China sets up private funds court

The Asset Management Association of China says the move follows a spike in complaints about the industry in recent months.

The Asset Management Association of China, the country’s regulator, has supported the establishment of a fund industry court in Beijing, following a sharp rise in complaints about the industry last year.

The court will hear cases concerning private funds including private equity and hedge funds. It is housed in the Fangshan district court in Beijing.

A statement on the AMAC website noted that the China Securities Investment Fund Association received 1,454 complaints about the fund industry in 2016.

The court’s focus will be disputes between managers and investors, internal disputes between managers, and fund investor agreement disputes.

“The court is an interesting development, it’s the first time this is happening in China. I think it demonstrates the importance of the fund industry in the country. It has seen enormous growth,” said Gavin Anderson, international counsel at Debevoise & Plimpton, a global law firm.

“This court won’t hear every private fund case, particularly as Beijing Is not necessarily the funds capital of China – other regions such as Shanghai and Tianjin are also important,” he added. 

In the statement, AMAC chairman Hong Lei, called the announcement a “landmark” move, promoting specialized legal processes for the industry, and establishing precedents in private funds litigation in China.

AMAC also cited the substantial growth in the funds industry and the need to be in line with international standards, as reasoning for setting up the court.