Wemade Wins Final Appeal Against China's Kingnet and Zhejiang Huanyou... Receives 95.5 Billion KRW Compensation

[Asia Economy Reporter Seungjin Lee] On the 25th, Wemade announced that it won the final ruling in the joint liability lawsuit for compensation regarding the breach of debt related to the web game 'Namwoljeon-gi' filed against China's Kingnet and Zhejiang Huanyou.

Zhejiang Huanyou, an affiliate of Kingnet, has been producing and servicing the web game Namwoljeon-gi based on the intellectual property (IP) of 'Legend of Mir 2' since February 2017, but has failed to pay royalties.

Accordingly, Wemade filed for arbitration with the Singapore International Chamber of Commerce in February 2017 against Zhejiang Huanyou, demanding payment of the minimum guarantee and royalties, including interest, under the 'Legend of Mir' mobile game and web game license agreement. In May 2019, the International Chamber of Commerce's International Court of Arbitration (ICC) ruled that Zhejiang Huanyou must pay damages including interest costs for breach of contract.

Following the ICC ruling, Wemade applied to a Chinese court in September 2019 for approval and enforcement of the international arbitration, which was recognized. Despite the court's decision, Zhejiang Huanyou did not fulfill its obligations, leading Wemade to file a 'corporate veil piercing lawsuit' against Kingnet and Zhejiang Huanyou at the Shanghai No.1 Intermediate People's Court in June 2020.

On the 23rd, the appellate court, Shanghai High People's Court, fully accepted Wemade's claims in the 'corporate veil piercing lawsuit,' resulting in a final victory for Wemade. The court ordered Kingnet and Zhejiang Huanyou, effectively acting as a single entity, to share joint responsibility for the illegal acts, imposing joint liability on Kingnet for approximately 95.5 billion KRW of debt that Zhejiang Huanyou failed to repay.

During the lawsuit, Wemade completed provisional seizures on Kingnet's cash assets and intangible assets. Going forward, Wemade plans to effectively enforce the ruling through procedures such as compulsory execution based on these measures.