Defaulting Seller Used Mainland and HK Companies to Obscure Identity: Lawyer Larry Successfully Represented Ghanaian Buyer in Lawsuit, Recovering RMB 2 Million and Holding the Actual Controller Liable

In January 2022, a Ghanaian company encountered a chemical materials exporter through Made-in-China.com, who claimed to be a Tianjin-based company in China. Subsequently, the parties negotiated via email, and the seller issued proforma invoices, confirming two purchase orders in January and May 2022, respectively. 

In the proforma invoices provided by the seller, the letterhead displayed the name of the seller’s Hong Kong company, and the payment was directed to the Hong Kong company’s bank account. However, the address listed on the invoices was located in Tianjin, China. Additionally, the English names of the seller’s Hong Kong company and its affiliated Tianjin company were highly similar, making it difficult for the Ghanaian buyer to distinguish between the two. 

After the payment schedule was agreed upon, the Ghanaian buyer made full payment in installments as planned. However, the seller unilaterally claimed that the goods had been resold, citing a delay in the final payment as the reason, and refused to deliver the goods unless the Ghanaian buyer paid an additional price difference. The seller failed to provide any valid evidence of the alleged resale. 

By refusing to deliver the goods after receiving payment and fabricating excuses to misappropriate the funds, the seller committed a fundamental breach of contract. As such, the seller was legally obligated to refund the full payment and compensate the Ghanaian buyer for related losses. 

As the seller refused to refund the payment and the dispute remained unresolved, the Ghanaian buyer engaged Lawyer Larry Zhou from Landing (Shenzhen) Law Office to represent them in the case. After comprehensively reviewing the case materials, Lawyer Larry filed a lawsuit with the court in the seller’s jurisdiction, seeking a judgment for the refund of the RMB 2 million payment and associated losses. 

The core of the case lay in the legal principle that the principal place of business of a legal entity can be deemed its habitual residence, serving as a connecting factor for determining the applicable law in this case. Through on-site visits, inquiries, and evidence collection, Lawyer Larry demonstrated that the Hong Kong company had no substantial operations in Hong Kong, while its contact persons, website addresses, and contract addresses were all located in Tianjin. 

The key significance of this case was that, by proving the seller’s Hong Kong company’s principal place of business was effectively in Mainland China, the Chinese court was persuaded to apply mainland law and rule that the individual shareholder of the Hong Kong company should bear joint liability for the company’s debts.

Ultimately, the court successfully applied the provisions of the Company Law on the joint liability of sole shareholder in a one-person limited liability company, holding the individual shareholder liable for the debts.

Judgement: