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As the Year of the Dragon arrives, we revisit some of the most noteworthy deals and cases of the past year

Every year, China Business Law Journal kickstarts a fresh beginning with a thorough annual review of the legal markets. Without fail, the experience of a year-end roundup of deals and cases never ceases to amaze.

We have selected 191 deals that stood out as our Deals of the Year 2023 from a vast submission database of Chinese and international law firms, backed by our independent observation and continued coverage of China’s legal market, and taking into account factors including overall significance, complexity, innovative nature and deal size.

As always, there are no fees or obligations involved throughout the submission and judging process. To qualify, the deals must have been closed or made significant progress between 1 November 2022 and 31 October 2023.

Despite a global decline in capital markets for the past year, A-share IPO markets continue to top the ranking in global bourses, with Shanghai Stock Exchange and Shenzhen Stock Exchange raising the largest and second-largest amount of funds, respectively.

Among our winning deals, the four IPOs of Hua Hong Semiconductor, United Nova, Nexchip and Shaanxi Energy stood out as some of the largest IPOs worldwide. This also echoes the central government’s efforts to promote development of cutting-edge technology, and the country’s energy transition agenda.

Looking back years from now, these first-of-a-kind deals and cases we have selected may serve as importance references when future lawyers seek to innovate structures and find guidance for judicial practice. These include the first non-credit enhanced commercial mortgage-backed securities from a central state-owned enterprise, China’s first merger in the financial leasing industry, the first artificial intelligence image copyright infringement in China, the first interbank bond misrepresentation case, and the first asset-backed securities fraudulent issuance case.

An evident trend is the hike in dispute resolution cases. According to the Supreme People’s Court, 45.6 million cases were filed in courts nationwide in 2023, representing a 15.6% increase. To better reflect these evolving market trends, this year we have refined deal categories, as we have observed significant growth in certain types of deals, such as restructurings and trade investigations.

Therefore, the winning deals are presented to you in 12 sections: Equity capital markets; Debt capital markets; ABS/Reits; Mergers and acquisitions; Private equity and venture capital; Projects; General corporate matters; Liquidation, bankruptcy and restructuring; Intellectual property; International trade investigations; Domestic dispute resolution; and Cross-border dispute resolution. In each section, the deals or cases are listed in alphabetical order to avoid presumptions of ranking.

EQUITY CAPITAL MARKETS
  1. AAG Energy taken private
  2. Air China's USD2.1bn private A-share placement
  3. Baimtec Material’s USD1bn Star Market IPO
  4. Bitdeer’s Nasdaq listing via SPAC
  5. China Eastern’s USD2.1bn private A-share placement
  6. China Southern’s private placement of A and H shares
  7. Chindata privatisation
  8. CSI Solar’s Star Market IPO
  9. Hua Hong Semiconductor’s Star Market IPO
  10. Huaqin Technology’s Shanghai listing
  11. Huayou Cobalt’s Swiss listing via GDR issuance
  12. Hunan Yuneng’s USD630m IPO on ChiNext
  13. J&T Global Express’s USD501m Hong Kong IPO
  14. Jinyuan Hchem’s Hong Kong IPO
  15. Kingsoft Cloud’s Hong Kong dual-primary listing
  16. Lotus Technology’s SPAC listing on Nasdaq
  17. Nexchip’s USD1.4bn Star Market IPO
  18. Shaanxi Energy’s Shenzhen IPO
  19. SharkNinja’s spin-off listing on NYSE
  20. Sunshine Insurance’s USD860m Hong Kong IPO
  21. United Nova’s USD1.5bn IPO on Star Market
  22. Vanke sells new H shares
  23. Will Semiconductor’s Swiss listing via USD445m GDR sale
  24. WuXi XDC Cayman listing in HK
  25. Xukuang Energy’s A-share IPO
  26. Yuexiu Property's rights issue in Hong Kong
  27. Zhejiang Expressway’s follow-on offering
  28. ZJLD’s USD680m Hong Kong IPO

EQUITY CAPITAL MARKETS01

AAG Energy taken private

CATEGORIES: Privatisation; scheme of agreement; energy

LEGAL COUNSEL: Harneys advised AAG Energy on Cayman Islands law. JunHe advised Xinjiang Xintai Natural Gas.

KEY POINTS: Liming Holding took Hong Kong-listed AAG Energy private by a way of a Cayman Islands scheme of agreement in a deal valued at about HKD2.7 billion (USD345 million). The Cayman Islands-incorporated Liming’s ultimate parent is A-share listed Xinjiang Xintai Natural Gas. The privatisation required compliance with listing rules and regulatory requirements in multiple jurisdictions, and had to address legal issues related to exploration and development of coalbed methane.

AAG Energy controls the largest proven geological reserves of coalbed methane in China, and its Panzhuang concession area is the most commercially advanced Sino-foreign co-operative coalbed methane asset in China.

EQUITY CAPITAL MARKETS02

Air China's USD2.1bn private A-share placement

CATEGORIES: Private placement; aviation

LEGAL COUNSEL: Jia Yuan Law Offices acted as the issuer’s counsel.

KEY POINTS:Air China raised RMB15 billion (USD2.1bn) in a private placement of A shares to 22 investors including Air China Group and UBS. This was the state-owned flag carrier’s second private placement since 2017.

Of the funds raised, 72% will be used to pay for 22 aircraft on order and 28% to supplement working capital. Air China has stated that the placement was to meet the demand for replacing ageing aircraft and to prepare for the recovery of civil aviation after the pandemic.

EQUITY CAPITAL MARKETS03

Baimtec Material’s USD1bn Star Market IPO

CATEGORIES: Star Market; aviation

LEGAL COUNSEL: Jia Yuan Law Offices advised the issuer. DeHeng Law Offices advised the main underwriter.

KEY POINTS: Baimtec Material (BIAM), a high-tech company, debuted on the Shanghai Stock Exchange’s Star Market after raising a total of RMB7.1 billion (USD1bn) in the fifth-largest IPO on the A-share market in 2023.

Established in 2000, BIAM was funded by China’s largest materials engineering research centre, AECC Beijing Institute of Aeronautical Materials. With 139 invention patents, BIAM serves as a key player in China’s industry for new materials used in aviation.

EQUITY CAPITAL MARKETS04

Bitdeer’s Nasdaq listing via SPAC

CATEGORIES: Nasdaq; SPACs; cryptocurrency

LEGAL COUNSEL:Cooley, Travers Thorp Alberga and Commerce & Finance Law Offices advised Bitdeer. Davis Polk, Haiwen & Partners, Shook Lin & Bok and Ogier advised Blue Safari. Sidley Austin advised China Renaissance, Bitdeer's financial adviser.

KEY POINTS: Cryptocurrency miner Bitdeer Technologies was listed on the Nasdaq after closing a merger with blank cheque company Blue Safari at a valuation of USD1.18 billion.

One of the largest crypto miners in the world, Bitdeer announced a merger with Blue Safari in 2021, a business combination initially valued at USD4bn when bitcoin was trading at close to USD70,000. However, as the crypto market bubble burst, the planned SPAC listing was postponed three times. The transaction had raised the US Securities and Exchange Commission’s concern over issues including figures related to SPAC mergers, crypto activities and estimated values of target enterprises.

EQUITY CAPITAL MARKETS05

China Eastern’s USD2.1bn private A-share placement

CATEGORIES: Private placement; aviation

LEGAL COUNSEL: Commerce & Finance Law Offices advised the issuer. Fangda Partners advised the underwriters.

KEY POINTS: China Eastern Airlines raised RMB15 billion (USD2.1bn) selling non-public A shares to its parent, China Eastern Airlines Group, and 20 other investors including UBS Group at RMB4.39 per share.

The proceeds were used for the introduction of 38 aircraft and supplementing working capital, including five C919s, indicating that this aviation giant became the first airline in the world to operate China’s first domestically made passenger aircraft.

EQUITY CAPITAL MARKETS06

China Southern’s private placement of A and H shares

CATEGORIES: Private placement; aviation

LEGAL COUNSEL:Dacheng Law Offices advised the issuer, while Jingtian & Gongcheng advised it on Hong Kong law. King & Wood Mallesons advised the brokers.

KEY POINTS:China Southern Airlines completed the non-public issuance of HKD1.8 billion (USD230 million) of H shares and RMB4.5bn (USD633 million) of A shares, marking the completion of the RMB30bn equity diversification reform of its core aviation business.

The airline initiated the equity diversification reform in 2019 to reduce its debt-to-assets ratio. This transaction established China Southern as the most frequent and largest fundraiser in China’s transport industry in the past three years. It is also the first central state-owned enterprise to adopt a co-operation model between central and local entities to promote group-level equity diversification reform.

EQUITY CAPITAL MARKETS07

Chindata privatisation

CATEGORIES:Privatisation; data centres

LEGAL COUNSEL: Kirkland & Ellis advised Bain Capital on US law, King & Wood Mallesons advised on PRC law and Conyers advised on Cayman Islands law. Gibson Dunn advised Chindata on US law, Haiwen & Partners advised on PRC law and Maples Group advised on Cayman Islands law. Davis Polk and Harneys advised APG Asset Management, one of the acquirers, on US and Cayman Islands law, respectively. Weil acted for financial adviser Citibank. JunHe advised a syndicate led by Shanghai Pudong Development Bank and Industrial Bank on PRC law.

KEY POINTS: A group of investors led by Bain Capital agreed to buy all the outstanding shares of Chindata for USD3.16 billion and take the Nasdaq-listed company private. One of the leading carrier-neutral hyperscale data centre solution providers in China, Chindata provides clients with manufacturing facilities, data centres and network services in the Asia-Pacific region. It raised USD621 million from its 2021 Nasdaq listing.

EQUITY CAPITAL MARKETS08

CSI Solar’s Star Market IPO

CATEGORIES: Star Market; solar energy

LEGAL COUNSEL: JunHe acted as the issuer’s counsel, while AllBright Law Offices acted as the joint underwriters’ counsel.

KEY POINTS: US-listed Canadian Solar’s Chinese subsidiary, CSI Solar, successfully debuted on the Star Market in China, raising RMB6 billion (USD830 million) in its IPO. The transaction represents the largest IPO of a parent company’s spinoff in the A-share market since the implementation of the registration-based IPO system in 2023.

CSI Solar was one of the world’s largest providers of photovoltaic and energy storage solutions. In 2022 the China Securities Regulatory Commission raised two rounds of inquiries when the company submitted its listing application. The company eventually withdrew its application but resumed the listing process the following year, addressing concerns raised by the CSRC and the Shanghai Stock Exchange regarding such spinoff listings, regulatory differences between China and the US, anti-dumping/anti-subsidy judicial procedures, industry competition, and major dispute resolution.

EQUITY CAPITAL MARKETS09

Hua Hong Semiconductor’s Star Market IPO

CATEGORIES: Star Market; semiconductors

LEGAL COUNSEL: Llinks Law Offices advised the issuer on PRC law, and Herbert Smith Freehills advised it on Hong Kong law. AllBright Law Offices advised the main underwriters.

KEY POINTS: Hua Hong Semiconductor raised RMB21.2 billion (USD2.95bn) from listing on the Star Market of the Shanghai Stock Exchange. The transaction marked the largest A-share listing in 2023 and the third-largest Star Market IPO to date, behind Semiconductor Manufacturing International Corp and BeiGene. A total of 30 strategic investors were introduced to the offering.

Hua Hong Semiconductor is China’s second-largest and the world’s sixth-largest wafer foundry. The company, a part of the Hua Hong Group, was incorporated in Hong Kong and listed on the Hong Kong stock exchange in 2014, making it the seventh red-chip company on the SSE.

Huahong Semiconductor’s listing on Sci-Tech Innovation Board

By Wayne Chen and Harriet Li, Llinks law offices

EQUITY CAPITAL MARKETS10

Huaqin Technology’s Shanghai listing

CATEGORIES: SSE; smart hardware

LEGAL COUNSEL: Zhong Lun Law Firm acted as the issuer’s counsel, while Haiwen & Partners acted for the joint underwriters.

KEY POINTS: Huaqin Technology made its debut on the Shanghai Stock Exchange, raising RMB5.85 billion (USD810 million). The company focuses on research, development, manufacturing and operation of smart hardware for some of the world’s leading consumer technology firms. Its clients include Acer, Amazon, ASUS, Lenovo, Oppo, Samsung, Sony, VIVO and Xiaomi.

Counterpoint data shows that Huaqin Technology ranked first in the global smart hardware original design manufacturer industry in 2020, with a shipment volume of 190 million units, based on the combined shipments of the “big three of smart hardware”: smartphones, laptops, and tablets.

EQUITY CAPITAL MARKETS11

Huayou Cobalt’s Swiss listing via GDR issuance

CATEGORIES: SIX Swiss Exchange; new energy

LEGAL COUNSEL: Niederer Kraft Frey, Clifford Chance and Grandall Law Firm advised the issuer. Jingtian & Gongcheng and Linklaters advised the underwriters.

KEY POINTS: Huayou Cobalt raised USD583 million in the largest global depository receipts (GDR) listing on the SIX Swiss Exchange in 2023. Huayou Cobalt placed 50 million GDRs on the SIX, with an offer price of USD11.65 apiece and each representing two of the company’s Shanghai-listed A shares. The listing was conducted via the China-Swiss Stock Connect scheme.

Huayou Cobalt, established in 2002, is a high-tech enterprise specialising in the research, development and manufacturing of lithium battery materials.

EQUITY CAPITAL MARKETS12

Hunan Yuneng’s USD630m IPO on ChiNext

CATEGORIES: ChiNext; new energy

LEGAL COUNSEL: Grandall Law Firm advised the issuer.

KEY POINTS: Hunan Yuneng completed its listing on the ChiNext board of the Shenzhen Stock Exchange, raising RMB4.5 billion (USD630 million). Notably, the company has no ultimate controlling shareholder, which complicated compliance with the CSRC’s Opinions No. 1 on the Application of Securities and Futures Laws that requires “no change to the ultimate controlling shareholder”. Grandall, by addressing factors such as the company’s articles of association, relevant agreements and governance structure, was able to confirm that such an absence was true but in line with the regulations.

Hunan Yuneng held about a quarter of China’s market for lithium iron phosphate cathode materials in 2021, the prospectus showed. The company’s flagship product, lithium iron phosphate, ranked first in terms of shipment volume in China in the new energy battery materials segment.

EQUITY CAPITAL MARKETS13

J&T Global Express’s USD501m Hong Kong IPO

CATEGORIES: HKEX; logistics

LEGAL COUNSEL: Latham & Watkins advised the issuer on Hong Kong and US law; DaHui Lawyers advised on PRC law; Harneys advised on Cayman Islands law; HHR Lawyers advised on Indonesian law; Vietnam International Law Firm advised on Vietnamese law; Rahmat Lim & Partners advised on Malaysian law; SyCipLaw advised on Philippines law; and Weerawong, Chinnavat & Partners advised on Thailand law. Skadden advised the joint sponsors and underwriters on Hong Kong and US law; Han Kun Law Offices and Commerce & Finance Law Offices advised them on PRC law.

KEY POINTS: J&T Express, Southeast Asia’s largest express delivery company, raised HKD3.92 billion (USD501 million) from its Hong Kong stock exchange IPO, selling 327 million shares at HKD12 apiece in the bourse’s second-largest initial stock offering of 2023.

The 12 cornerstone investors, which collectively invested almost USD200 million, included Sequoia and Hillhouse Group, as well as companies owned by SF Express, Temasek and Tencent.

J&T Express was Southeast Asia’s No.1 courier operator in 2022, with 22.5% of the market, and had grabbed a 10.9% market share in China by parcel volume, according to the company’s IPO prospectus.

EQUITY CAPITAL MARKETS14

Jinyuan Hchem’s Hong Kong IPO

CATEGORIES: H shares; energy

LEGAL COUNSEL: Reed Smith advised the issuer on Hong Kong law, and Brightstone Lawyers advised on PRC law. Deacons advised the sole sponsor and underwriters on Hong Kong law, while Global Law Office advised them on PRC law.

KEY POINTS: Jinyuan Hchem, a subsidiary spun off from the Hong Kong-listed Jinma Energy, listed on the main board of the Hong Kong stock exchange, raising HKD287 million (USD37 million). This marks the first instance of an H-share company’s spinoff debuting on the H-share market, as the model was previously more commonly adopted by red-chip companies.

Jinyuan Hchem’s main business activities cover the hydrogenated benzene chemicals, liquefied natural gas, coal gas and clean energy and hydrogen industry sectors. It is the largest pure benzene supplier and the third-largest liquefied natural gas supplier in Henan province.

EQUITY CAPITAL MARKETS15

Kingsoft Cloud’s Hong Kong dual-primary listing

CATEGORIES: HKEX cloud computing

LEGAL COUNSEL: Davis Polk advised the issuer on Hong Kong and US law, Fangda Partners advised on PRC law, while Maples Group advised on Cayman Islands law. Simpson Thacher advised the joint sponsors on Hong Kong and US law, Han Kun Law Offices advised on PRC law.

KEY POINTS: Nasdaq-listed company Kingsoft Cloud completed a secondary listing on the Hong Kong stock exchange by way of introduction. Although such listings do not involve issuance of new shares or fundraising, they provide companies with the benefit of dual-primary listing status. This means they qualify for the Stock Connect programme, enabling mainland investors to purchase their H shares.

According to Frost & Sullivan, Kingsoft Cloud ranked among the top five Chinese public cloud service providers from 2019 to 2021.

EQUITY CAPITAL MARKETS16

Lotus Technology’s SPAC listing on Nasdaq

CATEGORIES: Nasdaq; SPAC listing; electric vehicles

LEGAL COUNSEL: Skadden advised Lotus Technology on international law; Han Kun Law Offices and Maples Group advised on PRC law and Cayman Islands law, respectively. Kirkland & Ellis advised the special purpose acquisition company on international law; Fangda Partners advised it on PRC law. Shearman & Sterling acted for PIPE placement agent Deutsche Bank and capital markets adviser Santander US Capital Markets on international law. Haiwen & Partners advised underwriters on PRC law. Zhong Lun Law Firm acted as counsel for NIO Capital, a shareholder of Lotus Technology.

KEY POINTS: Automaker Geely Holding’s luxury electric vehicle unit Lotus Technology listed on Nasdaq after merging with L Catterton Asia (LCAA), a LVMH-backed blank check company. The new company is valued at USD6.1 billion. Since announcing the merger in March last year, Lotus Technology secured more than USD880 million through PIPE, or private investment in public equity, and selling convertible bonds, making it one of the largest funding rounds in a De-SPAC transaction in 2023.

The transaction involves R&D teams in three jurisdictions – the UK, Germany and China – and a put option agreement with affiliates of Geely and Etika Automotive.

EQUITY CAPITAL MARKETS17

Nexchip’s USD1.4bn Star Market IPO

CATEGORIES: Star Market; sustainable development

LEGAL COUNSEL: King & Wood Mallesons advised the issuer. Haiwen & Partners advised the lead underwriter.

KEY POINTS: Nexchip Semiconductor listed on the Star Market of the Shanghai Stock Exchange, raising RMB9.96 billion (USD1.4bn), marking the third-largest A-share IPO nationwide in 2023, and the largest IPO to date in Anhui province.

Nexchip Semiconductor is the third-largest pure wafer foundry enterprise in mainland China, and one of the top 10 worldwide. The company has disclosed that its revenue increased from RMB1.5bn in 2020 to RMB10bn in 2022.

EQUITY CAPITAL MARKETS18

Shaanxi Energy’s Shenzhen IPO

CATEGORIES: SZEX; energy

LEGAL COUNSEL: Jia Yuan Law Offices acted as the issuer’s counsel, while Grandall Law Firm acted as the major underwriters’ counsel.

KEY POINTS: Shaanxi Energy debuted on the main board of the Shenzhen Stock Exchange, raising RMB7.2 billion (USD1bn) in the fourth-largest IPO on the A-share market in 2023 and one of the first batch of companies to list on the main board since the implementation of the registration-based IPO system. This transaction represents the largest IPO deal in terms of fundraising amount in Shaanxi province in nearly a decade.

Shaanxi Energy is primarily engaged in thermal power generation and coal production. The prospectus reported the company’s revenue at RMB20.3bn in the first half of 2022.

EQUITY CAPITAL MARKETS19

SharkNinja’s spin-off listing on NYSE

CATEGORIES: NYSE; home appliances

LEGAL COUNSEL: Cleary Gottlieb advised JS Global Lifestyle on US law; Clifford Chance advised on Hong Kong law. Skadden advised SharkNinja on US law; Maples Group advised on Cayman Islands law. Paul Hastings acted for the financial advisers.

KEY POINTS: Hong Kong-listed JS Global Lifestyle spun off its subsidiary SharkNinja’s European and American operations and listed them on the New York Stock Exchange. This marks the first time a Hong Kong-listed company has completely divested its overseas business and listed it in the US. JS Global did not retain any equity interest in SharkNinja after the transaction.

Some shareholders of JS Global Lifestyle hold shares through the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect platforms and were not allowed to hold the US-listed shares of SharkNinja under the Chinese legal framework. Following extensive research by Paul Hastings, the holdings of these “non-qualifying shareholders” were transferred to a trust fund, with transactions being carried out by a designated US broker, the law firm said.

EQUITY CAPITAL MARKETS20

Sunshine Insurance’s USD860m Hong Kong IPO

CATEGORIES: HKEX; insurance

LEGAL COUNSEL: Clifford Chance advised the issuer on Hong Kong and US law, while Commerce & Finance Law Offices advised it on PRC law. Linklaters advised the joint sponsors on Hong Kong and US law, while King & Wood Mallesons advised them on PRC law.

KEY POINTS: Sunshine Insurance, a leading private insurance group in China, issued H shares for the first time in a Hong Kong IPO, raising HKD6.7 billion (USD860 million) and becoming the fourth-largest listing on the city’s bourse in 2022.

This issuance was the first Hong Kong IPO of a domestic comprehensive insurance group in the past decade, as well as the first Hong Kong IPO of a traditional private insurance company in China since Ping An Insurance was listed in 2004.

The main business streams at Sunshine include life insurance, health insurance and property management services. The property and casualty insurance business was particularly prominent, ranking Sunshine in this sector seventh among all PRC property insurance companies.

EQUITY CAPITAL MARKETS21

United Nova’s USD1.5bn IPO on Star Market

CATEGORIES: Star Market; semiconductors

LEGAL COUNSEL: AllBright Law Offices advised the issuer. DeHeng Law Offices advised the underwriters.

KEY POINTS: United Nova Technology, a circuit manufacturing company backed by Semiconductor Manufacturing International Corp (SMIC), debuted on the Shanghai Stock Exchange’s Star Market. After exercising the over-allotment option, the sale raised RMB11.07 billion (USD1.5bn), making it the second-largest IPO on the A-share market in 2023. Currently, United Nova is China’s largest micro-electro-mechanical systems (MEMS) wafer foundry enterprise.

EQUITY CAPITAL MARKETS22

Vanke sells new H shares

CATEGORIES: Additional issue; real estate

LEGAL COUNSEL: Sundial Law Firm advised the issuer.

KEY POINTS: Vanke Group raised HKD3.9 billion (USD500 million) selling 300 million new H shares at HKD13.05 apiece. 60% of the proceeds would be used to repay offshore debt financing, and the rest will supplement working capital. The transaction happened after the China Securities Regulatory Commission (CSRC) allowed real estate refinancing on 28 November 2022. Unlike most China’s real estate companies structured under the variable interest entity framework, Vanke, registered domestically, is required to undergo a filing process with the CSRC.

EQUITY CAPITAL MARKETS23

Will Semiconductor’s Swiss listing via USD445m GDR sale

CATEGORIES: GDR; SIX Swiss Exchange

LEGAL COUNSEL: Tian Yuan Law Firm advised the issuer on PRC law, Kirkland & Ellis advised on overseas law; JunHe, Niederer Kraft Frey and Clifford Chance acted on PRC law, Swiss law and other overseas laws to the underwriters, respectively.

KEY POINTS: Will Semiconductor launched a USD445 million global depositary receipt (GDR) offering on the SIX Swiss Exchange, marking the largest overseas IPO by a Chinese semiconductor company since 2005. Will Semiconductor is a Chinese fabless semiconductor designer and distributor with the highest revenue domestically, and a top 10 designer worldwide.

Originally, the company reached the final stage of GDR issuance planning in the second half of 2023. However, due to the sluggish performance of the consumer electronics market during that period, which led to a significant decline in the company’s A shares, the Swiss listing plan was delayed. It was not until the third quarter, when Will Semiconductor’s net profit rose almost 2.8 times year-on-year to RMB215 million (USD30 million), that the company revived the sale.

EQUITY CAPITAL MARKETS24

WuXi XDC Cayman listing in HK

CATEGORIES: HKEX; pharmaceuticals

LEGAL COUNSEL: Fangda Partners advised the issuer on Hong Kong and PRC law and acted as Hong Kong and US counsel to controlling shareholder WuXi Biologics. Wilson Sonsini advised the issuer on US law, and acted for another controlling shareholder, WuXi AppTec, as Hong Kong and US counsel. Maples Group advised the issuer on Cayman Islands law. Davis Polk advised the joint sponsors on Hong Kong and US law; Jingtian & Gongcheng advised on PRC law.

KEY POINTS: Chinese medical research group WuXi XDC completed a carve-out listing from Hong Kong-listed WuXi Biologics. XDC raised HKD3.68 billion (USD471 million) from the sale of 178 million shares at HKD20.60 apiece, making it the third-largest Hong Kong IPO in 2023. The proceeds will be used to establish an additional facility in Wuxi, Jiangsu Province and a proposed manufacturing centre in Singapore, said XDC.

XDC was the world’s second-largest pharmaceuticals contract research, development and manufacturing organisation by revenue in 2022, according to the share sale documents, with a primary focus on cancer drugs and the broader bioconjugate market.

EQUITY CAPITAL MARKETS25

Xukuang Energy’s A-share IPO

CATEGORIES: SSE; energy

LEGAL COUNSEL: AllBright Law Offices advised the issuer.

KEY POINTS: Xukuang Energy debuted on the main board of the Shanghai Stock Exchange, raising RMB4.26 billion (USD590 million) and becoming the only coal mining company to be listed on the main board in the past decade. The funds raised will be used for the construction of the Jiangsu Energy Ulgai 2×1,000MW high-efficiency coal-fired power generation units, and for supplementing working capital.

The controlling shareholder of Xukuang Energy is Xuzhou Coal Mining Group. The actual controller of Xuzhou Coal Mining Group is the government of Jiangsu province. Xuzhou Coal Mining Group’s main business includes coal mining, processing, sales and power generation, making it the only large-scale integrated energy entity in Jiangsu province that combines coal and electricity.

EQUITY CAPITAL MARKETS26

Yuexiu Property's rights issue in Hong Kong

CATEGORIES: Rights issue; real estate

LEGAL COUNSEL: Baker McKenzie FenXun advised the issuer on Hong Kong law, while Zhong Lun Law Firm advised it on PRC law. JunHe advised the joint underwriters on PRC law, while Linklaters advised them on overseas law.

KEY POINTS: Hong Kong-listed Yuexiu Property completed its HKD8.36 billion (USD1.07bn) rights issue, the first right issuance in Hong Kong since China’s new overseas offering rules took effect in March 2023. The proceeds would be used to support projects within the Greater Bay Area, core cities in eastern China, and other important provincial capitals.

Yuexiu’s data shows that from January to March 2023, the company’s cumulative contracted sales amounted to about RMB43.82bn, with a year-on-year increase of 217.3%.

EQUITY CAPITAL MARKETS27

Zhejiang Expressway’s follow-on offering

CATEGORIES: Share offering; infrastructure

LEGAL COUNSEL: Clifford Chance advised the issuer on Hong Kong and US law, while Jia Yuan Law Offices advised it on PRC law. Davis Polk advised the underwriters on Hong Kong and US law, and Commerce & Finance Law Offices advised them on PRC law.

