PRC Adopts New Arbitration Law

The long-awaited revision to the PRC Arbitration Law (New Arbitration Law) was adopted on 12 September 2025 and will come into effect on 1 March 2026.

Since its original enactment in 1995, the Arbitration Law has only undergone limited amendments, in 2009 and 2017. The most recent reform process commenced with the release of a draft for public consultation in July 2021, followed by three versions of draft amendments reviewed by the Standing Committee of the National People's Congress before the final adoption in September.

The new legislation marks a significant milestone in the evolution of China's arbitration framework, introducing a range of updates intended to align with international standards and better accommodate cross-border commercial activities. The most notable aspects are those focused on foreign-related arbitration, including new provisions on the seat of arbitration, permitting foreign institutions to administer foreign-related arbitration, and allowing ad hoc arbitration in designated areas, among others.

At the same time, the New Arbitration Law adopts a measured approach, especially on domestic arbitration, aiming to balance reform with stability given the varying degrees of development among the more than 280 arbitral institutions across China. For domestic arbitration, many of the changes aim at refining existing provisions or codifying existing practices of leading institutions, including, for example, replacing the term "arbitration commission(s)" with "arbitral institution(s)", recognising the legal effect of online arbitration activities and acknowledging parties' agreements on alternative methods of service.

Overall, the New Arbitration Law represents an important step forward for China's arbitration landscape. This blog post provides an overview of some of the key amendments introduced in the New Arbitration Law and our observations.

1. Seat of arbitration

Article 81 of the New Arbitration Law formally introduces the concept of the seat of arbitration into the PRC legislation. The article permits parties to agree on a seat for foreign-related arbitrations. It further provides that the seat determines the applicable procedural law (unless otherwise agreed) and the supervisory court and that awards are deemed rendered at the seat. While PRC courts have adopted the concept of the seat in their practice, this amendment codifies the concept, aligning the statutory legislation with the judicial practice.

Article 81 also sets out the order for determining the seat in the absence of an agreement: the agreed arbitration rules will apply first; if this does not resolve the matter, then the arbitral tribunal may determine the seat based on the circumstances of the case and in accordance with the principle of facilitating the resolution of the dispute.

The legislation does not specify whether the seat is relevant to determining the law governing the arbitration agreement, so this remains subject to judicial interpretation. According to existing judicial interpretations, where no governing law is agreed but a seat is specified, the law of the seat may govern the validity of the arbitration agreement.

2. Foreign arbitral institutions administering arbitration in Mainland China

In practice, it is not uncommon for parties to agree on arbitration administered by a foreign arbitral institution in Mainland China. This has previously led to questions over the validity of such arbitration agreements and the enforceability of the relevant awards in Mainland China, as the current Arbitration Law does not provide an express basis for this practice.

In recent years, the PRC courts have affirmed such clauses and clarified that awards rendered under such arrangements should be enforced as foreign-related awards through judicial opinions. Additionally, cities/provinces such as Shanghai, Beijing and Hainan have introduced regulations permitting foreign arbitral institutions to administer foreign-related arbitrations within designated local areas, rather than merely maintaining liaison offices. However, the gap under the legislation still exists.

Article 86 of the New Arbitration Law establishes the legal basis for foreign arbitral institutions to set up offices and administer foreign-related arbitrations in pilot free trade zones, the Hainan Free Trade Port, and other similar areas. The introduction of the concept of the seat of arbitration further assists in determining the nationality of awards issued under such clauses. While the article highlights free trade zones, the phrase "and other similar areas" suggests that the scope of application could be wider. In judicial practice, arbitration administered by foreign arbitral institutions outside free trade zones is not precluded.

3. Recognition and enforcement of foreign arbitral awards

Article 88 of the New Arbitration Law establishes a clear framework for the recognition and enforcement of foreign arbitral awards in Mainland China which aligns with the provisions of the PRC Civil Procedure Law. This was not covered under the current Arbitration Law. Under this article, an award creditor may apply to any of the following intermediate courts for recognition and enforcement:

(1) the court at the award debtor's place of residence;

(2) the court where the award debtor's assets are located;

(3) the court at the award creditor's place of residence (if both the award debtor and its assets are outside Mainland China); or

(4) the court at a location reasonably connected to the dispute (if both the award debtor and its assets are outside Mainland China).

