Legal Updates for June 2021

Does an Arbitration Agreement bind the Undisclosed Principal to a Contract?

In June 2020, the Beijing No. 4 Intermediate People's Court ("Court") granted a civil ruling ("Beijing Ruling") which dismissed the application to set aside an arbitral award issued by the China International Economic and Trade Arbitration Commission ("CIETAC"). In the Beijing Ruling, the Court held that in the situation of an undisclosed agency, although the relevant contract was signed by the agent, the arbitration agreement therein would nonetheless bind the undisclosed principal to the contract.

This is one of the few cases where a court has extended the effect of the arbitration agreement to a party who did not sign the relevant contract, and we examine the Court's grounds of decision in this Update.