Viewpoint... A brief analysis of the common legal and tax risks of shareholders' free transfer of equity.

1. Introduction The transfer of equity is a civil legal act in which the shareholders of a company transfer their shareholders' rights and interests to others in accordance with the law, so that others can obtain equity. So, can shareholders transfer their shares to others without compensation? China's Company Law does not explicitly prohibit the transfer of shares without compensation, but in the State-owned Assets Law, it is stipulated that the transfer price of state-owned assets shall be based on the price assessed in accordance with the law, approved by the institution performing the duties of the contributor or reported by the institution performing the duties of the contributor to the people's government at the corresponding level for approval. Thus, in principle, shareholders have the right to set their own prices, but not all free equity transfers are legal and valid for reasons such as the peculiarities of certain entities. The system of free transfer of equity is one of the most successful manifestations of the modern corporate system, but excessive freedom also means that there may be higher risks. In the early stage of entrepreneurship, some shareholders often transfer their equity to others at the price of "zero yuan" or "one yuan", most of which are aimed at reducing the cost of equity transfer. However, with the continuous improvement of China's tax system and the increasing intelligence of tax big data, this behavior will undoubtedly lead to more legal risks and tax risks. In judicial cases, shareholders' free disposal of equity may also be recognized as equity gifts. Some views believe that equity gifts are a special form of equity transfer like equity inheritance. In practice, disputes caused by shareholders' transfer of equity with "zero yuan" or "one yuan" are also diverse and complicated. This paper will briefly analyze the legal and tax risks of shareholders' free transfer of equity. 2. relevant laws and regulations (I) Company Law Article 71: Shareholders of a limited liability company may transfer all or part of their shares to each other. The transfer of equity by a shareholder to a person other than a shareholder shall be subject to the consent of more than half of the other shareholders. Shareholders shall notify other shareholders in writing of their equity transfer to seek consent. If other shareholders fail to reply within 30 days from the date of receiving the written notice, they shall be deemed to have agreed to the transfer. If more than half of the other shareholders do not agree to the transfer, the shareholders who do not agree shall purchase the transferred shares; if they do not, they shall be deemed to have agreed to the transfer. The other shareholders shall have the preemptive right to purchase the shares transferred with the consent of the shareholders under the same conditions. If two or more shareholders claim to exercise the right of first refusal, they shall negotiate to determine their respective purchase ratios; if they fail to negotiate, they shall exercise the right of first refusal in accordance with their respective proportions of capital contribution at the time of transfer. Where the articles of association provide otherwise for the transfer of shares, such provisions shall prevail. Article 137 The shares held by shareholders may be transferred in accordance with the law. (II) Civil Code Article 539 stipulates that if the debtor transfers property at an obviously unreasonable low price, assigns another person's property at an obviously unreasonable high price or provides security for another person's debts, which affects the realization of the creditor's claim, if the debtor's counterpart knows or should know the situation, the creditor may request the people's court to revoke the debtor's act. Article 657 stipulates that a gift contract is a contract in which the donor gives his property to the donee free of charge, and the donee expresses acceptance of the gift. (III) Law on State-owned Assets of the People's Republic of China Enterprises Article 55 stipulates that the transfer of state-owned assets shall be based on the price assessed in accordance with the law, approved by the institution performing the duties of the investor, or reported by the institution performing the duties of the investor to the people's government at the corresponding level for approval, and the minimum transfer price shall be reasonably determined. Law of (IV) on the Administration of the People's Republic of China Tax Collection Article 35 The tax authorities shall have the right to determine the amount of tax payable if a taxpayer has one of the following circumstances: The tax basis declared by the (VI) taxpayer is obviously low and there is no justifiable reason. Measures for the Administration of Individual Income Tax on Income from (V) Equity Transfer (for Trial Implementation) Article 11: The competent tax authority may approve the income from equity transfer if one of the following circumstances is met: (I) declared income from equity transfer is obviously on the low side without justifiable reasons. Article 13: The income from equity transfer that meets one of the following conditions is obviously low, and it is deemed to be justified: The (I) can issue valid documents to prove that the production and operation of the invested enterprise has been greatly affected due to the adjustment of national policies, resulting in the transfer of equity at a low price; The (II) inherits or transfers the equity to the spouse, parents, children, grandparents, grandparents, grandchildren, brothers and sisters who can provide legal proof of identity relationship, and the dependents or supporters who bear the obligation of direct support or maintenance to the transferor; (III) the provisions of relevant laws, government documents or articles of association of the enterprise, and the relevant information fully proves that the transfer price is reasonable and true for the internal transfer of the non-transferable equity held by the employees of the enterprise; (IV) other reasonable circumstances under which both parties to the equity transfer can provide valid evidence to prove its reasonableness. (VI) of the State Administration of Taxation, Guangdong Provincial Taxation Bureau, and Guangdong Provincial Market Supervision Administration on Matters concerning the Transfer of Equity by Individuals In the event of an equity transfer by a natural person shareholder of a 1. enterprise, before applying to the market entity registration authority for the relevant change registration, the withholding agent and taxpayer of the individual income tax on the equity transfer shall first go to the tax authority to file an individual income tax return. When the transfer of equity by a natural person shareholder of a 2. enterprise is registered for change, the market entity registration authority shall examine the personal income tax payment certificate related to the equity transaction and register the change in accordance with the law. 3. Focus Analysis Is the nature of the disposition of shares by (I) shareholders at a "zero dollar" price a gift of shares or a transfer of shares? The Equity Transfer Agreement signed by the transferor and the transferee only stipulates that the transaction price of the equity is zero yuan, but it does not stipulate whether the nature of the equity disposition is a transfer or a gift, which can be analyzed and demonstrated from the following aspects. First of all, the value of the company's equity is not necessarily positive or negative. The confirmation of its value needs to consider many factors. For example, the target company has been in a state of loss due to poor management, or even has become insolvent, but the company's brand value is still there, or there is a certain customer base. The transferee and the transferor reach an agreement to transfer the equity at a price of zero yuan, and both parties have no intention of giving, the nature of the equity disposition may be considered as a transfer of equity. Secondly, some views hold that equity should be the general term of shareholders' rights and obligations, and its consideration form is not only currency. In judicial cases, some courts hold that the transferee's transfer of equity does not mean that its assets will inevitably increase, on the contrary, it should also bear the risk of possible losses in the future operation of the target company, and the corresponding responsibility of the transferee is the consideration of the transferred equity. Furthermore, China's Civil Code stipulates that a gift contract is a contract in which the donor gives his property to the donee free of charge, and the donee expresses his acceptance of the gift, and if the words "free of charge" and "gift" do not appear in the contract, it cannot be forcibly speculated that the parties have the intention to conclude a gift contract. In addition, for the "zero yuan" transfer of equity and "one yuan" transfer of equity, the author believes that it is not a decisive factor in the nature of the determination of the disposition of equity transfer, can be regarded as free, as a symbolic agreement. In judicial practice, some courts believe that the equity transfer price agreed by both parties to the equity transfer is one yuan, not free of charge. For example, the People's Court of Futian District, Shenzhen City, Guangdong Province (2018) Yueyu 0304 Civil Judgment No. 42989, but this view has been rejected by the second-instance judgment. In summary, it is determined that the nature of the shareholder's disposition of the equity at a price of "zero yuan" should be analyzed and demonstrated in accordance with the background of the transfer transaction, the purpose of the transaction and other aspects. Is the right of first refusal system applicable to the free transfer of equity by (II) shareholders? Article 71 of the Company Law stipulates that shareholders of a limited liability company transfer their equity to a third party other than shareholders, and other shareholders have the legal preemptive right. The legislative intention of this right is that limited liability has the characteristics of human nature. When shareholders transfer their equity to the outside world, they need to join new shareholders, that is, it is possible to break the trust relationship of the original shareholders, while the joint stock limited company with strong capitalization does not have many restrictions. In practice, it is relatively rare for shareholders to transfer their shares without compensation while internal shareholders do not exercise their priority rights, and it is also controversial whether the system of preferential purchase rights applies to the free transfer of shares by shareholders. Some views believe that the priority "purchase" right is based on paid transfer. If shareholders donate equity to a third party free of charge, there is no "equal condition" for "purchase" of equity, and other shareholders within the company do not enjoy the priority. The right to purchase, as stated in the Civil Judgment No. 588 of Minhang District People's Court (2015) Minmin 2 (Shang) Chuzi, Shanghai. However, most of the view that the establishment of the right of first refusal system is intended to protect the human nature of the limited liability company, the law also does not clearly stipulate that the transfer is paid or free, so the shareholder free transfer of equity should apply the right of first refusal system, that is, the limited liability company shareholders to transfer equity outside the free transfer of equity should be approved by the internal shareholders. Can the shareholder, the creditor of the company to which the subject equity belongs, request the court to revoke the transfer if the (III) shareholder transfers the equity free of charge? If the shareholder's free transfer of equity causes damage to the creditor, the shareholder's creditor may request the court to revoke the debtor's transfer of equity, because the act may violate Article 539 of the Civil Code, the debtor transfers the property at an obviously unreasonable low price, and affects the realization of the creditor's claim. Shareholders transfer their equity and dispose of their own property, which does not affect the interests of the creditors of the company to which the subject equity belongs. Therefore, these creditors have not revoked the right to transfer. However, for shareholders who have not fulfilled their capital contribution obligations to transfer their equity, China's law provides other relief channels for debtors. Do (IV) shareholders need to pay taxes on the transfer of equity without compensation? According to Article 35 of the "the People's Republic of China Tax Collection and Administration Law", if the tax basis declared by a taxpayer is obviously low and there is no justifiable reason, the tax authority has the right to determine the amount of tax payable. Article 11 of the Measures for the Administration of Individual Income Tax on Income from Equity Transfer (for Trial Implementation) stipulates that if the declared income from equity transfer is obviously low and there is no justifiable reason, the competent tax authority may approve the income from equity transfer. At the same time, Article 13 also lists four situations in which equity income is obviously low, but can be regarded as justified. In the second half of 2021, local tax bureaus successively issued Notices on Matters Relating to the Transfer of Equity by Individuals, informing natural persons that the transfer of equity must first file tax returns and obtain tax payment certificates before going to the Market Supervision Administration for shareholder changes. In the early days, some local tax authorities recognized the method of one-dollar transfer, and the transferee of equity could make zero declaration directly in the tax system. Some tax authorities believed that there was a qualitative difference between one-dollar transfer and zero-dollar transfer, because the former was a paid transaction and the latter was a free gift. However, today's tax authorities for tax collection and management is becoming more and more strict, a dollar transfer of equity will not reduce the cost of equity transfer, but will increase the risk of being concerned by the tax authorities, and then the use of approved collection and other methods, resulting in enterprises to pay huge taxes and fines. Thus, the free transfer of equity by shareholders does not mean that the transferee is not required to pay taxes, but rather that the income from the transfer of equity should be determined in accordance with the amount of the company's net assets or other methods in accordance with the relevant laws and regulations. 4. related cases (I) Civil Judgment No. 22416 of Guangdong Province Shenzhen Intermediate People's Court (2019) Yue 03 Min Zhong Basic case: Defendant Erjingding Company was established on March 8, 2005. Plaintiff Construction General Hospital and Defendant Yiboyuan Yazhu are two shareholders of Jingding Company, holding 20% and 80% shares respectively. On February 14, 2007, Boyuan Yazhu and the General Construction Institute signed the Equity Transfer Agreement, agreeing that Boyuan Yazhu is willing to transfer its 31% equity of Jingding Company to the General Construction Institute at a price of 1 yuan, and agreeing that Boyuan Yazhu should issue a legal and effective resolution of the shareholders' meeting on this matter. On the same day, General Construction Institute signed a Memorandum with Boyuan Yazhu, stipulating that 2. Boyuan Yazhu should transfer 31% equity to Party A without paying any consideration. The Equity Transfer Agreement is priced at 1 yuan, which is based on the change of industrial and commercial registration information. The 1 yuan is only symbolic and does not represent the actual monetary value... 7. Party B promises to stay in the holding company, the company has no external debt and contingent debt. If there is a debt, Party B shall clearly and truthfully inform Party A in writing, and only after the pending plan is discussed can the equity transfer procedures be handled. On the same day, Boyuan Yazhu issued a "letter of commitment", stating: the Company in the holding of Jingding Company, Jingding Company no external debt and contingent debt. If so, our company is responsible for paying off. On March 16 of the same year, Boyuan Yazhu issued a letter stating that the above-mentioned "Equity Transfer Agreement" and "Memorandum" were signed under pressure from the General Construction Institute. Without asset evaluation, only 1 yuan was used as the consideration to obtain equity, which was detrimental to Boyuan Yazhu's legitimate rights and interests. The equity transfer agreement obviously violated the law and was obviously unfair, and the company could not perform the "Equity Transfer Agreement." On March 19 of the same year, the General Construction Institute issued a reply letter to Boyuan Yazhu on "Emergency Report on Share Transfer of Shenzhen Jingding Construction Engineering Co., Ltd.", believing that the contents of the letter sent by Boyuan Yazhu were inconsistent with the facts and the requirements were unreasonable. The share transfer procedures should be started before March 21, 2007, and Boyuan Yazhu would be deemed to have breached the contract if it was overdue. After that, the General Construction Institute delivered relevant notices urging the performance of the equity transfer agreement to Boyuan Yazhu through notarization in 2010, 2012, the end of 2013, the end of 2015 and the end of 2017, but both defendants failed to perform. Therefore, the General Construction Court sued the court to order Boyuan Yazhu to the company registration authority to change the registration of its 31% stake in Jingding Company to the General Construction Court, and Jingding Company recorded the above-mentioned shares in the company's register of shareholders and went through the registration procedures. The court of first instance (the people's Court of Futian District, Shenzhen City, Guangdong Province) held that the "equity transfer agreement" signed by the General Construction Institute and Boyuan Yazhu was an expression of the true intention of both parties and did not violate the mandatory provisions of laws and administrative regulations, and was confirmed in accordance with the law. Regarding whether the Equity Transfer Agreement is a gift contract. A gift contract is a contract in which the donor gives his property to the donee free of charge, and the donee expresses his acceptance of the gift. In the "Equity Transfer Agreement" signed by the General Construction Institute and Boyuan Yazhu, the equity transfer price agreed by both parties is 1 yuan, not free of charge, and looking at the contents of the "Equity Transfer Agreement", "Memorandum" and "Letter of Commitment", Boyuan Yazhu did not show the meaning of "gift", nor did the General Construction Institute "accept the gift. Therefore, the Equity Transfer Agreement in this case is not a gift contract. Boyuan Yazhu's claim of non-performance of the equity transfer agreement in question on the grounds of exercising the right of arbitrary revocation cannot be established. However, when the two defendants filed a lawsuit in this case.