KEY POINTS: Zhejiang Expressway sold 1.11 billion shares domestically and 548 million H shares, raising RMB6.1 billion (USD854 million) and marking the biggest equity financing by a Hong Kong-listed highway company to date.

The share placement was the first refinancing project among listed companies in the highway industry to adopt both domestic share and H-share financing, and the first simultaneous domestic and overseas refinancing project among Hong Kong-listed companies in non-financial industries after the implementation of the registration system in China.

EQUITY CAPITAL MARKETS28

ZJLD’s USD680m Hong Kong IPO

CATEGORIES: HKEX; beverages

LEGAL COUNSEL: Davis Polk advised the issuer on Hong Kong and US law, King & Wood Mallesons advised it on PRC law, and Conyers advised it on Cayman Islands law. Cleary Gottlieb advised the joint sponsors and underwriters on Hong Kong and US law, while Haiwen & Partners advised them on PRC law.

KEY POINTS: Chinese liquor maker ZJLD Group raised HKD5.3 billion (USD680 million), marking the -33largest IPO on the HKEX in 2023, and the second successful debut of a Chinese liquor company since 2016.

DEBT CAPITAL MARKETS
  1. Beijing Enterprises’ panda bond sets record
  2. Egypt’s first sustainable panda bond issuance
  3. Guangdong’s treasury bond sale in Macau
  4. NIO sells USD1bn convertible senior notes
  5. PBOC’s USD19.5bn renminbi bill issuance in Hong Kong
  6. Pioneer Reward sets up USD3bn medium term note programme
  7. Shenzhen’s aggregated USD1.4bn treasury bond
  8. SPIC’s USD17.2bn MTN, SCP issuance
  9. TCL Zhonghuan plans convertible bond sale
  10. Trina Solar sales record for convertible bonds
  11. Yuexiu Property subsidiary issues USD1.3bn bonds

DEBT CAPITAL MARKETS01

Beijing Enterprises’ panda bond sets record

CATEGORIES: Panda bonds

LEGAL COUNSEL: Haiwen & Partners advised the issuer on PRC and overseas law.

KEY POINTS: Beijing Enterprises sold RMB4 billion (USD563 million) of panda bonds, marking the largest single such issuance by a local state-owned enterprise as well as a record low interest rate for similarly dated bonds of a local SOE. The company also registered RMB20bn of a debt financing programme in the interbank market. Beijing Enterprises primarily operates in the public utilities sector including urban gas, water, solid waste treatment, and has the beverage unit Yanjing Brewery that produces beer under this brand.

DEBT CAPITAL MARKETS02

Egypt’s first sustainable panda bond issuance

CATEGORIES: Panda bonds; sustainable development

LEGAL COUNSEL: Fangda Partners advised the issuer on PRC law. Dechert advised the Egyptian government on international law. White & Case advised guarantors on international law, while Global Law advised them on PRC law. JunHe advised the lead underwriters on PRC law.

KEY POINTS: Egypt became the first African country to issue panda bonds, a RMB3.5 billion (USD530 million) three-year sustainable development renminbi-denominated debt, with a coupon rate of 3.51%, preparing other nations on the continent to enter the Chinese market.

The African Development Bank and the Asian Infrastructure Investment Bank provided credit guarantees for the panda bonds. The deal was also the first such issue in the domestic bond market to be jointly guaranteed by two multilateral banks.

Egypt will used the proceeds to support green projects in line with the country’s Sovereign Sustainable Financing Framework, including transport, renewable energy, sustainable management of water and sanitation, secure housing and secure digital infrastructure.

DEBT CAPITAL MARKETS03

Guangdong’s treasury bond sale in Macau

CATEGORIES: Green bond; local treasury bond

LEGAL COUNSEL: ETR Law Firm advised the issuer on PRC law.

KEY POINTS: The Guangdong government issued RMB2 billion (USD280 million) of local treasury bonds in Macau, comprising RMB1bn of two-year special bonds and RMB1bn of three-year green bonds. This transaction marks the province’s first issuance of green local treasury bonds in Macau, and the third consecutive year of issuing renminbi-denominated local treasury bonds in Macau.

DEBT CAPITAL MARKETS04

NIO sells USD1bn convertible senior notes

CATEGORIES: Convertible bonds; electric vehicles

LEGAL COUNSEL: Skadden advised the issuer on US law; Kirklands & Ellis advised on Hong Kong law; Han Kun Law Offices advised on PRC law; and Maples Group advised on Cayman Islands law. Latham & Watkins represented the initial purchasers – including Goldman Sachs, Morgan Stanley, CICC and JPMorgan Chase – in dealing with overseas legal issues, while Commerce & Finance Law Offices advised on PRC law.

KEY POINTS: Electric vehicle manufacturer NIO sold USD1 billion of convertible preferred bonds to alleviate short-term funding pressure and attract overseas investors.

The offering comprised two tranches, with USD500 million coming due in 2029 and the remainder a year later. NIO said that a part of the proceeds would be used to repurchase two portions of the existing convertible senior notes, while the rest would go to strengthening NIO’s financial position and general corporate purposes.

DEBT CAPITAL MARKETS05

PBOC’s USD19.5bn renminbi bill issuance in Hong Kong

CATEGORIES: Renminbi bill; PBOC

LEGAL COUNSEL: Deacons advised the issuer on Hong Kong law, while Linklaters and Fangda Partners advised it on international and PRC law, respectively.

KEY POINTS: From November 2022 to September 2023, the PBOC issued eight renminbi bills in Hong Kong through the Central Moneymarkets Unit’s Debt Securities Settlement System, totalling RMB140 billion (USD19.5bn). The PBOC has now issued renminbi bills in Hong Kong for six consecutive years. The notes issued by the central bank were an important benchmark for the yield curve of short-term debt instruments in the offshore renminbi market.

DEBT CAPITAL MARKETS06

Pioneer Reward sets up USD3bn medium term note programme

CATEGORIES: Bonds

LEGAL COUNSEL: King & Wood Mallesons advised the issuer and sponsors on UK and Hong Kong law; DeHeng Law Offices and Harneys advised on PRC law and British Virgin Islands law, respectively. JunHe advised the underwriters on PRC law.

KEY POINTS: Pioneer Reward established a USD3 billion medium term note programme guaranteed by its ultimate parent Huatai Securities, selling an initial USD800 million of bonds internationally.

The medium term note programme was listed in Hong Kong and Singapore. The USD800 million of three-year 5.25% coupon bonds were listed in Hong Kong.

Sales of US dollar bonds declined sharply in 2023 amid a cycle of interest rate increases by the Federal Reserve to combat inflation. This deal represented one of the few large-scale US dollar bond offerings by Chinese securities firms. Huatai Securities’ guarantee reflected the continued expansion of its overseas business.

DEBT CAPITAL MARKETS07

Shenzhen’s aggregated USD1.4bn treasury bond

CATEGORIES: Bonds; government

LEGAL COUNSEL: Guanghe Law Firm advised the issuer.

KEY POINTS: From February 2023 to September 2023, the Shenzhen government issued a total of RMB10.1 billion (USD1.4bn) in 52 special bonds. The proceeds of the sales were designated for various purposes including education, infrastructure and hospital construction, and procurement of medical equipment, cultural and sports facilities, and technology development.

Guanghe had to conduct legal due diligence within a short timeframe, assisting the client in standardising and improving the issuance process, co-ordinating with other intermediaries and providing a legal opinion letter to complete the transaction.

DEBT CAPITAL MARKETS08

SPIC’s USD17.2bn MTN, SCP issuance

CATEGORIES: MTNs; SCPs; energy

LEGAL COUNSEL: DOCVIT Law Firm advised the issuer.

KEY POINTS: State Power Investment Corp (SPIC) received the green light to issue an interbank financial programme totalling RMB114.7 billion (USD16.1bn) in phases, including medium-term notes (MTNs) and short-term commercial paper (SCP) in the form of ultra-short-term financing bonds. These included medium-term notes involving the issuance of special bonds for the preservation of energy supply, and all the funds raised will be used to enhance the ability to preserve the supply of energy and electricity.

Currently, 46 medium-term notes and 13 ultra-short-term financing bonds have been issued under the project. SPIC is the world’s largest developer of photovoltaic power generation and one of the three largest nuclear power development and construction operators in China, with non-energetic, third-generation nuclear power technology.

DEBT CAPITAL MARKETS09

TCL Zhonghuan plans convertible bond sale

CATEGORIES: Bonds; new energy

LEGAL COUNSEL: China Commercial Law Firm acted as the issuer’s counsel.

KEY POINTS: TCL Zhonghuan announced plans to raise as much as RMB13.8 billion (USD1.9bn) selling convertible bonds to unspecified investors to fund the development of a factory to produce high-purity ultra-thin monocrystalline silicon wafers with a capacity of 35GW a year and 25GW of N-type TPOCon high-efficiency solar cells.

At the time of the transaction, the project had not obtained the property rights certificate and environmental impact assessment approval for the proposed site, which added to the challenges. The transaction faced several difficulties, including proving that TCL Zhonghuan and its subsidiaries’ administrative penalties during the reporting period were not major violations. Additionally, the high number of associated natural persons and companies related to TCL Zhonghuan, as well as frequent related-party transactions, made it difficult to verify the relationships and transactions involved.

DEBT CAPITAL MARKETS10

Trina Solar sales record for convertible bonds

CATEGORIES: Convertible bonds; photovoltaics

LEGAL COUNSEL: King & Wood Mallesons advised the issuer.

KEY POINTS: Trina Solar, a provider of intelligent solutions in solar power, sold RMB8.86 billion (USD1.2bn) of convertible bonds in the biggest sale of such securities in 2023. The transaction also represented the third-largest refinancing project on the Shanghai Stock Exchange’s Star Market. The funds raised will primarily be used for the construction of a 35GW facility to produce single crystal semiconductors using the Czochralski method.

Trina Solar, listed on the Star Market in 2020, has consistently ranked among the top three globally in terms of solar panels shipments in the past three years.

DEBT CAPITAL MARKETS11

Yuexiu Property subsidiary issues USD1.3bn bonds

CATEGORIES: Bonds; real estate

LEGAL COUNSEL: King & Wood Mallesons advised the issuer.

KEY POINTS: Yuexiu Property subsidiary Guangzhou City Construction & Development sold five tranches of bonds to professional investors with a total face value of RMB9.4 billion (USD1.3bn). Amid restrictions on financing for real estate companies due to the “three red lines” policy, this was one of the few bond sales of significant size to be approved.

The smooth path achieved in the financing was attributed to Guangzhou City Construction & Development’s operating performance. The company’s sales rose 8.6% in 2022 from a year earlier, making it the only one of China’s 30 biggest real estate firms to see revenue expand.

ABS/REITS
  1. CSC SPIC New Energy REIT raises USD1.1bn
  2. First non-credit enhanced CMBS from central SOE
  3. Jilin Electric issues first wind, solar clean energy quasi-REITs
  4. Link REIT raises USD2.4bn
  5. Nanhai Industry Group issues USD132m CMBS
  6. Ping An, Xiamen ITG issue receivables ABS
  7. SPIC’s first offshore wind power quasi-REIT
  8. XCMG issues USD767.4m ABN

ABS/REITS01

CSC SPIC New Energy REIT raises USD1.1bn

CATEGORIES: Fund establishment; infrastructure REIT; new energy

LEGAL COUNSEL: Han Kun Law Offices advised SPIC Jiangsu Electric Power. King & Wood Mallesons advised China Fund. Zhong Lun Law Firm advised Paragon Trust, an asset servicer.

KEY POINTS: State Power Investment Corp, or SPIC, issued a new energy REIT on the Shanghai Stock Exchange, raising RMB7.84 billion (USD1.1 billion). China Fund served as the fund manager and CSC Financial as its financial adviser and project manager. The underlying assets of CSC SPIC New Energy REIT comprised two wind power projects in Yancheng, in Jiangsu province, known as the “number one city for offshore wind power”, and nine photovoltaic projects. This marked China’s first new energy REIT issued by a central SOE to be approved by the China Securities Regulatory Commission, and also its first REIT to include offshore wind power.

This deal not only expanded the market for public REITs, but also diversified sources of funding, injecting vitality into the market. In addition, being a new energy deal, it was in line with China’s goal of achieving “peak carbon” by 2030 and “carbon neutrality” by 2060. In terms of the deal’s contribution to the local economy, it created jobs, increased tax revenue and drove the development of the local clean energy industry’s ecosystem.

ABS/REITS02

First non-credit enhanced CMBS from central SOE

CATEGORIES: Commercial acceptance bill; real estate

LEGAL COUNSEL: Grandway Law Offices acted as the legal adviser to CSC Financial, the plan manager.

KEY POINTS: A joint venture of CSSC and CITIC Pacific issued a commercial mortgage-backed security (CMBS) with a shelf size of RMB5.4 billion (USD760 million). This was the first non-credit enhanced CMBS from a central SOE, as well as the first CMBS project for both CSSC and CITIC Group. The core asset of the product is located in Shanghai Lujiazui Financial City, and has a total valuation of RMB10.5bn.

Unlike previous shelf instalment issuances where the issuer of each instalment remained the same, neither the issuers nor their shareholders are involved in the credit enhancement instrument, which helps to optimise the credit structure of enterprises and streamline the overall transaction. According to Grandway, this was the first time the model has been brought to the market.

ABS/REITS03

Jilin Electric issues first wind, solar clean energy quasi-REITs

CATEGORIES: Fund establishment; infrastructure REIT; new energy

LEGAL COUNSEL: Jingtian & Gongcheng advised SPIC Jilin Electric Power, the issuer.

KEY POINTS: SPIC Jilin Electric Power on 29 December 2022 listed China’s first wind and photovoltaic green carbon-neutral infrastructure quasi-REIT, as well as the largest clean energy quasi-REIT at that date, on the Shenzhen Stock Exchange. Core assets included five solar projects and two wind power projects.

This deal creatively introduced the partnership structure into quasi-REITs products. Jilin Electric Power and its consolidated subsidiary jointly set up a partnership with KangFu International Leasing, making full use of the more flexible governance mechanism and rights and obligations distribution system.

The partnership structure can serve as a model for energy enterprises to revitalise stock assets, reduce financing costs and optimise their asset-liability structure.

ABS/REITS04

Link REIT raises USD2.4bn

CATEGORIES: Infrastructure REIT; real estate

LEGAL COUNSEL: Baker McKenzie acted as legal adviser to Link, the fund manager. Linklaters acted as the legal adviser to multiple underwriters, including HSBC Hong Kong, DBS Asia Capital and JP Morgan. Eversheds Sutherland acted as special counsel to OCBC, one of the underwriters.

KEY POINTS: Link REIT completed its first rights issue since it listed 17 years ago, raising a total of HKD18.8 billion (USD2.4 billion), making it the largest rights issue in Hong Kong for 13 years. The basis of the rights issue was one rights unit for every five existing units, with a subscription price at HKD44.20 per rights unit. The deal was oversubscribed by more than 1.4 times. According to Eversheds Sutherland, this deal was one of the largest secondary offerings in Asia for 2023.

Link REIT is the most liquid and the largest REIT in Asia in terms of market capitalisation. As of 30 September 2023, it owned a diversified portfolio valued at HKD238 billion.

ABS/REITS05

Nanhai Industry Group issues USD132m CMBS

CATEGORIES: Commercial acceptance bill; industrial investment

LEGAL COUNSEL: KingBridge Law Firm advised the issuer.

KEY POINTS: Nanhai Industrial Group successfully issued an ABS of just over RMB940 million (USD132 million) on the Shanghai Stock Exchange, which was the first SOE CMBS in Foshan. With RMB620 million of priority A level product at a coupon rate of 3.4% and RMB320 million of priority B level product at a coupon rate of 3.45%, the deal marked the lowest interest rates for a CMBS in Guangdong Province within the past two years.

Nanhai Industry Group, a regional SOE managed by the Nanhai District State-owned Assets Supervision and Administration Bureau, is designed to facilitate the district’s efforts to build a modern industrial system consisting of high-tech manufacturing, a high-quality service industry, new energy, new materials, and advanced electronic information and biomedical industries.

ABS/REITS06

Ping An, Xiamen ITG issue receivables ABS

CATEGORIES: Asset securitisation; bonds

LEGAL COUNSEL: Llinks Law Offices advised Xiamen ITG Group.

KEY POINTS: Xiamen ITG, a core member company of ITG Holding, a Fortune Global 500 company, successfully issued three instalments of receivables ABS on the Shanghai Stock Exchange, with tranches of RMB520 million (USD74 million), RMB1.36 billion and RMB1bn, respectively. The product is managed by Ping An Securities. Core assets of the products are trade receivables claims of Xiamen ITG, the original equity owner, and its subsidiaries.

Listed on the SSE in 1996, Xiamen ITG is mainly engaged in supply chain management.

ABS/REITS07

SPIC’s first offshore wind power quasi-REIT

CATEGORIES: Funds; infrastructure REIT; new energy

LEGAL COUNSEL: Zhong Lun Law Firm acted as counsel to Paragon Trust.

KEY POINTS: SPIC Guangdong Electric Power successfully issued a quasi-REIT product on the Shanghai Stock Exchange with an offering size of RMB8.1 billion (USD1.1bn), making it China’s largest quasi-REIT, overtaking the deal of SPIC Huanghe Hydropower Development, and also the first offshore wind power quasi-REIT product following the close of the deal. Paragon Trust, the asset servicer, assumed the role of project co-ordinator and lead party during the issuance.

This project underwent multiple rounds of negotiation on minority shareholders’ equity withdrawal, and involved state-owned assets, offshore wind power assets, securitisation and other complex legal and regulatory issues.

To the market, SPIC’s success with quasi-REITs may offer a model pathway to revitalising energy infrastructure projects, including offshore wind power assets.

ABS/REITS08

XCMG issues USD767.4m ABN

CATEGORIES: Commercial acceptance bill; equipment manufacturing

LEGAL COUNSEL: C&T Partners advised the issuer.

KEY POINTS: XCMG successfully issued the first instalment of ABNs in the inter-bank market for 2022, with a total product size of RMB5.1 billion (USD720 million). According to C&T Partners, this deal represented the largest shelf registration in the construction machinery industry, and the largest single issuance in the same industry, with a financing interest rate superior to those of the AAA-rated central SOEs in the same period.

Although the project involved numerous subjects and a considerable issuance amount, XCMG Finance drove all parties to complete the preparation and examination of all registration materials in the shortest time available, obtained the ABN registration notice, while actively seeking for high-quality financial resources, ultimately leading to oversubscription of the notes.

M&A
  1. Air China’s tender for Shandong Airlines
  2. Aramco bets on China refining, bags major supply deal
  3. BYD pays USD2.2bn for Jabil’s mobility business
  4. Cargill sells China poultry unit to DCP Capital
  5. China Power acquires SPIC clean energy assets
  6. China Resources Land’s monster acquisition
  7. China’s first merger in financial leasing industry
  8. Chow Tai Fook’s tender offer to buy NWS
  9. Chubb increases stake in Huatai
  10. CSG acquires Enel’s Peruvian assets
  11. DFM acquires auto arm’s 55% stake
  12. Nanjing Nangang Iron and Steel United’s 60% equity transaction
  13. National pipeline’s west-east M&A, restructuring
  14. NetDragon’s overseas carve-out mergers with GEHI
  15. PSBC raises USD6.3bn in private placement
  16. Qingdao Port major asset reorganisation
  17. Shandong Gold’s USD1.8bn acquisition in Yintai Gold
  18. Shanxi Coking Coal Energy buys two coal affiliates
  19. Sinopec joins Kazakhstan’s biggest polythene project
  20. Sinosteel merges into China Baowu
  21. Six design institutes spinoff and merger
  22. SRBG buys East African potash project
  23. Subway’s biggest master franchise agreement
  24. Vistra and Tricor complete USD6.5bn merger
  25. Volkswagen invests USD700m in XPeng
  26. Xiamen C&D buys Red Star Macalline
  27. XPeng purchases Didi’s EV unit
  28. Yankuang Energy Group’s USD3.7bn purchase
  29. ZEMIC takes jet fighter public

M&A01

Air China’s tender for Shandong Airlines

CATEGORIES: Tender offer; aviation

LEGAL COUNSEL: Haiwen & Partners advised Air China.

KEY POINTS: Air China triggered a compulsory tender offer for the shares it did not own in Shandong Airlines after the acquisition of stakes held by Shansteel Financial and Qingdao Qifa, and a RMB6.6 billion (USD920 million) capital injection gave the nation’s flagship carrier a 42% holding in the B-share listed regional airline.

The deal marked the first significant consolidation of China’s aviation industry since the pandemic, with the takeover of a smaller rival by one of China’s three biggest state-owned airlines raising antitrust concerns. It also involved unique issues from the B-share market perspective and the parties’ state-owned nature.

M&A02

Aramco bets on China refining, bags major supply deal

CATEGORIES: Transfer by agreement; petrochemicals

LEGAL COUNSEL: White & Case acted as international counsel to Saudi Aramco, while Fangda Partners acted as PRC counsel. Grandall Law Firm advised Rongsheng Petrochemical and its controlling shareholder, Rongsheng Holding Group. T&C Law Firm also advised Rongsheng Holding Group.

KEY POINTS: Saudi Aramco paid RMB24.6 billion (USD3.4bn) for 10% of Rongsheng Petrochemical, which is a major stakeholder in one of China’s largest private refiners, Zhejiang Petroleum and Chemical (ZPC). The latter operates the country’s biggest single refining and chemicals complex. Aramco also signed a long-term agreement to supply 480,000 barrels of feedstock a day to ZPC.

M&A03

BYD pays USD2.2bn for Jabil’s mobility business

CATEGORIES: Asset acquisition; new energy; consumer electronics

LEGAL COUNSEL: King & Wood Mallesons advised BYD Electronics. JunHe and Skadden advised Jabil on PRC and overseas law, respectively.

KEY POINTS: BYD Electronics completed its USD2.2 billion acquisition of US-headquartered Jabil’s mobility business in Chengdu and Wuxi, the biggest of its kind for BYD to date. The transaction involved taxation, IP, banking and financing, cross-border dispute resolution and regulatory matters.

Prior to completion, Jabil had to finalise its reorganisation in Singapore as per the agreement between the parties. With this acquisition, BYD Electronics aims to expand its smartphone business and kickstart a new accelerated growth phase.

M&A04

Cargill sells China poultry unit to DCP Capital

CATEGORIES: Private equity; agribusiness

LEGAL COUNSEL: Haiwen & Partners and Paul Weiss advised DCP Capital on PRC and overseas law, respectively. Fangda Partners acted as Cargill’s counsel.

KEY POINTS: US agribusiness giant Cargill exited the Chinese market by selling its poultry business there to private equity firm DCP Capital. The sale included chicken farms and manufacturing sites in Chuzhou, in Anhui province.

Due to the tight two-month timeline for completing the acquisition, the due diligence process was conducted simultaneously with negotiations. However, Cargill’s incomplete disclosure of contracts with suppliers added complexity to the due diligence efforts. The significant reliance of the China operations on the parent company Cargill posed additional challenges in the separation process.

M&A05

China Power acquires SPIC clean energy assets

CATEGORIES: Share acquisition; energy

LEGAL COUNSEL: Slaughter and May, Zhongzi Law Office and JunHe advised China Power.

KEY POINTS: China Power International Development has completed the acquisition of five clean energy power companies from State Power Investment Corp (SPIC) for RMB10.8 billion (USD1.5 billion) in cash. These companies are engaged in wind and solar power generation and have project assets across 21 provinces in China. Notably, the acquisition occurred during the restructuring of two target companies located in Beijing and Fujian.

As a Hong Kong-listed company, China Power International Development was granted a put option under the listing rules, allowing the buyer or a third party to repurchase the acquired equity interests under specific circumstances. The HKEX has also exempted China Power from submitting connected transactions with Agricultural Bank of China in relation to the acquisition, simplifying the process.

M&A06

China Resources Land’s monster acquisition

CATEGORIES: Share acquisition; real estate

LEGAL COUNSEL: Zhong Lun Law Firm advised China Resources Land, while Tian Yuan Law Firm advised China Fortune Land Development (CFLD).

KEY POINTS: China Resources Land, a state-owned company, completed the largest M&A deal in the domestic property sector of 2022 by acquiring four companies under Hebei-based real estate company CFLD, valued at RMB12.4 billion (USD1.74bn).

This acquisition played a crucial role in the debt restructuring of CFLD, one of China’s earliest private sector real estate enterprises which had been facing a liquidity crisis. It also expedited the resolution of debt risks and provided a blueprint for state-owned property developers to address the crisis faced by private real estate enterprises through M&A.

The transaction solved various project-specific challenges such as unsigned transfer contracts for some land parcels, property height restrictions, and special buyback arrangements between CFLD and associated parties.

M&A07

China’s first merger in financial leasing industry

CATEGORIES: Secondary offering; share acquisition; financial leasing

LEGAL COUNSEL: Zhong Lun Law Firm advised China National Foreign Trade Financial & Leasing, while Grandall Law Firm advised CRRC Financial Leasing.

KEY POINTS: China Foreign Trade Financial & Leasing, a subsidiary of Minmetals Capital Holdings, acquired CRRC Financial Leasing in a landmark RMB14.2 billion (USD2bn) transaction, the first of its kind in China’s financial leasing industry.

China Foreign Trade Financial & Leasing issued additional equity interest to CRRC Group, CRRC Corp and Tianjin Trust in exchange for their equity interests in CRRC Financial Leasing, resulting in the dissolution of CRRC Financial Leasing and the transfer of its assets, liabilities and business operations to the acquirer.

The transaction, involving central enterprises and listed companies in a specialised industry, underwent strict supervision by the State-owned Assets Supervision and Administration Commission and the National Administration of Financial Regulation to comply with state-owned asset trading procedures and information disclosure requirements.

M&A08

Chow Tai Fook’s tender offer to buy NWS

CATEGORIES: Tender offer; energy; retail

LEGAL COUNSEL: Deacons and Dorsey advised Chow Tai Fook Enterprises on Hong Kong and US law, respectively. Woo Kwan Lee & Lo acted as Hong Kong counsel to NWS Holdings’ major shareholder, New World Development, while Allen & Overy acted as US counsel. Clifford Chance acted as NWS Holdings’ counsel. Norton Rose Fulbright advised Chow Tai Fook’s joint financial adviser, HSBC, while Slaughter and May acted on New World Development’s financial adviser, Goldman Sachs.

KEY POINTS: Jewellery group Chow Tai Fook Enterprises completed a pre-conditional voluntary cash offer through a subsidiary to acquire all shares of NWS Holdings, an infrastructure arm of property developer New World Development, and cancel its outstanding share options. This HKD35.5 billion (USD4.54bn) deal marked the largest M&A transaction in Hong Kong in 2023.

Leveraged financing from HSBC, Bank of China (Hong Kong) and ING Bank helped fund the acquisition. Regulatory approval from entities such as the Hong Kong Insurance Authority and the Bermuda Monetary Authority was necessary due to NWS Holdings’ ownership of multiple licensed companies.

M&A09

Chubb increases stake in Huatai

CATEGORIES: Stock acquisition; insurance

LEGAL COUNSEL: Jincheng Tongda & Neal acted for Chubb.

KEY POINTS: Chubb, the largest US-listed property and casualty insurer, purchased 35.9% of Huatai Insurance Group, marking one of the largest deals in China’s insurance sector.

This raised Chubb’s stake to 83.2%, making Huatai Insurance China’s first property insurance group to transition to foreign ownership.

M&A10

CSG acquires Enel’s Peruvian assets

CATEGORIES: Tender offer; outbound direct investment; energy

LEGAL COUNSEL: Allen & Overy advised China Southern Power Grid (CSG), while Hogan Lovells advised Enel’s counsel.

KEY POINTS: CSG acquired Enel’s power distribution and supply business in Peru for USD2.9 billion. Enel, the world’s second-largest electric utility, sold an 83.15% equity stake in Enel Distribucion Peru and complete ownership of Enel X Peru.

