China Business Law Journal celebrates the most significant transactions of 2010 and reveals the domestic and international law firms that guided them to fruition. By George W Russell and Raymond Yang
With global lending in retreat and governments in Europe and North America hamstrung by debt, China has emerged as a bright light in the world economy. Its deposit-rich financial institutions, strong domestic demand and major outbound investments helped make China itself a Deal of the Year.
Following a lengthy period of research and consultation, China Business Law Journal has compiled a collection of landmark deals concluded between December 2009 and December 2010 that showcase legal talent at its best. The winning deals and cases, which are divided into several categories, have been chosen subjectively based on transactional data, submissions received from PRC and international law firms, and interviews conducted with China-focused legal and corporate professionals.
In China Business Law Journal this month we cover outstanding deals and cases in the fields of banking & finance, offshore IPOs, outbound M&A, infrastructure & project finance, intellectual property, and restructuring & insolvency. In next month’s issue we will cover domestic IPOs, domestic and inbound M&A, dispute resolution, private equity & venture capital, foreign direct investment and environment & natural resources.
In arriving at decisions on the winning deals and cases, China Business Law Journal’s editorial team evaluated the significance of all shortlisted contenders from a legal and regulatory standpoint. The value, uniqueness and complexity of each deal or case were taken into consideration, as were any precedents that may have been established for the future.
Banking & finance deals of the year
White & Case advised on a China Development Bank (CDB) dual loan facility to Venezuela’s oil sector. The credit line, with a combined value of US$20 billion, was the largest that CDB has extended to any country. Hogan Lovells advised the two recipients of the loans, Petroleos de Venezuela (PDVSA), the state-owned oil company, and BANDES (the Venezuelan Social and Economic Development Bank under the Ministry of Finance of Venezuela).
PDVSA and China National Petroleum Corp (CNPC) also signed a separate US$16.3 billion joint venture agreement for a project that will pump a million barrels a day of oil for Chinese refineries.
The financing required negotiations involving three systems of law, and also included oil sales contracts from PDVSA to China National United Oil (Sinoil). “The first US$10 billion facility was governed by English law, the second RMB70 billion [US$10.6 billion] facility was governed by Chinese law, while the oil contract between PDVSA and Sinoil was governed by Venezuelan law,” said Bruno Ciuffetelli of Hogan Lovells, who advised PDVSA and BANDES, along with Keith Larson, Jose Valdivia, Luis Bottaro, Ken Hawkes and Wei Jun.
White & Case’s lead partner advising CDB was Li Xiaoming.
Sinopec SABIC Tianjin Petrochemical (SSTPC), a 50:50 JV between Saudi Basic Industries Corporation (SABIC) and China Petroleum & Chemical Corporation (Sinopec), obtained RMB12.26 billion in long-term financing from Chinese lenders and RMB6 billion to cover its working capital needs in one of the largest mainland China financings to date.
King & Wood corporate partner Carolyn Dong and finance partner Cai Yongmei advised the JV on all aspects of the financing. White & Case advised the JV internationally.
Chu Hejun led a Jun He Law Offices team advising the lenders, a consortium of Chinese banks.
Zhong Lun Law Firm, led by partners Zhi Hui and Gui Gang from the firm’s Shenzhen office, advised a group of banks on a US$1.28 billion syndicated loan to Shenzhen Huaxing Photoelectric Technology. The loan is for a thin-film transistor liquid crystal display panel project, which is the largest single investment project since the establishment of the Shenzhen Special Economic Zone. Total investment is RMB24.5 billion. Jiayuan Law Firm advised Shenzhen Huaxing Photoelectric.
Herbert Smith, led by Hong Kong partner Alexander Aitken, and Jakarta firm Hiswara Bunjamin & Tandjung, led by name partner Tjahjadi Bunjamin, advised Industrial and Commercial Bank of China (ICBC), its Hong Kong affiliate Industrial and Commercial Bank of China (Asia) and Indonesian affiliate Bank ICBC Indonesia in connection with a US$294 million credit facility to Indonesia Bakrie Telecom. It is the first RMB-denominated offshore loan to a non-Chinese borrower. Partner Fan Rong of Zhong Lun Law Firm acted as PRC legal counsel.
