Introduction
In the wake of Mainland China’s recently reported largest-ever trade surplus at over $1 trillion and the expected ongoing global trade tailwinds this year, it should be important for local and international businesses to take stock of the latest commercial dispute resolution landscape in the People’s Republic of China.
On 12 September 2025, the Standing Committee of the 14th National People’s Congress adopted a comprehensive revision to the Arbitration Law of the People’s Republic of China (中华人民共和国仲裁法) (the “Amended Arbitration Law”). The amended law is a major reform since the Arbitration Law’s enactment in 1995. The Amended Arbitration Law comprises 96 articles in eight chapters and will take effect on 1 March 2026. The reform aims to modernise China’s arbitration regime, align it more closely with international arbitration standards, and enhance the attractiveness of PRC as the seat for international dispute resolution.
Notable Reforms Under the Amended Arbitration Law
To resolve a dispute by way of arbitration, one key issue is whether there is an arbitration agreement. Article 27 of the Amended Arbitration Law provides guidance on the existence and terms of the arbitration agreement. An arbitration agreement includes an arbitration clause in a contract and other written agreement of request for arbitration before or after a dispute arises. The terms of the arbitration agreement should include (1) expression of intent to submit the dispute to arbitration; (2) matters to be dealt with by arbitration; and (3) the selected arbitral institution. Article 27 also provides that if one party claims the existence of an arbitration agreement when requesting for arbitration and the other party does not object to such existence before the first hearing, upon the reminder and recording of the arbitral tribunal, an arbitration agreement will be deemed to exist between the parties.
The Amended Arbitration Law now formally recognizes the concept of the “seat of arbitration” (仲裁地). Article 81 of the Amended Arbitration Law permits parties to agree on the seat of foreign-related arbitration and unless otherwise agreed, the seat will determine the applicable procedural law and the supervisory court of the arbitration. Article 81 further provides that the arbitral award will be deemed to have been made at the seat of the arbitration. This introduction aligns the arbitration practice in the PRC with other major jurisdictions.
The Amended Arbitration Law also includes the doctrine of Kompetenz-Kompetenz — a well-established international doctrine regarding the arbitral tribunal’s ability to rule on its own jurisdiction. Previously, only arbitral institutions and the PRC courts have jurisdictions to rule on the arbitral tribunal’s jurisdiction. Under Article 31 of the Amended Arbitration Law, a party challenging the validity of an arbitration agreement may now submit the challenge to the arbitral tribunal (or the arbitral institution), or the People’s Court. However, if one party submits a challenge to the arbitral tribunal (or the arbitral institution) and the other submits to the People’s Court, the court should prevail and decide on the challenge. This development marks another shift towards international arbitration norms, enhancing procedural certainty and reinforcing the autonomy of arbitration tribunals while retaining the ultimate deciding power in the PRC courts.
It is not uncommon for parties to conduct arbitration remotely and / or online. Article 11 of the Amended Arbitration Law expressly permits arbitration proceedings to be conducted using online information network (unless expressly disagreed by the parties). Also, arbitration proceedings conducted online will have the same legal effect as offline arbitration proceedings. This formal recognition underpins an increasingly digital arbitration landscape.
Historically, there may be some uncertainty about full recognition of “ad hoc arbitration” under the current Arbitration Law (ie. arbitration without an administering institution). The Amended Arbitration Law slightly clarifies or broadens the recognition of ad hoc arbitration within Mainland China. Under Article 82, parties may conduct ad hoc arbitration for foreign-related maritime disputes or foreign-related disputes between enterprises registered in the listed trade free zones etc. Ad hoc arbitration is quite commonly used for maritime disputes globally and this amendment reflects Mainland China’s effort to embrace specified ad hoc arbitration.
The Amended Arbitration Law introduces statutory provisions for interim measures, including asset and evidence preservation and injunctive relief. Some notable Articles in this aspect include :-
However, the applications for preservation and interim measures should still be made to the People’s Court. While tribunals themselves do not yet have express statutory authority to grant interim relief, this framework significantly strengthens judicial support for arbitration in the PRC.
The Amended Arbitration Law updates the current Article 31 of the Arbitration Law on selecting presiding arbitrator (in the case of arbitral tribunal with three arbitrators).
In relation to the impartiality of the arbitrators, the Amended Arbitration Law also imposes an obligation under Article 45 for arbitrators to promptly disclose in writing to the arbitral institution any situation which may cause the parties to reasonably doubt their independence and fairness. This is heightened obligation on the current requirement that the arbitrator should recuse himself (and the parties to the arbitration also have rights to request recusal) under specific circumstances such as the arbitrator having a stake in the dispute (Article 34 of the current Arbitration Law, which remains in the Amended Arbitration Law under Article 46).
The time limit for applying to set aside arbitral awards is shortened from six months to three months from receipt of the award (Article 72 of the Amended Arbitration Law), enhancing the finality of awards and aligning with international standards.
Notably, the law introduces “public interest” as an explicit judicial ground to set aside or refuse enforcement of arbitral awards (see Articles 71 and 76).
Last but not least, the Amended Arbitration Law explicitly supports foreign arbitral institutions establishing branches in pilot Free Trade Zones, the Hainan Free Trade Port, and other designated areas to conduct foreign-related arbitration activities. This reflects Mainland China’s encouragement on cross-border and cross-jurisdiction cooperations in dispute resolution. The Amended Arbitration Law further provides that arbitration institutions are encouraged to establish entities outside Mainland China to conduct arbitration activities (Article 86).
Takeaway
Whilst the implementation of any updated law remains to be seen, the above notable measures of the Amended Arbitration Law will no doubt boost the collective confidence of multinational businesses in terms of the infrastructure and institutional support for confidential resolution of related cross-border investment, trade and commercial agreement disputes by arbitration.
For parties based in Hong Kong and other international centres, the Amended Arbitration Law presents both opportunities and challenges. For example, the codification of the seat of arbitration concept and enhanced interim measures may increase confidence in choosing Mainland China as an arbitration forum. On the other hand, some unique PRC features, including the public interest ground and continued judicial oversight on key issues, underscore the importance of bespoke drafting of arbitration agreements and strategic planning when selecting the seat and structure of disputes. Parties should consider closely these reforms when negotiating arbitration clauses involving PRC law or assets.
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