As Enel Distribucion Peru was listed on the Lima Stock Exchange, the acquisition had to adhere to local requirements regarding tender offers. Additionally, the transaction was contingent upon approval from the Peruvian antitrust authorities, and meeting China’s foreign direct investment regulations.

M&A11

DFM acquires auto arm’s 55% stake

CATEGORIES: Acquisition agreement; tender offer; automobiles

LEGAL COUNSEL: Zhong Lun Law Firm advised Dongfeng Motor Group, Jia Yuan Law Offices acted as legal counsel to the buyer’s financial adviser, while King & Wood Mallesons acted for Nissan Motor.

KEY POINTS: State-owned carmaker DFM Group acquired a controlling stake in Dongfeng Automobile for RMB6.2 billion (USD842 million). At the conclusion of the deal, DFM Group had 55% of Dongfeng’s shares, signalling that the central authorities are an above-board controller and had regained control after DFM Group and Nissan Motor set up a joint venture in 2003 to own Dongfeng Automobile.

The acquisition involved a transfer agreement and partial tender offer. To avoid triggering a general tender offer, DFM Group acquired 29.9% of the shares from the controlling shareholder of Dongfeng Automobile, below the 30% threshold. Subsequently, DFM Group offered a partial tender to other shareholders, seeking to acquire 25.1% of the shares.

M&A12

Nanjing Nangang Iron and Steel United’s 60% equity transaction

CATEGORIES: Right of first refusal; tender offer; dispute resolution; steel

LEGAL COUNSEL: AllBright Law Offices advised Fosun’s subsidiaries and one of Nanshan Iron & Steel Group’s major shareholders. Zhong Lun Law Firm advised the buyer, Hubei Xinyegang Steel, while Freshfields advised the buyer’s major shareholder. JC Master Law Offices acted for Nanshan Iron & Steel and one of its subsidiaries.

KEY POINTS: In October 2022, three subsidiaries of Fosun made an agreement to sell their stakes in Nanjing Iron & Steel United to Shagang Group. However, before finalising the deal, Fosun’s subsidiaries reached out to Nanjing Iron & Steel Group, the other major shareholder of Nanjing Iron & Steel United, to inquire about exercising its right of first refusal. Upon receiving a positive response, Fosun’s subsidiaries decided to cancel the contract with Shagang Group. This decision led to a lawsuit between Shagang Group and Fosun’s subsidiaries. After six months of legal battles, the parties eventually reached an out-of-court settlement.

This transaction sparked discussions regarding the boundaries and implementation of the right of first refusal.

In addition to the acquisition of Fosun’s stake, Nanjing Iron & Steel Group also received a RMB13.58 billion (USD1.9bn) investment from Hubei Xinyegang Steel, triggering a mandatory tender offer for the former’s listed subsidiary, Nanshan Iron & Steel.

M&A13

National pipeline’s west-east M&A, restructuring

CATEGORIES: Energy

LEGAL COUNSEL: Hiways Law Firm acted for the buyer.

KEY POINTS: China Oil and Gas Pipeline Network Corp’s West-East Gas company completed a RMB12 billion (USD1.67bn) acquisition and restructuring of three subsidiaries of Zhejiang Energy Group, focusing on natural gas development and pipeline operations.

The merger required thorough on-site due diligence and verification by the Department of Natural Resources, Department of Market Supervision and other administrative organisations across multiple locations in Zhejiang province. The transaction involved the transfer of assets and management rights, negotiation and performance of the M&A restructuring agreement, and adherence to the articles of association to ensure successful completion.

M&A14

NetDragon’s overseas carve-out mergers with GEHI

CATEGORIES: Spinoff listing; reverse takeover; education

LEGAL COUNSEL: Cleary Gottlieb and Walkers advised Best Assistant on US and Cayman Islands law, respectively. Kirkland & Ellis, Jingtian & Gongcheng, and Allen & Gledhill acted as NetDragon Websoft’s Hong Kong, PRC and Singapore counsel, respectively. Skadden, Commerce & Finance Law Offices, and Maples Group advised Gravitas Education Holdings (GEHI) on US, PRC and Cayman Islands law, respectively. Morrison & Foerster, Zhong Lun Law Firm, and Appleby acted as investor Ascendent Capital Partners’ US, PRC and Cayman Islands counsel, respectively.

KEY POINTS: Hong Kong-listed NetDragon separated its overseas education business and merged it with GEHI, a NYSE-listed company, to achieve a reverse takeover. The resulting entity, now known as Mynd.ai, has been valued at USD800 million and has transformed itself into an AI education entity.

NetDragon’s overseas subsidiary, Best Assistant, established a new entity named eLMTree to complete the merger via incorporating a wholly owned subsidiary, transferring the spun-off business, and exchanging existing shares for eLMTree shares in the merger.

As part of the transaction, Ascendent Capital Partners acquired USD65 million of GEHI convertible bonds.

After the merger, NetDragon’s overseas education business combined with GEHI’s early childhood education business in Singapore, while GEHI divested its operations in China to address data security concerns in the AI and education industries.

M&A15

PSBC raises USD6.3bn in private placement

CATEGORIES: Follow-on offering; banking & finance

LEGAL COUNSEL: King & Wood Mallesons advised the issuer, while Haiwen & Partners advised the investor.

KEY POINTS: Postal Savings Bank of China (PSBC) raised RMB45 billion (USD6.3bn) through a private offering, issuing 6.78bn shares at RMB6.64 apiece. China Mobile Communications subscribed to all the shares, with a five-year sales restriction. The bank is now the second-largest domestic shareholder of PSBC, holding 6.83% of the stock.

The issuer received approval from the Ministry of Finance, the former China Banking and Insurance Regulatory Commission (CBIRC), and the China Securities Regulatory Commission, while the investor also sought approval for shareholder status from the former CBIRC.

The capital infusion aimed to strengthen PSBC’s financial position, enabling the bank to expand its credit scale, enhance business development, and drive profitability.

M&A16

Qingdao Port major asset reorganisation

CATEGORIES: State asset reorganisation

LEGAL COUNSEL: Jia Yuan Law Offices acted as Qingdao Port’s counsel, while Commerce & Finance Law Offices advised financial adviser CITIC Securities.

KEY POINTS: Qingdao Port acquired eight subsidiaries from Rizhao Port Group and Yantai Port Group for RMB15.4 billion (USD2.14bn) by issuing shares and paying cash. In addition, Qingdao placed additional A shares to as many as 35 investors.

These eight subsidiaries, along with Qingdao Port, are part of the Shandong Port Group. The parent company had previously committed to resolving the overlapping businesses and competition within the industry by 2027. This commitment would be achieved through asset reorganisation, equity transfer and business restructuring.

M&A17

Shandong Gold’s USD1.8bn acquisition in Yintai Gold

CATEGORIES: Transfer by agreement; mining

LEGAL COUNSEL: Jingtian & Gongcheng advised the buyer, while Grandway Law Offices advised the seller.

KEY POINTS: State-owned Shandong Gold Mining completed the RMB12.76 billion (USD1.77bn) acquisition of a 23.1% stake in Yintai Gold, marking the largest acquisition in the A-share gold sector to date.

As Yintai’s share price undervalued the company, the final purchase price was determined by the company’s gold reserves, production and operating conditions, and mine prospects to ensure a comprehensive evaluation and a fair deal.

The transaction involved regulatory requirements of three stock exchanges as Shandong Gold Mining is listed in Hong Kong and Shanghai, while Yintai Gold is listed in Shenzhen.

M&A18

Shanxi Coking Coal Energy buys two coal affiliates

CATEGORIES: State asset reorganisation; energy

LEGAL COUNSEL: Guantao Law Firm advised the buyer.

KEY POINTS: Shenzhen-listed Shanxi Coking Coal Energy Group completed the RMB7.04 billion (USD980 million) acquisition of Huajin Coking Coal and Mingzhu Coal. The acquisition involved cash payment and share issuance, with the buyer acquiring a 51% stake in Huajin Coking Coal and a 49% stake in Mingzhu Coal.

Additionally, Shanxi Coking Coal Energy Group issued RMB4.4bn of shares to a maximum of 35 specific investors.

The controlling shareholder of Shanxi Coking Coal Energy Group has direct or indirect control over the two sellers. This acquisition can decrease inter-trade competition between the buyer and its controlling shareholder, minimise connected transactions, and standardise operations for the listed buyer.

M&A19

Sinopec joins Kazakhstan’s biggest polythene project

CATEGORIES: Share acquisition; petrochemicals

LEGAL COUNSEL: Han Kun Law Offices acted as Sinopec’s lead counsel, with assistance from Kinstellar on Kazakhstan law. Fieldfisher acted as the seller's counsel.

KEY POINTS: China’s Sinopec acquired a 30% stake in KazMunayGas JSC, the state-owned oil and gas company of Kazakhstan, for USD7 billion. This acquisition allowed Sinopec to participate in Kazakhstan’s largest polythene project, located in the Atyrau region of western Kazakhstan. The project has been designed with an annual capacity of 1.25 million tons per year.

Signed in the presence of Kazakhstan’s president, Kassym-Jomart Tokayev, the deal represented one of the key projects in the energy co-operation between China and Kazakhstan under the Belt and Road Initiative.

M&A20

Sinosteel merges into China Baowu

CATEGORIES: State asset reorganisation; Steel industry

LEGAL COUNSEL: Fangda Partners and Clifford Chance acted as China Baowu Group’s domestic and international counsel.

KEY POINTS: Sinosteel Group merged into the world’s largest steel producer, China Baowu Steel Group, to resolve its RMB100 billion (USD14bn) debt crisis that emerged in 2014. The transaction also aligns with the Chinese government’s strategy of consolidating the steel giants to optimise resources.

To safeguard the interests of Sinosteel Group’s creditors, the deal was ultimately executed via gratuitous transfer and under approval from the State Council. The discussion of the proposal overlapped with the listing application of Sinosteel Group’s subsidiary, Luonai Materials Technology. Thus, it was necessary to balance the acquisition plan with the steady advancement of the IPO process.

Additionally, the transaction involved various foreign jurisdictions including Australia, Japan, Germany and Turkey.

M&A21

Six design institutes spinoff and merger

CATEGORIES: Reverse takeover; construction

LEGAL COUNSEL: Jia Yuan acted as legal counsel for both parties involved in the transaction. DeHeng Law Offices advised CCCC and China Urban and Rural Holding Group. Zhong Lun Law Firm acted as legal counsel for the sole financial adviser.

KEY POINTS: China Communications Construction Company (CCCC) and China Urban and Rural Holding Group spun off six design institutes in a reverse takeover that created the largest publicly traded company in China specialising in engineering survey, design and consulting.

The six institutes, valued at RMB23.5 billion (USD3.7bn), were sold to A-share listed Qilianshan Cement Group.

As part of the deal, CCCC’s parent company received Qilianshan’s cement assets, valued at RMB10.43bn. Qilianshan issued shares to CCCC and China Urban and Rural, compensating for the price difference, and raised an additional RMB2.26bn through a non-public share offering. The company was renamed CCCC Design and Consulting Group.

M&A22

SRBG buys East African potash project

CATEGORIES: Share acquisition; auction; mining

LEGAL COUNSEL: Zhong Lun Law Firm, Hamilton Locke, and Berhane Gila-Michael acted as the buyer’s PRC, Australian and Eritrean counsel, respectively. Steinepreis Paganin and Kebreab Habte Michael advised the seller on Australian and Eritrean law, respectively.

KEY POINTS: Australian fertiliser developer Danakali sold the Colluli sulphate of potash project in Eritrea for USD166 million at auction. The buyer, a subsidiary of Chinese engineering company Sichuan Road and Bridge Group (SRBG), eventually received a 50% stake in the world’s largest undeveloped potash basin.

Since Eritrean National Mining held the remaining equity interests in the project and their consent was required for SRBG to purchase the stake, SRBG engaged in negotiations with many local authorities. Additionally, approval from China’s Ministry of Commerce was necessary for the outbound investment to proceed smoothly.

To tackle the challenges posed by unique features of the Eritrean legal system, the transaction was tailor-made to ensure the secure transfer of equity.

M&A23

Subway’s biggest master franchise agreement

CATEGORIES: Franchising; food & beverage

LEGAL COUNSEL: Baker McKenzie represented Subway. Kirkland & Ellis and Haiwen & Partners advised the consortium of private investors on international and PRC law, respectively. Han Kun Law Offices represented one of the private investors.

KEY POINTS: International fast-food chain Subway sold its mainland Chinese business to Shanghai Fu-Rui-Shi Corporate Development (FRS) and reached a new master franchise agreement, which is one of the world’s largest master franchise agreements in the fast-food industry to date.

FRS, backed by a consortium of private investors that includes Asia Investment Capital, has gained exclusive management and development rights for all Subway outlets in China. It plans to open 4,000 stores in mainland China over the next two decades, which would represent a sevenfold increase in the number of outlets.

M&A24

Vistra and Tricor complete USD6.5bn merger

CATEGORIES: Private equity

LEGAL COUNSEL: Latham & Watkins represented the Baring Asia Private Equity Fund V and VI, and Vistra. Ropes & Gray acted for the Baring Asia Private Equity Fund VIII and Tricor, while Milbank also acted for one of the affiliated investment funds under BPEA EQT. Weil advised the joint financial advisers.

KEY POINTS: Private equity firm BPEA EQT has completed the merger of Vistra and Tricor, both in portfolios of funds it manages, creating a company with a market value of up to USD6.5 billion and marking one of Asia’s largest PE-backed transactions in 2023.

The Hong Kong-headquartered combined company, which is still owned by BPEA EQT, provides funds and corporate services to clients in more than 50 jurisdictions.

M&A25

Volkswagen invests USD700m in XPeng

CATEGORIES: Transfer by agreement; electric vehicles

LEGAL COUNSEL: Simpson Thacher, Freshfields and Fangda Partners advised XPeng on US, Hong Kong and PRC law, respectively. Clifford Chance and JunHe advised Volkswagen on international and PRC law, respectively.

KEY POINTS: Electric vehicle maker XPeng sold a 4.99% stake to Volkswagen for USD705 million. The two parties will jointly develop two Volkswagen-branded B-segment all-electric autos after completion. This partnership marked the first Chinese auto manufacturer to contribute core technology and expertise to a leading European counterpart, overturning decades of technology transfer norms.

The deal was a rare instance of a so-called private investment in public equity, or PIPE, by a strategic investor in the US and Hong Kong-listed XPeng, requiring meticulous planning and strict adherence to listing regulations.

M&A26

Xiamen C&D buys Red Star Macalline

CATEGORIES: Transfer by agreement; debt for equity swap;

LEGAL COUNSEL: Tian Yuan Law Firm advised the seller, while King & Wood Mallesons advised the buyer.

KEY POINTS: A-share listed property and logistics company Xiamen C&D acquired a 29.95% stake in furnishing mall operator Red Star Macalline Group from major shareholder RSM Holding. The RMB6.3 billion (USD890 million) deal was the first acquisition to date by an A-share listed company of another one that was publicly traded on both the Hong Kong and A-share markets.

Red Star Macalline Group, which is listed in Hong Kong and Shanghai, enticed Alibaba to exchange RSM Holding bonds into Red Star’s shares. This helped reduce RSM Holding’s stake ratio, avoiding the need for a tender offer.

M&A27

XPeng purchases Didi’s EV unit

CATEGORIES: Secondary public offering; electric vehicles

LEGAL COUNSEL: Fangda Partners and Sullivan & Cromwell advised XPeng on PRC and international law, respectively. Han Kun Law Offices and Skadden acted as Didi’s PRC and international counsel, respectively.

KEY POINTS: Electric vehicle maker XPeng bought Didi Global’s smart-car development arm for HKD5.84 billion (USD750 million). This unit will launch an A-class electric vehicle brand under a project named “Mona”.

XPeng will fund the acquisition by issuing as many as 91.13 million class A shares, or about 5.26% of the company’s total issued share capital.

According to XPeng’s filing to the Hong Kong stock exchange, about 58.16 million class A shares of XPeng were issued at a price of HKD64.03 apiece on the initial delivery date. Additional shares may be issued subject to the brand achieving annual sales of 180,000 units within two years.

M&A28

Yankuang Energy Group’s USD3.7bn purchase

CATEGORIES: Share acquisition; energy

LEGAL COUNSEL: King & Wood Mallesons advised the buyer, Yankuang Energy Group, while Commerce & Finance Law Offices advised the buyer’s financial adviser.

KEY POINTS: Yankuang Energy Group, a coal producer in eastern China, acquired majority stakes in two units of its controlling shareholder, Shandong Energy Group, for RMB26.4 billion (USD3.7bn), aiming to minimise the competition between them.

The share transfer by agreement involved Yankuang Energy taking a 51% stake in Luxi Mining and Xinjiang Energy & Chemical.

With a decline in coal production in China’s central and eastern regions, this acquisition helped Yankuang Energy Group gain access to high-quality and scarce coking coal from Shandong. In addition, it can optimise resource allocation to support the development of the chemical industry in Xinjiang.

M&A29

ZEMIC takes jet fighter public

CATEGORIES: Reverse takeover; national defence; aviation

LEGAL COUNSEL: Jia Yuan Law Offices advised Zhonghang Electronic Measuring Instruments (ZEMIC).

KEY POINTS: The listed maker of measuring, testing and control instruments acquired all the equity of J-20 fighter jet maker from State-owned aviation and defence giant Aviation Industry Corp of China by issuing RMB17.4 billion (USD2.43bn) worth of new shares.

The injection of Chengdu Aircraft Industrial Group into the listed vehicle was a rare securitisation of state-owned assets by a military-industrial enterprise, allowing share purchases from the public market.

Meticulous calculation of share prices in the transaction and the valuation of Chengdu Aircraft Industrial Group were required to maintain the public float of more than 10% and avoid the risk of delisting.

PE/VC
  1. AESC’s series B round
  2. Avatr’s USD411m series B funding round
  3. China Aerospace receives strategic investment
  4. Cofco Fortune secures USD2.9bn investment
  5. Enflame Technology’s series D financing
  6. ESWIN Computing’s series D financing
  7. Hasten Biopharma’s series A financing
  8. HESAI Technology’s series D financing
  9. KKR exits Yuehai Feed
  10. Lotus Technology’s series pre-A and series A financing
  11. Oriza sets up industrial machine tool fund
  12. Shougang Zhixin Electromagnetic’s financing
  13. Sinoma Lithium Battery Separator financing
  14. SJ Semiconductor’s series C+ financing
  15. Tianjin rail industry fund raises USD1.4bn
  16. Vivo Capital pharma fund success

PE/VC01

AESC’s series B round

CATEGORIES: Financing; electric vehicles

LEGAL COUNSEL: Fangda Partners, Wilson Sonsini, Simpson Thacher and Freshfields advised the investors, while Davis Polk advised AESC.

KEY POINTS: AESC, a maker of batteries for electric vehicles, completed its series B financing of USD1 billion.

AESC is a joint venture set up by Nissan Motor and NEC in 2007, headquartered in Japan. Envision Energy, a Chinese technology company, took a controlling stake in the company in 2018.

Dedicated to the R&D, design, manufacturing and sales of power and storage battery systems, AESC has entered into a strategic co-operation with international and domestic automobile manufacturers including Mercedes-Benz, BMW, Nissan, Renault, Honda, Mazda, Hyundai, FAW, Dongfeng, Geely and Chery, supplying batteries for more than 950,000 EVs in 59 countries.

PE/VC02

Avatr’s USD411m series B funding round

CATEGORIES: Financing; electric vehicles

LEGAL COUNSEL: Zhong Lun Law Firm advised Avatr.

KEY POINTS: Avatr completed its series B financing of RMB3 billion (USD411 million), taking the company’s valuation close to RMB20 billion. Apart from additional investments from Changan Automobile, South Industry Assets Management and Liangjiang Industry Fund, Avatr also attracted financing from state-owned investors such as Chongqing Industrial Fund of Funds Chongqing Industrial Investment Master Fund, Bocom Financial Asset Investment and Guangzhou Development District Holding.

Established in 2018, Avatr is jointly held by Changan Automobile, Huawei and CATL, and is committed to building an international high-end smart electric vehicle brand with support from the three shareholders in vehicle R&D and intelligent manufacturing, intelligent vehicle solutions, and intelligent energy ecology. Since its name change from Changan-Nio on 20 May 2021, Avatr has completed three rounds of financing.

PE/VC03

China Aerospace receives strategic investment

CATEGORIES: Financing; drone technology

LEGAL COUNSEL: Fangda Partners advised CDB Capital. V&T Law Firm advised Aerospace Era Feihong Technology.

KEY POINTS: Aerospace Era Feihong Technology, a subsidiary of China Aerospace Times Electronics completed its planned capital increase, raising RMB3.8 billion (USD530 million) from strategic investors led by CDB Capital, following the conclusion of a public listing period on the Beijing Equity Exchange.

The deal involved the sale of almost 29% of the company’s stock to eight new strategic investors, with CDB subscribing to as much as RMB1.8bn. The stake of China Aerospace Times fell to about 53%.

Founded in 2018, Aerospace Era Feihong specialises in the R&D, design, production and sale of unmanned aircraft systems, with a commitment to developing advanced unmanned aircraft technology and the application of AI and big data in the country’s unmanned systems.

PE/VC04

Cofco Fortune secures USD2.9bn investment

CATEGORIES: Equity exchange; food

LEGAL COUNSEL: Zhong Lun Law Firm acted as the special legal adviser to this deal. Kangda Law Firm advised Cofco Fortune. Global Law Office acted as the legal adviser to the National Council for Social Security Fund, the lead investor. Jingtian & Gongcheng was the legal adviser to China Structural Reform Fund, an investor.

KEY POINTS: Cofco Fortune introduced strategic investors to raise RMB21 billion (USD2.9bn), which was China’s largest private equity financing project in 2022. The investors included the National Council for Social Security Fund, Cosco Shipping, Chengtong Holdings Group, China Life, PPP Fund, Temasek and Affirma Capital. The deal valued Cofco Fortune at about RMB95bn and formed a mixed-ownership equity structure with state and international capital.

Cofco Fortune was set up by parent Cofco injecting its core agrifood assets into the company in 2020. The company’s business involves grain, oils and oilseeds, sugar, cotton and other foodstuff, with 2022 revenue exceeding RMB500bn.

PE/VC05

Enflame Technology’s series D financing

CATEGORIES: Financing; artificial intelligence

LEGAL COUNSEL: Zhong Lun advised Enflame Technology. AllBright advised the lead investor, subsidiaries and industrial funds of Shanghai International Group. Haiwen & Partners advised the co-investors. Junyou Law Firm advised the existing shareholders.

KEY POINTS: Enflame Technology completed its series D financing with the participation of more than 15 institutions, raising a total of RMB2 billion (USD280 million), marking the single-largest financing in the field of domestic AI chipmaking in 2023. The investment was jointly led by subsidiaries and industrial funds of Shanghai International Group, and followed by both new and existing shareholders including Tencent, Meitu Technology, Summitview Capital, YTI Capital, Hundreds Capital, Redpoint China Ventures, GF Qianhe, Delta Capital, and Pudong Investment Holdings.

The deal involved more than 50 new and existing shareholders. The timeline was highly compressed, and the deal was fast-paced and involved multiple procedures. Additionally, it required shareholder restructuring and several rounds of investor interest balancing, which made the negotiations very challenging.

PE/VC06

ESWIN Computing’s series D financing

CATEGORIES: Financing; semiconductors

LEGAL COUNSEL: Jingtian & Gongcheng advised ESWIN Computing.

KEY POINTS: ESWIN Computing raised more than RMB3 billion (USD417 million) in its series D financing jointly led by Financial Street Capital and Guoxin Investment, and followed by E-town Capital, Ruicheng Fund and Sino-Singapore Fund, among others. This deal involved a wide range of entities and a tight timetable, along with communication and settlement with previous shareholders.

With RISC-V chip technology as its core, ESWIN Computing is a next-generation provider of computing architecture chips and solutions. RISC-V is an open-source instruction set architecture with technical merits such as simple instructions, availability of modular options, low cost and the ability to be tailored. In recent years, it has gained strong momentum in the internet of things, smart homes and other areas.

PE/VC07

Hasten Biopharma’s series A financing

CATEGORIES: Financing; biotechnology

LEGAL COUNSEL: Fangda Partners acted as the legal adviser to Hasten Biopharma.

KEY POINTS: Hasten Biopharma’s series A financing raised USD315 million, jointly led by CBC Group, one of the largest healthcare-dedicated investment firms in Asia, and Mubadala Investment, a sovereign wealth fund from Abu Dhabi, with follow-on investments from other institutional investors.

Established by CBC Group, Hefei Industry Investment and the government of Feidong county in Hefei, Hasten Biopharma is an innovative biopharma company dedicated to treating China’s chronic and geriatric diseases, as well as acute and critical illnesses.

The financing was launched after Hasten Biopharma had obtained exclusive rights to five cardiovascular and metabolic drugs for mainland China from Takeda Pharmaceuticals in March 2022, and will be used for future acquisitions and business development of the innovative product pipeline.

PE/VC08

HESAI Technology’s series D financing

CATEGORIES: Financing; light detection and ranging (lidar)

LEGAL COUNSEL: Commerce & Finance Law Offices advised HESAI Technology. Jingtian & Gongcheng advised the investors.

KEY POINTS: Series D financing for HESAI Technology secured more than USD370 million, led by GL Ventures, Xiaomi Group, Meituan, CPE and Huatai USD Fund and with participation from existing shareholders including Lightspeed China Partners, Lightspeed Venture Partners and Qiming Venture Partners.

Given the tight schedule and the fact that the financing was carried out in tandem with the company’s red-chip restructuring, the deal was designed to synchronise the two processes. The deal was also complicated by the diversity of investors, as existing and new investors, and industrial and financial investors, took part in the round.

HESAI Technology is a global leader in lidar R&D and manufacturing. Its products enable a broad spectrum of applications including passenger and commercial vehicles, with advanced driver assistance systems and autonomous driving vehicles.

PE/VC09

KKR exits Yuehai Feed

CATEGORIES: M&A; agriculture

LEGAL COUNSEL: Paul Weiss acted as KKR’s legal counsel.

KEY POINTS: KKR’s Fortune Magic liquidated its position in Yuehai Feed, a leading aquatic feed company in China, raising RMB750 million (USD104 million) selling 99.7 million shares, or a stake of more than 5%, through centralised bidding, block trading and share transfers. The sale represented an incremental gain of about RMB223 million from the original stake. The two companies have been working together for eight years.

New York-based KKR is one of the world’s largest USD-denominated investment funds, managing more than USD500 billion in assets globally.

It is uncommon to see a foreign private equity firm exit from an A-share listed company via private agreement, as it is subject to review.

PE/VC10

Lotus Technology’s series pre-A and series A financing

CATEGORIES: Financing; electric vehicles

LEGAL COUNSEL: Han Kun Law Offices acted as PRC counsel to Lotus Technology.

KEY POINTS: Lotus Technology, part of luxury sports carmaker Lotus Group, secured USD370 million through its series pre-A and series A financing. Investors included NIO Capital, Sequoia China, GLy Capital and Hubei Changjiang Jingkai Fund.

Headquartered in Wuhan, Lotus Technology owns the long-established British luxury sports car brand, Lotus. In 2017, Geely bought a 51% stake in Lotus and announced its plan to make a full transformation to electrification and intelligent automotive design. The remaining stake is owned by Malaysia’s Etika Automotive.

PE/VC11

Oriza sets up industrial machine tool fund

CATEGORIES: Fund establishment; manufacturing

LEGAL COUNSEL: Haiwen & Partners acted as counsel to Oriza, the general partner. Jingtian & Gongcheng acted as counsel to the National Manufacturing Transformation and Upgrading Fund, the limited partner.

