Page 18 - 2017 Policy Watch
P. 18
icy Watch: The Circuit Courts of the Supreme People’s Court
Civil Cases, if a cause of action is not specified in the causes 17 of the Marriage Law of our country. Upon the death of
of action of the third level, then the corresponding causes Huang Guanfang, Huang Yiming and Su Yuedi initiated
of action of the second level shall apply. There being no this litigation as heirs and co-owners of his property
“contract dispute over transfer of equity and creditor’s respectively, which is obviously in compliance with the
rights” at the third level, this case shall be determined as a provision regarding a “plaintiff” specified in Article 119 of
“contract dispute” according to the causes of action of the the Civil Procedural Law of the People’s Republic of China,
second level. and both were the proper plaintiffs of this case.
(2) An issue raised by Chow Tai Fook Company and (3) As to the issues on the validity of the Agreement
Pacific Gain Company that Huang Yiming and Su Yuedi involved and the liability for breach of contract in this case,
were not proper plaintiffs in this case is one of procedural this was a Hong Kong-related contract dispute. Both Article
law. By reference to the theory of international private 17 of the Memorandum and Article 27 of the Equity Purchase
law, lex fori – the Mainland law shall apply to this case. Agreement specified the law applicable to these two
Civil Procedural Law of our country, Article 119 reads as documents is Hong Kong law and the four supplementary
follows: “The plaintiff is defended a citizen, legal person or agreements did not change this agreement. According
any other organization with a direct interest in the case.” to the provision of Article 145 (1) of the then effective
So whether Huang Yiming and Su Yuedi are citizens with General Principles of the Civil Law, the contract dispute
a direct interest in this case became a prerequisite issue in in this case should apply Hong Kong law. Considering
this case. According to the Interpretation on Several Issues the format of the contract, the parties’ qualification to
Concerning Application of the Choice of Law for Foreign- execute the contract, intention, consideration, purpose of
Related Civil Relationships, Article 12, the applicable law the contract, etc., the Memorandum, the Equity Purchase
shall be determined by the nature of the first problem Agreement and the four supplementary agreements all
resolved. In this instant case, Huang Yiming claimed his met the conditions for a contract to be interpreted by the
rights and interests as an heir at law and Su Yuedi claimed Contract Law of Hong Kong and were determined to be
her rights and interests as the co-owner of community valid. Both Parties expressed their intention to terminate
property with Huang Guanfang, her husband. The Choice of the contract, so the Memorandum, the Equity Purchase
Law for Foreign-related Civil Relationships, Article 31 reads: Agreement and the four supplementary agreements shall
“The laws of the habitual residence at the time of death of be terminated. According to the contractual agreement,
the deceased shall apply to legal inheritance.” The habitual the main contractual obligation of Chow Tai Fook Company
residence of the deceased Huang Guanfang at the time and Pacific Gain Company was to transfer all the equity in
of his death was Mainland China. Then According to the Baoyi Company and the shareholders’ creditor’s right in
provision of Article 25 (1) of the Law of Succession of our Baoyi Company to Huang Guanfang upon full payment
country, it can be determined that Huang Yiming was an of the transfer price. Huang Guanfang’s main contractual
heir at law of Huang Guanfang and had the right to inherit obligation is to pay the transfer price in the amount of
the property involved in this case. Moreover, according to HK$184.5 million. Huang Guanfang did not perform
the Choice of Law for Foreign-related Civil Relationships, his payment obligations as agreed, thus breaching the
Article 24, as for the property relations between husband contract and should bear liability for breach of contract.
