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April29,2005PRIVILEGEDANDCONFIDENTIALMemorandumto:JeffWood,Esq.Debevoise&Plimpton(HongKong)ChineseCourt’sJurisdictionOverAT&TBackgroundYouhaveaskedustoadvisewhetheraChinesecourtwouldhaveJurisdictionoverAT&Tinthefollowingtransaction:*AT&TplanstoinvestinaChinese-foreignjointventurecompany(the“JointVentureCompany”)throughPudongLLC,anoffshorespecialpurposevehicletobeestablishedandwhollyownedbyit.*Onceestablished,PudongLLCwillenterintoajointventureagreement(the“JointVentureAgreement”)withtwoChinesepartiestoformtheJointVentureCompany.AttherequestoftheChineseparties,AT&Tintendstoprovideaguaranteeintheformofacomfortletter(the“Letter”)toensuretheperformancebyPudongLLCofitsobligationsundertheJointVentureAgreement.TheLetter(acopyofwhichhavingbeenprovidedtous)expresslyprovidesthatitisgovernedbyNewYorklawandsubjecttothejurisdictionofNewYorkorFederalcourtsintheUnitedStates.TheletterisproposedtobesignedbyAT&TandcountersignedbytheChinesepartiestotheJointVentureAgreement.QuestionThequestioniswhetherAT&TwillbesubjecttothejurisdictionofaChinesecourtbyexecutingtheLetterinthemannerasdescribedabove.ShortAnswer*IfadisputearisesfromtheinterpretationorperformanceoftheJointVentureAgreementand,intheabsenceofavalidandenforceablearbitrationagreementamongtheparties,aclaimismadeagainstPudongLLCbeforeaChinesecourt空一行空两行空两行空一行*此为提纲挈领之部门，可促使作者在之后的法律分析中紧扣题目，故有书写此部分必要*凡冒号、句号等表示一句终了的标点之后均空两格左边距为3.00cm右边距为3.00cm*客户时间有限，有时只需要简短的结论性回答距信纸抬头下边缘1.30cm空一行havingjurisdictionovertheclaim,itislikelythatAT&TwillbenamedasanindispensablepartyandtheChinesecourtmaydecidethat,sincetheLetterispartandparceloftheJointVentureAgreement,thecourtshouldhavejurisdictionoverAT&T.Analysis*UnderChineselaw,contractsoragreementssuchastheJointVentureAgreementwhichwillbefiledwiththerelevantChinesegovernmentalauthoritiesfortheestablishmentofcompaniessuchastheJointVentureCompanymustbegovernedbyChineselaw.Asaparallel,China’sCivilProceduralLawprovidesthat,intheabsenceofavalidandenforceablearbitrationagreementamongtheparties,theChinesecourtwillhavejurisdictionoveranydisputethatmayarisefromtheinterpretationandperformanceofacontractsuchastheJointVentureAgreement.Article246oftheCivilProcedureLawstates:“ActionsconcerningdisputesarisingfromtheperformanceofcontractsforChinese-foreignequityjointventures,orChinese-foreigncooperativeexplorationanddevelopmentofthenaturalresourcesinthePRCshallfallunderthejurisdictionofPRCcourts.”SinceAT&T,byvirtueoftheLetter,providesaguaranteefortheperformancebyPudongLLCofitsobligationsundertheJointVentureAgreement,itislikelythatAT&Twillbenamedasanindispensablepartytothedispute.Ifso,thequestioniswhethertheChinesecourtwilldecidethatithasjurisdictionoverAT&TeventhoughAT&TdoesnothaveanypresenceinChinaotherthanprovidingtheguarantee.UnderArticle243oftheCivilProcedureLaw,aforeignpersonmaybesubjecttothejurisdictionoftheChinesecourtif,amongotherthings,(i)ithasarepresentativeofficeinChina,or(ii)itisapartytoacontractwhichisthesubjectmatterofthelitigation,or(iii)ithasassetslocatedinChinathatcanbeattached.Forexample,partiestotheJointVentureAgreementwillhavetochooseChineselawasthegoverninglawand,intheabsenceofanarbitrationagreement,theChinesecourtwillhavejurisdictionoveradisputearisingfromtheJointAgreementbyvirtuebyvirtueofArticle246oftheCivilProcedureLawandoverthepartiesifanyoftheconditionssetforthunderArticle243oftheCivilProcedureLawismet.Ontheotherhand,Chineselawalsopermitspartiestoacontracttochoosethegoverninglawandtheforumofdisputeresolution(includingforeigncourts)ifsuchachoiceisnotwiththemandatoryrulesunderChineselawthatprovideotherwise.ConclusionBasedupontheaboveanalysis,weareoftheviewthattheLetter,assodrafted,inandbyitselfdoesnotconstituteacontractthatismandatorilygovernedbyChineselaworoverwhichtheChinesecourtwillhavejurisdictioninrespectofanydisputearisingtherefrom.Chinesecourtsshouldhonortheparties’choiceoflawandjurisdictioninrespectoftheLetter.Ontheotherhand,however,iftheChinesecourtdetermines上边距为3.00cm*建议写此部分*建议写此部分thatadisputearisingfromtheLetterconstitutesadisputeoftheJointVentureAgreement,itmaydecidethatithasjurisdictionoverAT&T.Suggestions*Inviewoftheaboveanalysis,wewouldsuggestthefollowing:First,partiestotheJointVentureAgreementagreethatanydisputearisingtherefromshouldbesubmittedtoarbitrationbeforeawellestablishedinternationalarbitrationinstitution,suchastheLondonCourtofInternationalArbitrationortheInternationalChamberofCommerceCourtofArbitration.Bylaw,Chinesecourtsshouldhonortheparties’choiceofarbitrationandrejectfilingofalawsuitbyanyofsuchpartiesinrespectofadisputearisingfromtheJointVentureAgreement.Second,thelanguageoftheLettershouldbeadjustedsoastoeliminateanysuggestionorimpressionthatAT&Tistheactualparty(inlieuofPudongLLC)thatmakestheinvestmentintheJointVentureCompany.Third,subjecttotheagreementamongtheParties,theLettershouldbeasexplicitaspossiblethattheguaranteebyAT&Tisageneralguarantee,andnotajointandseveralguarantee.UnderChineselaw,intheabsenceofajointandseveralguarantee,apartymaynotsuetheguarantoruntilandunlessithasexhausteditsremediesagainstthe