Guiding case ruling raises concerns regarding mixed roles of affiliates

By Vincent Mu, Martin Hu & Partners

On 6 February, the Supreme People’s Court issued its fourth set of guiding cases. Among them, Guiding Case No. 15 – “Sales contract dispute case, XCMG Construction Machinery v Chengdu Chuanjiao Industry & Trade et al” – indicates that where there is mixing in terms of personnel, business, financial affairs, etc. among affiliates, all of the affiliates will bear joint and several liability for the external debt of one or more them.

牟笛 Vincent Mu 胡光律师事务所 律师 Associate Martin Hu & Partners
Vincent Mu
Martin Hu & Partners

The system of guiding cases began in 2010. Pursuant to article 7 of the Notice on the Provisions for Case Guidance Work (Fa Fa [2010]), when a People’s Court at any level tries a case similar to a guiding case issued by the Supreme People’s Court, it is required “to make reference” to it.

Based on this, Case No. 15 will set the train of thought in future trials of similar disputes.

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