Supreme People’s Court Mediates Cross-Border Liquidation Liability Dispute Worth Over $10 Million

Cross-border Liquidation Liability Dispute Worth Over Ten Million US Dollars Settled Mediation In-Court; International Commercial Court Innovates Full-chain Reconciliation Model.

A Swiss company entered into an international sales contract with a Shenzhen trading firm in earlier years. A dispute arose during performance, and the London Metal Exchange issued an arbitral award ordering the Shenzhen company to pay compensation exceeding ten million US dollars to the Swiss claimant. Nevertheless, the Shenzhen firm’s shareholder (a Henan trading company) and its senior management formed a liquidation team and deregistered the enterprise without notifying the Swiss creditor, leaving the Swiss company’s huge claim unenforceable. The Swiss enterprise subsequently filed a lawsuit with the First International Commercial Court of the Supreme People’s Court, demanding the Henan trading company repay the debts and its wholly-owned parent Henan Coal & Power Company bear joint and several liability. The case involved an enormous disputed sum and severe risks from exchange rate fluctuations, with deep divides between the parties. A judgment would have permanently severed their years-long business ties.

The case presented three major legal and practical challenges. First, the coordination of validity between foreign arbitral awards in China and the determination of shareholders’ joint liability for improper corporate liquidation. Second, prevention of exchange rate risks during mediation over large cross-border claims, avoiding sharp shrinkage of the agreed settlement amount caused by volatile global exchange rates. Third, balancing debt recovery with sustainable commercial relations to break the industry predicament where litigation permanently terminates cooperation.

Adhering to the judicial philosophy of standing in the litigants’ shoes, the collegial panel pioneered a full-chain mediation framework of “evidence exchange – issue identification – dynamic negotiation – coordinated promotion”. Through comprehensive pre-trial evidence sorting, the panel pinpointed two core controversies: illegal liquidation and the amount of outstanding claims. It conducted multiple rounds of shuttle mediation, adjusted settlement proposals in real time in response to exchange rate movements to guard against currency losses, and leveraged the parties’ history of cooperation to guide them to set aside confrontation and pursue long-term mutual benefits. All four parties signed a settlement agreement in open court, and the court issued a civil mediation statement on the spot. The domestic companies fully performed all payment obligations within one week, achieving a one-time substantive resolution of this complex Eurasian commercial dispute valued at over ten million US dollars. This case was selected as one of the second batch of Model Mediation Cases in Foreign-related Commercial and Maritime Matters released by the Supreme People’s Court.