Zhong Lun Law Firm also advised a group of Chinese banks in China’s largest domestic syndicated loan thus far made to a private-sector borrower, AsiaAlum, a Guangdong-based aluminium producing-and-processing company. The RMB4 billion deal is also notable because the loan was made less than a year after AsiaAlum’s parent company, Asia Aluminum Holdings, defaulted on US$1.2 billion of outstanding debt.
The Zhonglun team consisted of Zhi Hui, Zheng Jiamei and Lin Hua.
On 20 May 2010, Bank of Tokyo-Mitsubishi UFJ (China) issued RMB1 billion of bonds on the interbank market, becoming the first foreign-invested commercial bank in mainland China to issue RMB-denominated bonds.
A team including Huo Wei, Lei Fan, Yang Lei and Li Chong from Zhong Lun Law Firm’s Beijing office provided legal advice in relation to the project.
China first allowed foreign institutions to issue “panda bonds” in China in 2005, but at that time the only banks to issue such bonds were two international financial institutions – the Asian Development Bank and the International Finance Corporation, which is part of the World Bank.
McDonald’s Corporation, the US-based fast food chain, completed the first RMB bond issue by a non-financial, non-Chinese company in Hong Kong. The issue, of RMB200 million 3% notes due September 2013, was targeted at institutional investors.
In New York, Cleary Gottlieb Steen & Hamilton partners Janet Fisher and Kristofer Hess, and counsel James Small, acted for McDonald’s in relation to US issues. Deacons partners Eugina Chan and Alexander Que advised McDonald’s on Hong Kong law.
Simmons & Simmons, led by Hong Kong partners Sau-wing Mak and Kevin Tong, advised the arranger and lead manager, Standard Chartered Bank (Hong Kong).
Capital markets deals of the year – offshore IPOs & listings
Agricultural Bank of China’s US$22 billion IPO in July vaulted past the Industrial and Commercial Bank of China’s $21.9 billion offering in 2006 to become the world’s largest IPO at that time. Beijing’s DeHeng Law Office, led by managing partner Wang Li and partners Xu Jianjun and Li Guangxin, advised the issuer.
Davis Polk & Wardwell was the issuer’s US counsel, with Hong Kong partner Show-Mao Chen leading the advice. Freshfields Bruckhaus Deringer partners Teresa Ko and Antony Dapiran advised the bank on Hong Kong law. Anderson Mori & Tomotsune, led by Tokyo partner Hironori Shibata, advised the bank on Japanese law concerning the offering.
Herbert Smith, led by partners Tom Chau in Beijing and John Moore in Hong Kong, advised China International Capital Corporation, Goldman Sachs, Morgan Stanley, Deutsche Bank, JP Morgan, Macquarie and ABCI Securities as joint sponsors, joint book-runners and joint lead managers. Partners David Johnson, Mark Roppel and Linda Lee led an Allen & Overy team advising the sponsors on US law. Wang Jianyong of Haiwen & Partners advised them on PRC law.
Partners Yang Xiaolei, Tang Lizi and Su Zheng were the King & Wood team acting for China International Capital Corporation, Citic Securities, Galaxy Securities and Guotai Junan Securities as lead underwriters.
Standard Chartered Bank, an investor, was represented by Slaughter and May, which advised on Hong Kong and English law. Partners Laurence Rudge in Hong Kong and Nilufer von Bismarck in London headed the firm’s team. Roger Denny of Clifford Chance advised another investor, Rabobank, as Hong Kong counsel.
Bathroom fittings manufacturer Joyou debuted on the Frankfurt Stock Exchange in March 2010. Joyou’s €91 million (US$124 million) IPO was the largest recorded for a Chinese company on a German exchange.
The IPO signalled a China-led revival in the European capital markets as about 15 other Chinese companies announced they were seeking a Frankfurt listing. “The world’s best brands come from Germany,” said Joyou chief executive Cai Jianshe in explaining the choice of venue. “We can benefit from German know-how.”
CMS Hasche Sigle, led by Frankfurt partner Philipp Melzer, and its Shanghai affiliate CMS, China advised the issuer. Ian Wei, a Trend Associates Shanghai partner, advised Joyou on PRC law, while the former Hammonds office in Hong Kong (which subsequently joined Brandt Chan & Partners, the Hong Kong affiliate of SNR Denton, following the global merger of Hammonds with Squire Sanders & Dempsey) advised on Hong Kong law. Arendt & Medernach advised on Luxembourg law and Farara Kerins advised on British Virgin Islands law.
