The current Arbitration Law of the People’s Republic of China (the “Arbitration Law”) was brought into force in 1994. Other than cosmetic amendments made in 2009 and 2017, this law has been in force and nearly unchanged for 30 years.
The law has been widely perceived not to be fully up to the standards required for internationalisation and development of arbitration in China. Therefore, the CPC Central Committee and the State Council issued the Opinions on Improving the Arbitration System and Improving the Credibility of Arbitration in 2019, requiring that the Arbitration Law be revised. On 30 July 2021, the Ministry of Justice issued the Revised Arbitration Law (Draft for Comment) for public comments.
Thereafter, there were no developments noticeable to the public, until revisions to the draft were made in November 2024, followed by the second revised draft in April 2025. Ultimately, on 12 September 2025, the newly revised Arbitration Law (the “New Arbitration Law”) was passed at the 17th Session of the 14th Standing Committee of the National People's Congress, which will take effect on 1 March 2026.
The New Arbitration Law comprises 8 chapters and 96 articles, adding 16 provisions to the New Arbitration Law. The specific revisions are as follows:
1. Institutional reform
Historically before the Arbitration Law of 1994, Chinese arbitration institutions were established as state public institutions. Against this background, the Arbitration Law of 1994 did not clarify the legal nature of arbitration institutions and used the concept of an “arbitration commission”, which made arbitration institutions operate similarly to public institutions (i.e. to be indirectly led by government departments).
The New Arbitration Law firstly defines the nature of arbitration institutions as “public-interest non-profit legal persons” in Article 13. It replaces “arbitration commissions” with “arbitration institutions”, which facilitates the alignment of domestic arbitration institutions’ nomenclature with international standards. Furthermore, Article 89 explicitly specifies the scope of arbitration institutions, including arbitration commissions, arbitration courts, and other lawfully established institutions.
2. Distinction between foreign-related and domestic arbitration institutions diminished
Traditionally, separate competencies and procedures existed in China for foreign-elated and domestic arbitration. However, already in 1996 the General Office of the State Council confirmed that newly established domestic arbitration institutions could handle foreign-related arbitration cases, and that both domestic and foreign-related arbitration institutions were in practice capable of administering all kinds of cases. Now, under the New Arbitration Law, the distinction between foreign-related arbitration institutions and domestic arbitration institutions has ultimately been eliminated. Accordingly, the provisions specifically concerning foreign-related arbitration institutions were deleted.
With the abolition of the dual-track institutional framework distinguishing between domestic and foreign-related arbitration institutions under the New Arbitration Law, a unified regime will be applied to the appointment of arbitrators by all arbitration institutions and the procedural rules are identical.
However, the New Arbitration Law retains a dual-track approach when determining the grounds for setting aside arbitral awards, which continue to differ between foreign-related awards and domestic awards.
3. Branch offices of foreign arbitration institutions in China
Previously, there has been a controversy over whether overseas arbitration institutions fall into the concept of “arbitration commissions” under the Arbitration Law, and related arbitration agreements have also been questioned. The clarification of the nature of arbitration institutions and the removal of the expression of “arbitration commission” lay the foundation for Article 86 of the New Arbitration Law.
Article 86 explicitly states that foreign arbitration institutions are permitted to establish business institutions in free trade pilot zones, Hainan Free Trade Port, and other areas approved by the State Council to conduct foreign-related arbitration activities.
This provision aligns with the introduction of the new policies of the State Council in 2019 and 2020, which permit the establishment of branches of foreign arbitration institutions in the Free Trade Zones (“FTZs”) of Shanghai and Beijing. However, the New Arbitration Law imposes restrictions on the scope of business and territorial restrictions within China for foreign institutions, failing to put them on equal footing with Chinese arbitration institutions. The subsequent implementation measures require further clarification through supporting regulations issued by the State Council.
4. Acceptance of deemed arbitration agreement
Article 16 of the current Arbitration Law refers to an arbitration agreement as “including an arbitration clause contained in a contract and any other written agreement to arbitrate made before or after the occurrence of a dispute.” It requires that an arbitration agreement shall contain (a) an expression of an intention to request arbitration; (b) the matters to be arbitrated; and (c) a designated arbitration institution. While Chinese judicial practice has allowed for the validity of clauses where the institution can be reasonably inferred, the absence of any identifiable arbitral institution has historically rendered an arbitration agreement invalid.
The New Arbitration Law’s Article 27 introduces a pivotal addition to the original Article 16, stating that “if a party files an application for arbitration and the other party does not raise a written objection regarding the existence or validity of the arbitration agreement prior to the first hearing, and remains silent after being reminded by the arbitral tribunal, the parties shall be deemed to have an arbitration agreement.” The acceptance of this “deemed arbitration agreement” marks a crucial shift for China’s arbitration system from formalism toward respecting the true intent of the parties. This change prevents parties from exploiting procedural technicalities to evade arbitration, thereby enhancing procedural efficiency and upholding the principle of good faith in dispute resolution.
5. Adoption of “seat of arbitration”
In the past, arbitration legislation was centred on the arbitration institution. The location of the arbitration institution determined the nationality and affected recognition and enforcement of arbitration awards.
The New Arbitration Law firstly introduces the concept of “seat of arbitration”. The seat of arbitration determines the nationality of the arbitral award, the applicable provisions for the recognition and enforcement of the award and replaces the previous standard of the location of the arbitration institution.
