The Second Defendant (Jiangsu) contracted to build two ships for the Plaintiff, which paid a deposit of 10% of the total purchase price. The Second Defendant (Jiangsu) contracted with the First Defendant (CIESCO), which agreed to finance the construction of the two ships. The contract between the First Defendant and the Second Defendant provided that the parties would share the rights and obligations in the shipbuilding contract with the Plaintiff, but that the First Defendant would become owner of the ships if the Second Defendant did not make repayments to the First Defendant as agreed. The Second Defendant failed to make repayments as agreed, so the First Defendant sued, in separate proceedings in the Wuhan Maritime Court, which held that the First Defendant was entitled to ownership of the two ships. The First Defendant then sold the two ships to another buyer, which made performance of the obligation to deliver them to the Plaintiff impossible. The Plaintiff sued both Defendants for return of the deposit that it had paid in advance. The Court held that the Plaintiff was entitled to return of the deposit, plus interest, rejecting the Second Defendant’s argument that it was entitled to terminate the contract and retain the deposit because of breaches of the contract by the Plaintiff, as the Second Defendant had not provided any evidence that it had terminated the contract in the agreed manner. Despite the First Defendant’s protestations that it was not party to the shipbuilding contract, the Court also held that the First Defendant was jointly and severally liable for return of the deposit to the Plaintiff.