Robert Seiden has a tough job – pursuing Chinese companies on behalf of their U.S. shareholders who lost money. But a little-noticed court ruling in China a year ago may have made his daunting task a bit easier.
As The Wall Street Journal reports Monday, Mr. Seiden, the court-appointed receiver for several Chinese companies that have stonewalled U.S. shareholders and retreated to China, has reached a settlement with one company and says he’s close to a second. His approach has been to use his authority as receiver to take control of foreign entities that often hold the companies’ China-based operating assets, and then leveraging that control to coax the companies’ executives into addressing their American investors’ claims.
But also helping Mr. Seiden’s cause, he says, has been a June 2014 ruling by China’s Supreme People’s Court, the country’s highest court. That ruling recognized that a company’s foreign-appointed legal representative such as Mr. Seiden could exercise authority over a subsidiary of the company inside China.
The ruling sided with Sino-Environment Technology Group, a company with a liquidator appointed in Singapore, that was engaged in a dispute with Thumb Envinromental Technology Group, a Chinese subsidiary of Sino-Environment whose leadership the parent had replaced. The court rejected Thumb’s attempt to force Sino-Environment to make a capital contribution to the subsidiary, and it recognized that Sino-Environment’s liquidator had the authority to appoint the subsidiary’s board and legal representatives.
That situation is roughly analogous to Mr. Seiden’s when battling with Chinese companies that have ignored U.S. court judgments, and he said the ruling strengthens his hand in enforcing his authority in China, where foreign authorities have often faced resistance. He has cited the Supreme People’s Court ruling in some of his correspondence with Chinese executives, saying it supports his efforts.