US District Court of the Southern District of New York grants petition to confirm New York Convention awards rendered in London

US District Court of the Southern District of New York grants petition to confirm New York Convention awards rendered in London

On 22 February 2016, the US District Court for the Southern District of New York granted Crescendo Maritime Co. (“Crescendo”)’s petition brought pursuant to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), to enforce three arbitration awards issued in its favor in London, against respondent Bank of Communications Co. Ltd. (“BOCOM”) (Crescendo Maritime Co. v. Bank of Communications Co. Ltd., Case no. 1:2015cv04481 (S.D.N.Y. 2016)).

Factual Background

On 16 August 2007, Crescendo, a special purpose vehicle incorporated in the Republic of the Marshall Islands, entered into a shipbuilding contract with Nantong Mingde Heavy Industry Stock Co. Ltd. (“Nantong”) for the construction of a large bulk carrier vessel (“Shipbuilding Contract”). Through an addendum entered into the same day, New Future International Trade Co. Ltd. (together with Nantong, the “Sellers”) became party to said contract as a co-seller. Both documents, however, were backdated to 6 December 2006. The purchase price for the vessel was USD 18.6 million plus USD 9.18 million, the total to be paid out in five installments. Crescendo paid three installments of USD 6.2 million between 2007 and 2010 with the help of financing from Alpha Bank.

Under the Shipbuilding Contract, disputes “arising out of or relating to” the contract were to be referred to arbitration in London. The Shipbuilding Contract also provided that the validity and interpretation of the contract was to be governed by English law.

On behalf of the Sellers, BOCOM, a Chinese bank, issued three refund guarantees in Crescendo’s favor (“Refund Guarantees”), through its branch in Qingdao. The Refund Guarantees provided that BOCOM would reimburse Crescendo for the installments if they became repayable to Crescendo under the terms of the Shipbuilding Contract and the Sellers failed to pay any refunds owed. Each of the guarantees also contained a choice-of-law provision (English law) and an arbitration provision (London Maritime Arbitration Association (“LMMA”) arbitration).

Following several delays in the construction of the vessel, Crescendo and the Sellers agreed to a number of extensions to the delivery date and to a reduction of the purchase price to USD 20 million. Albeit these modifications, the agreement between the parties broke.

Therefore, on 29 November 2011, the Sellers purported to terminate the Shipbuilding Contract and notified Crescendo that they had commenced arbitration proceedings in London against it (the “Shipbuilding Arbitration”). In response, on 1 December 2011, Crescendo cancelled the Shipbuilding Contract and demanded repayment of the installments.

Crescendo also demanded reimbursement from BOCOM under the Refund Guarantees. When BOCOM refused to pay, Crescendo commenced arbitration against it (the “Refund Arbitration”).

The Shipbuilding Arbitration and the Refund Arbitration were heard concurrently by the same panel of three arbitrators.

In the meantime, Crescendo assigned its rights under the Shipbuilding Contract and the Refund Guarantees to Alpha Bank by way of security. Alpha Bank sought to join the arbitration proceedings under the protest of BOCOM, and on 23 August 2014, the Tribunal decided that it had jurisdiction to join Alpha Bank to the proceedings.

On 29 August 2014, BOCOM filed an action in the Qingdao Maritime Court in China against Crescendo, Alpha Bank, and the Sellers, alleging maritime fraud based on the backdating of the Shipbuilding Contract. On 21 October 2014, the Chinese court issued a ruling freezing the principal sum and interest under the Refund Guarantees and refraining BOCOM from making any payment to Crescendo or Alpha Bank.

Subsequently, Crescendo and Alpha Bank obtained a preliminary anti-suit injunction against the Chinese court’s ruling through the English courts. The injunction ordered BOCOM not to pursue the proceedings in China because its claims were subject to the ongoing arbitration proceedings in London.

