Claimant: P&O NEDLLOYD LIMITED
Address: Beagle House Braham Street, London E1 8EP
Legal Representative: R.B.Woods, G.R.Cheleseman, the directors of P&O NEDLLOYD LIMITED
Authorized Attorneys: Lin Yihua, Liu Lei, the attorneys-at-law of Zhongchen Law Firm of Guangzhou
Claimant: P&O NEDLLOYD (HK) LIMITED
Address: No.25, Hong Kong Telecommunication Building, Taigu Fang, British King Avenue No. 979, Hong Kong
Legal Representative: LO.Wing Yat Alfred, the executive director of P&O NEDLLOYD (HK) LIMITED
Authorized Attorneys: Lin Yihua, Liu Lei, the attorneys-at-law of Zhongchen Law Firm of Guangzhou
The party against whom the application is made: WAH HING SEAFREIGHT (CHINA) CO., LILMITED
Address: Room 905,9th Floor, Yi Zhou International Building, No. 118 of West, Gannuo Avenue, Hong Kong
Legal Representative: Wu Wenhua, president
Authorized Attorneys: Zhong Huihua, Chen Rongfeng, the attorneys-at-law of Foreign Economy Law Firm of Guangzhou
　　 This Court, after filing the case that the claimants P&O NEDLLOYD LIMITED and P&O NEDLLOYD (HK) LIMITED and the party against whom the application is made WAH HING SEAFREIGHT (CHINA) CO., LILMITED apply for validating the arbitration clause on THE B/L invalid on February 15, 2000, has duly organized a collegial panel and held a trial. The case has now come to a close.
　　 The claim of the claimants P&O NEDLLOYD LIMITED and P&O NEDLLOYD (HK) LIMITED and the reasons are: In May of 1998, the claimants consigned ten containers of cargo from Hong Kong to Yufu Liudu of Guangzhou by "Guang Bin Ji74". The party against whom the application is made issued the B/L filed as 74/9805LD02 on May 16, 1998. It was prescribed in Clause 2 on the back of THE B/L: "All disputes arising under or in connection with this B/L shall be determined by Chinese Law in the courts of, or by arbitration in, the People's Republic of China." The claimants demurs the validity of this clause as an arbitration clause and claims this clause shall be invalid as an arbitration clause. The reasons as follows: 1.In accordance with the prescription in Article 16 of Arbitration Law of the People's Republic of China, an arbitration agreement shall contain the following: ①The expression of application for arbitration; ②Matters for arbitration; ③The arbitration commission chosen. The word "shall" in this prescription indicates the above items are the constitutive requirements for a valid arbitration agreement. The validity of an arbitration agreement would be affected without any one of three. In other words, the arbitration agreement would be invalid without any one of three. 2. The expression of application for arbitration is not declared clearly in Article 2 on the back of the B/L. Both jurisdiction and arbitration are stipulated in that clause, which two exclude each other on the right of jurisdiction. Therefore, the jurisdiction for the dispute is uncertain in the clause, and the expression of application for arbitration is unclear. 3.It is only stipulated "arbitrated in China" in the clause, without appointing a certain arbitration commission. It means no "arbitration commission chosen" is agreed upon in the clause. 4.In accordance with the prescription in Article 20 of Arbitration Law of the People's Republic of China, whereas parties concerned have doubt on the validity of an agreement for arbitration, a request can be made to the arbitration commission for a decision or to the people's court for a ruling. Now the claimants have doubt on the validity of Article 2 on the back of THE B/L filed as 74/9805LD02 as an arbitration clause on the grounds of the above reasons, and apply the court for determining the invalidity of the above clause as an arbitration clause.
　　 The opinion of the party against whom the application is made WAH HING SEAFREIGHT (CHINA) CO., LILMITED to the claimants' petition: In May of 1998, the claimants consigned ten containers of cargo from Hong Kong to Yufu Liudu of Guangzhou by "Guang Bin Ji74". The party against whom the application is made issued THE B/L filed as 74/9805LD02 on May 16, 1998. It was prescribed in Clause 2 on the back of THE B/L: "JUR1SDICTI0N: all disputes arising under or in connection with this B/L shall be determined by Chinese Law in the courts of, or by arbitration in, the People's Republic of China.
　　 " This clause on jurisdiction is valid. The reasons as follows: 1.Two meanings are indicated in the clause: ①The application of law is determined, namely, all disputes arising under or in connection with this B/L shall be apply for Chinese Law; ②The jurisdiction is determined, namely, all disputes arising under or in connection with this B/L shall be ruled by the jurisdiction organizations in China. Thus, the clause is valid. 2.Since it i　s agreed upon that the dispute shall be judged or arbitrated in China, in accordance with Chinese Law, the dispute shall not be ruled by the arbitration organization but by the court according to the above clause whereas two parties do not agree upon on this point clearly. Therefore, the dispute arising under or in connection with this B/L shall not be ruled by the arbitration organization but by the court. 3.This clause is not just an arbitration clause, but a clause about both the application of law and the jurisdiction. The validity of the whole clause shall not be affected even if the part on arbitration is invalid. In other words, the part "the dispute arising under or in connection with this B/L shall be judged by the court in China in accordance with Chinese Law. On the grounds of the above reasons, the party against whom the application is made asks the court to determine the part about the application of law and the jurisdiction in Article 2 on THIS B/L is valid.
