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GAR 100 - 10th Edition

Zhong Lun

02 March 2017

China is using the firm in its only pending ICSID case

People in Who’s Who Legal 1
Pending cases as counsel 33
Value of pending counsel work US$3.3 billion
Treaty cases 1
Current arbitrator appointments 5* (of which 2 are as sole or chair)
Lawyers sitting as arbitrator 2

*Excludes CIETAC cases

Zhong Lun was founded in 1993 as one of China’s earliest private partnership law firms. Since then it has grown from a single office in Beijing to one of China’s three largest firms. It has an international arbitration group full of English-speaking lawyers, which is part of the firm’s wider dispute resolution practice.

In the early days, this group was focused on real estate and construction arbitrations at CIETAC, the Beijing Arbitration Centre and some overseas fora. As the firm has developed, the practice has grown and now handles disputes over joint ventures, equity transfer, international sale of goods, IP licensing, shipbuilding, banking and finance, distribution, energy, media and telecoms.

The dispute resolution department is headed by Yuming Liu, who worked as a Chinese Supreme Court judge for over 10 years before joining private practice, and has experience dealing with high-profile commercial lawsuits and enforcement applications before the courts. He also sits as an arbitrator at CIETAC and the Beijing Arbitrator Committee.

The head of the arbitration practice is Lijun Cao, a New York and China-qualified lawyer who worked with CIETAC for many years and who is currently a member of the SIAC executive committee responsible for revising the institution’s rules. Other major partners include Lei Niu, a former deputy secretary general of the China Maritime Arbitration Commission’s Shanghai subcommission, and New York qualified Huawei Sun. Both Cao and Niu sit as arbitrators for various Asian institutions (Cao also sits on AAA-ICDR cases).

The firm’s eminence in Chinese arbitration was recognised when it picked up an award at the GAR Awards ceremony in Shanghai in 2016.

Network

In 2014, the firm opened new offices in Qingdao and Chongqing. Zhong Lun now has eight offices in mainland China (the others are in Beijing, Shanghai, Shenzhen, Guangzhou, Wuhan and Chengdu) as well as other offices in Hong Kong, Tokyo, London and New York, which opened in 2013.

Who uses it?

Domestic clients include Chinese state-owned electrical supplier Shandong Luneng; Dongfang Electric, the New York Stock Exchange listed CDEL; Paul Y Construction (China); Sinosure; Shanghai Motors; Zhejang Tenglong Shipyard Company; and Chinachem Group. The Chinese government is also now a client at ICSID (see ‘Recent events’).

Outside China, clients include US’s Intel Security Group; Intercontinental Hotels; Honeywell; Lacoste; BNP Paribas; Heineken-Asia Pacific Breweries Limited, which is engaged in a series of disputes in relation to a Chinese joint venture; and US-owned Invista Technologies, in a dispute arising from agreements between the client as licensor and a Chinese company as licensee.

Track record

In 2014, the firm won a landmark decision from a Chinese court for a Luxembourg subsidiary of Invista. The court found that a “hybrid” clause providing for arbitration at CIETAC under UNCITRAL rules was valid and enforceable. Norton Rose Fulbright acted as Zhong Lung’s co-counsel.

Zhong Lun defended a Hong Kong property service provider, as respondent in two consolidated arbitrations worth US$10 million before CIETAC’s South China subcommission in Shenzhen, succeeding on most counts.

It also knocked out claims brought against Shanghai Motors in an arbitration before a CIETAC Shanghai tribunal over a long-term auto parts sale contract (before CIETAC Shanghai broke away to become SHIAC).

Other successes were for Zhejiang Tenglong Shipyard as claimant in a London Maritime Arbitration Association case against Russian vessel owners; and Canada’s Absolute Energy in an international sale of goods dispute against a US subsidiary of a Chinese state-owned company.

The firm represented Puyang Steel Company as claimant in a CIETAC Beijing arbitration against an international air products company worth US$280 million. That claim was settled. The team also obtained a settlement for Zhejiang Fulida Company avoiding an HKIAC arbitration with a Canadian company.

As for court work related to arbitration, Zhong Lun obtained an order setting aside a Beijing Arbitration Commission award for Meibang Yalian, a Beijing-based real estate developer.

Recent events

In 2016, the Chinese government gave the firm its highest-profile instruction to date – defending the state in its only pending ICSID case. The US$80 million claim by South Korean investor Ansung Housing relates to the failed construction of a golf course and condominiums. (Dentons is acting as co-counsel to China.)

Zhong Lun had already topped a list of 15 Chinese firms that the state had announced as its preferred counsel in investment treaty matters in 2015.

The firm won a partial victory for a BVI client in a US$129 million SIAC arbitration with a Chinese state-owned enterprise; and helped one of Asia’s largest alternative investment management firms prevail in a US$174 million dispute that played out in two CIETAC arbitrations.

In another CIETAC case, it defended a local solar power company from a US$80 million claim relating to a contract for the supply of polycrystalline silicon chips. It also knocked out the bulk of a US$42 million claim against its client, a local state-owned gas enterprise.

The firm convinced the notably pro-arbitration Hong Kong courts not to stay a mainland Chinese litigation involving Bank of China, which the counterparty said breached an arbitration agreement.

It hired partner Xiangwen Liu from King & Wood Mallesons in July 2016. Meanwhile Cao Lijun was part of the executive committee that drew up SIAC’s new rules for investment arbitration.

Client comment

Geraldine Lim, general counsel to Heineken, had occasion to use a Zhong Lun team led by partner Cao Lijun. She praises them for their ability to “keep the big picture in mind, including the practicalities”. Cao is an “experienced arbitrator who knows the CIETAC system inside out”.

Jonathan Fung of Paul Y Construction (China), a Hong Kong-based engineering group, has been using Zhong Lun for contentious matters in mainland China for a long time, and says they have given “insightful” legal advice.

Renn Shi, CEO of China’s HRS Wind Power Technologies, says the firm provides “the right people with the right expertise at the right time.” Cao is “top class” and “a high-level orator” while partner Wang Bing is a “sharp-minded lady” with “excellent cross-examination skills.”