In the third edition of the Hong Kong chapter under Lexology In-Depth: Anti-Money Laundering, Financial Services Regulatory & Enforcement practice partners Sara Or, Vincent Law and Raymond Chan outline the 2025 amendments and developments regarding the anti-money laundering (AML) and counter-terrorist financing (CTF) legal and regulatory framework in Hong Kong. The chapter offers an overview of the key AML legal framework and associated offences in Hong Kong. It also discusses the operation, requirements and enforcement of Hong Kong’s AML regulations while examining their alignment with international standards. Concluding the chapter, our authors share valuable insights into the outlook and enforcement landscape of AML/CTF regulations in Hong Kong. This report was originally published in Lexology’s In-Depth Anti-Money Laundering: Hong Kong and is reproduced with permission.

1. Background Recent reports emerged in mid-January 2026 regarding large-scale evictions of tenants living in certain subdivided units (SDUs) in Sham Shui Po. What prompted landlords to evict these tenants en masse? The answer lies in the Basic Housing Units Ordinance (Cap.658) (BHUO), which will take effect on 1 March 2026. The BHUO is Hong Kong’s first comprehensive regulatory regime governing the letting of SDUs, which can only be legally let out if they meet minimum living standard conditions and receive formal Basic Housing Unit (BHU) recognition issued by the Secretary for Housing. Ahead of the legislation coming into effect, some SDU owners evicted tenants to perform necessary renovations on the SDUs to comply with the BHUO, resulting in the large-scale evictions in Sham Shui Po. Given the impending implementation of the BHUO, this is a timely opportunity to remind stakeholders of its key features. 2. Summary of the BHUO (A) What falls under the scope of the BHUO? The BHUO applies only to SDUs. An SDU is defined as: a flat in a domestic building partitioned in a way not shown in the approved building plans of the building; after the partition, there are 2 or more compartments in the flat; among the compartments, at least 2 compartments are the subject of separate domestic tenancies; and among the compartments that are the subject of separate domestic tenancies, at least 1 is formed by the partition. (B) What are the requirements to obtain BHU recognition?  An SDU must obtain BHU qualification before it can be legally let out. To obtain BHU qualification, it must meet the following minimum standards of living conditions (all captured in Schedule 1 to the BHUO): Internal floor area: at least 8 m2; Height: at least 2.3 m (from floor to ceiling) and, if there is a beam in the SDU, at least 2 m (from floor to underside of the beam); Fire safety: comply with the requirements under paragraph 3 of Schedule 1 of the BHUO, such as inter alia providing adequate means of escape for safe evacuation; Loading: the SDU and its principal flat must not be subject to a load beyond each of their proper bearing capacity; Toilet: the SDU must have an enclosed and waterproofed toilet for exclusive use by its occupier; Water supply point and sink: the water supply point and sink must be provided outside the toilet of the SDU, and its surrounding area must be waterproofed; Lighting and ventilation: the SDU must comply with the requirements under paragraph 7 of Schedule 1 of the BHUO, such as, inter alia, providing at least 1 openable window, artificial lighting and mechanical means of ventilation in the SDU; and Water and electricity meters: the SDU must be provided with a water meter and electricity meter exclusive to that SDU. (C) What steps must owners of SDUs take to obtain BHU recognition? If an SDU was the subject of a domestic tenancy at any time between 4 July 2025 and 3 October 2025, the owners of the flat containing such SDUs may apply for grace-period registration in respect of the flat. Such registration would provide the owner with a 36-month grace period (from 1 March 2027 to 28 February 2030), during which they may let out their SDU. To apply for BHU recognition, the owner of the SDU must submit an application to the Housing Bureau in accordance with section 17 of the BHUO, including inter alia a report by a specified professional (such as registered architects, registered professional engineers and registered professional surveyors) certifying that, in his opinion, the SDU meets the minimum standards of living under Schedule 1 of the BHUO, after conducting an on-site inspection of the SDU. Each BHU recognition is valid for 5 years, subject to renewal or cancellation. Applications for BHU recognition may be made beginning on 1 March 2026. Owners of SDUs should take timely and proactive steps to ensure compliance because, beginning 1 March 2027, it will be a criminal offence for an owner to let out an SDU with neither grace-period registration nor BHU recognition. 