Hong Kong-based and Mainland China owned firm Sino Dragon lost its appeal in an Australian Federal Court against a May 2016 arbitration ruling, which forces Sino to fork over USD 2m to Singapore-based commodities group Noble Resources. Should Sino fail to pay, the Hong Kong authorities will wind up the company.

In January 2014, Sino Dragon had agreed to buy 170,000 metric tons of iron ore from Noble. Sino missed two deadlines to obtain a letter of credit, however, and Noble demanded USD 2m in damages and costs.

In the sales contract, Australia had been chosen as the venue for arbitration. Buried in the fine print, the parties agreed that English should be the language of the arbitration.

During the late-2015 arbitration hearing held in Sydney, Sino Dragon fielded two witnesses: Mr. Wang and Mr. Li. Sino Dragon requested the two witnesses to dial into the hearing from China via video link and using an interpreter.

Perhaps anticipating the outcome, Noble’s lawyer pointed out that not appearing in person would put Sino Dragon at a “forensic disadvantage.” But Sino Dragon prevailed.

“There is no such thing as a ‘perfect’ interpretation”—Judge Beach, Federal Court of Australia

The arbitral tribunal cautioned that “if any interpreter was required, Sino Dragon would need to arrange for the attendance of a qualified interpreter.”

On the day of the hearing, things went sideways. The video link did not work and Sino Dragon resorted to a video connection via WeChat on an iPad. But, apparently, WeChat’s sound settings were not working, so a telephone connection was set up and Messrs Wang and Li spoke over the phone with the WeChat video turned on.

The interpretation was also beset by problems as the interpreter provided by Sino Dragon had to give up because “she could not understand the questions being asked and therefore could not adequately interpret;” presumably because of a lack of understanding of legal terms. Sino Dragon then resorted to having their solicitor’s paralegal interpret.

However, instead of objecting to the procedure at the time of the hearing, Sino Dragon’s own counsel concluded in the closing address that “Mr. Li Dan and Mr. Wang gave their evidence clearly.”

But in a stunning u-turn, when the tribunal awarded Noble USD 2m in damages, Sino’s counsel changed his mind!

Looking to buy time and prevent the authorities in Hong Kong from winding up the company, Sino tried a last hail mary: blame translation.

In the appeal to Australia’s federal court Sino, said the interpreter was only Level 2, which according to NAATI classification would make her a “Paraprofessional Interpreter.”

Sino concluded they “were mistranslated and misunderstood and did not have a proper opportunity to present their case.” To prove the point, Sino engaged a “nationally accredited” translator to check the interpretation of the testimonies of Li and Wang against the original transcript.

“Where there is a need for evidence in multiple languages, care must be taken to ensure that the quality of evidence is not jeopardized by the mode in which it is given”—Clifford Chance

The appeals judge would have none of it. He pointed out that the translation check revealed only minor changes and stated that, in any case, “there is no such thing as a ‘perfect’ interpretation and that an interpreter is using expertise and an evaluative judgment in order to give a close correspondence of meaning.”

Ultimately, the judge found that Sino Dragon was “largely…the author of its own misfortune” and dismissed the appeal.

The lesson? For global law firm Clifford Chance, “the case also serves as a reminder that, where there is a need for evidence in multiple languages, care must be taken to ensure that the quality of evidence is not jeopardized by the mode in which it is given.”