In the case of civil and commercial disputes involving Hong Kong, we should refer to the provisions of the conflict norms of private international law in China and the theory of private international law, and divide the applicable law for different problems. This case involves the specific application of some conflict norms, such as qualitative, procedural matters, preliminary issues, legal succession, marital property relations, contract disputes, limitation of action, etc., and also involves the identification and application of Hong Kong laws, which has typical significance and reference value in the field of foreign-related, Hong Kong, Macao and Taiwan-related civil and commercial trials.
On June 19th, 2000, Chow Tai Fook Company of Hong Kong and Hengman Company of Hong Kong signed the Equity Purchase and Sale Agreement with Huang Guanfang, a mainlander, stipulating that Chow Tai Fook Company and Hengman Company would transfer 100% shares of Hong Kong Baoyi Company and shareholders’ loan rights to Huang Guanfang; The total transfer consideration and shareholder loans amounted to HK$ 184.5 million. Article 27 stipulates that this Agreement shall be governed by and interpreted in accordance with the laws of Hong Kong, and the parties agree that the courts of Hong Kong shall exercise non-exclusive jurisdiction. Previously, the two sides drafted the Memorandum on June 1, 2000, stipulating that Baoyi Company should obtain the state-owned land use certificate of the land involved from Shunde Land and Resources Bureau and other prerequisites. Article 17.1 stipulates that this Memorandum shall be governed by and interpreted in accordance with the laws of Hong Kong. Since then, the two sides have signed four supplementary agreements, which revised the payment currency, payment time and interest payment. The fourth supplementary agreement signed on January 25, 2002 confirmed that Huang Guanfang had paid 20 million Hong Kong dollars, 93.5 million yuan and 4,861,217 yuan of interest based on the agreement, and made a new agreement on the payment of the balance and interest. Since then, Huang Guanfang has not paid again. On May 30, 2006, Chow Tai Fook Company and Hengman Company informed Huang Guanfang that they had seriously breached the contract and immediately terminated the contract.
Huang Guanfang, a native of Shunde, Foshan, died on January 19th, 2008. He had two sons, Huang Yiming and Huang Shiming. His wife Su Yuedi and his son Huang Shiming both renounced the inheritance of Huang Guanfang’s estate. On September 2, 2010, the plaintiffs Huang Yiming and Su Yuedi filed a lawsuit with the Guangdong Higher People’s Court, requesting an order to dissolve the Memorandum, the Equity Purchase and Sale Agreement and all their supplementary agreements; The defendants Chow Tai Fook Company, Hengman Company and Baoyi Company jointly repaid the principal and interest of the transfer money and compensated for the losses.
The Guangdong Higher People’s Court partially supported the plaintiff’s claim, and the first-instance judgment confirmed the dissolution of the Memorandum, the Equity Purchase and Sale Agreement and its four supplementary agreements; Chow Tai Fook Company and Hengman Company returned the payment made by Huang Guanfang to Huang Yiming and Su Yuedi, but deducted the liquidated damages of HK$ 25 million agreed in the contract. Both parties refused to accept the judgment of the first instance and appealed to the Supreme Court. The Supreme Court made a civil judgment (2015) Min Si Zhong Zi No.9, dismissed the appeal and upheld the original judgment.
1. About the qualitative problem of this case raised by Huang Yiming and Su Yuedi.
Article 8 of China’s Law on the Application of Laws in Foreign-related Civil Relations stipulates that "the characterization of foreign-related civil relations shall be governed by the law of the forum", and this case shall be governed by the law of the forum-the mainland law. To characterize a case is actually to determine the cause of the case. Judging from the contents of the contract dispute in this case, it includes two aspects of rights transfer. One is that Chow Tai Fook Company and Hengman Company will transfer all the shares of Baoyi Company to Huang Guanfang, and the other is that Chow Tai Fook Company and Hengman Company will transfer their shareholder loan rights to Baoyi Company to Huang Guanfang. Therefore, the essence of this case is a contract dispute over the transfer of equity and creditor’s rights. According to the provisions of the Supreme Court on the cause of action of civil cases, if there is no provision for the third-level cause of action, the corresponding second-level cause of action shall apply. The third-level cause of action does not stipulate "contract disputes over the transfer of equity and creditor’s rights", so the cause of action of this case should be determined as "contract disputes" according to the second-level cause of action.
2. Regarding the question that Huang Yiming and Su Yuedi are not qualified plaintiffs in this case raised by Chow Tai Fook Company and Hengman Company.