3. Tenant safeguards under the Landlord and Tenant (Consolidation) Ordinance (Cap.7) (LTO) The LTO provides tenants of SDUs with certain safeguards, including: 4-year security of tenancy (an SDU tenancy is deemed to be for a term of 2 years, followed by a deemed offer from the landlord for a second tenancy for a term of 2 years); tenant’s right to demand written tenancy agreement; restrictions on the amount of rental deposit; and restrictions on the amount of rental increment. The above protections remain in place and are unaffected by the BHUO. Furthermore, given that an SDU tenancy is deemed to be for 2 terms of 2 years, subject to the following paragraphs, a landlord has no right to evict an SDU tenant before the end of the tenancy (i.e. maximum period of 4 years), whether such eviction is for the purposes of upgrading the SDU to comply with the BHUO or otherwise. A tenancy for an SDU may be terminated in the following circumstances before its expiry: pursuant to the LTO, a landlord may terminate a tenancy for an SDU before the expiration of the 4-year tenancy period by re-entry into the premises only if the tenant: fails to pay rent by the due date; makes, or permits to be made, any structural alteration to the SDU without the landlord’s prior written consent; uses the SDU or permits the SDU to be used for any immoral or illegal purposes; does anything, or permits anything to be done, in the SDU which would cause any unnecessary annoyance, inconvenience or disturbance to the landlord or any other person; or assigns or underlets or otherwise parts with possession of the whole of the SDU or, without the landlord’s prior written consent, underlets part of the SDU to another person; and pursuant to the BHUO, if a tenancy for an SDU begins between 4 October 2025 and 31 August 2029 and, as of 31 August 2029, a grace-period registration has been granted in respect of the flat containing the SDU (but the SDU has not been granted BHU recognition), that tenancy will be automatically terminated as of 1 September 2029. Nothing in the LTO would prevent that tenancy from termination by operation of law but, under section 31(4) of the BHUO, the tenant of such terminated tenancy may recover civil debt compensation from the operator of the SDU. 4. Illustration By way of illustration, assuming a flat is partitioned into two SDUs (SDU A and SDU B), if SDU A was subject to a domestic tenancy beginning on 3 October 2025, under the BHUO the owner of the flat may apply for the 3-year grace-period registration in respect of the flat, beginning on 1 March 2026. (A) Automatic termination of tenancy for SDU B If a domestic tenancy for SDU B begins at any time between 4 October 2025 and 31 August 2029 and, as of 31 August 2029, a grace-period registration has been granted in respect of the flat, but no BHU recognition has been granted in respect of SDU B, that tenancy will be automatically terminated as of 1 September 2029. (B) Continuation of tenancy for SDU A Given that the domestic tenancy for SDU A began on 3 October 2025, under the LTO, it will be deemed to be for a term of 2 years (from 3 October 2025 to 2 October 2027), followed by a deemed offer from the landlord and deemed acceptance by the tenant for a second tenancy for a term of 2 years (from 3 October 2027 to 2 October 2029). If, as of 31 August 2029, a grace-period registration has been granted in respect of the flat, but no BHU recognition has been granted in respect of SDU A, the tenancy of SDU A will be allowed to proceed until its expiration on 2 October 2029 (i.e. beyond the automatic termination date of 1 September 2029 prescribed under the BHUO). 5. Further recommendations: coordination efforts Given the wide‑ranging impact of the BHUO, its effective implementation will require close coordination with various government and community bodies. Owners of SDUs should proactively liaise with the Housing Bureau, which is the primary body responsible for administering BHU recognition, to facilitate compliance matters. District service teams and charitable organisations can also provide on‑the‑ground assistance to support displaced tenants with relocation or application for transitional housing. Such collaborative efforts would help to ensure smooth administration of the BHUO and mitigate hardship for affected tenants. The BHUO is a milestone on Hong Kong’s path to providing better housing for its population. However, its smooth and effective implementation will rely on the coordination and proactive collaboration of multiple stakeholders, owners of SDUs, and the government.