KEY POINTS: Machine Tool Industrial Investment Fund was established in Suzhou, Jiangsu province, with a registered capital of RMB15 billion (USD2bn). According to Haiwen & Partners, it is the first national industrial PE fund in the machine tool sector, which is a national strategy fund approved by the State Council. Oriza serves as the executive affairs partner. SOEs in Jiangsu province, and the National Manufacturing Transformation and Upgrading Fund, are fund partners.

The investment scope of the machine tool fund includes both primary and secondary debt markets, aiming to strengthen and increase the independence of the high-end machine tool industry. Moving China’s machine tool sector up the value and innovation chain is seen as essential to developing Chinese high-tech and strategic industries.

PE/VC12

Shougang Zhixin Electromagnetic’s financing

CATEGORIES: Financing; new materials

LEGAL COUNSEL: Jingtian & Gongcheng advised Shougang Zhixin Electromagnetic.

KEY POINTS: Shougang Zhixin Electromagnetic, a manufacturer of electrical steel, successfully completed its second round of financing on the China Beijing Equity Exchange (CBEX), raising RMB2 billion (USD280 million). This deal involved not only a competitive negotiation process at the CBEX, but also the exercise of preferential subscription rights by existing shareholders. There were 15 investors including CDB Development Fund, TBEA, ICBC Asset, Chengtong ICBC, SDIC Fund and Everbright Financial Holding.

Shougang Zhixin Electromagnetic is the only electrical steel manufacturing platform affiliated to Shougang Group. It is among very few enterprises globally capable of mass producing ultra-thin specification high magnetic induction-oriented electrical steel, and one of the only two enterprises in China that can supply high magnetic induction-oriented electrical steel for extra-high voltage transformers. In the field of non-oriented high-grade electrical steel, it is also one of only two enterprises in China with massive and stable output of the whole set of products for new energy vehicles.

PE/VC13

Sinoma Lithium Battery Separator financing

CATEGORIES: Financing; new energy

LEGAL COUNSEL: Zhong Lun acted as the legal adviser to all investors.

KEY POINTS: Sinoma Lithium Battery Separator, a controlled subsidiary of Sinoma Science & Technology, completed its capital increase by public listing on the Shanghai United Assets and Equity Exchange. Sinoma Science & Technology, Sinopec capital, and CNBM (Anhui) New Materials Fund invested RMB1.5 billion (USD210 million), RMB1.5bn and RMB1.4bn, respectively. Chengtong Mixed-ownership Reform Fund, CRHC Science and Technology Reform Fund, and Three Gorges Capital made an investment of RMB2.1bn through a newly established partnership. After this deal, Sinoma Lithium Battery Separator was valued at RMB14.2bn.

Established in 2016, Sinoma Lithium Battery Separator has a base film production capacity of 1.3 billion square metres a year. It also has globally advanced wet diaphragm manufacturing equipment and leading R&D capabilities, and its business covers major lithium battery markets at home and abroad.

PE/VC14

SJ Semiconductor’s series C+ financing

CATEGORIES: Financing; semiconductors

LEGAL COUNSEL: Cooley acted as legal adviser to SJ Semiconductor. Maples Group advised SJ Semiconductor on Cayman Islands law.

KEY POINTS: SJ Semiconductor closed its series C+ financing, raising more than USD500 million. After the deal, its total historical funding exceeded USD1 billion, with a valuation of nearly USD2bn. The initial investors included Legend Capital, Goldstone Investment, INCE Capital, Jade Stone Venture, Shang Qi Capital, Leafoison Capital, TCL Capital, China Fortune-Innovation Capital and GLP-C&D Capital. Existing shareholders, Oriza Rivertown and Oriza Hua Capital, offered additional investment.

SJ Semiconductor, founded in 2014, is the first in China to produce advanced 12-inch wafer bumping, and offers first-class MEOL wafer manufacturing and testing services, as well as developing 3D multi-die integration technology and solutions.

PE/VC15

Tianjin rail industry fund raises USD1.4bn

CATEGORIES: Financing; infrastructure

LEGAL COUNSEL: Guantao Law Firm served as legal adviser to Tianjin Rail Transit Industry Fund.

KEY POINTS: With China Insurance Investment acting as fund manager and Tianjin Railway Construction & Investment Holding, wholly owned by Tianjin Railway Transit Group, as the executive partner, Tianjin Rail Transit Industry Fund Partnership was established with a target fundraising size of RMB10 billion (USD1.4bn), with two general partners for the partnership PE fund.

This deal involved multiple shareholders of state-owned institutions, so the balance of shareholders’ interests needed to be considered. Tianjin Railway Construction & Investment Holding contributed 36.56%.

The fund is expected to invest in areas such as equity of unlisted companies, non-publicly issued or traded shares of listed companies, convertible and exchangeable bonds, market-based and legalised debt-equity swaps, and equity fund shares.

PE/VC16

Vivo Capital pharma fund success

CATEGORIES: Fund establishment; healthcare

LEGAL COUNSEL: Jingtian & Gongcheng acted as legal adviser to Vivo Capital.

KEY POINTS: Vivo Capital launched its first renminbi fund, raising nearly RMB10 billion (USD1.4bn). According to Jingtian & Gongcheng, this was the largest RMB healthcare fund to be made public since 2022. The fund will focus on investment opportunities in new drugs, pharmaceutical R&D and the production of related instruments and equipment, clinical equipment, diagnostic instruments and consumables, professional services related to the development of new drugs, healthcare services and synthetic biology.

Founded in 1996, Vivo Capital is a global healthcare investment firm that has funded more than 300 companies in the areas of biopharmaceuticals, specialty pharmaceuticals, medical devices, and other subsectors of healthcare and life sciences.

Projects
  1. Airbus builds first full cycle aircraft service centre
  2. Chongqing Bishan-Tongliang railway project
  3. Cosco finances Peru’s big venture investment
  4. Cyprus LNG pile pipe shipping project
  5. Gezhouba builds solar power stations in Uzbekistan
  6. HK’s largest cold storage facility raises USD1.13bn
  7. Huayou Cobalt’s nickel collaboration project in Indonesia
  8. NEOM smart city project in Saudi Arabia
  9. Pudong Airport initiates fourth expansion phase

Projects01

Airbus builds first full cycle aircraft service centre

CATEGORIES: Construction; aviation

LEGAL COUNSEL: AllBright Law Offices advised Chengdu Airport Industry Xingcheng Investment Development; Zhong Lun Law Firm advised Airbus.

KEY POINTS: The Airbus full lifecycle services centre in Chengdu’s Shuangliu district wrapped up in September 2023. It marked a global milestone as the sole aircraft recycling initiative managed by a manufacturer, and Airbus’ inaugural full lifecycle services centre outside Europe. Offering a spectrum of services such as parking, storage, repairs, modification, dismantling, recycling of aircraft, and its second-hand usable aerial material distribution business, the centre aims to generate more than RMB21 billion (USD2.9bn) by 2030.

The project involved the Shuangliu district government, Airbus, Tarmac Aerosave and Satai, covering the establishment of joint ventures, project financing, construction, leasing and cross-border procurement. AllBright provided comprehensive legal support, ensuring compliance and meeting stakeholders’ needs across various fields.

Projects02

Chongqing Bishan-Tongliang railway project

CATEGORIES: Construction; transportation

LEGAL COUNSEL: Tahota Law Firm advised Chongqing Municipal Government.

KEY POINTS: Construction of the entire route of Chongqing Bishan-Tongliang Railway, with a total investment of about RMB8.6 billion (USD1.2bn), was completed, with track laying advancing by more than a third. Pioneering the first rail transit project in China under the PPP+TOD model, it aims to revamp the integration of rail transport and adjacent land resources. This innovative approach seeks to address funding gaps in rail transit construction and operation by leveraging land development along the rail corridor – a novel exploration to tackle the common issue of subways running at a loss in China’s cities.

In China’s current legal system, the land supply processes for public projects like rail transit, and for commercial-residential purposes, are governed by different regulations, posing challenges to the implementation of rail PPP+TOD initiatives. Tahota constructed the legal framework for this project, drafted project contracts, engaged in negotiations, and facilitated a groundbreaking attempt at simultaneous bidding and implementation.

Projects03

Cosco finances Peru’s big venture investment

CATEGORIES: Construction; port infrastructure; financing

LEGAL COUNSEL: Mayer Brown acted as the lenders’ international counsel, Appleby advised on Bermuda and BVI law, while Garrigues Peru advised on Peru law; Rebaza Alcázar & De Las Casas advised Volcan Compañía Minera

KEY POINTS: COSCO Shipping’s Peru Chancay Multi-Purpose Terminal secured a 15-year loan of USD975 million, making it Peru’s most significant investment venture of 2023. The financing involved negotiations between the Chinese, Hong Kong and Peruvian companies and covered asset pledges, account pledges, land and concession mortgages, and a contracting agreement with the project.

The Chancay Multi-Purpose Terminal represented COSCO Shipping Ports’ majority-owned port project in South America. Positioned as a flagship endeavour within China’s Belt and Road Initiative, the terminal is expected to be fully operational in 2024 and to develop into an important hub port for the entire South Pacific.

Projects04

Cyprus LNG pile pipe shipping project

CATEGORIES: Construction; maritime

LEGAL COUNSEL: DOCVIT Law Firm served as the legal counsel for Docvit International Logistics.

KEY POINTS: Docvit International Logistics collaborated with China Petroleum Pipeline Material and Equipment Corp on the shipping of pipe pile for Cyprus LNG Terminal Project. As it was the largest single energy project in Cyprus and the first project contracted by a Chinese company in this region, safe transportation of LNG piles is crucial.

This project involved multiple overseas entities spanning various jurisdictions, such as gas infrastructure companies, port authorities, banks, shipping companies and insurance firms. DOCVIT Law Firm provided legal services in international trade, shipping and insurance, ensuring legal compliance across jurisdictions.

Projects05

Gezhouba builds solar power stations in Uzbekistan

CATEGORIES: Construction; energy; Belt and Road

LEGAL COUNSEL: Jingtian & Gongcheng advised Gezhouba Group Overseas Investment; Centil Law advised it on Uzbekistan law.

KEY POINTS: Gezhouba Group Overseas Investment plans to build a 1GW photovoltaic project in Uzbekistan. The project includes the simultaneous establishment of 500MW photovoltaic power stations in the Karaulbazar district of Bukhara and Kashkadarya, making it the first major new energy project by a Chinese enterprise in Central Asia, and the largest photovoltaic project in the region under the Belt and Road Initiative. The development will help ensure power supply in the region and create thousands of jobs for locals.

Due to the short development timeframe provided by Uzbekistan, Jingtian & Gongcheng worked efficiently to assist Gezhouba in conducting due diligence, negotiating agreements and finalising the project plan, facilitating the successful implementation of the project.

Projects06

HK’s largest cold storage facility raises USD1.13bn

CATEGORIES: Construction; infrastructure; financing

LEGAL COUNSEL: Allen & Overy advised borrowers, Chinachem Group and ESR Group; Mayer Brown advised lenders including Sumitomo Mitsui Banking, United Overseas Bank, Oversea-Chinese Banking, Industrial and Commercial Bank of China (Asia), Bank of East Asia and China CITIC Bank, while Ogier advised on BVI law.

KEY POINTS: Chinachem Group and ESR Group jointly secure a HKD8.8 billion loan (USD1.13bn) for a five-year term to construct the largest cold storage facility in Hong Kong to date, the Kwai Chung Cold Storage and Logistics Centre. This loan stands as one of Hong Kong’s largest green loans in 2023. Mayer Brown introduced an innovative “hybrid split-loan tranches” structure, allowing guarantors to secure certain portions of the loan at lower rates, while the remainder follows standard market rates with no recourse, effectively reducing the overall project’s borrowing costs and benefiting both guarantors and unsecured lenders.

Mayer Brown drafted green provisions based on the framework of the Green Loan Principles jointly released by the Loan Market Association and Asia Pacific Loan Market Association, and negotiated and revised them to ensure compliance with green loan standards.

Projects07

Huayou Cobalt’s nickel collaboration project in Indonesia

CATEGORIES: M&A; metals

LEGAL COUNSEL: White & Case acted as international legal counsel for Huayou Cobalt; Baker McKenzie FenXun and its Indonesian affiliate HHP Law Firm advised PT Vale Indonesia (PTVI).

KEY POINTS: Huayou Cobalt, China’s leading cobalt product supplier, collaborated with global automaker Ford and one of the world’s largest nickel producers, PTVI, on the Pomalaa Block High-Pressure Acid Leaching (HPAL) Project.

This project, classified as a national-level strategic initiative in Indonesia, involves a total investment of IDR67.5 trillion (USD4.5 billion). Once completed, it is expected to yield 120,000 tons of nickel per year, catering to the demand of 2 million electric vehicles. Additionally, it aims to promote sustainable production in Indonesia’s nickel industry and drive the development of its electric vehicle value chain.

White & Case noted potential legal complexities, including Indonesia’s resource ownership policy changes affecting PTVI’s shareholding, introducing uncertainties to the collaboration agreement. Mining licence renewal terms and the US Inflation Reduction Act will also impact the ownership structure in the agreement. The Chinese pure electric vehicle manufacturing industry may face export restrictions in certain jurisdictions, ESG considerations, and stricter compliance regulations.

Projects08

NEOM smart city project in Saudi Arabia

CATEGORIES: Construction; infrastructure

LEGAL COUNSEL: Pinsent Masons advised multiple Chinese contractors.

KEY POINTS: Saudi Arabia’s NEOM project, valued at USD500 billion, is one of the world’s largest and most complex transportation and public infrastructure projects, aiming to create a highly automated city utilising clean energy sources, such as solar and wind power. Chinese companies undertook various infrastructure projects including tunnels, dams, high-speed railways, renewable energy and utilities.

Pinsent Masons provided contracts review, negotiation and modification services for 80% of Chinese-contracted NEOM projects, navigating new legal challenges under Saudi Arabia’s Civil Transactions Law.

Projects09

Pudong Airport initiates fourth expansion phase

CATEGORIES: Construction; aviation

LEGAL COUNSEL: Hiways Law Firm acted as legal adviser to Shanghai Pudong International Airport.

KEY POINTS: Shanghai Pudong International Airport Phase IV Expansion Project encompasses six major components, including the terminal area, runway area, passenger transit, municipal facilities, new eastern cargo area, and associated support. With a total investment of RMB80 billion (USD11bn), the airport is expected to handle 130 million passengers a year, with a cargo throughput of 5.9 million tons and 805,000 aircraft takeoffs and landings. This expansion aligns with the integrated development strategy of the Yangtze River Delta.

Hiways Law Firm offered legal support across all project stages: bidding, construction and completion. Services cover document preparation, agreement negotiation, compliance system development, land approval, project initiation, and acceptance, ensuring legal compliance throughout construction.

GENERAL CORPORATE MATTER
  1. Bank of Montreal, Tophay cross-border financing
  2. Baowu sets up O/S compliance management system
  3. BASF, SPIC sign 25-year green PPA
  4. Chengdu welcomes new bourse for financial assets
  5. China Gas, Wah Kwong, CSSC form JV
  6. CNGR, POSCO’s South Korean nickel JV
  7. Saudi Aramco, Norinco JV to set up refinery complex
  8. Taikang Life debuts perpetual bond for insurer

GENERAL CORPORATE MATTER01

Bank of Montreal, Tophay cross-border financing

CATEGORIES: Banking and finance; agriculture

LEGAL COUNSEL: Dacheng Law Offices advised the Bank of Montreal on PRC law, while Dentons Canada advised it on Canadian law. Tenet & Partners advised both the borrowers and the guarantor on PRC law.

KEY POINTS: The Bank of Montreal extended CAD270 million (USD200 million) in loans to two members of the TopHay Group, one in the US and the other in Canada, in order to supplement their working capital, with the group’s Chinese subsidiary, Bicaoyuan, providing various guarantees.

Cross-border guarantees provided by Bicaoyuan required registration with and regulatory approval from relevant government agencies, including the National Development and Reform Commission and the State Administration of Foreign Exchange. In this regard, the Bank of Montreal relied on Dacheng’s expertise in cross-border financing and communication with the government.

The deal was one of the first instances where a Chinese company participated in an international financing initiated by an overseas bank after China relaxed its pandemic control measures, sending signals to the world that Chinese companies are back in the game of international trade.

GENERAL CORPORATE MATTER02

Baowu sets up O/S compliance management system

CATEGORIES: International compliance; steel

LEGAL COUNSEL: Zhong Lun Law Firm advised Baowu Steel Group.

KEY POINTS: China Baowu Steel Group, the world’s largest steel producer, completed the overhaul of its overseas compliance management system. Ranking in the top 50 of Fortune 500 companies in 2023, state-owned Baowu is a market leader in supplying major projects in aerospace, energy and power, and transport, among others. Baowu was among the first central SOEs dedicated to overseas strategic expansion, with global mine development and factory-building activities still on the rise. Due to geopolitical factors, central SOEs have in recent years generally been subject to a growing number of restrictions and risks related to their overseas ventures, making overseas compliance and risk control a priority.

Zhong Lun prepared a series of documents for Baowu, including an overseas compliance handbook. It also issued compliance guidelines targeting four areas considered to be of the greatest concern and involving the highest compliance risks for outbound Chinese companies: expatriate executive overseas criminal compliance, overseas data compliance, overseas trade compliance, and overseas anti-monopoly compliance.

GENERAL CORPORATE MATTER03

BASF, SPIC sign 25-year green PPA

CATEGORIES: Corporate and commercial; new energy

LEGAL COUNSEL: Zhong Lun Law Firm acted as legal counsel for SPIC.

KEY POINTS: State Power Investment Corp, or SPIC, and BASF, the largest chemical producer in the world, entered into a 25-year green power purchase agreement (PPA). From 2025, with the startup of the steam cracker and core of BASF’s Zhanjiang Verbund site, SPIC will supply at least 1,000GWh of renewable electricity annually, which will mainly be sourced from solar and offshore wind in Guangdong Province.

The Zhanjiang Verbund site ranks as BASF’s largest investment, of up to EUR10 billion (USD11bn). The PPA, continuing from the framework agreement between the two companies dated March 2022, set new records in China for both green power transaction volume and duration.

GENERAL CORPORATE MATTER04

Chengdu welcomes new bourse for financial assets

CATEGORIES: Exchange setup; compliance; asset management

LEGAL COUNSEL: Baijus Law Firm advised Sichuan Digital Asset Trade Centre.

KEY POINTS: The Sichuan Digital Asset Trade Centre completed the establishment of the Chengdu Financial Asset Exchange, or CDFEX, a dedicated platform for trading fixed-income financial products. CDFEX was jointly funded by the Chengdu Municipal Finance Bureau and private parties, including third-party payment institutions, with approval from the Sichuan provincial government.

Work began in 2016 and lasted until early 2023. Due to the lack of laws or administrative regulations in the area of setting up a financial asset exchange, the establishment and operation of CDFEX are regulated by normative documents issued by the State Council and other authorities. As regulatory policies dictate that only one exchange of the same type may be maintained in each region, CDFEX needed to integrate businesses with the Sichuan Financial Assets Exchange.

Baijus reviewed a total of 13 categories of financial products totalling more than RMB20 billion (USD2.8bn) and issued a compliance review report running to more than 46,000 characters, which detailed various legal risks as well as liabilities that may be borne by the CDFEX, its shareholders and directors.

GENERAL CORPORATE MATTER05

China Gas, Wah Kwong, CSSC form JV

CATEGORIES: Joint venture; maritime; energy

LEGAL COUNSEL: Reed Smith advised China City Gas, Vantage Energy and Fortune Clean Energy

KEY POINTS: China City Gas, a subsidiary of China Gas, entered into a joint venture agreement with Vantage Energy, a subsidiary of Wah Kwong Maritime Transport, and Fortune Clean Energy, a subsidiary of CSSC (Hong Kong) Shipping. The JV, named Sea Jade Investment, has commissioned Dalian Shipbuilding Industry to construct two liquefied natural gas carriers for approximately HKD14 billion (USD1.8 billion).

The new carriers are expected to be fitted with a range of eco-friendly technologies that offer lower daily fuel consumption, in full compliance with the stringent emission control requirements set by the International Maritime Organisation.

Reed Smith’s Hong Kong, New York and London offices collaborated to provide all-round legal counsel. The firm navigated international sanctions affecting the shipping industry and built mechanisms in the JV agreement to address the particular risks that shipping companies are subject to.

GENERAL CORPORATE MATTER06

CNGR, POSCO’s South Korean nickel JV

CATEGORIES: Joint venture; new energy; lithium battery

LEGAL COUNSEL: The anti-monopoly team at Merits & Tree Law Offices advised CNGR Advanced Material. King & Wood Mallesons participated in CNGR’s merger filing in South Korea.

KEY POINTS: Changsha-based CNGR Advanced Material entered into a KRW1.5 trillion (USD1.1 billion) partnership with POSCO Group to establish an integrated refining and precursor industrial base in Pohang, South Korea. Under the partnership, CNGR will build a nickel refining joint venture with POSCO Holdings set to produce 50,000 tons of nickel sulphate per year, and establish another JV with POSCO Future M to produce 110,000 tons of precursors annually. POSCO is among the world’s largest steelmakers and a Fortune 500 company.

Merits & Tree advised on the merger filing for South Korea, the US and the EU, among other jurisdictions, which impose strict trade control when it comes to batteries and related materials. In view of the heavy scrutiny and restrictions on international trade between China and foreign parties in the battery sector, CNGR’s move to establish bases overseas may set valuable precedence for its peers.

GENERAL CORPORATE MATTER07

Saudi Aramco, Norinco JV to set up refinery complex

CATEGORIES: Joint venture; construction; energy

LEGAL COUNSEL: White & Case acted as international counsel to Saudi Aramco, while Fangda Partners acted as its PRC counsel. JunHe advised Huajin Group.

KEY POINTS: Saudi Aramco entered into a joint venture with Norinco Group’s subsidiary Huajin Group, and Panjin Xincheng Industrial Group, to establish a 300,000 barrels per day refinery with a 1.65 million metric tonnes per annum ethylene cracker and a 2 million metric tonnes per annum paraxylene unit in Panjin, Liaoning Province.

Aramco, Huajin and Xincheng have 30%, 51% and 19% stakes in the venture, respectively.

This project is one of the China-Saudi Arabia strategic co-operation projects jointly promoted by the countries’ leaders in 2017, and is expected to become fully operational by 2026. Aramco will supply up to 210,000 barrels of crude oil per day to the complex.

GENERAL CORPORATE MATTER08

Taikang Life debuts perpetual bond for insurer

CATEGORIES: Derivative; bond issuance; insurance

LEGAL COUNSEL: AnJie Broad acted as legal counsel for Taikang Life Insurance

KEY POINTS: Taikang Life Insurance became the first insurance company in China to be given the green light to issue a perpetual bond. In November 2023, Taikang issued RMB5 billion (USD700 million) of perpetual bonds with a coupon of 3.7%, the first of three tranches set to raise RMB20 billion in order to shore up the company’s core tier-2 capital.

This marked the first time China’s financial regulators approved an insurance company to raise funds by way of a perpetual bond. To facilitate the market debut of such a product, AnJie Broad participated in drafting core terms of the bond, including write-downs and interest payments.

For many insurers, Taikang’s success sets a much-needed precedent as their solvency has largely been found wanting since the second phase of the China Risk-Oriented Solvency System (C-ROSS II) came into effect in 2022. China Pacific Life Insurance soon followed suit with its own perpetual bond.

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING
  1. Bankruptcy reorganisation of Grandland Group
  2. Beijing’s first compulsory liquidation of corporate legal person
  3. CATL successfully reorganises Snowway
  4. CEFC: HK courts defer to mainland
  5. Citic Group in massive overhaul of Guoan businesses
  6. Huaxia Life’s graft losses trigger takeover
  7. Jiayuan International creditors force HK winding up
  8. Loncin Group: order from chaos
  9. Shanghai Huanshou Industrial’s liquidation
  10. Yi’an P&C Insurance reorganisation
  11. Yongcheng Coal resolves bond default risk
  12. Zhonghe’s successful reorganisation
  13. ZK Engineering debt mountain resolved

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING01

Bankruptcy reorganisation of Grandland Group

CATEGORIES: Reorganisation; construction decoration

LEGAL COUNSEL: DeHeng Law Offices acted as legal counsel for the reorganisation investor, Shenzhen SEZ Construction Group; Zhuo Jian Law Firm acted as the bankruptcy reorganisation administrator; Zhong Lun Law Firm acted as the specialised legal counsel for Grandland Group’s reorganisation.

KEY POINTS: Grandland Group faced financial and operational strain following the default of its largest client, Evergrande Group, accumulating debts exceeding RMB16.4 billion (USD2.27bn). Upon creditor application, the Shenzhen Intermediate People’s Court approved Grandland Group’s reorganisation.

Shenzhen SEZ Construction Group, a large state-owned construction industry group, invested more than RMB800 million to restructure Grandland Group. The reorganisation involved a significant amount of debt, numerous creditors, and complex procedures including regulatory approvals for state-owned assets, public disclosures for listed companies, and business operator concentration fillings. Additionally, Grandland Group underwent reorganisation while already under a delisting risk warning, adding urgency to the process.

DeHeng provided legal services for the reorganisation investment including due diligence, and designing and executing reorganisation investment agreements. Zhong Lun assisted Grandland Group in clarifying the mode of pre-reorganisation to reorganisation, promoting the pre-approval of reorganisation, assisting administrators in formulating the formal reorganisation plan, facilitating pre-reorganisation and reorganisation procedures.

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING02

Beijing’s first compulsory liquidation of corporate legal person

CATEGORIES: Liquidation; e-commerce

LEGAL COUNSEL: King & Capital Law Firm acted as a liquidator for the China Electronic Commerce Association.

KEY POINTS: Due to governance structure issues, irregular internal operations and financial audits, coupled with three consecutive years of failure to undergo obligatory annual inspections for national social organisations, the China Electronic Commerce Association had its registration revoked by the Ministry of Civil Affairs and was subject to compulsory liquidation applied by its supervisory department, the Ministry of Industry and Information Technology. This case marks Beijing’s first instance of compulsory liquidation of a corporate legal person, exploring the exit mechanism for non-profit entities. Additionally, as a typical case of decoupling between industry associations and their supervisory authorities, it further promotes the establishment of a favourable business environment.

King & Capital conducted a comprehensive investigation into the association’s operations, assets, tax and creditor status, facilitated the liquidation process, participated in litigation between the group and its creditors, and formulated and implemented repayment plans.

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING03

CATL successfully reorganises Snowway

CATEGORIES: Bankruptcy reorganisation; new energy; mining

LEGAL COUNSEL: Llinks Law Offices acted as the legal counsel for the reorganisation investor CATL.

KEY POINTS: Yajiang court approved the reorganisation plan for Yajiang Snowway Mining Development and terminated its bankruptcy proceedings, allowing electric vehicle battery giant CATL to work on fixing the owner of a lithium asset in western China. Since entering bankruptcy proceedings, the ownership of Snowway’s lithium mine attracted competition from multiple listed companies, with CATL ultimately selected as the reorganisation investor and subsequently acquiring 100% equity of the company.

Snowway owns the Dechenongba lithium mine and quartz mine exploration rights in Yajiang county, Sichuan province. According to Llinks Law Offices, Dechenongba is a large lithium mine that will have a production capacity of 1 million tons per year when completed. The reorganisation investment amounted to RMB6.4billion (USD890 million), setting the highest record for the disposal of lithium resources in China. This transaction holds significant importance for CATL, a leading enterprise in the new energy battery industry, in its industrial chain layout.

Llinks Law Offices provided legal consultation for CATL, from the selection of the reorganisation investor and bidding for the major shareholder of Sinowway to the execution of the reorganisation plan and responding to derivative litigation.

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING04

CEFC: HK courts defer to mainland

CATEGORIES: Liquidation; finance

LEGAL COUNSEL: King & Wood Mallesons, Fangda Partners, and AllBright Law Offices acted as joint administrators.