Dewey & LeBoeuf served as international counsel to the underwriters, Macquarie Capital, China International Capital Corporation Hong Kong Securities, WestLB and DZ Bank. Frankfurt partner Matthias von Oppen and Beijing partner Yuan Gang led the Dewey team. Jingtian & Gongcheng advised the underwriters on PRC law.
Freshfields Bruckhaus Deringer, led by Shanghai partner Heiner Braun, and Zhong Lun Law Firm, led by Shanghai partner Anthony Zhao, acted for China Renaissance Capital Investment and Grohe, the major independent shareholders in Joyou.
Chen Leiming, a Hong Kong partner, led a Simpson Thacher & Bartlett team advising the Zhongshan, Guangdong-based China Ming Yang internationally. Voon Keat Lai of Stephenson Harwood in Hong Kong and Wang Lixin and Xiao Lan of King & Wood in Guangzhou led teams providing Hong Kong and PRC advice respectively. Hong Kong-based partner Greg Knowles led a Maples and Calder team acting as Cayman Islands and British Virgin Islands counsel to the wind power company.
Hong Kong partner David Zhang, global corporate vice-chair and co-head of the China practice at Latham & Watkins, led a team advising Morgan Stanley, Credit Suisse and BofA Merrill Lynch as underwriters. Fangda Partners represented the underwriters in respect of PRC law.
Chia Kim Huat and Howard Cheam of Rajah & Tann advised China Minzhong Food Corporation in relation to its S$236.8 million (US$171.3million) IPO and listing on the Singapore Stock Exchange. The transaction is one of the largest S-chip IPOs on the exchange since 2008.
Fangda Partners advised China Minzhong on PRC law. Soh Chun Bin led the Stamford Law Corporation team advising JPMorgan as lead managers. Yuan Tai Law Offices advised JPMorgan on PRC law.
Tianjin-based property development company Sunac China Holdings launched its HK$2.6 billion (US$336 million) global IPO on the Hong Kong Stock Exchange. Its shares were offered through a public offering in Hong Kong and an international offering in compliance with Regulation S and Rule 144A of the US Securities Act of 1933.
Davis Polk & Wardwell, led by partners Show-Mao Chen in Hong Kong and John D Paton in London, advised Sunac internationally. Jincheng Tongda & Neal and Jun He Law Offices advised Sunac on PRC legal matters while Norton Rose advised on Hong Kong law and Conyers Dill & Pearman provided Cayman Islands expertise.
A Paul Hastings Janofsky & Walker team, led by capital markets partners Raymond Li, Sammy Li, Neil Torpey and Steve Winegar, advised Deutsche Bank Hong Kong Branch as sole sponsor and Deutsche Bank and Goldman Sachs (Asia) as joint global coordinators, book-runners and lead managers.
Shanghai-headquartered Bank of Communications, the fifth largest commercial bank in the PRC, raised RMB32.8 billion from a July 2010 issue in both Hong Kong and Shanghai of 1½ rights shares for every 10 existing shares.
Yang Xiaolei and Zhang Mingyuan, Shanghai partners at King & Wood, advised the bank on PRC aspects of the issue. A Baker & McKenzie team, led by Shanghai partner Anthony Jacobsen and Hong Kong partners CY Leung and Brian Spires, advised the bank on Hong Kong law.
The underwriters, 13 banks and financial institutions, were advised by Grandall Legal Group. Shanghai partner Liu Wei headed the firm’s team. Hong Kong partner Chris Wong led a Freshfields Bruckhaus Deringer team advising HSBC, a significant shareholder in the Bank of Communications.
China Merchants Bank, the country’s sixth-largest lender by assets, became the first major Chinese bank to raise funds from a rights issue since the credit crunch began in late 2008. The issue consisted of a public offering of A shares in China, a public offering of H shares in Hong Kong and private placements of H shares to qualified institutional investors elsewhere.
