## Facts

- Ferco Steel Ltd. (English seller) agreed in March 1993 to sell Minmetals Germany GmbH (German buyer) 10,000 metric tons of steel channels at US$340/metric ton on shipment terms to Shanghai.
- The contract provided for post-discharge inspection in China, required timely claims based on the inspection bureau’s report, and required arbitration before CIETAC in Beijing.
- Minmetals resold the goods to a Chinese sub-buyer; inspection in Shanghai found nonconforming dimensions and incorrect quality marks.
- Two CIETAC arbitrations proceeded before the same tribunal: (1) Minmetals vs. sub-buyer and (2) Minmetals vs. Ferco seeking damages including sums payable to the sub-buyer.
- CIETAC first awarded the sub-buyer about US$1.6 million against Minmetals; the next day it awarded Minmetals roughly the same amount against Ferco, treating the sub-buyer award as evidence of Minmetals’ loss.
- Ferco contended the tribunal relied on the sub-buyer award without disclosing it in the main arbitration or giving Ferco a chance to address its relevance and effect.
- Ferco sought to revoke the first Minmetals-against-Ferco award in China; the Chinese court did not revoke but suspended and remitted for a resumed arbitration so Ferco could make submissions on the tribunal’s reliance on the sub-buyer award.
- In the resumed arbitration, the tribunal invited Ferco’s views on the sub-buyer award; Ferco did not squarely argue that reliance on it was impermissible and maintained that the matter should be reheard entirely.
- CIETAC issued a second award substantially maintaining the first (about US$1.69 million plus costs and interest); a Chinese court refused revocation, finding any initial procedural breach had been cured and Ferco had chosen not to address the point.
- An English court granted leave to enforce both awards under Arbitration Act 1996 § 101; Ferco applied to set aside enforcement under § 103.

## Issues

1. Whether Ferco was “unable to present its case” under Arbitration Act 1996 § 103(2)(c) because the tribunal relied on the sub-buyer award without proper disclosure and because of the conduct of the resumed arbitration.
2. Whether the awards were not made “in accordance with the agreement of the parties” or applicable arbitral procedure under § 103(2)(e).
3. Whether enforcement should be refused on public policy grounds under § 103(3) due to alleged procedural unfairness.

## Decision

- The Commercial Court dismissed Ferco’s application and left in place the order granting leave to enforce the CIETAC awards in England.
- The court held § 103 defenses are construed narrowly in line with the New York Convention’s enforcement objective.
- Any procedural defect in the initial CIETAC proceedings was cured by the Chinese court’s remission and the resumed arbitration’s invitation to Ferco to make submissions on the sub-buyer award.
- Ferco was not “unable” to present its case; it had an opportunity in the resumed arbitration but did not take it.
- Enforcement was not contrary to English public policy given the curative process at the seat and the absence of a continuing denial of a fair opportunity to be heard.

## Legal Principles

- Grounds to refuse enforcement of a Convention award under Arbitration Act 1996 § 103 are limited and construed narrowly; enforcement proceedings are not a merits appeal.
- “Unable to present [one’s] case” under § 103(2)(c) requires an externally imposed deprivation of a fair opportunity to be heard; a party’s tactical or deliberate choice not to advance available arguments does not satisfy the standard.
- A procedural irregularity may be cured through remission or resumed proceedings providing a proper opportunity to address the relevant material; once cured, § 103(2)(c) and § 103(2)(e) may not apply.
- The public policy exception in § 103(3) is exceptional and does not extend to ordinary procedural imperfections, particularly where the court at the seat has addressed the complaint and upheld the award.
- Decisions of the supervisory court at the seat on procedural challenges are given significant weight when an enforcing court considers § 103 objections.

## Conclusion

The court enforced the CIETAC awards because Ferco had a fair opportunity to address the tribunal’s reliance on the sub-buyer award after the Chinese court remitted the matter, and Ferco’s failure to use that opportunity defeated its § 103 arguments based on inability to present its case, procedural noncompliance, and public policy.


Minmetals Germany GmbH v. Ferco Steel Ltd., [1999] 1 All E.R. (Comm) 315 (Q.B. 1999)