Aquapoint LP v Xiaohu Fan

The Privy Council just expanded the meaning of ‘just and equitable’ and here’s why it matters.  

The Privy Council’s decision in Aquapoint LP v Xiaohu Fan is important for anyone involved in shareholder disputes as well as investment partnerships, funds, or offshore structures.   

Aquapoint LP was a Cayman Islands exempted limited partnership established to hold shares in a biotech company listed on Nasdaq. Dr Xiaohu Fan, a major limited partner, had been assured  well before the biotech’s IPO (initial public offering/float) that he would eventually receive 10% of the listed company’s shares. Dr Fan’s case was that he relied on that assurance to enter into the partnership.   

After the IPO’s lock-in period had ended, Dr Fan asked to withdraw from the partnership and take his share entitlement. The general partner refused. The general partner relied on the strict text of a 2017 Agreement, which gave it broad discretion and did not require it to transfer shares to departing partners. From a purely contractual perspective, the general partner believed it was simply following the rules.  

Dr Fan saw it very differently. He believed he was being denied something he had been promised. With no workable route inside the contract to resolve the dispute, he turned to the court and sought to wind up the partnership on “just and equitable” grounds.  

The Cayman Grand Court agreed with Dr Fan.  The Court of Appeal also upheld that result. The Privy Council confirmed that winding up was indeed justified. It held that even when parties have a detailed written agreement (including “entire agreement” and “no reliance” clauses), the court can still step in on “just and equitable” grounds if enforcing the contract strictly would be unfair. It also held that Dr Fan had no practical alternative remedy: a contract claim would likely fail, and a derivative action would not give him the personal shares he was entitled to.  

What matters is the reality of the relationship, including promises made, expectations created, and how the parties behaved. In short, even sophisticated commercial agreements do not prevent the court from intervening on fairness grounds.  

The dispute in Aquapoint escalated because each side became entrenched in their own view of what was “fair” versus what was “written”. A mediated settlement would likely have avoided years of costly litigation and the drastic remedy of winding up the partnership. Mediation could have enabled the parties to agree a practical timetable for transferring or realising the shares, preserved confidentiality, and protected commercial relationships. It would have delivered flexibility and speed that court proceedings cannot offer.