We are delighted to present the fourth issue of JSM International Arbitration newsletter, continuing our commitment to delivering timely insights into key developments shaping the arbitration landscape in Hong Kong, Chinese Mainland and beyond. Covering the period from October to December 2025, this edition spotlights recent judgments from Hong Kong, Chinese Mainland and the UK that underscore evolving judicial attitudes. In particular, cases headlined here note judgments on granting anti-suit injunction; showing a genuine intention to arbitrate when it comes to dismissing or staying a winding-up petition; applicability of the O.50 r.11-15 stop notice and order regime; the distinction between “contract for fraud” and fraud affecting arbitration process; and the US enforcement of a CIETAC arbitration clause in a cross-border procurement dispute. In addition to case law analysis, this issue also reflects on industry trends and legislative updates, in particular changes in the Chinese approach towards interim measures under the new PRC Arbitration Laws and Securities and Futures Arbitration Rules adopted by the Beijing Arbitration Commission and Shanghai Arbitration Commission. Whether you’re a seasoned practitioner or new to the field, we hope this newsletter continues to be your go-to resource for latest arbitration news and perspectives. Notable Hong Kong cases | Chinese Mainland arbitration updates | Overseas jurisdictions observations  Court of Appeal finds merits relevant in dismissing application for interim anti-suit injunction against Cayman winding-up proceedings pending appeal Hyalroute Communication Group Limited v Industrial and Commercial Bank of China (Asia) Limited [2025] HKCA 936 21 October 2025 Summary: The plaintiff’s application for an injunction to restrain the defendant from commencing winding-up proceedings in the Cayman Islands in favour of arbitration in Hong Kong was previously dismissed by Recorder William Wong SC in the Hong Kong Court of First Instance (see our legal update on the decision). The plaintiff appealed and, pending determination of the appeal, made a renewed application for an interim anti-suit injunction (ASI). Amongst others, the court must be satisfied the appeal has a real prospect of success. In finding the plaintiff had not shown a real prospect of success in the appeal, the Hong Kong Court of Appeal held that the merits of the plaintiff’s defence as to the petitioning debt were a relevant consideration and refused to grant an ASI. Applying Re Guy Kwok-Hung Lam (2023) 26 HKCFAR 119 and Re Simplicity & Vogue Retailing (HK) Co Ltd [2024] 2 HKLRD 1064, the court affirmed the position under Hong Kong law that (i) an ASI would normally be granted in respect of winding-up proceedings brought in breach of an arbitration agreement in the absence of strong reasons; and (ii) the lack of any bona fide dispute to the petitioning debt may constitute an abuse of process as well as a strong reason not to grant an ASI. In this case, the plaintiff had advanced an estoppel argument based on purported representations by the defendant regarding termination of the insurance contract in question. This defence was held to be hopeless and frivolous at first instance. Subsequently, the Court of Appeal was not satisfied that the defence was reasonably arguable. It follows that while the plaintiff’s grounds of appeal relating to the construction of the arbitration agreement – namely whether the scope of the arbitration agreement was limited to disputes that would be finally resolved in a non-contractual forum – was reasonably arguable, even if the Court of First Instance had erred on this construction issue, such an error would not have assisted the plaintiff’s application, unless there was a reasonably arguable appeal in respect of the merits of the plaintiff’s defence. Takeaway: The case represents the first time the Court of Appeal commented on the relevance of merits of the debtor’s defence when assessing interim ASI applications in aid of Hong Kong arbitration, set against a backdrop of foreign winding-up proceedings. Notwithstanding the lower bar established in Re Guy Lam (as compared with the Privy Council’s jurisprudence) for a stay of winding-up proceedings in favour of arbitration, if there is a lack of any bona fide defence to the debt, this may be seen as an “abuse of process” which remains an important consideration – even in the context of interim ASIs. Stay tuned for further update on the substantive appeal. Link to judgment Hong Kong court