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Introduction
The 17th session of the 14th National People’s Congress Standing Committee achieved a significant milestone by passing the Amendment to the Arbitration Law of the People’s Republic of China. Set to take effect on March 1, 2026, this revision marks the first comprehensive reform since the Act’s original adoption in 1994, reflecting China’s urgent need to modernize its dispute resolution framework and align with global arbitration practices.
The Amendment introduces several critical changes aimed at increasing efficiency, independence, and international compatibility:
Arbitration Institutional Reforms
The term “arbitration institution” replaces the former “arbitration commission,” officially reflecting the shift from an administrative/bureaucratic body to a charitable not-for-profit legal person. This change, stipulated in Article 13, emphasizes the independence of these institutions. While institutions are now recognized as non-profits, they remain under the registration and supervision of the administrative department of justice (Articles 14 and 26). To ensure transparency and professionalism, the Amendment mandates that at least two-thirds of the governing members must possess expertise in law, trade, economics, or scientific technology. Additionally, a minimum of one-third of the members must be replaced every five years to mitigate conflicts of interest.
Modernizing Arbitration Procedure
Article 22 excludes public servants, such as prosecutors and judges, from serving as arbitrators, while encouraging the inclusion of qualified foreign experts in various fields. Article 45 imposes a clear duty on arbitrators to disclose any situation casting reasonable doubt on their independence or impartiality. Article 55 grants arbitral tribunals the power to collect evidence and request assistance from relevant authorities, a significant expansion from the previous limitation on evidence collection. Article 39 formally confirms the parties’ right to apply to the People’s Court for interim measures or injunctions before arbitration proceedings are initiated.
The time limit for applying to set aside an arbitral award has been significantly shortened from six months to three months (Article 72), aiming to enhance the efficiency of enforcement. The Amendment unifies the legal grounds for both setting-aside and non-enforcement applications of arbitral awards.
Aligning with International Arbitration Norms
Previously, the “location of the arbitration commission” determined the nationality of an arbitral award. Article 81 now formally adopts the “seat of arbitration” theory, allowing parties to choose the seat. If the parties fail to agree, the seat is determined by the institutional rules or, failing that, by the arbitral tribunal based on the convenience principle. The law of the seat now governs the arbitration proceedings and the judicial review of the award. In a controlled move toward greater flexibility, Article 82 permits ad hoc arbitration—arbitration not administered by an institution for a limited scope of disputes: foreign-related maritime disputes and disputes involving parties from Free Trade Pilot Zones, the Hainan Free Trade Port, and other approved regions.
This liberalisation is conditional on the parties informing the Association of Chinese Arbitration about the tribunal’s details shortly after its establishment, with the People’s Courts offering judicial support for interim measures. Article 86 explicitly supports foreign arbitration institutions establishing business entities in designated areas, such as the Free Trade Zones and the Hainan Free Trade Port, subject to government approval. This marks a clear step toward further opening up China’s dispute resolution market.
Conclusion
The 2025 Amendment is an undeniably progressive effort, demonstrating China’s commitment to creating a more business-friendly environment for settling economic disputes. It integrates essential modern practices, most notably the legalizing of online arbitration, the adoption of the seat theory, and the limited, yet significant, recognition of ad hoc arbitration.
However, the Amendment remains cautious in several aspects.It retains the mandatory requirement of a named arbitration institution for the validity of an arbitration agreement, largely limiting the scope of ad hoc arbitration.The competence-competence doctrine remains limited, with the People’s Court retaining the primary role in determining the validity of the arbitration agreement when challenged by the parties. Arbitral tribunals still lack the power to rule on interim measures, which must continue to be referred to the People’s Court. Despite these limitations, the Amendment represents a major advancement in modernizing China’s arbitration rules. Its implementation will be closely watched by the international legal and commercial community as China continues to navigate global economic currents and strengthen its role in international commerce.
Expositor(s): Adv. Shreya Mishra
