Hong Kong Court Confirms Arbitration Agreement’s Absolute Exclusivity, Dismisses BVI Receiver’s Disclosure Application

The Hong Kong Court of First Instance recently handed down a judgment in a dispute between the Gerald Parties and China National Gold Group (Hong Kong) Limited (CNG) concerning the sale and purchase of shares in, and shareholders’ agreement relating to, Soremi Investments Ltd. (SIL) ([2026] HKCFI 1250). The Court dismissed an application by a receiver appointed in the British Virgin Islands (BVI) seeking recognition in Hong Kong and an order for disclosure of documents, further underscoring the absolute exclusivity of the arbitration agreement. Previously, the BVI court had appointed a receiver to take control of SIL’s shares and confirmed that the Gerald Parties were the sole owners of all shares in SIL. Thereafter, the receiver applied to the Hong Kong Court for recognition of his appointment and sought an order requiring SIL’ s former law firm, Herbert Smith Freehills, to produce relevant arbitration documents. While the Hong Kong Court accepted that there was a “sufficient connection” between the BVI receivership order and the appointing court, it held that there was no need to exercise its discretion to grant recognition. In particular, the Court noted that the receiver’s true purpose was to circumvent the dispute resolution mechanism agreed between SIL and HSF, namely referral to HKIAC arbitration, which would be contrary to Hong Kong’s public policy of supporting arbitration. The Court also held, pursuant to section 20 of the Arbitration Ordinance, that the document disclosure dispute should be referred to arbitration, and stayed the court proceedings.

Hangzhou Intermediate Court Issues First Investigation Order to Assist Commercial Arbitration, Advancing Evidence-Gathering Support Mechanism

Following the formal implementation of the revised Arbitration Law of the People’s Republic of China on March 1, 2026, the legal foundation for arbitration institutions to request court assistance in evidence collection has been further clarified. Recently, the Hangzhou Intermediate People’s Court, relying on the Work Guidelines jointly formulated with the Hangzhou Arbitration Commission, issued its first investigation order in support of commercial arbitration, marking a key step forward in the practical implementation of the arbitration evidence-gathering support mechanism. In its judicial review of arbitration cases, the Court observed that, due to objective constraints, some cases face difficulties in obtaining evidence, which hinders fact-finding. This not only affects the fairness and credibility of arbitral awards but may also give rise to subsequent disputes such as applications to set aside awards. To address this, the Court and the arbitration institution have established a normalized and standardized cooperation mechanism, enabling arbitral tribunals to rely on judicial assistance to obtain critical evidence that cannot be otherwise secured.

The first investigation order arose from a dispute over a livestreaming cooperation agreement accepted by the Hangzhou Arbitration Commission. In that case, an agency sought distribution of livestreaming revenues attributable to a contracted streamer in accordance with the agreement. However, the relevant revenue data was controlled by the streamer or the livestreaming platform, which would only respond to requests from judicial or administrative authorities, making it inaccessible to the arbitration institution directly. The arbitral tribunal considered such evidence crucial to determining the facts and, accordingly, the Hangzhou Arbitration Commission applied to the Hangzhou Intermediate Court for assistance. Upon review, the Court found that the request was specific and well-defined, that the evidence could not be obtained independently, and that it was directly relevant to the adjudication of the case, thus meeting the conditions for judicial assistance. The Court therefore issued the investigation order in accordance with the law and served it electronically on the same day. This development demonstrates that judicial support for arbitration is extending from post-award review to procedural assistance during the arbitration process, helping to enhance fact-finding capabilities, improve the quality of arbitral awards, and strengthen the credibility of arbitration, while also contributing to the optimization of a market-oriented, law-based, and internationalized business environment.

