Sinocore International Co Ltd v RBRG Trading (UK) Ltd

Recognition and enforcement of a New York Convention award will generally be refused only where the award gives effect to an unlawful or fraudulent claim or transaction. A lawful contractual claim is not rendered unenforceable merely because the successful party separately engaged in fraud or presented forged documents. Where an arbitral tribunal, with knowledge of the facts, determines under the applicable foreign law that the operative breach and loss arose before the fraudulent presentation, the enforcement court should not re-examine that contractual analysis. The public policy interest in the finality of international arbitration awards may prevail over a broad objection that the transaction was tainted by fraud.

Sinocore obtained an order under section 101(2) of the Arbitration Act 1996 permitting enforcement of a CIETAC award made in China. The award required RBRG to pay damages for breach of its obligation to provide a conforming letter of credit. RBRG applied under section 103(3), contending that enforcement would offend English public policy because Sinocore had presented forged bills of lading and was pursuing separate proceedings against the issuing bank.

The central issues were whether the award was based on the fraudulent presentation, whether the wider fraud tainted the lawful contractual claim, and whether the alleged non-disclosure or risk of double recovery affected enforcement.

1. Application dismissed. Enforcement of the award was not contrary to public policy.
2. The award was for damages for RBRG’s prior breach in procuring an unauthorised amendment to the letter of credit. The tribunal had found that breach to be the operative cause of the termination and loss. The enforcement court could not re-examine that determination under Chinese law merely because an English court might have analysed causation differently. The tribunal had jurisdiction over the contractual breach and loss, had considered the forgery issue, and had reached its conclusion with knowledge of the full facts. The public interest in finality therefore prevailed.
3. The fraud exception applicable to a bank’s duty to pay against apparently conforming documents did not establish a general rule that a seller presenting forged documents could obtain no relief concerning the wider transaction. The authorities did not support treating a lawful contract or lawful damages claim as unenforceable merely because it was allegedly tainted by fraud. Such a rule would create uncertainty and undermine party autonomy.
4. The court accepted that English public policy would prevent enforcement of an award upholding a fraudulent claim for payment based on forged documents. That was materially different from the present award, which upheld a prior contractual claim. The separate proceedings against Rabobank and the possibility of double recovery did not affect enforceability, particularly as Sinocore’s undertaking removed the risk of double recovery.
5. Sinocore had not breached its duty of full and frank disclosure. The award itself disclosed and addressed the forged documents, and the continuing Rabobank appeal was not relied on as an independent public policy ground. The revised undertaking was accepted and ordered to be recorded.