2022-10-13

Viewpoint... Analysis of the nature of the difference make-up commitment and the application of law.

Definition of the concept of 1. gap-making commitments. Deficiency, also known as deficiency compensation, deficiency payment, etc., refers to the act of fulfilling the obligation to make up the deficiency in accordance with the agreement when the obligor fails to perform its obligations in accordance with the agreement or fails to achieve a certain profit-making performance goal in order to ensure the realization of the interests of the right holder in the relationship between the principal rights and obligations. It is often represented in the asset management products as a special arrangement in which the underlying assets are not sufficient to pay the current overdue income or principal due on the corresponding payment date in accordance with the agreement of the transaction documents, and the difference undertaker assumes the obligation to make up the difference. This commitment is commonly used in a large number of tiered financial products to reduce investment risk for senior investors. Depending on the object of the replenishment, the difference can be divided into the difference of the expected return, the difference of the debt service debt, the difference of the investment dividend, the difference of the collection of funds, etc. The difference between the differential replenishment commitment and the rigid payment is that the differential replenishment on the equity investment side is essentially the same as the common gambling agreement or gambling clause in the field of private equity investment, which is the redistribution of equity investment risk based on the autonomy of the parties to the transaction. On the investment side, the legal status of the asset management product is the investor. If the counterparty or its affiliates or other third parties voluntarily provide credit enhancement measures for the equity investment transaction, if the subject of the credit enhancement obligated party is qualified and there is no invalid contract, it does not constitute rigid payment, because the credit enhancement obligated party is not the issuer or manager, even if there are economic consequences of "capital preservation and income protection" for the product end investor, it is also not derived from the promise or payment of the issuer or manager, and does not pose a more serious financial risk. The dispute 2. judicial practice on the determination of the commitment to make up the difference. Article 91 of the Minutes of the National Court's Civil and Commercial Trial Work Conference stipulates: "If the parties outside the trust contract provide similar commitment documents such as third-party balance compensation, performance of due repurchase obligations, liquidity support, etc. as credit enhancement measures, and their contents conform to the provisions of the law on guarantee, the people's court shall determine that a guarantee contractual relationship has been established between the parties. If its content does not conform to the provisions of the law on guarantee, the corresponding rights and obligations shall be determined according to the specific contents of the commitment document, and the corresponding civil liability shall be determined according to the facts of the case." The article points out the idea in terms of the qualitative nature of the validity of the contract, but there is no doubt that the content of the credit enhancement measures "conforms" or "does not conform" to the standard of the law on guarantee. In the latter sentence, where "the content does not comply with the provisions of the law on warranties", it is also not clear whether the provisions of the Company Law on external guarantees of companies are permitted. According to article 36 of the "Judicial Interpretation of the Security System", the legal nature of the deficiency shall be interpreted according to its content, which may be interpreted as a guarantee, a debt accession or an independent contract, depending on the circumstances. However, the law does not provide for the criteria for judging different situations, which also makes judicial practice have different judgments on the nature of the commitment to make up the difference. 1. Recognized as a guarantee According to article 681 of the Civil Code, the conditions that constitute a guarantee include: the existence of a principal creditor's debt relationship. Accordingly, if there is an obvious principal-subordinate contractual relationship in the transaction model, and the performance of the differential replenishment obligation is premised on the debtor's failure to perform the debt due, it is more likely that the differential replenishment agreement is considered to be a guarantee contract. For example, (2019) in the case of Supreme Law Minzhong No. 560, Huarong Company signed a Trust Loan Contract with Kaidi Company, and the debtor of Kaidi Company borrowed 0.5 billion yuan from Huarong Company. Huarong Company and Kaidi Ecological Company signed a Letter of Commitment to Make up the Difference, agreeing that if Kaidi Company fails to repay the main contract debt in full and on time, fails to pay any money under the main contract, or has any breach of contract under the main contract, Huarong Company has the right to directly require Kaidi Ecological Company to perform the obligation to make up the difference without any pre-procedure. The court held that the Trust Loan Contract was the principal claim contract, and the Letter of Commitment to Make Up the Difference guaranteed the realization of the principal claim and established a joint and several liability guarantee. "From the definition of the meaning of the difference between the two parties, the" Difference Make-up Contract "stipulates that the main contract is the" Trust Loan Contract ", the principal debtor is Kaidi Company, and the scope of liability for the difference make-up is all the debts under the main contract, all of which are in line with the legal characteristics of the subordination of the guarantee contract. It follows that the nature of the contract is consistent with the legal characteristics of the contract of guarantee, both in terms of the literal interpretation of the core terms of the Contract for Deficiency and in terms of the interpretation of the contract system." 2. Recognized as debt accession According to article 552 of the Civil Code and the general theory, debt accession, also known as "concurrent debt assumption", means that a third party joins the existing debt relationship as a new debtor and assumes joint and several debts with the original debtor to the extent that it is willing to assume. The commonality between debt joining and guarantee is that there must be an existing creditor's and debt relationship as a prerequisite; the difference is that the debt joining establishes a new creditor's and debt relationship, which is independent of the original creditor's and debt relationship, and the guarantee has obvious subordination. It can be seen that, compared with the guarantor, the liability of the debt joining party is heavier, and the requirements for the establishment of debt joining are also higher, because it needs to make a comprehensive agreement on the relationship between creditor's rights and debts. (2019) In the case of Supreme Court Minzong No. 1438, China CITIC Bank and Letv Holding Company signed the "Merger and Acquisition Loan Contract". Letv Company issued a letter to China CITIC Bank stating that in case of overdue or default on the principal and interest of the loan, Letv promised to bear the responsibility of making up the difference in the repayment obligations of the borrower Letv Holding under the "Merger and Acquisition Loan Contract. In the first instance, the Beijing High Court held that the M & A Loan Contract agreed on the guarantee method and the specific name of the guarantee contract, but did not include the letter promising to make up the liability for the difference, indicating that the parties did not recognize the commitment as a guarantee when signing the M & A Loan Contract and a series of guarantee contracts. Secondly, LeTV promises to bear the responsibility for making up the difference as long as there is overdue or default on the principal and interest of the loan. The above promise does not mean to guarantee, on the contrary, it means to actively join the debt. Third, since the guarantee is a typical form of guarantee, its establishment, entry into force, guarantee period, mode of performance, etc. have more stringent provisions. In the absence of a very clear and clear agreement between the parties, it should not be easily identified as a guarantee. Therefore, LeTV's commitment to assume the responsibility of making up the difference belongs to the meaning of debt joining. In the second instance, the Supreme Court upheld the determination. 3. Identified as an independent contract or unilateral burden. In the structure of financial transactions, if there is no principal creditor's rights and debts, or the obligation to make up the difference is not based on a certain creditor's rights and debts, at this time, the balance does not constitute a guarantee or debt accession, but an independent contract or unilateral burden, and the obligation to make up the difference shall perform the corresponding obligations according to the agreement or commitment letter. For example, (2019) in the case of Supreme Law No. 1524, Ankang Company, as a principal, signed a "trust contract" with the trust company, and the trust funds were earmarked for the issuance of trust loans to Renjian Company. Guo, as the actual controller of Renjian Company, signed the "Difference Compensation and Assignment Agreement" with Ankang Company. The agreement stipulates that Ankang Company shall, on each trust benefit distribution day under the Trust Contract, if due to any reason including but not limited to Renjian Company's failure to pay off the principal and interest under the Trust Loan Contract in time and in full, if Ankang Company fails to obtain the distribution of trust benefits on time and in full according to the annualized 13% trust rate of return, Guo shall bear the full supplementary responsibility for the difference. The court held that the agreement agreed that Guo made up Ankang Company's annualized 13% of the trust income, paid the principal of the trust loan and the trust beneficiary right of the transferee Ankang Company, rather than assuming the guarantee liability for the debts incurred by Renjian Company under the contract involved in the case, so it was not recognized as a guarantee guarantee. The nature analysis and legal application of the commitment to make up the difference in 3.. Perhaps noting the particularity of the commitment to make up the difference, some argue that, based on the principle of autonomy of the will of the civil law, the balance of the difference, as an expression of the obligor's willingness to bear the debt, is the result of the autonomy of the parties, and can be recognized as an independent contractual obligation in cases where there is no prior debt that does not conform to the legal characteristics of the guarantee or the debt is added. In view of the fact that the deficiency make-up commitment is in several respects identical to, at least similar to, the guarantee designed in the Civil Code, the advantages of the classification of the deficiency make-up commitment as an atypical guarantee are even more advantageous: the provision of the law on guarantees shall not be applied to the deficiency make-up commitment in cases where the intention of the parties clearly shows that the deficiency make-up commitment and the guarantee differ in terms of constituent elements and legal effect; where the parties' intention is not easy to identify the difference between the commitment to make up the difference and the guarantee, the corresponding provisions of the Civil Code on the guarantee apply by analogy. In this way, cases of deficiency replenishment commitments can be resolved in a more comprehensive and appropriate manner. As far as the application of the specific law for the shortfall is concerned, the following aspects are noteworthy: First, the subordinate nature of the guarantee should not apply to the commitment to make up the difference. The scope of liability for the shortfall may be greater than the secured principal obligation, which is different from the scope of liability for a guarantee, and may itself establish a breach of contract clause. The principle of civil law holds that the secured obligation, since it has a subordinate nature, shall not be heavier than the principal obligation. However, in terms of the transaction structure and purpose of the credit enhancement measure, most parties treat it as an independent obligation, and it is common to set up a default clause. At present, if the people's court supports the plaintiff's claim of making up the difference in the judicial decision, it will usually support the liability for breach of contract. By extension, based on the principle of autonomy, it is entirely possible that the debt content of the credit enhancement measure may be agreed to exceed the scope of the secured debt. However, if the debtor and the creditor subsequently negotiate to change the principal debt and increase the debt, the court may apply the provisions of article 695 of the Civil Code by analogy, and the credit-enhancing party shall not be liable for the increased debt. Secondly, under article 686 of the Civil Code, guarantees are divided into general guarantees and joint and several guarantees, and are presumed to be general guarantees in the absence of an agreement or when the agreement is unclear. The legislative rationale for the presumption of general guarantees in the Civil Code is primarily to mitigate the liability of the guarantor and to avoid the presumption of joint and several liability leading to the bankruptcy of a number of enterprises in "serial debt", which would affect socio-economic development. However, most of the shortfall is used in commercial situations, and there is a reasonable expectation and prior agreement of the parties to initiate credit enhancement measures if the creditor is not fully satisfied. Even if the people's court handles the case of making up the difference according to the idea of guarantee, it should generally find that the credit-adding party bears joint and several guarantee liability. Finally, when the company is the commitment party to the deficiency make-up clause, it shall be bound by the provisions of article 16 of the Company Law and articles 7 to 11 of the Judicial Interpretation of the Guarantee System on the company's external guarantee. Although there is a difference between the commitment to make up the difference and the guarantee, as a kind of nameless contract with the function of guarantee, its content is to increase the credit party to bear an irrevocable debt without compensation, in the economic substance affecting the company's stakeholders, so the company's external guarantee rules should be applied by analogy. Moreover, the parties' use of the margin replenishment commitment is more based on the consideration of facilitating the realization of the rights of the right holder, the burden of the commitment party is heavy, and the lack of the guarantor's defense, more should emphasize the company's decision-making control of the margin replenishment commitment.

2022-10-12

Viewpoint... On Chinese investors-host country dispute settlement mediation rules.

