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CISG CASE PRESENTATION

China 10 July 1997 CIETAC Arbitration proceeding (Carbomide case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/970710c1.html]

Primary source(s) of information for case presentation: Case text

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Case identification

DATE OF DECISION: 19970710 (10 July 1997)

JURISDICTION: Arbitration ; China

TRIBUNAL: China International Economic & Trade Arbitration Commission [CIETAC] (PRC)

JUDGE(S): Unavailable

DATABASE ASSIGNED DOCKET NUMBER: CISG/1997/21

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: United States (respondent)

BUYER'S COUNTRY: People's Republic of China (claimant)

GOODS INVOLVED: Carbomide


Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 74

Classification of issues using UNCITRAL classification code numbers:

74A ; 74B [General rules for measuring damages: loss suffered as consequence of breach; Outer limits of damages: foreseeability of loss]

Descriptors: Damages ; Foreseeability of Damages

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Chinese): Zhong Guo Guo Ji Jing Ji Mao Yi Zhong Cai Wei Yuan Hui Cai Jue Shu Hui Bian [Compilation of CIETAC Arbitration Awards] (May 2004) 1997 vol., p. 2142

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Dong WU, CIETAC's Practice on the CISG, at nn.57, 158, 170, Nordic Journal of Commercial Law (2/2005)

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Case text (English translation)

Queen Mary Case Translation Programme

China International Economic & Trade Arbitration Commission
CIETAC (PRC) Arbitration Award

Carbamide case (10 July 1997)

Translation [*] by Zhan Changzheng [**]

Translation edited by Meihua Xu [***]

INTRODUCTION

China International Economic and Trade Arbitration Commission (Arbitration Commission, formerly known as "China Council for the Promotion of International Trade Foreign Economic and Trade Arbitration Sub-commission") accepted the Carbamide case on 12 November 1996 in accordance with the written application for arbitration submitted by Claimant [Buyer], Jiangdu Trading Company on 12 November 1996, and the arbitration clause in Contract JLH951108 [the Contract] entered into by and between the [Buyer] and Respondent [Seller], American ___ Company, on 4 November 1995.

The Secretariat of the Arbitration Commission sent Notice of Arbitration No.___ to the [Seller] on 12 November 1996, and on 18 December 1996 sent Letter No.___ to urge the [Seller] to appoint an arbitrator and to submit a statement of response. The [Seller] stated in its letter sent to the Arbitration Commission on 26 December 1996 that it was not necessary to arbitrate the case, and did not appoint an arbitrator.

The [Buyer] appointed Ms. A, and the Chairman of the Arbitration Commission appointed Mr. D as arbitrator for the [Seller] according to Article 26 of the Arbitration Rules of the Arbitration Commission because the [Seller] failed to appoint an arbitrator. Because the parties failed to jointly appoint the Presiding arbitrator or to authorize the Chairman of the Arbitration Commission to appoint the Presiding arbitrator, the Chairman of the Arbitration Commission appointed Mr. P as the Presiding arbitrator according to Article 24 of the Arbitration Rules. The Arbitral Tribunal consisting of Mr. P, Ms. A, and Ms. D commenced to hear the case. The Secretariat of the Arbitration Commission sent Notice No.___ Regarding Establishment of the Arbitral Tribunal via fax on 27 January 1997 and Notice of Hearing No.___ to the [Seller] and the [Buyer], respectively, via registered letter on 27 February 1997.

The Arbitral Tribunal reviewed the Arbitration Application of the [Buyer] and the Defense Statement of the [Seller]. On 8 April 1998, the Arbitral Tribunal held a hearing in Beijing at which the representative of the [Buyer] made oral statements and answered the Tribunal's questions. Because the [Seller] was absent, the Arbitral Tribunal proceeded with the hearing by default according to Article 42 of Arbitration Rules of the Arbitration Commission. The [Buyer] submitted supplementary evidence materials after the hearing. On 11 April 1997, the Arbitral Tribunal informed the [Seller] about the hearing by letter, requested the [Seller] to submit supplementary statements and evidence or a written application for a second hearing, and shared with the [Seller] the supplementary documents submitted by the [Buyer] after the hearing. The [Seller] did not provide any reply.

The case has been concluded. The Arbitral Tribunal rendered the award through discussion on 27 October 1997 within nine months of the date of establishment of the Tribunal 27 January 1997 as stipulated in the Arbitration Rules.

