On November 23, 2015, the United States District Court for the Southern District of New York issued an order freezing up to $500,000,000 of assets belonging to A-Power Energy Generations Systems, Ltd., a Chinese wind turbine manufacturer. The order preserves GE Transportation’s ability to collect on a $360,000,000 Hong Kong arbitration award issued in August 2012 in favor of GE Transportation (“GET”), a unit of General Electric. The arbitration concerned an alleged default by an A-Power subsidiary on a contract to purchase wind turbine gearboxes from a GET subsidiary in China. GET obtained an order enforcing the award from the Hong Kong courts, as well as an order finding A-Power’s chairman in contempt for wasting A-Power’s assets.
A-Power never appeared before the New York court, though it appears GET went through numerous attempts at service. A-Power’s failure to appear is not surprising. In 2013, A-Power also failed to make any of the required filings to resist an SEC proceeding to revoke its Nasdaq listing. A-Power’s registration was revoked in 2013.
Whether GET will ultimately collect on the arbitration award is an open question. According to the Southern District’s order, GET has identified only about $10,000 in American bank accounts belonging to A-Power and related entities. Further, A-Power itself, a British Virgin Islands entity with its operations (such as they may be) in China, is unlikely to have significant assets in the US. GET may be able to enforce the arbitration award in the PRC, which has a special arrangement with Hong Kong concerning the enforcement of Hong Kong arbitration awards.
GET’s action in New York is a reminder that arbitration awards can typically be enforced worldwide, especially in states that have acceded to the New York Convention. It also highlights the difficulty faced by U.S. litigants in attempting to enforce arbitration awards against a foreign counterparty that has little or no assets in the United States.
We previously wrote about A-Power and the issues facing US-listed Chinese companies in an article available here.
For some of the unique issues facing Chinese companies engaged in US litigation, please see our article in Law360, available here.