Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies [Abstract]

Commitments and Contingencies

21. Commitments and Contingencies

(i) Capital Commitments

As of December 31, 2019 and March 31, 2020, the Company had the following contracted capital commitments:

	December 31,		March 31,
	2019		2020
For construction of buildings	$	3,397,961	$	3,341,855
Capital injection to CBAK Power, CBAK Trading and CBAK Energy (Note 1)		83,900,000		82,565,000
	$	87,297,961	$	85,906,855

(ii) Litigation

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. Other than the legal proceeding set forth below, the Company is currently not aware of any such legal proceedings or claims that the Company believe will have an adverse effect on our business, financial condition or operating results.

On July 7, 2016, Shenzhen Huijie Purification System Engineering Co., Ltd ("Shenzhen Huijie"), one of the Company's contractors, filed a lawsuit against CBAK Power in the Peoples' Court of Zhuanghe City, Dalian, (the "Court of Zhuanghe") for the failure to pay pursuant to the terms of the contract and entrusted part of the project of the contract to a third party without their prior consent. The plaintiff sought a total amount of $1,190,807 (RMB 8,430,792), including construction costs of $0.9 million (RMB6.1 million, which the Company already accrued for at June 30, 2016), interest of $28,249 (RMB0.2 million) and compensation of $0.3 million (RMB1.9 million). On September 7, 2016, upon the request of Shenzhen Huijie for property preservation, the Court of Zhuanghe froze CBAK Power's bank deposits totaling $1,190,807 (RMB 8,430,792) for a period of one year. On September 1, 2017, upon the request of Shenzhen Huijie, the Court of Zhuanghe froze the bank deposits for another one year until August 31, 2018. The Court further froze the bank deposits for another one year until August 27, 2019 upon the request of Shenzhen Huijie on August 27, 2018. On August 27, 2019, the Court froze the bank deposits for another year until August 27, 2020, upon the request of Shenzhen Huijie.

On June 30, 2017, according to the trial of first instance, the Court of Zhuanghe ruled that CBAK Power should pay the remaining contract amount of RMB6,135,860 (approximately $0.9 million) claimed by Shenzhen Huijie as well as other expenses incurred including deferred interest, discounted charge on bills payable, litigation fee and property preservation fee totaled $0.1 million, the Company has accrued for these amounts as of December 31, 2017. On July 24, 2017, CBAK Power filed an appellate petition to the Intermediate Peoples' Court of Dalian ("Court of Dalian)" to defend the adjudication dated on June 30, 2017. On November 17, 2017, the Court of Dalian rescinded the original judgement and remanded the case to the Court of Zhuanghe for retrial. The Court of Zhuanghe did a retrial and requested an appraisal to be performed by a third-party appraisal institution on the construction cost incurred and completed by Shenzhen Huijie on the subject project. On November 8, 2018, the Company received from the Court of Zhuanghe the construction-cost-appraisal report which determined that the construction cost incurred and completed by Shenzhen Huijie for the subject project to be $1,289,548 (RMB9,129,868). On May 20, 2019, the Court of Zhuanghe entered a judgment that Shenzhen Huijie should pay back to CBAK Power $250,616 (RMB 1,774,337) (the amount CBAK Power paid in excess of the construction cost appraised by the appraisal institution) and the interest incurred since April 2, 2019. Shenzhen Huijie filed an appellate petition to the Court of Dalian. On June 28, 2020, the Court of Dalian entered the final judgment that Shenzhen Huijie should pay back to CBAK Power $235,475 (RMB 1,667,146) (the amount CBAK Power paid in excess of the construction cost appraised by the appraisal institution) and the interest incurred since April 2, 2019, and reimburse the litigation fees totaling $29,564 (RMB 209,312.00) that CBAK Power has paid. As of March 31, 2020, the Company has already paid RMB 10,962,140 (approximately $1,548,347) and accrued $0.9 million (RMB 6.1 million) for the construction cost incurred and completed by Shenzhen Huijie.

