Minmetals Germany GmbH v. Ferco Steel Ltd.

Ferco Steel Ltd. (Ferco) (defendant), an English company, and Minmetals Germany GmbH (Minmetals) (plaintiff), a German company, entered into an agreement under which Ferco agreed to sell steel channels to Minmetals in China. The agreement contained an arbitration clause. Minmetals then sold the steel channels to a third party (the subbuyer). A dispute arose, and Minmetals initiated arbitration before the China International Economic and Trade Arbitration Commission (CIETAC). The same tribunal had also arbitrated a dispute between Minmetals and the subbuyer, and it relied upon the award in favor of the subbuyer (the subsale award) in making an award in favor of Minmetals against Ferco. Ferco filed an action in Chinese court for revocation of the award against it, asserting that Ferco did not have the opportunity to respond or challenge the findings in the subsale award. Instead of revoking the award, the Chinese court sent the matter back to the arbitral tribunal so that the arbitration could be resumed and that Ferco could make submissions based on the tribunal’s reliance on the subsale award. However, during the resumed arbitration, Ferco elected not to submit anything regarding the tribunal’s consideration of the subsale award, taking the position that the whole matter should have been rearbitrated. However, Ferco did not file a formal objection. The arbitral tribunal issued a second award consistent with the first award. Ferco again asked the Chinese court to revoke the award, but the Chinese court declined. Minmetals then sought enforcement of the award in the United Kingdom. Resisting enforcement, Ferco applied for intervention in English court, complaining that the award should not be enforced because Ferco was unable to fully present its case in the arbitration and because the award was issued by means of a procedural irregularity under the CIETAC rules.