provides guidance on the “genuine intention to arbitrate” factor under Re Guy Lam and Re Simplicity Re Xu Peixin [2025] HKCFI 5846 27 November 2025 Summary: In 2017, Xu Peixin (“Xu”) purportedly guaranteed to Fruitful Worldwide Limited (“FWL”) the due performance by Bliss Chance Global Limited (“BCGL”) of its obligations under an investment agreement (the “Agreement”) between FWL, BCGL and another company (the “Guarantee”). The Guarantee contained an HKIAC arbitration clause. FWL later alleged non-payment of dividends payable under the Agreement. Having issued a statutory demand against Xu, FWL presented a bankruptcy petition (the “Petition”) in August 2024. This was opposed by Xu, who in the notice of intention to oppose the petition contended that the dispute should be referred to arbitration. Several months later, Xu issued a letter requesting FWL to agree to submit the matter to arbitration, which led to further correspondence as to which party should issue a notice of arbitration. In the end, Xu commenced arbitral proceedings in June 2025. Upon Xu’s application to dismiss or stay the Petition, FWL contended that Xu had failed to show a genuine intention to arbitrate – one of the considerations that the ourt may take into account when adopting the multi-factorial approach under Re Guy Kwok-Hung Lam (2023) 26 HKCFAR 119 and Re Simplicity & Vogue Retailing (HK) Co Ltd [2024] 2 HKLRD 1064 in deciding whether to decline to exercise its insolvency jurisdiction and instead hold the parties to their arbitration agreement. On this issue, the Hong Kong Court of First Instance held that: Although the most straightforward way for a putative debtor to demonstrate a dispute which should be determined pursuant to an arbitration clause is to serve a notice of arbitration, the same can be done by writing to the claimant, informing him that the debt is disputed and that the dispute should be referred to arbitration. In most cases, the claimant (in this case FWL) will be the appropriate party to commence arbitration proceedings. If this is the case and the claimant is invited to commence an arbitration, this will generally suffice to demonstrate a genuine intention to arbitrate. The fact that a debtor does not express an intention to arbitrate until after a petition is presented does not mean that the arbitration clause ceases to be relevant. Service of a notice in opposition to the petition, which states that the debt is disputed and that the dispute should be arbitrated, will commonly be sufficient to show a genuine intention to arbitrate if coupled with a clear and reasoned proposal that the claimant commence the arbitration process. The sooner that the debtor makes plain his desire to arbitrate, the more straightforward the matter becomes and, absent the claimant showing either that the grounds for disputing the debt are frivolous or that an insolvency consideration justifies presentation of a petition, the court will dismiss the petition. Here, even though Xu’s solicitors waited six months after the notice in opposition was served to write to FWL requesting commencement of arbitration, this was not fatal. The court ultimately dismissed the Petition on the basis that the defence of estoppel – namely that Xu had been assured the Guarantee was purely a formality – could not be said to be frivolous. Takeaway: This case indicates that when it comes to applying for dismissal or stay of winding-up proceedings in favour of arbitration, the burden on the purported debtor to demonstrate a genuine intention to arbitrate may not be an onerous one. That said, upon being served a statutory demand and prior to being served a petition, it would be prudent to consider writing to the purported creditor to request that they commence arbitration. Otherwise, any subsequent post-petition reliance on the arbitration agreement might be seen as purely tactical and not showing a genuine intention to arbitrate, which is a risk that will increase as the delay persists. Link to judgment Hong Kong court confirms jurisdiction to grant stop orders in aid of foreign arbitrations U.K. Prolific Petroleum Group Company Limited 𝘷 鑫都集团有限公司 [2025] HKCFI 4769 9 October 2025 Summary: The underlying dispute arose out of a memorandum executed among 鑫都集团有限公司 (“Xindu”), U.K. Prolific Petroleum Group Company Limited (“UKPPGC”, a BVI company) and two other parties, with Xindu claiming entitlement to 20% of UKPPGC’s shares and convertible bonds (the “Subject Securities”) in China Energy Development Holdings Limited (the “ListCo”) under the memorandum. When Xindu issued a stop notice over the Subject Securities under O.50 r.11 of the Rules of the High Court, UKPPGC