DeHeng Lawyers Helped the Client Recover USD 20 Million in an IPO Valuation Adjustment Mechanism Dispute at the HKIAC

2023-06-26

In June 2021, DeHeng lawyers represented Fund A in an arbitration at the Hong Kong International Arbitration Centre (HKIAC), demanding that other shareholders of the joint venture they co-funded with Fund A in the Cayman Islands should perform the share repurchase in accordance with the Shareholders' Agreement. The respondent (other shareholders) engaged the world's top law firms in Hong Kong, New York, the Cayman Islands and Japan to form a joint legal team to respond to the lawsuit. After two years of arbitration proceedings, the arbitral tribunal recently made a final award on the equity repurchase case, demanding the other shareholders to pay a total of about USD 20 million (including the amount paid by some shareholders in compensation due to arbitration pressure in the later stage of the case) to Fund A.

After searching and combing through nearly 2,000 basic documents and pieces of evidence, the expert team led by DeHeng identified the key facts: the respondent had promised to fulfill the repurchase obligation in the early negotiations. These documents were eventually accepted as evidence by the arbitral tribunal, despite the common law rules on evidence collection during negotiation. DeHeng lawyers then invoked the "estoppel" doctrine under New York law and argued that the respondent must not make claims contrary to the previous one in arbitration, which was the knockout in the case.

For the team of Chinese lawyers, DeHeng's managing partner of Beijing and Hong Kong offices, Mr. Li Zhong served as the team leader, lawyer Chen Jixin as the lead lawyer, with support from the trainee lawyer Quan Wanqing. They also led a joint team of experts composed of barristers from Hong Kong, and lawyers in Cayman and New York.