Typical Case: Shandong Yue Belt Co., Ltd. v. Related-Party Transaction Defendants in a Sino-Foreign Joint Venture
In a harmful related-party-transaction dispute involving a Sino-foreign joint venture, an arbitration clause in the joint-venture contract should not be applied mechanically to displace company-law derivative-action and judicial-relief mechanisms. After taking the case for retrial, the Supreme People's Court promoted a mediated solution that preserved the parties' cooperation, emphasizing the need to consider derivative-suit mechanisms, the identity of the related parties, and business continuity rather than allowing procedure to become an empty loop.
Holding
In a harmful related-party-transaction dispute involving a Sino-foreign joint venture, an arbitration clause in the joint-venture contract should not be applied mechanically to displace company-law derivative-action and judicial-relief mechanisms. After taking the case for retrial, the Supreme People's Court promoted a mediated solution that preserved the parties' cooperation, emphasizing the need to consider derivative-suit mechanisms, the identity of the related parties, and business continuity rather than allowing procedure to become an empty loop.