Recently, Yong WANG and Biaochong CHEN (to be confirmed), senior partners of JT&N, engaged in a business trust dispute case, and the case won the final victory after more than one-year hearings of the Supreme People’s Court of the People’s Republic of China.
The Supreme People’s Court of the People’s Republic of China confirmed again the legal relationship of contract of transfer of right to earnings of special assets and didn’t deal with purchase and resale of the right to earnings of special assets as debit and credit. There are only two similar cases published by the Supreme People’s Court of the People’s Republic of China. Both are represented by lawyers of JT&N.
One of points in dispute in the final trial of the case is the nature of the related master contract involved the case. JT&N represented Minmetals International Trust Co., Ltd. to engage in the case. On the basis of research on the trust law, property right and debtor-creditor relationship, lawyers of JT&N made a conclusion that the legal relationship is the relationship of contract of transfer of right to earnings of special assets rather than debtor-creditor relationship. The relationship of contract of transfer of right to earnings of special assets is a new type of legal relationship identified by law. It conforms to the stipulation of Management Regulation on Trust Company and Management Regulation on Trust Plan for Collecting Funds of Trust Company that trust company can take various forms to use trust fund. The contract of the case is different from borrow and loan contract no matter in the nature of payables, formula mode or mode of payment.
In favor of the proposal of lawyers of JT&N, the court considered that Contract of Transfer of Right to Earnings of Special Assets is an agreement that was signed for Minmetals International Trust Co., Ltd. to receive the right to earnings of special assets of Jinzhengmao Holdings Limited via trust fund under the involved trust plan item. In the case, the nature of the transfer of the right to earnings of special assets, a new type of legal relationship has been identified by the Supreme People’s Court of the People’s Republic of China. The identification can bring benefits to trust business that has widely used the right to earnings of special assets as well as other practice where the right to earnings of special assets is used for investment.