KEY POINTS: In February 2023, CEFC Shanghai International Group (CEFC) and 65 associated companies completed substantive merger bankruptcy liquidation. This case involved Hong Kong litigation, cross-border bankruptcy, and overseas assets. During the liquidation, foreign creditors applied to the Hong Kong court to seize the receivables of CEFC in Hong Kong to settle their claims.

To prevent the forced execution of its Hong Kong assets, CEFC’s administrators applied to the Hong Kong High Court for recognition of the Shanghai bankruptcy court’s decision on the bankruptcy of CEFC, and the identity and authority of the bankruptcy administrators. Ultimately, the Hong Kong court terminated the review of the seizure order. This was the first recognition of mainland China’s bankruptcy proceedings and bankruptcy administrators by the Hong Kong court, which is of great significance.

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING05

Citic Group in massive overhaul of Guoan businesses

CATEGORIES: Reorganisation; finance

LEGAL COUNSEL: Dacheng Law Offices acted as the administrator for the bankruptcy reorganisation. Grandall Law Firm advised Citic Group.

KEY POINTS: Citic Guoan Group faced a debt and liquidity crises due to aggressive expansion, leading to defaults and involvency. It was ultimately ordered by the court to undergo substantive merger and reorganisation with six companies including Citic Guoan Investment, Qinghai Citic Guoan Technology Development, and Qinghai Citic Guoan Lithium Industry Development. The assets of these companies were valued at about RMB76.5 billion (USD10.6bn), with debts nearing RMB210bn and more than 1,000 creditors including numerous individual investors. According to Dacheng Law Offices, this is currently the largest bankruptcy reorganisation case by debt scale in Beijing.

As the reorganisation investor, Citic Group established a new company, Citic Guoan Industrial Group, to acquire high-quality assets from Citic Guoan Group and assume debt repayment, investing RMB12bn in equity acquisition, capital increase, and debt-to-equity swaps for the new company. Assets of low value were retained within the Guoan Group for disposal, with proceeds used for debt repayment. Dacheng Law Offices assisted the reorganising entities in improving corporate governance, supervising business operations, and submitting reorganisation plans within six months, completing the reorganisation process within a year.

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING06

Huaxia Life’s graft losses trigger takeover

CATEGORIES: Restructuring; insurance

LEGAL COUNSEL: Dacheng Law Offices acted as legal counsel on risk disposal for Huaxia Life Insurance.

KEY POINTS: After Huaxia Life Insurance was left insufficiently solvent by embezzlement of related parties, the conditions were set for a takeover under the Insurance Law. The former China Banking and Insurance Regulatory Commission took over for two years and approved the establishment of Ruizhong Life Insurance by the Insurance Protection Fund and a joint remedial fund by multiple insurers, which acquired Huaxia Life Insurance’s assets and liabilities, including all policies, organisational structures, information systems and personnel.

The transfer of policies faced numerous challenges, including sourcing substantial remedial funds, valuing non-performing assets, and transferring property rights. Huaxia Life Insurance introduced a special trust to acquire non-performing assets, compensating for the difference in benefits before and after the policy transfer. Trust beneficial rights were used to offset claims, providing greater flexibility and benefiting various types of creditors compared to asset sales and debt-to-equity swaps.

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING07

Jiayuan International creditors force HK winding up

CATEGORIES: Liquidation; real estate

LEGAL COUNSEL: DLA Piper advised OCM APDO Gene Investments (OCM), part of Oaktree Capital Management; Mayer Brown advised Jiayuan International Group; Chungs Lawyers advised Yang Min, a creditor.

KEY POINTS: Jiayuan International Group had been petitioned for liquidation by creditor Yang Min due to its failure to repay a debt of USD14.5 million on time. Despite three adjournments of the hearing, the company failed to present a viable plan for debt resolution. Consequently, the High Court of Hong Kong issued a winding-up order supported by several creditors, including Oaktree Capital Management.

DLA Piper not only advised OCM in the liquidation proceedings of Jiayuan International Group and the insolvency procedures of its directors, but also provided legal counsel on matters concerning security, priority, receivership, enforcement and asset recovery.

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING08

Loncin Group: order from chaos

CATEGORIES: Reorganisation; manufacturing

LEGAL COUNSEL: Longan Law Firm and Dacheng Law Offices formed a joint institution to assist in pre-restructuring, and act as administrators for restructuring; Zhong Lun Law Firm advised creditor Minsheng Bank.

KEY POINTS: Loncin Group, along with its controlling entities Jinling Group and four other companies, faced financial distress due to poor management, accumulating debt of RMB40 billion (USD5.54bn). The debt situation was complex, involving interrelated guarantees among affiliated parties and significant amounts of associated debt. Despite the high degree of legal entanglement among the companies, their assets and operations were loosely connected. After deliberation by the Chongqing No. 5 Intermediate People’s Court, these 17 enterprises underwent a substantive merger and restructuring.

With diverse industrial structures and extensive assets, Loncin Group posed more difficult requirements for the investor. To streamline the restructuring process, the group’s 13 enterprises first underwent pre-restructuring and then substantive merger and restructuring procedures. Through comprehensive due diligence, the administrators successfully clarified the asset-liability structure of the entire group and its nearly 200 affiliated companies. They included all debts of various affiliated entities within the scope of resolution, achieving a 99% resolution rate and safeguarding the interests of small and medium investors. This case stands as the largest successful pre-restructuring case in China’s judicial practice to date.

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING09

Shanghai Huanshou Industrial’s liquidation

CATEGORIES: Restructuring; e-commerce

LEGAL COUNSEL: Jin Mao Law Firm acted as the bankruptcy administrator.

KEY POINTS: Shanghai Huanshou Industrial went into bankruptcy due to mismanagement of its social e-commerce platform, taojiji.cn. The Shanghai Bankruptcy Court ordered its liquidation. Creditors primarily consisted of platform merchants, involving a large amount of interaction data between merchants and users, complicating the process of clarifying debt size and relationships.

To reduce bankruptcy costs and enhance efficiency, Jin Mao developed an online debt declaration system with features such as online application submission, identity verification, debt amount calculation, and audit receipts. If creditors disputed debt amounts in the system, they could submit evidence online, to Jin Mao Law Firm, the bankruptcy administrator, conducting substantive reviews and providing feedback. Additionally, creditors’ meetings were conducted online, replacing costly offline meetings. The case was recognised as a typical bankruptcy management case by the Shanghai Bankruptcy Administrators Association.

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING10

Yi’an P&C Insurance reorganisation

CATEGORIES: Reorganisation; insurance

LEGAL COUNSEL: Tian Yuan Law Firm advised the reorganisation investor BYD; Dacheng Law Offices advised Yi’an P&C Insurance.

KEY POINTS: The reorganisation of Yi’an adopted a market-oriented restructuring approach to mitigate debt risks. As the reorganisation investor, BYD acquired 100% equity of Yi’an for a consideration of RMB7 million (USD970,000), provided about RMB547 million to clear its debts and replenish its net assets, and invested RMB3 billion in capital.

The reorganisation of Yi’an was successful. The case marks China’s first bankruptcy reorganisation project in the insurance industry and the only case where a non-financial institution holds 100% equity of an insurance institution.

Tian Yuan Law Firm formulated a reorganisation investment plan for BYD, innovating in the review of bankruptcy reasons of Yi’an, classification and application review of policy claims, analysis of the insurance company’s business model, and asset-liability identification, ultimately assisting BYD in being selected as the reorganisation investor, fully acquiring Yi’an, and expanding its new energy vehicle insurance business.

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING11

Yongcheng Coal resolves bond default risk

CATEGORIES: Bond default; energy

LEGAL COUNSEL: Hai Run Law Firm acted as legal counsel to the issuer, Yongcheng Coal & Electricity Holding Group.

KEY POINTS: Yongcheng Coal, a subsidiary of Henan Energy and Chemical Group, repaid the remaining nine outstanding credit bonds ahead of schedule, successfully resolving a debt default crisis of more than tens of billions of renminbi. The company had earlier defaulted on a RMB1 billion (USD140 million) ultra-short-term bond, triggering cross-defaults totalling RMB15bn, severely impacting confidence in the bond market.

Hai Run Law Firm meticulously assessed Yongcheng Coal’s complex debt situation, communicated with bondholders to devise extension repayment agreements, and safeguarded the interests of all parties involved. This transaction not only facilitated the restoration of corporate credit and financing functions, but also boosted investor confidence in the bond market.

An issuer’s perspective of bond default disposal and solutions

By Wang Xiaodong, Hai Run Law Firm

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING12

Zhonghe’s successful reorganisation

CATEGORIES: Reorganisation; new energy

LEGAL COUNSEL: JunHe and Fidelity Law Firm acted as bankruptcy administrators for Fujian Zonghe.

KEY POINTS: Fujian Zonghe faced financial collapse due to a broken funding chain and debts surpassing assets. Coupled with its highly intertwined shares with Fujian Zhonghe Textile, Xiamen Hualun Printing and Dyeing, and Xiamen Huangyan Trade, the court ordered Fujian Zonghe to undergo a substantial merger and reorganisation with these three companies.

With debts exceeding RMB4 billion (USD554 million), more than 1,800 creditors and about 37,000 shareholders, the restructuring plan drafted by JunHe flexibly adjusted the rights and interests of contributors by converting capital reserves into shares for all shareholders, attracted restructuring investors and fully repaid all debts, including ordinary debts, in cash. The plan was approved with an overwhelming majority, leading to fundamental financial improvement post-restructuring, especially in its new energy lithium battery business.

LIQUIDATION, BANKRUPTCY AND RESTRUCTURING13

ZK Engineering debt mountain resolved

CATEGORIES: Reorganisation; construction engineering

LEGAL COUNSEL: Fangda Partners acted as the reorganisation administrator.

KEY POINTS: ZK Engineering is the sprawling parent of a group under the Administrative Bureau of the Chinese Academy of Sciences, with more than 400 subsidiaries and branch companies. Funding shortfalls and operating difficulties led to the accumulation of more than RMB80 billion (USD11bn) in debts.

Given its large asset-liability scale, multiple corporate levels and complex equity structure, to further confirm the feasibility of reorganisation and increase the success rate, ZK Engineering adopted a pre-reorganisation to reorganisation process and introduced a trust plan to distribute its beneficial rights to all creditors according to the order and amount of claims, facilitating flexible disposal of interests by creditors and promoting the approval of the reorganisation plan. Ultimately, the reorganisation was successful, resolving debts and compensating more than 3,000 creditors. This case was the first pre-reorganisation to reorganisation case in Shanghai.

INTELLECTUAL PROPERTY
  1. Akeso, Summit tie-up over lung cancer therapy
  2. AMEC sues Lam Research over trade secret
  3. Ansjer Electronics counters US patent infringement allegation
  4. BNIC, Ford China lawsuit over Cognac indication
  5. Christian Silvain sues Ye Yongqing for art plagiarism
  6. Drone maker sues four companies
  7. ‘Envy’ apple at root of Enzafruit rights dispute
  8. First AI image copyright infringement in China
  9. Gilead, Kawin prodrug indirect patent dispute
  10. Golden-Elephant, Hualu Hengsheng melamine dispute
  11. Goufangtong trademark unfair competition dispute
  12. Hengrui, Merck exclusive licence for PARP1 inhibitor
  13. Hutchmed, Takeda license therapy outside China
  14. Hytera, Motorola trade secret theft via poaching dispute
  15. Jingu, Xingye series dispute over trade secret
  16. Lacoste, Nanji dispute over ‘crocodile’ mark
  17. Lepu, Keymed exclusive licence to AstraZeneca
  18. Liangxin Electrical nationwide rights defence campaign
  19. Loongson, CIP United instruction set copyright dispute
  20. Snap-on, Mitchell against Autel over alleged data theft
  21. Sunny Optical, AAC Optics series patent dispute
  22. Tesla, Zhongyin trademark and unfair competition dispute
  23. TikTok, Stitch Editing trademark bout in the US
  24. Weinian, Li Ziqi's dispute over contract, trademark
  25. Youkeduo infringement over source code
  26. Youku sues Kuaishou over infringement of TV series

INTELLECTUAL PROPERTY01

Akeso, Summit tie-up over lung cancer therapy

CATEGORIES: Out-licensing; biopharmaceutical

LEGAL COUNSEL: Sidley Austin represented Akeso.

KEY POINTS: Akeso, a China-based developer and manufacturer of innovative and affordable antibody drugs, struck a USD5 billion licensing deal with Summit Therapeutics, in which the US company would develop and commercialise ivonescimab, Akeso’s potential first-in-class breakthrough bispecific antibody treatment for lung cancer in the US, Canada, Europe and Japan.

Under the agreement, Akeso will receive a USD500 million upfront payment, with a total potential deal value of up to USD5bn. Akeso will also receive a low double-digit percentage of royalties on net product sales of ivonescimab.

INTELLECTUAL PROPERTY02

AMEC sues Lam Research over trade secret

CATEGORIES: Trade secrets; semiconductors

LEGAL COUNSEL: Jincheng Tongda & Neal (JT&N) represented AMEC from initial lawsuit to final hearing.

KEY POINTS: After 13 years, the technical secret infringement litigation initiated by Advanced Micro-Fabrication Equipment China (AMEC) against Lam Research, a US wafer fabrication equipment supplier, reached a conclusion at the Shanghai No. 1 Intermediate People’s Court, which held that Lam did, by unfair means, obtain trade secrets related to AMEC’s etching machine. Lam was ordered to immediately destroy the photos containing the trade secrets, not to reveal, use or allow others to use the stolen technology, and pay damages of RMB1 million (USD139,000) plus legal fees and reasonable expenses set at a further RMB900,000.

The case established the principle of “compensation for future losses”. AMEC had no evidence that Lam Research used the disputed trade secret in its operations, or took reference from it during R&D. Nevertheless, JT&N was able to prove that Lam had obtained the trade secret by unfair means and will eventually profit from it, causing AMEC to lose competitive advantage and suffer losses, which was upheld by the court.

Notably, etching machines are a highly technical field with inadequate competition, with only around 10 manufacturers of such machines globally. This feature, along with Sino-US friction and rivalry in the high-tech field, put the case under the spotlight.

INTELLECTUAL PROPERTY03

Ansjer Electronics counters US patent infringement allegation

CATEGORIES: Patents; electronics

LEGAL COUNSEL: Kangda Law Firm represented Ansjer Electronics.

KEY POINTS: Singapore-based Portus and its US subsidiary filed a lawsuit against Uniden America, a wireless electronics manufacturer, at a Texas federal court, accusing it of selling wired and wireless cameras that infringe on Portus’ US patents. Besides demanding a cessation of infringement and compensation of legal fees, Portus sought punitive damages at three times the amount of losses.

Ansjer Electronics, based in Zhuhai, was the manufacturer of the products in dispute, and according to the agreement it signed with Uniden, it would bear joint and several liability for all IP infringements. If an infringement were affirmed, Ansjer would be liable for an overwhelming amount of compensation, and its US-marketed products, with tens of millions of dollars in annual sales of similar goods to the US, would be likewise compromised.

After analysing the exemplary Graver Tank case heard by the US Supreme Court, which concerns determination of patent infringement, as well as the resultant function-way-result method and doctrine of equivalents, Kangda confirmed that the disputed products were substantially different from the patented technologies claimed by the plaintiff. Accordingly, Kangda adopted a strategy of affirmative defence, and set a firm goal of product non-infringement.

The case ended with Portus withdrawing its claims and the court issuing a dismissal with prejudice, which means the plaintiff cannot refile the same claim in that court.

How can Chinese firms defend IP rights in overseas trades?

By Zhou Zhengping, Kangda Law Firm

INTELLECTUAL PROPERTY04

BNIC, Ford China lawsuit over Cognac indication

CATEGORIES: Trademarks; beverages; automotive

LEGAL COUNSEL: Wanhuida Intellectual Property represented BNIC. Suotong Law Firm (now the Chongqing office of SGLA Law Firm) and Grandall Law Firm represented Ford China.

KEY POINTS: The Bureau National Interprofessionnel du Cognac (BNIC), a French organisation responsible for promoting and safeguarding the geographical indication of “Cognac”, filed a civil lawsuit against the Chinese affiliates of Ford Motor due to the car maker’s use of “Cognac” in its tagline and “Cognac brown” in a description of vehicle interior colour.

The BNIC challenged the use on the basis of Cognac’s geographical indication (GI) registration but, in the absence of a specific GI law in China, resorted to base the action on the Anti-unfair Competition Law.

In the first instance of the hearing, the Suzhou Intermediate People’s Court determined that Ford China’s actions constituted unfair competition, ordered cessation and awarded damages of RMB2 million (USD280,000). The Jiangsu Provincial High People’s Court later upheld this verdict after appeal.

The case confirms that GI product registrants may act based on the Anti-unfair Competition Law, and considerably extends the concept of competitive relationship, in the sense that products or services concerned do not need to be similar, and simple “association” in the mind of consumers can trigger protection.

INTELLECTUAL PROPERTY05

Christian Silvain sues Ye Yongqing for art plagiarism

CATEGORIES: Copyright; art

LEGAL COUNSEL: Duan & Duan Law Firm and Yingke Law Firm represented Christian Silvain.

KEY POINTS: Christian Silvain, a Belgian artist, accused Ye Yongqing, a celebrated Chinese contemporary painter, of infringing on the copyright of his works. In the first-instance verdict, the Beijing Intellectual Property Court (BIPC) determined that Ye did infringe Silvain’s copyright, including the rights of attribution, modification, reproduction and distribution. Ye, ordered to issue a public apology and pay EUR650,000 (USD700,000) in damages, has filed an appeal.

Duan & Duan conducted detailed comparison against 176 infringing artworks spanning 25 years, the results of which were condensed in a 500-page document and presented to the court, who agreed with the counsel’s opinion that the infringing work were essentially identical to Silvain’s work. While there were a few visual differences, they proved far from sufficient to establish any expression of “originality”.

The lawsuit was originally initiated by Silvain in 2019. At one point, Ye could not be reached for the purpose of service of process, so the BIPC issued a public announcement to that effect. Ye subsequently raised an objection on jurisdiction, but this was dismissed. Afterwards, the case saw further delay due to the pandemic.

In the meantime, Silvain also sued Sotheby’s and Christie’s, two auction houses that sold Ye’s infringing works, which ended with settlements.

INTELLECTUAL PROPERTY06

Drone maker sues four companies

CATEGORIES: Trademark; aviation

LEGAL COUNSEL: JunZeJun Law Offices represented DJI.

KEY POINTS: DJI Technology, a leading manufacturer of unmanned aerial vehicles, sued Runkangyuan Technology, Xinkechuang Precision Machinery, Eternal (Guangdong) Tech Electric, and Runlongqing Technology for the unauthorised use of the “大疆” trademark on consumer electronics products including head, neck and eye massagers, fascia guns and warming belts. Collected evidence put the profits from infringement as high as RMB260 million (USD36 million). DJI demanded the defendants cease infringements and pay RMB10 million in damages.

There were immediate obstacles to DJI’s action. For one thing, the infringing products were not aircraft. To meet the standard for cross-class protection of trademarks, DJI would need to be recognised as a well-known trademark. Complicating the issue, Runkangyuan had pre-emptively applied for the “大疆” mark, granting it a potential “prior rights” defence. In addition, DJI sought punitive damages, a rare move in trademark disputes and which called for exceptionally compelling evidence.

The case is currently in second-instance hearing, following a first-instance verdict favourable to DJI. According to JunZeJun, courts have generally been prudent when it comes to offering cross-class protection of well-known trademarks. This rare occurrence, coupled with the punitive damages, sounded the alarm for trademark infringers across the market.

INTELLECTUAL PROPERTY07

‘Envy’ apple at root of Enzafruit rights dispute

CATEGORIES: Plant variety rights; fruit

LEGAL COUNSEL: Lusheng Law Firm represented Enzafruit.

KEY POINTS: Enzafruit, a New Zealand-based breeder and grower of fruit and vegetables, scored a victory in a plant variety rights (PVR) infringement case in China over the most expensive apple variety in New Zealand, known as Scilate and branded as “Envy”.

The Lanzhou Intermediate Court of Gansu province awarded Enzafruit’s full claim by applying punitive compensation, marking the highest infringement damages regarding vegetative plants on record.

Lusheng’s IP litigation team collected evidence from several orchard sites in China to capture the necessary propagation materials and conduct DNA analysis to be presented as evidence in court.

The case followed a revision to China’s Seed Law in March 2022 that strengthened protection for the rights of breeders of varieties and now extends protection to both fruit and propagation material in any protected variety.

INTELLECTUAL PROPERTY08

First AI image copyright infringement in China

CATEGORIES: Copyright; artificial intelligence; art

LEGAL COUNSEL: Tian Yuan Law Firm represented Li Yunkai, the plaintiff. Li is an associate at Tian Yuan, but did not act as legal counsel.

KEY POINTS: Li Yunkai, a lawyer and AI art enthusiast, discovered that an image he generated using Stable Diffusion was appropriated in an article posted on Baijiahao, Baidu’s content sharing platform. He then filed a lawsuit against the user. In the first-instance verdict, the Beijing Internet Court ordered the defendant to issue a statement to eliminate adverse effects and pay damages at RMB500 (USD70), which Li has renounced.

This was the first copyright infringement case in China involving AI-generated images. Tian Yuan comprehensively researched and illustrated the process of image generation, whether it constitutes as “work”, and whether the plaintiff enjoys its copyright. In the end, the court determined that the defendant infringed on the plaintiff’s rights of attribution and communication on information networks.

Furthermore, the court held that although the plaintiff did not physically draw the lines or guide AI’s hand, he nevertheless led to the creation of the image after multiple iterations of prompt-feeding and parameter adjustments, which constituted an expression of individuality. Therefore, the image was considered a “work”, and subject to the protection of the Copyright Law.

INTELLECTUAL PROPERTY09

Gilead, Kawin prodrug indirect patent dispute

CATEGORIES: Patents; biopharmaceuticals

LEGAL COUNSEL: Jincheng Tongda & Neal represented Kawin Technology and, together with Yuzhi Law Firm, represented KawinGreen Biotech.

KEY POINTS: Gilead Sciences, a US biopharmaceuticals company, filed a lawsuit against Kawin Technology and KawinGreen Biotech on the grounds that the sofosbuvir tablets developed, used and marketed by the defendants inevitably metabolises in the patient’s body to produce the pharmacologically active ingredient GS-461203, which falls under the scope of Gilead’s patent. Gilead believed the production and use of the ingredient constituted direct infringement, while the provision of the tablet to patients constituted indirect infringement.

This was the first prodrug indirect patent infringement case in China. Indirect patent infringement is complex and legally ambiguous, as the concept is absent from China’s current laws and regulations. While interpretations contain substantive provisions for abetting and assisting patent infringement, there is no consensus on the criteria of determining joint infringement on such basis.

After combing through the legal basis, categorisation and practice of indirect patent infringement systems in various jurisdictions, defendants’ counsel summarised how the “singular subject principle” of the US, the “realising goal of invention” standard of Germany, the “tool theory” standard of Japan, and adjudication criteria behind prominent global cases concerning prodrug and metabolite patent infringement can be applicable in China.

In the end, the Beijing IP Court dismissed any accusation of direct or indirect infringement. The case delineated the scope of protection for innovative drug developers concerning the active ingredients produced by the parent drug, which not only reserved breathing room for domestic prodrug developers, but also kept the affordable sofosbuvir available to China’s low-income hepatitis C patients.

INTELLECTUAL PROPERTY10

Golden-Elephant, Hualu Hengsheng melamine dispute

CATEGORIES: Trade secrets; chemicals

LEGAL COUNSEL: King & Wood Mallesons represented Golden-Elephant.

KEY POINTS: Sichuan-based Golden-Elephant Sincerity Chemical, a melamine producer and owner of the leading technology of “producing melamine with a pressurised gas phase quenching method”, filed a lawsuit against the Shanghai-listed Hualu Hengsheng Chemical, a former employee that brought trade secrets to Hualu, along with a design institute and a consulting company that helped design the infringing plant for Hualu using the trade secrets.

The dispute proceeded on two prongs: patent infringement and trade secret infringement. Combined, the two cases resulted in damages payable to Golden-Elephant at RMB218 million (USD30 million), the highest amount for IP infringement within a single project.

The case set an example on determining infringement based on documentary evidence only – designing document and safety evaluation report – without inspecting physical evidence, as it involves large industrial equipment.

Subsequently, Golden-Elephant launched a separate melamine-related trade secret lawsuit against the same defendants, demanding RMB600 million in damages. A settlement amounting to RMB440 million was reached.

INTELLECTUAL PROPERTY11

Goufangtong trademark unfair competition dispute

CATEGORIES: Trademarks; unfair competition; real estate

LEGAL COUNSEL: W&H Law Firm represented Goufangtong. Baijus Law Firm represented Huanjutang.

KEY POINTS: Goufangtong, a real estate information platform jointly operated by Chengdu Goufangtong Technology and Ruixiaobo Technology, has a presence in Chengdu, Nanjing and Hangzhou. Since June 2021, Huanjutang, a competitor, began providing similar services on WeChat, websites and elsewhere using the “Goufangtong” mark, causing confusion among real estate companies, brokers and users. Therefore, Goufangtong launched an unfair competition lawsuit against Huanjutang.

One of the most significant challenges faced by Goufangtong is that it did not obtain the registered trademark exclusive right related to “Goufangtong”, and a prior attempt to register this trademark was turned down by the China National Intellectual Property Administration (CNIPA) for not being distinct enough. Taking advantage, Huanjutang claimed that the mark did not constitute a trademark “with certain influence”, as defined under article 6 of the Anti-unfair Competition Law.

In the end, the first-instance court determined, based on evidence such as Goufangtong’s market performance, industry article citations, and we-media recommendations, that it was influential in Chengdu. While the trademark was not distinct, its function of indicating a source of services in Chengdu should not be overturned by the fact that these same words may have been used by others at one point.

Huanjutang was ordered to cease infringement, compensate for damages, and issue a public statement to eliminate any ill effects. The verdict was upheld after appeal.

INTELLECTUAL PROPERTY12

Hengrui, Merck exclusive licence for PARP1 inhibitor

CATEGORIES: Out-licensing; biopharmaceutical

LEGAL COUNSEL: Cooley advised Hengrui Pharma.

KEY POINTS: Hengrui Pharmaceuticals struck an exclusive licensing agreement with Merck to develop, manufacture and commercialise its HRS-1167 and SHR-A1904 treatments worldwide (outside of mainland China), as well as co-promote them in mainland China.

HRS-1167 is a selective, highly active and orally available PARP1 small molecule inhibitor, while HR-A1904 is an antibody-drug conjugate (ADC) targeting Claudin 18.2, both developed by Hengrui.

According to the agreement, Merck will provide Hengrui an upfront payment of EUR160 million (USD172 million). Hengrui will also receive payments for technology transfer, as well as an option exercise for the Claudin 18.2 ADC for up to EUR90 million. Hengrui is further eligible to receive royalty payments on net sales of such products, subject to achievement of certain milestones, driving the total potential payment up to EUR1.4 billion.

INTELLECTUAL PROPERTY13

Hutchmed, Takeda license therapy outside China

CATEGORIES: Licensing; biopharmaceutical

LEGAL COUNSEL: Ropes & Gray advised Hutchmed, while Mayer Brown represented Takeda.

KEY POINTS: Hutchmed, a Hong Kong-based biopharmaceutical company focused on targeted therapies for cancer treatment, entered into an exclusive licensing agreement with Takeda, under which the Japanese company will develop and commercialise fruquintinib worldwide (excluding mainland China, Hong Kong and Macau).

Fruquintinib is a highly selective and potent medicine that received regulatory approval in China in 2018 to treat patients with metastatic colorectal cancer, the third-most common type of cancer worldwide.

Hutchmed will receive USD400 million upfront, and is eligible to receive up to USD730 million more, subject to milestones, as well as royalties on net sales. The deal was processed in parallel with applications for approval with major regulatory agencies around the world.

