Applying trade usage to resolve diamond deal disputes

The claimant, company A, is a foreign-invested company registered in China, engaging in transactions of diamonds on the Shanghai Diamond Exchange (SDE). The respondent, company B, is a Chinese company that trades in jewellery, diamonds and accessories. Between June 2013 and July 2013, company A and company B entered into five contracts for the transaction of diamonds, under which company A was the seller and company B was the buyer. During the performance of the contracts, disputes arise over the payment obligation. As the seller, company A submitted its request for arbitration to the Shanghai International Arbitration Centre (SHIAC), the venue agreed in the contracts.

In its request for arbitration, the claimant contends that after the contracts were concluded, it delivered the agreed diamonds worth a total amount of RMB953,674.97 (US$147,450) to the respondent, who then only partially paid to the claimant an amount of RMB200,000 for the diamonds. The amount of RMB753,674.97 remains outstanding and should be duly paid by the respondent.

The respondent, on the other hand, objects that the receipt for the diamonds submitted by the claimant did not bear the company stamp of the respondent, and, for the lack of sufficient evidence, the claimant had failed to prove the agreed diamonds had all been delivered to the respondent. As such, the respondent refused to pay the requested amount.