　　 This Court finds, after investigation, that: In May of 1998, the claimant P&O NEDLLOYD LIMITED consigned ten containers of cargo from Hong Kong to Yufu Liudu of Guangzhou by "Guang Bin Ji74". The party against whom the application is made issued THE B/L filed as 74/9805LD02 on May 16, 1998. JUR1SDICTI0N: all disputes arising under or in connection with this B/L shall be determined by Chinese Law in the courts of, or by arbitration in, the People's Republic of China. The parties concerned did not reach a supplemental agreement about arbitration afterwards and have no doubt on the above facts. As far as the application of law to the validity of the relevant arbitration agreement in this case, the parties concerned agree upon that it shall be Chinese Law.
　　 The presiding judge Wu Zili and the judge Deng Zifeng hold that: As this case involves foreign elements, the determination to the validity of the arbitration agreement is a procedural question. In accordance with the prescription in Clause 1 of Article 5 of Convention on the Recognition and Enforcement of Foreign Arbitral Awards accessed to on December 2, 1986, the principle of the application of law to determine the validity of the arbitration agreement shall be the one parties concerned agree upon; whereas parties concerned do not, it shall be the law of the place of arbitration In this case, the application of law shall be Chinese Law, for it is the one parties concerned agree upon. 　　　Clause 2 on the back of the B/L filed as 74/9805LD02 is a clause about jurisdiction which aim to determine the approach to settle the dispute arising under or in connection with this B/L. According to the principle prescribed in Article 2 of Convention on the Recognition and Enforcement of Foreign Arbitral Awards above, the court in state party shall command parties concerned to submit for arbitration according to the request of one of parties while hearing whereas an arbitration agreement is reached on the litigant matters. It shows that litigation shall be excluded whereas arbitration is agreed upon in an arbitration agreement. Litigation and arbitration could not be carried through at one time. Otherwise, the fundamental principle of arbitration system would be violated. The arbitration agreement shall be invalid, for parties concerned agreed upon both arbitration and litigation in the relevant clause on jurisdiction. As far as the validity to the clause on the application of law and jurisdiction on this B/L requested by the party against whom the application is made is not within the scope of this case because the claimants did not request this court to do so, and shall be heard in a separate case. The cost of this case is RMB50, and shall be borne by the claimants.
　　 The deputy judge Huang Qiusheng holds that: Clause 2 on the back of the B/L is a selective clause on jurisdiction, in which parties concerned choose both jurisdiction and arbitration. Therefore, this clause includes two agreements above in fact. The validity to the agreement on jurisdiction is not within the scope of this case because the claimants did not request this court to do so. According to general principle, the choice would be invalid whereas the parties concerned choose both jurisdiction and arbitration, for these two excluded each other. In this case, the invalidity of whole choice is based on the validity of two choices respectively. In other words, invalid choice of jurisdiction could not exclude the valid choice of arbitration. On the other hand, invalid choice of arbitration could not exclude the valid choice of jurisdiction. In this case, it could not be determined whether jurisdiction and arbitration exclude each other effectively, for the choice of jurisdiction is not within the scope of this case. As a result, the validity to the relevant clause could not be determined. It is prescribed in Article 18 of Arbitration Law of the People's Republic of China "whereas an agreement for arbitration fails to specify or specify clearly matters concerning arbitration or the choice of arbitration commission, parties concerned may conclude a supplementary agreement. If a supplementary agreement cannot be reached, the agreement for arbitration is invalid." It does not agree upon the arbitration commission in Article 2 on the back of the B/L in this case. And there is a supplemental agreement being reached afterwards. Thus, the choice of arbitral procedure is invalid. It is not comprehensive for the claimants to claim, "This clause shall be invalid as an arbitration clause". The validity to the whole clause could not be determined before complete investigation, for it is a clause on jurisdiction in fact. However, it has been determined after investigation that the arbitration agreement is valid in this clause. Hence, it shall be the arbitration agreement in this clause not the clause that is invalid. The cost of this case is RMB50, and shall be borne by the claimants.
　　In conclusion, this collegial panel holds that the arbitration agreement in the clause on jurisdiction in Article 2 on the back of this B/L filed as 74/9805LD02 is invalid. The validity to the clause on the application of law and jurisdiction on this B/L requested by the party against whom the application is made is not within the scope of this case because the claimants did not request this court to do so, and shall be heard in a separate case. This Court hereby decided as follow pursuant to Article 18 and Article 20 of Arbitration Law of the People's Republic of China, and Item 11 of Clause 1 of Article 140 of Civil Procedure Law of the People's Republic of China:
　　 The arbitration agreement in Article 2 on jurisdiction on the back of the B/L filed as 74/9805LD02 shall be invalid.
　　 The cost of this case is RMB50, and shall be borne by the claimants. 　　If the claimants refuse to accept this judgement, it may submit its appeal petition to this Court within 30 days after service of this judgement, together with 8 copies, and the appeal shall be filed with the Higher People's Court of Guangzhou.


　　 Presiding Judge: Wu Zili
　　 Judge: Deng Zifeng
　　 Deputy Judge: Huang Qiusheng
　　 Date: June 5, 2000

　　 This copy is same with the original completely.
　　 Court Clerk: Zhu Mingfang