The article provides that courts shall review these applications based on international treaties to which the PRC is a signatory or the principle of reciprocity. These revisions enhance transparency and provide international parties with greater clarity on enforcement procedures.

Consistent with the principle of reciprocity, Article 88 further introduces a mechanism whereby, if any foreign arbitral institution imposes restrictions or discriminatory measures against PRC parties, then the relevant PRC authorities may implement reciprocal measures targeting parties of that foreign jurisdiction.

4. Limited introduction of ad hoc arbitration

While foreign ad hoc arbitral awards are recognised and enforced in Mainland China under the New York Convention, there is a lack of legal basis for non-institutional arbitration conducted within Mainland China, despite increasing instances of domestically seated ad hoc arbitrations.

The New Arbitration Law takes a measured approach towards ad hoc arbitrations. Pursuant to Article 82, parties are permitted to submit specific types of foreign-related disputes – specifically, (1) foreign-related maritime disputes; and (2) disputes between enterprises registered within pilot free trade zones, the Hainan Free Trade Port, and other designated areas – to non-institutional arbitration. The arbitrators in such arbitrations must meet the criteria specified in the legislation, and the details of the arbitrations must be registered with the relevant arbitration association(s), which are self-regulatory bodies of Chinese arbitral institutions, within three working days after the constitution of the arbitral tribunal, for administrative purposes. Currently, there are multiple arbitration associations in Mainland China, both at the national level and the local provincial and municipal levels, but the New Arbitration Law does not specify which associations are responsible for administering such registration. The additional administrative requirements on ad hoc arbitration under Article 82 stem from the differing degree of development among different regions in Mainland China. The legislators described this article as ad hoc arbitration "with Chinese characteristics" in the press release announcing the New Arbitration Law.

Article 82 outlines general provisions on ad hoc arbitration, but certain implementation aspects require further clarification. For example, Article 82 provides that in ad hoc arbitration, the tribunal is to forward any application for interim measures to the courts for handling. The procedures by which the tribunal should transfer such application to the courts are not specified and these details may be addressed in future judicial interpretations.

5. Appointment and disclosure obligations of arbitrators

The New Arbitration Law refines the rules on arbitrator appointment and disclosure.

The current Arbitration Law provides that the presiding arbitrator in a three-member tribunal should either be selected by the parties jointly or, with party consent, appointed by the director of the arbitration commission. Article 43 of the New Arbitration Law introduces a new mechanism which allows the two co-arbitrators to jointly appoint the presiding arbitrator, when there is party consent.

Article 45 expands arbitrators' disclosure obligations by requiring them to promptly disclose any circumstances that may reasonably give rise to doubts over their independence or impartiality in writing. This goes beyond the current Arbitration Law, which only addresses grounds for recusal.

Major PRC arbitral institutions have already adopted these practices which have also been reflected in their arbitration rules. Codifying them into law will ensure that the practices are adopted consistently across all Chinese arbitral institutions.

6. Tribunal's powers

The New Arbitration Law maintains most of the existing provisions concerning the powers of arbitral tribunals and remains cautious in expanding their authority, particularly in matters involving interim relief and challenges to arbitration agreements, reserving those to judicial oversight.

With respect to the principle of kompetenz-kompetenz, Article 31 affirms that arbitral tribunals may rule on the validity of arbitration agreements. However, parties may still apply directly to courts. Under current judicial interpretations, the review process by the court will be determinative unless the tribunal or arbitral institution has issued a ruling before the court accepts the case.

Regarding interim measures, Articles 39 and 58 introduce provisions on action preservation and confirm the availability of pre-arbitration interim relief. These provisions align with the PRC Civil Procedure Law, but reiterate that all interim measures must be issued by the courts.

In terms of evidence-taking, Article 55 provides that tribunals may collect evidence on their own initiative and, where necessary, request assistance from relevant authorities. However, the provision does not specify the procedures or scope of such assistance, leaving room for further clarification.

7. Other notable revisions

In addition to the above, other notable revisions in the New Arbitration Law include: shortening the time limit for applying to set aside an arbitral award from six months to three months from the date the parties receive the award, aligning with the UNCITRAL Model Law (Article 72); and including declaratory provisions stating that the law supports PRC arbitral institutions to establish offices and conduct arbitration activities overseas (Article 86) and promotes engagement with foreign arbitral institutions and international organisations (Article 12).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.