According to an October 24 report by Songjiang News, the People’s Court of Songjiang District in Shanghai recently resolved a shareholder transfer dispute involving a foreign individual through adjudication and mediation.
The defendant, a Japanese national, had previously collaborated with the plaintiff in running several restaurant chains. In 2020, they entered into a share transfer agreement where the plaintiff exited the business and transferred his shares to the defendant. The agreement stipulated that the defendant would pay the plaintiff 1 million yuan. However, when the lawsuit was filed on June 6, the defendant still owed 360,000 yuan plus interest.
During the trial, the judge thoroughly examined the situation of both parties. The plaintiff, aiming to recover the outstanding debt, requested the freezing of the defendant’s bank accounts and restrictions on his departure from China.
Considering the defendant’s status as a foreign national still operating multiple restaurant chains, the judge initially provided a legal explanation to encourage both parties to settle the matter through mediation.
The judge noted that the case’s facts were evident, and based on the present evidence, it was probable that the defendant would lose, leading to possible further actions upon the plaintiff’s request. Such measures would significantly affect the defendant’s livelihood. “Freezing the defendant’s accounts and restricting his exit, as requested by the plaintiff, could heavily impact the defendant,” explained He Jihua, Senior Judge of the Commercial Court. “We prefer to avoid such outcomes. Since the defendant is a foreign businessman in China, we aim to support his business success while ensuring the plaintiff’s rights are upheld.”
Through mediation, the court facilitated a settlement where the defendant consented to repay the remaining amount over two years in monthly installments. Consequently, the case was amicably resolved, and the defendant has already made the first payment as per the agreement.
Judge He highlighted that this mediation outcome was significant not only for safeguarding the plaintiff’s rights but also for minimizing the impact on the defendant. “This method reduces the strain on the defendant, allowing him more time and resources to focus on his business activities. It contributes positively to the business environment,” he stated. Additionally, the defendant’s restaurant chains employ over 100 staff members, and successful mediation helped prevent potential indirect repercussions like layoffs.