  内容摘要：主权国家间的正常关系的若要维护完全，东道国良好的跨境投资环境若要得到保证，跨境投资中双方当事人的合法权益若要得到维护、国家间友好合作关系若要得到健康发展，妥善解决国际间投资争端是重中之重。作为一种非诉解决纠纷方式，调解是指在第三方的帮助之下，争端各方在互谅互让的基础上达成协议解决争端的方法。调解具有独特的效益价值与和谐价值，具有节约争端解决成本、稳定合作关系的功能，能够为当事人提供一次性解决争议的机会。   本文通过研究现行国际争端的调解规则与程序适用，试图在创新调解规则、拓宽调解规则适用、完善调解规则执行程序三方面提出具体建议。   关键词：国际投资争端解决   调解规则   BIT   一、投资者-东道国争端解决调解规则概述   他国于东道国的跨国投资、交易行为导致的各类争议是国际投资争端的主要形式。从主体上可分为投资者与东道国投资者之间的争端、投资者与东道国之间的争端和投资者国与东道国之间的争端，本文主要探析的是相较之下出现更频繁的投资者与东道国之间的争端。   解决国际投资争端主要依托于国家之间签订的国际投资条约的约定。国际投资条约包括多边投资条约、双边投资条约和区域性投资条约。国际投资争端问题只有早期的《华盛顿公约》专门对争端解决做出了规定。   调解作为一种解决争端的救济程序主要表现为：争端出现——双方当事人选取第三方介入争端——第三方按照一定标准和流程听取各方意见、总结争议焦点、提出解决建议——双方当事人遵从自愿合法原则作出决定。[1]从现代法治的意义上分析，规则是对意思自治的框定限制，但调解的灵魂在于自由，具有一种“反程序外观”[2]，虽然通常调解有利于“开诚公布”，但并非实现实质公正的必然捷径。而调解规则是指经权威制定并遵守的标准或原则；或者指规定或指引特定情况下的行为或活动的一般性标准。[3]因此，作为调解程序的载体，调解规则极具研究价值，我国可以完善投资者—东道国争端解决机制中的调解规则。   调解规则与诉讼或仲裁规则相比具有较为任意的外观，这是由合意这一调解的本质因素决定的。[4]调解中，调解人可以用多种方式灵活协助当事人查明争议、提出方案、促成和解，而不必严格遵循程序顺序。一但调解合意达成，也往往能迅速调解结案。   二、中国投资者-东道国争端解决调解规则的实践检视   （一）中国多边投资条约中的投资者-东道国投资争端调解规则   1.《华盛顿公约》中的调解规则分析   调解机制在此公约中第一次于国际公约范围内被规定为解决国际投资争端的方式之一。他国投资者与被投资国政府之间在被投资国发生投资争端，国际上已存在相当数量的双边性投资保护条约对此进行规制，即将该类争端的管辖权提交互认的争议解决“中心”处理，中心可以进行调解或仲裁。   ICSID公约还有其调解规则，即《ICSID公约调解规则》（2006年）与《ICSID调解附加便利规则》（2006年），两个规则是争端解决中心对公约中调解规则适用方式上的再明确。   2011年，马来西亚的伊佳兰公司在ICSID秘书处登记于中国海南政府土地出让权纠纷案，该案是和解（调解）结案。该案由海南省政府而起，该政府单方面收回伊佳兰开发万宁市土地的权利，未对其进行合理补偿。因涉案土地足有2000多亩且涉及国际投资，中国方面高度重视，积极开展与伊佳兰公司的协商工作，于同年顺利达成和解。当然，伊佳兰公司不再纠缠的原因，是由于海南政府承诺另寻500亩土地开发权对其补偿。此案是中国在ICSID被诉的第一案，伊佳兰公司按照1988年中马BIT最惠国待遇条款援引1995年中国-以色列BIT投资者-东道国投资争端解决条款，该条款规定投资争端可提交ICSID加以解决。本案涉及到管辖权以及国家主权利益等问题。   2.《多边投资担保机构公约》中的调解规则分析   该公约附件二第三条详列了调解解决争端的规则。20世纪80年代初，许多发展中国家都面临着类似的债务危机，由于无力还债，导致国际债务纠纷频起。在此背景之下，《多边投资担保机构公约》应运而生。公约创造性地设立了代位求偿制度，既以MIGA行使代位权，间接解决国际投资争端。该公约规定，机构与成员国之间与解释和执行无关的其他争端，都须采取谈判、仲裁和调解的方式加以解决，明文规定了调解规则的适用。MIGA为我国私人资本自由流动起到了积极的促进作用。2000年，中国人保与MIGA签署了合作协议，共同保障中国投资者在其它发展中国家的投资。2006年，中国出口信用保险公司与MIGA签署全面合作谅解备忘录，进一步深化和规制双方合作关系。MIGA对我国投资发展也起到了极大的促进作用：一是MIGA为小额投资提供担保，保障民间投资者的小额国际投资行为；二是随着国力提升和“一带一路”倡议的支持，我国对外直接投资增加，MIGA使我国对外直接投资投资获得了国际法意义上的保护。   （二）中国双边投资条约中的投资者-东道国投资争端调解规则   1.双边投资条约中的调解程序剖析         注：2015年7月29日，中国与土耳其签署了《中华人民共和国政府和土耳其共和国政府关于相互促进和保护投资协定》。该协定已于2020年11月11日生效   2.双边投资条约中的调解规则适用   我国目前双边投资协议有105个，其中明确指出可寻求调解或第三方介入解决争端的条约有12个，分别是中国与乌兹别克斯坦、比利时与卢森堡、坦桑尼亚、以色列、土耳其、印度、巴布亚新几内亚、日本、斯洛伐克、荷兰、俄罗斯、希腊，占比11.4%。   中国与希腊政府签订的于1993年生效的《关于鼓励和相互保护投资协定》[7]条规定投资者东道国之间争议当事人合意，可提交ICSID通过调解或仲裁解决，明确提出了调解程序的适用。   中国与印度签订的于2007年生效的《关于促进和保护投资的协定》第九条之（二）规定，若双方不能在期间内通过友好协商解决争议，经当事人同意，可将争议提交司法、仲裁或行政机构解决，也可以根据《联合国贸法会调解规则》进行调解。   与乌兹别克斯坦签订的于2011生效的《关于促进和保护投资的协定》[7]第12条第1款规定，争议应尽可能通过双方当事人磋商解决，其中包括调解程序的适用。   与以色列签订的于2009年生效《关于促进和相互保护投资协定》[8]第八条规定，若不能友好解决，则可以向解决投资争端国际中心秘书长提出书面请求来诉诸调解或仲裁程序，是前置程序经过之后可以再通过解决投资争端国际中心调解，同样的还有与日本签订的双边协定（1989年）。   与坦桑尼亚联合共和国政府于2014年生效的《关于促进和相互保护投资协定》[9]第十三条规定，投资者与另一方缔约国领土内的投资争端，应尽可能通过双方当事人友好磋商解决，其中包括调解程序的应用。   （三）中国自贸区协定中的投资者-东道国投资争端调解规则   1.中国-新西兰自贸区协定中的调解规则分析   中国与新西兰《中国-新西兰自由贸易协定》[10]规定,投资者与东道国之间的投资争端，应尽量通过投资者与另一方的磋商友好解决，若争端双方都接受第三方程序的介入，争端解决也可以引入第三方程序。这非约束性的第三方程序包括调解程序。该规定与上述乌兹别克斯坦和坦桑尼亚国家相类似，将调解置于磋商或谈判的“友好协商”语境之下。   2.中国-东盟自贸区协定中的调解规则分析   中国与东盟《全面经济合作框架协议投资协议》是规定在中国—东盟自贸协定之中的。2015年，中国与东盟在北京就升级谈判达成成果文件《议定书》，《议定书》于2016年生效。该《议定书》旨在为在投资领域进一步深化合作做出一系列保障。为促进投资便利化，双方达成简化投资批准手续，促进发布投资相关政策、法规信息，必要时可建立一站式投资中心或相关机制，支持为商界提供营业执照便利许可与咨询等一系列共识。   虽然该协议中对缔约方与投资者间争端解决的规则是争端所涉方应尽可能通过磋商解决争端，未解决则可以提起仲裁，没有直接规定调解规则的适用，但提到了将争端提交所列的投资争端国际解决中心、贸法会或双方同意的其他仲裁机构后可以适用该仲裁机构的调解规则。   三、完善中国投资者-东道国争端解决调解规则的具体建议   （一）创新投资者-东道国争端解决调解规则   目前，贸法会正在推动投资者与国家争端解决的改革，梳理出来了现有制度的一系列问题，中国可以在讨论会议中加入自己的合理主张或建议。   第一，可将调解程序独立于仲裁程序，将调解与诉讼、仲裁相分离。通过分离，可以促使调解独立发展，促进调解规则演进与创新，形成规范、合法、合理的调解规则，发挥其司法功能，提高调解的“程序正义”，增加程序的使用效率。同时，可以提高调解程序的保密性与独立性，使调解程序不至于给诉讼或仲裁程序的公正性造成影响，不会因为调解中悉知的事项使审判庭或仲裁庭做出预判。   第二，可将调解设定为优先程序，以节约司法资源。参照我国民事诉讼法第122条、133条规定的“先行调解”制度，可以将投资者与东道国政府之间关于投资的部分裁量性问题先行调解，若能重新协商或者探讨则不必诉之法院或仲裁机构，以节约时间和费用，节约司法资源。同时，应强调争端是否能够适用调解程序（即调解适用规则），取决于该纠纷的争议焦点是否具有调解可能性，让步的内容是否能够被该方主体所决定，不得强迫调解。“优先适用”并不是必然适用调解程序解决问题，要注意避免对调解过分推崇。同时要注意保障当事人诉权，如果争端双已经僵持，明显无法通过调解程序解决争议，应及时终止程序，转如其他诉讼或仲裁程序。   第三，可构建规范、多元的调解员资质选任制度。成功的调解员能够根据自己的角色定位，选择合适的方式方法，运用合适的沟通技巧，进行专业的调解，并恰当处理调解中获取的材料与信息，成功促成调解。这种制度支持将为调解提供稳定的外部环境，夯实调解环节的基础功能，降低调解机制机会成本。   第四，在制度上提供便利，一是可以论证国际投资中调解效力与执行可能性，通过不断完善调解规则，增加对调解中司法正义的认可；二是可以在实践中对调解机构设置完备，调解规则构成完善，调解人员适格权威，调解结果公正恰当的调解在合适条件下就认可与执行进行评估，并进行试点，以促进调解制度的良性发展。   （二）拓宽投资者-东道国争端解决规则的具体适用   经过上述分析，可以得知，我国与大多数国家签订的BIT中，关于投资者与东道国的争端解决方式上的约定没有明确出调解规则的适用，但这种规定并没有排除投资者在实际操作中将调解作为解决投资争端解决方式[11]。理由如下：   第一，条约中都没明确限制第三方介入争端，即使用调解程序解决争议的方式的适用，没有岔路口条款。岔路口条款是指投资者在选择救济途径时已经选择了国内诉讼或国际仲裁程序之后再不得诉诸另一程序。调解规则的适用并不在限制之中。   第二，大多数我国签订的BIT中都明确规定了协商前置程序，且需要经过一定的冷却期,当事人可以在协商程序中达成调解合意，作为协商的具体方式之一。这种相对扩大解释既不会妨害后续救济程序的进行，也不会改变现有规则。能充分利用调解优势增强了协商成功的可能性。   第三，确实存在BIT中列明协商程序包括调解程序的适用，将调解视为协商程序之一，这在现行法律框架下，这样解释是可行的。   （三）完善投资者-东道国争端解决调解规则的执行程序   完善调解规则的执行程序，可以尝试建立类似于对仲裁程序的衔接机制。由于对投资者—东道国争端规则最彻底的公约是《华盛顿公约》，因此，可以参照其拟定如下要点：（1）每一缔约国都负有承认与执行的义务。（2）每一缔约国都应把经专门机构制定的调解协议（不涉及国家利

2022-10-11

Viewpoint... A brief analysis of the guarantor's right of recovery after the transfer of claims.

