Recently, lawyers Zhou Shichao and Hu Jiaming of Landing (Shenzhen) Law Offices successfully resolved a cross-border arbitration matter arising from a steel trade dispute between an Austrian company and a Shandong enterprise. The case highlighted the team’s expertise in the flexible application of international commercial arbitration rules, domestic litigation procedures, and effective negotiation strategies in handling complex cross-border disputes.

In March 2023, an Austrian company purchased steel from a Shandong company under a bilingual sales contract. The Chinese version stipulated that disputes be submitted to the China International Economic and Trade Arbitration Commission (CIETAC), while the English version stipulated arbitration at the Hong Kong International Arbitration Centre (HKIAC). The contract lacked a governing language clause.

After delivery, the Austrian company alleged quality defects and, relying on the arbitration clause in the English version, initiated arbitration at HKIAC, seeking over €130,000 in damages plus the full cost of the arbitration costs.

Upon receiving the arbitration notice, the Shandong company engaged the legal team of Landing (Shenzhen). After careful review, Zhou Shichao and Hu Jiaming identified two critical issues:

1、Validity of the arbitration clause was questionable due to conflicting language versions. A Chinese court would likely refuse to recognize the clause, rendering any HKIAC award difficult to enforce in China.

2、The Austrian company's evidence was deficient because it had failed to have the goods inspected by a jointly recognized professional institution which severely undermined its claims.

Based on these findings, the lawyers submitted an informal defense to HKIAC, expressly challenging the validity of the arbitration. Simultaneously, they filed a lawsuit before the Intermediate People’s Court in Shandong, seeking confirmation that the arbitration agreement was invalid—a strategic move designed to exert procedural pressure and create leverage for settlement negotiations.

To further accelerate resolution and minimize their client’s costs, Zhou and Hu actively led settlement negotiations in parallel with the litigation. In multiple rounds of discussions, they consistently emphasized the flaws in the arbitration clause and the high likelihood of it being declared invalid by a Chinese court, clearly outlining the significant procedural risks and adverse consequences for the opponent. They also stressed the evidentiary weakness of the Austrian company’s case, noting the absence of a mutually recognized inspection report.

Under dual procedural and substantive pressure, the Austrian company recognized that settlement was the optimal solution. Ultimately, after patient and strategic negotiations, the parties reached a settlement: the Shandong company agreed to make a payment of approximately US$70,000—a significant reduction from the initial €130,000 claim. The Austrian company withdrew its HKIAC arbitration and bore the arbitration costs; and the Shandong company withdrew its lawsuit in the Chinese court. The dispute was thus resolved efficiently and with finality.

This case demonstrates the Landing (Shenzhen) team’s profound understanding of international arbitration rules, extensive experience in cross-border dispute resolution, and ability to integrate legal strategy with business negotiation to safeguard clients’ interests.

Lawyer Profiles

Zhou Shichao
Senior Partner, Landing (Shenzhen) Law Offices
Practice Areas: International Investment & Trade, International Commercial Dispute Resolution, Industrial Parks & High-Tech Enterprises
Contact: shichao.zhou@landinglawyer.com | +86 133 4293 61852

Hu Jiaming
Lawyer, Landing (Shenzhen) Law Offices
Practice Areas: International Trade, Foreign-related Civil & Commercial Litigation and Arbitration, Corporate & Equity Matters