Hong Kong partner James Lin led a Davis Polk & Wardwell team advising the bank on the issue. Herbert Smith, with a team led by corporate partners Tom Chau in Beijing and Kevin Roy in Hong Kong, acted for the bank on Hong Kong matters. Jun He Law Offices advised the bank on PRC law. Freshfields Bruckhaus Deringer and Commerce & Finance Law Offices advised the underwriters.
Hu An Cable is one of the 10 largest producers of electric cables and wires in China. In February 2010 it listed on the main board of the Singapore Stock Exchange, and on 28 October it successfully issued Taiwan depositary receipts (TDRs) on the Taiwan Stock Exchange, raising NT$1.6 billion (US$55 million). This makes it one of the first mainland Chinese companies to issue TDRs.
Hu An’s advisers on PRC law were Jin Mao Partners. Its advisers on Taiwanese law were THY Taiwan International Law Offices. Its advisers on Singapore law were Shook Lin & Bok. The responsible partners at Jin Mao Partners were founding partner Li Zhiqiang and partner Fang Xiaojie.
According to current Taiwanese regulations, PRC-registered companies may not directly enter the Taiwanese capital markets. Both Hu An and Yangzijiang Shipbuilding Holdings, which had earlier issued TDRs, had listed in Singapore, therefore meeting the criteria for issuing TDRs.
Mergers & acquisitions deals of the year – outbound
Blake Dawson acted for PetroChina. “This matter had some unusual aspects in negotiating documentation, first with Shell and then working with Shell as a joint venture partner,” says team leader Justin Shmith, a Melbourne partner. Partners Marie McDonald in Melbourne and Paul Newman in Brisbane also worked on the deal.
Andrew Knox and Chelsey Drake of Allens Arthur Robinson in Brisbane advised Royal Dutch/Shell. Sydney firm Gilbert + Tobin advised Arrow Energy with a team that included M&A partners Gary Lawler and Gary Besson and capital markets partner Janine Ryan.
State-owned oil giant CNOOC paid US$3.1 billion for a 50% stake in Argentina’s Bridas Corporation in a deal that highlighted China’s growing need for energy resources and reflected Beijing’s encouragement of state-owned energy companies to buy assets abroad.
Baker & McKenzie represented CNOOC. Several partners worked on the deal, including Beijing-based Stanley Jia and Bee Chun Boo; Jonathan Cahn and Tom Egan in Washington; Adolfo Duranona and Roberto Grane in Buenos Aires; Hugh Stewart and Jeremy Winter in London; Antonio Ortuzar in Santiago and Francisco Escat in Madrid.
Akin Gump Strauss Hauer & Feld, led by Rick Burdick in Washington, advised long-time client Bridas. He described the transaction as “a major cross-border English law joint venture” and “transformational in the energy sector”. Corporate partners Seth Molay in Dallas and Steven Blakeley in London also worked on the deal.
China Petroleum & Chemical Corporation (Sinopec) spent US$2.5 billion in its acquisition of a 55% stake in Angola’s Sonangol Sinopec International joint venture. The acquisition from Sinopec Group, Sinopec’s parent, marks its first acquisition of overseas upstream assets.
Skadden Arps Slate Meagher & Flom, with China head Greg Miao and Beijing partner Peter X Huang leading, served as US counsel to Sinopec in the matter.
Corporate partner Tom Chau led the transaction for Herbert Smith, which also advised Sinopec.
Allen & Overy – led by partner Mark Roppel in Hong Kong and counsel Kathleen Wong in Shanghai – also advised Sinopec.
Zhejiang Geely Holding Group bought Swedish manufacturer Volvo Cars from Ford Motor Company for US$1.8 billion in one of the biggest outbound investments made by a Chinese company since the PRC Anti-monopoly Law came into effect.
The deal, one of the most-watched outbound transactions of recent years, required approval from China’s State Council, the National Development and Reform Commission, the Ministry of Commerce and the State Administration of Foreign Exchange.
Freshfields Bruckhaus Deringer, led by corporate partners Chris Bown in London and Tim Wilkins in New York and IP partner Avril Martindale in London, advised Zhejiang Geely Holding, which became the first private Chinese company to take over a foreign vehicle maker. Haiwen & Partners advised Geely on PRC law. Stockholm-based Cederquist, led by partner Petter Wirell, advised Geely on Swedish law.