applied to discharge it, which led to a further application by Xindu for a stop order under O.50 r.15 to restrain ListCo and its share registrar from registering the transfers of the Subject Securities or issuing new certificates. Shortly after, Xindu commenced arbitration in the Shenzhen Court of International Arbitration (SCIA) seeking, inter alia, a declaration of its entitlement to the Subject Securities. Hearing these applications, the Hong Kong Court of First Instance considered the novel issue of whether it has jurisdiction to seal stop notices and grant stop orders under O.50 rr.11-15 in aid of foreign arbitrations absent substantive Hong Kong proceedings. The court held in the affirmative, noting that the rationale of the O.50 r.11-15 regime is to preserve the shares in specie while there is an unresolved dispute as to the entitlement to the shares. Such purpose would be frustrated if restrictions based on where and how the dispute is to be resolved are superimposed. The court ultimately decided that the circumstances gave rise to serious issues to be tried – justifying exercise of the court’s discretion to grant a stop order. Nevertheless, in view of new documents adduced by UKPPGC and to align with the quantum claimed in the SCIA arbitration, the court lowered the amount of securities subject to the stop order – and Xindu was granted leave to file an amended stop notice reflecting the downwards adjustment.  Takeaway: This case confirms the potential of O.50 rr.11-15 machinery to be used for obtaining interim measures to support foreign arbitrations of shareholders’ disputes, even if no substantive court proceedings have been commenced in Hong Kong. That said, practitioners should be mindful that the court will carefully examine what exactly is being asked of the arbitration tribunal, such that the scope of any stop order granted must be aligned with the relief sought in arbitration. Link to judgment HKIAC announces expansion of expedited procedure and fee updates 17 December 2025 Summary: The Hong Kong International Arbitration Centre (HKIAC) announced updates on the scope of its expedited procedure and fee schedules under its Administered Arbitration Rules on 17 December 2025. These changes apply to all cases filed with HKIAC on or after 1 January 2026 under such Rules. Key updates include: Expanding the scope of expedited procedure by doubling the monetary threshold of the maximum amount in dispute from HK$25 million to HK$50 million. Parties may apply to the HKIAC for expedited procedure where the amount in dispute representing the aggregate of any claim and counterclaim (or any set-off defence or cross-claim) does not exceed this figure Raising the registration fee from HK$8,000 (which remained unchanged for 12 years) to HK$10,000 across all cases regardless of dispute size Raising the cap on arbitrators’ hourly rates from HK$6,500 to HK$7,500, the first adjustment since 2013. HKIAC also remains one of few global institutions where parties are given a choice between hourly rates and the ad valorem fee model Takeaway: The increased monetary threshold for the expedited procedure reflects market practice and continuing demand for flexibility and efficiency in arbitration proceedings. The HKIAC continues to provide transparent and flexible fee structures which remain competitive despite the measured increases. Overall, the changes are welcome as the HKIAC continues to deliver world-class arbitration services while maintaining affordability. Link to HKIAC announcement Link to revised fee schedule   Industry dynamics – Changes in the Chinese approach towards interim measures under new Chinese Mainland Arbitration Laws which now permit tribunals to grant interim measures Summary: Comprehensive revision of the PRC Arbitration Law – which passed in September 2025 and comes into force on 1 March 2026 (the “Revised Law”) – introduces a modernised framework for interim measures in arbitration. Historically, only courts in Chinese Mainland could grant interim relief, which could lead to delays and somehow limit a tribunal’s power to achieve the goal for a speedy and just resolution of disputes by arbitration. Under the new law, arbitral tribunals seated in Chinese Mainland may also issue interim measures, including asset preservation, evidence preservation and conduct preservation. This reform aligns Chinese Mainland with international standards such as the UNCITRAL Model Law and significantly enhances procedural efficiency. The amendments also clarify application procedures, enforcement mechanisms, and judicial support for tribunal-ordered measures, reducing reliance on court intervention and