Empowering Chinese Companies: A Breakthrough in Litigation Funding for State-owned Enterprises in Mainland China

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Introduction

Deminor is thrilled to share a recent success story in relation to its financing of a claim involving a Mainland Chinese company in a London-seated arbitration. One noticeable feature about the client is that it is part of a state-owned group in Mainland China and this is the first offshore arbitration for the client.

Empowering Chinese Companies: A Breakthrough in Litigation Funding for State-owned Enterprises in Mainland China 

Navigating the Challenges

Deminor’s client (the “Claimant”) was registered in Mainland China. The Claimant was a fully owned subsidiary of a company listed on the Hong Kong Stock Exchange.

 

A few years ago, the Claimant entered into a sales contract to sell machinery.  The Respondent, an Asian holding company, provided a corporate guarantee to the Claimant (the “Guarantee”) for the due and punctual payment of 55% of the total contract price by the buyer of the machinery. Although the buyer never disputed delivery or the quality of the goods, it failed to pay the relevant amount and was ultimately wound up in court proceedings. As a result, the Claimant sought to enforce the Guarantee for the outstanding amount.

 

Deminor provided funding for the Claimant’s LCIA arbitration in London against the Respondent, and the parties ultimately settled before the proceedings concluded. The client obtained a satisfactory settlement offer.

 

Tailored Funding Solutions

The costs of arbitration in London were going to be considerably higher than anticipated for the Claimant. These unforeseen financial obligations created significant hurdles for the company, especially considering the substantial losses already incurred due to the dispute and non-payment under the Guarantee. Understanding the Claimant’s predicament, Deminor recognized the need for a funding agreement that provided both financial certainty and flexibility. Deminor also understood the difficulty in securing management approval for the arbitration without sufficient certainty over the amount of damages that could potentially be recovered. Deminor assisted the Claimant with understanding and analysing the budget required and the likely quantum of the claim.

Cultural and Linguistic Understanding

One crucial aspect that distinguished Deminor from other funding providers was its ability to communicate effectively with the client. Deminor understands that language and cultural nuances play a significant role in building trust and facilitating efficient communication. By speaking their language and comprehending their cultural context, Deminor was able to guide the Claimant’s management through the internal decision-making process, alleviating their concerns and ensuring transparency at every step.

Linking Law Firms and Experts

Without Deminor’s involvement, the Claimant would have faced significant obstacles in pursuing its case. The complexities of the arbitration process, coupled with the unfamiliarity of offshore arbitration and experts, presented daunting challenges. However, Deminor’s comprehensive network of law firms and experts, combined with its litigation funding, played a pivotal role in enabling the client to proceed with confidence. Deminor leveraged its connections to link the Claimant with top-tier law firms experienced in London-seated arbitrations. By bridging the gap between the Claimant and the legal expertise they required, Deminor facilitated a seamless and efficient collaboration.

Deminor acted as a strategic partner, leveraging its expertise, network, and its understanding of Chinese culture to provide comprehensive support to the Claimant and to facilitate its success.

Written by:

Professional headshot of Irene Lee, General Counsel China and South East Asia at Deminor Litigation Funding

Irene Lee

General Counsel: Greater China and Southeast Asia

David Walker

David Walker

Senior Legal Counsel: United Kingdom

Professional headshot of Allana Lau, Legal Counsel at Deminor Litigation Funding

Alanna Lau

Legal Counsel: Greater China and Southeast Asia

Litigation Funding  Type:

Arbitration 

Case Type:

Breach of contract

Industry Sector:

Industrial | Manufacturing

Case Manager(s):

  • Irene Lee
  • David Walker

Location:

London | APAC region

Contact persons

 

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