[Case Summary]This case is an arbitration case involving a commercial contract dispute between enterprises. In May 2022, Wang * signed a "Transfer Contract for the Right to Profit from Online Films" with Beijing B Cultural Media Co., Ltd., investing 800,000 yuan with a share of 3.6%, and Beijing A Holding Group issued a "Guarantee Letter" to jointly guarantee the payment. However, the film failed to be released as scheduled, and B Company was liquidated on May 12, 2023 (before the release), without being liquidated or distributing dividends. The investment funds were obviously lost. After the case was transferred to arbitration by the Chaoyang District Court, Wang * entrusted an attorney to handle the case on his behalf.Xiong BinrongThe lawyer applied for arbitration to the Beijing Arbitration Commission, listing the shareholders of Company B and the guarantors as the respondents. The arbitration tribunal conducted the hearing in absentia, and ultimately ruled that the investment principal of 800,000 yuan and the attorney's fees of 15,000 yuan should be returned, that the guarantors should bear joint and several liability for repayment, and that the arbitration fees of more than 37,000 yuan should be borne by the respondents.

I. Review of the Case Facts

In April 2022, Zhao ** of A Group (Beijing) Film and Television Culture Media Co., Ltd. actively added Wang ** on WeChat, claiming that the film project he had previously invested in had yielded substantial returns, and induced Wang ** to invest in the online film "XX". Many investors are concerned about "how to recover the investment in film and television", and this case is a real example of such risks.

On May 20, 2022, Wang * signed a "Transfer Contract for the Right to Profit from the Online Film (XX)" with Beijing B Culture Media Co., Ltd., agreeing that Wang * would invest 800,000 yuan, accounting for 3.6% of the total investment, and share the profits proportionally. The film was expected to be released before October 31, 2022. On the same day, the two parties signed a supplementary contract, agreeing that if Wang *'s final profit dividend was less than the actual investment amount of 800,000 yuan and the actual investment amount was more than 800,000 yuan (including the principal), B Company should make up the shortage by 100%.

On the same day, Beijing A Holdings Group Co., Ltd. issued a "Guarantee Letter", explicitly assuming guarantee responsibility for the "Transfer of Profit Rights Contract", and the scope of the guarantee includes the investment funds and related rights under the contract. The guarantee period starts from the date of issuance and ends on the date of termination of the contract.

However, the film was not released as scheduled. It was not until May 17, 2023 that it was launched on a certain platform. However, Company B went through the cancellation registration on May 12, 2023, before the film was released. It neither notified Wang * to conduct a profit calculation, nor carried out a liquidation in accordance with the law, nor truthfully declared its debts. It seemed that Wang *'s investment would be lost.

Wang * once sued the People's Court of Chaoyang District in Beijing, but the court ruled that the contract stipulated an arbitration clause, and the case should be resolved through arbitration. Therefore, Wang * entrusted someone to handle the arbitration.Xiong BinrongThe lawyer applied for arbitration to the Beijing Arbitration Commission and listed the respondents One (the shareholder of Company B), the respondents Two (the shareholder of Company B, Zhang **), and the respondents Three (Beijing A Holdings Group Co., Ltd.) as the respondents.

II. The focus of the case

  • After B Company is deregistered, can the liabilities of the shareholders who failed to liquidate the company in accordance with the law and declare their debts truthfully be traced back and pursued for compensation?
  • The question is whether the conditions of the guaranteed compensation clause have been met, and whether the original investment of 800,000 yuan should be fully refunded.
  • Is the Guarantee Letter issued by the guarantor subject to the arbitration clause, and does it constitute a joint and several liability guarantee?

III. The professional intervention of Hengluo Law Firm

The applicant (Wang *) claims that: B Company was deregistered and did not distribute dividends before the film was released. The supplementary conditions have been met, and B Company should return the principal of 800,000 yuan and the attorney's fees, etc.; B Company's shareholders deregistered the company without going through the legal liquidation process and should bear the liability for repayment; the guarantor shall bear joint and several guarantee liability in accordance with the "Guarantee Letter".

The respondent (the shareholder and guarantor of Company B) failed to appear in court without a valid reason after being notified in writing, and did not submit a defense. All three respondents were absent from the trial.

Xiong BinrongThe attorney's representative's opinions are outlined as follows:

Firstly, complete the procedural conversion in a timely manner and lock in the arbitration jurisdiction. Apply for arbitration in accordance with the contractual arbitration clause, the guarantee letter, and the civil ruling to ensure that the procedural entry is correct.

