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BVI Commercial Court hands down judgment in longrunning dispute concerning Lunan Pharmaceutical Group Limited

Jul 28, 2021

Advisory
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Key Takeaways

  • Walkers has secured a comprehensive victory for its client, Ms Zhao Long, in a complex dispute regarding the ownership of shares in a significant PRC pharmaceutical company in a judgment of the BVI Court following a three-week trial. 

  • The dispute concerned the ownership of shares in a BVI company (“Endushantum”) which in turn held shares in a significant PRC pharmaceutical company called Lunan Pharmaceutical Group Limited (“Lunan” and the “Lunan Shares”) as well as shares in other group companies (together with the Lunan Shares, the “PRC Shares”).  
  • The case demonstrates the BVI Court's ability to effectively adjudicate complex cross-border commercial disputes involving PRC assets and wide ranging questions of both BVI and PRC law.  

Walkers has secured a comprehensive victory for its client, Ms Zhao Long, in a long running dispute regarding the ownership of shares in a significant PRC pharmaceutical company in a judgment of the BVI Court demonstrating the BVI Court's ability to effectively adjudicate complex cross-border commercial disputes involving PRC assets and wide ranging questions of both BVI and PRC law.

On 20 July 2021, the British Virgin Islands (“BVI”) Commercial Court handed down judgment in favour of Walkers' clients, Zhao Long and Kunlun Newcentury Investment Holdings Co Ltd (the 'Claimants') in a complex litigation concerning the ownership of shares in a BVI company (“Endushantum”) which in turn holds a quarter of the issued share capital of a significant PRC pharmaceutical company called Lunan Pharmaceutical Group Limited (“Lunan” and the “Lunan Shares”) as well as shares in other group companies (together with the Lunan Shares, the “PRC Shares”).

From 2011, the shares in Endushantum were held by a BVI trust for the benefit of the founder of Lunan, Mr Zhao Snr (the “Zhao Trust”). Shortly before his death in 2014, Zhao Snr executed instructions to transfer title to the shares in Endushantum to his daughter, Ms Zhao Long. Those instructions were not followed. Justice Jack held that a transfer of shares in Endushantum, the issuance of new shares in that company to third parties and the establishment of a new BVI trust following the death of Zhao Snr was a breach of the Zhao Trust. The Judge has found that the third parties receiving shares in Endushantum were knowing recipients and the Claimants, Ms Zhao Long and another BVI company, are entitled to the return of the shares in Endushantum.

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Authors

Oliver Clifton

Oliver Clifton

Partner/British Virgin Islands

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John Crook

John Crook

Partner/Hong Kong

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Silhouette Female

Meenaa Azmayesh

Senior Counsel/British Virgin Islands

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Yegâne Güley

Yegâne Güley

Associate/British Virgin Islands

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E/Email Yegâne Güley
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Vivian Kwan

Senior Associate/Hong Kong

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E/Email Vivian Kwan
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