August, 2014 - Chinese Performance Guarantees

Enforcement of Chinese performance guarantees in China – new regulations and common pitfalls The expansion of China’s economy has resulted in a significant increase in fixtures with Chinese entities, many of which are substantial concerns operating and registered in China. Often, such charters are concluded with special purpose companies, which tend not to hold substantial assets and which may be domiciled in foreign jurisdictions - commonly Hong Kong, the BVI and Singapore. The practice therefore developed for a large parent corporation to guarantee the performance of its chartering entity. However enforcement of these guarantees can be problematic.