The facts, opinions, and the award are as follows:

THE FACTS

During September to October 1995, the [Buyer] established contacts with the [Seller], and the [Seller] sent to the [Buyer] a quotation for 100,000 mts of carbamide. Through negotiation, they entered into the Contract on 4 November 1995 under which the [Buyer] agreed to purchase from the [Seller] 100,000 mts of carbamide originated in Russia (used in agriculture). The major contents of the Contract include:

   -    Quantity: 100,000 mts of carbamide;
 
   -    Unit price: US $ 188/mt CNF Main Port of China (discharge fee excluded, to be discharged according to practices of port) (CNF FOCQD), total price: US $18,800,000;
 
   -    Payment: The [Buyer] shall establish an irrevocable and transferable documentary Letter of Credit (L/C) with China Agricultural Bank Yangzhou Branch in the amount of US $4,600,000 (for the first shipment of 25,000 tons), 100% payable upon receipt of notice of shipment unless claiming events arise in the scope of liabilities of the insurance company and/or owner of the ship; the L/C for the next shipment shall be established within 10 days after receipt of the last shipment;
 
   -    Delivery: The [Seller] shall finish loading on 25 November 1995; the shipment should arrive in the port designated by the [Buyer] prior to 20 December; the cargo shall be shipped separately within four months, 25,000 mts per month;
 
   -    Performance guarantee: [Seller] shall pay to the [Buyer] 2% of the amount of L/C as a performance guarantee; in case the [Seller] fails to perform its obligation under the Contract, the [Buyer] shall be entitled to demand payment from the performance guarantee.

POSITION OF THE PARTIES

[Buyer]'s position

After conclusion of the Contract, the [Buyer] entered into a Cooperation Agreement with Jilin A Import & Export Company Autochthonism Division (Jilin Company) to authorize Jilin Company to communicate with Hong Kong with regards to establishment of the L/C. This Cooperation Agreement provided that [Buyer] shall bear all expenses and risks, and shall also pay Jilin Company renminbi [RMB] 4,200,000 as a guarantee and 1.5% of the total amount of the L/C as a handling charge. Jilin Company, in turn, entered into a Cooperation Agreement with Hong Kong B Trading Company (Hong Kong Company) to sub-authorize Hong Kong Company to handle the establishment of the L/C.

On 15 November 1995, the [Buyer] opened the L/C with Zhejiang Xingye Bank in the amount of US $ 4,700,000 in favor of the [Seller] for the first shipment of 25,000 mts of carbamide. The [Seller] requested the [Buyer] to make the following amendments to the L/C in a fax dated 23 November 1995:

" 1. Letter of Credit must be transferable.
2. Date of expiry change from 95/12/25 to 96/01/25.
3. Term of payment revise to CNF Dalian only. In other words, delete FO, CQD.
4. In the specification, the granular size should be 1 to 3 mm. instead of 0.8 to 2.5 mm.
5. In the documentation, the reference to the inspection certificate issued by China Commodity Inspection Bureau should be deleted.
6. Latest date of shipment should be extended from 95/11/25 to 95/12/25."

On 25 November 1995, the [Buyer] made the first amendments to the L/C with Zhejiang Xingye Bank, but the clause regarding China Commodity Inspection Bureau (C.C.I.B.) was not removed. After revision of the L/C, on 5 December 1995, the [Seller] notified the [Buyer] that for the first 25,000 mts shipment, the loading port is Odessa; the ship is Powstaniec Stycaniowy; the ship date is from 11 to 20 December 1995.

However, the [Seller] did not perform the obligation of delivery according to the Contract. By letter dated 9 January 1996, the [Seller] requested the [Buyer] to amend the L/C once again: the last shipment date to be extended to 10 February 1996; the date of expiry of the L/C to be extended to 25 February 1996.

For the purpose of the second amendment to the L/C and performance of the Contract, upon approval of the [Buyer], Jilin Company entered into a Supplementary Agreement regarding establishment of the L/C with Hong Kong Company pursuant to which Jilin Company promised that this amendment shall be the last amendment and Jilin Company shall not propose any further amendment to Hong Kong Company. In case of ineffectiveness of the L/C caused by fault of Jilin Company or Jilin Company's Contact or the [Seller] after such amendment of the L/C, Jilin Company agreed that Hong Kong Company shall be entitled to retain the guarantee of RMB 4,200,000. On 18 January 1996, Zhejiang Xingye Bank made the second amendment as requested by the [Seller].

