Recently, the High Court of Guangdong Province issued20 typical cases concerning cross-border disputes in Guangdong-Hong Kong-MacaoGreater Bay Area. These cases reflected how the courts in Guangdong Provincedealt with civil and commercial disputes related to Macao or Hong Kong, whichconcerned a wide range of issues including production and operation rights,trademark rights, land use rights, and rights and interests protectionregarding cross-border investment, cross-border marriage, and cross-border employment,which can act as the guidance for the adjudication of relevant civil andcommercial cases at courts of all levels in Guangdong Province.
Typical Cases Concerning Cross-border Disputes inGuangdong-Hong Kong-Macao Greater Bay Area adjudicated by Courts in GuangdongProvince:
1. ZHUANG v. WEN Moushou and others (Dispute over aGuarantee Contract)
—Concerning the adoption of the legal opinionsprovided by Hong Kong lawyers in the resolution of civil and commercialdisputes involving Hong Kong
2. Zhentong Co., Ltd. v. Xiecheng Co., Ltd. (Disputeover a Processing Contract)
—Concerning the determination of the validity ofmediation regarding commercial disputes conducted by Hong Kong mediators in aplace other than Hong Kong
3. Yongshen Co., Ltd. v. Yuefei Co., Ltd. and others(Dispute over Liability for Vessel Collision Damage)
—Concerning the determination of the liability ofvessels registered in Mainland China in disputes concerning collisions in Macaowaters
4. Macao Koi Kei Bakery v. Australian Island Co., Ltd.and others (Dispute over Trademark Infringement)
— Concerning the protection of exclusive rights forregistered trademarks of Macao enterprises in Mainland China
5. Petition for Bankruptcy Liquidation of Kong JingFur Factory Co., Ltd. Filed by Beijing Fur Factory
—Concerning the approval of the application filed byHong Kong enterprises regarding the bankruptcy of the subsidiaries in MainlandChina
6. GE v. ZHEN Mouchang and others (Dispute overEnforcement Objection)
—Concerning the protection of expectant rights in theproperties owned by Hong Kong residents who purchased real estates in GreaterBay Area
7. Application for property preservation by FarencoShipping Pte Ltd.
—Concerning the approval of the application forproperty preservation prior to the recognition and enforcement of Hong Kongarbitration awards
8. Application for recognition and enforcement of aforeign arbitral award by Water Solutions (Hong Kong) Limited
—Concerning the recognition and enforcement of foreignarbitral awards pursuant to treaty obligations
9. Heli Co., Ltd. v. Zhuhai Real Estate RegistrationCenter (Dispute over Housing Administrative Registration)
—Concerning the approval of applications filed byMacao enterprises to modify the real estate registration in Mainland China
10. Bureau of Marine and Fisheries v. PENG Mouquan andothers (Dispute over Liability for Pollution of Marine Environment)
—Concerning the determination of tort liability inmarine-environment-related public interest litigation in Guangdong, Hong Kong,Macao Greater Bay Area
11.ZHAOMouting v. LIN Mouyi (Dispute over Invalidation of Contract)
—Concerning the determination of the validity of realestate bestowal in Mainland China between a Hong Kong couple
12. XIE Moufang v. Bolin Co., Ltd. and others (LaborDispute)
—Concerning the determination of the validity of thecontracts with the characteristic of “Two employment contracts for one job” involvingcross-border migrant workers
13. Youcheng Co., Ltd. v. Qiuchang Sub-district Office(Dispute over Land Ownership Replacement and Land Planning Administrative)
—Concerning the determination of rights and interestson the use of state-owned land of Hong Kong enterprises in Mainland China
14. DU Moufeng v. LI Mouying and others (Dispute overa Cooperation Contract)
—Concerning the determination of the validity of HongKong residents’ lease of medical license from medical institutions in MainlandChina
15. Macao Hongyun Co., Ltd.and others v. WU and others (Dispute over Shareholders Funding)
—Concerning the determination of the validity ofagreements on investment to Macao enterprises by residents in Mainland China
16. Xinguang Co., Ltd. v. Zhongyi Co., Ltd. (Dispute overRight to Revoke in Bankruptcy)
—Concerning the determination of the validity of therevocation regarding enforcement of the agreement between Macao enterprises andbankruptcy administrators of enterprises in Mainland China
17. Dongfang Hengtai Co., Ltd. v. Huasheng Co., Ltd.(Dispute over Enforcement Objection)
—Concerning the determination of the enforcementobjection with Hong Kong enterprises as applicants by enterprises in MainlandChina
