Resear On The Enforcement Recognition Of Valuation Adjustment Mechanism

The Supreme People's Court made a final judgment on the case of Haifu Company v.Shiheng Company,which was called the first case that concerns the gambling agreement.Throughout this case,the focus of the dispute has always been on the effectiveness of the gambling agreement signed between Haifu Company,Shiheng Company and its shareholder Diya Corporation.The introduction briefly analyzes the first case of gambling agreement and the focus of the dispute.It sorts out whether the gambling agreement violates the principle of public order and good customs,whether the cash compensation clause can be interpretated as liquidated damage clause,whether the gambling agreement is actually a loan contract,and whether the gambling contract between the investor and the target company is legally effective or not.The first part discusses whether the gambling clause has the nature of liquidated damages.The essence of the cash compensation clause is to adjust deviation of the equity evaluation and the composition of clause does not fit with the requirements of the liability clause.The second part reaches a conclusion that the gambling agreement does not breach the principle of public order and good customes from three perspectives: the relationship between the gambling agreement and gambling contract;the signing of the gambling agreement fits with the principle of equitable compensation and the creation of gambling agreement has its practical reasonableness.The third part analyzes whether the gambling agreement is actually a legal form that covers up illegal purpose.And this part points out that the gambling agreement is actually an investment agreement,not illegal borrowing.The fourth part focuses on the effectiveness of the gambling between the investment institution and the target company,and points out that the gambling between the two does not necessarily infringe upon the interests of the company's shareholders and its creditors.