Hysome Cases | A series of disputes over annulment of arbitration award between Rao and a partnership in Hubei

In March 2020, Rao, a Chinese citizen who has permanent residency in Australia and has settled in Australia all year round, received a notice to participate in a video conference with shareholders of Beijing A Co., Ltd., and learned that without his knowledge, his identity information had been fraudulently used and became Company A's largest shareholder, and that his Chinese bank account had been frozen by the court in accordance with the law.

In April 2020, Mr. Rao returned to China from Australia. With further information, we learned that while Rao was in Australia, Rao was impersonated and falsified his signature as a shareholder of Company A in Beijing. Company A once again falsified Rao's signature in December 2015, and signed an investment and gambling agreement “Capital Increase and Stock Expansion Agreement for Beijing Company A” and “Supplementary Agreement” with a partner enterprise in Hubei in the name of Rao: The agreement stipulated that a partnership in Hubei would subscribe for XXX yuan in Beijing A's new registered capital of 30 million yuan. In 2018, due to Beijing Company A's failure to meet the agreed performance targets, the anti-gambling clause was triggered. According to the gambling clause, five entities, including Rao, must repurchase the shares obtained by a partnership enterprise in Hubei and bear corresponding compensation therefor. In 2019, a partnership in Hubei applied to the Beijing Arbitration Commission for arbitration with five entities, including Rao, as the respondent due to a dispute over a gambling agreement. During the arbitral tribunal's trial, Rao did not receive any notices or materials from the arbitral tribunal in China, and Beijing Company A once again falsified Rao's signature and signed a full power of attorney with a law firm, representing Rao in the arbitration hearing and signed the relevant documents. In June 2019, the Beijing Arbitration Commission issued a ruling that five entities, including Rao, bear contractual responsibilities for share repurchase and performance compensation. In 2020, the arbitration ruling was enforced by the Beijing court. Only then did Rao learn that tens of millions of assets in his Chinese account had been frozen for execution. Based on the above reasons, Mr. Rao appointed our attorney Yuan Quan to handle this case for him, and filed a lawsuit with the Beijing No. 4 Intermediate People's Court to annul the arbitration award to protect the client's legitimate rights and interests.

The focus of the dispute in this case is: 

1. Whether Rao's signatures in the “Beijing Company A's Capital Increase and Stock Expansion Agreement” and the “Supplementary Agreement” were signed by him;

2. Whether the gambling clauses in the “Beijing Company A's Capital Increase and Stock Expansion Agreement” and the “Supplementary Agreement” could bind on Rao.

On August 27, 2020, a partnership enterprise in Hubei reached an execution settlement agreement with Mr. Rao and others. The agreement stipulated that Rao's would be exempted from the debts, and that several other parties against whom execution would fulfill their obligations under the arbitration and mediation agreement. Furthermore, the applicant, a partnership enterprise in Hubei, withdrew the application for enforcement against Rao; the client Rao's assets that had been sealed, seized, and frozen were all unsealed; and Rao also withdrew his lawsuit to the No. 4 Intermediate People's Court regarding the annulment of the arbitration award.

Because Beijing Company A falsified the signature of client Rao and signed investment and gambling agreements with various entities, such as capital increase and share expansion agreements, equity transfer agreements, etc., and Beijing A did not achieve the listing or performance goals agreed upon in the agreement upon the  expiration, triggering a series of lawsuits or arbitration cases involving our client Rao as the defendant and respondent, including the subject of this case. After accepting the client Rao's appointment, our attorney Yuan Quan actively collected evidence favorable to the client, and discovered that the key point of this series of cases was that the “Capital Increase and Stock Expansion Agreement for Beijing Company A” and the “Supplementary Agreement” stated in the opening section of the “Beijing Company A Capital Increase and Stock Expansion Agreement” that the agreement was signed by the parties to the agreement in Beijing on X/X, 2015. However, the client Rao's immigration records show that at the time the above agreement was signed, Rao was not in China so that it was impossible for Rao to sign the above agreement in Beijing. On this basis, the attorney applied for a handwriting review of the parties' signatures, clarifying the fact that the signatures on the “Capital Increase and Stock Expansion Agreements” and “Supplementary Agreements” mentioned above, and the power of attorney were not signed by the client Rao. On this basis, the attorney team represented Rao in negotiations with the parties involved in various disputes, including a partnership in Hubei, and reached an executive settlement. A partnership in Hubei and other entities exempt Rao from all debts and lifted all preservation measures. At the same time, Mr. Rao withdrew his application to annul the arbitration award, and the various parties no longer held Rao to any responsibility, and promptly recovered tens of millions of yuan in losses for our client. In addition, on the basis of protecting the client’s property, our lawyer investigated the liability of Beijing Company A and relevant responsible personnel, safeguarding the legitimate rights and interests of our client.