Posted by on Jan 11, 2017 in Direct Investment from China, Dispute Resolution |

An India-based pharmaceutical company, Dishman Pharmaceuticals and Chemicals, Inc. (“Dishman”), won a significant victory on December 29, 2016, when the Appellate Division of the New Jersey Superior Court held that Dishman could not be sued in state court even though one of its subsidiaries, Dishman USA, Inc., is located in New Jersey.

The litigation arose from the failed sale of a Chinese manufacturing facility owned by a Dishman subsidiary in China to FDASmart, Inc., a New York-based company. The Memorandum of Understanding (“MOU”) between Dishman and FDASmart provided that FDASmart would be paid certain consulting fees in connection with the transaction. It also stated that the deal was to governed by the laws of India, a non-disclosure agreement was to be signed in India, and fees were to be paid with applicable Indian taxes. When the deal fell through, FDASmart filed suit against Dishman and Dishman USA in the Law Division of the New Jersey Superior Court, alleging Dishman breached the MOU by failing to pay consulting fees to FDASmart.

After the Law Division initially found that it had general jurisdiction over the dispute due to the presence of Dishman’s subsidiary in New Jersey, the Appellate Division reversed, holding that Dishman lacked “continuous and systematic contacts” with New Jersey to justify it being “haled” into its courts. The Appellate Division refused to assert jurisdiction based solely on the technicality of ownership of the subsidiary by the parent company and held that FDASmart needed to demonstrate the “dominance” of Dishman USA by Dishman via other factors such as “common ownership, financial dependency, interference with a subsidiary’s selection of personnel, disregard of corporate formalities, and control over a subsidiary’s marketing and operational policies.” Since the evidence in the record showed Dishman USA operated independently of and was not financially dependent on Dishman, the Appellate Division determined that the New Jersey courts lacked general jurisdiction over Dishman and dismissed it as a defendant.

While this decision is generally favorable to foreign pharmaceutical companies with subsidiaries in New Jersey, it is a fact-specific outcome that may not be repeated in situations where parent-subsidiary operations are intertwined and subsidiaries are dependent on parent companies for decision-making and financial matters. Careful analysis and restructuring may be required to operate within the confines of the court’s decision and avoid imputation of liabilities upon the parent company.

Hill Wallack LLP represents over 20 companies in the life sciences sector, including biotechnology, therapeutic, diagnostic, pharmaceutical, biopharmaceutical, biomedical and biosynthesis companies. The firm assists these clients in connection with intellectual property, technology transfer, university spin-outs, venture capital and finance, employment, regulatory and mergers and acquisition issues.

This article is for informational purposes only and does not constitute legal advice or a legal opinion.

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Posted by on May 31, 2016 in Direct Investment from China |

根据有关报道,中国2015年在美国的直接投资年达到150亿美元。根据2016年目前的情况,这个数字可能在2016年被刷新。美中关系全国委员会(National Committee on U.S.-China Relations)和Rhodium Group 4月12日最新发布的信息称,中国2016在美国的直接投资预计将达到300亿美元。

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新泽西连锁经营法“Franchise Practices Act”对连锁经营合同的适用

Posted by on Nov 17, 2015 in Direct Investment from China |


很多个人和公司都想加盟连锁经营店,例如McDonald’s, Subway, Panda Express, Kung Fu Tea等等。新闻中也时常介绍我们华人加盟这些连锁经营店不失为谋生创业的一个好途径。最近,我有机会代理和帮助几个客户加盟不同的连锁品牌,希望在此和广大读者分享新泽西Franchise Practices Act保护加盟者的主要内容,以及对连锁经营合同的影响。










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Hill Wallack Attorneys Attend International Business Opportunities Conference

Posted by on Nov 4, 2015 in Direct Investment from China, Import-Export Issues, International Trade |

On October 13, 2015, Henry Chou and Kun Zhao, attorneys in Hill Wallack LLP’s Princeton office, attended the International Business Opportunities Conference (IBOC) at The College of New Jersey.  The event was organized by the MIDJersey Center for Economic Development (MIDCED), a non-profit organization dedicated to fostering and accelerating growth in central New Jersey.  The IBOC focused on gathering international trade experts, business leaders and state officials to explore the fundamentals of exporting regional business products and services to strategic global markets, and Messrs. Chou and Zhao discussed their experiences in international transactions with the participants.  The program agenda is available at MIDCED’s website.

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Federal Appeals Court Reverses CFIUS Veto of Chinese Investment in U.S. Wind Farms

Posted by on Aug 7, 2014 in Direct Investment from China, Renewable Energy and Sustainability |

By: Henry T. Chou, Esq.

Ralls Corp – a Chinese-owned renewable energy company – has won a significant victory over the Committee on Foreign Investment in the U.S. (CFIUS), the interagency government body responsible for reviewing national security concerns implicated by “transactions that could result in control of a U.S. business by a foreign person.”

CFIUS, which is a part of the executive branch and is directly supervised by the President, has broad power to veto all or parts of international transactions involving the acquisition of U.S. businesses by foreign entities. In 2012, President Obama, relying on CFIUS’ advice, signed an order blocking Ralls Corp from acquiring wind farms in Oregon, citing a threat to national security based on the proximity of the wind farms to a U.S. Navy weapons training facility. The order stated that “there is credible evidence” indicating that Ralls Corp and its owners “might take action that threatens to impair the national security of the United States,” even though it provided no actual evidence of such threats.

Ralls Corp filed suit, claiming that its due process rights had been violated because President Obama’ order offered no “evidence or explanation” for its decision and that Ralls Corp had not been given an opportunity to respond to the administration’s concerns. The U.S. Court of Appeals for the District of Columbia has now ruled in favor of Ralls Corp, finding that due process requires foreign companies to be given access to unclassified evidence used in the decision-making process, as well an opportunity to rebut that evidence.

Historically, the courts have granted broad discretion to the executive branch concerning national security matters. Using its broad discretion, CFIUS has heavily scrutinized business transactions involving Chinese companies in recent years, including a prolonged review of Shuanghui International’s bid to acquire Smithfield Foods in 2013. The Smithfield transaction, which CFIUS ultimately approved after a long delay, prompted concerns that political considerations, rather than national security concerns, was the driver of CFIUS decisions. The circus involving the Smithfield transaction, including Congressional hearings on whether Chinese control of pork supplies posed a threat to national security, sparked complaints of discrimination by many.

Until now, foreign companies seemed to have little recourse against decisions by CFIUS. Moving forward, the Ralls Corp decision should have the effect of eliminating political and other arbitrary considerations from CFIUS’ decision-making process. The decision is likely to stimulate Chinese investment in more U.S. industries, including hi-tech sectors that Chinese companies have previously avoided due to CFIUS concerns.

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Smithfield Shareholders Approve Shuanghui Takeover

Posted by on Sep 24, 2013 in Direct Investment from China |

By: Henry T. Chou, Esq.

On Tuesday, September 24, 2013, the shareholders of the U.S. pork giant Smithfield Foods voted by a margin of 96% to 4% to approve the acquisition of the company by Shuanghui International, a Chinese meat processing conglomerate.  The $7.1 billion deal, which includes $4.5 in cash and an assumption of $2.6 of Smithfield debt, represents the largest acquisition of a U.S. company by a Chinese company in history.

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