## Facts

- China Minmetals Materials Import and Export Co., Ltd. (a PRC corporation) sought to enforce an arbitral award against Chi Mei Corp. (a New Jersey corporation) arising from an alleged transaction involving electrolytic nickel cathode.
- Minmetals relied on two written “sales contracts” containing arbitration clauses and bearing a purported Chi Mei signature and corporate seal.
- Chi Mei denied it agreed to any sales transaction and asserted the documents were forged, including that the signatory was a non-existent employee and the corporate seal was not authentic.
- Minmetals initiated arbitration before CIETAC pursuant to the contracts’ arbitration clauses.
- Chi Mei appeared in the arbitration and argued that the contracts and arbitration clauses were fraudulent; the tribunal rejected the defense for insufficient proof and awarded Minmetals more than $4 million.
- Minmetals petitioned in the Eastern District of Pennsylvania to confirm the foreign award under the New York Convention as implemented by the Federal Arbitration Act.
- Chi Mei opposed confirmation and proffered additional evidence (including expert evidence) supporting its forgery allegations; the district court confirmed the award and entered judgment for $4,040,850.41.
- Chi Mei appealed, arguing the district court improperly treated the arbitral rejection of forgery as effectively conclusive and failed to permit meaningful development of the formation challenge.

## Issues

1. When enforcing a foreign arbitral award under the New York Convention, must a federal court independently determine a colorable claim that the arbitration agreement (and underlying contract) is a forgery and thus never formed?
2. What process is required—including discovery and an evidentiary hearing—when the award debtor presents prima facie evidence supporting a contract-formation challenge under Convention defenses such as Article V(1)(a)?

## Decision

- The Third Circuit vacated the order confirming the award and remanded for further proceedings.
- The court held that a non-frivolous claim of forgery/fraud in the factum presents a gateway question of whether any arbitration agreement was formed, requiring an independent judicial determination at the enforcement stage.
- The district court was instructed to allow limited discovery targeted to the authenticity/formation issue and to conduct an evidentiary hearing if material factual disputes remained.

## Legal Principles

- Under the New York Convention, an award may be refused enforcement where the arbitration agreement is not valid under the applicable law, including where no agreement was formed because the contract or assent is forged.
- Distinction: fraud concerning a concededly formed contract (e.g., inducement or performance disputes) is generally for arbitrators, while fraud that negates contract formation (fraud in the factum/forgery/lack of authority) is for courts.
- A foreign tribunal’s rejection of a forgery-based formation defense does not eliminate the enforcing court’s duty to independently assess whether the party ever consented to arbitrate when the defense is supported by a colorable evidentiary showing.
- When prima facie evidence supports a formation challenge, due process in the enforcement proceeding requires a meaningful opportunity to develop the record, including limited discovery and, if warranted, an evidentiary hearing.

## Conclusion

The Third Circuit required independent judicial scrutiny of a substantial claim that no arbitration agreement was formed due to forgery, vacating summary confirmation of the foreign award and remanding for limited discovery and a possible evidentiary hearing on contract formation under the New York Convention.


China Minmetals Materials Import & Export Co. v. Chi Mei Corp., 334 F.3d 274 (3d Cir. 2003)