Case Background
Our firm represented a Japanese-funded feed enterprise (JH Company) in a dispute over asset loss caused by forced demolition for a government project. In 2007, a project office of a municipal transportation bureau demolished the enterprise’s factory buildings and equipment without following statutory procedures, causing the enterprise to cease operations completely. Japanese shareholder Iwazume Takenao (who passed away during the litigation) initiated a shareholder representative lawsuit, demanding that the project office, the Chinese shareholder (CZ Company), and the lessor (ZH Liaoning Company) jointly and severally compensate over 96 million yuan.
Case Difficulties
- Determination of heir status after the Japanese shareholder’s death required application of the Japanese Civil Code.
- Proving the illegality of the government’s forced demolition faced local administrative resistance.
- The liability boundary of the Chinese shareholder was ambiguous (failure to fulfill mitigation obligations).
- Calculation of current asset losses faced conflicting assessments (government-commissioned vs. enterprise-commissioned).
Highlights of Our Services
1.Breakthrough in Cross-Border Procedures:
- Argued shareholder representative lawsuit standing (Article 151 of the Company Law).
- Applied Article 887 of the Japanese Civil Code in court to confirm the legal status of the heir.
2.Multi-dimensional Allocation of Tort Liability:
- Established 100% direct tort liability for the project office.
- Limited the Chinese shareholder’s liability to the portion attributable to its failure to mitigate losses in a timely manner (20%).
- Completely excluded the lessor’s legal liability.
3.Precise Loss Quantification System:
- Adopted the government assessment report for machinery and equipment loss (to ensure procedural credibility).
- Applied contributory negligence to current assets, reducing compensation by 30% (breaking the precedent of full compensation).
- Excluded employee compensation claims lacking payment documentation.
4.Rational Limitation of Expected Profits:
- Rejected the unrealistic claim for 3 years of lost profits.
- Supported compensation for 1 year of expected profits (aligning with industry recovery cycles).
Case Results
1. Liability Proportion Restructuring
- Project office bore 33.61 million yuan in compensation liability (primary responsibility).
- CZ Company jointly and severally compensated 6.72 million yuan (secondary liability).
- ZH Liaoning Company was exempted from liability.
2. Loss Calculation Breakthroughs
- Machinery and equipment loss reduced by 35% (from 12.28 million yuan to 8.04 million yuan).
- Contributory negligence applied to current assets (from 9.60 million yuan to 6.72 million yuan).
3. Procedural Benchmark Established
- The shareholder representative litigation path was conclusively affirmed by the Supreme Court.
- Japanese substantive law was directly applied in the foreign-related inheritance case.
4. Cost Optimization
- Final adjudication reduced litigation costs by 260,000 yuan.
- Frivolous claims totaling 41 million yuan were dismissed.
◦ (Note: “驳回滥诉标的4100万元” is duplicated in the original)
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