INTELLECTUAL PROPERTY14

Hytera, Motorola trade secret theft via poaching dispute

CATEGORIES: Trade secrets; copyright; telecommunications

LEGAL COUNSEL: Steptoe, Commerce & Finance Law Offices, Perkins Coie, Calfee Halter & Griswold, Finnegan, Morgan Lewis, Smith Gambrell Russell, Duane Morris, Cohen & Gresser, Honigman, and MinterEllison represented Hytera, the defendant. Kirkland & Ellis and Crowell & Moring acted for Motorola, the plaintiff. Greenberg Traurig represented Texas Instruments, a third-party defendant. JGBLaw advised the Dealers Industry Viability Group, the amicus.

KEY POINTS: Motorola continues its global campaign against Hytera Communications, which began in 2017 when it accused the Shenzhen-listed company of hiring three Motorola engineers who allegedly secretly took about 10,000 documents containing key technology, which allegedly enabled Hytera to build its own line of handheld radios.

This tussle takes place on multiple fronts, including the US, China, Germany, Australia and the UK. In February 2020, a federal jury in Chicago found Hytera guilty of stealing trade secrets and copyright infringement, awarding Motorola total damages at USD765 million (later reduced to USD544 million). Hytera was also ordered to pay USD49 million in royalties for sales that had occurred, and was subsequently found in civil contempt for not paying.

Elsewhere, the Federal Court of Australia found, in December 2022, that certain Hytera products did infringe Motorola’s copyright and patent rights, while dismissing the other claims. The Court of Appeals Dusseldorf modified in May 2023 a first-instance verdict from 2018 and fully dismissed Motorola’s patent infringement complaint.

In the UK, Motorola applied for a freezing order against Hytera, which was subsequently set aside on appeal. Motorola’s continued attempt to appeal was dismissed by the UK’s Supreme Court, concluding the English proceedings.

The saga continues as a US criminal trial examining Motorola’s trade secret theft allegations against Hytera is set to begin, with a Federal indictment unsealed in an Illinois court on 7 February 2024.

INTELLECTUAL PROPERTY15

Jingu, Xingye series dispute over trade secret

CATEGORIES: Trade secrets; chemicals

LEGAL COUNSEL: DHH Law Firm and Zhiwuhe Law Firm represented Jingu Group, the plaintiff. Wincon Law Firm represented Xingye Group, the defendant.

KEY POINTS: Zhejiang Jingu is the Chinese market agency for eco-pickled surface (EPS), a patented process to replace acid pickling of flat rolled steel developed by The Material Works (TMW), a US toll processor. Jingu entered into an EPS equipment sale contract with Xingye Group, and supplied the latter with instruction manuals on the operation and maintenance of the equipment.

Subsequently, Jingu discovered that a company named Green Steel Environmental Technology submitted an invention patent for “mixed jet scale removal system”, and accordingly filed a lawsuit against Xingye for leaking the technical secrets contained in the manual to Green Steel.

Wincon argued that EPS is a technically mature product commercially licensed for the Chinese market, and had been both on sale and in use around the world for many years, making it a widely known technology. Furthermore, the firm argued that Jingu, fully knowing that EPS was no trade secret, filed a malicious lawsuit to compromise Xingye’s interests, and launched a counterclaim.

In its first-instance verdict, the Qingdao Intermediate Court upheld Wincon’s view and dismissed all of Jingu’s claims, further ordering Jingu to pay RMB100,000 (USD14,000) in reasonable expenses. Jingu filed an appeal but later withdrew.

Compared with patent rights, technical secrets, such as in this case, have no clear basis or boundary of rights, which means that it can be easy for plaintiffs to file a lawsuit by abusing their rights, but on the other hand incredibly burdensome for the defendant to deal with the aftermath.

INTELLECTUAL PROPERTY16

Lacoste, Nanji dispute over ‘crocodile’ mark

CATEGORIES: Trademarks; apparel

LEGAL COUNSEL: Wanhuida Intellectual Property represented Lacoste. Dacheng Law Offices, Hiways Law Firm and DeHeng Law Offices represented Nanji E-commerce and Cartelo.

KEY POINTS: The battle between two left-facing crocodiles concluded before the Beijing High Court with Lacoste prevailing in the retrial and second-instance proceedings initiated by Nanji E-commerce, which acquired Cartelo Crocodile in 2016.

Nanji E-commerce sought a retrial to reverse court decisions that invalidate Cartelo’s standalone left-facing crocodile registrations, but the applications were dismissed in September 2023, which brought the trademark dispute to a close.

The court held that the two parties’ “crocodile” trademarks are similar and unlikely to be distinguished by the general consumers. Despite the history and use status of both Lacoste and Cartelo, to draw a clear distinction between the two parties’ trademarks, it would be appropriate to rule that Cartelo’s disputed trademark violated the Trademark Law.

Both companies entered the mainland Chinese market in the 1990s, and their first litigation over the crocodile image can be dated to a 1969 civil suit in Osaka. The High Court notably determined in a 2000 lawsuit that, due to Cartelo’s trademark consisting of more than the crocodile, the two were substantially different and did not confuse consumers. The latest reversal of this opinion reflects the evolution of trademark awareness and judgment standards.

INTELLECTUAL PROPERTY17

Lepu, Keymed exclusive licence to AstraZeneca

CATEGORIES: Out-licensing; biopharmaceutical

LEGAL COUNSEL: Zhong Lun Law Firm acted as legal counsel at Lepu Biopharma. Sidley Austin represented Keymed Biosciences.

KEY POINTS: Hong Kong-listed Lepu Biopharma, Keymed Biosciences and AstraZeneca entered into a global exclusive licensing deal in relation to CMG901, a potential first-in-class Claudin 18.2 antibody drug conjugate (ADC). Under the agreement, AstraZececa obtained the exclusive licence to develop, manufacture and commercialise CMG901 globally.

CMG901, the first Claudin 18.2-targeted ADC approved for clinical trial in both China and the US, is owned by KYM Biosciences, a 70%-30% joint venture between Lepu and Keymed.

KYM will receive an upfront payment of USD63 million on the transaction closing, and additional development and sales-related milestone payments of up to US$1.1 billion, as well as tiered royalties of up to low double-digits.

INTELLECTUAL PROPERTY18

Liangxin Electrical nationwide rights defence campaign

CATEGORIES: Trademarks; electrical appliances

LEGAL COUNSEL: Ronly & Tenwen acted as legal counsel for Liangxin Electrical.

KEY POINTS: In view of widespread counterfeiting of its company name and trademarks, the Shenzhen-listed Liangxin Electrical launched a holistic rights defence campaign targeting dozens of companies across the nation, with many lawsuits launched or planned.

The numerous infringers, spread across Zhejiang, Jiangsu, Wuhan, Beijing and elsewhere, are great in number and diverse in the manner of their infringement, which proved challenging for Liangxin. In a few standout cases, the infringement was well disguised under legitimate acts; infringing products extended to the upstream and downstream of the industry chain, making it difficult to capture; the infringement began so long ago that it risked exceeding the statute of limitation; and the regional court, favouring the local infringer, imposed only minor penalties.

In view of these obstacles, Ronly & Tenwen successfully established that the upstream and downstream circuit breakers constitute similar products with new energy charging stations, convincing the court to support the claim for RMB3 million (USD417,000) in compensation.

In another case, beside proving that the defendant profited from infringement, the legal team showed that it bid for land, paid high land use fees and built a factory, indirectly proving that it enjoyed good returns during the early stages of infringement, which, combined with referential data such as gross profit margin, led the second-instance court to raise an originally low amount of damages to RMB2 million.

INTELLECTUAL PROPERTY19

Loongson, CIP United instruction set copyright dispute

CATEGORIES: Copyright; semiconductors

LEGAL COUNSEL: Jingtian & Gongcheng represented Loongson Technology, while Mayer Brown advised it on Hong Kong law. Global Law Office represented CIP United.

KEY POINTS: The dust settles following years of dispute between the Star Market-listed Loongson Technology and CIP United over possible infringement of the former’s instruction set on the latter’s MIPS set.

The MIPS instruction set was developed by the California-based MIPS Technologies. In 2011, Loongson obtained the full license of the MIPS instruction set. However, CIP United later claimed that it had received the MIPS technology licensing contract from MIPS Technologies in 2019. As Loongson and CIP did not directly enter into any contract, CIP claimed that Loongson had, without authorisation, used and modified the MIPS technologies and underpaid royalties.

In February 2023, the Beijing IP Court issued a verdict that dismissed CIP’s claims that Loongson’s LoongArch instruction set and 3A5000 processor infringed on the MIPS instruction set and constituted unfair competition. During appeal, the Beijing High Court upheld the original decision.

CIP also launched an arbitration against Loongson at the Hong Kong International Arbitration Centre (HKIAC), submitting seven claims that focus on more than RMB27 million (USD3.2 million) in unpaid royalties stemming from the MIPS technology licensing contract between the two, six of which were dismissed by the HKIAC in June 2023.

In January 2024, the HKIAC determined Loongson as the winner, supporting its claim of arbitration fees at RMB41 million, but also requested it to pay accrued royalties at RMB24 million, as well as deferred payment of expenses, to CIP.

The case paved the way for setting review standards for instruction set-related copyright infringement, which may facilitate the handling of similar cases in the future.

INTELLECTUAL PROPERTY20

Snap-on, Mitchell against Autel over alleged data theft

CATEGORIES: Trade secrets; data security; automotive

LEGAL COUNSEL: Morrison & Foerster represented Snap-on and Mitchell 1, while AnJie Law Firm advised them on PRC law. Fish & Richardson and Greenberg Traurig advised Autel, while Broad & Bright acted as PRC counsel. AnJie and Broad & Bright have since merged to become AnJie Broad.

KEY POINTS: High-end toolmaker Snap-on and automotive repair solutions provider Mitchell 1 brought a lawsuit against Shenzhen-based Autel Intelligent Technology and its US subsidiary, accusing them of hacking into the handheld diagnostic computers and data servers to steal proprietary data relating to vehicle repair and diagnostics, and setting up accounts under false names to access that data.

Faced with forensic evidence of its misconduct, Autel stipulated to a temporary injunction – which was subsequently converted to a preliminary injunction – agreeing to refrain from using or disclosing the data that it obtained. The case was then brought before JAMS to determine the arbitrability and then proceeded to arbitration.

The case involved claims for misappropriation of trade secrets, violation of the Digital Millennium Copyright Act, and violation of the Computer Fraud and Abuse Act and state anti-hacking statutes. Exporting data from China to be used in arbitration and litigation required assessment of material under China’s Personal Information Protection Law and the Data Security Law, including processing export applications through various regulators.

INTELLECTUAL PROPERTY21

Sunny Optical, AAC Optics series patent dispute

CATEGORIES: Patents; optics

LEGAL COUNSEL: Lifang & Partners represents Sunny Optics. JunZeJun Law Offices and Grandall Law Firm represent AAC Optics.

KEY POINTS: Sunny Optics, a leader in the optics manufacturing industry, initiated lawsuits against its competitor, AAC Optics, starting a patent dispute that lasts to this day and bringing AAC’s listing on the Star Market to a halt.

Both Sunny Optics and AAC Technologies, the controlling shareholder of AAC Optics, are Hong Kong-listed companies. Just as AAC Optics, a spinoff of AAC Technologies, was gaining momentum for a public listing, it and five affiliates were hit by a total of 17 patent infringement lawsuits from Sunny Optics. Days later, ACC hit back with 10 more lawsuits against Sunny and four other companies.

The ensuing series of actions marked the largest patent infringement dispute in the global optics market, as well as the largest domestic patent dispute since Huawei v Samsung. As of the deadline for this award, five patent infringement claims brought up by Sunny Optics have been dismissed.

INTELLECTUAL PROPERTY22

Tesla, Zhongyin trademark and unfair competition dispute

CATEGORIES: Trademarks; automotive; food & beverage

LEGAL COUNSEL: Lusheng Law Firm represented Tesla. PW & Partners Law Firm represented Zhongyin.

KEY POINTS: Tesla initiated a lawsuit against Guangdong-based Zhongyin Food due to the latter using the “TESLA”, “TESLA MOTORS”, “特斯拉”, and other figurative trademarks that were identical or highly similar to Tesla’s on their soda and beer products. Zhongyin applied for and was assigned more than 50 trademarks identical or similar to Tesla, and used images of Tesla vehicles on its posters.

The Shanghai IP Court determined in its first judgment that Tesla’s six class-12 trademarks are recognised and well-known trademarks, supported Tesla’s claim of RMB5 million (USD700,000) in full, and ordered Zhongyin to publish a statement in Legal Daily to eliminate any adverse effects on Tesla. After appeal, the Shanghai High Court upheld the verdict.

One of the most challenging issues is that Zhongyin applied for the “TESLA MOTORS 特斯拉” trademark in 2013 to be used on beer, preceding Tesla’s own application. Lusheng argued that Zhongyin’s infringement acts with the trademark were not only used on beer, and that it obtained it in bad faith, which was supported in court.

INTELLECTUAL PROPERTY23

TikTok, Stitch Editing trademark bout in the US

CATEGORIES: Trademarks; short videos

LEGAL COUNSEL: Dorsey represented TikTok and ByteDance. Mintz represented Stitch Editing.

KEY POINTS: UK-based video editing company Stitch Editing launched a lawsuit at the US District Court for the Central District of California against TikTok and its developer, ByteDance. Stitch Editing claimed that TikTok’s “stitch” feature, which allows users to clip up to five seconds from an existing video and stitch it together with a second video clip, infringed on their own US-registered trademark of “STITCH EDITING” and common law trademark rights in the term “STITCH”, requesting USD116 million in damages.

After two years, the federal jury found that the TikTok feature did not violate the trademark rights of Stitch Editing, furthering rejecting the argument that it caused any confusion among consumers, or any impression that the companies were affiliated.

INTELLECTUAL PROPERTY24

Weinian, Li Ziqi's dispute over contract, trademark

CATEGORIES: Trademarks; influencers; e-commerce

LEGAL COUNSEL: Kangda Law Firm and JunHe represented Weinian.

KEY POINTS: After two years, the RMB600 million (USD83.5 million) battle over corporate control and trademark between Li Ziqi, a popular video blogger and internet celebrity, and Weinian Brand Management, a multi-channel network (MCN) company, ended in the form of a settlement and re-entering into a co-operation agreement.

The dispute concerned control over Ziqi Culture Communication, a joint venture between the two parties, of which 51% was originally held by Weinian, and 49% by Li. Following the settlement, Li is now a 99% stakeholder, and its video channel resumed activity after more than 500 days of hiatus. Other than video blogging, Li is also engaged in the production, sale and export of luosifen (snail rice noodle) herbal cough syrup and other traditional foodstuff, all in her namesake.

Weinian, which began as an internet celebrity management company, began its co-operation with Li in 2016. The company has gradually steered its focus to online retail, and the decoupling with Li accelerated this process.

In view of the special corporate nature, Weinian’s counsel took business logic and factors into heavy consideration when making their argument. For example, to mitigate the effects of interim measures, Kangda communicated with the court about how seizure, impounding and freezing of assets would materially affect its operations.

The case drew considerable attention due to the involvement of a top brand in the new economy sector, as well as complex legal issues such as crossover of criminal and civil lawsuits, unfair competition and trademark rights. The final settlement and recommitment to co-operation set a valuable precedent to the industry, particularly in terms of brand-manager relationship.

INTELLECTUAL PROPERTY25

Youkeduo infringement over source code

CATEGORIES: Trade secrets; software engineering

LEGAL COUNSEL: Jincheng Tongda & Neal (JT&N) represented Huaer Zhanfang.

KEY POINTS: Huaer Zhanfang, a Shenzhen-based integrated online operation solutions provider, brought a trade secret infringement lawsuit against its partner, RockySaaS, due to the latter uploading the source code of the WeChat mini program, Youkeduo, independently developed by Huaer, onto GitHub, leading to it being copied by many users.

In the first-instance hearing, the Shenzhen Intermediate Court affirmed that the technical information in question was a trade secret and ordered RockySaaS to pay damages, plus reasonable expenses, of RMB5 million (USD695,000). After appeals from both sides, the verdict was upheld by the Supreme People’s Court.

For litigation strategy, JT&N opted for a civil lawsuit, but operated with a criminal lawsuit mindset. Although there was no way to reveal the natural person identity of the leaker, significant suspicion of unlawful disclosure was attributed to the company by analysing the information embedded in the source code, thereby listing the company as the defendant.

The case was selected among the “IP court exemplary cases” by the Supreme People’s Court. Jurisdiction was given to the court at the place of infringement results, the domicile of the infringer, who was pinpointed using the “preponderance of evidence” standard and citing daily life experience.

GitHub is an overseas platform, which means there was no way to directly prove that the uploader worked for RockySaaS, who lacked motivation or profit prospects for the act. Therefore, the firm submitted evidence that not only located Rocky’s domain name, website link and other publicly accessible information in the source code, but also certain parameters only in its possession, for which Rocky failed to provide a reasonable explanation.

INTELLECTUAL PROPERTY26

Youku sues Kuaishou over infringement of TV series

CATEGORIES: Copyright; television; short videos

LEGAL COUNSEL: Ronly & Tenwen represented Youku and Cool Young.

KEY POINTS: Youku (Beijing) and Cool Young (Kunshan) launched an infringement lawsuit against popular short video sharing platform Kuaishou in relation to Young Marshall, a TV series depicting the early days of Manchurian warlord Zhang Xueliang.

The plaintiffs found a significant number of infringing clips of Young Marshall circulating on Kuaishou, which diluted the show’s audience base and imposed on their legitimate interests, causing economic losses.

Given that Young Marshall was an award-winning and well-known series, that Youku had previously issued other infringement notices to Kuaishou (albeit not specifically about this show), and that Kuaishou had a special hashtag dedicated to Young Marshall, the court held that Kuaishou, as the beneficiary of video hits and ad revenue, failed to exercise due management and care, therefore constituting assisting infringement. Kuaishou was ordered to compensate economic losses and bear reasonable legal expenses of RMB1.4 million (USD194,500).

INTERNATIONAL TRADE INVESTIGATIONS
  1. Anti-dumping wins for tyre makers
  2. Canada probes Chinese support of wind turbines
  3. EU’s investigation into China EVs
  4. Fuyao gets Brazil’s lowest tax rate
  5. Hweschun, others triumph in US inquiry
  6. New Continent Tire’s anti-dumping review win
  7. Steel products receive uninjured final ruling

INTERNATIONAL TRADE INVESTIGATIONS01

Anti-dumping wins for tyre makers

CATEGORIES: International trade; anti-dumping investigations

LEGAL COUNSEL: Gaopeng & Partners advised Shandong Xinghongyuan Tire and Shouguang Firemax Tyre.

KEY POINTS: South Africa began an anti-dumping inquiry into imports of Chinese-made tyres for cars, light trucks and buses. Shandong Xinghongyuan Tire was granted the sole zero tax rate and Shouguang Firemax Tyre the second-lowest nationwide tax rate.

Before the South African investigating authority issued its affirmative preliminary ruling on anti-dumping, it rejected questionnaires from all sampled companies, including Xinghongyuan and Firemax. Consequently, all Chinese enterprises bore a temporary anti-dumping tax rate of 38.33%.

Gaopeng & Partners assisted the two companies in preparing and submitting questionnaires in accordance with South African anti-dumping regulations, leading to acceptance by the investigating authority and the assignment of the lowest and second-lowest dumping margins nationwide. Gaopeng & Partners challenged the investigating authority’s method for calculating dumping margins, ultimately securing the zero tax rate for Xinghongyuan and a lower rate for Firemax.

INTERNATIONAL TRADE INVESTIGATIONS02

Canada probes Chinese support of wind turbines

CATEGORIES: International trade; anti-dumping investigations; anti-subsidy investigations

LEGAL COUNSEL: East & Concord advised China’s wind turbine industry through the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

KEY POINTS: The Canadian International Trade Tribunal on 17 November 2023 gave its final ruling regarding the country’s anti-dumping and anti-subsidy investigations into wind-power turbines from China. The ruling excluded the western Canadian market, where Chinese companies are major players, from the scope of anti-dumping measures. It also granted a unified industrywide lowest dumping and subsidy combined tax rate to certain companies represented by East & Concord.

Canada’s anti-dumping and anti-subsidy investigations encompass both administrative and judicial branches. Its injury inquiries are split into preliminary and final phases, presenting a complexity surpassing that of other nations and making orchestrating industry defences more difficult. East & Concord diligently facilitated collaboration among enterprises and chambers of commerce, and effectively organised defences in both preliminary and final stages, thereby exerting a beneficial influence on the ultimate verdict.

INTERNATIONAL TRADE INVESTIGATIONS03

EU’s investigation into China EVs

CATEGORIES: International trade; anti-subsidy investigations; electric vehicles

LEGAL COUNSEL: Steptoe & Johnson advised Tesla; JunHe advised one of the mandatory respondents, a pure electric vehicle company.

KEY POINTS: The European Commission initiated an anti-subsidy investigation into electric cars imported from China without any application for such action from the EU domestic industry. This investigation includes Chinese auto brands and international brands producing electric vehicles (EVs) in China for export to the EU, with significant implications for the global automotive industry supply chain.

According to JunHe, the investigation imposed stringent requirements, with larger volumes of questionnaires submitted by respondent enterprises compared with more typical investigations. Single enterprises underwent on-site inspections lasting up to two months. JunHe assisted respondent enterprises in completing questionnaires for 80 affiliated companies within one month. Steptoe & Johnson advised Tesla, which is both the top EV producer in the EU and the largest exporter of Chinese-made models, to take part in the commission’s investigation.

INTERNATIONAL TRADE INVESTIGATIONS04

Fuyao gets Brazil’s lowest tax rate

CATEGORIES: International trade; anti-dumping investigations

LEGAL COUNSEL: Hiways Law Firm advised five automotive glass companies, including Fuyao Group.

KEY POINTS: Brazil gave its first anti-dumping sunset review final ruling on automotive glass originating from China, imposing a five-year anti-dumping tax. Fuyao Group maintained its original tax rate, the lowest nationwide, for exporting automotive glass to Brazil.

In this investigation, Hiways Law Firm collected questionnaires from client enterprises and their subsidiaries, a total of 12 companies, and retrieved company and product information. After a section of Brazil’s government unlawfully refused to accept Fuyao’s data, Hiways promptly sought an intervention from the Chinese Ministry of Commerce to safeguard the legitimate rights of Chinese enterprises.

INTERNATIONAL TRADE INVESTIGATIONS05

Hweschun, others triumph in US inquiry

CATEGORIES: International trade; anti-dumping investigations

LEGAL COUNSEL: Commerce & Finance Law Offices advised Tianjin Hweschun Fasteners Manufacturing, Zhejiang Best Nail Industrial, and Shaoxing Bohui Import and Export.

KEY POINTS: The US Department of Commerce granted zero tax rates for Tianjin Hweschun Fasteners, Zhejiang Best Nail Industrial, and Shaoxing Bohui Import and Export in its annual anti-dumping review of steel nails from China.

In this project, Commerce & Finance acted as sole legal counsel for the Chinese mandatory respondent companies, handling legal work involving both Chinese and US law, including evidence collection, dossier writing, dumping margin calculation, and responding to US officials’ verifications, ultimately securing zero tax rate rulings for the companies.

This highlights Chinese law firms’ capacity in international affairs, particularly in handling international trade investigations, providing strong support for Chinese companies’ international business development.

INTERNATIONAL TRADE INVESTIGATIONS06

New Continent Tire’s anti-dumping review win

CATEGORIES: International trade; anti-dumping investigations

LEGAL COUNSEL: Jincheng Tongda & Neal advised Shandong New Continent Tire.

KEY POINTS: The US Court of International Trade rendered a judgment on the fourth administrative review of anti-dumping on certain passenger vehicle and light truck tyres from China in March 2023, maintaining Shandong New Continent Tire’s zero anti-dumping rate.

Before this judgment, US Customs and the IRS initiated investigations into New Continent Tire’s selling prices, taxes and profits. At the request of the Court of International Trade, the Department of Commerce initiated another anti-dumping investigation into the company. Simultaneous investigations increased the difficulty of preparing correspondence material and defences. New Continent Tire’s success lowered trade barriers for US-China automotive tires.

INTERNATIONAL TRADE INVESTIGATIONS07

Steel products receive uninjured final ruling

CATEGORIES: International trade; anti-dumping investigation; anti-subsidy investigations

LEGAL COUNSEL: Jincheng Tongda & Neal advised Jinhuan Construction Group, while Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt acted as its US partner, and Hiways Law Firm advised Modern Heavy Industries.

KEY POINTS: The US Court of Appeals for the Federal Circuit affirmed the US International Trade Court’s judgment, supporting the US International Trade Commission’s uninjured final ruling on anti-dumping and anti-subsidy investigations into steel components from China, Canada and Mexico. This marks the conclusion of investigations that notably affected the Chinese steel industry.

Defendant Jinhuan Construction was initially subject to a combined tax rate of 107% by the US Department of Commerce. Due to being identified as a Chinese state-owned enterprise, Modern Heavy Industries faced the highest anti-dumping rate of 154.14% and an anti-subsidy rate of 27.34%.

Jincheng Tongda & Neal and Hiways Law Firm co-ordinated the defences for the companies, actively responding to court proceedings and appeals, ultimately obtaining an uninjured zero tax rate, prompting appellants to abandon review and withdraw their lawsuits.

DOMESTIC DISPUTE RESOLUTION
  1. Amethystum IPO fraud
  2. Banks’ reverse purchase dispute
  3. Battle of succession to Shanshan founder
  4. CCSEB’s SPC enforcement supervision case
  5. Chang’an recovers arrears from Thaihot
  6. Contract dispute over CERCG US dollar bond
  7. First ABS fraudulent issuance case
  8. First interbank bond misrepresentation case
  9. First review of third-party funded arbitration
  10. Hongta sues Huarong over investment loss
  11. Jingsheng Real Estate contract dispute
  12. Kehua, Tianlong acquisition dispute
  13. L&K, CCMC construction contract disputes
  14. Liability dispute follows DZH misrepresentation scandal
  15. Panda Entertainment, Li Cen’s streaming contract case
  16. PICC (Zhongshan), CPIC (Dongguan) double insurance dispute
  17. Shanshan, Zhongjing USD1.7bn equity transfer
  18. SHCCIG, Sichuan Saide’s Tajikistan supervision contract
  19. SPC overturns market abuse finding
  20. Talent sues Gao Yunxiang for breach of morals
  21. Times Fortune, Hailongwang, Silver Lake series dispute
  22. World Group, Thaihot Group equity transfer dispute

DOMESTIC DISPUTE RESOLUTION01

Amethystum IPO fraud

CATEGORIES: IPO fraud; securities compliance

LEGAL COUNSEL: Zhong Lun Law Firm advised China Securities.

KEY POINTS: After optical storage provider Amethystum was delisted following a fraudulent IPO, the China Securities Regulatory Commission carried out investigations into four institutions that served as intermediaries for the share sale. During the process, IPO sponsor China Securities and three others applied to the commission for the application of the administrative enforcement commitment system. They voluntarily established a pre-compensation fund to compensate investors for their losses and paid commitment fees. Ultimately, this landmark case of the first fraudulent IPO on the Star Board, concluded with the commission signing commitment recognition agreements and reaching administrative settlements with intermediaries.

China Securities, Grant Thornton, RSM China and GFE Law Office together paid about RMB1.27 billion (USD177 million) in commitment fees, including RMB1.08 billion in pre-compensation.

This was the first application of the “pre-compensation” investor protection system since its introduction in 2019 through amendments to the Securities Law. The pre-compensation fund has so far fulfilled its duty, effectively resolving disputes with retail investors. This case also marked the first application accepted by the commission since the implementation of the Measures for the Implementation of the Rules for the Undertakings Made by the Parties to Securities and Futures Administrative Law Enforcement in January 2022.