Hogan Lovells (then Hogan & Hartson) advised Ford. Partners Wei Jun in Shanghai and William Curtin in Washington led the firm’s teams. Ford turned to partners Adam Green in Stockholm and Clas Nyberg in Göteborg and their teams at Mannheimer Swartling for Swedish advice.
China Guangdong Nuclear Power Corporation, a major Chinese state-owned nuclear power utility, acquired Meiya Power from Standard Chartered Private Equity and Noonday Asset
Management. Meiya Power owns 22 electricity generation projects in China and Korea.
Grandall Legal Group was Guangdong Nuclear’s PRC counsel, while Freshfields Bruckhaus Deringer, led by Asia managing partner Simon Marchant in London and corporate partner Chris Wong in Hong Kong, advised the company in relation to other jurisdictions. “This is a hugely significant outbound transaction,” says Wong. “Meiya Power will become the platform for Guangdong Nuclear’s international expansion programme.”
Milbank Tweed Hadley & McCloy acted as the sellers’ international counsel with senior attorney Jacqueline Chan in Singapore leading the transaction. Jun He Law Offices advised the sellers as to PRC law. Russin & Vecchi’s office in Taipei provided advice on Taiwanese law.
CRCC-Tongguan Investment – a joint venture between Tongling Nonferrous Metals Group Holdings, the PRC’s second largest copper producer, and state-owned China Railway Construction Corporation (CRCC) – paid C$679 million (US$686 million) for Vancouver-based Corriente Resources, a major producer of copper in Ecuador.
Davies Ward Phillips & Vineberg, led by Toronto partner Ian McBride, acted as legal counsel to Tongling, CRCC and CRCC-Tongguan. Dacheng Law Offices, under senior partner Jiang Rongqing, provided PRC law services to the purchasers.
Marion Shaw and Judith Downes, partners at Vancouver firm Bull Housser & Tupper, served as legal counsel to Corriente. Peter O’Callaghan, a Vancouver partner with Blake Cassels & Graydon, advised the Corriente board of directors.
China Media Capital (CMC), the PRC’s first private equity fund with a focus on investment in the media industry, acquired a controlling stake in three Chinese television channels – Xing Kong, Xing Kong International and Channel [V] Mainland China – and the Fortune Star Chinese movie library from global media behemoth News Corporation.
Weil Gotshal & Manges represented CMC with a team led by partners Peter Feist and Henry Ong (Hong Kong), Kevin Ban (Shanghai) and Jeffrey Osterman (New York). Skadden Arps Slate Meagher & Flom and King & Wood represented News Corporation internationally and in the PRC respectively.
Martin Hu, Kevin Xu, Gavin Song and Yvonne Lu of Martin Hu & Partners advised Jiangyin Group on its acquisition of 75% of Telma, a French maker of reduction-gear equipment for the automotive industry. Separately, Jiangyin acquired holdings in Telma’s affiliated Chinese, British and American companies.
The deal highlighted a growing trend for cross-border acquisitions of multinational companies by Chinese private enterprises. Telma, based in Saint-Ouen l’Aumône, near Paris, was a wholly owned subsidiary of Valeo, one of the world’s largest automotive parts suppliers.
“The deal overcame challenges from the labour unions normally seen in the acquisition of European companies, especially with French companies, and was successfully closed,” said Hu.
Infrastructure & project finance deals of the Year
US-based Dow Chemical, in partnership with China’s Shenhua Group, is building a US$15 billion coal-to-chemicals project in Yulin, Shaanxi. This is expected to be China’s largest foreign direct investment project and largest project financing to date.
Partner Nick Wang of Shearman & Sterling in Hong Kong led the legal team advising Dow Chemical internationally. Yi Zhang, the Hong Kong head of O’Melveny & Myers, also advised Dow.
The Export-Import Bank of China (China Eximbank) provided financing for Wilson Sons, a Brazilian shipping company, in connection with a major equipment upgrade for the expansion of its Rio Grande container terminal in Brazil.
This is the first China Eximbank financing in South America and only the third buyer credit extended by the bank to a non-Chinese company. Shearman & Sterling advised Wilson Sons.