一、导言   《中华人民共和国民法典》（下称“《民法典》”）与《最高人民法院关于适用<中华人民共和国民法典>有关担保制度的解释》（下称“《担保制度解释》”）对于保证人受让债权行为性质和追偿权的问题作了更为细化的规定，并在追偿主体方面相较《民法典》颁行之前的《中华人民共和国担保法》等相关法律法规进行了一定的修改变动。   笔者近期提供法律顾问服务时遇到此类咨询事项，在此谨通过法律对比和判例检索等方法，对保证人受让债权后的追偿权问题进行分析，以供读者参考。   二、相关法律条文   （一）《中华人民共和国民法典》   第七百条 保证人承担保证责任后，除当事人另有约定外，有权在其承担保证责任的范围内向债务人追偿，享有债权人对债务人的权利，但是不得损害债权人的利益。   （二）《最高人民法院关于适用<中华人民共和国民法典>Interpretation of the Guarantee System Article 13 If two or more third parties provide guarantee for the same debt, the guarantors agree on mutual recovery and share, and the guarantor who has assumed the guarantee liability requests other guarantors to share according to the agreement, the people's court shall support it. If the guarantors agree to undertake joint and several joint guarantees, or agree to recover each other but do not agree to share, each guarantor shall share the part that cannot be recovered from the debtor in proportion. If two or more third parties provide guarantee for the same debt, and the guarantors have not agreed on mutual recovery and have not agreed to undertake joint and several joint guarantee, but each guarantor signs, seals or prints on the same contract, and the guarantor who has assumed the guarantee liability requests other guarantors to share the part that cannot be recovered from the debtor in proportion, the people's court shall support it. Except for the circumstances specified in the preceding two paragraphs, the people's court shall not support the request of the guarantor who has assumed the liability for security to request other guarantors to share the part that cannot be recovered from the debtor. Article 14 Where two or more third parties provide security for the same debt, and the guarantor is transferred to the claim, the people's court shall determine that the act is liable for the guarantee. If the guarantor of the transferred claim, as a creditor, requests other guarantors to assume the liability for security, the people's court shall not support it; if the guarantor requests other guarantors to share the corresponding share, it shall be dealt with in accordance with the provisions of Article 13 of this interpretation. Article 18 If a guarantor who has assumed the liability for security or compensation recovers from the debtor within the scope of its liability, the people's court shall support it. The the People's Republic of China Guarantee Law of (III) (hereinafter referred to as "the Guarantee Law", which has been repealed) Article 12 Where there are two or more guarantors for the same debt, the guarantors shall bear the guarantee liability in accordance with the guarantee share agreed in the guarantee contract. If there is no agreement on the share of the guarantee, the guarantor shall bear joint and several liability, and the creditor may require any one of the guarantors to bear full responsibility for the guarantee, and the guarantor shall have the obligation to guarantee the realization of all claims. A surety who has already assumed suretyship liability shall have the right to recover from the debtor or to require other sureties who are jointly and severally liable to pay off their share. Comparison of legal provisions: 1. With regard to the nature of the act of the guarantor's assignment of the claim and the consequences of recovery, the Guarantee Law does not specify, while the Interpretation of the Guarantee System makes it clear that "if the guarantor assigns the claim, the people's court shall determine that the act is liable for security". Through the case search, it can be seen that before the promulgation of the Civil Code, some people's courts, in the course of the trial through the application of the Guarantee Law, have identified the nature of the guarantor's transfer of claims as the assumption of security liability, which is consistent with the provisions and spirit of the Civil Code. 2. There is a clear difference between the Guarantee Act and the Interpretation of the Guarantee System as to the right of recourse after the guarantor has assumed the responsibility for the guarantee. Article 12 of the Guarantee Law stipulates that a guarantor who has already assumed the responsibility for the guarantee shall have the right to require other guarantors who bear joint and several liability to pay off their share. The definition of "other guarantors with joint and several liability" is broader, and if "there are more than two guarantors for the same debt" and "there is no agreed guarantee share", the guarantors are jointly and severally liable. Article 13 of the Interpretation of the Guarantee System stipulates that if two or more third parties provide guarantees for the same debt, if the guarantors have not agreed on mutual recovery and have not agreed to undertake joint and several guarantees, nor have they signed, sealed or fingerprinted the same contract, the guarantor who has already assumed the guarantee liability has no right to recover from other guarantors. It can be seen that there are obvious differences before and after the implementation of the Civil Code as to whether guarantors can recover from each other. Compared with the Guarantee Law, the Interpretation of the Guarantee System has significantly tightened the caliber of recovery between guarantors. 3. Case Retrieval (I) Zibo Intermediate People's Court of Shandong Province:(2019) Lu 03 Min Zhong No. 286, (2020) Lu 03 Min Zhong No. 3135 Summary of the case: On January 14, 2014 and October 15 of the same year, the defendant Zibo Duoshan Building Materials Co., Ltd. (hereinafter referred to as "Duoshan Building Materials") and Industrial and Commercial Bank of China Co., Ltd. Zibo Linzi Sub-branch (hereinafter referred to as ICBC Linzi Sub-branch) signed two "Working Capital Loan Contracts", borrowing 5 million yuan and 9.25 million yuan from ICBC Linzi Sub-branch respectively. On January 15 and October 16 of the same year, 5 million yuan and 9.25 million yuan were transferred to the defendant's Duoshan building materials account respectively. Defendant Zibo Oneth Plastic Co., Ltd. (hereinafter referred to as "Oneth Company") signed the "Maximum Guarantee Contract" with the contract number of 2013 Linzi (Bao) Zi No. 0529 with ICBC Linzi Sub-branch on September 27, 2013, promising to undertake joint and several liability guarantee for the loan contract of Defendant Duoshan Building Materials to ICBC Linzi Sub-branch with the maximum balance of RMB 20 million from September 27, 2013 to September 26, 2016, the guarantee period is two years from the day following the expiration of the term of the loan under the autonomous contract. Defendant Sun Duoshan and Defendant Yang Honglian issued a guarantee letter to ICBC Linzi Sub-branch on October 8, 2014, promising to provide joint and several liability guarantee for the credit business of Defendant Duoshan Building Materials in ICBC Linzi Sub-branch with their existing and future legal property. The guarantee period is two years from the day following the expiration of the credit business period under the independent contract. On October 15, 2014, the plaintiff Shandong Longyang Chemical Co., Ltd. (hereinafter referred to as "Longyang Company") and Linzi Sub-branch of ICBC signed a "Guarantee Contract" with the contract number of 2014 Linzi (Bao) Zi 0522, assuming the guarantee responsibility for the 9.25 million yuan loan on October 15, 2014. The guarantee period is two years from the day following the expiration of the credit business term under the independent contract. The defendant refused to repay the principal and interest and stopped paying the interest on the second loan after the first loan was due. Later, ICBC Shandong Branch transferred the claims of the above two loans to Great Wall Company, and on July 3, 2015, ICBC Shandong Branch and Great Wall Company issued a joint announcement on the transfer of claims and debt collection through Shandong Legal News. On September 10, 2015, Great Wall Company and Gaoyang Company issued a joint announcement on the transfer of creditor's rights and debt collection through Shandong legal newspaper. Great Wall transferred the two claims to Gaoyang. Longyang Company, as the joint and several liability guarantor of the two loans mentioned above, signed a "creditor's rights transfer agreement" with Gaoyang Company on October 8, 2015 to obtain the creditor's rights of the two loans. Entrusted by Gaoyang Company, Longyang Company has notified the defendant in writing of the fact of the transfer of creditor's rights on October 12, 2015. The actual controller of the defendant Duoshan Building Materials, Sun Hongchao (son of the defendant Sun Duoshan and Yang Honglian), signed it and delivered it to Wang Zheng, the legal representative of the defendant Oneth Plastic. After the creditor's right expired, the defendant did not repay the principal of 14234377.12 yuan and interest after the plaintiff claimed the right. Longyang Company paid 230000.00 yuan for the lawyer's fees for the lawsuit. ICBC Shandong Branch transferred the creditor's rights of the above two loans to Great Wall Company on the transfer date (April 30, 2015) with a principal of 14234377.12 yuan, an interest of 189979.82 yuan and a total principal and interest of 14424356.94 yuan. Both Liquidity Borrowing Contracts expressly stipulate that the Borrower shall bear the costs incurred by the Lender in realizing the claims under this Contract, including but not limited to attorney's fees, appraisal fees, auction fees, etc. All three assignments of claims agree that the principal claim and all rights under the security contract are enjoyed by the transferee. The Court held that: (2019) The court of first instance in case No. 286 of Lu 03 Min Zhong held that the plaintiff Longyang Company obtained the creditor's right of 14234377.12 yuan through legal creditor's right transfer, and the creditor's right transfer had legal effect on the four defendants. It was decided that the defendant Zibo Duoshan Building Materials Co., Ltd. paid the plaintiff Shandong Longyang Chemical Co., Ltd. the loan principal of 14234377.12 yuan, and the defendant Zibo Oneth Plastic Co., Ltd., the defendant Sun Duoshan and the defendant Yang Honglian were jointly and severally liable for repayment. The Intermediate People's Court of Zibo City, Shandong Province (hereinafter referred to as "Zibo Intermediate People's Court"), as the court of second instance of (2019) Lu 03 Min Zhong No. 286, held that Longyang Company had different identities in the two loans involved and should be distinguished: (1) On the issue of 9.25 million yuan loan. In this loan relationship, the appellee is one of the guarantors. Therefore, the appellee from Gaoyang company "transfer claims" behavior, in fact, should be the guarantor to bear the responsibility of the guarantee. According to Article 31 of the the People's Republic of China Guarantee Law, "After the guarantor assumes the responsibility for the guarantee, he has the right to recover from the debtor" and the Supreme People's Court on the application of<中华人民共和国担保法>Article 38, paragraph 1, of the Interpretation of Certain Issues "Where the same claim has both a guarantee and a security provided by a third party, the creditor may request the guarantor or the guarantor of the goods to assume the liability for security. If the parties have no agreement on the scope of the guarantee or the scope of the guarantee in rem or the agreement is unclear, the guarantor who has assumed the guarantee liability may recover from the debtor or require other guarantors to pay off their share." The appellee has the right to recover from the debtor the amount actually paid off, or to require other guarantors to pay off their share. The appellee brought a lawsuit as a "creditor's rights transferee", but the 9.25 million yuan loan did not belong to the "creditor's rights" transferred by him in essence. The two were different in nature, and the appellee did not submit valid evidence to prove the actual repayment amount of the 9.25 million yuan loan. Therefore, the issue of the 9.25 million yuan loan was not dealt with in this case, and the appellee may claim another right. (II) about the 5 million yuan loan. The appellee's assigned creditor's rights are legal and valid. The principal of the loan he claims shall be calculated according to 4984377.12 yuan. The appellant shall bear the principal, interest and economic losses of the loan. The defendants in the original trial, Oneth Company, Sun Duoshan and Yang Honglian shall bear joint and several liability for the above debts. In addition, combined with the fact that the maturity date of 5 million yuan is earlier than 9.25 million yuan, it is believed that part of the loan principal of 15622.88 yuan (14250000-14234377.12) repaid by the defendant should belong to the 5 million yuan, so the balance of the loan principal of 5 million yuan should be 4984377.12 yuan. To sum up, Zibo Intermediate People's Court ruled that the defendant Zibo Duoshan Building Materials Co., Ltd. paid the plaintiff Shandong Longyang Chemical Co., Ltd. the loan principal of 4984377.12 yuan and interest, and the defendant Zibo Oneast Plastic Co., Ltd., the defendant Sun Duoshan and the defendant Yang Honglian were jointly and severally liable for repayment. Since then, all parties concerned have filed a separate lawsuit and appealed against the 9.25 million yuan loan. Zibo Intermediate People's Court held in (2020) Lu 03 Min Zhong No. 3135 that the plaintiff's act of transferring creditor's rights as a guarantor belongs to the way the guarantor assumes the guarantee responsibility, and the guarantor can recover from the debtor after assuming the guarantee responsibility. This case is a lawsuit filed by the plaintiff to realize the right of recovery. Because the plaintiff's agreement with Gaoyang Company specified that the consideration was 9.5 million yuan and the interest on the commercial loan since October 8, 2015, and the share of the two claims was not specified in the previous transfer of claims, the plaintiff's agreement with Gaoyang Company did not specify the share of the consideration for the debt and the transfer of claims, the compensation for the debt recovered by the plaintiff can be calculated according to the proportion of the debt in the total amount of the agreement (I .e. the compensation actually paid by the plaintiff for the loan of 9.25 million yuan = 9.5 million yuan * 9.25 million yuan/14234377.12 yuan = 6173434.87 yuan). Judgment: The appellant Duoshan Building Materials returned the appellee Longyang Company's compensation of 6173435 yuan. The part that the plaintiff Longyang Company could not recover from the debtor Duoshan Building Materials shall be shared equally by all joint guarantors, namely the plaintiffs Longyang Company, Oneth Company, Sun Duoshan and Yang Honglian. Case Summary: An analysis of the two relevant cases and their respective two-level trial proceedings shows that: 1. Although the Civil Code and the Interpretation of the Guarantee System had not been enacted at the time of the judgment of this case, and there were some differences among the courts on the nature of the guarantor's assignment of claims and the consequences of recovery, the people's court that made the judgment in force of this case was consistent with the spirit of the Civil Code and the Interpretation of the Guarantee System, that is, the nature of the guarantor's assignment of claims should be identified as the responsibility for security, its recovery is not based on the status of the new creditor, but can only be recovered within the scope of liability. 2. As mentioned earlier, there are significant differences in the applicable law and the outcome of the judgement before and after the enactment of the Civil Code as to whether the guarantor can recover from other guarantors after assuming the liability for the guarantee. In this case, there is no agreement between the guarantors on mutual recovery or joint guarantee, or sign, seal or fingerprint on the same contract. However, according to the provisions of the Guarantee Law, the court identified other guarantors as joint guarantors in (2020) Lu 03 Min Zhong No. 3135 and ruled that the guarantor who bears the guarantee liability cannot recover from the debtor, shared equally by the joint guarantors. People's Court of Weidu District, Xuchang City, (II):(2021) Yu 1002 No. 3439 Minchu Summary of the case: On January 19, 2017, Zhongheng Company borrowed 2 million yuan from Zhongyuan Bank. On the same day, Lu Guangbin, as a mortgagor, signed a "Mortgage Contract" with Zhongyuan Bank to provide mortgage guarantee for the above loan with commercial houses under his name. Lu Guangbin, Jiao Xiaoshu and Zhang Lifeng respectively issued "Personal Guarantees" to Zhongyuan Bank. From May 26 to June 11, 2021, Lu Guangbin transferred 200000 yuan, 300000 yuan, 300000 yuan, 200000 yuan, 300000 yuan, 300000 yuan, and 70000 yuan to Juliyuan Company, totaling 1.67 million yuan. On May 27, 2021, the company delisted the above-mentioned claims at a transaction price of 1.65 million yuan by participating in the auction of the non-performing debt project of Zhongheng Company Limited by Tianjin Financial Assets Exchange. </中华人民共和国担保法></中华人民共和国民法典></中华人民共和国民法典>

2022-10-09

Real estate perspective... How to determine the substantive change of the content of the construction contract in practice?

