Tianjin Port Free Trade Zone International Trade Service Co., Ltd. v. Tiancheng International Inc USA
5:17-cv-02127
| C.D. Cal. | Sep 18, 2018Background
- Tianjin Port Free (Chinese company) obtained a CIETAC arbitration award against Tiancheng (California company) for $547,000 plus fees and interest arising from a March 5, 2014 sales contract for chemical goods.
- CIETAC issued the award after Tiancheng failed to appear at an August 26, 2015 arbitration hearing and the arbitration proceeded by default.
- CIETAC documented multiple mailings to Tiancheng (application, notices, fee notice, additional evidence) to Tiancheng’s correct California address and verified service dates.
- Tiancheng opposed confirmation in federal court under the New York Convention, arguing (1) there was no valid contract (forgery/fraud as to the signature and prices) and (2) it never received notice of the arbitration.
- The district court held a bench trial and reviewed whether Tiancheng met the narrow defenses available under Article V of the New York Convention and 9 U.S.C. § 207.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of underlying contract / forgery or fraud | Tianjin Port Free: contract is valid; arbitrator decided merits | Tiancheng: signature forged; prices indicate fraud; no enforceable contract | Court: Alleged forgery/fraud are merits issues for the arbitrator and do not defeat confirmation; Tiancheng failed to meet heavy NY Convention burden |
| Proper notice of arbitration | Tianjin Port Free: CIETAC sent multiple notices to respondent’s correct address; service verified | Tiancheng: never actually received CIETAC mailings; lacked notice to present a defense | Court: “Proper notice” standard satisfied by CIETAC’s documented mailings; Tiancheng’s denial of receipt insufficient to rebut presumption of proper notice |
| Standard of review for foreign arbitral awards | Tianjin Port Free: courts’ review is narrow and confined to Convention defenses | Tiancheng: seeks de novo review of award and merits via fraud contention | Court: Review is circumscribed; only Convention defenses reviewed de novo; merits belong to arbitrators |
| Burden of proof to avoid confirmation | Tianjin Port Free: defendant bears substantial burden; public policy favors enforcement | Tiancheng: attempted to show defenses via witness testimony and price disparity | Court: Tiancheng did not satisfy the substantial burden; enforcement granted |
Key Cases Cited
- Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Defense Systems, Inc., 665 F.3d 1091 (9th Cir.) (identifies Article V grounds to refuse recognition)
- China Nat’l Metal Prods. Import/Export Co. v. Apex Digital, Inc., 379 F.3d 796 (9th Cir.) (review of foreign arbitral award is circumscribed; defenses under Convention reviewed de novo)
- Polimaster Ltd. v. RAE Systems, Inc., 623 F.3d 832 (9th Cir.) (New York Convention defenses are narrowly construed and burden is substantial)
- Europcar Italia S.p.A. v. Maiellano Tours, Inc., 156 F.3d 310 (2d Cir.) (distinguishes merits challenges to underlying contract from Convention defenses like fraud in procurement of the arbitration agreement)
- Linley Investments v. Jamgotchian, [citation="670 F. App'x 627"] (9th Cir.) (mailings reasonably calculated to give notice can satisfy Convention’s proper notice requirement)
- Ministry of Defense of the Islamic Republic of Iran v. Gould, Inc., 969 F.2d 764 (9th Cir.) (discusses limited scope of judicial review of foreign arbitral awards)