Public Announcement of Judicial Opinion on First Financial Market Test Case in China

On February 22, 2023, Shanghai Financial Court publicly announced the first test case of financial market cases, namely the judicial opinion of the test case of default disposal of central counterparty clearing business. It is the first test case heard under the “Shanghai Financial Court Regulations on the Financial Market Case Testing Mechanism (for Trial Implementation).The case was initiated by a joint application of Shanghai Clearing House, Bank of Communications Co., Ltd., Shanghai Pudong Development Bank Co., Ltd., Industrial Bank Co., Ltd. and Societe Generale (China) Limited. The case is also the first test case of central counterparty financial cases globally. The judicial opinion clarifies the principles of legal application in disputes involving financial market infrastructures and determines the focus of the relevant disputes, and determines that the relevant default disposal rules of Shanghai Clearing House meet the relevant conditions. The judicial opinion is legally binding, and the specific default disposal acts are not obviously unreasonable. The judicial opinion has the legal effect on members of Shanghai Clearing House.

The outcome of the case is of great significance to the improvement of China’s financial market infrastructure rules and has attracted the attention of relevant international and domestic institutions. Our attorneys, Zhu Liting and Yuan Xiaodong, participated in the case throughout the whole process, and the legal documents submitted in all aspects and the professional opinions expressed in the trial were adopted by Shanghai Financial Court.