International Chamber of Commerce Approves Revised Arbitration Rules, Effective 1 June 2026

The International Chamber of Commerce (ICC) has recently approved a revised version of its Arbitration Rules, which will apply to all arbitration requests submitted on or after 1 June 2026. Building on the 2021 edition, the revisions aim to further enhance efficiency, clarity, and practical usability, while responding to the evolving needs of global arbitration practice. While preserving the flexibility and procedural integrity that characterize ICC arbitration, the revised rules introduce several new procedures and refine existing provisions, with a focus on streamlining proceedings, strengthening case management, and continuing to safeguard parties’ autonomy in appointing arbitrators and tailoring procedural arrangements within the framework of the rules. Claudia Salomon, President of the ICC International Court of Arbitration, noted that the revisions reflect the ICC’s commitment to providing fair, efficient, and reliable dispute resolution mechanisms for businesses, states, and state entities worldwide.

To date, the ICC International Court of Arbitration has registered more than 30,000 cases under its Arbitration Rules. The present revision was led by the Court’s Presidency and Secretariat, with broad input from the ICC Commission on Arbitration and ADR, members of the ICC Court, and dispute resolution service management bodies. The approval of the new rules comes amid sustained global demand for ICC arbitration: in 2025, a total of 881 cases were filed under the rules, with the total amount in dispute reaching USD 299 billion, ranging from less than USD 2,500 to as much as USD 31 billion. A global arbitration survey conducted in the same year also ranked the ICC Arbitration Rules as the most preferred set of arbitration rules worldwide and across major regions among more than 60 institutional rules. The ICC has indicated that it will publish the full text of the 2026 Arbitration Rules and further practical guidance prior to their entry into force, to assist users and practitioners in familiarizing themselves with the new procedural requirements.

Chongqing First Intermediate People’s Court: Arbitration Clause Extends to Shareholders Assuming Company Liabilities upon Deregistration

Legal Basis:

"Arbitration Law of the People’s Republic of China"

Article 16

An arbitration agreement shall include arbitral clauses stipulated in the contract and other written agreements which request arbitration to be made prior to or following the occurrence of a dispute.

An arbitration agreement shall include the following:

(1) the expression of an application for arbitration;

(2) items for arbitration;

(3) the chosen arbitration commission..

Case Description：

On 5 June 2020, a district administrative committee in Chongqing entered into an Investment Agreement and a Supplemental Agreement with Caimaobang Technology Co., Ltd. and Chongqing Chenjiayuan Technology Co., Ltd. (“Chenjiayuan”). The agreements provided that Chenjiayuan would establish a project company in a designated area and, subject to meeting tax and performance conditions, would be eligible for industrial support funds. The Investment Agreement further stipulated that if Chenjiayuan were dissolved, deregistered, or relocated within 15 years from the date of execution, it must return all government subsidies and compensate for the loss of use of such funds. Disputes arising from or in connection with the agreement were to be submitted to the Chongqing Arbitration Commission.

On 24 July 2025, the administrative committee initiated arbitration against Chenjiayuan and six respondents, including Caimaobang, a Shanghai-based network technology company, and several individuals, on the grounds that Chenjiayuan had unilaterally deregistered without repaying the subsidies. The committee sought joint liability for repayment of RMB 7.79 million, compensation for fund occupation losses, and arbitration costs. It argued that Chenjiayuan had been deregistered despite outstanding obligations, and that its shareholders had failed to conduct lawful liquidation, instead declaring in the liquidation report that the company had no debts and that all liabilities had been settled, while undertaking that any remaining liabilities would be borne jointly by all shareholders.Therefore, the shareholders shall bear joint and several liability for the company’s debts.

One of the shareholders, Yang, subsequently applied to the Chongqing First Intermediate People’s Court (“Court”) for a declaration that the arbitration clause in the Investment Agreement was not binding on him. He argued that the arbitration agreement was void ab initio and that the Chongqing Arbitration Commission had no jurisdiction over the matters of “shareholder liability” and “company liquidation disputes” in question. Mr Yang contended that he was merely a former shareholder and former legal representative of the Chenjiayuan, and he was not a signatory and had never consented to arbitration. He relied on the principle of privity of contract, asserting that the arbitration agreement could only bind the original contracting parties, and could not be extended to apply to non-signatories; consequently, the Chongqing Arbitration Commission had no authority to join him as a respondent.

