A Guangzhou-based business service company v. a Shaanxi-based electronic engineering company, a Shaanxi-based industrial company, a Shaanxi-based investment company, et al. retried by the Supreme People's Court was recognized as one of the first "Reference Cases" included in the People's Courts Case Database under the database no. 2023-08-2-269-006. A team led by JunHe partner Zhao Zhen undertook and won the case in the retrial proceedings.

In January 2018, a Guangzhou-based business company entered into an Equity Acquisition Agreement with a Shaanxi-based electronic engineering company, a Shaanxi-based industrial company et al. Under the agreement, the Guangzhou-based business company acquired a 50% equity interest held by the latter two companies in a Shaanxi-based real estate company, with the intention of developing a plot of land in Qinling held by the real estate company. However, the procedures for the approval of the key points of planning and design that the Shaanxi-based electronic engineering company and the Shaanxi-based industrial company promised to complete was held off.

The Guangzhou-based business company filed a lawsuit claiming for the termination of the agreement, the return of the full equity transfer price, the lifting of escrow measures on the escrow account, and the performance by the guarantors of their guarantee liabilities. All the claims of the Guangzhou-based business company were dismissed by the Intermediate People's Court of Xi’an City and the High People's Court of Shaanxi Province in the first and second instance proceedings.

After the High People's Court of Shaanxi Province rendered the second-instance judgment, the Guangzhou-based business company engaged JunHe and its partner Zhao Zhen to represent it in this case. Mr. Zhao researched the evolution of the local land planning policies and communicated with local planning and other administrative authorities to confirm future regulatory measures related to land development. He argued that the Ecological Environment Protection Plan for Qinling in Xi'an issued on September 23, 2021 had led to material changes in the fundamental conditions of the agreement in this case. Ultimately, Mr. Zhao decided to file a petition for retrial with the Supreme People's Court on the ground of change of circumstances.

Since the introduction of the doctrine of change of circumstances by the Interpretation II of the Supreme People's Court of Several Issues Concerning the Application of the Contract Law of the People's Republic of China in 2009, courts have been very cautious in applying the doctrine to order the termination of contracts, and therefore there were few precedents available for reference.

Ultimately, the Supreme People's Court adopted JunHe’s argument above and decided in its judgment that "six months after the agreement was signed, the national policy on the development of the concerned land changed significantly, which went beyond the scope of normal business risks and had a material impact on the performance of the agreement. It can be found that a change of circumstances occurred during the performance of the agreement." Accordingly, the first- and second-instance judgments were reversed, and a judgment ordering the termination of the Equity Acquisition Agreement was rendered. The client obtained a complete victory in this case.

This case witnessed a complete reversal of original judgments in the retrial proceedings and is the first case published by the Supreme People's Court in which the doctrine of change of circumstances was applied since the promulgation of the Civil Code of the People's Republic of China. Due to its benchmark and exemplary significance, the Supreme People's Court included this case in the People's Courts Case Database.

The inclusion recognizes JunHe’s overall strength in dispute resolution and affirms the approach adopted by JunHe lawyers in handling complex commercial disputes. JunHe lawyers will continue to leverage their professional expertise to provide high-quality services and assist clients in their business transactions.