In May 2017, CBAK Power filed a lawsuit in the Court of Zhuanghe against Pingxiang Anyuan Tourism Bus Manufacturing Co., Ltd., ("Anyuan Bus") one of CBAK Power's customers, for failure to pay pursuant to the terms of the sales contract. CBAK Power sought a total amount of RMB18,279,858 ($2,581,937), including goods amount of RMB17,428,000 ($2,461,617) and interest of RMB851,858 ($120,321). On December 19, 2017, the Court of Zhuanghe determined that Anyuan Bus should pay the goods amount of RMB17,428,000 ($2,461,617) and the interest until the goods amount was paid off, and a litigation fee of RMB131,480 ($18,571). Anyuan Bus did not appeal and as a result, the judgment is currently in the enforcement phase. On June 29, 2018, the Company filed application petition with the Court of Zhuanghe for enforcement of the judgement against all of AnyuanBus' shareholders, including Jiangxi Zhixin Automobile Co., Ltd, Anyuan Bus Manufacturing Co., Ltd, Anyuan Coal Group Co., Ltd, Qian Ronghua, Qian Bo and Li Junfu. On October 22, 2018, the Court of Zhuanghe issued a judgment supporting the Company's petition that all the AnyuanBus' shareholders should be liable to pay the Company the debt as confirmed under the trial. On November 9, 2018, all the shareholders appealed against the judgment after receiving the notice from the Court. On March 29, 2019, the Company received judgment from the Court of Zhuanghe that all these six shareholders cannot be added as judgment debtors. On April 11, 2019, the Company have filed appellate petition to the Intermediate Peoples' Court of Dalian challenging the judgment from the Court of Zhuanghe. On October 9, 2019, the Intermediate Peoples' Court of Dalian dismissed the appeal by the Company and affirmed the original judgment.

As of December 31, 2019 and March 31, 2020, the Company had made a full provision against the receivable from Anyuan Bus of RMB 17,428,000 ($2,461,617).

On July 25, 2019, CBAK Power received notice from Shenzhen Court of International Arbitration that Shenzhen Xinjiatuo Automobile Technology Co., Ltd filed arbitration against the Company for the failure to pay pursuant to the terms of the contract. The plaintiff sought a total amount of $0.16 million (RMB1,112,269), including equipment cost of $0.14 million (RMB976,000) and interest of $0.02 million (RMB136,269). As of March 31, 2020, the Company have accrued the equipment cost of $0.14 million (RMB976,000).

On August 9, 2019, upon the request of Shenzhen Xinjiatuo Automobile Technology Co., Ltd, Shenzhen Court of International Arbitration froze CBAK Power's bank deposits totaling $0.16 million (RMB1,117,269), including equipment cost $0.14 million (RMB976,000), interest $0.02 million (RMB136,269) and litigation fees of $706 (RMB5,000) for a period of one year to August 2020. The Company believes that the plaintiff's claims are without merit and are vigorously defending themselves in this proceeding.

On August 7, 2019, CBAK Power filed counter claim arbitration against Shenzhen Xinjiatuo Automobile Technology Co., Ltd for return of the prepayment due to the unqualified equipment, and sought a total amount of $0.28 million (RMB1,986,400), including return of prepayment of $0.2 million (RMB1,440,000), liquidated damages of $67,798 (RMB480,000) and litigation fees of $9,384 (RMB66,440).

In November 2019, CBAK Suzhou received notice from Court of Suzhou city that Suzhou Industrial Park Security Service Co., Ltd ("Suzhou Security") filed a lawsuit against CBAK Suzhou for the failure to pay pursuant to the terms of the sales contract. Suzhou Security sought a total amount of $19,734 (RMB139,713), including services expenses amount of $19,620 (RMB138,908) and interest of $114 (RMB805). Upon the request of Suzhou Security for property preservation, the Court of Suzhou froze CBAK Suzhou's bank deposits totaling $0.02 million (RMB 150,000) for a period of one year. As of March 31, 2020, $31 (RMB218) was frozen by bank and the Company had accrued the service cost of $19,734 (RMB139,713).

In December, 2019, CBAK Power received notice from Court of Zhuanghe that Dalian Construction Electrical Installation Engineering Co., Ltd. ("Dalian Construction") filed a lawsuit against CBAK Power for the failure to pay pursuant to the terms of the construction contract. Dalian Construction sought a total amount of $97,612 (RMB691,086) and interest $1,827 (RMB12,934). As of December 31, 2019, the Company has accrued the construction cost of $97,612 (RMB691,086). Upon the request of Dalian Construction for property preservation, the Court of Zhuanghe ordered to freeze CBAK Power's bank deposits totaling $99,439 (RMB704,020) for a period of one year to December 2020. As of December 31, 2019, $93,397 (RMB661,240) was frozen by bank. In January 2020, CBAK Power and Dalian Construction have come to a settlement, and the bank deposit was then released.