Milbank Tweed Hadley & McCloy represented China-owned State Grid International Development on its US$1.7 billion acquisition of seven power transmission lines in Brazil from Spanish engineering, procurement and construction companies. Partners Anthony Root in Hong Kong and Dan Bartfeld in New York led the firm’s team.
Pinheiro Neto Advogados, led by Rio de Janeiro corporate partner Laura Helena Pinheiro de Oliveira, and Machado Meyer Sendacz e Opice Advogados, led by São Paulo partner José Ribeiro do Prado junior, advised State Grid on Brazilian law.
Uría Menéndez, led by Beijing managing partner Juan Martín Perrotto, advised the Spanish sellers.
Orrick Herrington & Sutcliffe is acting for Vietnam’s Ministry of Industry and Trade on the Vinh Tan 1 coal-fired power plant project in southern Vietnam. Financed by a consortium of investors led by China Southern Grid, Vinh Tan 1 is Vietnam’s largest Chinese-invested project.
Hong Kong partner Christopher Stephens leads the Orrick team working on the transaction. The firm works in association with a team from Hanoi firm LVN & Associates led by founding partner Doãn Quynh Linh.
Clifford Chance projects group leader Ting Ting Tan in Singapore is advising China Southern Grid as well as China Power Investment Group and Vinacomin on the project.
Allen & Overy is lenders’ counsel.
The September 2010 launch of the first Shenyang metro line was the culmination of a joint venture project between Shenyang Metro and Hong Kong’s Mass Transit Railway Corporation (MTRC). The joint venture will operate the system in the Liaoning provincial capital for 30 years.
Belinda Tian, a real estate and infrastructure partner with Jincheng Tongda & Neal in Beijing, was the lead attorney for the MTRC.
The National Museum of China is regarded as one of the 10 most significant buildings in the country. The major project to renovate it began in 2005. A team from V&T Law Firm, led by the managing partner Wang Jianhong, has provided legal advice throughout the entire project.
V&T Law Firm advised Sinohydro Road and Bridge on its involvement in the construction of the third phase of the Wuqing New Technology Industrial Development Area in Tianjin on a build-transfer basis. V&T provided support throughout the negotiations and drafting of the contracts. The project involved the development of 35.5 square kilometres of land, the construction of 1.3 million square metres of residential buildings in order to house residents relocated as a consequence of the development, and the construction of associated infrastructure. The V&T team was made up of Wang Jianhong, Xie Yi, Xiao Yanren and Xing Zhuang.
The overseas shareholding relationships and the structure of the transaction as a whole were complex, involving an overseas bridging loan, a pledge of equity, a transfer of equity in and increase in capital of a BVI company, and an overseas acquisition loan. The laws of the BVI, Hong Kong and the PRC needed to be taken into account, and the control of risk was of primary importance.
The GNPower Mariveles project involves the development and financing of a 2 x 300-megawatt coal-fired power project, including a private port and associated facilities in the Philippine province of Bataan. The project is being designed and constructed by China National Electric Equipment Corporation on a turnkey basis for US$580 million and is receiving buyer credit financing of US$490 million from China Development Bank Corporation with political and commercial risk cover provided by China Export & Credit Insurance Corporation (Sinosure).
Milbank Tweed Hadley & McCloy acted as international counsel to the owner, GNPower Mariveles Coal Plant. Gary Wigmore, a partner in the Tokyo office, headed the firm’s team along with of-counsel Desiree Woo in Hong Kong. Run Ming Law Office acted as PRC counsel to the owner with partners Liu Yi and Gavin Wang leading on the transaction.
China National Electric Equipment Corporation was represented by Sunshine Law Office in the PRC, Villegas Gomos Dayao & Ricafrente in the Philippines and Pinsent Masons internationally.
Hogan Lovells represented China Development Bank Corporation, Sinosure and a consortium of commercial lenders. Washington partner Keith Larson led the firm’s team. Han Muxin and Xiong Yunxiang of Century-Link & Xin Ji Yuan Law Office acted as PRC counsel for China Development Bank.
Several international firms represented members of the equity sponsor group: Tokyo partner Michael Yoshii of Latham & Watkins acted for Denham Capital Management and Ed Koehler of Hunton & Williams in Bangkok advised Power Partners. Allen & Overy acted for Sithe Global Power.
