Winson Global
2026-07-20 12:16
Xiamen Maritime Court Upholds Procedural Review Baseline under the New York Convention and Clarifies Standards for Refusing Cross-border Enforcement of Awards Rendered by an Incomplete Arbitral Tribunal
In 2003, First Investment Corporation of the Marshall Islands (FIC) signed a shipbuilding option agreement with Mawei Shipbuilding Co., Ltd. of Fujian Province and Fujian Shipbuilding Industry Group. The contract stipulated that all disputes arising out of vessel construction would be submitted to ad hoc arbitration in London, governed by the UK Arbitration Act 1996 and LMAA Maritime Arbitration Rules. The arbitral tribunal would consist of two party-appointed arbitrators and one jointly appointed presiding arbitrator. During performance, the domestic shipbuilder failed to execute the mass shipbuilding contract as scheduled, triggering a substantial dispute over breach of contract damages. The claimant initiated London ad hoc arbitration. Among the three arbitrators, one party-appointed arbitrator withdrew midway due to objective reasons and did not attend all hearings or participate in full deliberation of the final award. The remaining two arbitrators issued a final award based on majority opinions, ordering the domestic shipbuilder to pay heavy compensation for breach of contract. After the award took effect, the two shipbuilders refused to perform payment obligations, and their major assets were located in Xiamen, Fujian. In December 2006, FIC submitted a full set of notarized and authenticated arbitration documents, shipbuilding agreements, corporate qualification certificates and standard Chinese translations to the Xiamen Maritime Court, applying for recognition and enforcement of the London ad hoc arbitral award. The two respondents defended that the absent arbitrator had not participated in the full proceedings or joint deliberation of the final award, rendering the arbitration procedures inconsistent with the contractual arbitration clause and UK arbitration law, which constituted statutory grounds for refusal of recognition and enforcement under the New York Convention.
This case highlights three typical practical hurdles in judicial review of foreign-related ad hoc maritime arbitrations. Distinct from institutional arbitration, ad hoc foreign arbitration is unfamiliar to domestic enterprises, which lack awareness of the full-panel deliberation requirements under LMAA Rules and UK arbitration law, often resulting in procedural defects such as awards rendered by an incomplete tribunal after an arbitrator’s mid-proceeding withdrawal. Chinese and foreign shipping and shipbuilding entities hold divergent understandings of the scope of procedural review under Article V of the New York Convention, leading to long-standing judicial disputes over whether majority awards without full tribunal attendance are enforceable in China. Shipbuilding disputes usually involve enormous claim amounts accompanied by voluminous foreign arbitration documents, and applicants frequently submit materials with non-compliant notarization, authentication or inconsistent translations, prolonging judicial review cycles.The collegial panel conducted layered documentary verification and hearing examination pursuant to foreign-related judicial assistance provisions of the Civil Procedure Law and the full text of the New York Convention. By cross-referencing the arbitration agreement, LMAA Rules and relevant provisions of UK arbitration law, the court confirmed that a three-person tribunal may only issue a valid award if all arbitrators attend all hearings and jointly deliberate the full award text. In this case, one arbitrator withdrew mid-proceeding and took no part in subsequent document revisions or final deliberations, leaving only two arbitrators to render the award. The defective tribunal composition and flawed arbitration procedures violated both the contractual arbitration clause and mandatory provisions of the lex arbitri (UK law), squarely falling within the statutory grounds for refusal of recognition and enforcement set forth under Article V(1)(d) of the New York Convention. No other defenses such as violation of public policy or non-arbitrability applied, yet the severe procedural defect alone justified dismissal of the entire application. The court ruled to refuse recognition and enforcement of the London ad hoc arbitral award. The claimant filed an application for reconsideration, and the Supreme People’s Court issued a reply affirming the Xiamen Maritime Court’s judgment, rendering the ruling final and binding.