In the letters continuously sent on 19, 20, and 21 December 1996, the [Buyer] urged the [Seller] to provide the performance guarantee and to notify of the shipment date, and indicated that disastrous economic loss will occur if the cargo cannot be delivered, and that the import license cannot be extended any more. On 22 December 1995, the [Seller] replied to the [Buyer] that it would be impossible to load the goods prior to 25 December 1995. The [Buyer] was in touch with the [Seller] many times by letter, fax, or telephone from 23 December 1995 to 9 January 1996. The [Seller] sent a letter on 16 January 1996, informing that they are helpless with 25,000 mts of carbamide, and expressing their regrets to the [Buyer].

When the [Buyer] worked with establishment of the L/C, the [Buyer] had entered into an agreement with China [...] Material Company (Material Company) on 30 November 1995 to do the business of 100,000 mts of carbamide jointly. The agreement provides that the [Buyer] authorizes the Material Company to handle issues regarding import agency and Import License with expense of RMB 161 per mt; all commodities shall be sold at the price of RMB 1,990 per mt to the Material Company which will be the domestic seller; except for failure to supply caused by force majeure, the [Buyer] shall compensate the Material Company for 3% of the total price of the goods. On 20 December 1995, the Material Company notified the [Buyer] that the application procedure for the import license had been completed; they had paid RMB 5,000,000 of guarantee payment to another related party; and that the import declaration procedure shall be done within five days prior to arrival to Dalian port.

The Material Company then requested by letter that the [Buyer] pay RMB 5,000,000 of import license guarantee payment because the agreement cannot be performed. On 12 June 1996, the [Buyer] reached an agreement with the Material Company consenting to indemnify for the loss incurred by the Material Company in the amount of 2.5% of the total payment. The damages are RMB 4,975,000 to be paid in four instalments within one year. The [Buyer] promised to pay to the Material Company RMB 5,000,000 of import license guarantee payment for one time prior to the end of June 1996.

To sum up, the [Buyer] alleges that the failure to implement the Contract for 100,000 mts of carbamide between the [Buyer] and the [Seller] was caused by the [Seller]'s unilateral breach of contract, which had serious influence on the execution of the agricultural production plan of the country, and also resulted in a huge economic loss of the [Buyer]. The [Buyer] brought an application for arbitration on 12 November 1996 to the Arbitration Commission, requesting the Arbitral Tribunal to rule that the [Seller] shall pay to the [Buyer] the following damages in accordance with Article 74 of CISG which provides that "Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach":

1. Loss of L/C guarantee payment of RMB 4,200,000 incurred by the [Buyer] due to the [Seller]'s failure to deliver the goods which had rendered the L/C invalid.

2. Loss of RMB 4,975,000 paid by the [Buyer] to Material Company due to its default.

3. Loss of guarantee payment of RMB 5,000,000 compensated for by the [Buyer] to Material Company in respect of the application for the import license.

4. Loss of expected profit:

  1. Selling price: RMB 1,990 /mt
  2. Cost of purchase:
    Import price: 8.3(exchange rate) X US $188 /mt = RMB 1,560.4 / mt
    Import License Handling charge: RMB 161/mt
    Destination dock charge: RMB 40 /mt
  3. Expected profit: (1,990-1,560.4-161-40) /mt X 100,000 mt = RMB 2,860,000

5. Arbitration fee and attorney fee of RMB 409,650 prepaid by the [Buyer]

Furthermore, the [Buyer] indicated orally as follows against the [Seller]'s response at the opening of the hearing:

1. Performance guarantee payment

The [Buyer] signed the printed version of the Contract and sent it to the [Seller] via fax. The Contract provides that the [Seller] shall remit by mail transfer a performance guarantee payment in the amount of 8% of the total price of the L/C within two banking days of receipt of the L/C from the [Buyer]. However, [Seller] amended 8% to 2% and mailed to the [Buyer] the original version with the [Seller]'s signature. In addition, the [Seller]'s failure to deliver the goods had nothing to do with the performance guarantee payment within two banking days upon receipt of the L/C from the [Buyer]. The [Seller] could have paid to the [Buyer] 2% of the total price of the L/C as performance guarantee payment according to the Contract; However, the [Seller] neither made the payment, nor delivered the goods according to the Contract.

