Ning Bo Free Trade Zone Jiayu Chunhua Venture Investment Partnership v. Wu

Background

Plaintiff Ning Bo Free Trade Zone Jiayu Chunhua Venture Investment Partnership, described in its complaint as "a limited partnership duly organized under the laws of People's Republic of China," filed suit in California state court on February 19, 2026. The complaint names two defendants: Ying Wu, identified as Chairman of the Board of Zhongjia Bochuang Information Technology Co., Ltd. — a company listed on the Shenzhen Stock Exchange — and Wenhong Wu, who according to the Notice of Removal had not been served and had not appeared.

Plaintiff alleged that defendant Ying Wu made fraudulent and/or negligent misrepresentations that induced plaintiff to agree to a merger between a company plaintiff owned and Zhongjia Bochuang. Plaintiff also asserted a claim for constructive trust, which the court noted is not an independent cause of action but rather a remedy for certain underlying wrongs.

Removal and Jurisdictional Framework

On June 18, 2026, defendant Ying Wu removed the case to federal district court. The basis for removal was 9 U.S.C. § 205, which grants federal courts subject-matter jurisdiction (authority to hear a case) over actions removed from state court when (1) an arbitration agreement "falls under" the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention"), and (2) the subject matter of the state court proceeding "relates to" that agreement.

Defendant contended that the merger agreements between plaintiff and Zhongjia Bochuang contained arbitration clauses covered by the Convention. Plaintiff moved to remand — send the case back — to state court, challenging federal jurisdiction.

Analysis of the Two Jurisdictional Elements

Element One: Does the Arbitration Clause Fall Under the Convention?

Under 9 U.S.C. § 202, an arbitration agreement arising out of a commercial legal relationship falls under the Convention unless the relationship is entirely between U.S. citizens and has no reasonable relation to a foreign state. The court found this element satisfied: the arbitration clauses arose out of a commercial relationship — the merger of two Chinese companies — that was plainly not entirely between U.S. citizens.

Element Two: Does the Subject Matter "Relate To" the Agreement?

The Ninth Circuit (the federal appeals court with jurisdiction over this district) has held that a state court proceeding "relates to" a qualifying arbitration agreement "whenever an arbitration agreement falling under the Convention could conceivably affect the outcome of the plaintiff's case," citing Infuturia Glob. Ltd. v. Sequus Pharms., Inc., 631 F.3d 1133, 1138 (9th Cir. 2011). This is an intentionally broad standard: federal jurisdiction exists "over just about any suit in which a defendant contends that an arbitration clause falling under the Convention provides a defense," so long as that contention is not "completely absurd or impossible."

The court found this element satisfied because arbitration clauses appeared in each of the two agreements defendant allegedly induced plaintiff to sign, and it was at least conceivable that defendant could succeed on his pending motion to compel arbitration.

Plaintiff's Counterarguments and the Court's Responses

Non-Signatory Argument

Plaintiff argued that defendant Ying Wu, who did not personally sign the merger agreements, could not invoke their arbitration clauses. Plaintiff characterized its claims as resting on defendant's "personal torts" — specifically "pre-contract fraud to induce a transaction" — rather than on contractual duties.

The court rejected this argument. Relying on Amisil Holdings Ltd. v. Clarium Cap. Mgmt., 622 F. Supp. 2d 825 (N.D. Cal. 2007), the court explained that agents of a signatory company can compel arbitration when: (1) the wrongful acts for which the agents are sued relate to their behavior or capacity as agents, and (2) the claims against the agents arise out of or relate to the contract containing the arbitration clause. The court found both conditions met here.

Sufficiency of the Notice of Removal

Plaintiff also argued that the Notice of Removal did not adequately articulate the grounds for removal under 9 U.S.C. § 205. The court found this argument contradicted by the record, citing specific paragraphs of the Notice that stated the action was removable under § 205 because the subject matter related to international arbitration agreements, that the merger agreements contained arbitration clauses, that a defendant need not be a party to the arbitration agreement to remove under § 205, and that defendant reserved the right to move to compel arbitration.

Disposition and Case Management Orders

The court denied plaintiff's motion to remand.

The court then set a briefing schedule on defendant's pending "Motion to Dismiss for Forum Non Conveniens, for Lack of Personal Jurisdiction, or to Compel Arbitration": plaintiff's opposition is due no later than September 18, 2026, and defendant's reply is due no later than thirty days after plaintiff files its opposition.

In the interest of judicial economy, the court stayed further briefing on defendant's separate "Motion to Dismiss Plaintiff's Complaint Pursuant to Fed. R. Civ. P. 12(b)(6), 9(b)" (the standard rule for dismissal for failure to state a claim, and the heightened pleading rule for fraud claims). That motion will be set, if appropriate, after the earlier-filed motion is resolved.