The People’s Republic of China amended its Arbitration Law on 12 September 2025 during the 17th Session of the Standing Committee of the National People's Congress. The amendments incorporate the first substantive changes in over three decades and will enter into force on 1 March 2026.
Summary
- Under the new Arbitration Law, Chinese foreign-related arbitral awards will be treated like domestic arbitral awards and enforced in the same way. Such awards are rendered in arbitrations with a foreign element where the seat of arbitration is within the PRC but the arbitration is administered by a foreign arbitral institution.
- This change opens up new opportunities for parties to choose foreign arbitral institutions to administer their disputes in China. Which arbitral institution parties should choose to administer their case will depend on the individual characteristics of the case, personal choice, and bargaining power.
- Further changes to the New Arbitration Law are wide-ranging and include new rules on the role of state courts in interim relief and online arbitration.
Introduction
On 12 September 2025, the People’s Republic of China (“PRC”) issued the first substantive update to its arbitration law in over three decades (the “New Arbitration Law”). This article briefly discusses recent changes introduced with the New Arbitration Law, which goes into effect on 1 March 2026.
Recognition and Enforcement of Awards in the PRC
In the PRC, domestic arbitral awards are directly enforceable at the enforcement division of the competent state court, whereas the enforcement of foreign awards depends on a state court deciding that the foreign award should be recognized in the PRC and is enforceable. The PRC is a Member State of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (“New York Convention”). According to the rules of the Convention, Member States must recognize foreign awards as binding and enforce them unless any of the limited grounds for refusal under Article V of the New York Convention applies. In practice, however, enforcement rates in the PRC heavily depend on the region of the country where the creditor seeks enforcement.
Under former PRC practice, unlike in most jurisdictions, the nationality of an arbitral award was not determined by the seat of arbitration. It turned on the nationality or seat of the administering arbitral institution. As a result, an award rendered in China could still be classified as a foreign award if the arbitration was administered by a foreign institution. Such an award, though made in China, required recognition and enforcement under the New York Convention and was therefore exposed to review by courts that have at times been perceived as less arbitration friendly. Against this backdrop, parties seeking straightforward enforcement often felt compelled to select a Chinese institution, even if that did not align with their preferences. Domestic institutions in the PRC have traditionally exercised greater institutional involvement in decision making and lacked the depth of experience in complex cross border cases that leading international institutions, such as the ICC, have developed.
Seat-Centered Approach and the Role of Foreign Institutions
The New Arbitration Law marks a decisive shift toward a seat-centered framework for determining the legal regime and nationality of arbitral awards in China. Under the 1994 Arbitration Law, a valid arbitration agreement had to designate a Chinese “arbitration commission,” which in practice meant an institution established in the PRC; the statute did not envisage foreign arbitral institutions administering arbitrations seated in mainland China. Nevertheless, the Supreme People’s Court (“SPC”) gradually opened up the Chinese arbitration market through a series of pro-arbitration decisions, most notably the 2013 Longlide decision that upheld an ICC arbitration clause seated in Shanghai (Anhui Longlide Packaging and Printing Co Ltd v BP Agnati SRL, (2013) Min Si Ta Zi No. 13). Subsequent decisions from courts in major centers, followed by further SPC guidance and amendments to the Civil Procedure Law, reinforced the trend toward recognizing awards by foreign-administered, China-seated arbitrations as Chinese foreign-related awards and, crucially, toward assessing an award by reference to the place of arbitration rather than the administering institution.
The New Arbitration Law consolidates this evolution. First, Article 81 affirms that, in foreign-related cases, the parties may agree on the place (seat) of arbitration, thereby anchoring the applicable procedural law and the supervisory court’s jurisdiction in the seat. Second, Articles 27 and 89 recognize a broader category of arbitral institutions — “arbitration committees, arbitration courts and other institutions established in accordance with the law” — and thereby move away from the strict 1994 formulation that tethered validity to a PRC “arbitration commission.” Together, these provisions align China’s statutory framework with modern international practice by prioritizing the seat as the organizing principle of the arbitration.
Clarifying the Status of Foreign-Administered, China-Seated Cases
For foreign arbitral institutions, Article 86 of the New Arbitration Law permits the establishment of business offices in designated areas, such as pilot free trade zones and the Hainan Free Trade Port, in order to conduct foreign-related arbitration activities in accordance with applicable national regulations. Those permissions do not convert the seat analysis into a geographical restriction, however: for purposes of characterizing an award, it is the seat that is determinative, not the presence of an institutional office in a free trade zone. Nor does the law allow parties to submit purely domestic (non-foreign-related) disputes to foreign arbitral institutions; domestic disputes remain the preserve of PRC institutions. In other words, foreign institutions may engage with the China market in foreign-related matters within the regulatory framework, and an award rendered in a China-seated, foreign-administered case is treated as a Chinese foreign-related award, subject to set-aside and enforcement under PRC law, without any requirement that the seat be located in an approved zone.
