On the morning of April 2, the Shanghai Financial Court (SFC) held a press conference to release the Shanghai Financial Court Judicial Work Report (2024) (hereinafter referred to as the “Report”) and the Top 10 Typical Cases of 2024. The press conference marked the fifth installment in the court’s series on “Innovative Practices in Modernizing Financial Adjudication.” Gu Quan, Party Leadership Group Member and Vice President of the SFC, and Xu Xiaoxiao, Deputy Chief Judge of the Appeal Review and Adjudication Supervision Division and Director of the Research Office, presented the relevant details and took questions from the press.
In recent years, the SFC has anchored itself to the goal of building a world-class “professional, international, and digital” financial court, fully leveraging the exemplary and market-oriented role of judicial adjudication. It has established adjudication rules through high-profile cases, contributed to social governance through trial practices, and continuously enhanced its core competitiveness in financial justice.
The Report is divided into three main sections:
The first section summarizes the cases handled by the SFC in 2024 from three perspectives: case volume, case types, and industry distribution. In 2024, the court accepted a total of 7,310 financial cases, with the total disputed amount reaching 215.726 billion yuan. The types of cases were varied but relatively concentrated, with financial loan contract disputes overtaking securities misrepresentation disputes as the most frequently filed category. The court handled 196 cases with foreign, Hong Kong, Macao, and Taiwan elements, marking a 136.14% year-on-year increase. The parties involved came from more than 10 countries and regions, including the U.S., U.K., and Japan, reflecting Shanghai’s growing prominence as a preferred venue for resolving international financial disputes. The court also handled 1,064 arbitration enforcement cases, demonstrating its increasing support for financial arbitration.
The second section analyzes issues reflected in financial cases in six areas: banking, securities, insurance, enforcement, bankruptcy, and cases with foreign, Hong Kong, Macao, and Taiwan elements, and provides targeted recommendations.
Banking sector cases accounted for 40.69% of the total, reflecting concentrated financing disputes in real estate, frequent controversies over the validity of corporate external guarantees, and prominent issues in individual loan business. In one case, the SFC ruled that the clause in a standard contract, which provided for “penalty interest calculated by applying two successive markups to the original loan rate,” essentially imposed a double markup on the base loan rate, and that it was not binding on the borrower since the financial institution failed to fulfill its duty of notification and explanation regarding this unusual clause, thereby protecting the legal rights and interests of financial consumers.
Securities sector cases accounted for 23.01% of the total, reflecting issues such as fraudulent issuance by listed companies, associated entities aiding listed companies in committing fraud, financing risks arising from “debt disguised as equity,” and recurring violations in private equity institutions’ fundraising, investment, management, and exit processes. For example, in a landmark case adjudicated by the SFC - the first nationwide ruling holding a private fund manager liable for unfair distribution - the manager distributed proceeds based on the chronological order of investors’ subscriptions; the court deemed this practice a violation of the principle of fairness and ordered the manager to compensate investors for losses, contributing to a sound legal environment in the private investment sector.
Insurance sector cases accounted for 11.03% of the total, reflecting emerging challenges in internet insurance and platform-purchased employer’s liability insurance in the context of the digital and platform economy, and calling for further regulatory improvements. In a case concerning platform-purchased employer’s liability insurance, the SFC clarified the standard for fulfilling duty of notification and explanation under the platform insurance model. It also issued judicial recommendations to the Shanghai Financial Regulatory Bureau on relevant issues, facilitating the supervision of employer’s liability insurance.
For enforcement cases, a total of 22.318 billion yuan was successfully recovered through enforcement proceedings. Notably, there has been an increase in novel types of financial enforcement cases, with real estate-related enforcement cases accounting for a significant proportion. The SFC proactively promoted the disposal of bulk real estate assets through government-court coordination mechanisms. It successfully enforced a financial loan contract dispute involving nearly five billion yuan in principal and interest, wherein a key urban redevelopment project was pledged as collateral. This outcome satisfied the financial creditor's rights while concurrently ensuring the protection of public welfare interests in the context of urban redevelopment..
For financial bankruptcy cases, the SFC accepted 14 cases involving bankruptcy petitions filed by financial institutions or compulsory liquidation of financial institutions, including the nation’s first series of bankruptcy liquidation cases concerning an insurance group company. The court proactively utilized bankruptcy procedures to promote the optimization of financial markets while maximizing the protection of creditors’ rights to equitable repayment.
