Tyre manufacturer, Zhaoyuan Leo Rubber is facing a US$2 million suit by a Singapore company for failing to ship an estimated 2,000 tonnes of rubber. Other cases are likely to be filed.
The Shandong-based company has defaulted contracts to buy 2,016 tonnes of rubber from Regional Rubber Trading.
The lawsuit involves defaults in 2008, when buyers in top rubber consumer China stunned the market by refusing to pay for cargoes after the financial crisis hit global auto sales and tyre prices.
“The ARBC is in the midst of processing more cases reported by members, which will be published on its website. This will be a strong deterrent to errant behaviour in an otherwise honourable rubber industry,” said an ASEAN Rubber Business Council (ARBC) official.
Two default cases were filed in 2009 and 2010 and are still awaiting decision by an intermediate court in China, according to the plaintiff, Regional Rubber Trading and the ARBC, whose six member countries produce more than 80% of the world’s total rubber output.
“In fact, the plaintiff has already been granted an arbitration award by SICOM to get compensation from the defendant, who however refused to pay,” said the ARBC official, referring to the Singapore Commodity Exchange. (RJA)