In February 2020, CBAK Power received notice from Court of Zhuanghe that Dongguan Shanshan Battery Material Co., Ltd ("Dongguan Shanshan") filed lawsuit against CBAK Power for the failure to pay pursuant to the terms of the purchase contract. Dongguan Shanshan sought a total amount of $0.6 million (RMB 4,434,209), which have already been accrued for as of March 31, 2020. Upon the request of Dongguan Shanshan for property preservation, the Court of Zhuanghe ordered freeze CBAK Power's bank deposits totaling $0.6 million (RMB4,434,209) for a period of one year to December 17, 2020. As of March 31, 2020, $32,979 (RMB233,490) was frozen by bank.

On March 20, 2020, CBAK Power received notice from Court of Nanpi County, Hebei Province that Cangzhou Huibang Engineering Manufacturing Co., Ltd ("Cangzhou Huibang") filed lawsuit against CBAK Power for the failure to pay pursuant to the terms of the purchase contract. Cangzhou Huibang sought a total amount of $0.3 million (RMB2,029,594), including materials purchase cost of $0.3 million (RMB 1,932,947), and interest of $13,651 (RMB96,647). As of March 31, 2020, the Company has accrued materials purchase cost of $0.3 million (RMB1,932,947).Upon the request of Cangzhou Huibang for property preservation, the Court of Nanpi ordered to freeze CBAK Power's bank deposits totaling $0.3 million (RMB 2,029,594) for a period of one year to March 3, 2020. As of March 31, 2020, $2,622 (RMB18,562) was frozen by bank.

In June 2020, CBAK Suzhou received notice from Court of Suzhou Industrial Park that Ligao (Shandong) New Energy Technology Co., Ltd ("Ligao") filed a lawsuit against CBAK Suzhou for the failure to pay pursuant to the terms of the sales contract. Ligao sought a total amount of $10,961 (RMB77,599), including contract amount of $10,365 (RMB73,380) and interest of $596 (RMB4,219). As of March 31, 2020, the Company had accrued the material purchase cost of $10,961 (RMB77,599).

In June 2020, CBAK Suzhou received notice from Court of Yushui District, Xinyu City that Jiangxi Ganfeng Battery Technology Co., Ltd ("Ganfeng Battery") filed a lawsuit against CBAK Suzhou for the failure to pay pursuant to the terms of the sales contract. Ganfeng Battery sought a total amount of $ 106,750 (RMB755,780), including contract amount of $103,534 (RMB733,009) and interest of $3,216 (RMB22,771). Upon the request of Ganfeng Battery for property preservation, the Court of Yushui froze CBAK Suzhou's bank deposits totaling $108,758 (RMB769,994) for a period of one year. As of March 31, 2020, nil was frozen by bank and the Company had accrued the material purchase cost of $103,534 (RMB 733,009).

In June 2020, CBAK Suzhou received notice from Court of Suzhou Industrial Park that Suzhou Jihongkai Machine Equipment Co., Ltd ("Jihongkai") filed a lawsuit against CBAK Suzhou for the failure to pay pursuant to the terms of the sales contract. Jihongkai sought contract amount of $24,820 (RMB175,722) and interest as accrued until settlement. As of March 31, 2020, the Company had accrued the material purchase cost of $24,820 (RMB175,722).

In early September, 2019, several employees of CBAK Suzhou files arbitration with Suzhou Industrial Park Labor Disputes Arbitration Commission against CBAK Suzhou for failure to pay their salaries in time. The employees seek for a payment including salaries of $90,165 (RMB638,359) and compensation of $76,696 (RMB543,000), totaling $0.17 million (RMB 1,181,359). In addition, upon the request of the employees for property preservation, bank deposit of $0.17 million (RMB 1,181,359) was frozen by the court of Suzhou for a period of one year. On September 5, 2019, CBAK Suzhou and the employees reached an agreement that CBAK Suzhou will pay these salaries and compensation. In February 2020, the Company fully repaid the salaries and compensation. As of March 31, 2020, $6 (RMB43) was frozen by bank.