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Wilson’s Team from Zhong Lun Represented the Client to Initiate Litigation and Reached Settlement Using ADR Measures Even under Contract Provision of an Arbitration Clause
Wilson’s Team from Zhong Lun Represented the Client to Initiate Litigation and Reached Settlement Using ADR Measures Even under Contract Provision of an Arbitration Clause
Recently, a team led by Zhonglun’s Partner Wilson Wei Huo on behalf of a well-known USA company in consumer electronics industry, initiated a litigation proceeding before a PRC court although the contract has provision of an oversea arbitration clause, and ultimately reached settlement with low costs in a dispute of international sale of goods,.
In an international trade transaction between our client as the buyer and a domestic PRC company as the seller, a dispute arose after the goods were detained and subsequently destroyed by the US Customs due to infringement of a third party’s IP rights. Wilson’s team found a relatively complicated dispute resolution clause in the underlining contract, which stipulated that all disputes shall be submitted to ICC and arbitrated under ICC rules in Hong Kong with New York law as the applicable law. In consideration of costs, lengthy procedures and future enforcement of the award if complying with such an arbitration clause, we decided to circumvent the binding contract, and brought litigation before a PRC court against another domestic enterprise related with the transaction but has stronger economic backgrounds. After initiation of the proceedings, while putting continuous pressure through litigation, Zhong Lun team contacted the defendant on chosen occasions, which resulted in defendant’s application to add the seller into the litigation as a third party. Eventually, the three parties reached a settlement before the court, under which the opposing parties gave double “assurance" to our client by assuming liabilities jointly and severally.
This case serves to be a model to prove that right strategy choice among arbitration, litigation and other ADR measures will help the client greatly save costs as well as to protect their legal rights. This is also another example among those successful cases which Wilson’s team has resolved with great efficiency.