SAN MATEO, Calif.--(BUSINESS WIRE)--Last week, a U.S. federal court judge in Northern California confirmed an arbitration ruling in favor of 1955 Capital against China Fortune Land Development (“CFLD”, 600340.SS) and its subsidiary Global Industrial Investment Ltd. (GIIL). The judge upheld an arbitrator’s ruling that CFLD and GIIL’s commitment to invest $200 million into 1955 Capital’s funds constitutes a valid and ongoing contractual obligation. CFLD’s attempts to obtain a return of its initial deposit of $80 million were rejected, and the funds are secure and continue to be available to 1955 Capital for investment. The arbitrator also awarded the venture capital firm more than $9.3 million in attorneys’ fees and costs as the prevailing party, which GIIL has not paid to date.
"Judicial confirmation of the arbitrator’s carefully reasoned 140-page award is an important victory, but was exactly what I think everyone expected," said Robert Varian of Orrick Herrington & Sutcliffe LLP, who represents the funds. "The award that the court confirmed rejected a myriad of unfounded attacks that had been made in an attempt to invalidate the underlying contracts. The validity of the investment agreements, and the limited partners’ obligations under them, were reaffirmed."
The judge upheld the arbitrator’s ruling – that CFLD and GIIL, Chinese investors in 1955 Capital’s funds, had breached their contracts with 1955 Capital and acted in bad faith. The arbitrator rejected a series of false accusations and meritless legal claims that were asserted by CFLD and GIIL in a failed attempt to evade their obligations and invalidate the investment contracts. He confirmed that the contracts between 1955 Capital and GIIL are binding on both GIIL and on CFLD, GIIL’s corporate parent.
“We will continue as active partners with our portfolio companies, which are achieving great things, and aim to make more promising investments,” said Andrew Chung. “Our portfolio companies have progressed well, and despite all of CFLD’s efforts to frustrate our operations, we expect the funds’ performance to be strong. Because we called a significant portion of investor capital into escrow upfront, we have ample funds with which to move forward. We remain steadfast toward our original goal of inventing a new global future with 1955 Capital, and we are grateful to everyone who continues to stand by us.”
1955 Capital has asserted counterclaims against CFLD and GIIL in a second arbitration for, among other things, CFLD’s continued bad faith conduct in attempting to thwart the purpose of the Funds, for violation of CFLD’s confidentiality obligations by disclosing confidential information related to the Funds, and for damages arising from CFLD’s interference with 1955 Capital’s relationships with existing and prospective portfolio companies. Claims made by GIIL in this second arbitration related to 1955’s investment mandate are baseless and refuted by CFLD’s own public shareholder notices and communications with 1955.
“Recent accusations made publicly by CFLD after they lost the initial arbitration are categorically false. It is a renewed attempt to escape their contractual obligations by either repeating very narrow claims that were already litigated or continuing to fabricate new ones. The key dispute was resolved with the victory from the first arbitration, and we expect to prevail on any future claims,” said Andrew Chung.
The arbitration ruling affirming the validity of the investment contracts, and the ongoing contractual obligations that CFLD and GIIL have under them, has been converted to a federal court judgment.
More information is available at www.1955.capital/litigationfaqs.
About 1955 Capital
1955 Capital was founded by Andrew Chung to invest in companies that can address the developing world's most pressing challenges related to energy, healthcare, food, agriculture, education and sustainable manufacturing. With over a decade of experience investing in these sectors at leading global firms like Khosla Ventures and Lightspeed Ventures, Chung has experience in identifying technologies with significant impact potential in developing countries and supporting entrepreneurs in developing mutually productive partnerships. The firm is based in San Mateo, California.