This seat-centered approach resolves the long-standing “institution-versus-seat” uncertainty that persisted under the 1994 statute despite a decade of favorable judicial developments, including Longlide (see above), subsequent recognition of clauses providing (for example) for SIAC or ICC administration with seats in Beijing or Shanghai, and enforcement decisions treating foreign-administered, China-seated awards as Chinese foreign-related awards. The New Arbitration Law provides statutory clarity that the place of arbitration governs the procedural framework, the supervisory court, and the classification of the award.
Encouraging PRC Institutions and Opening Up Foreign-Related Matters
The New Arbitration Law simultaneously continues to encourage parties in foreign-related arbitrations to select PRC arbitral institutions and confirms that those institutions may hear investor–state treaty disputes. The CIETAC and the Shenzhen Court of International Arbitration (SCIA) have already prepared dedicated rules for investment arbitration, and the statute’s express authorization is expected to increase the number and visibility of investor–state cases involving Chinese parties and interests. This policy preference coexists with parties’ autonomy in foreign-related cases to agree on foreign administration, subject to the statutory limits described above.
Practical Implications for Clause Drafting and Case Strategy
A seat-centered regime heightens the importance of precise drafting. The choice of seat directly affects the supervisory court’s jurisdiction, the procedural law of the arbitration, the grounds and forum for set-aside, and how the award will be enforced in China. The selection of an administering institution remains consequential for case management, arbitrator appointment mechanics, interim measures interfaces, and evidentiary practice because institutional rules often govern those features comprehensively. In foreign-related matters seated in the PRC, parties weighing foreign versus PRC administration should calibrate their choices with the nature of the dispute, desired procedural tools, and anticipated enforcement trajectory.
Court Assistance for Interim Measures and Preservation of Evidence
The New Arbitration Law adopts a restrictive approach to interim measures. Although interim relief is often critical in arbitration – particularly because parties may need swift, enforceable protection even when their disputes are subject to an arbitration agreement – the New Arbitration Law does not empower arbitral tribunals to issue interim measures. Instead, jurisdiction to grant such relief lies exclusively with the courts.
In practice, this means that during an arbitration, applications for interim measures must be filed with the arbitral institution, which then forwards the application to the competent court for determination. The arbitral institution acts as a transmission channel rather than a decision-maker. In urgent circumstances arising before an arbitration is commenced, parties may apply directly to the court for interim relief. In both scenarios, it is the state court that decides on the application and issues any order.
This framework also applies to applications for the preservation of evidence. Parties may seek court assistance for evidence preservation even before initiating arbitral proceedings, subject to the same procedural distinctions between pre-arbitration urgency and applications made once a case is on foot and administered by an arbitral institution.
Parties should, however, be mindful of enforcement considerations. While PRC court-ordered interim measures are effective domestically, recognition and enforcement of such orders abroad may be challenging, depending on the jurisdiction. The cross-border enforceability of interim relief remains jurisdiction-specific and may require parallel strategies to secure practical protection outside the PRC.
Additional Key Amendments
The following further key amendments are also included:
Ad hoc arbitration: For the first time under national law, ad hoc arbitration is permitted for foreign-related maritime disputes and for disputes between enterprises that are both incorporated and registered in designated free trade zones, the Hainan Free Trade Port, and other nationally prescribed areas (Article 82). While this marks a departure from the longstanding preference for institutional arbitration, the reform is narrowly framed: ad hoc arbitration remains unavailable for domestic disputes and will continue to be largely inaccessible for most international disputes outside the specified categories.
Enhanced Independence and Disclosure Obligations: Arbitrators must disclose any circumstances that could give rise to reasonable doubts about their independence or impartiality, aligning the standard with internationally recognized best practices (Article 45).
Online Arbitration: The New Arbitration Law expressly permits arbitral proceedings to be conducted online unless the parties expressly opt out (Article 11). By default, virtual hearings and the electronic submission of documents and evidence are treated as equivalent to their offline counterparts. This opt-out model reflects contemporary technological realities and is expected to facilitate more efficient proceedings.
Conclusion
China’s New Arbitration Law signals a meaningful alignment with international practice, including greater party autonomy to select arbitral institutions, express recognition of the seat of arbitration as the determinant of an award’s nationality, and clearer accommodation of ad hoc proceedings. These reforms, shaped by globalization and external benchmarking, indicate an intent to position the PRC as a more appealing venue for cross-border disputes. However, their practical impact should be assessed with care. Each change operates within defined boundaries and preconditions, making its availability and effect highly context-dependent; parties should therefore scrutinize applicability in light of the specific arbitration agreement, the chosen seat, and the nature of the dispute.
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