DOMESTIC DISPUTE RESOLUTION02

Banks’ reverse purchase dispute

CATEGORIES: Reverse purchases; contractual disputes

LEGAL COUNSEL: JunZeJun Law Offices represented plaintiff Bank of Yingkou, and Liang Gao Law Firm and Yun Gong Law Firm represented defendant Yaodu Rural Commercial Bank.

KEY POINTS: Bank of Yingkou and Yaodu Rural Commercial Bank entered into agreements in 2018 and 2021 regarding two reverse purchase transactions. After Yaodu failed to buy back assets as agreed, Yingkou filed a lawsuit in the Yingkou Intermediate People’s Court of Liaoning Province, demanding the defendant fulfil its obligations as per the agreements and pay the principal, interest, and default penalty.

During the stage of filing for litigation hold, faced with the defendant’s refusal to communicate and insufficient account balance to cover the debts, JunZeJun, in addition to applying for common types of property preservation, assisted the enforcement judge to go to Beijing to seek the freezing of more than RMB1 billion (USD139 million) of China Development Bank debt securities held by the defendant. Interbank certificates of deposit were also considered as an alternative option, effectively seizing all the defendant’s cash assets. As a result, the defendant’s cash flow was restricted, and it proposed a settlement and cleared the debt.

The case involved principal and interest exceeding RMB1 billion and went through 10 legal proceedings, including jurisdictional objections, preservation execution objections, and first and second instance trials.

Against the backdrop of commercial banks recovering non-performing assets, JunZeJun had to deal with many challenging issues in the case involving financial institutions, such as the transfer of trust beneficiary rights, debt transfer, atypical guarantees, and determination during the transitional period of China’s New Asset Management Regulations.

DOMESTIC DISPUTE RESOLUTION03

Battle of succession to Shanshan founder

CATEGORIES: Inheritance disputes; corporate control disputes

LEGAL COUNSEL: AllBright Law Offices advised the plaintiff, Zhou Ting.

KEY POINTS: Zheng Yonggang, the founder of Shanshan Group, the first listed company in the Chinese clothing industry, died suddenly in February 2023. His spouse, Zhou Ting, and Zheng Ju, the second son from his previous marriage who was elected as chairman of the company in March of the same year, got into disputes over inheritance distribution and control of the company. As a result, Zhou filed a lawsuit against Zheng and applied for the freezing of the shares held by Zheng Yonggang in a company that could determine control of the Shanshan Group.

With the assistance of AllBright, the two parties reached a phase one settlement agreement in May 2023. At the same time, Zhou was elected as a non-independent director of Shanshan Group, and an application was made to the court to lift the share freeze.

This case was complex and involved various areas such as marriage and family laws, corporate disputes, and arrangements related to overseas assets. The inheritance left by Zheng Yonggang was substantial, and the inheritance arrangements were unclear. The situation of the heirs was also complicated, as the plaintiff and Zheng Yonggang had three children together, and the relationships between the parties sensitive. In addition, unlike general commercial cases, AllBright not only needed to clarify the facts and legal relationships of the case but also had to address the emotions of parties who had been in intense conflict in order to help the client better understand the situation of all those involved.

DOMESTIC DISPUTE RESOLUTION04

CCSEB’s SPC enforcement supervision case

CATEGORIES: Enforcement supervision; financial leasing

LEGAL COUNSEL: Zhonglun W&D represented Minsheng Financial Leasing, while Sino Pro Law Firm acted for China Construction Sixth Engineering Bureau (CCSEB).

KEY POINTS: The Supreme People’s Court, during an enforcement supervision procedure, revoked two previous enforcement rulings made by the Tianjin High Court and the Tianjin No.3 Intermediate Court, and added CCSEB as an entity subject to enforcement.

Minsheng Financial Leasing filed a lawsuit in 2018 with the Tianjin High Court demanding immediate payment of unpaid rent and default penalties under a financing lease contract by CCSEB No.3 Construction Co. CCSEB Sichuan Branch and CCSEB were jointly liable for the guarantee.

It was discovered in another case that Li Jian, the legal representative of CCSEB No.3 Construction CONFIRMED and the person in charge of the CCSEB Sichuan branch, forged CONFIRMED the authorisation letter from CCSEB to the Sichuan branch, which provided the guarantee for the financing lease contract. The Tianjin High Court ruled that the CCSEB Sichuan branch and CCSEB No.3 Construction should bear joint liability for Minsheng’s losses, while CCSEB was not liable.

The SPC rejected CCSEB Sichuan’s appeal and confirmed that CCSEB was not liable for compensation.

During the enforcement stage, the Tianjin No.3 Intermediate Court found that CCSEB No.3 Construction and CCSEB Sichuan had no property available for enforcement. As a result, the enforcement was terminated. Minsheng objected to the execution and requested the addition of CCSEB as an entity subject to enforcement in the case. However, the intermediate court and the Tianjin High Court rejected Minsheng’s requests on the grounds that adding CCSEB would contradict the effective judgments and rulings. Minsheng continued to appeal to the SPC through the execution supervision procedure and obtained the support of the top court.

The SPC made it clear that the changes during enforcement and additional procedures is the expansion of the subjective scope of enforcement authority, which has a clear legal basis. Therefore, adding CCSEB as an entity subject to enforcement is not a change to the previous judgment contents.

DOMESTIC DISPUTE RESOLUTION05

Chang’an recovers arrears from Thaihot

CATEGORIES: Contractual disputes; property crisis

LEGAL COUNSEL: TianTong Law Firm, Huizhong Law Firm and Lantai Partners advised the plaintiff, Chang’an International Trust. Anli Partners and Liu Tao Law Firm represented the defendant, Fuzhou Taihe New World Real Estate Development, an affiliated company under Thaihot Group. Additionally, Anli Partners acted for the defendants, Thaihot Group and its controllers.

KEY POINTS: Due to Fuzhou Taihe’s partial default on its trust loan, China United Property Insurance, China United Life Insurance and Bohai Life Insurance requested the trustee, Chang’an International Trust, to declare the entire loan due and to sue Fuzhou Taihe to recover the principal and interest. The claims were supported by Beijing No.4 Intermediate People’s Court and on appeal by the Beijing High Court.

The judgment has now taken effect and the targeted assets have been used to settle the debt.

This is China United’s first asset disposal and its largest case in terms of the target amount.

The case involves a trust loan of RMB3.14 billion (USD436 million), with Fuzhou Taihe providing first-priority mortgage guarantees using its real estate properties, its shareholders providing equity pledges, and Thaihot Group and its controllers providing suretyship.

Thaihot Group, known for luxury residential developments and once a leading real estate company in Fujian Province, has been facing financial difficulties since 2019. Tibet Trust, JIC Trust, Huarong Asset Management, Chang’an International Trust, and other institutions have filed lawsuits against Thaihot for trust loan defaults.

Debt repayment procedures involving real estate companies are often difficult and complex, involving various financial institutions, upstream and downstream supply chain companies, and the presence of cross-guarantees and credit enhancements among different projects. Debtors may also take different legal measures to protect their interests.

DOMESTIC DISPUTE RESOLUTION06

Contract dispute over CERCG US dollar bond

KEYWORDS: Guarantee contract disputes; US dollar bonds

LEGAL COUNSEL: Fangda Partners advised the Bank Of Communications Trustee, while Alliance J&S Law Firm and Guantao Law Firm acted for China Energy Reserve and Chemicals Group (CERCG).

KEY POINTS: The Supreme People’s Court ruled in its final proceeding that the Hong Kong courts have exclusive jurisdiction over a guarantee contract dispute between Bank of Communications Trustee and CERCG that originated from CERCG’s default on a US dollar bond. The ruling overturned an earlier decision by the Beijing High Court. The ruling has important implications for whether offshore holders of US dollar bonds can assert their rights against Chinese entities in mainland China, a matter of importance for investor protection.

In 2016, China Life Asset Management Co (CLAMC) and Shanghai Bank purchased USD400 million of bonds issued by a subsidiary of CERCG, with guarantees provided by CERCG. Bank of Communications Trustee acted as the trustee and signed the guarantee agreement. In October 2019, due to CERCG’s failure to make timely interest payments, CLAMC and Shanghai Bank instructed Bank of Communications Trustee to file a lawsuit against CERCG in the Beijing courts seeking payment of principal and interest.

In November 2019, the defendant raised an objection over jurisdiction, arguing that both the trust agreement and guarantee agreement stipulated that the Hong Kong courts have exclusive jurisdiction, explicitly excluding the jurisdiction of mainland Chinese courts. This objection was initially supported by the Intermediate People’s Court but was subsequently rejected by the High Court in October 2020.

DOMESTIC DISPUTE RESOLUTION07

First ABS fraudulent issuance case

CATEGORIES: Misrepresentation; intermediary liability

LEGAL COUNSEL: TianTong Law Firm represented the plaintiff and institutional investor of the asset-backed securities scheme, Postal Savings Bank of China. Fangda Partners acted for the defendant and scheme manager, HFT Fortune Asset Management. King & Wood Mallesons represented itself as a defendant and the scheme’s legal adviser. AllBright Law Offices acted for the defendant and the credit rating agency, China Chengxin Credit Ratings. Zhong Lun Law Firm represented the defendant and the scheme’s financial adviser, Huatai Securities.

KEY POINTS: The Shanghai Financial Court ruled that, due to fraudulent issuance, the original equity holder of the Huatai-Meijite Dengdu asset-backed securities scheme, Meijite Dengdu Management, was liable to compensate the plaintiff for an investment loss of RMB560 million (USD77.8 million). The financial adviser bore 100% joint and several liability, while the scheme manager bore 30%, and the credit rating agency and legal adviser 10% each for the formation and release of misrepresentation.

This is China’s first ABS fraud liability dispute in which the ruling extends the scope of regulation under the Securities Law to include ABS. It has garnered significant attention within the professional service industry due to the substantial amount of compensation awarded and the trend of courts to hold intermediary institutions accountable. Parties involved in the case have filed appeals.

DOMESTIC DISPUTE RESOLUTION08

First interbank bond misrepresentation case

CATEGORIES: Misrepresentation; interbank market

LEGAL COUNSEL: Jia Yuan Law Offices and Daoshang Law Firm acted for the plaintiff, Bluestone Asset Management; Fangda Partners for the defendant and the main sponsor, Industrial Bank; Dadi Law Firm for the defendant and the accounting firm, Reanda; King & Wood Mallesons for the defendant and the credit rating agency, China Lianhe Credit Rating; and the former Fada Law Firm (now merged into SGLA Law Firm) for the defendant and legal adviser, Zhi Ben Law Firm.

KEY POINTS: As one of the investors in Dalian Machine Tool Factory’s “No. 16 Machine Tool SCP002” bond, Bluestone sued the various intermediaries involved in the debt issuance. The suit alleged that misrepresentation in the information disclosure documents led to investment losses after Dalian Machine Tool Group entered bankruptcy proceedings and was unable to repay its debts. It sought the intermediaries to bear the joint and several compensation liabilities. Based on the degree of fault of each party involved, the causal relationship between the misrepresentation and the losses, the Beijing Financial Court ruled in the first instance that the credit rating agency was not liable, while the main sponsor, the accounting firm, and the law firm were respectively liable for 10%, 4%, and 6% of the compensation to be paid by Dalian Machine Tool Group.

This case was the first finding of misrepresentation in China’s interbank bond market. One of the disputed points was whether the actions of the intermediaries constituted misrepresentation. The Supreme People’s Court’s judicial interpretation on misrepresentation did not explicitly include the interbank bond market, but the ruling considered the interbank market as China’s largest bond issuance and trading market, and thus deemed that the relevant issuance and transactions should be subject to the provisions of the Securities Law and its judicial interpretation.

Regarding liability determination, the court supported the plaintiff’s claims regarding misrepresentation of the intermediaries, but Fangda managed to convinced the court to also consider the plaintiff’s own responsibility as a professional institutional investor for the investment losses, resulting in a reduction of the main sponsor’s liability to 10% of the total amount claimed by the plaintiff.

Both the plaintiff and defendants have filed appeals, and the case is currently in the process of being heard in the second instance.

DOMESTIC DISPUTE RESOLUTION09

First review of third-party funded arbitration

CATEGORIES: Third-party funded arbitration; judicial review

LEGAL COUNSEL: Jingtian & Gongcheng represented the claimant of the arbitration as well as the respondent in the court annulment proceedings, Guoyin Aircraft Leasing (Tianjin). Former AnJie Law Firm (now AnJie Broad) represented Ruili Airlines and its affiliated parties, the respondent of the arbitration as well as the applicant of the annulment proceedings.

KEY POINTS: Beijing No.4 Intermediate People’s Court ruled in a groundbreaking judicial review on foreign-related arbitral awards, dismissing the debtor’s application to set them aside. This was the first case in China of judicial review of third-party funding of arbitral awards, which went through non-enforcement and annulment proceedings before ultimately upholding the arbitration tribunal’s decision.

The two arbitration awards in question originated from a dispute between the parties over aircraft operating lease agreements and were issued by the China International Economic and Trade Arbitration Commission (CIETAC). The debtor first requested that Wuxi Intermediate People’s Court refuse enforcement based on the use of third-party funding in the arbitration, and later applied to the Beijing court to set aside the awards, both of which were rejected by the courts.

The Beijing court pointed out that third-party funding is not illegal, and the parties’ decision to seek such funding should be respected. The court emphasised that disclosing the funding arrangement is beneficial to safeguard the parties’ right to information, and no evidence of a breach of disclosure obligations was found.

The ruling demonstrates the legitimacy and fairness of third-party funding in arbitration proceedings and sets a positive precedent for future arbitration cases that may involve such arrangements.

DOMESTIC DISPUTE RESOLUTION10

Hongta sues Huarong over investment loss

CATEGORIES: Investment loss disputes; asset management

LEGAL COUNSEL: AnJie Broad acted for the defendant, the Zhejiang branch of the former China Huarong Asset Management (now known as China CITIC Financial Asset Management).

KEY POINTS: The Beijing Financial Court ruled in the case of Hongta Shenzhen Asset Management against Huarong, dismissing all claims made by the plaintiff. Hongta had claimed a total of RMB3.58 billion (USD497 million) in the largest individual claim in a case involving Huarong, and also the largest amount sought since the establishment of the Beijing Financial Court.

The case involved a complex transaction structure and multiple asset management schemes and entities. In 2016, China Postal Savings Bank, China Guangfa Bank and other financial institutions established an asset management scheme and subscribed to partnership shares in Huitong Gangtai Equity Investment Fund Partnership. The plaintiff served as the trustee of the scheme. Subsequently, Huitong Gangtai invested some of the scheme’s funds into its own underlying assets. This was when Huarong became Huitong Gangtai’s investment adviser via a delegated management agreement with a company called Zhenchi Investment Management. The plaintiff suffered losses due to the inability to recover investment principal and returns and attributed the losses to the alleged misconduct of Huarong, taking the case to court to seek compensation.

By clarifying the rights and obligations between the parties involved, AnJie Broad provided reasonable defence arguments regarding the existence of misconduct in the management process and the causal relationship between such misconduct and the damages suffered by the plaintiff. These arguments were ultimately accepted by the court, thereby helping Huarong avoid a significant compensation burden.

DOMESTIC DISPUTE RESOLUTION11

Jingsheng Real Estate contract dispute

CATEGORIES: Administrative disputes; real estate

LEGAL COUNSEL: Wang Jing & GH Law Firm represented Heyuan Yuancheng government, D&S Law Firm acted for Jingsheng Real Estate, and Jingfang Law Firm acted for a third party.

KEY POINTS: The Guangdong High Court, in a dispute over a primary land development contract between a local government and a developer, reversed a previous judgment and dismissed all claims made by the plaintiff real estate company.

The contract was signed in the early 2000s, with the real estate company agreeing to help finance land acquisition and infrastructure development and receive a share of the government’s land transfer fees after the public auction. As land management laws have improved, such contracts have encountered legal hurdles that have resulted in disputes before the courts in Guangdong Province.

Wang Jing & GH says that in order to challenge the first-instance judgment requiring the Yuancheng government to pay RMB120 million (USD17 million) in compensation, the firm carried out an analysis of the threat such contracts posed to the healthy operation of the public bidding system for land transfers. The legal team also addressed with the courts the issues of fault liability and allocation of compensation after the contract became invalid. In the end, the firm helped the government recover a substantial amount of its losses.

DOMESTIC DISPUTE RESOLUTION12

Kehua, Tianlong acquisition dispute

CATEGORIES: Equity acquisitions; pharmaceuticals

LEGAL COUNSEL: Hiways Law Firm acted for Kehua Bio-Engineering.

KEY POINTS: In 2018, Kehua agreed to acquire a 62% stake in Tianlong Bio-technology, for RMB554 million (USD77 million). However, a dispute arose over the pricing of the equity transfer after the outbreak of covid-19 led to soaring demand for Tianlong’s testing products and generating significant profits and making Tianlong a much more expensive company at the time.

After unsuccessful negotiations, Tianlong’s shareholders initiated a lawsuit and an arbitration against Kehua, demanding a payment of RMB10.5 billion for the equity transfer. The prolonged dispute caused Kehua to face the risk of delisting, resulting in a 50% slump in its market value. The arbitration was also the largest case in terms of the target amount since the Shanghai International Arbitration Centre (SHIAC)’s establishment.

In response, Hiways initiated diverse measures, including a series of civil litigations, filing of criminal reports and lodging administrative appeals. After 17 court hearings, Tianlong’s shareholders withdrew the arbitration application, abandoned the RMB10.5bn demand, co-operated with the acquisition audit, and Kehua’s delisting risk was eventually eliminated.

DOMESTIC DISPUTE RESOLUTION13

L&K, CCMC construction contract disputes

CATEGORIES: Construction disputes; counterclaims

LEGAL COUNSEL: Joius Law Firm represented L&K Engineering, an industrial development firm, while Jingtian & Gongcheng acted for CCMC, a semiconductor wafer producer.

KEY POINTS: Zhejiang High Court ruled that CCMC must pay the outstanding engineering fees of about RMB110 million (USD15 million) plus interest to L&K Engineering, bringing an end to a series of disputes between the two parties that dragged on over four years.

The series of cases involved two sets of lawsuits that the two companies brought against each another and went through a total of eight procedures, including first instance, second instance, retrial first instance and retrial second instance. The cases were heard in the Hangzhou Intermediate People’s Court and the Zhejiang High People’s Court, with a total of 15 court sessions. The proceedings involved more than 10,000 pages of evidence and included procedures such as engineering quantity assessment and engineering quality assessment that lasted for 18 months.

Faced with CCMC’s claims for contract termination, breach of project schedule and breach of quality, Joius said its legal team caught a subtle difference in one Chinese character in the opponent’s correspondence file during their examination of the case materials and collected evidence. This led the court to reject CCMC’s claim to have the contract terminated.

DOMESTIC DISPUTE RESOLUTION14

Liability dispute follows DZH misrepresentation scandal

CATEGORIES: Misrepresentation; class action

LEGAL COUNSEL: Xiansi Law Firm acted for China Securities Investor Services Centre (ISC). Win Zone Law Firm, Jingtian & Gongcheng, and Huidi Law Firm represented the directors, supervisors and senior executives of Shanghai DZH. DeBund Law Offices advised Shanghai DZH. Commerce & Finance Law Offices and Zhonglun W&D Law Firm represented BDO China.

KEY POINTS: In the two liability lawsuits against the directors, supervisors and senior executives of listed company Shanghai DZH, the company itself and the ISC, representing thousands of investors, claimed compensation of RMB330 million (USD46 million) and RMB860,000. During the litigation process, the controlling shareholder of DZH fully compensated the company for a total of RMB335 million in claimed losses. The ISC then applied to withdraw the lawsuit, citing the fulfilment of all litigation requests and reaching a settlement.

This is the first shareholder derivative lawsuit brought by an investor protection agency under article 94 of the Securities Law. It is also the first case in which an investor protection agency filed a claim against the directors, supervisors and senior executives of a listed company for compensation after the company was ordered to bear civil liability for securities fraud.

In both cases, the company’s annual audit firm, BDO China, was listed as a third party and ultimately exempted from any compensation liability.

In 2016, the China Securities Regulatory Commission imposed administrative penalties on DZH, its senior executives and BDO China for inflating profits in the company’s annual report. Subsequently, thousands of investors filed misrepresentation liability lawsuits against DZH and the relevant responsible individuals, claiming investment losses caused by the false disclosure.

DOMESTIC DISPUTE RESOLUTION15

Panda Entertainment, Li Cen’s streaming contract case

CATEGORIES: Contract dispute; livestreaming

LEGAL COUNSEL: Yilong Law Firm acted for Li Cen, an online streamer, and Jinyong Chengde Law Firm advised his agency, Boaiyou Information Technology. Hiways Law Firm (the leading partner has now joined Joint-Win Partners) represented Panda Mutual Entertainment Culture.

KEY POINTS: Gaming livestream platform Panda Mutual Entertainment Culture sought damages for breach of contract from one of its streamers, Li Cen, and his talent agency in a suit filed with the Shanghai Jing’an District Court after Li switched to rival Douyu. In the first-instance trial, considering factors such as the streamer’s earnings and the quantifiable losses to the platform, the court adjusted the initial claim of RMB3 million (USD420,000) to award Panda RMB2.6 million. Li appealed to the Shanghai No.2 Intermediate Court but was subsequently rejected.

The execution process of the case was completed in 2023, and the Supreme People’s Court selected it as an exemplary case in the same year.

The court wrote in its evaluation report: “When the online streamer claims that the contractual liquidated damages are significantly excessive and requests a reduction, in situations where actual losses are difficult to determine, the people’s courts can reasonably determine the compensation based on the actual income the streamer obtains from the platform, taking into account factors such as the platform’s previous investment, platform traffic, and the individual commercial value of the streamer, considering the characteristics of the livestreaming industry.”

DOMESTIC DISPUTE RESOLUTION16

PICC (Zhongshan), CPIC (Dongguan) double insurance dispute

CATEGORIES: Insurance claims; double insurance

LEGAL COUNSEL: Huang & Huang Co represented the Zhongshan branch of PICC Property and Casualty Co (PICC P&C), while Yunyuan Law Firm acted for the Dongguan branch of Pacific Insurance.

KEY POINTS: In a retrial before the Supreme People’s Court regarding a double insurance dispute between two insurance companies, the court upheld the judgment of the Guangdong High Court. It held that the two insurance policies involved constituted double insurance and ruled that the Dongguan branch of Pacific Insurance should pay the Zhongshan branch of PICC P&C RMB17.28 million (USD2.4 million), along with interest. The judgment was published by the SPC in its official gazette, providing important judicial guidance for determining double insurance cases.

Sinofert insured fertiliser products stored at the Port of Machong against all risks and related additional risks with the Zhongshan branch of PICC P&C. Meanwhile, Dongguan Shenchiwan Port Affairs had purchased a policy from the Dongguan branch of Pacific Insurance that included Machong port’s inventory.

The insured goods suffered water damage during Typhoon Mangkhut in 2018. The Zhongshan branch of PICC P&C initiated an investigation based on Sinofert’s report and sent a letter to the Dongguan branch of Pacific Insurance, requesting they share double insurance costs.

The Zhongshan branch of PICC P&C paid RMB43.2 million to Sinofert. They then filed a lawsuit with the Guangzhou Maritime Court, demanding that the Dongguan branch of Pacific Insurance pay RMN21.6 million or double insurance sharing and interest. The court adjusted the amount to RMB17.28 million in its judgment. The defendant appealed to the Guangdong High Court but was subsequently rejected.

DOMESTIC DISPUTE RESOLUTION17

Shanshan, Zhongjing USD1.7bn equity transfer

CATEGORIES: Equity transfer; counterclaims

LEGAL COUNSEL: Zhenghan Law Firm represented Shanshan Holding, Shanshan Group and their affiliated companies. AllBright Law Offices, TianTong Law Firm, and Chengyi Law Firm acted for Zhong Jing Xinhua Asset Management. Jincheng Tongda & Neal advised Zhongjing Far East International Trading. Tianhe Law Firm represented Huishang Bank.

KEY POINTS: Shanshan, as the acquirer, entered into an equity transfer agreement with Zhongjing Far East International Trading regarding a commercial bank, with a target amount exceeding RMB12 billion (USD1.7 billion). After a dispute arose during the performance of the agreement, both parties filed lawsuits with the Shanghai Financial Court that were later appealed to the Shanghai High Court. At the same time, both parties filed mutual lawsuits regarding a related loan dispute amounting to RMB1bn in the Ningbo Intermediate Court.

In the equity transfer dispute, Zhongjing Far East claimed that Shanshan failed to pay the remaining equity transfer payment, constituting a breach of contract, and demanded that Shanshan return the transferred equity and compensate for economic losses of about RMB6.2bn.

Zhenghan says the legal team discovered that the Huishang Bank equity transfer needed approval from the former China Banking and Insurance Regulatory Commission (CBIRC, now replaced by National Financial Regulatory Administration), and that this had not been obtained. Therefore, they restructured the litigation strategy and revised claims, successfully persuading the court to re-examine the effectiveness of the contract and the liability for pre-effective contractual breaches.

Both courts ultimately determined that the equity transfer contract did not take effect without CBIRC approval, and Shanshan had no obligation to pay the remaining equity transfer payment or bear the compensation liability. The court ordered Zhongjing Far East to return the already paid equity transfer payment of RMB3.89bn to Shanshan.

In the loan dispute, Zhongjing claimed that Shanshan borrowed RMB1bn from them to finance the equity transfer and demanded it repay the principal and interest. During the trial, Zhenghan’s team created a visual representation of the fund flows that revealed the alleged loan was in fact a circular accounting arrangement. The court ruled that the loan contract was invalid and the loan did not actually occur, rejecting Zhongjing’s claims.

DOMESTIC DISPUTE RESOLUTION18

SHCCIG, Sichuan Saide’s Tajikistan supervision contract

CATEGORIES: Contract dispute; Belt and Road Initiative

LEGAL COUNSEL: Yong Jia Xin Law Firm represented Shaanxi Coal & Chemical Industry Group (SHCCIG) and the project company it established in Tajikistan, while Zhizheng Law Firm advised Sichuan Saide Engineering Management.

KEY POINTS: A dispute arose during the performance of the supervision contract between SHCCIG’s project company and the engineering consulting firm, Saide, which withdrew its supervisory personnel from the site as a result. Saide sued SHCCIG at the Xi’an Intermediate Court, seeking payment of its supervisory fees. In the first-instance trial, the court approved the payment of a portion of the fees but deducted relevant performance assessment fees. Subsequently, the Shaanxi Provincial High Court dismissed Saide’s appeal.

In 2015, the SHCCIG signed a public-private joint venture framework agreement with the Tajikistan government to co-operate on a wind power transmission and transformation project in an economic development zone under the build-operate-transfer model.

This case was the first in the country to apply Tajikistan laws, setting an important precedent for the application of laws in Belt and Road countries in China.

During the second-instance trial, the court entrusted the Silk Road Economic Belt Legal Policy Co-ordination and Innovation Centre at Xi’an Jiaotong University to conduct research on relevant Tajikistan laws.

DOMESTIC DISPUTE RESOLUTION19

SPC overturns market abuse finding

CATEGORIES: Anti-monopoly; pharmaceuticals

LEGAL COUNSEL: Tian Yuan Law Firm acted for HIPI Pharma Tech and Hefei Enruite Pharmaceutical, Wanhuida Intellectual Property acted for Hefei Enruite, the former Dare & Sure Law Firm (now merged into DOCVIT Law Firm), Origintelligence acted for Hai Rui Pharmaceutical, Jingtian & Gongcheng acted for Yangtze River Pharmaceutical Group, and Dangdai Guoan Law Firm acted for Nanjing Hicin Pharmaceutical.

KEY POINTS: The Supreme People’s Court (SPC) overturned the first-instance judgment and dismissed all the claims made by Yangtze River Pharmaceutical Group in an anti-monopoly case related to the active pharmaceutical ingredients field.

