Shijiazhuang Intermediate People’s Court declares arbitration agreement providing for ICC Rules arbitration seated in China invalid.

By Ing Loong Yang, Oliver Browne, and Isuru Devendra

In a dispute between Hebei Zhongxing Automobile Manufacturing Co., Ltd. (HZAM), a Chinese company, and Automotive Gate FZCO (FZCO), a UAE company, the Shijiazhuang Intermediate People’s Court declared invalid two related arbitration agreements that provided for arbitration in accordance with the Arbitration Rules of the International Chamber of Commerce (ICC) and to be held “in China”.

By Hanna Roos and Kavan Bakhda

Hong Kong approved last week the awaited Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016 to permit third party funding of arbitration, as well as supporting court, emergency arbitration and mediation proceedings. The Hong Kong Legislative Council adopted the draft bill in the form of amendments made to the Arbitration Ordinance (Cap. 609) presented to the Legislative Council in January 2017 (see our earlier blog for a discussion of the draft bill). It is expected that the amendments will take effect later this year while an appropriate Code of Practice for funders is drawn up.

The bill introduces a new Part 10A (ss 98E-98W) to the Arbitration Ordinance, as well as a new section 7A to the Mediation Ordinance. The bill applies equally to domestic and international arbitrations which were unified into a single regime in 2011. The amendments clarify that third party funding of arbitration and mediation seated in Hong Kong (or using services provided in Hong Kong for arbitrations taking place elsewhere) is not prohibited by the common law doctrines of maintenance and champerty.

According to the report of the Legislative Council, the bill does not apply to court litigation, and its funding by third parties therefore remains prohibited in Hong Kong, save for court proceedings related to the arbitration such as challenges and enforcement. This may encourage parties with a Hong Kong nexus to opt for arbitration over litigation.