strengthening the enforceability of arbitral decisions. Takeaway: The revised amendments mark a pivotal shift in Chinese Mainland’s arbitration landscape. Parties to PRC-seated arbitrations can expect greater flexibility and responsiveness through tribunal-issued interim measures. Link to the revised PRC Arbitration Law US court enforces CIETAC arbitration clause in cross-border procurement dispute over alleged kickbacks 18 December 2025 Summary: The underlying dispute concerns a US company’s (the “Plaintiff”) claims of tortious interference and fraud, as well as contraventions of the Robinson-Patman Act (relating to commercial bribes) against two Chinese manufacturers (the “1st and 2nd Defendants”) for allegedly giving kickbacks to a former employee on the Plaintiff’s procurement team in exchange for business with the Plaintiff. Following the Plaintiff’s commencement of an action in the United States District Court for the Southern District of New York (the “US Court”), the Defendants put forward a motion to stay the proceedings in favour of arbitration. The sales contract between the Plaintiff and the 1st Defendant provided that the parties would settle all disputes arising from the execution of or in connection with the contract first through negotiation, failing which the dispute would be referred to the China International Economic and Trade Arbitration Commission (CIETAC) for arbitration in Beijing (“1st Arbitration Clause”). The contract between the Plaintiff and the 2nd Defendant similarly provided for the referral of all disputes arising from or in connection with the contract to CIETAC for arbitration. However, it also stipulated that the arbitration would be conducted in accordance with the CIETAC Arbitration Rules (the “Rules”) in force at the time of such arbitration (“2nd Arbitration Clause”). The US Court granted both the 1st and 2nd Defendants’ motions to stay the litigation in favour of arbitration, on the following basis: The Plaintiff’s allegations of the illegitimate competitive advantage enjoyed by the 1st Defendant and the resultant economic loss suffered by the Plaintiff indicated that their dispute was closely connected with the contract and therefore fell squarely within the ambit of the 1st Arbitration Clause; and As against the 2nd Defendant, the substance of the Plaintiff’s case did not even have to be considered by the US Court, since the 2nd Arbitration Clause gives effect to the Rules which in turn empower the arbitral tribunal to decide questions of jurisdiction. Incorporation of the Rules was clear evidence of the parties’ intention to delegate the issue of arbitrability to the tribunal.  Takeaway: CIETAC observes that this decision reflects the strong pro-arbitration approach of US courts and offers two key insights for drafting cross-border procurement contracts: Effect of broadly worded arbitration clauses: Phrases such as “arising from or in connection with” can extend the arbitrability of procurement disputes to statutory and tortious claims arising from the performance of the contract. Incorporating institutional rules matters: Express incorporation of institutional rules (e.g. the Rules in this case) may operate as a delegation clause, ensuring that questions of arbitrability are generally determined by the arbitral tribunal rather than the court. Well-drafted arbitration clauses remain a critical safeguard against litigation risk. Link to CIETAC article Industry dynamics – Beijing Arbitration Commission and Shanghai Arbitration Commission adopt new Securities and Futures Arbitration Rules to elevate financial dispute resolution 29 December 2025  Summary: The Beijing Arbitration Commission (BAC) has adopted the Securities and Futures Arbitration Rules (《证券期货仲裁规则》) which came into force on 1 November 2025. It introduced a specialised yet flexible framework for resolving contractual and property-rights disputes in securities and futures-related transactions. Following Beijing’s reforms, the Shanghai Arbitration Commission (SAC) has similarly adopted its own set of Securities and Futures Arbitration Rules (《证券期货仲裁规则》) (collectively, the “Two Rules”), set to take effect on 1 March 2026. Key features of the Two Rules include a specialised arbitrator panel, expedited and electronic procedures, mechanisms for test cases and consolidation of cases, and integration of mediation and settlement options, aligning with global best practices for financial sector arbitration.  