In the construction project has not yet begun, the contractor in order to obtain construction opportunities, may sign a construction contract with the contractor in addition to the winning contract, by reducing the price of the project, change the payment method, shorten the duration and other acts to ensure their competitive advantage. This leads to the fact that in practice, there are often one or more contracts between the contractor and the contractor for the construction project in addition to the winning contract, I .e., "black and white contracts". Under the premise of the validity of the winning contract, under what circumstances will the content of the non-winning contract and the different part of the winning contract be deemed as substantive change and invalid? Although there are relevant laws and regulations in practice, there are still many disputes to be clarified. 1. legal provisions on the substantive content of contracts Article 57, paragraph 1, of the Regulations for the Implementation of the Law on Tendering and Bidding stipulates: "The tenderer and the winning bidder shall sign a written contract in accordance with the provisions of the Law on Tendering and Bidding and these Regulations, and the main terms of the contract, such as the subject matter, price, quality and time limit for performance, shall be consistent with the contents of the tender documents and the winning bidder's tender documents. The tenderer and the winning bidder shall not enter into any other agreement shall not enter into any other agreement." From the contents of the legal provisions stipulated in Article 57, paragraph 1, of the Regulations on the Implementation of the Bidding Law, it can be seen that the substantive content shall refer to the main provisions of the contract, such as the subject matter, price, quality and time limit for performance. Paragraph 1 of Article 2 of the Interpretation (I) of the Supreme People's Court on the Application of Law in the Trial of Disputes over Construction Contracts (hereinafter referred to as the (I) of Judicial Interpretation of Construction Projects) stipulates that the substantive contents of the construction contract separately signed by the tenderer and the winning bidder, such as the scope of the project, construction period, project quality and project price, are inconsistent with the winning contract, and one party requests to determine its rights and obligations in accordance with the winning contract, the people's court should support it. Paragraph 2 stipulates that in addition to the winning contract, the tenderee and the winning bidder shall sign a separate contract for the purchase of the contracted property at a price significantly higher than the market price, the construction of housing supporting facilities free of charge, the transfer of profits, and the donation of property to the construction unit, so as to reduce the project price in a disguised form. If one party requests that the contract deviates from the substantive content of the winning contract, the people's court shall support. As can be seen from paragraph 1 of the provision, the substantive content includes the scope of the project, the construction period, the quality of the project, the price of the project, etc. Paragraph 2 provides for more detailed provisions on changes in the price of the project to prevent disguised reductions in the price of the project through other means. 2. typical cases The current laws and regulations and judicial interpretation of the substantive change has been more clearly defined, but in practice, due to the "black and white contract" of the phenomenon of widespread, the contract content of the change is also a wide variety of ways. Therefore, how to determine whether it is a substantive change must not only stand on the basis of legal provisions, but also combine relevant precedents in practice. 1.(2019) Lu 01 Min Zhong No. 3547 In this case, the court of first instance held that "the project payment and payment schedule and standards have changed with the filing contract. The total price of the filing contract is 3.4 million yuan, while the total price of the contract project is more than 4.17 million yuan after the contract change signed separately by both parties is increased, and the progress of the payment project is quite different from that of the filing contract. At the same time, due to the signing of the supplementary agreement, the quantity and duration of the project involved have also changed. According to Article 46 of the Bidding Law, the tenderer and the winning bidder shall enter into a written contract in accordance with the bidding documents and the bid documents of the winning bidder, and shall not enter into any other agreement that deviates from the substantive content of the contract. Accordingly, the" Construction Project Construction Contract "and" Supplementary Agreement "signed by the plaintiff and the defendant violated the mandatory provisions of laws and regulations and were invalid." The court of second instance held that "the construction project construction contract and supplementary agreement signed by the research institute of traditional Chinese medicine and Haidong lantao company involved in the case have undergone substantial changes to the above-mentioned government procurement contract due to the agreed project price, payment schedule and standard, and the construction project construction contract and supplementary agreement have not reorganized the bidding procedures, on this basis, the court of first instance found that the" construction contract "and" supplementary agreement "signed by both parties were invalid because they violated the mandatory provisions of laws and administrative regulations, which were based on the law, and the court confirmed this." In this case, the contract price was changed from 3.4 million yuan to 4.17 million yuan, and the payment schedule and standard were significantly changed. Finally, the court found that the change was the substantive content of the contract, resulting in the invalidity of the contract. 2.(2019) Supreme Law Minzong No. 1093 In the first instance, none of the parties raised any objection to the validity of the "General Contract Supplementary Agreement" involved in the case. Therefore, the first instance did not regard this as the focus of the dispute. In the second instance, Nantong Second Construction claimed that the "General Package Supplementary Agreement" was invalid, and the real estate company should pay the project advance payment and progress payment to it in accordance with the agreement of the winning "Construction Contract. In this regard, the Court believes that the "General Package Supplementary Agreement" and the winning "Construction Contract" compared to the project payment method from the advance payment plus progress payment to the contractor full advance construction. The payment method is an important part of the project price, therefore, it should be determined that the "General Package Supplementary Agreement" constitutes a substantial change to the winning contract, according to the provisions of Article 46 of the the People's Republic of China Law on Tendering and Bidding, the agreement is invalid and not legally binding on both parties. Similar cases include (2018) Supreme Law Minzong No. 69. In this case, the court of first instance found the following facts: after the company and Jinsha County Education Bureau signed the "Investment and Construction Contract" according to the bidding documents and the winning bidder's bidding documents, they signed the "Supplementary Agreement" on December 25, 2012, changing the "payment method for project repurchase payment" from BT mode to "payment according to Party B's construction progress". The court of first instance held that the BT model is the process of general contracting through the project company, transferring financing and construction to the owner, and the owner paying the total project investment plus a reasonable return to the investor. One of the core elements of the BT model is that the contractor has a financing obligation. The "Supplementary Agreement" has modified the core content of the BT Agreement, which belongs to the situation of "other agreements concluded by the tenderer and the winning bidder that deviate from the substantive content of the contract" stipulated in the "the People's Republic of China Tendering and Bidding Law. The court of second instance confirmed this. From the above cases, it can be seen that a material change in the method of payment for the works would also be deemed to constitute a material change to the winning contract. 3.(2018) Supreme Fa Min Shen No. 1235 In this case, according to the bidding documents, the two parties signed the "Construction Project Construction Contract" for the 5# and 6# buildings on August 24, 2009 and filed it with the construction authority, and signed two more "Construction Project Construction Contract Supplementary Agreements" for the 5# and 6# buildings respectively. The project price pricing standard, contract duration, liability for breach of contract and other contents agreed in the two supplementary agreements are inconsistent with the provisions of the construction project construction contract for filing, which is a change to the substantive content of the bid-winning contract for filing, in violation of the aforementioned mandatory provisions. the second-instance judgment found that the changes in the substantive terms of the two supplementary agreements were invalid and the applicable law was correct. Article 30 of the the People's Republic of China Contract Law provides that changes in the subject matter of the contract, quantity, quality, price or remuneration, time limit for performance, place and manner of performance, liability for breach of contract and method of dispute resolution are material changes to the content of the offer. Yuhua claims that the breach clause is not a statutory substantive clause, even if it is inconsistent with the tender documents, it is valid and lacks legal basis. In this case, the Supreme Court also identified the liability for breach of contract and the method of resolving disputes as a material change. 4.(2022) Supreme Fa Min Shen No. 262 In this case, the employer and the contractor have signed a series of supplementary agreements and supplementary contracts according to the changes in the construction situation of the project involved in the case. For example, the "Supplementary Agreement" on June 30, 2014 is an agreement between the two parties on losses such as suspension of work and subsequent construction matters, supplementary Contract 2 to Supplementary Contract 8 and Project Settlement Agreement of Xinghai Harmony World Area 1 and Area 2 are further supplementary agreements made by both parties on specific matters such as newly added house type renovation project, completed project content and settlement price, determination method of project cost of unconstructed part, construction period, project payment, liability for breach of contract, completion, project settlement, etc, the above agreements are the true intentions of both parties in the course of the performance of the construction contract due to changes in objective circumstances, and do not affect whether other bidders can win the bid or the conditions under which they will win the bid. The signing of the above-mentioned agreement does not violate the bidding system, resulting in an imbalance of rights and obligations between the contractor and the contractor, and does not constitute a substantive change to the Construction Contract. The second-instance judgment found that the above-mentioned supplementary agreement and supplementary contract were made due to changes in the construction of the project and actual needs, and were the constituent documents of the construction contract involved in the case, and there was nothing improper. Huiyuan Company advocates that the supplementary contract changes the substantive content of the "Construction Contract", and the "Construction Contract" is a "black and white contract" relationship, can not be established, the hospital will not support. In this case, although the subsequent supplementary agreement changed the duration, payment method, and liability for breach of contract, the court did not find it to be a substantive change. 3. comprehensive analysis What was found to be a material change in the above-mentioned cases was not directly provided for in the legal provisions, and the grounds for the court's determination of a material change in the first three cases included the progress of payment, the standard of payment, the method of payment, the liability for breach of contract, and the method of dispute resolution. In the fourth case, there are also changes to the above contents, but they are not considered as substantive changes. Thus, not all changes in the content of the contract should be considered as material changes. In fact, from the perspective of legal provisions, some contents are not clearly reflected, but their essence also belongs to the category of substantive changes, or although they are stipulated in the legal provisions to belong to the category of substantive changes, their reasonable changes will not be recognized as substantive changes by the court. In judicial practice, the judge's discretion is also extremely important when determining the scope and extent of deviation from the substantive content of the contract. From the perspective of project quality, if the employer requires to improve the project quality standard or safe construction requirements after the contract is signed, the project price will be increased accordingly. Similarly, the employer requires to reduce the project quality standard and the project price will be reduced accordingly. At this time, the supplementary contract signed by changing the contract price shall be a valid contract. However, if the contractor requires the contractor to significantly reduce the project price when the project quality standards are not adjusted or fine-tuned, the supplementary contract signed by both parties to change the contract price is likely to be considered as a material change and the contract will be invalid. Similarly, the same is true for the adjustment of the speed of the construction period, the change of the payment method of the project, and the change of the terms of liability for breach of contract. Therefore, for the determination of substantive changes, first, to see whether the content of the change belongs to the scope of substantive changes stipulated by law, including the subject matter of the contract, price, quality, performance period, scope of the project, construction period, payment method, payment term. Second, when the content of the change belongs to the substantive change stipulated by law, the scope of the change should also be considered, whether it is a normal change or a substantive change, while the consideration and determination of the scope of the change belongs to the scope of the judge's discretion. When the content of the change is not clearly stipulated in the law, it is also necessary to consider whether the content of the change will lead to a significant change in the rights and obligations of both parties, resulting in unequal rights and obligations, such as the terms of payment, payment methods, liability for breach of contract and other provisions above. In judicial practice, as in the above-mentioned cases, under the premise of the validity of the winning contract, the judge's discretion is generally to measure the size of the change in the relationship between the rights and obligations of both parties, if the change in the content of the contract leads to a serious imbalance of interests between the two parties will generally be identified as a substantive change.

2022-10-08

Viewpoint... Legal analysis of the repurchase of shares held by investors in the target company of equity investment.

1. Foreword In the process of equity investment, in order to reduce the investment risk, the investor will often require the underlying company as the financier or its actual controller or shareholders to buy back the shares of the underlying company held by the investor when the agreed conditions are triggered. The more common repurchase subject is the actual controller, shareholders or their related parties of the target company, and on the premise that the relevant subject does not violate other regulatory provisions, the use of this method can effectively reduce the investment risk and ultimately promote the cooperation between the investment and financing parties. This article does not discuss this method too much. However, in practice, we will also encounter the request of the relevant parties to directly repurchase the investor's equity by the target company, and this paper focuses on the effectiveness, operability, and possible risks of such repurchase behavior of the target company. 2. legal analysis (I) the relevant provisions of the Company Law 1. Relevant regulations of limited liability company Article 74 of the Company Law stipulates that under any of the following circumstances, a shareholder who votes against the resolution of the shareholders' meeting may request the company to purchase its equity at a reasonable price:(1) the company has not distributed profits to shareholders for five consecutive years, and the company has made profits for the five consecutive years and meets the conditions for profit distribution stipulated in this Law;(2) the company merges, divides or transfers its main property;(3) When the term of business as stipulated in the articles of association expires or other reasons for dissolution as stipulated in the articles of association arise, the shareholders' meeting passes a resolution to amend the articles of association so that the company survives. Within 60 days from the date of adoption of the resolution of the shareholders' meeting, if the shareholders and the company cannot reach an equity purchase agreement, the shareholders may bring a lawsuit to the people's court within 90 days from the date of adoption of the resolution of the shareholders' meeting. The above-mentioned rights are often referred to as the "right of dissenting shareholders to request share repurchase" of a limited liability company, which is clearly defined in the company's corporate law. At the same time, other chapters of the company law do not prohibit limited liability companies from directly buying back shares held by shareholders. 2, the relevant provisions of the company limited by shares. Article 142 of the Company Law stipulates that a company may not purchase shares of the Company. However, except in one of the following circumstances:(1) reduction of the company's registered capital;(2) merger with other companies holding shares in the Company;(3) use of shares for employee stock ownership plans or equity incentives...... The above provisions provide for specific circumstances in which a joint stock company buys back shares held by shareholders. From the above provisions alone, there is no prohibition on the repurchase of shares by the subject company in the Company Law, and there seems to be no obstacle to the repurchase of shares by the company, but in practice it is prone to investment risks, disputes and disputes, as detailed in the analysis below. Relevant Provisions of (II) Nine Minute Minutes According to the "Minutes of the National Court Civil and Commercial Trial Work Conference" issued by the Supreme People's Court: "Where an investor requests a target company to repurchase its shares, the people's court shall conduct a review in accordance with the mandatory provisions of Article 35 of the Company Law on" shareholders shall not withdraw their capital contributions "or Article 142 on share repurchase. After review, if the target company has not completed the capital reduction procedure, the people's court shall reject its claim." In the process of the subject company repurchasing the investor's equity, it is necessary to use the subject company's own funds to pay the repurchase price, the substantive result of which is: the investor recovers the equity investment. If no procedure is taken in the repurchase process, shareholders may be suspected of evading capital contributions, while the underlying company's assets due to the repurchase resulting in a reduction in solvency, is also not conducive to the protection of the rights and interests of the company's creditors. Therefore, the nine people's minutes clearly state that the court should reject the request for repurchase without capital reduction. That is, the completion of the capital reduction procedure is a prerequisite for the repurchase. Conditions to be met and procedures to be performed to (III) the capital reduction of the subject company As mentioned earlier, the completion of the capital reduction procedure is a prerequisite for the repurchase, and the completion of the capital reduction procedure has a significant impact on the execution of the repurchase, and the relevant provisions on the conditions and procedures to be met for the capital reduction are as follows: 1. Internal procedures of the company Article 37 of the Company Law, the shareholders' meeting shall exercise the following functions and powers:(7) to make a resolution on the increase or decrease of the registered capital of the company; 2. External procedures of the company Article 177 of the Company Law, when a company needs to reduce its registered capital, it must prepare a balance sheet and a list of property. The company shall notify the creditors within 10 days from the date of making the resolution to reduce the registered capital, and make a public announcement in the newspaper within 30 days. The creditor shall have the right to require the company to pay off its debts or provide corresponding guarantee within 30 days from the date of receipt of the notice, or within 45 days from the date of announcement if the notice is not received. Possible risks of (IV) the underlying company's repurchase 1. According to Article 37 of the Company Law, the company shall perform internal decision-making procedures in accordance with the provisions of the Company Law and the Articles of Association before capital reduction. If other shareholders object, the capital reduction and repurchase procedures may not be carried out. 2, the subject company triggered the repurchase conditions, many cases are due to the company's operating conditions in general, or even face more debt. Article 177 of the Company Law provides for the protection of creditors as a result of the change in the company's solvency as a result of the capital reduction, which results in the loss of shareholders and the loss of creditors' interests. However, in practice, it is very difficult for a company to pay off all its debts in order to reduce its capital or to provide security that meets the requirements of creditors, thus failing to meet the requirements of the company law for the protection of creditors. At the same time, in view of the fact that the company's capital reduction should be registered by the industrial and commercial administration department in accordance with the law, and after telephone consultation with the industrial and commercial administration departments in many places, the staff all said that if the relevant documents indicate that the creditors have objections to the relevant debt settlement arrangements or debt guarantees for the capital reduction, the industrial and commercial registration authority will not handle the relevant change registration. In particular, if the company has an economic dispute and enters into judicial or arbitration proceedings, it is difficult to go through the capital reduction procedures. 3. Supervision of state-owned assets If the subject enterprise is a state-controlled enterprise, the capital reduction procedure and whether the capital reduction price is in line with the state-owned regulatory provisions should also be considered when reducing capital, and if the difference between the capital reduction price and the then equity assessment price is too large, it may also lead to violation of the relevant state-owned regulatory provisions. 4. Consequences of flawed capital reduction and repurchase procedures Even if the company does not meet the conditions for capital reduction through improper means to reduce the procedures and pay the repurchase price, the company or shareholders are still exposed to legal risks. After searching, in judicial practice, some courts hold that if the company does not obtain the consent of the creditors when reducing its capital, it should bear supplementary liability for the creditor's debt within the scope of the capital reduction. For example,(2011) Shanghai No.1 Zhongmin No.1 (Min) Zhongzi No. 1458 Civil Judgment: The appellant shall bear supplementary compensation liability to the appellee for the debts of XC Company within the scope of capital reduction. According to the judgment of the case, if the creditors of the target company do not agree, even if the investor recovers the investment through capital reduction, there is still the possibility of recovery. 5, the target company repurchase default, the investor rights more difficult. (1) According to the clear provisions of the above-mentioned nine people's minutes, the court shall reject the request for repurchase without capital reduction. Under the premise that the company is unable to fulfill the capital reduction procedures in any of the above, it is difficult for the investor to require the underlying company to assume the repurchase liability through litigation. (2) Even if the investor's claim is changed to require the company to reduce its capital, there is a dispute as to whether the court should intervene in the acceptance of such claims, and there is a greater risk of losing the case if the capital reduction is not resolved by the shareholders' meeting and the creditors raise objections. 3. Conclusion In summary, for matters related to the repurchase of shares held by the investor of the winning company in the equity investment: (I), in the case of a limited liability company, there is no prohibition in the company law on the direct repurchase of shares by the company; in the case of a limited liability company, the company may repurchase shares only under certain conditions. Although the effectiveness of repurchase agreements is not directly affected, both limited liability companies and joint stock companies are more difficult to implement in the practice of direct acquisition of shares by companies, prone to disputes, and more difficult for investors to defend their rights after disputes. (II), in the structure of investment transactions where there is a real need for gambling repurchase, it is proposed that the actual controller, shareholders or their related parties of the company should assume the equity gambling and repurchase obligations, and if the subject company is required to provide credit enhancement, the subject company may consider providing joint and several liability guarantee for the payment of the above-mentioned gambling repurchase price. (III) relevant investment entities should also pay attention to complying with the relevant regulations of relevant regulatory authorities or industry organizations (such as the State-owned Assets Supervision and Administration Commission, the China Securities Regulatory Commission, and the China Foundation Association), and their applicable entities should also comply with relevant requirements. Introduction to Zhongcheng Qingtai Jinan Institute Fund Business Center In order to do excellent, refined, specialized fund business and better provide legal services, Zhongcheng Qingtai Jinan Institute integrates the resources of the whole institute and establishes a fund business center, which brings together excellent lawyers of relevant specialties in the institute. Currently, it is composed of more than 30 senior lawyers who are proficient in and familiar with the field of fund legal business. The team lawyers all graduated from well-known law colleges in China, more than 80% of lawyers have a master's degree or above, a diploma with a double degree, and a collection of multi-compound lawyers in criminal, corporate, securities, real estate and other fields. At present, it provides fund legal services for more than 30 provincial and municipal state-owned enterprise fund companies and high-quality private fund companies, including Shandong guidance Fund, Shandong Finance Group, Shandong Development Investment Group, Lushang Group, Shandong Expressway Group, Shandong Ocean Group, Jinan guidance Fund, Weihai guidance Fund, Jinan first Investment Company, etc. And has been committed to the professional development of fund business, to provide customers with the whole process of fund legal services, to provide accurate program design, to minimize legal risks for customers.

