The legality and effect of VIE has always been a controversial issue in both the judicial and legal service circles. In attorney’s opinion letters on red-chip internet companies publicly traded overseas, the legal effect of VIE and risks associated with its enforceability in China is often disclosed emphatically. 

Recently, Beijing-based partner Qing Zhengke instituted an arbitration on behalf of a renowned Japanese e-commerce business against Chinese shareholders and senior officers who violated the VIE protocol signed and taking effect in China and requested the respondents perform obligations set out in the VIE protocol. Due to the complexity and controversy of the case, the arbitration court postponed arbitrating the case six times. 

Before the arbitration was initiated, attorney Qing gave his opinion on the completeness of the VIE structure; in the arbitration process, he further proved his points, winning commendation from the clientEventually, an arbitration award was issued, recognizing the legality of the VIE and order the respondents to fulfill the obligations of the contract. Three years had passed since the arbitration was first brought up. 

The award affirmed the legality and enforceability of the VIE and therefore is of great significance.