18. Application for Recognition and Enforcement of aMacao Court Decision by LI Mouwang
—Concerning the recognition and enforcement ofproperty damage compensation in criminal judgments made by Macao courts
19. ZHANG Mouhe v. CHEN Mouzai (Dispute over EquityTransfer)
—Concerning the confirmation of the validity of equitytransfer contract between residents of Mainland China and residents of HongKong, which conducted in accordance with party autonomy
20. Application for recognition of a divorce judgmentmade by Hong Kong court by NI Mouxiong
—Concerning the recognition of the divorce part of ajudgment made by Hong Kong court regarding divorce between a resident of HongKong and a resident of Mainland China
BCI& BIMC Ascertainment Case No. 1:
ZHUANG v. WENMoushou and others
(Dispute over aGuarantee Contract)
Concerning the adoption of the legal opinions providedby Hong Kong lawyers in resolving civil and commercial disputes involving HongKong
Facts
In 2008, WEN Moutai (a Hong Kong resident), borrowedRMB 1 million from XIE (a mainland resident), for a period of one month, andZHUANG (a mainland resident), provided guarantees for that. After the expiry ofthe loan period, WEN Moutai failed to repay the principal and interest, and theguarantor, ZHUANG, fulfilled the guarantee responsibility to XIE and repaid allthe principal and interest of the loan. In 2014, WEN Moutai passed awayunexpectedly. As the debt was not repaid, ZHUANG sued WEN Moutai’s heirs, WENMoushou and WEN Mouguang (both of them are Hong Kong residents) to ShenzhenQianhai Cooperation Zone People’s Court in Guangdong Province, asking them topay a sum of RMB 1.5 million and assuming joint and several liabilities.
AscertainmentReport
Shenzhen Qianhai Cooperation Zone People’s Courtentrusted BCI & BIMC (formerly known as BCI) to ascertain legal provisionsconcerned under Hong Kong law. The foreign law ascertainment experts of BCI& BIMC issued the Hong Kong Law Ascertainment Opinion (“the LegalOpinion”).
The main contents of the Legal Opinion are as follows:
1. The determination of the heirs after the death ofthe deceased according to the laws of HKSAR.
In HKSAR, the first step to determine the estates andthe distribution thereof depends on whether the deceased made a valid will. Ifa valid will was made, the determination of the heirs and the distribution ofthe estates that the heirs can take shall be handled according to theinstructions of the deceased.
A complete and valid will shall include a clearappointment of the executor of the will, the beneficiaries (i.e. the heirs),and the distribution of the estates to each beneficiary (if there is more thanone beneficiary).
The will is subject to the High Court’s verificationand the court may issue the Grant of Probate to the applicant (The executordesignated by the will. If no executor was appointed by the will, the applicantauthorized by law shall have the right to apply for execution.) and theidentity of the executor would be determined. Then the estates would be disposedand distributed in accordance with the instructions of the will.
If the deceased does not make a will or the will isinvalid or the will is not verified by the court, or if the estate is notcovered by the will, the heirs and the distribution of the estate will bedisposed in accordance with the Intestates’ Estates Ordinance (Cap. 73).
Article 4 of theIntestates’Estates Ordinance stipulates the methodfor determining the heirs, please refer to the brief description of thefollowing table: 4 (3) If the intestate leaves a husband or wife and issue, thesurviving husband or wife shall take the personal chattels absolutely and, inaddition, the residuary estate of the intestate (other than the personalchattels) shall stand charged with the payment of a net sum of $500,000, freeof death duties (if any) and costs, to the surviving husband or wife withinterest on that sum from the date of the death at the rate determined fromtime to time by the Chief Justice for the purpose of section 49(1)(b) of theHigh Court Ordinance (Cap. 4) until paid or appropriated and, subject toproviding for that sum and interest, the residuary estate (other than thepersonal chattels) shall be held—
(a) as to one half, in trust for the surviving husbandor wife absolutely; and
(b) as to the other half, on the statutory trusts forthe issue of the intestate. According to Non-Contentious Probate Rules(Cap. 10A), those who are qualified to become the executor of the estates mayapply to the High Court for Letters of Administration, and then manage anddistribute the estates according to law.