Takeaway: The Two Rules signal a major step towards faster, cost-effective arbitration in Chinese Mainland’s financial sector, boosting efficiency and global confidence in cross-border securities and futures disputes. Link to BAC article Link to SAC article Beijing Arbitration Commission establishes branch in Hong Kong – eyes status as international commercial arbitration centre 9 October 2025  Summary: In response to the recent revision of the PRC Arbitration Law, the 19th Session of the Standing Committee of the 16th Beijing Municipal People’s Congress adopted the Regulation on the Construction of the Beijing International Commercial Arbitration Centre (《北京国际商事仲裁中心建设条例》) (the “Regulation”) on 26 September 2025. It took effect on 1 December 2025. The Regulation addresses the aim to support Beijing’s development as a preferred venue for international commercial arbitration by enhancing institutional autonomy, promoting international cooperation and establishing a centralised platform for dispute resolution services. It also introduces mechanisms to align with global arbitration standards, including support for ad hoc arbitration, digital procedures and cross-border legal collaboration. In parallel with these developments, the Beijing Arbitration Commission (BAC) officially launched its Hong Kong Centre on 12 November 2025, marking its first overseas branch and a major step in expanding its global footprint. The Hong Kong Centre will serve as a service and management hub for the BAC’s international arbitration cases, recommend Hong Kong as a preferred seat to global parties, and operate under the revised BAC International Arbitration Rules, which are aligned with the UNCITRAL Model Law on International Commercial Arbitration and the Hong Kong Arbitration Ordinance. Takeaway: Beijing’s new Regulation marks a significant step in positioning the city as a global commercial arbitration hub, introducing modern mechanisms that foster flexibility, global alignment and digital innovation in dispute resolution. This Regulation is especially timely as the BAC is establishing a branch in Hong Kong, enhance cooperation between two cities both recognised as leading international arbitration centres. Link to BAC article on the Regulation Link to BAC article on the Hong Kong Centre   English High Court stresses distinction between “contract for fraud” and fraud affecting arbitration process K1 & Ors v B [2025] EWHC 2539 (Comm) 7 October 2025 Summary: B (the “Defendant”) had obtained a US$3.2 million award (the “Award”) in an LCIA arbitration against three companies (the “Claimants”) found payable as a success fee for services provided under a letter of engagement (LOE). The Claimants first filed a challenge against the Award under section 67 of the Arbitration Act 1996 (the “Act”), arguing that the LCIA tribunal lacked jurisdiction because the Claimants were not bound by the LOE and the arbitration agreement. Pending the hearing of this challenge, the Claimants applied to mount an additional challenge based on serious irregularity under section 68(2)(g) of the Act (i.e., where “the award [is] obtained by fraud” or “the award or the way in which it was procured [is] contrary to public policy”). They contended that the LOE was a “contract for fraud” – a contract for provision of services to obtain, by deception, confidential information from foreign state officials or authorities. The English Commercial Court dismissed the Claimants’ application to include the additional section 68 challenge – reaffirming that the focus of the section is not on the underlying claim or cause of action, but rather on the parties’ conduct in arbitration and process by which the award was obtained. In this case, the Claimants’ complaint about fraud related to the merits of the Defendant’s contract claim. They had not raised the issue during the arbitration, nor was there any suggestion of interference with the arbitration process. The Claimants therefore could not now resort to section 68 to challenge the Award. However, the court left open the question of whether the Award should be enforced where enforcement would be contrary to public policy, as the question of enforcement was not for determination in this application. Takeaway: This case may be of relevance to arbitration practitioners in Hong Kong since section 4(2)(g) of Schedule 2 to the Arbitration Ordinance (Cap. 609) (if opted in under the relevant arbitration agreement) similarly provides that an award may be challenged on the grounds that it is obtained by fraud. Before relying on an alleged fraud either during arbitration or when contesting the resulting award, parties need to recognise the difference between a “contract for fraud” and “fraud affecting the arbitration process”. It is important that they choose the appropriate strategy for their case based on such distinction. Link to judgment