2. Term of payment by L/C

The [Buyer] indicated that the parties had discussed the clause regarding the China Commodity Inspection Bureau [C.C.I.B.] but did not confirm it in the Contract. Then, at the time the [Seller] requested the [Buyer] to make the first amendment of the Contract, the parties decided by phone that, the clause with regard to C.C.I.B. would be removed upon receipt of the performance guarantee payment from the [Seller]. In case the [Seller] fails to pay the performance guarantee, the [Buyer] would notify the bank to remove the clause with regard to C.C.I.B. after the [Buyer] had overseen the loading of the goods upon request of the [Seller]. Therefore, the [Buyer] had not removed the clause when the L/C was amended for the first time, moreover, the [Seller] accepted the amended L/C and did not make any challenge to the amendment. In the letter dated 9 January 1996, the [Seller] only requested the [Buyer] to postpone the last shipment date to 10 February 1996, and the expiry date of the L/C to 25 February.

Furthermore, Mr. Chen (...), a witness for the [Buyer] who had arrived in Los Angeles, USA on 8 February 1996, testified that, the [Seller] had turned out to be a company engaging in the waste paper business but never in the business of carbamide. The [Seller] did not have a reliable source of goods and did not reserve a ship for the Contract. The [Buyer] had requested to see the goods, but the [Seller] failed to arrange for that.

Therefore, the [Buyer] holds that the [Seller] failed to perform its obligation to deliver goods under the Contract.

[Seller]'s position

The [Seller] responded that:

The performance guarantee stipulated in the Contract is 2% of the L/C amount. 8% of the L/C amount as performance guarantee is not a usual practice in the sales of carbamide, though the [Buyer] maintains that the [Seller] pay 8% of the L/C amount as a performance guarantee.

The term of payment in the L/C, "By Payment Drafts at Sight", requires that such payment can be negotiated at Seller's bank upon departure of the carrying vessel; however, the [Buyer] requested that the payment cannot be negotiated until the issuance of certificate of inspection except SGS by the [Buyer] at the destination port, which would take a rather long time. The [Seller] disagreed with such provision which is not "at sight" payment terms, and requested the first amendment of the L/C.

The [Buyer] established the L/C in Hong Kong on 15 November 1995, which was sent to Germany via the Los Angeles Bank of China and received by the supplier on 25 November. The supplier could not accept the L/C because the [Buyer] demanded 8% of the L/C Amount as a performance guarantee and the payment would not be negotiated until the issuance of certificate of inspection at the destination port. Moreover, the time would be too short because the L/C was received only on 25 November, which however stipulates that the goods should be loaded on 25 November, but the L/C would be void as from 25 December.

Therefore, the [Seller] requested the [Buyer] to make the first amendment of the L/C.

The [Buyer] accomplished the extension of the L/C until 18 January. The ship date was extended to 10 February, and it was provided that the L/C would be void as from 25 February. The L/C was sent to Los Angeles on 20 January and transferred to Germany at the end of January. However, there were only several days left before the loading date, and the shipment could not be done actually after that extension. Besides, the [Buyer] failed to amend the clause of 8% performance guarantee and the clause that the payment cannot be negotiated until the issuance of certificate of inspection by the [Buyer] at the destination port.

At the time of the second amendment of the L/C, the supplier had been prepared for inspection and shipment, had urged the [Seller] to extend the L/C and to amend the above two clauses. The [Buyer] notified in the fax dated 26 February that "'regarding the clause of payment upon issuance of certificate of inspection at the destination port,' we have notified your company on 17 November that we would amend the clause upon loading of goods." However, the [Buyer] has never amended the two clauses.

A new L/C should have been re-established because the original L/C has expired after the second amendments, but the [Buyer] failed to establish a new L/C.

Hence, the [Seller] holds that the [Buyer] should be liable for the non-performance of the Contract. The supplier of the [Seller] has been prepared for shipment, though the [Buyer] failed to establish an L/C according to the Contract; the supplier therefore rejected acceptance of the L/C and repeatedly requested the [Buyer] to amend the L/C, but the [Buyer] failed to amend the L/C in good faith, which resulted in the expiry of the L/C. The [Buyer] should be held responsible for failure to extend or re-establish the L/C.