The diverse types of cases with foreign, Hong Kong, Macao, and Taiwan elements reflect the growing activity in cross-border capital flows and financial services, mirroring Shanghai’s enhanced competitiveness and global influence as an international financial center. The SFC has strengthened its foreign law ascertainment mechanisms and given full play to the guiding role of rules and values in handling cross-border cases. For instance, in a cross-border guarantee dispute, the court ruled that the offshore Hong Kong-listed company’s external guarantee remained valid despite the absence of public disclosure of such guarantee arrangement, thereby stabilizing expectations regarding the validity of cross-border guarantees. The ruling helps listed companies in standardizing cross-border M&A management and enhances risk control of “offshore guarantee for onshore loan” business in domestic commercial banks.
The third section elaborates on how the SFC, as China’s first sepcialized financial court, continues to exemplify its pioneering role by focusing on rule formulation and institutional innovation to enhance the core competitiveness of financial judiciary. It outlines initiatives and achievements in four major areas: 1. Serving and supporting the implementation of national financial strategies in alignment with Chinese modernization; 2. Adhering to a people-centered approach to safeguard the public’s financial well-being; 3. Fulfilling the mission of China’s first financial court by creating “Chinese rules” and “Shanghai practices” in financial adjudication; 4. Embracing the digital transformation era to advance the modernization of financial governance services.
The SFC also released the Top Ten Typical Cases for 2024 to further leverage the exemplary guidance and market-orienting role of typical cases. These cases address high-profile legal issues that are of concern to financial markets, including whether QDII/RQDII subscriptions to exchangeable bonds are subject to judicial review under Hong Kong’s Money Lenders Ordinance, the determination of transactional causation in a securities misrepresentation dispute involving an employee stock ownership plan, judicial review to affirmation of the contractual fund manager’s rights, liability assessment for a trustee’s breach of fair distribution obligations, judicial determination of a bill holder’s recourse against prior endorsers after the completion of the issuer’s bankruptcy reorganization proceedings, and standards for fulfilling notification and explanation obligations in a platform insurance model. Several of these cases have been selected for inclusion in the One Hundred Excellent Judgments of Courts Nationwide, the Typical Cases of Cross-Execution by the Supreme People’s Court, and the Typical Cases of Financial Trials in the Yangtze River Delta Region.
The Typical Cases released this time demonstrate three distinctive features. First, they actively exemplify the guiding role of judicial adjudication rules. For instance, in China’s first securities misrepresentation case involving an employee stock ownership plan, the SFC made an accurate determination regarding whether transactional causation existed between institutional investors’ investment decisions and the securities misrepresentation.Second, they effectively promote the standardized and healthy development of emerging financial sectors. As illustrated by an insurance contract dispute case between a network technology company and an insurance company, the SFC clarified the standards for insurers to fulfill the notification and explicit explanation obligations in platform insurance purchases, thereby helping the insurance industry better adapt to the digital era. Third, they fully reflect the efficacy of financial justice in social governance. In one case involving judicial determination of a bill holder’s recourse against prior endorsers after the completion of the issuer’s bankruptcy reorganization proceedings, the adjudication rules established in the case substantively promoted efficient resolution of serial bill disputes and prevented financial risks. In the financial enforcement case concerning a large hotel, the SFC implemented the comprehensive governance framework for difficult enforcement cases, which features “overarching governance of Party committees, coordination by political and legal affairs committees, supervision by people’s congresses, government support, primary judicial responsibility of courts, departmental collaboration, and social participation,” achieving positive social outcomes through coordinated enforcement across three levels of courts.
“In 2025, the SFC will continue to follow the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly implement Xi Jinping Thought on the Rule of Law, as well as the policy decisions and deployments of the CPC Central Committee and Shanghai Municipal Committee and the work directives of the superior courts. It will continue to aim at the goal of building a world-class ‘professional, international, and digital’ financial court, base itself on the financial adjudication function, keep playing a leading and exemplary role as the first specialized financial court in the country, enhance the competitiveness and influence of Shanghai as an international financial center, and provide financial judicial safeguards for building China into a financial powerhouse and Shanghai into an international financial center,” said Gu Quan.
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