2022-09-29

Viewpoint... Legal personality denial system: parent company and subsidiary personality mixing problem and risk prevention and control research.

Summary: China first introduced the legal concept of "denial of legal personality" in 2005, also known as "unveiling the veil of corporate legal person". It is mainly reflected in Articles 20 and 63 of the the People's Republic of China Company Law (hereinafter referred to as the "Company Law"), through which the "denial of legal personality system" is formally determined. However, the nature of this provision is a principled provision and the applicable standards are vague in judicial practice. This principled provision is not balanced and does not match the increasing demand for the denial of legal personality in judicial practice, leading to an endless stream of new problems in judicial practice. Therefore, clarifying the applicable conditions and criteria of personality mixing is still a hot topic in the academic circles, and it is also an important purpose of this study. In the process of participating in the restructuring and reorganization project of major state-owned enterprises in 2022, the author comprehensively inspected the company's shareholders, controllers, main managers and financial personnel, the resolution and decision-making of major matters, the company's main business and the purpose of transactions between the company and other companies by combing the enterprise's "one enterprise, one policy" plan and on-site due diligence, it is found that the parent company and most of its subsidiaries have the risk of personality mixing, and the enterprise has been involved in litigation due to the mixing of legal personality. After examination by the court, it is believed that the shareholders of one-person limited liability company do not constitute property mixing, and complete company accounts, articles of association, audit reports, accounting firm reports and bank statements need to be provided, there are also written resolutions and corresponding financial documents for the company's investment, operation, budget and final accounts, loss recovery, dividends and other links, and the above-mentioned evidence provided by the enterprise is not sufficient to prove that the company's property is independent of the holding company's property, so it bears joint and several liability. This paper mainly takes the management control relationship between the parent company and the subsidiary company in practice, the guiding cases of the Supreme People's Court and the public cases of the Supreme People's Court as the starting point, interprets the relevant guidelines of the Minutes of the National Court Civil and Commercial Work Conference, and then sorts out the identification standards of the personality mix between the parent company and the subsidiary company, and further puts forward practical suggestions on the prevention and control of such risks. Keywords: Legal Personality Denial Identification Standard Property Mix Personality Mix. 1. legal person personality denial system Presentation of (I) issues In 2005, China first introduced the concept of corporate personality denial system in the "Company Law". The revised "Company Law" published in 2013 clarified the legal personality denial system in Article 20. The law stipulates: "Company shareholders shall abide by laws, administrative regulations and articles of association, exercise shareholder rights in accordance with the law, and shall not abuse shareholder rights to harm the interests of the company or other shareholders; the independent status of the company as a legal person and the limited liability of shareholders shall not be abused to harm the interests of the company's creditors. If a shareholder of a company abuses his rights as a shareholder and causes losses to the company or other shareholders, he shall be liable for compensation in accordance with the law. If the shareholders of a company abuse the independent status of the company as a legal person and the limited liability of shareholders to evade debts and seriously harm the interests of the company's creditors, they shall be jointly and severally liable for the debts of the company." However, the 20 provisions do not specify the specific applicable standards for the denial of legal personality. Only in Article 63 of the Company Law, "If the shareholders of a one-person limited liability company cannot prove that the company's property is independent of the shareholders' own property, they shall bear joint and several liability for the company's debts" stipulates the principle that the shareholders self-certify the independence of property when the legal personality of a one-person company is mixed. However, the above provisions are only provisions in principle, which give judges a certain degree of discretion, leading to the phenomenon of different judgments in the same case when dealing with similar cases. On January 31, 2013, the No. 15 Guiding Case issued by the Supreme People's Court made discussions and guiding opinions on issues related to the denial of legal personality of affiliated companies. However, there are no clear guidelines on the criteria for determining the confusion of legal personality and the applicable subjects, the identification of affiliated companies, and how to determine the confusion of related companies' personalities in judicial practice, the application of section 20 of the Companies Act requires a combination of factors. Therefore, to clarify the applicable conditions, applicable subjects and identification standards of the mixing of corporate personality is still a hot topic in the academic circles, and it is also the significance of this paper. (II) related concepts 1, the legal personality denial system. The legal person personality denial system is based on the protection of the legitimate rights and interests of third parties, in certain circumstances, because the company's legal personality and the company's shareholders, actual controllers, related related companies have the same personality, shareholders abuse the company's legal personality, at this time should not recognize the independent personality of the company's legal person system. At present, according to the provisions of the Company Law, the third party, I .e. the creditor, can only investigate the shareholder's responsibility when claiming the protection of rights. However, with the continuous development of market economy in reality, more and more companies have related behaviors and related transactions. The personality of related companies is mixed, but it is difficult to investigate the responsibility of shareholders. It is a supplement to the limited liability system of shareholders to deny the personality of related companies, it can effectively correct the imbalance of the shareholder limited liability system in the protection of third parties, I .e. creditors, under certain circumstances. 2. Related companies The definition of related relationship refers to the relationship between the controlling shareholders, actual controllers, directors, supervisors and senior managers of the company and the enterprises directly or indirectly controlled by them, as well as other relationships that may lead to the transfer of the interests of the company, but the enterprises controlled by the state are not only related because they are controlled by the state. Combined with the "the People's Republic of China Tax Collection and Management Law" (hereinafter referred to as the "Tax Collection and Management Law"), the "Detailed Rules for the Implementation of the the People's Republic of China Tax Collection and Management Measures" (hereinafter referred to as the "Detailed Rules for the Implementation of the Tax Collection and Management Measures") and the "Accounting Standards for Business Enterprises No. 36-Related Party Disclosure (2006)", the current legislation in our country mainly uses the standard of actual control relationship to determine related companies. Mr. Zhu Ciyun pointed out in the article "China's company law should establish the rules of lifting the corporate veil", the mixing of related companies refers to: "the external performance of the relevant companies as their own independent legal entities, but in fact in the production and operation of the same, this phenomenon most often occurs in the parent subsidiary, sister companies and other companies in the collection." [1] 3. Parent companies and subsidiaries This paper mainly studies how to identify the personality mix between the parent company and the subsidiary company in the affiliated company. A parent company and a subsidiary are corresponding legal concepts, and a parent company is a company that owns more than a certain percentage of shares in another company or is able to enjoy actual control over another company by agreement, and has legal personality. A subsidiary is a company in which more than a certain percentage of the company's shares are held by another company or are under the actual control of another company by agreement. Since the shares are controlled by the parent company, the subsidiary is often dominated and controlled by the parent company in its actual operations. 2. Criteria for the Mix of Personality between Parent Company and Subsidiary Company This paper mainly through the interpretation of the "National Court Civil and Commercial Work Conference Minutes" relevant guidelines, the Supreme People's Court guiding cases and the Supreme People's Court open cases of the decision gist, the identification of mixed personality standards to make a comb. Interpretation of the Minutes of the National Court Civil and Commercial Work Conference in (I) 1, independent meaning and independent property. The determination of whether a parent company and a subsidiary constitute a mix of personality depends on three main aspects: personnel, business and property, of which the mix of property is the key to determining whether a company constitutes a mix of personality. According to Article 10 of the Minutes of the National Court's Civil and Commercial Work Conference (hereinafter referred to as the "Nine People's Minutes"), the most fundamental criterion for determining whether the personality of the company and the personality of the shareholders are mixed is whether the company has independent meaning and independent property, and the most important manifestation is whether the property of the company and the property of the shareholders are mixed and indistinguishable. In determining whether it constitutes a personality mix, the following factors should be taken into account: (1) Shareholders use the company's funds or property free of charge without financial records; (2) The shareholder uses the company's funds to repay the shareholder's debts, or the company's funds are used by the affiliated company free of charge without financial records; (3) The books of the company are indistinguishable from the books of the shareholders, making the property of the company indistinguishable from the property of the shareholders; (4) The shareholders' own earnings and the company's earnings do not distinguish, resulting in unclear interests of both parties; (5) The property of the company is recorded in the name of the shareholder and is occupied and used by the shareholder; (6) other circumstances of mixed personality. In the case of personality mixing, the following mixing often occurs at the same time: the company's business and the shareholder's business; the company's employees are mixed with the shareholder's employees, especially the financial personnel; and the company's domicile is mixed with the shareholder's domicile. When the people's court is hearing a case, the key is to examine whether it constitutes a mix of personalities, without requiring the mix of other aspects at the same time, which is only a reinforcement of the mix of personalities. According to the No. 15 guiding case "Xugong Group Construction Machinery Co., Ltd. v. Chengdu Chuanjiao Industry and Trade Co., Ltd. and other sales contract disputes" [2] issued by the Supreme People's Court guiding case No. 4, it can be seen that there are three criteria for judging the mixing of legal personality: personnel mixing, business mixing and financial mixing. Among them, personnel mixing refers to the mixing of personnel in the company, business mixing refers to the company is engaged in similar or identical business, the main judgment criteria for business scope overlap, internal management control and meaning expression confusion three aspects. As for financial mixing, it is reflected in the use of common accounts and the indistinguishability of their respective assets. The reason for the judgment of the second instance of the case for business mixing has such a statement: "the actual operation of the three companies are involved in construction machinery-related business, the distribution process there is a common sales manual, distribution agreement" (2) Excessive control There is a relationship of controlling and being controlled between the parent company and the subsidiary company. Therefore, in practice, the parent company often brings the subsidiary company into the management system and system of the parent company to manage together, which easily makes the subsidiary company lose its independent property rights and produces the situation that the parent company controls the subsidiary company excessively. However, excessive control does not necessarily lead to the mixing of the legal personality of the parent company and the subsidiary company. Excessive control usually refers to the transfer of benefits between parent and subsidiary companies, where the parent company uses its control over the subsidiary to transfer benefits between parent and subsidiary companies or between subsidiaries and affiliates. This abuse of control, if the company's property boundaries are unclear, property is mixed, personality is difficult to distinguish or can not be distinguished, it constitutes the company's personality mix. However, if the abuse of the control right does not result in unclear property boundaries, mixed property, and difficult or indistinguishable personality of each company, it does not constitute mixed personality of the company, and the system of denial of corporate personality is not applicable. Creditors can protect their rights by exercising the right of revocation or claiming that the act is invalid according to law, and the second paragraph of Article 13 of the judicial interpretation (III) of the Company Law applies mutatis, to the extent that the benefits are obtained, the Company shall be liable for supplementary compensation for the portion of the Company's debts that cannot be paid off. According to Article 11 of the "Minutes of the National Court Civil and Commercial Work Conference" (hereinafter referred to as the "Nine People's Minutes"), the company's controlling shareholders over-dominate and control the company, manipulate the company's decision-making process, and make the company completely lose its independence and become The tools or bodies of controlling shareholders seriously damage the interests of the company's creditors, and the company's personality should be denied, and the shareholders who abuse control shall bear joint and joint liability for the company's debts. Common situations in practice include: (1) Transfer of benefits between parent and subsidiary companies or between subsidiaries; (2) Transactions between parent and subsidiary companies or subsidiaries, the proceeds go to one party, but the losses are borne by the other party; (3) first withdraw funds from the original company, and then set up a company with the same or similar business purpose, to avoid the debts of the original company; (4) Dissolve the company first, and then set up another company with the original company's premises, equipment, personnel and the same or similar business purposes to avoid the debts of the original company; (5) Other situations of excessive domination and control. (II) Guidance Case No. 163: Substantive Merger and Bankruptcy Reorganization Case of Jiangsu Textile Industry (Group) Import and Export Co., Ltd. and Its Five Subsidiaries [3] According to the guidance case No. 163, Jiangsu Textile Industry (Group) Import and Export Co., Ltd. (hereinafter referred to as "Provincial Textile Import and Export Company") and its five subsidiaries substantially merged bankruptcy reorganization case, the brief introduction of the case is as follows: The registered capital of Jiangsu Textile Import and Export Company is 55 million billion yuan, of which Jiangsu Textile (Group) Corporation (hereinafter referred to as the Provincial Textile Group) accounts for 60.71 percent and the company's trade union accounts for 39.29 percent. The registered capital of provincial light textile company, provincial knitting company, provincial mechanical and electrical company, Wuxi new Su textile company and provincial clothing company (hereinafter referred to as the five subsidiaries) are 10 million yuan, 5 million yuan, 6.37 million yuan, 10 million yuan and 10 million yuan respectively. The provincial textile import and export company accounts for 51% of the investment in the five subsidiaries, and the remaining shares of the five subsidiaries are held by employees. The case involves the operation and management of six companies. (1) Except for Wuxi New Su Textile Company, the other companies involved in the case are all registered at the same address, and the legal representatives of the five subsidiaries are all senior executives of the provincial textile import and export company. Financial personnel and administrative personnel are also shared. Among them, five subsidiaries share financial personnel with the provincial textile import and export company for accounting, the final approval personnel for payment and reimbursement are the same. (2) There is a situation of business cross-mixing between the provincial textile import and export company and the five subsidiaries, the business of the five subsidiaries is specifically arranged by the provincial textile import and export company, and there are a large number of related debts and guarantees between the provincial textile import and export company and the five subsidiaries. In this case, the court found out after examination that there was a high degree of personality mixing among the six companies involved in the case, which was mainly manifested in: the high degree of overlapping personnel and the failure to form a complete and independent organizational structure; Sharing financial and examination and approval personnel and lacking an independent financial accounting system; The business is highly cross-mixed, forming a highly mixed business entity, which objectively makes it difficult to properly distinguish the income of the six companies; there are a large number of related debts and guarantees between the six companies, resulting in the assets of each company can not be completely independent of each other, debt and debt liquidation is extremely difficult. In this case, the court held that the merger and reorganization of the related enterprises with highly mixed personality and the substantive merger of the related enterprises in a timely manner are in line with the principle requirements of the bankruptcy law on the fair liquidation of creditor's rights and debts and the fair protection of the legitimate rights and interests of creditors and debtors. From the above-mentioned guiding cases, it can be learned that when the people's court hears a case, the key is to examine whether it constitutes a mix of personality, without requiring other aspects of the mix at the same time, which is only a reinforcement of the mix of personality. When the people's court determines whether a company constitutes a mixed personality, it should make a judgment based on a variety of factors, such as the place where the company is established, the situation of the company's shareholders, controllers and key financial personnel, the company's main business and the purpose of transactions between the company and other companies, the company's tax situation, and the background and performance of specific creditors when signing contracts with the company, should be included in the scope of investigation. Public Case of (III) Supreme People's Court: Jiangsu Higher People's Court (2019) Su Min Zhong No. 1285 Civil Judgment

2022-09-29

Viewpoint... The (I) of the patent confirmation examination model-the administrative procedure of patent confirmation examination.