2. Under what circumstances shall the heirs beobligated to repay the debts incurred by the deceased before his or her death.
Generally speaking,thedebt of a natural person is his or her personal responsibility. After thedebtor’s death, the debt falls into the estates, and the creditor may recoverfrom the debtor’s estates. However, neither the debtor’s executor nor the heirsshall be responsible for the debts of the deceased person. If the creditorfiles a lawsuit on the debt of the deceased, the defendant should be theexecutor of the deceased’s estate, not the heirs. The identity of the executoris an agent, and the responsibility should be limited to the management of thedeceased’s estates. There is no personal liability for the deceased’s debts(Refer to The Rules of the High Court Cap. 4A, O. 15, R. 6A).
According to R.61 of the Probate and AdministrationOrdinance (Cap. 10), the estates of a deceased person are assets forpayment of his debts and liabilities, and the remaining estates would bedistributed to the heirs. If the estates can repay all the debts, the heirswill inherit the residuary estate (i.e. after payment of all such funeral andadministration expenses, debts and other liabilities as are properly payablethereout-R.2 (1) of the Intestates’ Estates Ordinance). If the estatesof the deceased would not be sufficient enough to repay all the debts, theheirs would not inherit any estates, and the creditors of the deceased may notbe able to recover part of the debts, as according to the principle of contractlaw, the creditor only has a contractual relationship with the deceased. Thecause of action for all contracts would be against the decedent’s estate only (Chittyon Contracts, 31st ed. Volume1 [20-001]).
If the deceased and the heirs maintain joint liabilityof relevant debts, the debt should be paid by the heirs after the death of thedeceased (Chitty on Contracts, 31st ed. Volume 1 [17-012]).However, it should be noted that if the deceased and the heirs maintain jointand several liability of relevant debts, not only the estates can be used forthe repayment of the debts, but also the heirs are obliged to repay the debts (Chittyon Contracts, 31st ed. Volume 1 [17-013]).
Highlights of the Ascertainment
The foreign law ascertainment report helps relevantparties to understand the possible risks in the lawsuit and improves thepredictability of the outcome of the case. In this case, based on the foreignlaw ascertainment report issued by BCI & BIMC, Shenzhen Qianhai CooperationZone People’s Court adopted a new third-party evaluation mechanism, whichcombined foreign laws and relevant facts to conduct litigation risk analysis,and promoted the resolution of disputes through evaluation. In the end, theparties made a decision to withdraw the case based on their own judgments ofthe case.
As a third-party foreign law ascertainment agency, BCI& BIMC has always maintained its professionalism. Specifically, BCI &BIMC has taken the following measures in its work:
The first was to establish an expert database that hasundergone strict qualification screening, and carry out label classificationmanagement of relevant experts to achieve the goal of accurate matching andmeet the diverse needs of users. In this case, the evaluation agencycommissioned by the court focused on whether the commissioned expert wasqualified. When BCI & BIMC identifies legal experts for clients accurately,it mainly considers two aspects: First, the professional quality andqualifications reflected from the academic qualifications, expertise,professional experience, and related research experience of the experts;Second, the major field, service charges, and time coordination of experts, inorder to decide whether the experts can meet the needs of the clients. Based onBCI & BIMC’s rich experience in serving courts and going globalenterprises, it can make effective and accurate match in practice, becoming areliable intermediary bridge between the client and the demander.
The second was understanding the needs of the clientsin detail. After accepting the entrustment of the parties, BCI & BIMC willlearn more about the specific legal issues, application scenarios and otherspecific situations that the entrusting parties need to find out throughphysical meetings and telephone conferences. Especially in the case oflitigation, BCI & BIMC will further understand the court’s requirements forascertainment. BCI & BIMC would ensure the correct direction of foreign lawascertainment by full communication in advance, which also could avoid wastingtime and unnecessary burden on clients.