For Philippine law matters, Joey Hofileña of SyCip Salazar Hernandez & Gatmaitan represented the borrower and Power Partners; Cornelio Abuda of Abuda Asis & Associates advised the lenders; and Maria Elizabeth E Peralta-Loriega of Puno & Puno acted for Denham Capital Management and Sithe Global.
Simpson Thacher & Bartlett acted for Blackstone Capital Partners, while offshore firm Walkers advised World Power Holdings and Blackstone Cayman funds. Ken Hawkes, then of Hogan Lovells, represented Citibank, the offshore accounts bank and offshore collateral agent.
Jakarta firm Ali Budiardjo Nugroho Reksodiputro provided advice to Indonesian coal suppliers Arutmin Indonesia and Kaltim Prima, while Maples and Calder acted for Indocoal Resources.
Intellectual property deals of the year
Following an application from Bangkok-based TC Pharmaceutical Industries, the holder of the Red Bull trademark, China’s Trademark Review and Adjudication Board (TRAB) cancelled the Red Bull trademark and image, which was held by a Mr Wei with the registration number 800816. Unhappy with the decision, Mr Wei commenced an administrative lawsuit against the TRAB. In July 2010, in a landmark ruling, the Beijing Higher People’s Court upheld a decision of the Beijing First Intermediate People’s Court relating to the use of a registered trademark in a non-use cancellation action.
The judgment “directly stopped the registrant from using the registered mark in a manner that would constitute unfair competition, trademark infringement, illegal production and fake production and to some extent, might cause the drinks industries to reshuffle in China,” said Long Chuanhong, vice-president of CCPIT Patent & Trademark Law Office.
Liu Guizeng of CCPIT represented TC Pharmaceutical Industries.
Orrick Herrington & Sutcliffe represented Microsoft in obtaining relief that shut down a 400,000-computer “botnet” capable of sending more than 1.5 billion spam e-mail messages per day.
This complex IP case was brought against 278 domains registered to Chinese domain registrars. Microsoft provided notice of the preliminary injunction and served all pleadings and orders in English and Chinese.
Orrick lawyers, including partners Neel Chatterjee in Silicon Valley and Preston Burton in Washington, crafted applications for an ex parte temporary restraining order that complied with Chinese law. It also researched how to serve the defendants through The Hague Convention on Service Abroad and documents were sent to China’s Ministry of Justice. The domains were shut down within 48 hours after a US District Court granted the order.
“This project reflects Air China’s – and Chinese firms’ in general – increasing awareness and attention to the protection of their IP rights,” said Simon Tsi , a Beijing partner with Chang Tsi & Partners. “We established a system for worldwide IPR protection tailored specifically for Air China, which is consistent with both Air China’s own characteristics and international IP rights protection.”
The case of Hino Motors v Trademark Review and Adjudication Board offers an insight into how Chinese courts determine similarity of goods. The Chinese Trademark Office (CTO) and the TRAB traditionally follow the Table of Similar Goods and Services under the Nice Classification, with few exceptions. However, the final judicial decision on the case of Hino Motors v TRAB led to an unprecedented break from such practice.
In the face of Beijing Nissan Jiahe Lubricants Company’s application for the registration of Hino marks for use on its lubricants (class 4), Hino Motors, as the owner of prior Hino marks for engines (class 7) and trucks (class 12), engaged China Patent Agent (HK) to file an opposition to assert its rights. But the initial assertions of rights did not succeed, as both CTO and TRAB determined, on the basis of the Nice table, that the goods designated for the marks in issue and those for the prior Hino marks were dissimilar. As a consequence, Beijing Nissan’s marks were found to be registrable.
Dissatisfied with TRAB’s decision, Hino Motors sought a judicial review in the Beijing First Intermediate People’s Court. Li Jiang and Du Shanshan of China Patent Agent (HK) highlighted the point that in assessing the similarity of goods, the table should serve as a reference only. The court agreed, ruling that the goods designated for the marks in issue and the goods designated for the prior marks owned by Hino Motors were similar goods, thereby cancelling the TRAB decision.
Zhejiang Zeda Law Firm acted for Hangzhou Bianfeng Network Technology as the plaintiff in its copyright dispute with Hangzhou Quwan Digital Technology. The responsible partner was Luo Yun, the firm’s senior partner and head of intellectual property.
