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June 21, 2007

Guangdong Court Applies Hong Kong Law in Commercial Lease Dispute

From Xinhua come reports of this case, in which a Guangdong court has, for the first time, decided a commercial leasing dispute by application of Hong Kong law. Thanks to Paul Jones, a barrister, solicitor and trademark agent in Canada, for making note of this article. You will find the original article in Chinese directly below the translation.

Our translation was graciously provided by ZHAO Chen, a patent examiner at the State Intellectual Property Office of the P.R.C. and a certificated translator. Zhao Chen, an M.E. graduate from Tsinghua University, blogs on China's intellectual property system: here (for readers in mainland China) or here. Two of his published commentaries may be read here and here.

Mainland Court Applies Hong Kong Law for the First Time
Contracting Parties are Both Hong Kong based Companies

June 13, 2007

By DENG Xinjian, WU Jiao, From Legal Daily

On June 11, Zhongshan Intermediate People's Court of Guangdong Province made the first instance judgment on a Hong Kong-related lease dispute. The case is said to be the first one where Hong Kong law is applied by a mainland court. Plaintiff Diamond Lease Ltd. (hereinafter referred to as “Diamond”) and one defendant Ronghui Technology Ltd. (hereinafter referred to as “Ronghui”) are both Hong Kong based companies. The court ordered the lease contract between the parties to be terminated, and the lessee Ronghui to return rental equipment.

The dispute is reportedly due to defendant Ronghui’s violation of the lease agreement. Plaintiff Diamond claimed that, on November 22, 2002, it entered into a lease contract with Ronghui agreeing that Ronghui leased certain machine equipment from Diamond. Diamond delivered the equipment to Ronghui for use under the agreement, although the actual user was Ronghui Electronics (Zhongshan) Ltd. (hereinafter referred to as “Ronghui II”). However, Ronghui did not fulfill the rental payment requirements set out in the contract, and failed to pay any rental ever since September 2003. Diamond alleged Ronghui’s contractual violation, and requested the court to order the contract dissolution and the return of rental equipment from two defendants.

“This contract shall be governed by, and interpreted and construed in accordance with the Law of Hong Kong. The Lessor and Lessee consent to the jurisdiction of courts in Hong Kong, and the Lessor may turn to courts in any other competent jurisdiction for compulsory enforcement of this contract.” The contracting parties agreed upon the application of law for dispute resolution under Article 16 of the Lease Contract.

Since Diamond and Ronghui concurred the law of Hong Kong as the governing law, Zhongshan Intermediate Court ordered Diamond to proof concerning the application of law. In response, Diamond filed a legal opinion rendered by Deacons Law Firm, Hong Kong, proposing opinions concerning certain provisions of the lease agreement. According to this legal opinion, Diamond may, in the case that Ronghui fails to pay rental timely pursuant to the terms and conditions of the agreement, immediately terminate the contract through written notification under the agreement, and be liable correspondingly for breach of contract.

Zhongshan Intermediate Court found that the legal opinion filed by Diamond was provided by qualified attorney in Hong Kong, attested by appointed attesting officer recognized by the Ministry of Justice, and delivered through China Legal Services (Hong Kong) Ltd. The opinion was thus not only presented via a sound, legal channel, but the legal content within Hong Kong thereof was in accordance with the judicial principles of the Basic Law of Hong Kong, and was neither contrary to basic principles of mainland law nor against social public interest. Therefore, the opinion could be adopted.

Zhongshan Intermediate Court so determined at first instance that 1) the lease contract between the plaintiff and the defendant terminate, 2) Ronghui return all the machine equipment leased from Diamond within three days after the ruling takes effect, 3) the two defendants bear the Case Acceptance Fee, RMB 36,500 Yuan.

CHEN Wei, Judge of No. 4 Civil Division of Zhongshan Intermediate Court, stated that extraterritorial application of law in hearing cases is available under two circumstances. One is where both parities in dispute have clearly agreed upon the application of law provided the agreement is valid, the other happens where the most related law with the dispute is extraterritorial law based upon the most significant relationship principle if the disputing parities fail to identify any governing law.

More Words from the Judge

Concerning the jurisdiction of this case, presiding judge CHEN Wei points out that Diamond and Ronghui have agreed upon the jurisdiction over disputes, i.e., the lessor and lessee consent to the jurisdiction of courts in Hong Kong, and the lessor may turn to courts in any other competent jurisdiction for compulsory enforcement of the contract. This means the lessor can make the contract enforceable in other dispute-related jurisdiction besides the jurisdiction of Hong Kong’s courts. Thus, the jurisdiction of courts in Hong Kong over their dispute set out in the contract is actually a non-exclusive jurisdiction, or in other words, does not preclude the jurisdiction from competent courts of other countries.

