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| TITLE | 【Syllabus of Latest Opinion】 Supreme Court Decision 2021Da220741 Decided July 3, 2025 【Indemnity】 [full Text] |
|---|---|
| Summary | |
| 【Main Issues and Holdings】 [1] Purpose of Article 20(3) of the former Company Law of the People’s Republic of China, stipulating where any of the shareholders of a company shall bear several and joint liability for the debts of the company Standard of determining whether the transfer of profits between a subsidiary and its parent company, such as the subsidiary’s dividends made in accordance with proper procedures to the parent company, its sole shareholder, constitutes an act of evading the payment of its debts by abusing the independent status of legal person or the shareholder’s limited liabilities and seriously injuring the interests of any creditor, which is stipulated in the above provision [2] Standard of determining the law applicable to the damages for delay (held: the applicable law regulating the original creditor-debtor relationship) Whether examining the details of a foreign law, which is the applicable law governing a legal relationship with a foreign element, corresponds to the matters to be inspected by the court ex officio (affirmative) Method of confirming the details of a foreign law, which is determined to be the applicable law, and interpreting the meaning thereof [3] In a case where Chinese Corporation B, established in China for the purpose of the construction of industrial facilities as a 100% subsidiary of Stock Company A, was contracted by Chinese Corporation C to install a gas supply facility inside Chinese Corporation C’s factory; shortly after the completion of the construction, as a fire broke out at the above factory due to the negligence of Chinese Corporation B, significant damage was caused to Chinese Corporation C; approximately four months after the fire, when Chinese Corporation B decided to distribute dividends to Stock Company A, its parent company, and subsequently paid out those dividends, according to an insurance contract with Chinese Corporation C, Chinese Corporation D (the insurer) paid insurance proceeds to Chinese Corporation C for the damages caused by the fire; Chinese Corporation D filed a lawsuit with a Chinese court against Chinese Corporation B, seeking compensation for part of the damages and interest arising from the above fire, by way of subrogation; Chinese Corporation D and others, which received a final and conclusive judgment in its favor for a portion of the claim, filed a lawsuit against Stock Company A, seeking to hold Stock Company A liable under Article 20(3) of the former Company Law of the People’s Republic of China, the case holding that the lower court, which determined that Stock Company A should bear several and joint liability for the debts of Chinese Corporation B to compensate in accordance with Article 20(3) of the former Company Law of the People’s Republic of China, did not err and adversely affect the conclusion of judgment by misapprehending the legal doctrine, while the lower court, which entirely dismissed the claims of Chinese Corporation D and others for the damages for delay by failing to exhaust all necessary deliberations in relation to the details of the relevant judgment, which became final and conclusive, and the relevant provisions of the Chinese law, erred and adversely affected the conclusion of judgment by misapprehending the legal doctrine | |