The plaintiff is a subsidiary of Shengda Networks, the owner of the intellectual property rights to San Guo Sha (literally, Killing in the Three Kingdoms), a popular computer game. The plaintiff alleged that the online game San Guo Zhan (literally, Beheading in the Three Kingdoms), which the defendant company released in March 2010, infringed its copyright in San Guo Sha, and commenced action on this basis in the Xihu district court in Hangzhou.
The case touched on a number of hot issues in the field of copyright, including the determination of the key points of originality in the online game, and the dividing line between “drawing on experience” and plagiarism. The court’s decision on the question of whether the plaintiff’s San Guo Sha may have plagiarized the copyright of the Italian game Bang provides a standard of reference relating to the legality of the Chinese games industry’s practice of “drawing from foreign games and modelling on the competition,” which will have significant influence on the future development of the industry.
Restructuring & insolvency deals of the year
Llinks Law Offices acted as legal adviser to Shanghai Yidian Holding (Group) Company in its acquisition and restructuring of SVA Group. Llinks provided comprehensive legal service, including structuring the deal and conducting legal due diligence. The lawyers responsible were partners Christophe Han and Grant Chen.
The restructuring took place in two stages, with Shanghai Yidian first acquiring, and subsequently restructuring, two listed subsidiaries of SVA Group. The acquisition and asset restructuring of the two listed companies were interdependent and took place simultaneously, and required approval from a number of government departments including the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commissions of both the State Council and the Shanghai municipal government, and the Ministry of Commerce. C&S Law Firm advised SVA.
Sichuan Airlines increased its stake in Northeast Airlines from 33.5% to 97% by means of an equity purchase, becoming Northeast Airlines’ controlling shareholder. Subsequently, Sichuan Airlines cooperated with Hebei Jizhong Power Group in the restructuring of Northeast, establishing a new company, Hebei Airlines, in which Sichuan Airlines took a 35% stake. Northeast Airlines was the last airline to be approved by the General Administration of Civil Aviation of China before it suspended the approval of new civil airlines. After the completion of this transaction, Northeast has changed from private to state ownership.
A team from Tahota Law Firm comprising managing partner Cheng Shoutai, Ma Ruojie and others provided overall legal advice to Sichuan Airlines, including structuring the transaction and post-transaction risk identification.
In the restructuring of cosmetics and fashion company All Team Group, and its acquisition by Ming Fai Holdings, Guantao Law Firm partner Yan Pengpeng and associate Rong Yan acted as All Team’s PRC legal advisers.
Before its entire equity was acquired by Ming Fai, All Team underwent a comprehensive restructuring of its original business and newly acquired assets, which included a series of equity and asset transfers. All Team was a foreign-invested enterprise in the retail fashion distribution business, which gave rise to a number of complexities during the restructuring.
This restructuring project has a long and difficult history. During the restructuring, Shahe Wine was illegally taken over by the government of Jieshou, which fined it RMB110 million and attempted to recover RMB33 million in tax. Chen Youxi of Capital Equity Legal Group acted for Shahe, which entered a not guilty plea to the allegation of tax evasion. The plea was ultimately accepted by the Fuyang Intermediate People’s Court, which overruled the decision of the court of first instance.
Following the hearing, the case against Shahe was dropped by the public security bureau, the procuratorate and the court. The general manager was released and the company was returned to its owners.
The law firm appointed by the administrator of East Star was Hubei S&H Law Firm, with its managing partner, Zhang Jie, taking charge. Run Ming Law Office represented Airbus, and negotiated a settlement with the insolvency administrator that was acceptable to all sides. The Run Ming team was led by partner Gavin Wang, who was assisted by partner Gao Song.
The East Star Airlines insolvency was the first cross-border insolvency case in China since the implementation of the PRC Enterprise Insolvency Law. The insolvency procedures were initially brought by six aircraft leasing companies including GE Commercial Aviation Services, which was represented by King & Wood. East Star had signed a letter of intent with Airbus for the purchase of 10 Airbus A320s, and a leasing deal with GE Commercial Aviation Services for a further 10 of the same aircraft.
The insolvency proceedings involved a number of legal issues, including reorganization, liquidation and the management of cross-border debt.