Capital Iron & Steel-Japan Electric Electronics Co. v. Chen Jingke

Capital Iron & Steel-Japan Electric Electronics Company (Capital Iron) (plaintiff) hired Chen Jingke (defendant). Chen signed several contracts with Capital Iron. Capital Iron had two key rights under the contracts: (1) Capital Iron could recover any training expenses incurred if Chen left or was absent during the employment term and (2) if Chen was absent without authorized leave, the employment was automatically terminated, and Chen had to compensate Capital Iron’s damages with three months’ average wages. Capital Iron sent Chen to Japan for approximately a year of training, loaning him money for the trip. Upon his return, Chen went on leave to visit family and then failed to return to work despite receiving no authorization for further leave. Instead, Chen’s father sent Capital Iron a false medical letter requesting additional leave so that Chen could recover from a disease. Capital Iron sent a representative to the home, but Chen was not there. Capital Iron then sent Chen a letter stating that he had to return or face discipline. Chen failed to return. Capital Iron terminated the employment contracts and filed a complaint with the Beijing Labor Arbitration Committee, seeking the cost of training, the loan, and economic damages, all of which the committee granted. Chen appealed, seeking reinstatement and back pay; Chen also claimed that the Japanese government had underwritten the training costs. Thus, according to Chen, he owed no damages. The appellate court rejected Chen’s arguments, affirmed the judgment, and ordered Chen to pay the amounts owed. Chen appealed.