The Tribunal issued a total of four awards in Crescendo’s favor (and without the appearance of either BOCOM or the Sellers): one in the Shipbuilding Arbitration and three in the Refund Arbitration (one for each of the Refund Guarantees). In the Shipbuilding Arbitration award, the Tribunal ordered the Sellers to make immediate repayment of the USD 18.6 million paid under the Shipbuilding Contract, along with costs, accrued interest, and post-award interest. In the three Refund Arbitration awards, the Tribunal ordered that in the event the Sellers failed to make repayment, BOCOM was required to pay Crescendo USD 18.6 million under the Refund Guarantees plus costs and interest.

On 20 January 2015, Crescendo demanded payment from the Sellers and BOCOM to satisfy the awards. When the Sellers and BOCOM failed to pay, Crescendo brought, on 9 June 2015, a petition before the US District Court for the Southern District of New York to confirm the three Refund Arbitration awards and have judgment entered in its favor.

On 9 October 2015, BOCOM opposed Crescendo’s petition on three grounds. First, BOCOM argued that the District Court lacked jurisdiction over BOCOM’s person or property to enforce the award. Second, BOCOM contended that, even if the District Court had jurisdiction, it should decline to exercise that jurisdiction under the doctrine of forum non conveniens. Third, BOCOM argued that the awards were unenforceable, because the Tribunal exceeded its authority under Article V(1)(c) of the New York Convention.

In the meantime, on 25 November 2015, the High Court of England and Wales, Queen’s Bench Division, issued a “final anti-suit injunction”, enjoining BOCOM from proceeding with its claims against Crescendo in Qingdao.

US District Court’s Judgment

The District Court held that it had jurisdiction to hear the petition and that forum non conveniens dismissal was not warranted.

The District Court also found that the awards were enforceable under the New York Convention and rejected BOCOM’s argument that the Tribunal exceeded its power under the Refund Guarantee arbitration clauses, in violation of Article V(1)(c) of the New York Convention, by (1) allowing Alpha Bank to join in the arbitrations and (2) considering and rejecting BOCOM’s argument that the Refund Guarantees were unenforceable due to fraud or nondisclosure by Crescendo.

The District Court referred to Article V(1)(c) of the New York Convention, which provides that enforcement may be refused when “[t]he award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration”. The District Court noted that the Article V(1)(c) defense is “construed narrowly”.

The District Court stated that BOCOM failed to demonstrate that the Tribunal erred in allowing Alpha Bank to join the arbitrations. There was no evidence that Alpha Bank’s joinder violated any procedural rules. In any event, BOCOM has not established that Alpha Bank’s joinder in any way caused the awards to contain decisions on matters beyond the scope of the submission to arbitration. As a result, the District Court found that the joinder did not render the awards unenforceable under the New York Convention.

The District Court also rejected BOCOM’s assertion that the arbitrators lacked the authority to address BOCOM’s allegations of fraud against Crescendo. The District Court determined that pursuant to the choice of law provision of the Refund Guarantees, English law governed the scope of the agreement to arbitrate. Referring to the House of Lords decision in Fiona Trust & Holding Corp. v. Privalov, 95 [2007] UKHL 40, the District Court noted that under English law, courts presume that an arbitration clause applies to all disputes arising out of the contractual relationship between the parties “unless the language makes it clear that certain questions were intended to be excluded from the arbitrator’s jurisdiction”. In the case before it, the Refund Guarantees each contained a clause referring “any dispute under this Guarantee” to arbitration. The clause provided no exclusion for questions of fraud or misrepresentation. Thus, under English law, the Tribunal acted within its authority by considering and rejecting BOCOM’s argument that the Refund Guarantees were void and unenforceable by reason of fraud or misrepresentation.

Accordingly, the District Court found that BOCOM has failed to meet its burden of establishing that any of the defenses under the New York Convention precluded enforcement and granted Crescendo’s petition and confirmed the awards.


Amore detailed summary and an excerpt of this decision, indexed and searchable according to the list of topics published in will be published in the 2016 volume of the Yearbook Commercial Arbitration, published by the International Council of Commercial Arbitration (ICCA).

Source: Original judgment available at

< Back to overview