THE OPINION OF THE TRIBUNAL

1) The applicable law

The Contract in the case is an international sales contract concluded by and between the [Buyer] and the [Seller]. The CISG shall apply to the dispute because the places of business of the [Seller] and the [Buyer] are located in China and USA, which are Contracting States of the CISG.

2) The breach of contract

The [Buyer] and the [Seller] have clearly agreed on their rights and obligations in the Contract: the [Buyer] shall open an irrevocable and transferable L/C at sight for the first shipment of 25,000 mts of carbamide with China Agricultural Bank Yangzhou Branch within five banking days after conclusion of the Contract; the L/C for the remaining shipment shall be opened within 15 days upon receipt of the first shipment; the [Seller] shall deliver the first shipment prior to 25 November 1995 and the remaining shipments by installments prior to 30 April 1996; the [Seller] shall pay to the [Buyer] 2% of the total amount of the L/C as a performance guarantee by mail transfer within two banking days upon receipt of the L/C.

On 6 November 1995, [Buyer] and Jilin Company entered into a cooperation agreement and after that Jilin Company entered into an agreement with Hong Kong Company under which Hong Kong Company was authorized to establish an L/C with a Hong Kong bank. Later than stipulated in the Contract, the [Buyer] opened an L/C in favor of the [Seller] for the first shipment of 25,000 mts of carbamide with Zhejiang Xingye Bank on 15 November 1995. The [Seller] did not raise any objection in this regard, and requested only for postponement of the L/C on 23 November 1995. The [Buyer] made the first amendments to the L/C on 25 November 1995 and the second amendment on 15 January according to the [Seller]'s request of 9 January. Therefore, the Tribunal finds that the [Buyer] has performed its obligation of establishing an L/C.

The [Seller] stated in its defense that the Contract cannot be executed because the [Buyer] had inserted the clause that a Certificate of Inspection shall be issued by C.C.I.B., which is in violation of the principle of the L/C payment at sight and cannot be accepted by the supplier of the [Seller]. The Tribunal has noticed that, in the letter of 23 November 1995, the [Seller] requested certain amendments to the L/C and removal of such clause with regard to China Commodity Inspection. In this respect, the Tribunal has also noticed the statement of the [Buyer] that the parties decided that the clause with regard to C.C.I.B. would be removed upon receipt of the performance guarantee payment from the [Seller]. In case of the [Seller]'s failure to pay the performance guarantee, the [Buyer] would notify the bank to remove the clause with regard to C.C.I.B. after the [Buyer] had overseen the loading of the goods upon request of the [Seller], and therefore, the [Buyer] had not removed the clause when the L/C was amended for the first time. Though the [Buyer] actually had not removed such clause at the time of first amendment, the [Seller] did not make any objection, but accepted the amended L/C, and notified the [Buyer] of the loading date of the first shipment of 25,000 mts of carbamide on 5 December 1995. The [Seller] also failed to request for amendment of the clause in the second letter requesting amendment. Therefore, the Tribunal holds that the [Seller] has accepted the clause. The [Seller] states in its defense that the supplier cannot accept 8% of the total amount of the L/C as a performance guarantee requested by the [Buyer], the Contract then cannot be executed. The Arbitration Tribunal holds that it was clearly stipulated in the Contract that the performance quarantee is 2% of the total amount of the L/C, and that it was [Seller]'s obligation to pay. Despite 2% or 8%, the [Seller] failed to pay 2% of the total amounts of the L/C as a performance guarantee upon receipt of the L/C as stipulated by the Contract. In addition, according to the materials submitted by the parties, especially the materials submitted by the [Seller], the Tribunal noticed that the [Seller]'s supplier was mainly concerned about the quick establishment of L/C as shown by its request, but never mentioned the clause with regard to C.C.I.B. or the clause regarding the performance guarantee. Therefore, the Tribunal does not sustain the [Seller]'s above allegation because of its inadequate reasoning and evidence.

Based on the above, the Tribunal holds that the [Buyer] has performed its obligation of establishing the L/C, while the [Seller] failed to deliver the goods in accordance with the Contract and breached the contractual obligation. The [Seller] therefore shall indemnify for damage incurred by the [Buyer] as a result thereof.