China's current patent confirmation examination model adopts the administrative single-track model, which is presented in the form of patent invalidation system and patent confirmation litigation procedure. After the patent right is authorized, any unit or individual who believes that the authorization of the patent does not comply with the provisions of the Patent Law and the Detailed Rules for the Implementation of the Patent Law may submit a request to the Invalidation Review Department of the State Intellectual Property Office (hereinafter referred to as the Invalidation Review Department) to review the patent again. The Invalidation Review Department examines this request and makes a conclusion that the patent right is invalid, the patent right is valid or partially valid. If the patentee or the applicant for invalidation is not satisfied with the invalidation procedure of the invalidation department, he may bring an administrative lawsuit to the people's court within the statutory time limit. This procedural feature is generally referred to as the single-track review model. 1 Sole review authority and review process The single-track system of China's patent confirmation examination procedure has two major characteristics, one is that the reexamination invalidation department is the only authority for patent confirmation examination, and the other is that the patent invalidation procedure is the only procedure for patent confirmation. 1, the review invalidation department is the only statutory patent confirmation examination authority. The establishment of the Invalidation Review Department aims to use the expert resources within the Patent Office to quickly eliminate disputes and reduce litigation through administrative procedures. From the point of view of China's entire patent authorization system, the review invalidation department mainly exists as the patent examination and authorization of the patent office. According to the provisions of the Patent Law, the responsibility of the Invalidation Review Department is mainly to review the decision to reject the patent authorization before the patent is granted, and to examine the request for patent invalidation after the patent is granted. In other words, the reexamination invalidation department actually has two opportunities to examine the patent authorization behavior of the patent office, one for the possible wrong patent non-authorization, and the other for the possible wrong patent authorization. However, the reexamination invalidation department is not the administrative reconsideration organ of the Patent Office, and the patent reexamination procedure and the invalidation procedure are not administrative reconsideration procedures. According to the Administrative Reconsideration Regulations of the State Intellectual Property Office, the administrative reconsideration agency related to the authorization of patent applications is the State Intellectual Property Office, and the agency responsible for legal work handles administrative reconsideration matters specifically, and is not satisfied with the decision to reject the patent application. The decision on the request for reexamination and the decision on the request for invalidation are not matters that can be reconsidered. In China, a large part of the examination of patent applications is carried out by the Patent Examination Collaboration Center. In 2001, the Patent Office of the State Intellectual Property Office established the Patent Examination Cooperation Center of the State Intellectual Property Office in Beijing. In 2011, it was renamed the "Patent Examination Cooperation Center of the Patent Office of the State Intellectual Property Office", and in 2016 it established a branch in Fujian. center. In addition, since 2011, Jiangsu, Guangdong, Henan, Hubei, Tianjin, Sichuan and other places have also established patent examination cooperation centers. The Center undertakes most of the examination of patent applications, such as the preliminary examination of various patents, the substantive examination of invention patents, and the patent evaluation report of practical patents. At the same time, it also participates in the examination of patent reexamination cases. The Audit Association Center is an institution directly under the State Intellectual Property Office and is entrusted by the State Intellectual Property Office to undertake patent-related examination work. Because it is an entrusted administrative act, the effect of the action of the Audit Association Center is borne by the State Intellectual Property Office. An administrative act of entrustment refers to an administrative act made by an administrative subject on the basis of entrusting a part of its authority or all of a certain authority to other administrative organs, organizations or individuals. Some scholars have pointed out that the concept of entrusted administrative act is not strict in expression, and the accurate statement should be the entrusted implementation of administrative act. In other words, the center of the Patent Examination Association does not have the substantive right of patent examination, but is entrusted by the State intellectual property Office to carry out the examination work for patent authorization. 2. The patent invalidation procedure is the only legal procedure for patent confirmation. The patent invalidation procedure is the only statutory examination procedure for granted patents. China does not allow the court to determine the validity of patents in the trial of patent-related civil cases, and the invalidation department has only this procedure to examine authorized patents. The uniqueness of the procedure leads to the fact that this procedure must cover all matters related to the examination of the validity of the patent. The invalidation procedure includes a patent invalidation request for any patent in any field of technology on all grounds. The term "all reasons" here does not mean that any reason that does not meet the conditions for granting a patent can be used to file a request for invalidation, but rather that the statutory reasons for invalidation need to be examined in this unique way and through a unique procedure. However, from the statistical data, the distribution of these reasons in all invalidation and litigation is not the same, and the need for complex and complete review procedures is also questionable. In contrast, the U.S. patent law sets up different examination procedures in the part of the administrative agency's examination to re-examine the authorized patent, and each applies different grounds for invalidation. For example, in the case of a two-party review procedure (IPR procedure), U.S. patent law limits the grounds for filing to those based on novelty and inventive defects. At the same time, China's invalidation procedure includes the examination of the right to confirm patents in all technical fields, and adopts a unified procedure. 2 More lenient start-up conditions Since the patent invalidation procedure is the only statutory patent confirmation examination procedure in China's patent legal system, a relatively loose starting condition is adopted. Specifically, the scope of the subject of the request can be raised, there is no express limit on the time of the raising, the commencement of the procedure is only subject to formal review and there are no other restrictions. 1. The scope of the subject of the initiation of the invalidation procedure. From the perspective of the subject who can file a patent invalidation request, the Patent Law and the Implementation Rules do not impose express restrictions. Any unit or individual who believes that the grant of the patent right does not comply with the relevant provisions of this law may request the reexamination Invalidation Department to declare the patent right invalid. However, the Review Guide lists a number of inadmissibility of invalidation, respectively, for the claimant does not have the qualification of the subject of civil litigation, the patent right is relatively invalid, the patentee's own patent is all invalid, multiple claimants jointly put forward a request for invalidation. It is worth noting that when the Review Guide was revised in 2010, the restriction on the qualification of the claimant for invalidation was added, that is, when the patent design conflicts with the legal rights obtained by others before the application date, the claimant must be able to prove that he is the prior right holder or interested party. Among them, "interested party" refers to the person who has the right to sue the court or request the administrative department to deal with the dispute of infringement of prior rights. The Supreme People's Court affirmed the validity of this restriction through a case, and in the case of "Stepels Design", the Supreme People's Court analyzed the nature of the object being regulated, the purpose of legislation and the effect of the legal order. In the judgment, the court held that the legislative purpose of the relative invalidity of the patent right is to safeguard the prior right and has nothing to do with the public interest. If anyone can claim the invalid reason for the conflict between the design patent right and the prior legal right of others, it may violate the will of the prior right holder. In addition to demonstrating the correctness of this provision itself, this approach of the Supreme People's Court also shows that while encouraging the public to challenge wrongly authorized patents in order to safeguard the public interest, more factors should be considered to set conditions for the initiation of invalidation proceedings, including the qualifications of the applicant for invalidation. The time requirement for initiating the invalidation procedure, from the time point of view, the patent law stipulates that the object of the invalidation request is the patent that has been announced and authorized, that is, the invalidation procedure is initiated as early as the date of the patent announcement authorization, and there are not too many restrictions. Although the direct effect of the patent invalidation procedure is to invalidate an authorized patent, this procedure can also be filed for a patent that has lapsed, such as the expiration of the patent or the voluntary waiver of the patentee. This is also made clear in the Review Guide. The reason why the request for invalidation should be allowed after the expiration of the patent is mainly because the various legal relationships arising from the patent during the duration of the patent may continue beyond the expiration of the patent. The unlimited time is also reflected in the fact that the examination procedure is not divided on the basis of different times, and any patent invalidation request filed at any time is heard using almost the same procedure. In fact, before the revision of the Patent Law in 2000, the administrative examination procedures for patent confirmation were divided into two types: patent revocation procedures and patent invalidation procedures. The division of procedures was bounded by six months from the date of patent authorization announcement. The two are quite different in terms of the subject of review and the reasons for invalidity/revocation. Similarly, in contrast, the U.S. patent law divides the patent re-examination procedure into post-patent authorization review (PGR) and two-party review (IPR) procedures, taking nine months after the patent is authorized. At the same time, it stipulates that if an infringement lawsuit based on the disputed patent is in progress, the party accused of infringement shall not initiate two-party review proceedings one year after the date of delivery of the copy of the complaint. 2. Formal review of the acceptance and initiation of the invalidation procedure As a result of the more lenient conditions for initiation, the Patent Reexamination Board only conducts a formal examination of the patent invalidation request before initiating the examination procedure. The contents of the formal examination stipulated in the Review Guide are whether the object of the request for invalidation is a patent authorized by the announcement, the qualification of the applicant for invalidation, and the scope, reasons and evidence of the request for invalidation. At this stage, the Patent Reexamination Board's examination of the reasons for the request and the evidence is limited to whether the requester has given the reasons for invalidation and stating what evidence is used to support what reasons. As long as the grounds and evidence of invalidity exist, are not hindered by the principle of non-justification and fall within the scope of article 66, paragraph 2, of the Regulations, the request is admissible. As for the examination of the reasons themselves and the probative force of the evidence, all are referred to the formal examination process. In contrast, in the United States patent law, after the patent grant review procedure is accepted, the patent director shall conduct a preliminary examination of the content of the request. Only when it is reasonably foreseeable that the request of the requester will make at least one claim be successfully declared invalid, the examination procedure will be formally initiated. 3 Reasons that can be used to request patent invalidation Although the purpose and process of the invalidation procedure is to re-evaluate whether the patent technology in dispute meets the conditions of patent authorization, not all the reasons that may cause the failure of authorization at the patent application stage can be the reasons for the patent invalidation request. The grounds for invalidation are limited to the grounds provided for in paragraph 2 of Article 65 of the Regulations. These reasons include: invention-creation or non-patentable object that is not protected by the patent law, failure to conduct confidential examination according to law when applying for a patent abroad, defects in the substantive conditions of patent authorization, defects in the writing of specifications or claims and defects in pictures, beyond the scope of application document modification, defects in the legality of invention-creation, lack of necessary technical characteristics of independent claims, and beyond the scope of division application. Among the above reasons, most of them are related to the scope of protection of patent rights. Through the re-examination of these reasons, the scope of protection of contested inventions and creations can be re-determined and redefined. However, there are also contents that have nothing to do with the scope of patent protection, such as failing to conduct a confidential examination in accordance with the law when examining a patent abroad, which will also invalidate the authorized patent right. It is worth mentioning that the right to apply and the wrong ownership of the patent do not belong to the reasons for the declaration of patent invalidation in China. The patent invalidation procedure does not involve a dispute over patent ownership, nor does the Department of Invalidation Review have jurisdiction over this matter. It is logical that errors in patent ownership should be made by transferring the patent to the correct right holder, rather than by invalidating the patent. The authorization error at this time is not that the patented technology does not meet the authorization conditions, so the patent should still be valid. But in contrast to the Japanese regulations. The Japanese Patent Law also considers patent "fraud" or patent joint application requirements as grounds for invalidation. The reason is that "since the patent law grants a patent right to an invention on the basis of an invention and through an application, there is no reason to retain the patent when the patent right is falsely recognized, that is, when the inventor does not apply for registration." Similarly, the issue of singleness defects is not a cause of invalidity, as the lack of singleness of a patent is generally resolved through division of applications at the application stage. However, after the patent is granted, the number of patent rights does not have much influence on the actual scope of protection of the invention, but only involves the issue of the annual fee of the patent.

