Contents
Case I Identifying and clarifying Singaporean law, confirming the real shareholder status under equity trusteeship.——Wu Peiliang vs. Sheng Haomin, Shen Yanqin the Property Damage Compensation Dispute
Case II Applying Hong Kong Precedents to clarify the boundary of “Piercing the corporate veil”.——Wuxi Yaswei Metro Media Co., Ltd. vs. Qianqu Import & Export Co., Ltd., Shanghai Qianqu Network Technology Co., Ltd. Advertising Contract Dispute
Case III The Judge ascertains the Australian law ex officio and determines the qualification for shareholder representative litigation——Mei Shanhai vs. Lin Xiaoning, Tao Xisong, Tao Xi Feng, and Sun Suping the Dispute over Liability for Damages to Company Interests
Case IV Verifying the Indonesian Civil Code online, Vindicating the interest of the default party——Jiangsu Minonop Nano Material Co., Ltd. vs. PT. DRE Resource International the International Sale of Goods Contract Dispute
Case V Accurately ascertain the German Civil Procedure Law and confirm the validity of the arbitration clause——Yixing New Will Reach Rare Earth Co., Ltd. vs. OSRAM GMBH the International Sale of Goods Contract Dispute
Case VI Proactively ascertain the Macau Commercial Code to confirm the effectiveness of shareholders' corporate governance actions——You Aimei vs. Jiangsu Huanhai Heavy Industry Co., Ltd. and the third party Macau Qiujing Trading Co., Ltd. Request to Change Company Registration Dispute
Case VII Identifying complex legal relationships and applying Korean Commercial Law to resolve preliminary issues——TiTi Corporation vs. Tiantian Company, Cho Woo-hyun, the Shareholder Right to Information Dispute
Case VIII Accurately ascertain Iranian civil law in multi-dimension and define the scope of damage compensation——Behshahr Industrial Company vs. Jiangyin Komar Metal Products Co., Ltd. The Confirmation of International Bankruptcy Claims Dispute
Case IX Accurately apply the New York Convention, and reject to recognize or enforce 'excessive' arbitration awards——Bright Morning Limited vs. Yixing Leqi Textile Group Co., Ltd. Applying for Recognition and Enforcement of Foreign Arbitral Award Dispute
Case X Priority Application of the CISG, Clarifying the Absence of Payment Obligation before Inspection of Goods——International Sale of Goods Contract between Samsung STS Corporation and Wuxi Dingchen Metal Products Co., Ltd
Case I
Identifying and clarifying Singaporean law, confirming the real shareholder status under equity trusteeship.
——Wu Peiliang vs. Sheng Haomin, Shen Yanqin the Property Damage Compensation Dispute
01 Basic Facts
On 28 December 2009, the Singapore private limited company Linlan Company, adjusted its shareholding structure. The minutes of the meeting stated that “after the adjustment, Sheng Haomin owns 35% of the shares of Linlan Company, and Wu Peiliang owns 10% of the shares”. On 14 August 2010, the resolution of the general meeting of shareholders of Linlan Company confirmed that Sheng Haomin and Wu Peiliang had paid the actual amount and financial expenses which accounted for 45% of the capital of Linlan Company, of which Sheng Haomin held 35% and Wu Peiliang held 10%. All shareholders signed to confirm on the minutes of the meeting and the resolution of the shareholders' meeting. The 45% of the shares were all registered under the name of Sheng Haomin. On 1 December 2011, Sheng Haomin transferred these 45% of the shares to an external party, and the board resolution of Linlan Company stated that all the shareholders unanimously agreed to assume joint and several liability for payment. After receiving the proceeds of the share transfer, Sheng Haomin did not pay Wu Peiliang the corresponding portion of the transfer proceeds for its 10% shareholding. Wu Peiliang brought against Sheng and Shen after several unsuccessful demands.
02 Court Ruling
The Intermediate People's Court of Wuxi City of Jiangsu Province (hereinafter referred to as “The Court”) held that, according to Article 14 of the Law of the People's Republic of China on the Application of the Law on Foreign-Related Civil Relations, the dispute between the parties was whether Wu Peiliang was entitled to 10% of the shares of Linlan Company, which fell within the scope of matters concerning shareholders' rights and obligations. Therefore, the law of Singapore, where Linlan Company is registered, should be applied. The court sought an expert opinion on the clarification of Singaporean company law, and relevant content of Singapore company law was provided by East China University of Political Science and Law, which was accepted by both parties. The Court held that, according to the provisions of the Singapore Companies Act, it allowed the nominee to hold company shares. Although the Singapore Companies Act stipulates that a shareholding nominee agreement should be attached to the company's articles of association in the form of a note, this clause is only an advocacy norm, not a mandatory one, and certainly not a requirement for the effectiveness of the shareholding nominee agreement. Thus, it cannot be concluded that the shareholding nominee agreement does not exist or has not come into effect simply because this formal requirement is not met. Therefore, the court recognized that Wu Peiliang was entitled to 10% of the shares of Linlan Company and ordered Sheng Haomin and Shen Yanqin to undertake the corresponding payment obligation for the transfer of the shares. Sheng Haomin and Shen Yanqin appealed against the decision, but The High People's Court of Jiangsu Province rejected the appeal and upheld the original verdict.
