Chengdu Court Clarifies Service Standards, Recognizes German Arbitral Award

The Chengdu Intermediate People’s Court properly distinguishes service rules for arbitral instruments and judicial documents, interprets the standard of “proper notice” in good faith, and validates the German arbitral award in accordance with law, equally safeguarding the creditor’s rights of both Chinese and foreign trading entities.

Wins China Import GmbH, a German enterprise, maintained cross-border goods trading ties with Sichuan Rongfeng Import and Export Co., Ltd. Their payment dispute was submitted to the Hamburg Chamber of Commerce Arbitration Tribunal in Germany. The arbitral tribunal rendered an award in March 2020 ordering Sichuan Rongfeng to settle outstanding payment owed to Wins China. In 2022, Wins China filed an application with the Chengdu Intermediate People’s Court to recognize and enforce this German arbitral award. Sichuan Rongfeng raised a defense, arguing that the arbitral tribunal only delivered procedural documents via post. It claimed China has made reservations to the postal service clauses under the Hague Service Convention, rendering the delivery procedure unlawful and inconsistent with the “proper notice” requirement under the New York Convention, and requested the court to dismiss the enforcement application.

The case involved three core legal disputes. First, defining the scope of application of the Hague Service Convention, which clarifies that the Convention only governs judicial documents issued by courts and does not apply to arbitral procedural documents, so China’s postal service reservations shall not come into play here. Second, judging whether overseas postal service constitutes “proper notice” under the New York Convention, with comprehensive evaluation based on the registered address, valid contact numbers and records of domestic judicial assistance service. Third, the application of statutory grounds for refusing enforcement of foreign arbitral awards, narrowly interpreting Article V of the New York Convention and adopting a judicial orientation favoring the recognition and enforcement of arbitral awards.

After trial, the Chengdu Intermediate People’s Court found that arbitral documents were mailed to Rongfeng’s registered industrial and commercial address with the valid phone number of its handler retained. Even though the recipient refused acceptance, the documents were deemed duly served under the German Code of Civil Procedure. Moreover, the same address successfully received the award through domestic judicial assistance channels, proving Rongfeng had actual access to information on arbitral proceedings, thus satisfying the “proper notice” requirement. No grounds for refusal specified under the New York Convention existed in this case. The court therefore ruled to recognize the legal effect of the German arbitral award and allow compulsory enforcement. This case was selected by the Supreme People’s Court as a Model Case Concerning Application of International Treaties in Foreign-related Civil and Commercial Disputes, setting judicial norms for cross-border enforcement of international commercial arbitral awards.