Article 81 further clarifies the rules for determining the seat of arbitration. The parties may agree in writing on the seat of arbitration. Where no agreement exists, the seat of arbitration shall be determined according to the arbitration rules agreed by the parties. Where no agreed rules exist, the arbitral tribunal shall determine the seat of arbitration in accordance with the principle of facilitating the resolution of the dispute. Moreover, for the applicable procedural law, the parties may freely choose the procedural law governing the arbitration. Where no agreement has been made regarding the governing law of the proceedings, the seat of arbitration shall serve as the basis for determining the governing law of the arbitration proceedings.
Meanwhile, the New Arbitration Law stipulates that the arbitration award shall be deemed to be rendered at the seat of arbitration. This revision resolves the jurisdictional issues arising when foreign arbitration institutions conduct arbitration with China as the seat of arbitration and also provides a legal basis for Chinese courts to revoke such awards.
6. Interim measures
Although the second revision draft placed the arbitral tribunal as a determining subject alongside the people’s court, the New Arbitration Law still does not entitle the arbitral tribunal to enforce provisional measures directly. This power still only belongs to the people’s court. The New Arbitration Law explicitly incorporates the existing mechanism of pre-arbitration preservation into the statutory framework of arbitration law. It confirms that parties may, under urgent circumstances prior to initiating arbitration, directly apply to the people’s court for provisional measures.
7. Limited expansion of Arbitral Tribunal Powers
Article 31 of the New Arbitration Law explicitly adopts the self-determination of jurisdiction by the arbitral tribunal, granting the tribunal - rather than solely the arbitration institution - the authority to determine the validity of arbitration agreements.
There is a reformed competence-competence mechanism in the New Arbitration Law. However, this mechanism still gives the court the authority to ultimately decide on the arbitrability of a case and the jurisdiction of an arbitral tribunal. A party can apply to the intermediate court to review an arbitral decision on jurisdiction and arbitrability. Supporters in the arbitration community had been hoping for more.
Furthermore, Article 55 adds an additional new feature and confers upon the tribunal powers to request relevant parties to assist in evidence collection.
8. Limited recognition of ad hoc arbitration
Ad hoc arbitration is a popular dispute resolution method under a private agreement in international arbitration. Due to China’s accession to the New York Convention, foreign ad hoc arbitral awards could be recognised and enforced in China, but domestic ad hoc arbitration was not permitted. Considering the equal treatment of domestic and foreign arbitration, the New Arbitration Law recognizes the ad hoc arbitration system.
However, the scope of this reform is intentionally limited. Ad hoc arbitration is not permitted for all foreign-related disputes. It is currently available only for two specific categories: (1) foreign-related maritime disputes, and (2) foreign-related disputes between enterprises registered in pilot free trade zones, free trade ports, or other areas designated by the State Council. Notably, purely domestic disputes remain ineligible for ad hoc arbitration. This cautious approach means that the national law currently provides a narrower scope for ad hoc arbitration than some local regulations in certain FTZs, which had previously permitted it for domestic disputes between foreign invested enterprises.
The judicial department has to implement a filing requirement for ad hoc arbitration awards, including the status of a case and information of the award. The strict supervision of ad hoc arbitration may incur unnecessary exposure of the information of the parties and their case, which is contrary to the confidential principle of arbitration.
9. Potential for expanded scope of arbitration
The New Arbitration Law explicitly includes “non-legal person organizations” among eligible parties. Since the Arbitration Law already covers these organizations under the category of “other organizations,” the amendments to the New Arbitration Law represent more of a refinement of legislative technique than a substantive breakthrough.
Additionally, the New Arbitration Law covers investor-state disputes. Specifically, Article 94 of the new law confirms that Chinese arbitration institutions have the authority to adjudicate investment disputes between investors and governments, thus explicitly bringing investor-state disputes within the reach of Chinese arbitration. Regarding sports arbitration, the New Arbitration Law does not address this area. Therefore, sports arbitration must follow the provisions of the PRC Sports Law, which explicitly exclude two types of disputes: property rights disputes as defined by the Arbitration Law and labour disputes as defined by the PRC Labour Dispute Mediation and Arbitration Law.
Shortcomings and conclusion
The New Arbitration Law introduces ad hoc arbitration only in limited circumstances—for foreign-related maritime disputes and specific regional inter-enterprise foreign-related disputes - falling short of achieving full liberalization. This creates more incompatibilities of the enforcement system between domestic and foreign arbitration and falls behind the current status in the FTZs.
The New Arbitration Law lacks clarity regarding the investigative powers and interim measures of arbitral tribunals. Further details remain to be elucidated on the actual power of the branch offices of the overseas arbitration institutions to administer cases.
Emergency arbitrator procedures, a common form of interim relief in international commercial arbitration, were not incorporated into the New Arbitration Law. This results in inconsistent institutional rules and impacts international competitiveness.
The changes proposed in the New Arbitration Law, in particular, allowing overseas arbitration institutions to set up branch offices and the adoption of the “seat of arbitration” concept are positive signals that China’s lawmakers intend to change the landscape of the arbitration environment in China, and to develop gradually into a seat that is more friendly to international arbitrations. However, some mismatches with international arbitration standards remain.
