ZHH wins a favorable second instance judgement for Liangjiang D&I Group in disputes over project construction contract with HCG before Chongqing Higher People's Court

Date:2019/07/02 Views:2735

In January 2013, Chongqing Cloud Computing Investment and Operation Co., Ltd. (“Chongqing Cloud Computing”) tendered out the electrical & medical installation works for the Onshore Data Center, EC Chongqing Data Industry Park Phase I (“the Subject Works”). Hebei Construction Group Installation Engineering Co., Ltd. (“HCG”) tendered for this project. On March 11, 2013, Chongqing Cloud Computing sent the Letter of Acceptance to the bidder HCG. However, no written contract was ever signed for the Subject Works between the two parties. Chongqing Cloud Computing was established on November 24, 2011. Its shareholders include Chongqing Liangjiang New Area Development and Investment Group Co., Ltd. (“Liangjiang D&I Group”) and Chongqing Beibei District Finance Bureau (“Beibei Finance Bureau”). Liangjiang D&I Group contributed RMB 275 million, including RMB 100 million currency paid on June 1, 2011 and land use right on May 31, 2013. Later, disputes occurred between HCG and Chongqing Cloud Computing over the failure to sign a written contract, losses arising from the demolition of temporary facilities and other matters. HCG therefore filed a lawsuit to Chongqing No. 1 Intermediate People's Court (“CQIPC 1”) against Chongqing Cloud Computing, Liangjiang D&I Group, and Beibei Finance Bureau together, demanding that Chongqing Cloud Computing compensate for considerable losses and that Liangjiang D&I Group and Beibei Finance Bureau be held jointly and severally liable. The court of first instance judged that (1) Chongqing Cloud Computing should issue a written approval for the return of the bid bond to HCG, which had paid such bid bond to Chongqing Cloud Computing for the Subject Works within 10 days from the effective date of this judgment; (2) HCG's other claims would be dismissed. HCG appealed to Chongqing Higher People's Court (“CQHPC”) against such judgement.

 

As the agent ad litem of Liangjiang D&I Group, ZHH helped win this case in the first instance (the first instance judgment was made on January 16, 2017) and the second instance (the second instance judgment was made on November 23, 2017). Both CQIPC 1 and CQHPC dismissed HCG's claim, which is that Liangjiang D&I Group shall be held jointly and severally liable, in a move to support our defense. At present, there are many disputes over the application of shareholders' supplementary liability under Article 33 of the Provisions of the Supreme People's Court on Several Issues concerning the Application of the Company Law of the People's Republic of China (III) in judicial practices. ZHH's lawyers provided a clear, in-depth analysis of legal relations and preconditions where this article applies as well as an accurate, professional analysis of the date of contribution, procedures for the modification of the articles of association, performance of contribution, subject qualifications, etc. of Liangjiang D&I Group based on exhibits and facts of this case, all of which were supported by the courts.

 

This case is one of the few project construction contract dispute cases involving the issue of shareholder contribution and especially a large amount. ZHH's lawyers provided high-quality legal services to the client to close this case based on its solid legal foundation and serious and responsible working attitude, and were highly recognized and praised by the client, to the extent to help ZHH maintain its good reputation.

 

This project was led by Partners Yuan Xiaobin and SONG Tao and handled by Chief Attorney ZHANG Xiaoqing.