03 Typical Significance
Singapore is a common law country with legal sources including statutes, case law, and equity law, making the ascertainment of the law relatively challenging. In this case, by consulting experts from East China University of Political Science and Law, the statutory provisions of the Singapore Companies Act were ascertained. At the same time, as to the validity of the form requirements for the nominee holding agreement set out in the said statutory provision, the original intention of the legislature was explored by going back to the text of the statutory provision itself. This led to the determination that the clause is an advocacy norm rather than a mandatory one, laying the legal foundation for the recognition of the nominee -holding relationship. The fact findings in this case were sound, and the legal determination was accurate. By clarifying the legislative intent through the meaning of the text, the 'exploration' and 'clarification' of foreign law in the trial process was achieved.
Case II
Applying Hong Kong Precedents to clarify the boundary of “Piercing the corporate veil”.
——Wuxi Yaswei Metro Media Co., Ltd. vs. Qianqu Import & Export Co., Ltd., Shanghai Qianqu Network Technology Co., Ltd. Advertising Contract Dispute
01 Basic Facts
The plaintiff, Wuxi Yaswei Metro Media Co., Ltd. (hereinafter referred to as Yaswei Company), negotiated advertising business with the defendant, Shanghai Qianqu Network Technology Co., Ltd. (hereinafter referred to as Shanghai Qianqu Company). Subsequently, Shanghai Qianqu Company proposed that Qianqu Import & Export Co., Ltd. (hereinafter referred to as Hong Kong Qianqu Company) sign the relevant advertising contracts and agreements with Yaswei Company, and provided an explanation that Hong Kong Qianqu Company was affiliated with Shanghai Qianqu Company. After the contract was signed, Yaswei Company fulfilled its contractual obligations, but Hong Kong Qianqu Company failed to make the payment as agreed. Yaswei Company then sued in court, demanding that Shanghai Qianqu Company and Hong Kong Qianqu Company bear joint and several repayment responsibilities. The reason is that there is a confusion of personnel, business, and finance between Hong Kong Qianqu Company and Shanghai Qianqu Company, and that Shanghai Qianqu Company is the sole shareholder of Hong Kong Qianqu Company. During the trial, Yaswei Company provided evidence that it had signed an advertising contract with Hong Kong Qianqu Company in 2015, which had been fulfilled already. Shanghai Qianqu Company argued that according to the principle of relativity of the contract, it should not bear the responsibility for payment of the contract; there was no abuse of the independent status of the corporation and the limited liability of the shareholder by Hong Kong Qianqu Company to evade debts, and requested to dismiss Yaswei Company's claims.
02 Court Ruling
The Court held that, the dispute over whether Shanghai Qianqu Company had abused the corporate personality of Hong Kong Qianqu Company essentially pertained to the determination of whether Hong Kong Qianqu Company had civil rights and capacity for civil conduct as a legal person. According to Article 14 of the Law of the People's Republic of China on the Application of Law on Foreign-Related Civil Relations, the trial of this dispute should apply the law of the place where Hong Kong Qianqu Company is registered, namely, the law of the Hong Kong Special Administrative Region of the People's Republic of China. The Court consulted East China University of Political Science and Law to clarify the company law of the Hong Kong Special Administrative Region. A professor from the Faculty of Law at the Chinese University of Hong Kong provided an expert opinion on the matter. The court believed that, according to the expert opinion and the six court cases cited therein, under the case law of the Hong Kong Special Administrative Region, the plaintiff must prove that the purpose of the defendant by establishing a subsidiary was to defraud, conceal, or evade debts, and only in that case can the defendant be held liable. Additionally, Hong Kong Special Administrative Region case law has held that it is lawful to establish a subsidiary for the purpose of incurring debt and that the corporate veil cannot be pierced merely because of the arrangements of the parties in the group structure. Under the legal framework of the HKSAR, the issue of the independence of ownership of a one-person company essentially concerns the commingling of assets. In this case, there was some overlap between the two companies in terms of personnel and business, but Yaswei Company's evidence could precisely prove that Shanghai Qianqu Company, as a shareholder of Hong Kong Qianqu Company, arranged for Hong Kong Qianqu Company to be the contracting party without any malicious intent not to fulfill the debts. Yaswei Company also had no evidence to prove that the two defendants had commingled assets. Therefore, the court ruled that Hong Kong Qianqu Company should bear the corresponding payment responsibility, and rejected Yaswei Company's claim for Shanghai Qianqu Company to bear joint and several liability. Neither party appealed the judgment and it became final.
