JunHe represented a UK company (the “Client) that had entered into a distribution contract with a Hong Kong company (the “Plaintiff”). The contract specified that it would be governed by English Law and any dispute arising therefrom or in connection therewith shall be referred to an English court. As the Plaintiff failed to reach the minimum purchase amount covenanted in the distribution contract, triggering the Client’s contractual right to unilaterally terminate the distribution contract, the Client terminated the distribution contract in writing. The Plaintiff found such termination unacceptable, and for the purpose of dispute resolution, the Plaintiff and its affiliate (that was established in Guangzhou and was also the Plaintiff’s distributor in mainland China) as co-plaintiffs, brought a lawsuit against the Client before the Guangzhou Intermediate People’s Court (“Guangzhou Intermediate Court”). The Plaintiff requested that the Client assume the alleged “huge losses” arising from the termination of the Distribution Contract. The Plaintiff was able to file this case in Guangzhou by involving its affiliate in the case. JunHe actively defended the Client in the Guangzhou Intermediate Court. Through the application of English law, and based on reviewing and hearing the evidence and the opinions submitted by the concerned parties, the Guangzhou Intermediate Court eventually accepted in full JunHe’s defense and the legal opinion issued by the British barrister engaged by the Client on the application of English law, ruling that all the Plaintiff’s claims be dismissed. The Plaintiff did not appeal against the judgment of first instance, which has since come into effect, and the legitimate interests of the Client were protected.
This case was significant because:
1. JunHe successfully had English law applied in a Chinese court
The distribution contract at issue contained a clear law application clause, which stipulated that the laws of England and Wales (“English Law”) shall be applied, and therefore this case should be subject to proof by foreign law. The Plaintiff engaged a domestic law research center to issue an English legal opinion, which arrived at the conclusion that by applying the principle of “implied clause” under English law, the Plaintiff had completed the minimum purchase commitment covenanted in the distribution contract and thus the Client was entitled to terminate the distribution contract. The English legal opinion submitted by the Plaintiff argued that certain acts of the Client constituted a waiver of the right of termination. The English legal opinion submitted by the Plaintiff further argued that the losses to be compensated by the Client for unilaterally terminating the distribution contract shall include the loss of anticipated profits during the next few years of the contract’s performance.
JunHe communicated with the Client’s English lawyers and had the English barrister engaged by the Client issue English legal opinion. JunHe’s team completed a vast amount of translation work in a short period of time, including more than 450 pages of cases attached to the English legal opinion. Also, we were required to act as a “bridge” between the English law experts and the Chinese judges. JunHe effectively communicated with the presiding judge and assisted in a case where the Plaintiff and the Client had submitted two English legal opinions with completely opposite conclusions on the same matter.
2. JunHe collected comprehensive evidence
We assisted the Client in searching for relevant evidence. We also suggested that the Client collect and submit evidence which did not seem to be directly relevant to the case but would enable the presiding judge to fully understand the background of the cooperation between the parties and the business logic of the Client’s termination of the distribution contract, so as to fully demonstrate the legality and commercial justification of the Client’s termination of the distribution contract thereunder. JunHe fully restored the facts of the case by accurately collecting the evidence, enabling the court to apply English law based on the factual evidence, which ultimately resulted in a successful and fair judgment.
In this case, JunHe’s lawyers fully demonstrated their strong foreign-related legal services, solid and comprehensive legal skills, and their in-depth and comprehensive evidence collecting skills. JunHe’s ability to quickly solve complex issues, and their serious and responsible professionalism, were highly recognized and praised by the Client and its English legal team.
This case was led by Mr. ZHENG, Yu and undertaken by Ms. HU, Nan and Mr. ZOU, Delong.