For a long time now, lawyers in China have not had a right of investigation and evidence gathering expressly granted to them by law, and additionally face a relative dearth of information sources. That is, until the implementation of the Regulations for the Disclosure of Government Information on 1 May 2008. Since then, we have achieved good results in several cases.
Case 1. The Chinese shareholder of a Sino-foreign equity joint venture (JV) had been squeezing the foreign shareholder for a considerable length of time. So the government relocated the JV and in addition to cash, the JV was given a compensatory lot of land. The Chinese shareholder then falsely claimed that the JV could not continue to operate due to reasons including “environmental protection” and “zoning revision”, and brazenly shut down the JV. Additionally, the Chinese shareholder went behind the back of the foreign shareholder, using the new lot of land and cash to set up a new business on the sly, giving rise to a dispute.
In past cases of a similar nature, even if the foreign shareholder had countless reasons to suspect the excuses concocted by the Chinese shareholder, it was extremely difficult for it to verify and understand the real reason for the closure of the JV through regular channels. As the lawyers of the foreign shareholder, our firm submitted applications to the local environmental protection authority and planning authority for the disclosure of government information, requesting an explanation as to whether the JV had previously been subjected to environmental penalties, and whether there had been changes in the zoning of the lot on which it was located, receiving responses in the negative to both questions. In the subsequent dispute resolution procedure, the two government information disclosure responses exerted extreme pressure on the Chinese shareholder, playing a key role in assuring the rights and interests of the foreign shareholder.
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Vincent Mu is a senior associate and Zhou Chengcheng is an associate at Martin Hu & Partners
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