CTA International Pty Ltd v Sichuan Changchong Electric Co Ltd
[2002] VSC 103
•26 March 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
| AT MELBOURNE PRACTICE COURT |
No. 4278 of 2001
| CTA INTERNATIONAL PTY. LTD. | Plaintiff |
| V | |
| SICHUAN CHANGHONG ELECTRIC CO. LTD. | Defendant |
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| JUDGE: | BEACH, J |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 26 March 2002 |
| DATE OF JUDGMENT: | 26 March 2002 |
| CASE MAY BE CITED AS: | CTA International v. Sichuan Changhong Electrics |
| MEDIUM NEUTRAL CITATION: | [2002] VSC 103 |
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. T.V. Hurley | J. Lei & Co. |
| For the Defendant | Mr. A.G. Serong | KPMG Legal |
| HIS HONOUR: |
The plaintiff, CTA International Pty Ltd, is a company incorporated in the State of Victoria and is principally engaged in the import and wholesale distribution of electronic products.
The defendant, Sichuan Changhong Electric Co Ltd, is a company based in Sichuan, China, and is a manufacturer of various electronic products including colour TVs and VCRs.
By an agreement made on 21 April 1988 between the plaintiff and the defendant, the defendant granted to the plaintiff an exclusive sales right in respect of the defendant's product in the territory of Australia and New Zealand for a period of three years from 1 June 1998 until 31 May 2001.
The agreement between the parties contains an arbitration clause which reads:
"All disputes arising in connection with this agreement or execution thereof shall be settled amicably through negotiation. In case no settlement can be reached the case under dispute shall then be submitted for arbitration to an arbitration body. Where the dispute arises in accordance with this body's rules and procedure for arbitration, the decision of the arbitration shall be accepted as final and binding upon both parties"
In due course the defendant supplied a number of colour TV sets to the plaintiff for distribution by the plaintiff throughout Australia and New Zealand. The plaintiff claims that over the period during which the defendant supplied the TV sets to it approximately 2000 of the sets were faulty.
On 31 January 2001 and the plaintiff filed a writ in the court claiming a sum of $7,000,000 from the defendant in respect of the losses it contended it had suffered.
The defendant filed its defence to the plaintiff's claim on 11 May. By that defence the defendant admitted the agreement between the parties, but did not admit that any of the sets supplied by it to the plaintiff were defective, and denies that it is liable to make any payment to the plaintiff in respect of those sets.
Thereafter there were a number of orders made by masters of the court in relation to the interlocutory steps the parties should take in the proceeding. However, on 22 April 2001 the defendant commenced an arbitration proceeding before the Mianyang Arbitration Commission in Sichuan, China.
The plaintiff, through its solicitors in China, challenged the validity of the arbitration clause in the agreement. That challenge came before the Mianyang City Intermediate People's Court in the Sichuan province, a court presided over by a judge and assisted by two further judges. As I understand it, both parties made written submissions to the court in relation to the validity of the arbitration clause.
On 18 December 2001 the Mianyang City Intermediate People's Court delivered its ruling in relation to the matter and upheld the validity of the arbitration clause. The actual order made by the court at the end of its reasons for judgment reads:
"In accordance with the regulations in ss.18 and 20 in the Arbitration Law of the People's Republic of China and sub-s.(11) in Clause 1 and Clause 2 in s.140 in Civil Procedure Law of the People's Republic of China the order is thus made as follows:
'That CTA company's application of objection to the validity of the arbitration agreement is dismissed and that the hearing fee of 300 yuan to be born by CTA company. This order is the order for the final hearing'."
A matter of days ago the plaintiff ascertained that the date fixed for the hearing of the arbitration in China is 28 March, that is Thursday. On 21 March the plaintiff filed a summons in the court whereby it seeks to restrain the defendant from participating in any way in the hearing of the arbitration in China. It is that summons which is now before me.
In my opinion it is inappropriate to make the order sought by the plaintiff, I say that not because this court is necessarily an inappropriate forum. Indeed it may well be that this court is the appropriate forum, although having regard to a certain aspect of the defendant's claim in the arbitration proceeding, and I refer in that regard to its claim for the sum of $3,240,000 in respect of what I shall describe as the foreign currency aspect of its claim, it may well be that the appropriate forum is that of the Arbitration Commission in Mianyang City.
Why I refuse the application is, firstly, the delay which has occurred since this dispute was referred to arbitration. The plaintiff has known since at least 18 December 2001 of the decision of the Mianyang City Intermediate People's Court.
Secondly, there is the fact of that decision itself, a decision arrived at after the plaintiff challenged the validity of the arbitration clause.
Finally, a matter which does concern me would be the enforceability of any order that this court was inclined to make.
As I indicated at the outset, the defendant is a Chinese corporation conducting its business in China. There is no evidence that it has any presence here in Australia.
Accordingly, the application for injunctive relief is refused.
I order the plaintiff to pay the defendant's costs of the application.
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