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JunHe Assists Xinyuan Financial Leasing (Zhejiang) Co., Ltd. to win their Second Trial Involving a Dispute over the Financial Leasing Contracts of Dashe International Logistics (Shanghai) Co., Ltd

2021.02.06

On November 2, 2020, the Hangzhou Intermediate People’s Court made a second instance judgement regarding a case concerning a dispute over a finance lease contract filed by the appellant Xinyuan Financial Leasing (Zhejiang) Co., Ltd. (hereinafter referred to as "Xinyuan Company" or "client"), against the appellee Dashe International Logistics (Shanghai) Co., Ltd. (hereinafter referred to as "Dashe Company"). While revoking the judgment of the court of the first instance, it was confirmed that the financing lease contract relationship between Xinyuan Company and Dashe Company was valid, and the appellant Xinyuan Company's appeal request was supported. Xinyuan Company lost in the first instance, which may seriously affect the development of its financial leasing sale and leaseback business. Under this unfavorable situation, Xinyuan Company changed its first instance agent, and hired JunHe to represent them to participate in the second instance litigation, and finally won the second instance litigation of this case.


Xinyuan Company lost in the first instance procedure. The court of first instance confirmed that the legal relationship of the sale and leaseback mode of Xinyuan Company’s core business was essentially a loan relationship and ruled that the financial leasing contract signed between the two parties was invalid. Xinyuan Company, as a financial leasing company whose core business is operating automobile financial leasing, has nearly a hundred lawsuits involving similar business models. Although the subject matter of this case was not large, it involved the legitimacy of billions of RMB transactions that Xinyuan Company has made in the past. It may even affect the transaction safety of the business conducted under the sale and leaseback mode of auto financial leasing in the whole Zhejiang market.


Xinyuan Company entrusted Mr. Zhang Xingzhong, a partner of JunHe, to intervene in the second instance of the case when the judgment of the case’s first instance had a huge adverse impact on its main business. Based on a comprehensive review of the case evidence, the first instance judgment and the judgment of similar cases, Partner Mr. Zhang Xingzhong led JunHe’s team to design and formulate an effective litigation plan. The team finally solved the problems in the above litigation and obtained a favorable judgment for their client. JunHe was highly recognized by the client. In the process of handling this case, JunHe’s team cooperated with the following work:


1. Conducting in-depth communication with the customers and clarified the particularity of the operating automobile business model of after-sale and leaseback financial leasing;


2. JunHe’s team adhered to the mechanism for resolving differences promoted by the Supreme People’s Court. This was due to the particularity of the client’s business model and due to the fact that there are a large number of similar cases in judicial practice with different verdicts. It also was prior to the promulgation and implementation of the “Guiding Opinions of the Supreme People's Court on Unifying the Application of Law and Strengthening the Search of Similar Cases (for Trial Implementation)”and before a similar case retrieval system is officially launched.  JunHe’s team sorted out the many judgments and rulings in similar cases in Zhejiang Province by referring to the relevant provisions of the “Implementing Measures of the Supreme People's Court for Establishing a Mechanism for Resolving Differences in the Application of Law”. Since similar cases are required to have the same rulings, JunHe suggested that the Hangzhou Intermediate People's Court unify the ruling results for cases involving the  sale- leaseback of automobile finance leases in judicial practice.


3. During the trial, JunHe focused on whether the legal relationship formed between the two parties (that is, the true intention of both parties) was a loan contract or a financial leasing contract relationship. JunHe explained to the court of second instance the particularity of the business model of automobile financial leasing, and sorted out the legal relationship of the sale and leaseback model. JunHe’s team submitted the results of the same case with the same judgment, which convinced the Hangzhou Intermediate People's Court to adopt the view of JunHe and promoted the Hangzhou Intermediate People's Court to confirm the unified ruling of such cases. The Xinyuan Company won the second trial, promoting the legitimacy of the sale and leaseback mode of operating vehicles in the automobile financial leasing industry to be recognized in judicial practice and confirmed that the leaseback business mode of automobile financial leasing in Hangzhou can be protected by law.


The lead partner of this litigation project was Mr. ZHANG, Xingzhong.

JunHe is the only Chinese law firm to be admitted as a member of Lex Mundi and Multilaw, two international networks of independent law firms. JunHe and selected top law firms in major European and Asian jurisdictions are “best friends.” Through these connections, we provide high quality legal services to clients doing business throughout the world.