and wife, if the parties do not choose, the laws of their The Court, when determining breach of contract by Huang
mutual habitual residence shall apply. The mutual habitual Guanfang, decided that the legal liabilities to be borne by
residence of Huang Guanfang and Su Yuedi was Mainland the Parties after termination of the contract, shall be one of
China. It can then be determined that the property involved the principles for solving the contract dispute based on the
belonged to community property of Huang Guanfang and ascertained facts. The Court rejected Huang Yiming and Su
Su Yuedi and Su Yuedi was the co-owner of the disputed Yuedi’s claims on the grounds of breach of contract by Chow
property in this case, according to the provision of Article Tai Fook Company and Pacific Gain Company, and decided
18
Civil Cases, if a cause of action is not specified in the causes 17 of the Marriage Law of our country. Upon the death of
of action of the third level, then the corresponding causes Huang Guanfang, Huang Yiming and Su Yuedi initiated
of action of the second level shall apply. There being no this litigation as heirs and co-owners of his property
“contract dispute over transfer of equity and creditor’s respectively, which is obviously in compliance with the
rights” at the third level, this case shall be determined as a provision regarding a “plaintiff” specified in Article 119 of
“contract dispute” according to the causes of action of the the Civil Procedural Law of the People’s Republic of China,
second level. and both were the proper plaintiffs of this case.
(2) An issue raised by Chow Tai Fook Company and (3) As to the issues on the validity of the Agreement
Pacific Gain Company that Huang Yiming and Su Yuedi involved and the liability for breach of contract in this case,
were not proper plaintiffs in this case is one of procedural this was a Hong Kong-related contract dispute. Both Article
law. By reference to the theory of international private 17 of the Memorandum and Article 27 of the Equity Purchase
law, lex fori – the Mainland law shall apply to this case. Agreement specified the law applicable to these two
Civil Procedural Law of our country, Article 119 reads as documents is Hong Kong law and the four supplementary
follows: “The plaintiff is defended a citizen, legal person or agreements did not change this agreement. According
any other organization with a direct interest in the case.” to the provision of Article 145 (1) of the then effective
So whether Huang Yiming and Su Yuedi are citizens with General Principles of the Civil Law, the contract dispute
a direct interest in this case became a prerequisite issue in in this case should apply Hong Kong law. Considering
this case. According to the Interpretation on Several Issues the format of the contract, the parties’ qualification to
Concerning Application of the Choice of Law for Foreign- execute the contract, intention, consideration, purpose of
Related Civil Relationships, Article 12, the applicable law the contract, etc., the Memorandum, the Equity Purchase
shall be determined by the nature of the first problem Agreement and the four supplementary agreements all
resolved. In this instant case, Huang Yiming claimed his met the conditions for a contract to be interpreted by the
rights and interests as an heir at law and Su Yuedi claimed Contract Law of Hong Kong and were determined to be
her rights and interests as the co-owner of community valid. Both Parties expressed their intention to terminate
property with Huang Guanfang, her husband. The Choice of the contract, so the Memorandum, the Equity Purchase
Law for Foreign-related Civil Relationships, Article 31 reads: Agreement and the four supplementary agreements shall
“The laws of the habitual residence at the time of death of be terminated. According to the contractual agreement,
the deceased shall apply to legal inheritance.” The habitual the main contractual obligation of Chow Tai Fook Company
residence of the deceased Huang Guanfang at the time and Pacific Gain Company was to transfer all the equity in
of his death was Mainland China. Then According to the Baoyi Company and the shareholders’ creditor’s right in
provision of Article 25 (1) of the Law of Succession of our Baoyi Company to Huang Guanfang upon full payment
country, it can be determined that Huang Yiming was an of the transfer price. Huang Guanfang’s main contractual
heir at law of Huang Guanfang and had the right to inherit obligation is to pay the transfer price in the amount of
the property involved in this case. Moreover, according to HK$184.5 million. Huang Guanfang did not perform
the Choice of Law for Foreign-related Civil Relationships, his payment obligations as agreed, thus breaching the
Article 24, as for the property relations between husband contract and should bear liability for breach of contract.
and wife, if the parties do not choose, the laws of their The Court, when determining breach of contract by Huang
mutual habitual residence shall apply. The mutual habitual Guanfang, decided that the legal liabilities to be borne by
residence of Huang Guanfang and Su Yuedi was Mainland the Parties after termination of the contract, shall be one of
China. It can then be determined that the property involved the principles for solving the contract dispute based on the
belonged to community property of Huang Guanfang and ascertained facts. The Court rejected Huang Yiming and Su
Su Yuedi and Su Yuedi was the co-owner of the disputed Yuedi’s claims on the grounds of breach of contract by Chow
property in this case, according to the provision of Article Tai Fook Company and Pacific Gain Company, and decided
18