The Court further found that Chenjiayuan was established on 20 November 2018 with registered capital of RMB 5 million, and that Yang was one of its registered shareholders. On 12 September 2024, the shareholders resolved to dissolve the company and form a liquidation group. The liquidation report stated that the company had no outstanding debts, that all claims and liabilities had been settled, the company’s remaining assets have been distributed in proportion to the shareholders’ capital contributions and that any residual legal issues would be borne jointly by all shareholders. The company was deregistered on 22 May 2025.

Court's View:

The key issue was whether the arbitration clause in the Investment Agreement was binding on Yang.

First, the Court held that the arbitration clause satisfied the formal and substantive requirements under Article 16 of the PRC Arbitration Law: it contained a clear intention to arbitrate, specified the matters subject to arbitration, and designated an arbitration institution, and the matter in dispute falls within the scope of arbitrable matters. No invalidating circumstances under Article 17 were present, rendering the clause valid.

Second, although Yang was not a signatory, the Court found that, as one of the registered shareholders, his statement in the liquidation report—undertaking joint liability for any residual obligations—constituted more than a mere factual declaration. Rather, it amounted to a unilateral commitment to assume the company’s rights and obligations in a general capacity, including potential liabilities under the Investment Agreement.

Second, although Yang was not a signatory, the Court found that his statement in the liquidation report—undertaking joint liability for any residual obligations—constituted more than a mere factual declaration. Rather, it amounted to a unilateral commitment to assume the company’s rights and obligations in a general capacity, including potential liabilities under the Investment Agreement.

Third, by reference to Article 9 of the SPC Interpretation on the Arbitration Law, which provides that arbitration agreements generally bind assignees in cases of a total or partial assignment of claims and liabilities, the Court reasoned that although this case did not involve a typical assignment, the legal effect was analogous. Where shareholders undertake to assume a company’s liabilities upon deregistration, the arbitration clause may correspondingly extend to such shareholders to preserve consistency between substantive obligations and procedural arrangements.

Finally, the Court emphasized that the parties had expressly agreed to arbitration before the Chongqing Arbitration Commission. The subsequent deregistration of the company merely altered the subject of performance and it did not automatically render the existing dispute resolution clause invalid, nor should it alter the parties' choice of dispute resolution mechanism at the time of contract formation. Extending the arbitration clause to shareholders assuming liability was consistent with the parties’ reasonable expectations and protected the legitimate reliance interests of the counterparty.

Finally, the Court emphasized that the parties had expressly agreed to arbitration before the Chongqing Arbitration Commission. The subsequent deregistration of the company merely altered the subject of performance and did not invalidate the agreed dispute resolution mechanism. Extending the arbitration clause to shareholders assuming liability was consistent with the parties’ reasonable expectations and protected the legitimate reliance interests of the counterparty.

Accordingly, the Court held that the arbitration clause was binding on Yang and dismissed his application.

Hong Kong Court of First Instance:

China ODI and Foreign Exchange Controls Do Not Constitute Hong Kong Public Policy; Application to Set Aside Award Dismissed

Case Description：

On 12 December 2016, the applicant AT and respondent QC entered into a Share Transfer Agreement and two supplemental agreements, under which QC agreed to acquire shares in a target company from AT for USD 110 million. Completion was conditional upon QC obtaining outbound direct investment (ODI) approval from China authorities and making payment in USD.

Under the first supplemental agreement, if the target company failed to complete an IPO by 11 December 2019, AT would repurchase the shares and pay a specified return. The second supplemental agreement provided that, in light of tightened ODI policies, QC could first pay an equivalent amount in RMB, with AT transferring the shares upfront; once ODI approval was obtained, the RMB would be returned and replaced by USD payment. If completion had not occurred by 31 January 2020, AT would be required to refund QC, including principal and a 10% annual return.

