From: Ten Typical Enforcement Cases for Recognition and Enforcement of Extraterritorial Arbitral Awards and Court Judgments

[Information of the parties involved]

Applicant: AAA Technology Company.

Respondant: BBB Hong Kong Company.

Basic Information of the Case

The applicant AAA Technology Company and the respondent BBB Hong Kong Company entered into a loan relationship in Hong Kong. The parent company of AAA Technology Company and BBB Hong Kong Company established a joint venture in mainland China, and then the joint venture was dissolved and liquidated. All shareholders unanimously agreed to directly pay AAA Technology Company the liquidation proceeds from the joint venture capital account used for returning to BBB Hong Kong Company, which will be used to repay AAA Technology Company's current year's loan, And it is agreed that disputes related to the settlement agreement shall be subject to arbitration by the International Chamber of Commerce ICC (Hong Kong). According to relevant regulations, the actual controller of BBB Hong Kong Company who leaves China is subject to special requirements of the capital account, and the liquidation proceeds in the capital account must be handled by BBB Hong Kong Company. Due to the impact of the epidemic, shareholders of BBB Hong Kong Company were unable to send personnel to mainland China to handle relevant procedures. AAA Technology Company then filed an arbitration with the Hong Kong International Chamber of Commerce Arbitration Court, which made the final ruling. Later, AAA Technology Company applied to the Fourth Intermediate people's court of Beijing for recognition and enforcement of the final award made by the Arbitration Court of the International Chamber of Commerce in Hong Kong. The Fourth Intermediate people's court of Beijing recognized the award of the International Chamber of Commerce in accordance with the law, that is, the shareholder liquidation income of BBB Hong Kong Company in a joint venture's bank account in Beijing was transferred to AAA Technology Company's bank account in Hong Kong Special Administrative Region.

During the implementation process, in order to ensure that the direct transfer of funds from the account under the mainland capital fund involved in the case to the overseas account meets the requirements of domestic foreign exchange regulatory policies, the Fourth Intermediate people's court of Beijing has repeatedly communicated with the State Administration of Foreign Exchange and consulted relevant professional opinions to ensure that the implementation is legal and compliant. Afterwards, Beijing ranked fourth

The Intermediate people's court served a notice of assistance in enforcement on the bank where the clearing account was located, requiring the bank to assist in handling the matters determined by the arbitration award, but the bank said that due to the restriction of the bank's internal system instructions, it was unable to transfer the funds in the clearing account to the capital account of overseas non original investors.

In response to the feedback from the bank, the Fourth Intermediate people's court of Beijing made a careful study and judgment. On this basis, and in the principle of respecting the basis of implementation, it re formulated an alternative implementation plan, that is, first review the business background of the case, eliminate the possibility of suspected money laundering and other crimes, then calculate and settle the interest of the funds in the settlement account, and then trust the settled funds to the bank's intermediate account, The funds in the clearing account were transferred to a bank account in Hong Kong through an intermediary account.

Enforcement Results

The Fourth Intermediate people's court of Beijing Municipality, based on the principle of respecting the basis of implementation and in accordance with the requirements of domestic foreign exchange regulatory policies, reviewed the business background of the case, formulated an alternative plan, and finally made the arbitral award effectively implemented on the premise of complying with relevant domestic regulations.

Typical significance

When arbitration institutions make arbitral awards, they often do not coordinate the relationship between the arbitrations, resulting in some arbitration awards that cannot be executed during the court's enforcement process. In addition, due to differences in legal systems and policies and regulations, foreign arbitration institutions generally do not consider relevant domestic policies and regulations as factors when making arbitration awards. Therefore, when accepting applications for recognition and enforcement of extraterritorial arbitration awards, the people's court not only needs to examine whether extraterritorial arbitration awards have conventional circumstances of non enforcement, but also whether they have situations that violate domestic social and public interests, relevant policies, etc. In the absence of the aforementioned circumstances, the content of the extraterritorial arbitration award should be respected to the greatest extent possible. In this case

The Fourth Intermediate people's court of Beijing, on the premise of ensuring that the content of the ruling does not violate the domestic foreign exchange regulatory policy, has safeguarded the legitimate interests of the applicant to the greatest extent through the flexible implementation of the plan. As the first case to apply for recognition and enforcement in mainland China after the application of the 2017 edition of the International Chamber of Commerce arbitration rules, this case has not only received praise from the parties, but also has important significance for establishing an open, fair, and legal business environment in China.

Expert comments

The typical significance of this case mainly lies in two aspects. Firstly, as the first case to apply for recognition and enforcement in mainland China after the application of the 2017 edition of the International Chamber of Commerce arbitration rules, its successful completion has a strong demonstration effect. Secondly, the Beijing Fourth Intermediate People's Court made efforts to take on the responsibility and overcome difficulties in handling this case, consulted professional opinions from relevant administrative agencies multiple times, considered the business background of the case comprehensively, and creatively completed the enforcement of this case through a bank intermediary account, meeting China's foreign exchange regulatory policies, taking into account the enforcement of rulings and the legality and compliance of enforcement actions, and received praise from the parties involved, demonstrating China's construction of openness, fairness. The determination to establish a business environment based on the rule of law.