[Case Brief]: Applicant Fingad Shipping Ltd (hereinafter referred to as Fingad Ltd) signed a shipbuilding contract on a 16,600 dead tons liquid cargo ships for petroleum products and chemicals with appellee Ningbo Crafts & Arts Import & Export Corporation (hereinafter referred to as the Crafts & Arts Corporation) and Zhejiang Hangchang Shipbuilding Co., Ltd. ( hereinafter referred to as the Hangchang Ltd)  in June, 2007, in which the three parties involved agreed that the purchasing price of the ship was 27,359,000 US dollars, to be paid in five instalments, and the fifth instalment, constituting 20 percent of the total payment should be paid after the delivery and acceptance inspection of the ship; All the payment paid by ship purchaser before the date of delivery and acceptance inspection shall be regarded as advanced payment, which should be returned to the ship purchaser if the contract is cancelled or revoked by the purchasing party under the premise of mutual agreement; The refund, which includes all the advanced payment and corresponding interests, should be paid in dollars within three bank working days; The selling party should provide the purchasing party with the irrevocable repayment guarantee covering the first four instalments in the contract, while the purchasing party should deliver items including main engine prescribed in specification at the shipyard; they reached agreements on situations that allow delay in delivery, such as the shade temperature of the place where the shipyard locates exceeding 35 degree, natural disasters and so on. It is also stipulated that the selling party should inform the buying party of the delay by fax or email in three days; otherwise, the selling party would have no right for delay and have to take the burden of proof of the delay. The contract price of the ship can be negotiated by the two parties involved if the delivery delays or the speed of the ship is unsatisfactory; the ship needs to be delivered before 5th, December 2009, and if the delay time lasts 180 days after a grace period of 30 days, the purchasing party can cancel the contract by sending notification to the selling party; if any disputes arise, the two parties involved should seek arbitration settlement in London based on the English law ( the arbitration law enacted in 1996 and its revised and re-enacted versions from time to time). After signing of the agreement, Fingad Ltd started to pay in instalments. However, it cancelled the contract in May 2011 because the Crafts & Arts Corporation and the Hangchang Ltd failed to deliver the ship on the agreed due day.  In June, 2011, Fingad Ltd sent its request for payment to Bank of China Limited, Ningbo Branch (hereinafter referred to as BOC) according to the irrevocable L/G issued by it, however, BOC did not pay. Based on the arbitration clause agreed in the contract, Fingad Ltd started arbitration procedure in London, claiming that the Crafts & Arts Corporation and the Hangchang Ltd shall return all the advanced payment and corresponding interests while bearing relevant interests, compound interests and costs agreed in the contract, and Fingad Ltd is entitled to obtain those payment according to the irrevocable L/G issued by BOC. An arbitration committee formed by three arbitrators, including Edward Mocatta, designated by Fingad Ltd, Caihongda, co-designated by the Crafts & Arts Corporation and the Hangchang Ltd, and Patrick O’ Donovan, co-designated by the two arbitrators above heard the case of dispute. During the arbitration process, the Crafts & Arts Corporation and the Hangchang Ltd argued that the purchasing party’s refusing to check and accept the main engine in April and May, 2011, led to the selling party’s delay in delivery, on this note, the purchasing party’s cancellation on the contract on 26th, May, 2011 was unjustified. The arbitration committee opened court sessions from 5th to 9th, May, from 12th to 16th, November, and on 16th, November, 2012 on matters submitted to the hearing by the two parties, and the arbitrators drew up common reasons proposed by most arbitrators and made them a component of the final award. Among the common reasons of the award the following facts were confirmed: the ship was not and could not be delivered on the revised due date; the purchasing party made its last cancellation of contract with its notification sent on 26th, May, 2011; the major cause of the failure in delivery of the ship was that the construction of the ship had not been finished, and the reason resulting in the problem of the main engine remained unknown. The arbitration committee made the final award on 26th, July, 2013 that the Crafts & Arts Corporation and the Hangchang Ltd should pay a sum of 27,907,921.90 US dollars, with interests at an annual interest rate of 6 percent. The Crafts & Arts Corporation and the Hangchang Ltd should cover the cost of Fingad Ltd and the fees of the arbitral tribunal.  Based on the final award above, BOC paid a sum of 28,556,600 US dollars to the Fingad Ltd on 10th, October 2013, while the residual payment should be paid by the Crafts& Arts Corporation and the Hangchang Ltd since it was not covered by the repayment guarantee. The Fingad Ltd applied to Ningbo Maritime Court for recognition and enforcement of the arbitral awards mentioned above. The Court held that the arbitral awards mentioned accorded with Convention on Recognition and Enforcement of Foreign Arbitral Awards and perquisites of recognition and enforcement of foreign arbitral awards prescribed by Chinese laws, and expressed its support to Fingad Ltd’ s application since the objection of the Crafts & Arts Corporation was unsubstantiated.

   [Typical Significance]: It is a typical case of dispute over domestic shipbuilders’ fulfilment of contract involving foreign elements for vessel building and selling. Having accepted format contract with many clauses unfavorable for themselves was an unnegligible reason in their lawsuit loss. Concrete manifestation is as follows: 1. The agreed payment period was too long and the proportion of last payment, which would not be paid until the ship was delivered and checked, was too large. In this regard, if any disputes over the ship shall arise, the domestic shipbuilder might be unable to get the residual payment; 2. The responsibility assumed by the selling party was over-stressed in the agreements concerning advanced payment and repayment guarantee, besides, there was no proviso restricting the right of the purchasing party, therefore, if any disputes shall arise, the selling party would be put into a passive position; 3. It was agreed that the purchasing party had the right of unilateral termination of the contract, and when the situations allowing delay in delivery of ship happened, if the selling party fails to inform the purchasing party in three days, it would lose the right for delay, which is the root cause of the selling party’s lawsuit loss in this specific case;  4. The two parties have agreed on that the purchasing party should deliver items including main engine prescribed in specification at the shipyard, while have had no agreements on specifications or quality of major parts provided by the selling party, or how to deal with the situation where the parts provided by the selling party have quality problems. The arbitral tribunal thought that the major cause of the failure in delivery of the ship was that the construction of the ship had not been finished, and the reason resulting in the problem of the main engine remained unknown, which led to the lawsuit loss of the appellees. According to the objection of the appellees, the Court requested them to submit hundreds of emails between the parties involved in the case as forensic evidence. After reviewing all the evidence submitted and verifying the specific amount and composition of every single instalment paid by the Fingad Ltd, the Court decided that as in the case there was no unfair or impartial disclosure procedure, or defective or excessive exchange of witness statements, and the lawful day assured the appellees sufficient time to make an effective response, therefore, it recognized and enforced the foreign arbitral awards according to law.