration Commission rendered an award in favor of Jiarui. Later, Jiarui applied to the Wuhan Maritime Court to enforce the award, however, Qinyuan challenged the enforcement, claiming 1) that the tribunal had violated its institutional rules, because the tribunal failed to organize a hearing for a piece of evidence submitted by Jiarui after the hearing so as itcould notcross-examine the evidence, and 2) that the award did not mention or analyse Respondent's Supplementary Statement of Attorney challenging the admissibility of the evidence, which led the Respondent to believe the tribunal deprivedits reasonable right to make statements and arguments.

The Wuhan Maritime Court confirmed the facts and decided to refuse to enforce the award, finding that the arbitration violated the institutional rules, specifically Article 38.2, which states "The Tribunal shall be fair and impartial to treat the parties and give them reasonable opportunity to make statements and arguments."and Article 44, which states "The evidence shall be presented and examined during the hearing, unless the parties agree to a trial or cross examination solely base on written materials."

Hubei Higher People's Court found Qinyuan waived its right to challenge under Article 52 of the Arbitration Rules since it didn't raise challenge to the arbitration procedure upon reception of the disputed evidence, rather proceed with the arbitration by submitting Supplementary Opinion of Attorney. But it also found Qinyuan was unfairly treated and deprived of its right of making statements due to the silence on its Opinion in the award or its reasoning.

The Supreme People's Court of China disagreed with the opinions of the lower courts, finding the award is enforceable under Article 274 of the Civil Procedure Law,which grants for refusal of enforcement of arbitral awards. On one hand, the submission of the Supplementary Opinion of Attorney constitutes consent by Qinyuan on cross-examination by written materials, as well as a waiver of right to challenge; on the other hand, the tribunal rendered its award after Qinyuan's submission, which means Qinyuan was given rights to make statements and Qinyuan actually availed this right. The tribunal didn't treat the parties in any unfair or partial manners.

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