Reed Smith Client Alerts

On 16 February 2023, the Hong Kong court handed down a judgment in Li Wenjun v. Chen Chunhui & Another [2023] HKCFI 405, where the Hong Kong court dismissed the defendant’s application for a stay of the action in favour of arbitration because the arbitration clause in question did not cover tortious disputes and the defendant had waived his right to arbitration. The Hong Kong court therefore held that the arbitration did not cover the dispute arising in the action and, in any event, the arbitration clause was inoperative.

Factual background and the arbitration clause in question

The plaintiff (P) brought a Hong Kong court action (Action) against the first defendant (D1) and the second defendant for a claim based on deceit and conspiracy.

D1 applied to the Hong Kong court for a stay of the Action in favour of arbitration (Application) pursuant to an arbitration clause (Arbitration Clause) contained in a Share Transfer Agreement (Agreement) apparently signed by P and D1.

The Arbitration Clause read as follows (with our emphasis added):


(English translation: “Any dispute arising from the performance of this agreement shall be resolved by amicable negotiation, failing which either party has the right to refer the dispute to the Hong Kong International Arbitration Centre for arbitration pursuant to the arbitration rules in force at the time of the signing of this agreement.”)