3) The claims of the [Buyer]

After conclusion of the Contract with the [Seller] on 4 November 1995, the [Buyer] entered into a Cooperation Agreement with the Material Company on 30 November 1995 to resell to the Material Company the commodities contemplated by the Contract with the price of 1990 per mt. The [Buyer] thereby claimed for recovery of the loss of expected profit, i.e., the price difference between the Contract and the Cooperation Agreement, excluding reasonable expenses, and the [Seller] did not bring any objection to the [Buyer]'s above requests.

Article 74 of the CISG provides that "Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach." The Arbitral Tribunal also noticed that because the price stipulated in the Cooperation Agreement is obviously lower than the market price of the time, the [Seller] ought to have foreseen the loss as a possible consequence of the breach of the Contract at the time of conclusion of the Contract. The Tribunal concludes that the [Seller] shall indemnify for the loss of foreseeable profit, RMB 22,860,000.00.

Expected profit = selling price - import price - other purchase cost:

  1. Selling price: RMB 1,990 /mt
  2. Purchase cost:
    Import price: 8.3 (exchange rate) X US $188 /mt = RMB 1,560.4 / mt
    Import License Handling charge: RMB 161/mt
    Destination dock charge: RMB 40 /mt
  3. Expected profit: (1,990-1,560.4-161-40) /mt X 100,000 mt= RMB 22,860,000

The [Buyer] requests that the [Seller] indemnify for the loss of RMB 4,200,000 of L/C guarantee payment incurred by the [Buyer] in accordance with the agreement dated 15 January 1996 between Jilin Company and Hong Kong Company because the [Seller]'s failure in delivery of cargo had rendered the L/C invalid, and caused the loss of RMB 4,975,000 paid by the [Buyer] to Material Company due to its default, and the loss of RMB 5,000,000 of down payment compensated for by the [Buyer] to Material Company in respect of the application for the import license in accordance with the Cooperation Agreement dated 12 June 1996 between the [Buyer] and Material Company; however, the [Buyer] fails to submit the relevant original proof evidencing the three expenses. The Tribunal does not sustain the [Buyer]'s requests with regard to these three expenses.

4) Arbitration fee and Attorney fee

In accordance with Article 59 of the Arbitration Rules, the Tribunal decides that the [Seller] shall bear RMB 250,000 of attorneys' fee expended by the [Buyer] in the case, and the [Buyer] shall bear itself the remaining RMB 159,650 of attorneys' fee.

The arbitration fee of the case is RMB 540,350, 20% of which shall be borne by the [Buyer], and 80% shall be borne by the [Seller].

5) The [Buyer] requested the Tribunal in the letter of 6 June 1997 that the damages should be calculated in US dollars because the [Seller] is an American company. The Tribunal approves that the amounts to be paid by the [Seller] shall be calculated at the exchange rate of 8.3 to 1.

THE AWARD

Based on above, the Arbitral Tribunal decides as follows:

1) The [Seller] shall indemnify for the loss of foreseen profit, RMB 22,860,000.

2) The [Seller] shall bear RMB 250,000 of attorneys' fee expended by the [Buyer] in the case.

3) 80% of the arbitration fee of the case shall be borne by the [Seller], and 20% shall be borne by the [Buyer]. The [Seller] shall compensate the [Buyer] RMB ___ for the arbitration fee prepaid by the [Buyer].

4) All other claims of the [Buyer] are rejected.

5) The above 1~3 amounts, which amount to RMB 23,542,280, equal to US $ 2,836,419, shall be paid by the [Seller] to the [Buyer] within 45 days upon the award, and interest at the annual rate of 8% shall be paid on any overdue payment for the period beginning on 24 August 1997 and ending on actual payment date.

The award shall be final and binding.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Claimant of the People's Republic of China is referred to as [Buyer] and Respondent of the United States is referred to as [Seller]. Amounts in the currency of the United States (dollars) are indicated as [US $]; amounts in the currency of the People's Republic of China (renminbi) are indicated as [RMB].

** Zhan Changzheng is an Associate with Shanghai Haoliwen PRC Attorneys. He received his LL.M from Xiamen University. He focuses on company law, international commercial arbitration law, and international trade law.

*** Meihua Xu, LL.M. University of Pittsburgh School of Law on an Alcoa Scholarship. She received her Bachelor of Law degree, with the receipt of Scholarship granted by the Ministry of Education, Japan, from Waseda University, Tokyo, Japan. Her focus is on International Business Law and International Business related case study.

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