2022-09-28

Viewpoint | Liability for Guarantee in Hybrid Guarantee

The dispute 1. the internal recovery right in the mixed guarantee. 1. Affirmative argument (1) The right of recovery of the guarantor in article 700 of the Civil Code: the natural derivation of the equality of property security and human security. Affirmation Scholars believe that: 1. According to the Civil Code guarantee interpretation, the people's court may use the provisions of the Civil Code on guarantee contracts when hearing cases of security disputes over goods provided by third parties. According to article 700 of the Civil Code, after the guarantor assumes the responsibility of guarantee, there is both a right of recovery against the debtor (which is a nascent right) and a right of subrogation against the creditor, which means "the right of the creditor to the debtor". Then this subrogation right can be seen as a statutory concession of claims. Thus, a non-contractual debt relationship arises between the guarantor and the debtor. In accordance with article 468 of the Civil Code, the provisions on claims and debts arising on the basis of contracts are applicable, as well as the provisions of article 547 of the Civil Code on the transfer of claims and the provisions on the change of rights. A security interest can be regarded as a subordinate right, on the basis of which the guarantor enjoys a security interest and can recover from other guarantors. (2) the principle of fairness said The principle of fairness holds that, as a creditor, it has the right to choose the guarantor or guarantor to be liable in the event that the debtor is unable to pay off the debt, but the choice of whom depends on the creditor's own decision. If the mixed co-guarantors are not allowed to recover from each other, then some of the guarantors will bear full responsibility, while others do not need to bear any responsibility, which is obviously not in line with the requirements of fairness and justice. (3) Joint debt said. Some scholars draw on German law and try to establish the right of recovery through joint and several debt certificates. That is, the hybrid guarantee is consistent with the general provisions on joint and several obligations set out in the German Civil Code, and the right of mutual recourse is considered to be between the guarantors through the determination of the internal relations of the joint and several debtors in the German Civil Code. Some scholars also believe that since the various guarantors guarantee the same debt, they have a common purpose, thus presuming that they are related to each other, combined with the internal relationship between the debtor, the existence of the right of recovery. In China's judicial practice, there are also courts based on the original guarantee interpretation of the provisions of the joint and several debt theory to make decisions. (4) The claim of subrogation. Scholars of the subrogation claim argue that the guarantor who assumes responsibility can be seen as paying the debtor's debt. Since the debt is extinguished by a third party on behalf of the liquidation, the original creditor's claim has been legally transferred, at which point the new creditor becomes the guarantor who has fulfilled the security obligation. At this point, the guarantor who has assumed the liability for the guarantee may require the other guarantor to pay off (only to the extent of its own payment). 2. Rebuttal of Negative Theory (1) The "equality of physical security and human security" does not justify mutual internal recourse. First of all, the point of view of "the equality of property security and human security" is to consider the creditor's right of choice, that is to say, the creditor can choose to be liable by the guarantor, or by the property guarantor. However, the right of recovery between the guarantor and the guarantor is the internal relationship between the two, and it is illogical to conclude that there is an internal right of recovery between the guarantor through the equality of the property and the person. Moreover, the principle of equality always runs through the field of private law, and if the relationship between the two is equal, it can be concluded that there is an internal right of recourse between the guarantors, which is contrary to the general law of the development of private law and does not conform to the connotation and original intention of the principle of equality. (2) Specific performance based on the principle of fairness The understanding of the principle of fairness should be comprehensive and should not be confined to 1.1, otherwise it is easy to lead to one-sided understanding or misinterpretation. Based on the principle of fairness, the negative view is that, on the one hand, both the guarantor and the guarantor, when creating security for others, should understand the consequences and risks of their actions, when the guarantor assumes responsibility, can only choose to recover from the debtor, and there is no other remedy. If it is not possible to recover from the debtor, it is at its own risk; on the other hand, if the guarantor wants to reduce or avoid the risk that the debtor will not be able to repay, it should be specifically agreed by written contract or other means before the security is created. (3) Inadequacies in the application of the theory of joint and several obligations Joint and several debts are obviously aggravating the obligations of a party and should be agreed upon by the parties or provided for by law. In a mixed guarantee, there is no law that provides for the application of the joint and several debt theory to the joint guarantor. Secondly, according to the principle of autonomy, the parties did not agree on joint and several debts, and the joint and several debts began to talk about. It is worth noting that, within the affirmative, there is also a negative view of the theory of joint and several obligations and that the guarantor and the guarantor in rem are each separately responsible in terms of external relations, the former being the limited liability of rem and the latter being the unlimited liability of man, and that there should be no real joint and several relations between the two in different fields. Thus, the relationship between the guarantors does not conform to the structure of the joint and several obligations themselves. (4) Reflections on the theory of subrogation claims Neither in terms of the debt to which it is directed nor in terms of the meaning of the guarantor's liquidation, it cannot be concluded that the guarantor who liquidated the debt is liable to the creditor on behalf of the other guarantor. The reason is that the guarantor's act of paying off the debt is actually taking responsibility for the debtor, that is to say, the guarantor who has assumed the liability for security has the legal status of a creditor against the debtor. No other guarantors of the debtor are involved. In other words, this only involves the relationship between the guarantor who has assumed the security liability and the debtor, and there is no relationship between the guarantors. 2. from the legal basic value argument negative theory (I) from the principle of fairness Although both affirmative and negative are based on the principle of fairness, but the starting point is completely different, the starting point of the negative scholars is the principle of fairness and meaning autonomy, since the parties did not pre-set the intention to allow recovery, then it is fair to think that there is no right of recovery between the mixed guarantor. It is certainly argued from the point of view of coordination among the rules that the rule that creditors can choose the guarantor to assume liability at will is not in harmony with the rule that the mixed co-guarantor has no right of recovery from each other. The relationship between the creditor and the guarantor and the relationship within the guarantor have different causes, different value pursuits, different existence mechanisms, and different legal interests behind them. Therefore, there is no so-called incoordination. The judgment of the principle of fairness cannot be concluded simply through a single legal relationship. There can be no limitations. We should proceed from the overall situation and look at the principle of fairness from the perspective of transcending individual legal relations. (II) from the principle of efficiency When there is a legal right of recourse between the guarantors, the legal relationship is complex and the transaction cost is extremely high. The number of parties and do not know each other, access to the basic information of the parties is extremely difficult. Such a cumbersome situation makes it impossible for the guarantor to properly assess the risk of the transaction, and also makes the guarantor and the secured property in a "precarious" situation. As a result, people may no longer provide security because they are unwilling to take great risks, which is not conducive to the development of China's security system and the realization of claims. Therefore, it is more advantageous to think that there is no right of recourse between the guarantors. (III) from the perspective of autonomy The logic in the affirmative and negative statements is that the parties have an expectation of security risk and are willing to take their own risks based on the principle of autonomy. At this time, the law should give sufficient respect to the expected effect of the parties' guarantee. The negative view is that the risk expected by the guarantor is that the guarantor can only recover from the debtor after assuming the guarantee liability, and if the debtor cannot pay off, the guarantor can only bear the risk. After rational analysis, the guarantor anticipates this risk and is still willing to take the risk to provide security for the debtor. At this time, there is no agreement on joint guarantee or mutual recovery. Then the risk should be borne by the guarantor itself. Professor Cui Jianyuan of Tsinghua University pointed out that the guarantor did not mean to agree on sharing and recovery before the guarantee was made, and there was no intention to contact each other. Then when the guarantor assumes responsibility and cannot recover from the debtor, it can only "taste the bitter fruit" and cannot recover from other guarantors, otherwise it is contrary to the spirit of private law of autonomy. It must be said that the view is the opposite: if the guarantor was clearly aware of the existence of other guarantors at the time of the creation of the guarantee, then his thoughts at the time of the creation of the guarantee may be due to the existence of other guarantors, and then I cannot be held fully responsible. It is therefore certain that recovery between guarantors is not a violation of the principle of autonomy of will, but rather an implementation of autonomy of will. The author thinks that the affirmation scholars only pay attention to the "meaning" in the meaning autonomy and ignore the "autonomy". According to the principle of autonomy, it is the party's own choice to make a certain choice out of some consideration, which requires the party's own thinking and judgment. Because of its universal applicability, the law cannot make an appropriate choice for each party in each case. When a guarantee is agreed upon, if there is no agreement between the guarantors, it means that no one between the guarantors has agreed to internal recovery. If the parties intend to have an internal right of recourse in the agreed security, they may agree on the legal relationship and the risk on their own. The universal applicability of the law determines that it should fully respect the parties in real life. It is not possible to create a recovery relationship between the parties, otherwise it is a violation of the autonomy of private law. 3. Interpretation of Article 13 of the Civil Code Guarantee Interpretation (I) respect for autonomy After the promulgation of the guarantee interpretation of the Civil Code, it has become the only basis for solving the problem of internal recovery of mixed guarantee. The provision basically affirms the position of non-recourse within the hybrid security and respects the autonomy of the parties. If there is no agreement between the parties, there is no right of recovery; if the parties have only agreed on mutual recovery but have not agreed on the manner of recovery, the specific manner is supplemented by the principle of autonomy. In general: if the parties have clearly expressed mutual recovery, the court should give respect. As for the manner of recovery not agreed upon by the parties, the proportionality scheme was adopted. (II)'s compromise on affirmation The interpretation of the guarantee system provides for other circumstances in which compensation can be recovered. If "each guarantor signs, seals or prints on the same contract", in this case, the guarantor may recover from the other guarantor after assuming the guarantee liability. This is a compromise that the law certainly says about the right of recovery. If the guarantors sign the same contract and agree that they will provide the guarantee, then the guarantors are no longer in a back-to-back relationship, I .e., they know each other, and it is determined that there is an internal right of recovery, but this idea is worth considering. From a commercial point of view, there is a certain reason for "the same contract can be recovered": whether it is to avoid risks or pay attention to obligations, compared with civil subjects, the ability of commercial subjects is higher than that of civil subjects, and commercial activities pay more attention to efficiency. It is certain that the internal right of recovery is reasonable when the guarantee contract is signed between commercial subjects, but if it is analogized to the civil subjects, the civil subjects will be overburdened. Even if the paragraph is arbitrarily considered to adopt commercial law thinking, the logic between the two is not clear because the Civil Code adopts civil law thinking. China adopts the legislative model of civil and commercial integration, if the law and judicial interpretation does not indicate the use of civil law or commercial law thinking, then only the use of civil law thinking will not harm the interests of other subjects. In general, the Civil Code basically establishes the provision of non-recourse between guarantors, but the compromise in paragraph 2 makes the negation not fully implemented. In summary, the internal recovery right of the hybrid guarantee should be denied. The reason is that respect for the principle of autonomy of the will should not interfere with legal relations between private persons unless it violates the fundamental spirit of the law. Moreover, the negation can better guarantee the realization of creditor's rights, promote the financing, give the parties flexible space to own arrangements, and realize the fundamental purpose of the guarantee system. The mixed common guarantee system is the most important in the guarantee system, and the correct understanding and application of the mixed common guarantee system will make the guarantee system play a greater role in practice. Therefore, in the mixed co-guarantee system, it is considered that there is no right of mutual recovery between the mixed co-guarantors, which protects the interests of creditors and demonstrates the spirit of autonomy.

2022-09-28

Viewpoint | Reflections on the excessive expansion of patent rights in the context of the application of the "equivalence principle"

At present, in the trial of patent infringement cases, Chinese courts usually use the rules of "comprehensive coverage principle", "literal infringement principle" and "equivalence principle" to determine whether the alleged infringement constitutes infringement of the target patent. When the infringement judgment rules are applied to the trial of patent infringement cases, the court will first interpret the claims of the target patent literally, then compare the technical characteristics of the accused infringing object and the claims of the target patent one by one, and finally judge the consistency of the "mode/principle function results" of the two and whether there is "creative labor. However, the application of the above-mentioned rules to determine patent infringement has its inherent defects, in the interpretation of the meaning of the claim and the definition of the scope of patent protection, sometimes too carefully limited to the literal expression of the claim, often can not give the patentee fair and effective legal protection, that is, relative to the patentee or inventor's contribution to the existing technology, to give its patent protection scope is too small; sometimes, due to the change of the meaning of a certain technical feature caused by the progress of technology, the abuse of the functional limited technical feature in the target patent claim, etc., it is easy to ignore the examination of the creative difference in the mode/principle, thus providing the patentee with excessive legal protection, that is, the scope of patent protection is too large compared with the patentee or the contribution made to the existing technology. In other words, if the court applies the above-mentioned patent infringement determination principle in strict accordance with the literal meaning of the patent claim, there will always be a series of problems such as the mismatch between the scope of patent protection and the contribution of the patent to the existing technology. The author believes that in order to correct the deviation brought by the above-mentioned patent infringement judgment rules and balance the interests of the public and the patentee, the mechanism of restricting the excessive application of the principle of equivalence can be introduced. In the process of determining whether it constitutes patent infringement, in some specific cases, although the technical characteristics of the accused infringing object are the same as the corresponding technical characteristics in the patent claim, compared with the target patent, the working methods or implementation principles of the two are essentially different. Then even if the final function and effect of the two constitute the same substance, at this time should also be determined not to constitute patent infringement, that is, the principle of inverse equivalence. The establishment of the principle of inverse equivalence precisely solves the above-mentioned problems. On the one hand, it emphasizes the protection of prior technology patent rights, maintains the legitimate interests of prior technology research and development personnel, and encourages the public to innovate; on the other hand, by limiting the prior The scope of over-protection of patents, giving certain patent protection to post-technology research and development personnel is conducive to redevelopment and re-creation, to a certain extent, it has promoted the development and progress of science and technology, especially high and new technology. The United States is the first country in the world to establish the principle of inverse equivalence and the provisions of the principle are more perfect, although the principle was established in the United States at the beginning of its application encountered many difficulties, but with the continuous improvement of the rules, the continuous progress of technology, the application of the principle has great potential. Japanese courts in the trial of patent infringement cases, in the face of method or function limited product claims, the court will also apply similar to the principle of reverse equivalence to determine whether it constitutes equivalent infringement. In Taiwan, the principle of reverse equivalence is also an effective principle for local courts to determine patent infringement. By observing the application of the principle of inverse equivalence in the above-mentioned countries, the premise is that the accused infringing property has fallen within the literal scope of the claim protection of the target patent and has constituted a literal infringement. According to this, the elements that do not constitute patent infringement are all substantial differences between the accused infringing property and the completion method/principle of the target patent. Even though China's existing patent laws and regulations on the interpretation of patent claims is more strict, limiting the improper expansion of the scope of patent claims, but in practice, the patent claims and patent specifications are still out of touch. It should be noted that the role of the principle of reverse equivalence in the determination of patent infringement is far more than limiting the improper scope of the claims. Whether it is from the objective conditions or from the perspective of institutional needs, it is necessary to use this principle to amend and improve the existing patent infringement determination system, so that the interests of all parties can be balanced, which is in line with the ultimate value pursuit of the patent legal system. Zhongcheng Qingtai Law Firm has a large number of high-level expert teams in the field of intellectual property legal services such as patents, trademarks, copyrights, etc., providing satisfactory protection solutions and performance for the intellectual creativity and technological innovation of a wide range of client groups. Previously, many lawyers from Zhongcheng Qingtai have been selected into the talent expert database of the Provincial Protection Center. In the next step, Zhongcheng Qingtai lawyers will strengthen the publicity of intellectual property rights for government agencies, institutions, enterprises, and universities, and comprehensively promote the creation, use, protection, management and service of intellectual property rights. Improve the level, and help the high-quality development of intellectual property rights through their own professional and dedicated services.

2022-09-28