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Schlumberger Ltd, the world''s leading oilfield services company supplying technology, information solutions and integrated project management, is involved in a legal dispute with EGlobal (Shenzhen) Co, Ltd, which is a local high tech company in China.
The global top 500 company Schlumberger Ltd began to do business in China in early 1980s. But now it is in trouble with EGlobal (Shenzhen), whose business is focused on the rapidly expanding market of Biometric Security Systems. Since 2004, EGlobal (Shenzhen) has been trying to get back its 12 million yuan (about US$1.7 million) from Schlumberger (Shenzhen), the sum that was decided by China International Economic and Trade Arbitration Commission (CIETAC) on March 9, 2004.
EGlobal (Shenzhen) signed an exclusive and no-fraud agreement regarding the Shenyang Social Security cards project with Schlumberger Asia Headquarter and Schlumberger (Shenzhen) Co, Ltd in 2002. One year later, EGlobal applied to CIETAC for arbitration of the violation by Schlumberger.
An award was decided by CIETAC on March 9, 2004, which arbitrated that the defendant Schlumberger (Shenzhen) had to pay EGlobal about 12 million yuan ($1.7 million) in total, and this decision was final and effective from the date of the award. In the meantime, Beijing Second Intermediate People’s Court rejected Schlumberger‘s application of revocation, which was also a final decision.
In December 2004, the Shenzhen Intermediate People''s Court fined Schlumberger (Shenzhen) 2.9 million yuan ($426,000), and Schlumberger (Shenzhen) stopped doing business in Shenzhen. On April 13, 2006, this case was moved up to Guangdong Provincial Higher People''s Court, and the enforcement was executed by Puning People''s Court.
In fact, Huaxin Smartex (Shenzhen) Ltd, founded in 2004, openly declared that the company was former Schlumberger (Shenzhen) Ltd, which means all the original business was moved to the new company. Zhang Xi, the legal representative of Huaxin Smartex (Shenzhen) Ltd, was also the general manager of Schlumberger (Shenzhen) Ltd before.
Based on the above facts, in July 2009, EGlobal (Shenzhen) Co Ltd appealed to Puning People''s Court about the person that should implement the award as Mr. Zhang Xi, legal representative of Huaxin Smartex (Shenzhen) and Sanjin Technology (Shenzhen) Ltd; Mr. Li Ping, former legal representative of Schlumberger (Shenzhen) and current legal representative of Schlumberger (Beijing). EGlobal asked the two people to be responsible for additional payment obligations of this arbitration with joint and several liabilities.
On July 22, 2009, Puning People''s Court of Guangdong Province placed this case on file, and the hearing, also launched by the Puning People''s Court, is likely to finally close the arbitration, which has lasted nearly eight years.
"The divestiture of the smart card business in 2004 was a global decision unrelated to any particular activity in any given country," Chris Chi, the chief legal officer of Schlumberger (Beijing) and who has been following the case for a long time, told China Daily by email.
China''s reform and opening up policy has allowed many top companies around the world to invest in China, but it has also been accompanied by many problems. The related authorities should strengthen its supervision and the overseas companies should respect the local laws to avoid illegal flight of capital, business transfer or other related acts.
"China''s national legislature should improve corporate laws gradually to protect China''s SMEs so they don''t get taken advantage of by international enterprises through illegal means," said Song Limin, a representative of EGlobal (Shenzhen). "Most of China''s SMEs are the disadvantaged group when they do business with international enterprises, but the situation now is improving day by day."