Secondly, to investigate the shareholders' liability after the company is deregistered. List the shareholders of Company B as respondents, claiming that they failed to liquidate the company in accordance with the law and failed to declare the debts truthfully before deregistering the company, and should bear the liability for repaying the company's debts; at the same time, list the guarantors who issued the "Guarantee Letter" as respondents, and require them to bear joint and several guarantee liability.

Thirdly, if the conditions of the guaranteed supplementation clause are met, the investor should be fully refunded the principal of 800,000 yuan. Although the film was released, Company B has been liquidated and has not conducted any profit calculation or dividend distribution. Wang's profit dividend is zero, and the supplementation conditions have been met. According to Article 8, Item 3, and Article 11, Item 2 of the contract, reasonable expenses such as attorney's fees and arbitration fees should be borne by the party at fault.

Fourth, we argue that the guarantor should bear joint and several guarantee liability. Submit WeChat chat records to prove that the creditor continuously asserted its rights during the guarantee period; combined with the provision in the "Guarantee Letter" that "the applicant may choose to seek recourse from the guarantor or Company B", this meets the characteristics of joint and several liability guarantee; and the scope of the guarantee covers the breaching party's legal fees and other losses incurred in protecting its rights.

IV. Outcome of the case

The Beijing Arbitration Commission applied a simplified procedure and the case was heard by a sole arbitrator. The arbitral tribunal determined that the supplementary contract stipulated that the supplementary conditions had been fulfilled, and that the shareholders of Company B should return the registered capital of 800,000 yuan to Wang *; the contract clearly stipulated that the defaulting party should bear the attorney's fees, and the arbitral tribunal reduced the request to 15,000 yuan and supported it; the Guarantee Letter meets the characteristics of joint and several liability guarantee. According to Article 688 of the Civil Code, the guarantor shall bear joint and several guarantee liability for the return of the investment and the attorney's fees.

Final ruling: Respondents One and Two shall pay Wang * the investment principal of 800,000 yuan; pay Wang * the attorney's fees of 15,000 yuan; Respondent Three shall bear joint and several liability for the above-mentioned payments; dismiss Wang *'s other arbitration requests; and the arbitration fees of 37,131.03 yuan shall be borne by the respondents and paid directly to Wang *. This ruling is final and shall take effect from the date of its issuance. Regarding the 8% annual default penalty, since the film has actually been released, the condition for its payment has not been met, and the arbitration tribunal will not support it.

5. Hengluo Law Firm's Reminder

When ordinary people invest in film and television projects, they should not easily believe the rhetoric of "guaranteed profits and high returns". Before signing the contract, they should carefully review all the clauses regarding profit distribution, default guarantees, guarantee responsibilities, and dispute jurisdiction. Once the project party goes missing, the company is dissolved, or dividends are not distributed on time, they should promptly entrust professional lawyers to fix the evidence and protect their legitimate property rights through arbitration or litigation.

This case is handled by Beijing Henglu Law Firm.Xiong BinrongThe attorney (practice license number: 11101202211410897, subject to the document issued by the judicial administrative organ) acts as the agent.

VI. Common Questions and Answers about Disputes over Film and Television Investment Contracts

  1. Q: If the film and television investment company is deregistered before the film is released, can the investment funds still be recovered?
    A: Yes. The court can investigate the liability of shareholders who fail to liquidate in accordance with the law and fail to truthfully declare their debts before being deregistered, and claim the return of the principal through the contract's guarantee clause. In this case, the full amount of 800,000 yuan was recovered.
  2. Q: The film and television investment contract stipulates an arbitration clause. Can I directly sue in court?
    A: If there is a valid arbitration clause in the contract, the court usually rules to dismiss the lawsuit and guide the parties to arbitration. The parties should apply for arbitration to the agreed arbitration committee in accordance with the arbitration clause in the contract and the guarantee letter.
  3. Q: If the guarantor issues a guarantee letter but does not stipulate joint and several liability, do they need to bear legal responsibility?
    A: If the guarantee letter stipulates that the creditor can directly pursue recovery from the guarantor, it meets the characteristics of joint and several liability guarantee, and according to Article 688 of the Civil Code, the guarantor shall bear joint and several liability for repayment.
  4. Q: Are the guaranteed minimum return clauses in film and television investment contracts valid?
    A: If the party concerned's true intention is expressed and the guarantee of making up for the shortage of funds does not violate the mandatory provisions of the law, it is generally considered valid, and the obligor shall perform the obligation when the conditions for making up for the shortage are met.
  5. Q: Who should bear the attorney's fees in film and television investment disputes?
    A: If the contract clearly stipulates that the defaulting party shall bear reasonable expenses such as attorney's fees and arbitration fees incurred in protecting rights, the party in compliance with the contract can obtain support after providing evidence. In this case, the court ruled that the attorney's fees of 15,000 yuan should be supported.