This is further clarified in the purchase agreement, an annex to the lease contract, signed by the contracting parties on the same day. The agreed upon jurisdiction set out in the agreement is that both parties consent to the “non-exclusive jurisdiction” of courts in Hong Kong concerning any litigation and legal proceedings of certain agreement. Hence, Diamond has the right to litigate this case before other courts with competent jurisdiction besides courts in Hong Kong. Through financing lease, Ronghui leased machine equipment (commodities) from Diamond in compliance with its purchase requirement for the purpose of Ronghui II’s use. As a result, the place of performance of this contract is mainland China where Ronghui II is located; meanwhile, machine equipment, object in dispute of this case, is also located in mainland China. The litigation brought by Diamond before Zhongshan Intermediate Court, therefore, is in accordance with Article 24 concerning territorial jurisdiction and Article 243 of the Civil Procedure Law of P.R.C, and Zhongshan Intermediate Court has jurisdiction over this case.

合同双方为香港企业 内地法院首用香港法律判案
2007年06月13日 08:26:09 　来源：法制日报

昨天（11日），广东省中山市中级人民法院对一宗涉港租赁合同纠纷案作出一审宣判，据了解，这是内地法院首例适用香港法律判决的案件。原告钻石租赁公司和被告之一荣辉科技公司都是香港企业，双方的租赁合同被法院判令解除，承租人荣辉科技公司被判令返还租用设备。

据了解，双方的纠纷因被告荣辉科技公司违反租赁合同约定而起。原告钻石租赁公司诉称， 2002年11月22日，双方签订《租赁合同》，约定由荣辉科技公司向该公司租赁有关机器设备，该公司已依合同约定将租赁物交付被告使用，而实际使用人为荣辉电子(中山)有限公司。但荣辉科技公司却违反合同关于支付租金的约定，自2003年9月开始就未支付任何租金，其行为已构成根本违约。钻石租赁公司向法院请求判令解除合同及两被告交还租赁物。

“本合同在各个方面均受香港法律管辖，并按香港法律诠释。出租人与承租人愿受香港法庭司法管辖权的管辖，而出租人可在任何其他主管的司法管辖区法庭强制执行本合同。”双方在《租赁合同》第16条对解决纠纷适用法律作了约定。

由于钻石租赁公司和荣辉科技公司对双方发生纠纷适用的管辖法律约定为香港法律，中山市中级法院要求钻石租赁公司就法律适用进行举证。钻石租赁公司提供了由香港“的近律师行”出具的《法律意见书》，对租赁协议的相关约定提出了法律意见。对于违约责任，该《法律意见书》认为，根据香港法律，荣辉科技公司没有根据该协议的条款按时支付租金时，钻石可根据该协议的条款以书面通知立即解除该协议，并承担相应的违约责任。

中山中院认为，由钻石租赁公司提供的经香港注册专业律师作出、并由司法部委托公证人见证、法律服务公司转递的《法律意见书》，不仅提供途径规范、合法，其阐述的香港法律内容，也符合香港基本法规定的司法原则，并且没有违反我国法律的基本原则和社会公共利益。由此，可以采信。

中山中院遂作出一审判决，判令解除原、被告签订的《租赁合同》，荣辉科技公司于判决发生法律效力之日起3日内返还向钻石租赁公司租赁的所有机械设备。36500元的案件受理费，由两被告共同承担。

据中山市中级法院民四庭法官陈薇介绍，适用域外法审理案件有两种情形：一是如果争议双方明确约定适用域外法且约定有效的；二是争议双方没有约定，但根据最密切联系原则，与纠纷有最密切联系的法律是域外法的，也可以适用。（记者 邓新建 通讯员 吴娇）

法官说法

关于本案的管辖权，主审法官陈薇指出，钻石租赁公司和荣辉科技公司在《租赁合同》中有关于双方纠纷司法管辖的约定，即出租人与承租人愿受香港法庭司法管辖权的管辖，而出租人可在任何其他主管的司法管辖区法庭 “强制执行”本合同，意思就是双方因《租赁合同》而产生的纠纷，出租人除接受香港法庭的司法管辖外，还有权在其他与纠纷相关的司法管辖区域使合同得以强制履行。由此，该合同约定的香港法庭对其争议享有的管辖权，实际是一种非排他性管辖权，即并没有排除其他国家有管辖权法院的管辖权。

这一点，在双方同日签订的作为《租赁合同》附件的《购买协定》中有更进一步的明确：协定对管辖约定为双方同意接受香港法院对有关协定的任何诉讼及法律程式行使“非专有的司法管辖权”。因此，钻石租赁公司有权向除香港法院以外的其他有管辖权的司法管辖区法庭提起本案诉讼。荣辉科技公司以融资租赁的方式，向钻石租赁公司租赁由其指定购买的机械设备(货品)，以供荣辉电子公司使用。由此，本案合同的履行地在荣辉电子公司所在的中华人民共和国内地；同时本案争议的标的物机械设备也位于我国内地。因此，钻石租赁公司向中山市中级法院起诉，符合《中华人民共和国民事诉讼法》第二十四条关于地域管辖以及该法第二百四十三条的规定，中山市中级法院对本案享有管辖权。

Comments

Posted by: seoblog at July 2, 2007 6:27 PM

Posted by: peterjohan at July 19, 2007 8:31 AM

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