diff --git a/tests/pos/i12663.scala b/tests/pos/i12663.scala
new file mode 100644
index 000000000000..befbc65316cb
--- /dev/null
+++ b/tests/pos/i12663.scala
@@ -0,0 +1,72 @@
+// https://github.com/lampepfl/dotty/issues/12663
+
+final class HookComponentBuilder[Ctx, CtxFn[_]] {
+  def asd[A](f: Ctx => A): A = ???
+  def asd[A](f: CtxFn[A]): A = ???
+}
+
+object HookCtx {
+  case class P1[P, H1](props: P, hook1: H1)
+}
+
+object HookCtxFn {
+  sealed trait P1[P, H1] { type Fn[A] = (P, H1) => A }
+}
+
+object Test {
+  val b: HookComponentBuilder[
+    HookCtx.P1[String, Int],
+    HookCtxFn.P1[String, Int]#Fn
+  ] = ???
+
+  b.asd($ => $.props.length + $.hook1)
+  b.asd((props, hook1) => props.length + hook1)
+}
+
+final class HookComponentBuilder2[Ctx, CtxFn[_]] {
+  def asd[A](f: Ctx => A): A = ???
+  def asd[A](f: CtxFn[A]): A = ???
+}
+
+object HookCtx2 {
+  case class P1[P, H1](props: P, hook1: H1)
+}
+
+object HookCtxFn2 {
+  type P1[P, H1] = [A] =>> (P, H1) => A
+}
+
+object Test2 {
+  val b: HookComponentBuilder2[
+    HookCtx2.P1[String, Int],
+    HookCtxFn2.P1[String, Int]
+  ] = ???
+
+  b.asd($ => $.props.length + $.hook1)
+  b.asd((props, hook1) => props.length + hook1)
+}
+
+final class Builder[CtxFn[_]] {
+  def asd[A](f: Int => A): A = ???
+  def asd[A](f: CtxFn[A]): A = ???
+}
+
+object Test3 {
+  val b1: Builder[[Z] =>> (String, Int) => Z] = ???
+  b1.asd(identity)
+  b1.asd(_.length + _)
+
+  sealed trait Scala2TL { type F[Z] = (String, Int) => Z }
+  val b2: Builder[Scala2TL#F] = b1
+  b2.asd(identity)
+  b2.asd(_.length + _)
+
+  type Scala3TL = [Z] =>> (String, Int) => Z
+  val b3: Builder[Scala3TL] = b1
+  b3.asd(identity)
+  b3.asd(_.length + _)
+
+  val b4: Builder[({ type F[Z] = (String, Int) => Z })#F] = b1
+  b4.asd(identity)
+  b4.asd(_.length + _)
+}