Facts:

TanTech (a Hong Kong–incorporated tech company) joined forces with Huali Ventures (a Mainland China–based investment firm) to form a joint venture named SinoTan, focusing on digital payment solutions. The JV agreement stipulates that major decisions require unanimous board approval, while day-to-day operations remain delegated to a management team based in Shenzhen. After achieving initial market success, SinoTan received regulatory inquiries about data protection and cross-border fund transfers. In the midst of these concerns, TanTech planned to license SinoTan’s software to an overseas partner without consulting Huali Ventures. Huali objected, arguing that the proposed deal violated an exclusivity clause in the JV agreement. Tensions escalated when TanTech hinted at blocking dividend distributions until the license was approved, prompting Huali to consider legal action in both Hong Kong and the Mainland. Each side claims the other has breached the JV’s dispute resolution clause by failing to engage in good-faith negotiations, and both parties question whether Hong Kong arbitration tribunals will enforce any final award in the Mainland.

Question:

Discuss and analyze the key legal issues arising from the dispute between TanTech and Huali Ventures, focusing on:

1. The enforceability of the exclusivity clause and dividend distribution rights in the cross-border joint venture context;

2. The potential challenges of initiating legal proceedings in Hong Kong versus Mainland China; and

3. How to structure a dispute resolution mechanism in future JV agreements to protect both parties’ interests and ensure enforceability of awards in both jurisdictions.