Between 2016 and 2017, QC paid in RMB and AT transferred the shares, but QC failed to obtain ODI approval and the transaction was not completed. The target company’s IPO was terminated in June 2019. QC subsequently exercised its put option and sought payment from AT, who refused. QC commenced arbitration before HKIAC in March 2021, and an award in its favor was issued in August 2023. AT applied to the Hong Kong Court of First Instance to set aside the award, alleging lack of due process and violation of public policy.

AT raised two main arguments: first, that QC had altered its case at the closing stage by recharacterizing the RMB payments—which had previously been described as a “transitional arrangement”—as consideration for shares or an investment, and that the tribunal denied AT an opportunity to respond and refused to admit expert evidence on PRC law to demonstrate that the relevant arrangement might involve circumvention of China foreign exchange controls; second, that enforcement of the award would contravene public policy by effectively recognizing transactions circumventing China ODI and foreign exchange controls.

Court's View：

The Court dismissed the application in full. It reiterated that the threshold for setting aside an arbitral award is exceptionally high, requiring proof of serious procedural unfairness causing actual prejudice. Judicial intervention must remain minimal and cannot serve as a means to revisit the merits of the award. As for the arbitral tribunal's case management decisions, such as whether to permit supplemental expert evidence, these are in principle within the tribunal's discretion, and the Court will not intervene unless they amount to a serious miscarriage of justice.

On the alleged inability to present one’s case, the Court found that QC’ s arguments had been reflected in its amended submissions and were not raised for the first time at closing. AT had adequate opportunity to respond, and its complaint essentially reflected its failure to persuade the tribunal to accept its own position rather than any procedural injustice. The Court also noted that the arbitral tribunal did not simply conflate the RMB payment with the USD payment; rather, it made its findings based on its interpretation of the overall contractual arrangement, the transactional context, and the parties' respective rights and obligations. Therefore, AT suffered no actual prejudice from the manner in which the other party presented its case.

On the alleged inability to present one’s case, the Court found that QC’ s arguments had been reflected in its amended submissions and were not raised for the first time at closing. AT had adequate opportunity to respond, and its complaint essentially reflected dissatisfaction with the tribunal’s conclusions rather than any procedural injustice.

As to the tribunal’s refusal to admit PRC law expert evidence, the Court held that such decisions fall within the tribunal’s case management discretion. The tribunal had already determined that China ODI and foreign exchange regulations were not determinative of the dispute, and its refusal did not amount to serious procedural irregularity. The Court further observed that, even assuming there was some procedural irregularity, AT failed to show that the outcome would have been different. This is because the tribunal's decision in favour of QC was not based solely on whether China regulatory requirements permitted performance of the contract; it was also based on several independent grounds, including the doctrine of estoppel, the interpretation of the second supplemental agreement, and implied terms. In other words, even if AT had been permitted to adduce additional expert evidence on China law, the outcome of the award would not have changed.

Regarding public policy, the Court made clear that “public policy” under the Model Law and Hong Kong arbitration regime refers to Hong Kong’s public policy, not that of China or other jurisdictions. China ODI approval requirements and foreign exchange controls do not automatically form part of Hong Kong’s public policy for the purpose of setting aside an award. The Court further observed that the award essentially required AT to repay principal and agreed returns following termination, rather than to complete the original USD-denominated transaction, and thus did not amount to enforcement of an unlawful foreign exchange arrangement. Even if enforcement might encounter difficulties in China, this did not affect the validity of the award in Hong Kong.

In conclusion, the Court held that AT had failed to establish either serious procedural unfairness or a violation of Hong Kong public policy, and accordingly dismissed the application to set aside the award. The case reaffirms the Hong Kong courts’ pro-arbitration stance and their clear distinction between Hong Kong public policy and China regulatory requirements.