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US Court Refused to Apply the Chosen Chinese Law due to Public Policy Concern
In Fu v. Fu, 2017 IL App (1st) 162958-U, a father brought a claim against his son to revoke an unconditional gift of $590,000 that he donated to his son for the later to pursue an EB-5 Visa to immigrate to the US. Both parties are Chinese citizens and the defendant is currently a resident of Massachusetts. The gift agreement was entered into in China, drafted in Chinese and contained a clause specifying PRC law should apply. The money was held by the International Bank of Chicago. The plaintiff brought the action in Illinois.
Under the US Law (Title 8 of the Code of Federal Regulations, § 204.6) a foreign national must invest at least $500,000 in the US to be considered for an EB-5 Visa, and must ‘show that he has invested his own capital obtained through lawful means.’ (Matter of Ho, 22 I&N Dec. 206, 210 (AAO 1998)) After a few denied EB-5 approval, the plaintiff sought to recover the money, by claiming that the defendant was estranged from his parents, including the donor and refused to support them, and the purpose of the gift contract was for the defendant to obtain an EB-5 Visa but the defendant failed to do so.
Under the Illinois law, a valid gift requires ‘delivery of the property by the donor to the donee, with the intent to pass the title to the donee absolutely and irrevocably, and the donor must relinquish all present and future dominion and power over the subject matter of the gift.” (Pocius v. Fleck, 13 Ill. 2d 420, 427 (1958)). Furthermore, the gift agreement between the parties also used the language that the gift was ‘unconditional’. However, the plaintiff argued that under the PRC law, gifts may be revocable after the transfer of ownership, if the donee ‘has the obligation to support the donor but does not fulfil it’, or a donnee ‘does not fulfill the obligations as stipulated in the gift agreement.’ (PRC Contract Law, Art 192)
The Appellate Court of Illinois First Judicial District affirmed the judgment of the circuit court of Cook County that the gift agreement was irrevocable. The plaintiff failed to successfully prove Chinese law. And even if the plaintiff properly pled PRC law, such interpretation was ‘oppressive, immoral, and impolitic’. Under the US law on EB-5 Visa application, the foreign citizen must prove ownership of those funds to be eligible for an EB-5 Visa. The signed agreement stating the gift ‘unconditional’ would help the defendant to prove he legally owned the funds to acquire an EB-5 visa. If the governing PRC law indeed allows a gift to be given unconditionally and revoked after delivery and acceptance, as argued by the plaintiff, it would facilitate a deception on the US Government and is against public policy.
The full judgment can be found here.
NIKI continued
Written by Lukas Schmidt, Research Fellow at the Center for Transnational Commercial Dispute Resolution (TCDR) of the EBS Law School, Wiesbaden, Germany
The Spanish airline Vueling Airlines S.A. is still intending to acquire large parts of the NIKI business. Vueling is part of the European aviation group IAG, which also includes British Airways, Iberia, Aer Lingus and LEVEL. The provisional insolvency administrator of NIKI Luftfahrt GmbH, therefore, will continue to drive forward the sales process. Vueling has provided interim financing of up to € 16.5 million to finance the NIKI business until the closing of the purchase agreement. This funding is only sufficient for a few weeks. Read more
NIKI, COMI, Air Berlin and Art. 5 EIR recast
Written by Lukas Schmidt, Research Fellow at the Center for Transnational Commercial Dispute Resolution (TCDR) of the EBS Law School, Wiesbaden, Germany.
The Regional Court of Berlin has, on the basis of the immediate appeal against the order of the provisional insolvency administration on the assets of NIKI Luftfahrt GmbH (under Austrian law), repealed the decision of the District Court of Charlottenburg (see here) as it finds that international jurisdiction lies with Austrian and not German courts. In its decision, the regional court has dealt with the definition of international jurisdiction, which is based on the debtor’s centre of main interests (‘COMI’). According to the provisions of the European Insolvency Regulation, that is the place where the debtor usually conducts the administration of its interests and that is ascertainable by third parties. Read more
News
Dutch Journal of PIL (NIPR) – issue 2023/2
The latest issue of the Dutch Journal on Private International Law (NIPR) has been published.
NIPR 2023 issue 2
Editorial
C.G. van der Plas / p. 197
Articles
K.C. Henckel, Issues of conflicting laws – a closer look at the EU’s approach to artificial intelligence / p. 199-226
Abstract
While newly emerging technologies, such as Artificial intelligence (AI), have a huge potential for improving our daily lives, they also possess the ability to cause harm. As part of its AI approach, the European Union has proposed several legislative acts aiming to accommodate and ensure the trustworthiness of AI. This article discusses the potential private international law impact of these legislative proposals. In doing so, it – inter alia – addresses how the newly proposed legislative acts interact with existing private international law instruments, such as the Rome II Regulation. In addition, it questions whether there is a need for specific rules on the private international law of AI.
Out Now: Interim Measures in Cross-Border Civil and Commercial Disputes
A new volume by Deyan Draguiev on Interim Measures in Cross-Border Civil and Commercial Disputes, based on his PhD thesis supervised by Peter Mankowski, has just been published with Springer.
The blurb reads as follows:
The book focusses on applying a holistic overview of interim measures and associated procedures in the context of cross-border private law (civil and commercial) disputes that are the subject of international litigation and arbitration proceedings. It reexamines key features of said problem and outlines novel findings on interim relief in the area of international dispute resolution. The book analyses the rules of EU law (EU law regulations such as the Regulation Brussels Ibis and the rest of the Brussels regime) as the single system of cross-border jurisdictional rules, as well as the rules of international arbitration (both commercial and investment). In the process, it conducts a complete mapping of interim measures problems and explores the criteria for granting relief under national laws. For this purpose, it includes an extensive comparative law overview of many jurisdictions in Europe, Asia, Africa, the Americas, etc., to reveal common standards for granting interim relief.
Interim relief is a salient problem in dispute resolution, and serious international disputes usually require requests for such measures. This makes a more complete understanding all the more important. For scholars and practitioners alike, there are various ways to seek relief; precisely this complexity calls for a more complex and multilayered analysis, which does not (as is usually the case) adopt the perspective of either litigation or arbitration, but instead weighs the pros and cons and considers the viability and reliability of the different options, viewed from all angles.
Law Matters—Less Than We Thought, by Holger Spamann & Daniel M. Klerman
Holger Spamann and Daniel Klerman recently conducted a most interesting experiment on judicial behavior in the context of conflict of laws, the results of which have been pre-published by the Journal of Law, Economics, and Organization. They have kindly provided the following summary for the readers of this blog (who may access the full paper here):
Modern American choice of law has been much criticized for giving judges too much discretion. In particular, Brilmayer and others predict that the use of open-ended standards, such as the Restatement Second’s “most significant relationship” test, will enable judges to decide disputes in biased ways, including a bias in favor of plaintiffs. In contrast, critics argue that the more rules-based approach – such as the lex loci delicti principle that prevailed in America before the 1960s and that, in large part, continues to apply in much of the world – would be more predictable and less subject to bias. We designed an experiment involving US federal judges to test whether the modern American, standards-based approach is, in fact, less predictable and more subject to bias. We find that the rules-based approach may constrain more than the modern standards-based approach, although even under seemingly clear rules judicial decisions were less predictable than we expected. Judges under neither the lex loci rule nor that “most significant relationship” standard exhibited a bias towards the more sympathetic party, although we did detect some pro-plaintiff bias under both the rule and the standard. Somewhat surprisingly, we also found that judges who were supposed to apply the modern “most significant relationship” standard tended to decide according to lex loci delicti rule.