The third is the implementation of a strict managementprocedure for foreign law ascertainment. BCI & BIMC has formedascertainment rules, and improved the ascertainment efficiency through strictascertainment procedures, standardized management, and standardized contracts.Under normal circumstances, it usually takes about two months for BCI &BIMC to finish the work of foreign law ascertainment, starting from formalentrustment to formal issuance of a written foreign law ascertainment report,and it only takes 2-3 days to organize an online ascertainment consultationwith the participation of legal experts.
Through above efforts, as of now, the foreign lawascertainment reports issued by BCI & BIMC have been widely adopted bycourts in Shenzhen, Dongguan, Wuhan, Liuzhou, Urumqi and other places, andthere has never been a case of refusal to accept the report due to issuesrelated to professional qualifications of experts or ascertainment procedures.Similarly, in terms of serving going global enterprises, BCI & BIMC hasalso been highly recognized by the society. The 2017-2018 Chinese EnterpriseGoing Global Research Report released by LexisNexis and the China Instituteof Corporate Legal Affairs andThe2018 Action Report on Chinese (Guangdong) Companies Going Global along the Beltand Road released by the Information Office ofPeople’s Government of Guangdong Province, the Research Center of State-ownedAssets Supervision and Administration Commission of the State Council, andGuanghua School of Management, Peking University made grand introduction to BCI& BIMC.
Judgment
Shenzhen Qianhai Cooperation Zone People’s Court ofGuangdong Province held that the habitual residence of the deceased WEN Moutaiwhen he was alive was in HKSAR. With reference to Article 31 of the Law ofthe People’s Republic of China on the Law Applicable to Foreign-Related CivilRelationships, Hong Kong laws should be applied to resolve the inheritancerelationship problem. The court entrusted BCI & BIMC to issue a lawascertainment report. According to the laws and interpretations ascertained inthe report, although ZHUANG had a cause of action and the time limit was notexceeded, the case would not be accepted as WEN Moushou and WEN Mouguang werenot proper defendants of this case. The court explained to ZHUANG the situationof law ascertainment, and provided information to ZHUANG regarding thepreliminary judgment of the eligibility of the subject of litigation under theapplicable Hong Kong law. After that, ZHUANG applied for withdrawal of thecase, and the court granted that.
TypicalSignificance
In the process of ascertaining foreign laws, thepeople’s court entrusted foreign experts to clarify relevant laws, guided theparties to evaluate the case handling results, increased the predictability ofthe adjudication results, and promoted the parties to exercise their litigationrights reasonably.
BCI& BIMC Ascertainment Case No. 2:
Application forrecognition and enforcement of a foreign arbitral award by Water Solutions(Hong Kong) Limited
Concerning the recognition and enforcement of foreignarbitral awards pursuant to treaty obligations.
Facts
A dispute arises between Water Solutions (Hong Kong)Limited, Hongbai Industrial Co., Ltd. (“Hongbai Taiwan”) and Hongbai ElectricalAppliances (Shenzhen) Co., Ltd. (“Hongbai Shenzhen”) regarding the performanceof the Manufacturing and Supply Agreement. The International ArbitrationTribunal of ICDR-AAA (The International Center for Dispute Resolution, AmericanArbitration Association) made its final award in Los Angeles, California on 14October 2015. On 15 March 2016, Water Solutions (Hong Kong) Limited applied tothe Shenzhen Intermediate People’s Court of Guangdong Province for therecognition and enforcement of the award regarding Hongbai Shenzhen’sobligation to pay RMB 26,721,804.28 to Water Solutions (Hong Kong) Limited.Hongbai Shenzhen applied for non-enforcement of the foreign award, and statedthat Hongbai Taiwan had filed a lawsuit with the US court to declare that theaward was invalid and unenforceable, and Shenzhen Intermediate People’s Courtof Guangdong Province should suspend the review of this case. Water Solutions(Hong Kong) Limited requested Shenzhen Intermediate People’s Court of GuangdongProvince to order Hongbai Shenzhen to provide guarantee for the application forsuspension of the case. Then the court notified Hongbai Shenzhen to provideproperty valued at RMB 26,721,804.28 as guarantee within a time limit, butHongbai Shenzhen failed to do so.