Nanjing Intermediate People’s Court ruled, in March 2020, that HIPI Pharma Tech had engaged in various abusive practices such as unfair high pricing, restricted transactions and imposing unreasonable trading conditions. The court ordered HIPI to compensate Yangtze River with more than RMB6.8 billion (USD945 million).

This was selected as one of the exemplary cases of 2023 by the SPC regarding anti-monopoly and anti-unfair competition questions. In its second-instance judgment spanning 175 pages, the SPC established several groundbreaking determinations, including the monopoly pricing risks of innovative and intellectual property products, indirect competitive restraints of intermediate products, unreasonable trading conditions, and the boundaries of exercising intellectual property rights. The ruling attracted widespread attention within the industry and is expected to provide important guidance for future anti-monopoly practices in China.

DOMESTIC DISPUTE RESOLUTION20

Talent sues Gao Yunxiang for breach of morals

CATEGORIES: Morals clause; entertainment

LEGAL COUNSEL: Jingtian & Gongcheng represented Talent Television & Film.

KEY POINTS: Chinese actor Gao Yunxiang became involved in a criminal case in Australia due to an alleged sexual assault during the filming of a TV series. The scandal resulted in the company being unable to release the series in China. Talent Television filed a lawsuit against Gao and his talent agency at the Beijing No.1 Intermediate Court, claiming that Gao violated the “moral clause” in the performance contract and caused significant economic losses to the company.

The court supported the company’s claim and awarded compensation of RMB48.85 million (USD6.8 million) together with interest. Subsequently, the Beijing High Court rejected the plaintiff’s appeal over the size of the award. This was the first case in China where a court accepted a case based on a celebrity’s misconduct, attracting significant attention in society.

While conducting the case, Jingtian & Gongcheng helped Talent Television identify the assets of Gao and his agency, and ensured the efficient enforcement of the subsequent judgment.

DOMESTIC DISPUTE RESOLUTION21

Times Fortune, Hailongwang, Silver Lake series dispute

CATEGORIES: Contract dispute; real estate

LEGAL COUNSEL: TianTong Law Firm represented Times Fortune Industry Group, and Silver Lake Conference Centre Hotel.

KEY POINTS: In 1996, Shenzhen Silver Lake Conference Centre signed an agreement with Hailongwang Real Estate to jointly develop a high-end villa area in Shenzhen, with Silver Lake providing the land and Hailongwang contributing funds. The equity of the developed land was to be shared in the ratio of 32% and 68%.

The following year, the two parties signed another agreement, stipulating that Hailongwang would pay RMB10 million (USD1.39 million) to obtain 100% ownership of the land involved. However, Hailongwang failed to make the payment due to financial difficulties. In 2004, the 68% share of the land owned by Hailongwang was forcibly auctioned by the court due to its inability to repay debts, and it was acquired by Times Fortune Industrial Group. Hailongwang never terminated the contract with Silver Lake.

In 2007, Silver Lake transferred its 32% ownership to Times Fortune. In 2012, Hailongwang demanded the continued fulfilment of the 1997 agreement and sued Silver Lake, while Silver Lake counter-sued for contract termination. The first and second-instance courts both supported Hailongwang’s claims.

At the time of the dispute, the value of the land had skyrocketed several dozen times. Facing the situation where the initial judgment had entered the execution stage and the land with substantial development value might have been lost, TianTong actively defended their clients in the subsequent court proceedings. They argued that the other buyer in the “one land, two sales” situation had a legitimate right of possession and priority, convincing the court to recognise Times Fortune’s lawful rights to the land and persuading the court that the 1997 agreement was a supplement to the 1996 contract. Ultimately, the Shenzhen Intermediate Court denied Hailongwang’s claim for contract fulfilment.

DOMESTIC DISPUTE RESOLUTION22

World Group, Thaihot Group equity transfer dispute

CATEGORIES: Equity transfer; real estate crisis

LEGAL COUNSEL: Grandall Law Firm represented World Group and its affiliated companies, while Anheli Law Firm and East Capital Law Firm acted for Thaihot Group and its affiliated companies.

KEY POINTS: The Supreme People’s Court, in two final judgments regarding the equity transfer dispute between World Group and Thaihot Group regarding a project company, supported most of World Group’s claims.

The case attracted widespread attention due to the high visibility of the parties: Thaihot Group, a former listed company, and World Group, one of the leading companies in the Chinese agricultural machinery industry,

The two signed an agreement in 2017, stipulating that Thaihot Group and its affiliated companies would pay RMB3.8 billion (USD528 million) to World Group’s affiliated companies to acquire full equity in a certain real estate project company. However, due to the buyer’s financial difficulties and the downturn in the real estate market, Thaihot refused to make subsequent payments and requested the termination of the equity transfer agreement with World Group.

World Group filed a lawsuit against Thaihot Group at the Jiangsu High Court, demanding that they fulfil the contract and pay RMB600 million as the second instalment of the transfer payment. Thaihot Group filed a lawsuit against World Group in the same court, seeking contract termination and the return of the RMB2.8bn it had already paid.

After the consolidation of the two cases, the RMB3.4bn in dispute made it one of the largest cases accepted by the Jiangsu high court that year.

CROSS-BORDER DISPUTE RESOLUTION
  1. AsiaPhos, Norwest Chemicals dispute against China
  2. CNBM subsidiary, Ukraine bank guarantee obligation
  3. DP World, CMP case over Djibouti concessions
  4. Historic award enforcement in US against billionaire
  5. Hongtao, Yon Woo construction dispute in Cambodia
  6. I-Mab, Tracon dual collaboration agreements
  7. Jinggong’s dispute over World Cup stadium construction
  8. Maersk Honam’s damage to property liability
  9. PowerChina’s Uzbekistan taxes
  10. Series dispute over USD8.1bn data centre
  11. Ships’ liability dispute over collision at sea
  12. Sinopec, Repsol USD5.5bn dispute over assets
  13. Toyo Maru’s charterparty dispute
  14. US securities class action against JOYY

CROSS-BORDER DISPUTE RESOLUTION01

AsiaPhos, Norwest Chemicals dispute against China

CATEGORIES: Investment arbitration; bilateral investment treaty

LEGAL COUNSEL: Global Law Office represented China’s Ministry of Commerce, while King & Spalding and Dechert acted for AsiaPhos and Norwest Chemicals.

KEY POINTS: AsiaPhos and Norwest Chemicals alleged that their investments were unlawfully expropriated by the local government in China. After unsuccessful negotiations, they initiated investment arbitration under the Singapore-China Bilateral Investment Treaty and the UNCITRAL Arbitration Rules. The case was heard by the International Centre for Settlement of Investment Disputes (ICSID). The majority opinion of the arbitral tribunal supported China’s position on important issues such as jurisdiction, dismissing all AsiaPhos’ and Norwest Chemicals’ claims.

AsiaPhos’ mining operations were within the newly established Giant Panda National Park in Sichuan province. The provincial government refused to renew the mining rights when they expired in February 2018, ordering the company to close the two phosphate mines. Multiple rounds of negotiations between AsiaPhos and the government from November 2017 failed to reach an agreement.

The majority opinion of the arbitral tribunal concluded that the bilateral agreement between the two countries only allowed disputes related to the amount of compensation for expropriation (quantitative issues) to be submitted to international arbitration. The tribunal found that it lacked jurisdiction over disputes concerning the existence and legality of the expropriation (rights issues). The majority opinion also rejected the claimants’ argument regarding the application of the most-favoured-nation clause to broaden the scope of dispute resolution provisions.

Global Law Office says that this case further clarified the tribunal’s position on the jurisdictional scope of international arbitration under China’s first-generation bilateral investment treaties.

CROSS-BORDER DISPUTE RESOLUTION02

CNBM subsidiary, Ukraine bank guarantee obligation

CATEGORIES: Guarantee dispute; international arbitration

LEGAL COUNSEL: In the ICC arbitration, East & Concord Partners and Rede Chambers represented China National Building Materials and Equipment Import & Export Corp (CNBMEIEC), a subsidiary of state-owned CNBM. In the Ukraine court proceedings, AGA Partners acted for the subsidiary.

KEY POINTS: The ICC Hong Kong tribunal supported all of CNBMEIEC’s claims, ordering the Ukrainian bank to pay the outstanding debt and interest.

Regarding a series of procurement transactions between CNBMEIEC and several Ukrainian companies, PSC Prominvestbank, Ukraine’s largest commercial bank, issued multiple bank guarantees towards the Chinese company to secure payment obligations by the Ukrainian companies. After CNBMEIEC delivered the goods, the Ukrainian companies failed to make the agreed payments, leading to a dispute over partial payment obligations.

CNBMEIEC applied for arbitration at the ICC Hong Kong, seeking a ruling for the Ukrainian bank to pay the outstanding debt and interest, amounting to about RMB750 million (USD106 million). Meanwhile, the Ukrainian bank filed a lawsuit in its home courts, claiming the invalidity of the guarantee agreement and bank guarantees based on the bankruptcy of the relevant Ukrainian companies and alleged fraud during the signing of the guarantee agreement.

According to East & Concord, controversies arose over whether the dispute arising from the bank guarantees, which contained an arbitration clause, should be under the jurisdiction of the Ukrainian court in the context of the debtor’s bankruptcy proceedings, or be submitted to arbitration as per the arbitration agreement. This issue was rarely addressed in Ukrainian judicial practice, leading to significant differences between the parties. The matter was ultimately brought before the Supreme Court of Ukraine.

The Supreme Court ruled that even in the event of the debtor entering bankruptcy proceedings, disputes arising from the bank guarantees with arbitration clauses should be resolved through arbitration. Additionally, the Kiev Commercial Court rejected all the Ukrainian bank’s claims in the dispute over the guarantee agreement.

CROSS-BORDER DISPUTE RESOLUTION03

DP World, CMP case over Djibouti concessions

CATEGORIES: Authority to sue; Belt and Road Initiative

LEGAL COUNSEL: Reed Smith acted for China Merchants Port (CMP).

KEY POINTS: After Hong Kong courts rejected CMP’s application to have disputes related to construction of a port in Djibouti resolved by the Middle Eastern country’s courts, the company in February 2023 applied to the court to strike out a claim by Doraleh Container Terminal (DCT) on the basis that it lacked authority to sue. DCT is a joint venture company of DP World, the Dubai-owned ports giant.

Earlier, the London Court of International Arbitration had decided against the Djibouti government, awarding DP World interim damages of USD200 million.

Since 2006, DP World had been granted a concession in Djibouti for 30 years. Towards the end of 2017, the Djibouti government attempted to initiate contract renegotiations with DP World. However, in 2017, the local government signed an agreement with CMP to build another port called Doraleh International Container Terminal. Then, in February 2018, the government decided to terminate DP World’s contract, which subsequently triggered a series of legal proceedings worldwide.

In July 2023, CMP commenced legal proceedings before the Djibouti court and an administrator was appointed. In light of this, DP World and DCT then applied for anti-suit injunctions before a Hong Kong court.

The matter is at the stage of filing of evidence, and the substantive hearing of the strike-out application and one of the anti-suit injunction applications before the Hong Kong court are set to take place in April 2024.

CROSS-BORDER DISPUTE RESOLUTION04

Historic award enforcement in US against billionaire

CATEGORIES: Investment contract disputes; Cross-border enforcement

LEGAL COUNSEL: Pillsbury represented Huzhou Chuangtai Rongyuan Investment Management Partnership and individual plaintiffs, while Seiden Law Group acted for the defendant Qin Hui.

KEY POINTS: In a groundbreaking summary judgment, the District Court of the Southern District of New York ruled to enforce a record-breaking USD470 million CIETAC award against Chinese billionaire Qin, the former owner of what was once regarded as Beijing’s top-tier nightclub, Heaven on Earth. The ruling was the largest Chinese arbitration award ever confirmed in the US and came after the court rejected Qin’s claims that the tribunal was biased and failed to properly address his allegations of fraud.

Additionally, Pillsbury’s multiple motions to compel post-judgment discovery were successful, leading to sanctions against Qin and the production of crucial evidence.

In 2020, three Chinese investment companies filed an arbitration with the Chinese International Economic and Trade Arbitration Commission (CIETAC) against Qin and his companies over investment agreements, and were granted more than USD450 million in damages. In November 2021, the Chinese companies filed a petition in the New York courts to confirm the CIETAC award, as Qin was living in the city.

The ruling sets a strong precedent for future confirmations. According to Pillsbury, US courts have been hesitant to confirm Chinese arbitral awards, with about half of applications succeeding compared with more than nine out of 10 arbitral awards from other jurisdictions.

CROSS-BORDER DISPUTE RESOLUTION05

Hongtao, Yon Woo construction dispute in Cambodia

CATEGORIES: Contract dispute; international arbitration

LEGAL COUNSEL: Jincheng Tongda & Neal, 7BR Chambers, Atkin Chambers, Sethalay Law Office and R&T Sok & Heng Law Office represented the claimant, Shenzhen Hongtao Group, and its Cambodian subsidiaries, while Baker & McKenzie Wong & Leow and Legal Town Law Firm acted for Yon Woo (Cambodia).

KEY POINTS: In a construction dispute involving a stalled mega-project in Cambodia, the tribunal of the Singapore International Arbitration Centre (SIAC) supported most of the compensation claims made by the main contractor, Hongtao Group's local subsidiary. The total amount awarded was about USD60 million. Additionally, the tribunal dismissed the counterclaims of the local owner, Yon Woo (Cambodia), which amounted to more than UDS100 million.

The project, which started in 2008 and was to become the tallest building in Phnom Penh, faced numerous challenges including the global financial crisis and the covid pandemic, which resulted in multiple failed attempts to resume construction. In 2017, Hongtao Group entered into a construction contract with the owner but initiated arbitration due to the owner’s breach of contract.

Jincheng Tongda & Neal says that the case involved complex legal issues spanning multiple jurisdictions including China, Singapore, Cambodia and South Korea, with various aspects of international construction law. The firm assembled an international arbitration team comprising Chinese lawyers, British barristers and local Cambodian lawyers. They also assisted the client in hiring financial experts, construction delay experts, and Cambodian legal experts as third-party expert witnesses.

CROSS-BORDER DISPUTE RESOLUTION06

I-Mab, Tracon dual collaboration agreements

CATEGORIES: Collaboration agreements; pharmaceuticals

LEGAL COUNSEL: Sidley Austin and Dorsey acted as the lead counsel and co-counsel, respectively, for I-Mab Biopharma.

KEY POINTS: I-Mab, a Chinese and US-based biotech company, won a significant victory in a years-long dispute with Tracon Pharmaceuticals. The ICC tribunal dismissed Tracon’s claim for more than USD200 million related to I-Mab’s next-generation bispecific antibody assets, without awarding any damages.

The dispute centred on two agreements: a strategic collaboration and clinical trial agreement for testing an advanced cancer treatment in the US, and a separate strategic collaboration and clinical trial agreement. Tracon alleged that I-Mab breached the collaboration agreement for joint development of I-Mab’s proprietary bispecific antibodies.

The ruling allows I-Mab to protect and further realise the value of its existing proprietary cancer therapies and innovative bispecific antibody combinations, enabling accelerated development and global partnerships.

Outside of these disputes, Sidley, on behalf of I-Mab, continues to litigate in Delaware against Tracon’s expert in the arbitration, a direct competitor to I-Mab. I-Mab alleges the competitor can now commercialise its own oncology drugs more quickly through discovery associated with the arbitration proceedings.

CROSS-BORDER DISPUTE RESOLUTION07

Jinggong’s dispute over World Cup stadium construction

CATEGORIES: Construction disputes; Belt and Road Initiative

LEGAL COUNSEL: Zhong Lun Law Firm and Sunshine Law Firm represented Jinggong Steel International and Jinggong Steel Trading & Contracting, affiliated companies of Changjiang & Jinggong Steel Building Group.

KEY POINTS: In three construction disputes related to the Qatar World Cup stadiums, the tribunal of the ICC ruled in favour of the Jinggong companies, subcontractors in the projects. The main contractor, a joint venture between Indian company Larsen & Toubro and Al Balagh Trading & Contracting from Qatar, fully paid the awarded compensation amount in January 2024.

During the construction of one of the stadiums, disputes arose involving technical issues, project timeline and assessment of damages. The parties then decided to resolve the dispute through arbitration at the ICC. Due to the involvement of multiple entities from mainland China, Hong Kong, Qatar, India and Germany, and the complex technical issues at the core of the dispute, the case evolved into three separate ICC arbitration cases. The arbitration proceedings are seated in London, while the hearings were held in Doha, and the applicable law was Qatari law. The case involved more than 5,000 pieces of evidence and 13 witnesses.

The arbitration award not only recovered Jinggong’s economic losses but also defended the international reputation of Chinese contractors in overseas projects.

CROSS-BORDER DISPUTE RESOLUTION08

Maersk Honam’s damage to property liability

CATEGORIES: Liability disputes; shipping

LEGAL COUNSEL: Wang Jing & Co represented the plaintiff, A P Moller Singapore. Legal advisers to the defendants: Zhong Lun Law Firm represented Zhongshenghe Industry; Wintell & Co represented South Logistics International; Guangyu & Co represented Tai’an Huaming Import & Export, Shandong Lantian Disinfection Science and Technology, Zhengzhou Sainuo Chemical, Heze Huayi Chemical, Puyang Keliwei Chemical, Guotai Guomao Industry, RuiTuo Chemical, Tai’an Hautian Chemical, Hebei Xingfei Chemical, Qingdao Zhitong Chemical and Anhui Zhongyuan Chemical Group; Dunhua Law Firm represented ITI Logistics (China); Sloma & Co represented Shanghai East-High International Logistics; Dongwu Law Firm represented Zhucheng Taisheng Chemical; Huang & Huang Co Law Firm represented Jiheng Chemical; Guangyu & Co and Zhong Lun Law Firm represented Shijiazhuang Leshui Environment and Far-reaching Chemical; Kai Rong Law Firm represented Cofermin Rohstoffe; and Gengu Law Firm represented Ren Baozhong and Renmeng.

KEY POINTS: The Guangzhou Maritime Court ruled to dismiss all the plaintiff’s claims in a dispute involving the determination of liability in a ship accident.

In 2018, the vessel Maersk Honam experienced a fire and explosion while at sea. The ship’s owner, A P Moller Singapore, claimed that the incident was caused by the cargo. The company then filed a lawsuit in the Guangzhou court against 23 parties, including the manufacturer of the cargo, freight forwarders and consignors.

Wintell & Co says that in a major maritime accident, consignors, freight forwarders and cargo manufacturers often lack the opportunity to conduct on-site investigations and secure evidence in a timely manner. Faced with claims and accusations, the parties may clarify their legal responsibilities and specific obligations based on their legal status and carefully review the legality of their own actions so as to protect their legitimate rights and interests.

CROSS-BORDER DISPUTE RESOLUTION09

PowerChina’s Uzbekistan taxes

CATEGORIES: Administrative disputes; Belt and Road Initiative

LEGAL COUNSEL: Duan & Duan Law Firm acted for PowerChina’s subsidiary.

KEY POINTS: The Tashkent Administrative Court issued a ruling overturning the first-instance judgment and supporting the appeal of PowerChina. The court deemed the penalty decision of the Tashkent tax authority and the administrative review decision of the Tax Committee to be invalid.

In 2017, a subsidiary of state-owned PowerChina signed three contracts for the renovation of hydroelectric power stations in Uzbekistan. The project was financed by a loan from the China Export-Import Bank. According to Presidential Decree No. 3,857 of Uzbekistan, projects involving foreign government financial organisations were exempt from value-added tax until 1 July 2021. However, on 30 December 2019, Uzbekistan amended its Tax Code to include non-resident enterprises that conduct business within Uzbekistan through permanent establishments, like PowerChina, in the scope of VAT taxpayers.

In September 2021, the Tashkent tax authority issued a penalty decision, demanding that PowerChina pay the equivalent of about USD3,800 in VAT and fines. PowerChina subsequently applied for administrative review to the Tax Committee, and filed a lawsuit with the Tashkent Inter-District Administrative Court, but both attempts were unsuccessful.

Duan & Duan established its Tashkent office in 2018, becoming the first Chinese law firm in the country. The firm says that although Uzbekistan only began its reform and opening-up in 2017, and its local legal system is imperfect and subject to frequent changes, it is still a country moving toward the rule of law. The court’s judgment in this case demonstrates that local courts can provide fair rulings and protect the interests of foreign investors, thereby enhancing the trust of Chinese investors in the local legal system.

CROSS-BORDER DISPUTE RESOLUTION10

Series dispute over USD8.1bn data centre

CATEGORIES: Overseas acquisitions; data centres

LEGAL COUNSEL: Duan & Duan Law Firm, Des Voeux Chambers and Tsui & Co represented Daily-Tech, a developer and operator of internet data centre (IDC) infrastructure.

KEY POINTS: A Hong Kong court granted an injunction in 2022, filed by Daily-Tech against Global Switch, one of the largest IDC companies worldwide, preventing it from terminating a data centre services agreement between the two parties. In early 2023, Global Switch applied to have the injunction revoked, and the two parties later reached consensus in court to continue the agreement.

These proceedings were related to a dispute involving Daily-Tech, Global Switch and Global Switch’s owner, Shagang Group, regarding a data centre co-operation project in Hong Kong. This project was an important part of Shagang’s acquisition of Global Switch.

Recognising Daily-Tech’s position as a data centre company with many high-profile Chinese corporate leasing clients, the original sellers of Global Switch, the Reuben brothers, expressed their intention to sell 51% of the company’s shares to Daily-Tech. Shagang Group, once China’s largest privately owned steel company, which was seeking a business transformation, became the main source of funding for Daily-Tech through a consortium, whereby Shagang Group ultimately invested GBP6.3 billion (USD8.1 billion) to acquire 100% of Global Switch.

However, as the final step of the acquisition, Shagang’s plan to incorporate Global Switch into its listed company and achieve capital exit through the secondary market did not receive regulatory approval and has been delayed for a long time. Shagang Group also faces significant financial pressure to ensure a smooth exit for the original consortium of investors, which includes multiple trusts and bank wealth management funds.

According to Duan & Duan, the series dispute involved cross-border disputes arising from the acquisition spanning multiple jurisdictions, including mainland China, Hong Kong, the UK, France, Germany, Australia, the Netherlands, Spain, Singapore, BVI, and Cayman Islands.

CROSS-BORDER DISPUTE RESOLUTION11

Ships’ liability dispute over collision at sea

CATEGORIES: Collisions at sea; shipping

LEGAL COUNSEL: Wang Jing & Co represented Portovenere and Lerici Singapore, Quanzhi Law Firm acted for Qinhuangdao Boen Trading, Haitong Law Office advised Taizhou Wuxing Shipping, and Kaiyue Law Firm represented the Hebei branch of China Cinda Asset Management.

KEY POINTS: The Tianjin Maritime Court ruled that Portovenere and Lerici Singapore had the right to claim a debt of USD581,961 from Boen Trading and, within such scope, enjoy maritime liens on the vessel Sheng Jiahe 2, entitling them to priority in the related auction proceeds.

In 2020, the Singaporean liquefied natural gas carrier M/Portovenere experienced a boiler malfunction at sea, resulting in a complete loss of power and control that left it drifting westward. At the time of the incident, the Chinese vessel, Sheng Jiahe 2, was anchoring in the offshore area and had not activated its automatic identification system, or taken evasive action against the out-of-control M/Portovenere. During the attempt to restore power, the two vessels collided off the coast of Daya Bay in Huizhou, causing damage to the M/Portovenere.

Upon learning that the Sheng Jiahe 2 had been auctioned due to the shipowner’s outstanding debts, Wang Jing & Co promptly filed a creditor’s claim with the court and initiated a lawsuit to secure their rights.

Traditionally, anchored vessels are considered to have significantly reduced manoeuvrability and are not held responsible for collisions with vessels in motion. However, there were rare Chinese judicial precedents regarding collisions between two vessels with limited manoeuvrability, such as an out-of-control vessel and an anchored vessel. The court’s judgment in this case sets a precedent for future similar cases, establishing guidelines for determining liability, assessing damages and allocating losses.

CROSS-BORDER DISPUTE RESOLUTION12

Sinopec, Repsol USD5.5bn dispute over assets

CATEGORIES: International arbitration; natural resources

LEGAL COUNSEL: Herbert Smith Freehills (HSF) and Slaugher and May acted for Sinopec International Exploration and Production and Addax Petroleum, subsidiaries of Sinopec Group.

KEY POINTS: The tribunal of Singapore International Arbitration Centre (SIAC) rendered two partial awards in favour of Sinopec’s subsidiaries, holding Talisman, acquired by Repsol, liable for fraudulent misrepresentation. Following the liability phase, the parties settled through a multibillion-dollar agreement, with Repsol acquiring Sinopec’s stake in the venture.

The high-profile eight-year USD5.5 billion dispute was the largest claim ever filed with the SIAC as of submission of the arbitration application.

The dispute arose from the 2012 purchase by Sinopec of a 49% share in a Talisman oil and gas property in the North Sea. In 2015, Sinopec commenced SIAC arbitration proceedings against Repsol, alleging deceit, breach of warranty and contractual indemnities by Repsol.

HSF says the firm advised Sinopec on this matter for more than nine years, one of the most disruptive periods on record for the oil and gas industry, with the energy transition – and the transition away from North Sea oil and gas and move towards decommissioning of those assets – as well as covid and its associated travel restrictions, and upheaval of standard arbitration practice.

CROSS-BORDER DISPUTE RESOLUTION13

Toyo Maru’s charterparty dispute

CATEGORIES: Charterparties; shipping

LEGAL COUNSEL: Yanjing Law Firm acted for the plaintiff, Maximas Interation Group, a Hong Kong shipping firm. Globe-Law acted for Dalian Xinyi Trading and Haicheng Magnesium Fertiliser Industrial.

KEY POINTS: The Dalian Maritime Court ruled that Haicheng should pay Maximas a demurrage fee of USD61,920, plus interest. Haicheng’s appeal was rejected by the Liaoning High Court.

In 2018, Maximas, as the lessor, signed a charterparty with Dalian Xinyi Trading for the vessel Toyo Maru. Subsequently, as the consignor, Haicheng signed another charterparty with Maximas to indicate its acceptance and approval of chartering the Toyo Maru for the voyage.

After the ship took on board more than 6,000 tons of fertiliser from China and arrived at Indonesia’s Banjarmasin port, the demurrage fees and fuel consumption costs were incurred during the unloading period, deducting the time when unloading operations were halted due to rain, and the seven-day free unloading period specified in the charterparty. Considering that Xinyi Trading is controlled by Haicheng and specialises in foreign-related business, Maximas requested the court to order both companies to pay the related fees and interest.

This case was selected as an exemplary maritime trial case by the Supreme People’s Court in June 2023. The SPC wrote: “This case involves a charterparty dispute that occurred when Chinese companies provided infrastructure materials to countries along the Belt and Road Initiative. Chinese courts respect international commercial rules ... and protect the legitimate interests of parties from Hong Kong in accordance with the law. It has reference significance for similar foreign-related maritime disputes.”

CROSS-BORDER DISPUTE RESOLUTION14

US securities class action against JOYY

CATEGORIES: Misrepresentation; class action

LEGAL COUNSEL: Simpson Thacher represented JOYY.

KEY POINTS: In a groundbreaking decision, the US Ninth Circuit Court of Appeals upheld the complete dismissal of a securities class action against JOYY, a Nasdaq-listed video-based Chinese social media company. This was the first US federal circuit court decision to address the weight to be given to anonymous short seller allegations in securities litigation.

The lawsuit was filed in November 2020, in the US District Court for the Central District of California. The allegations relied on a report that included false and misleading statements regarding JOYY’s revenue and business model.

Simpson Thacher successfully moved to dismiss the complaint twice, arguing that the report lacked reliability and failed to prove falsity. The case was then dismissed in its entirety with prejudice by the District Court and affirmed by the Ninth Circuit, setting a precedent on the weight given to anonymous short seller allegations in securities litigation.

Steptoe Johnson 2024
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