03 Typical Significance
The law of the Hong Kong Special Administrative Region belongs to the Anglo-American legal system, where case law occupies a significant position. Due to the differences in legal systems, judges in mainland courts face multiple challenges in identifying, understanding, and applying case law. Inferring relevant adjudication rules from multiple identified cases is a prerequisite for ensuring the accuracy of the application of foreign law and is also the cornerstone for the lawful and fair trial of cases. To accurately ascertain the content of case law, the court issued an expert opinion consultation letter to East China University of Political Science and Law, and based on the key points of judgment in the six cases cited by the Hong Kong expert opinions, it synthesized the constitutive elements for the act of "abuse of corporate personality" recognized in the precedents of the Hong Kong Special Administrative Region. Consequently, the court rejected Yaswei Company's request to "pierce the corporate veil" and hold Shanghai Qianqu Company jointly liable, providing useful references for the trial of similar cases.
Case III
The Judge ascertains the Australian law ex officio and determines the qualification for shareholder representative litigation.
——Mei Shanhai vs. Lin Xiaoning, Tao Xisong, Tao Xi Feng, and Sun Suping the Dispute over Liability for Damages to Company Interests
01 Basic Facts
Mei Shanhai is a shareholder of Ocean Sincere Pty Ltd., which is an Australian company. Lin Xiaoning served as the sole director of the company from September 15, 2010, to July 25, 2014, with Tao Xisong assisting Lin in managing the company's affairs. On May 1, 2013, Ocean Sincere Pty Ltd. transferred its 'Alexandra Gardens' business to an external company. Lin Xiaoning and Tao Xisong then transferred RMB 1,880,595 to Tao Xi Feng's domestic account, which was not returned to the company. Sun Suping is the spouse of Tao Xi Feng. Mei Shanhai believes that Lin Xiaoning, Tao Xisong, Tao Xi Feng, and Sun Suping have harmed the interests of Ocean Sincere Pty Ltd and requests the court to order Lin Xiaoning to return the company's profits and pay interest, with Tao Xisong, Tao Xi Feng, and Sun Suping bearing joint repayment responsibility.
02 Court Ruling
The Court held that, this case was a dispute over liability for damages to the company's interests filed by Mei Shanhai as a shareholder of Ocean Sincere Pty Ltd. According to Article 14 of the Law of the People's Republic of China on the Application of Law on Foreign-Related Civil Relations, lex domicilii, namely the Law of the Commonwealth of Australia where Ocean Sincere Pty Ltd is registered, should be applied. Within the time limit set by the court, neither party provided relevant statutes or case law from Australian company law. The judge obtained the Commonwealth of Australia's “Corporations Act 2001” through the “Global Legal Network” of the Ministry of Commerce of the People's Republic of China. After verification by both parties and without objection, it was applied to this case. Sections 236 and 237 of the “Corporations Act 2001” respectively stipulate the circumstances and procedural requirements for shareholder representative litigation. The plaintiff, Mei Shanhai, must prove that he has met the corresponding provisions when initiating the lawsuit. Unlike the shareholder representative litigation system established by the Company Law of the People's Republic of China, the “Corporations Act 2001” of the Commonwealth of Australia requires that the shareholder initiates the lawsuit in the name of the company. Therefore, the claim filed by the plaintiff Mei Shanhai did not satisfy the subject matter requirement of the "Corporations Act 2001" of the Commonwealth of Australia, nor did it prove that it satisfied the procedural requirements; therefore, the court dismissed the claim filed by the plaintiff Mei Shanhai. The judgment was effective since Mei Shanhai didn’t appeal.
03 Typical Significance
This case was concluded in 2020, when the general practice for ascertaining foreign law primarily relied on the submissions by the parties involved. Article 15 of the “Interpretations of the Supreme People's Court on Several Issues Concerning the Application of the Law of the People's Republic of China on the Application of Law on Foreign-Related Civil Relations” also stipulates that if the parties fail to provide foreign law without reasonable cause shall be deemed as the inability to ascertain. The court accordingly issued a notice within a specified time limit, but there was no response. In practice, it is common for parties to shift their obligation to ascertain the law onto the court due to multiple factors such as cost, risk, and litigation/representation capabilities. At this point, finding an official, formal, and timely updated query path is a prerequisite for the court to ascertain foreign law. With the construction of various legal websites/databases, it has become increasingly commom for courts to conduct big data searches on the Internet to ascertain and verify the content of foreign law in the trial of foreign-related commercial cases. The proactive approach of this case in ascertaining foreign law ex officio was confirmed in the “Summary of the National Conference on Trial Work of Foreign-Related Commercial and Maritime Cases by Courts.” According to Item 21 of the summary, when the seven methods all fail to ascertain the law, the court may use other reasonable means to do so. In the Internet era, the method of big data search not only effectively reduces the cost for parties in ascertaining the law but also provides the possibility for judges to ascertain foreign law ex officio, making up for the inconvenience of existing methods and expanding practical and effective approaches for ascertaining foreign law.