Zhongtie Dacheng (Zhuhai) Investment Management Co Ltd v. Yan

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 27, 2025
• Docket: 24-736
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 27 2025 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

ZHONGTIE DACHENG (ZHUHAI) INV. No. 24-736 MGMT. CO. LTD. D.C. No. 8:22-cv-00461-KK-ADS Petitioner - Appellee MEMORANDUM* v.

JINGGANG YAN; LIANG XIUHONG,

Respondents - Appellants

Appeal from the United States District Court for the Central District of California Kenly K. Kato, District Judge, Presiding

Argued and Submitted February 11, 2025 Pasadena, California

Before: GRABER, HAMILTON**, and BUMATAY, Circuit Judges.

A tribunal of the Beijing Arbitration Commission (“Commission”) found that

Respondents Yan Jinggang and Liang Xiuhong guaranteed a loan made by Petitioner

Zhongtie Dacheng (Zhuhai) Investment Management Co., Ltd., (“Zhongtie”) to a

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable David F. Hamilton, United States Circuit Judge for the Court of Appeals, 7th Circuit, sitting by designation. 1 third party. The Commission concluded that the third party had violated the terms

of the loan repayment plan and, accordingly, made an award to Zhongtie for which

it found Respondents jointly and severally liable. Respondents did not attend either

of the two hearing days of the arbitration proceeding.

Zhongtie then petitioned the district court, under the New York Convention

on the Recognition and Enforcement of Foreign Arbitral Awards (“New York

Convention”), to enforce this foreign arbitral award against Respondents, who had

left China for the United States. The district court granted the petition. We vacate

and remand to the district court.

1. Respondents contend that the district court erred by rejecting their defense

that the Commission failed to provide them “proper notice” of the arbitration

proceedings. See New York Convention, June 10, 1958, 21 U.S.T. 2517, Art. V.

The district court noted that, although the Commission mailed notices to

Respondents’ last-known address in China, those notices were returned and marked

“undelivered.” Zhongtie also claims on appeal that Appellant Yan was the “actual

controller” of corporate entities that received actual notice of the proceedings,

including one that participated in the arbitration.

But are these facts? We simply can’t tell. A district court must make “a

determination of the limited statutory conditions for confirmation or grounds for

refusal to confirm” an arbitral award. Castro v. Tri Marine Fish Co. LLC, 921 F.3d

2 766, 773 (9th Cir. 2019) (citation and internal quotation marks omitted). The district

court stated in a section titled “Relevant Facts” that “Respondent Yan is the sole

director and shareholder” of the other corporate entities that participated in the

arbitration. But that is not obviously a finding of fact, because the district court

supported this proposition only with a citation to the allegations set out in Zhongtie’s

First Amended Petition to confirm the arbitral award. Further, the “Relevant Facts”

section relies almost exclusively on Zhongtie’s allegations. So the district court

failed to show its work, and it is unclear to what extent it considered any evidence

outside the petition. We thus vacate this portion of the judgment and remand for the

district court to determine whether Appellant Yan controlled the other corporate

entities and to conduct any further proceedings it deems necessary to conclude

whether the Commission provided “proper notice” to Respondents.

2. The district court erred in holding that Respondents waived their argument

that the underlying guaranty agreement was forged by failing to raise it in arbitration

proceedings before the Commission. Even if Respondents received proper notice,

forgery is a valid objection to the confirmation of a foreign arbitral award under the

New York Convention. See Al-Qarqani v. Chevron Corp., 8 F.4th 1018, 1023–24

(9th Cir. 2021) (“Arbitration is strictly a matter of consent and requires an agreement

to arbitrate.” (citations and internal quotation marks omitted)). And a party does not

waive that argument by failing to raise it in the very arbitral proceeding to which it

3 claims it never consented. See id. at 1022, 1026. A contrary holding “would be

inconsistent with the ‘first principle’ of arbitration that ‘a party cannot be required

to submit to arbitration any dispute which he has not agreed so to submit.’” Three

Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1142 (9th Cir. 1991)

(quoting AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648

(1986)). So we vacate the district court’s waiver holding and remand to consider

Respondents’ forgery claim in the first instance.

VACATED AND REMANDED.1

1 The district court may, if it wishes, consider the claim of forgery first. If it finds that the parties did not enter into a contract, it need not consider “proper notice.” 4