This is a matter of procedural law, and referring to the theory of private international law, the law of the forum-the law of the mainland should be applied. Article 119 of China’s Civil Procedure Law stipulates: "The plaintiff is a citizen, legal person and other organization that has a direct interest in this case". Whether Huang Yiming and Su Yuedi are citizens who have a direct interest in this case has become a prerequisite for this case. According to Article 12 of the Judicial Interpretation of the Law Applicable to Foreign-related Civil Relations, the applicable law should be determined according to the nature of the preliminary question itself. In this case, Huang Yiming claimed rights and interests as the legal heir of Huang Guanfang, and Su Yuedi claimed rights and interests as the co-owner of Huang Guanfang’s husband and wife’s property. According to the provisions of Article 31 of the Law on the Application of Laws in Foreign-related Civil Relations, "the law of the decedent’s habitual residence at the time of his death shall apply to legal inheritance", and the decedent Huang Guanfang’s habitual residence at the time of his death was in the mainland, and then according to the provisions of Article 25, paragraph 1, of China’s Inheritance Law, it is determined that Huang Yiming is the legal heir of Huang Guanfang and has the right to inherit the property involved in this case. According to the provisions of Article 24 of the Law on the Application of Laws in Foreign-related Civil Relations, if the parties have no choice, the law of common habitual residence shall apply, and the common habitual residence of Huang Guanfang and Su Yuedi is the mainland. According to the provisions of Article 17 of China’s Marriage Law, it is determined that the property involved in this case belongs to the joint property of Huang Guanfang and Su Yuedi, and Su Yuedi is the co-owner of the disputed property in this case. After Huang Guanfang’s death, Huang Yiming and Su Yuedi were the heirs and co-owners of his property respectively.Bringing a lawsuit in this case obviously conforms to the provisions of Article 119 of the Civil Procedure Law of People’s Republic of China (PRC) on "Plaintiff" and is a qualified plaintiff in this case.
3. Regarding the validity of the contract involved in this case and the liability for breach of contract.
This case is a contract dispute case involving Hong Kong. Article 17 of the Memorandum and Article 27 of the Equity Purchase and Sale Agreement stipulate that Hong Kong laws shall apply, and the four supplementary agreements have not changed this agreement. According to the first paragraph of Article 145 of the General Principles of Civil Law in effect at the time of the act, the contract dispute in this case shall be governed by the laws of Hong Kong. From the aspects of contract form, contracting qualification of the parties, expression of will, consideration and contract purpose, it is found that the Memorandum, the Agreement on Buying and Selling Equity and its four supplementary agreements all meet the conditions of contract validity in Hong Kong Contract Law and are all considered valid. Both parties have expressed their willingness to terminate the contract, and the Memorandum, the Equity Purchase and Sale Agreement and its four supplementary agreements should be terminated. According to the contract, the main contractual obligations of Chow Tai Fook Company and Hengman Company are to transfer all the equity of Baoyi Company and the shareholder loan rights of Baoyi Company to Huang Guanfang after the transfer payment is paid. Huang Guanfang’s main contractual obligation is to pay the price of HK$ 184.5 million. Huang Guanfang’s failure to complete the payment obligation as agreed constitutes a breach of contract and should bear the liability for breach of contract according to the contract. According to the facts ascertained, the court should determine the legal responsibilities of the parties after the termination of the contract when Huang Guanfang is found to have breached the contract, which is the proper meaning to solve the contract dispute. At the same time that the judgment rejected Huang Yiming and Su Yuedi’s claim for breach of contract by Chow Tai Fook Company and Hengman Company, the money that Chow Tai Fook Company and Hengman Company should return according to the contract was dealt with in this case, which did not exceed the trial scope of this case, and there was no so-called violation of "no complaint".The basic principles of litigation.
4. The question of whether this case exceeds the statute of limitations.
Article 7 of the Law on the Application of Laws in Foreign-related Civil Relations stipulates: "The statute of limitations shall apply to the laws applicable to relevant foreign-related civil relations." The statute of limitations in this case shall be determined according to the law applicable to the contract dispute-Hong Kong law. Article 4 (1)(a) of the Limitation Ordinance in Hong Kong stipulates that a lawsuit based on contract or tort shall be six years from the date when the cause of action arises. The parties have no objection to this, but there are disputes about the starting point of the limitation period. Huang Yiming and Su Yuedi filed a lawsuit in this case, based on the contract signed between Huang Guanfang and Chow Tai Fook Company and Hengman Company, requesting to confirm the termination of the contract and for Chow Tai Fook Company, Hengman Company and Baoyi Company to return the paid transfer money and its interest and compensate the losses. Although it is stipulated in the contract that Huang Guanfang’s payment term expires on May 31, 2002, Chow Tai Fook Company and Hengman Company notified Huang Guanfang to terminate the contract on May 30, 2006, so the cause of action in this case should be deemed to have occurred on May 30, 2006, not May 31, 2002. Therefore, this case did not exceed the statute of limitations.
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