Using the Neutral Third-party Evaluation Mechanism in Hong Kong-related Cases to Guide the Parties to Resolve Disputes Resonably ——Zhuang v. Wen Moutao, Wen Mouguang and others on Guarantee Contract Disputes

Basic Facts

Zhuang and Wen Moutai (Hong Kong) have been business partners for many years. In 2008, Wen Moutai borrowed 1 million yuan from Xie and Zhuang provided guarantees. After the expiry of the time limit, Wen Moutai did not repay the loan. Zhuang fulfilled the guarantee responsibility to Xie and payed principal and interest which totaled 1.5 million yuan. Wen Moutai passed away in July 2014. As the debt was not repaid, Zhuang sued Wen Moutai’s sons Wen Moutao and Wen Mouguang, Wen Moutai’s wife Mai, and Wen Moutai’s daughters Wen Moufeng and Wen Moushun to the Qianhai Court, and asked these defendants to pay a sum of 1.5 million yuan and assume joint and several liabilities.

Judgement

The court held that the case involved legal inheritance and lending of the Hong Kong Special Administrative Region. In order to more accurately understand and apply the Hong Kong laws involved in the case and enhance the predictability of the Judgement results of the parties, it is decided that the Hong Kong neutral third-party evaluation mechanism should be applied in this case. The Qianhai Court commissioned a senior legal expert from Hong Kong as a neutral third party. According to the relevant case materials, the expert evaluated the applicable Hong Kong laws and possible Judgement results and issued an evaluation report. The evaluation report held that the defendant in this case is not an appropriate subject of litigation. Wen Moushou and Wen Mouguang cannot be directly targeted for compensation. The court conducted a legal review of the evaluation report and confirmed the conclusion. The court explained the focus of disputes and the application of Hong Kong law to the parties, which enhanced the parties’ anticipation of the result of applying the Hong Kong law Judgement by the court, and finally Zhuang asked the court to withdraw the case.

 

    Significance

To meet the diversified judicial needs of international commercial subjects for dispute resolution and further expand the channels for the identification of foreign laws, the Qianhai Court established a neutral third-party evaluation mechanism for Hong Kong-related cases. For cases in which the parties agreed to apply Hong Kong law, Hong Kong legal experts shall issue a professional evaluation report with reference to the Hong Kong referee document format to clarify the content of Hong Kong law applicable to the case and the possible Judgement results. This case successfully applied the mechanism and was concluded by withdrawal. On the one hand, it reflects the diversity of the ways of the Qianhai Court in the identification of laws in Hong Kong, the professionalism of identification institutions and the authority of identification results, improves the accuracy of the application of Hong Kong laws. On the other hand, it also embodies the reasonable application of the diversification concept of the Qianhai Court in dealing with commercial disputes in Hong Kong, which enhances the expectation of the parties on the Judgement result, and is conducive to guide the parties to choose reconciliation and other means to resolve disputes.