Case Background
Our firm represented a real estate developer in East China (Plaintiff) in a cooperative development dispute with a US investor (Defendant). The parties signed an agreement in 2010 to jointly develop a 69.91 Mu plot in an economic development zone, stipulating:
- Plaintiff holds 51% equity; Defendant holds 49% and injects RMB 120 million
- Plaintiff guaranteed clear land title and readiness for immediate construction (except for temple demolition & high-voltage line relocation)
- US guarantor signed joint liability clause
After years of project stagnation, Defendant sued for contract termination, return of investment plus interest.
Case Challenges
- Cross-Border Guarantee Validity Dispute: US guarantor sought exemption from interest liability.
- Land Defect Attribution Dilemma: Failure to relocate high-voltage lines led to stalled construction permit.
- Loss Offset Defense: Defendant suddenly raised an RMB 81 million loss offset claim during the second instance.
- Interest Calculation Discrepancy: Contract lacked provisions for interest post-termination.
Highlights of Our Services
1.Precise Attribution of Title Defects
- Obtained original archives from land authorities, confirming title obstacles existed at land delivery.
- Locked in high-voltage line relocation as the primary cause for failure to obtain construction permits.
2.Rigorous Application of Procedural Rules
- Invoked Article 168 of the Civil Procedure Law, dismissing the newly raised second-instance loss offset claim.
- Established the judicial principle that “post-termination fund occupation requires payment of statutory accrued interest”.
3.Piercing Cross-Border Guarantee Liability
- Argued the independence of the guarantee clause, defeating the “termination of master contract nullifies guarantee” defense.
- Achieved full joint liability determination for the US guarantor.
4.Rational Segmentation of Interest Claims
- Voluntarily abandoned the claim for 3% monthly interest, focusing successfully on obtaining court support for central bank benchmark interest.
Case Result
- Contract Termination Granted: Cooperative agreement and supplementary agreements lawfully terminated.
- Principal Fully Recovered: 100% recovery of the RMB 120 million investment.
- Rigid Interest Support: Payment of fund occupation interest based on central bank loan benchmark rate (accruing from the filing date).
- Guarantee Liability Enforced: US guarantor held jointly liable.
- Procedural Costs Optimized: Newly raised second-instance loss claim procedurally dismissed.
Case Insights
1.Risk Control Points for Cross-Border Development Contracts:
- Land title commitments require attached government written proof.
- Guarantee clauses should independently stipulate post-termination liability.
- Fund return mechanisms must clearly define interest calculation methods.
2.Cross-Border Litigation Procedural Rules:
- Second-instance surprise defenses can be blocked by procedural rules.
- Claims for statutory accrued interest do not require prior contractual agreement.
3.Sovereign Judicial Advantage Manifestation:
- Chinese courts hold final adjudicative power over domestic real property disputes.
- Foreign guarantors are subject to Chinese Guarantee Law.
This case showcases our core capabilities in handling cross-border real estate cooperative development disputes:
- Land Title Obstacle Tracing Technology
- Rigorous Enforcement of Foreign Guarantor Liability
- Second-Instance Procedural Offense/Defense System
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