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HART ENTERPRISES INTL. v. ANHUI PROVINCIAL IMPORT

May 30, 1995

HART ENTERPRISES INTERNATIONAL, INC., Plaintiff, against ANHUI PROVINCIAL IMPORT & EXPORT CORP., Defendant.


The opinion of the court was delivered by: LEWIS A. KAPLAN

 LEWIS A. KAPLAN, District Judge.

 This is an action by a New York textile purchaser against a Chinese supplier for damages for alleged quality deficiencies in the goods and for breach and rescission of a settlement agreement between the parties. The defendant moves to stay the action pending arbitration in the People's Republic of China pursuant to arbitration clauses contained in the confirmations of the sales by defendant to plaintiff. The motion is granted.

 Facts

 From August 1991 to April 30, 1992, defendant Anhui Provincial Import & Export Corp. ("Anhui") entered into eighteen contracts to sell ramie/cotton dyed and polyester/viscose dyed yarn. Twelve of the eighteen contracts, all of which were headed "Sales Confirmation," were with Hart Enterprises International, Inc. ("Hart") and signed by Hart's Mr. Haroutiounian. Six nominally were with other entities and signed by a Mr. Lu (the "Lu Contracts"). All eighteen contained an arbitration clause which stated:

 
"Arbitration: All disputes arising from the execution of, or in connection with the S/C, shall be settled amicably through friendly negotiation. In case no settlement can be reached through negotiation, the case shall then be submitted to The Foreign Trade Arbitration Commission of the China Council For the Promotion of International Trade, Peking, for arbitration in accordance with its provisional rules of procedure. The arbitral award is final and binding upon both parties. The fees for arbitration shall be borne by the losing party unless otherwise awarded."

 (See Hong Aff. P 6 & Ex. A)

 Disputes arose between Anhui and Hart. On September 2, 1993, they entered into a settlement agreement concerning all eighteen contracts that called for Hart to make a series of scheduled payments, which represented a reduction of the amount claimed by Anhui. The agreement further provided that:

 
"It is clearly understood by both parties that the new prices for the above mentioned invoices are special deduction [sic] subject to party B's [Hart's] settlement on above mentioned schedule, and if party B [Hart] fails in fully performing the agreement or in case of partially performed [sic], party A [Anhui] is entilted [sic] to claims by law all its losses such as interst [sic], price difference in selling the goods according to the original contracts."

 (See Hong Aff. Ex. E P 4)

 Hart failed to make the payments required under the settlement agreement. On May 5, 1994, Anhui applied to the China International Economic and Trade Arbitration Commission in Beijing for commencement of arbitration against Hart for breach of contract. The Commission confirmed the application on July 20, 1994 and sent notice of the arbitration to Hart, requesting Hart to appoint an arbitrator and forward its statement of the case. Hart did not respond, so the Commission appointed an arbitrator on Hart's behalf and confirmed that the tribunal had been constituted.

 In November 1994, Hart commenced this action against Anhui in the State court, and the case was removed. Also in November 1994, the Commission scheduled an arbitration hearing for February 20, 1995 in Beijing and Hart was so notified. Hart did not respond or otherwise appear. The hearing was adjourned and a new date has not yet been set.

 Discussion

 Hart resists arbitration on a number of grounds, all of ...


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