Top Shanghai court outlines BRI work

A foreign business operator's popularity in its home country is a factor in determining whether another operator in the China market constitutes unfair competition, officials from the Shanghai High People's Court said recently.

The Shanghai Huangpu District People's Court ruled in July last year that a local company that had operated two Thai-style massage stores in downtown Shanghai since November 2016 had infringed upon a trademark held by an enterprise from Thailand that had run spa massage stores in that country for more than a decade.

The high court said it was the first case concluded in the city that used such a rule. It was one of eight typical cases concerned with better serving the construction of the Belt and Road Initiative over the past three years that the Shanghai High People's Court released recently.

Shanghai Jingshan Health Management, which operated the two stores in Shanghai, used the same characters for "Let's Relax" in the same font on its store signboards, indoor decorations, and its articles as those on the signboards of the stores run by the Thai company, Siam Wellness Group.

The Shanghai company also falsely claimed at its stores that it was an international brand from Thailand with years of spa service.

"Through the verdict we aimed to protect the business reputations accumulated for years by operators from countries involved in the BRI, and stopped local entrepreneurs from gaining profits through unlawful means," said Wang Shan, head of the maritime tribunal of the Shanghai High People's Court. "Such legal efforts will also contribute to BRI construction and provide a powerful judicial guarantee for a better domestic business environment."

Increasing economic and cultural exchanges between China and Thailand, among other countries involved in the BRI, since the initiative was put forward in 2013 saw Thailand become one of the favorite overseas travel destinations for Chinese residents, with Thai-style spa massage a popular leisure option.

Siam Wellness used "Let's Relax "as the spa store name, and it was one of the top 10 Thai spa massage brands among Chinese tourists multiple times between 2010 and 2018, according to the Tourism Authority of Thailand.

The Thai company has, since 2016, also established a presence in several Chinese cities, including Kunming in Yunnan province, Qingdao in Shandong province and Tianjin, and promoted its stores and services through the WeChat account "LetsRelaxSPA".

The local company's behavior showed obvious subjective malice in misleading consumers to believe the stores were run by the Thai enterprise, Wang said.

The other typical cases covered the fields of arbitration in foreign-related commercial disputes, the ascertainment of foreign laws, the use of video links to help identify items abroad subject to quality disputes, and recognizing and executing the decisions of foreign courts.

"The court's efforts to uphold openness and tolerance, respect international rules and market disciplines, protect market entities from home and abroad equally, and its prudent handling of new types of disputes in frontier areas showed the support from the judicial sector for higher-level opening-up," said Mao Ronghua, vice-president of the Shanghai High People's Court.

Together with the Foreign Law Ascertainment Center at East China University of Political Science and Law, the court established China's first operating rules for ascertaining foreign laws in 2014. Foreign law ascertainment has played a role in more than 20 commercial disputes, with judges looking into laws and judicial precedents in the United States, Japan, Switzerland, Mexico and Australia, among others.

In one of the typical cases, in which two companies sued each other in a dispute over a sales contract for equipment that broke down and caught fire during a road construction project in Mozambique, the court used a transnational video link to identify the problem with the equipment and determine which company was to be held responsible, a breakthrough method of fact finding, according to the high court.

Shanghai Zhaorui Machinery Equipment bought crushing accessories from Shanghai Ri Teng Industrial Control Equipment for the project, but the machine broke down and caught fire in 2018. Ri Teng sued Zhaorui for the remaining payment, while Zhaorui sued Ri Teng for its problematic products and the related construction delay.

During a hearing at Shanghai Jing'an District People's Court, judges asked technicians to operate the machine involved in the dispute and another in good condition at the construction site in Mozambique for the purpose of comparison. The court held each company partially responsible.