A Guarantor Is Generally Not Bound By An Arbitration Clause In The Underlying Con Tract

"China Oceanwide Holdings Group Co., Ltd v. Guo Wei"

Beijing Financial Court (2022) Jing 74 Min Te No. 13

In January 2024, the Supreme Court of the People's Republic of China (the "Supreme Court") issued ten leading cases in respect of judicial review of arbitration. The fifth case, China Oceanwide Holdings Group Co., Ltd v. Guo Wei, addresses whether a guarantor is bound by an arbitration clause in the underlying contract in circumstances where the letter of guarantee does not provide for an arbitration clause. In that case, the Beijing Financial Court held that the guarantor, China Oceanwide Holdings Group Co., Ltd ("China Oceanwide"), was not bound by the arbitration agreement in the underlying agreement with Guo Wei, and that the arbitral tribunal consequently no jurisdiction over Guo Wei's claim against the guarantor. By publishing the case as a leading case, the Supreme Court is effectively affirming the judgement of the Beijing Financial Court, and thereby