AscertainmentReport
Shenzhen Intermediate People’s Court entrusted BCI& BIMC (formerly known as BCI) to ascertain certain legal provisions,including Article 2 and Article 202 of the Federal Arbitration Act ofthe US and Article 1281, Article 1297.71, Article 1297.72 of the California Codeof Civil Procedure, and relevant jurisprudence. The foreign lawascertainment experts of BCI & BIMC issued a U.S Legal AscertainmentOpinion (the Legal Opinion) on the case.
The main contents of the Legal Opinion are as follows:
1. Statute of the United States on the Validity ofArbitration Agreements
Article 2 of the Federal Arbitration Act, withthe title of “Validity, Irrevocability and Enforcement of Agreements toArbitrate”, stipulates that: “A written provision in any maritime transactionor a contract evidencing a transaction involving commerce to settle byarbitration a controversy thereafter arising out of such contract ortransaction, or the refusal to perform the whole or any part thereof, or anagreement in writing to submit to arbitration an existing controversy arisingout of such a contract, transaction, or refusal, shall be valid, irrevocable,and enforceable, save upon such grounds as exist at law or in equity for therevocation of any contract.” Article 202 of the Federal Arbitration Act,with the title of “Agreement or award falling under the Convention”, statesthat: “An arbitration agreement or arbitral award arising out of a legalrelationship, whether contractual or not, which is considered as commercial, includinga transaction, contract, or agreement described in section 2 of this title,falls under the Convention. An agreement or award arising out of such arelationship which is entirely between citizens of the United States shall bedeemed not to fall under the Convention unless that relationship involvesproperty located abroad, envisages performance or enforcement abroad, or hassome other reasonable relation with one or more foreign states. For the purposeof this section a corporation is a citizen of the United States if it isincorporated or has its principal place of business in the United States.”
Article 1281 of the California Code of CivilProcedure states that: “A written agreement to submit to arbitration anexisting controversy or a controversy thereafter arising is valid, enforceableand irrevocable, save upon such grounds as exist for the revocation of anycontract.”
Although the above-mentioned American statute law doesnot directly stipulate how to determine the validity of the arbitration clausewhen both litigation and arbitration were agreed in the dispute resolutionclause. However, it is clearly stipulated that the arbitration agreement isvalid, irrevocable and binding, save upon such grounds as exist for therevocation of any contract.
2. Principles established by the US Supreme Court whenapplying the jurisprudence of the Federal Arbitration Act to interpretdisputed arbitration agreements
The US Supreme Court has established the principle ofsupporting arbitration in jurisprudence, including three aspects: First, a freefederal policy shall be conducive to arbitration agreements; Second, a clearfederal policy shall be conducive to considering arbitration as a method ofdispute resolution; and Third, any settlement of questions related toarbitration shall be conducive to arbitration.
Judgment
Shenzhen Intermediate People’s Court of GuangdongProvince held that the domicile of Hongbai Shenzhen was in Shenzhen, GuangdongProvince, therefore the court had jurisdiction over the case. Since both Chinaand the United States are contracting states to the Convention on theRecognition and Enforcement of Foreign Arbitral Awards (i.e. the New YorkConvention), this case should be reviewed under Article V of the New YorkConvention. The relevant arbitration agreement is valid after review, theentire arbitration procedure was promptly notified and the documents wereproperly served to Hongbai Shenzhen, and the arbitration procedure wasflawless. Although Hongbai Taiwan filed a lawsuit in the US court declaring thearbitral award was invalid and unenforceable, there is no evidence that thearbitral award involved in the case would be revoked by the US court. HongbaiShenzhen did not provide guarantee for the application to suspend the trial ofthis case, and did not meet the conditions for suspension of execution asstipulated in Article VI of the New York Convention. Therefore, the courtdecided to recognize and enforce the arbitral award regarding HongbaiShenzhen’s payment obligation. The parties did not apply for reconsideration,and the ruling has taken effect.
TypicalSignificance
The application of international conventions bypeople’s court to provide equal protection to enterprises in Guangdong-HongKong-Macao Greater Bay Area is conducive to the final settlement ofcross-border commercial disputes.
Read the original: 蓝海中心查明案例入选广东法院粤港澳大湾区跨境纠纷典型案例
