Amended Law Expands Arbitration Options for Businesses Operating in China

China’s amendments to the Arbitration Law, effective 1 March 2026, introduce significant reforms designed to modernise its arbitration framework, align with international best practice and increase China’s appeal as a seat for cross-border dispute resolution.

This client alert summarises the most important changes and their practical implications and provides a table comparing the relevant legal provisions before and after the changes.

Formal Recognition of the ‘Seat of Arbitration’

A landmark change is the introduction of the seat of arbitration into Chinese legislation.

While the notion of a seat has long been a cornerstone of international arbitration practice, it was absent from China’s previous Arbitration Law, creating uncertainty in both theory and practice.

Historically, Chinese law did not expressly distinguish between the seat of arbitration and the location of the arbitration institution. According to earlier provisions of the Civil Procedure Law, the nationality of the award would be determined by reference to the location of the foreign administering arbitration institution.

This practice gave rise to confusion in cross-border cases. For example, if the ICC Court of Arbitration in Paris administered an arbitration in China, questions arose as to whether the resulting award should be regarded as a “Chinese award” or a “French award.”

The lack of clarity led to inconsistent judicial approaches, most notably in determining whether such an award should be enforced under the New York Convention as a foreign award or under PRC law as a domestic award.[1]

Over time, Chinese judicial practice gradually moved toward recognising the seat of arbitration as the decisive factor for determining the nationality of the award, the applicable procedural law and the supervisory courts’ jurisdiction. In addition, arbitration rules promulgated by Chinese arbitration institutions, such as the Beijing Arbitration Commission (BAC) and the China International Economic and Trade Arbitration Commission (CIETAC), have long provided that an arbitral award is deemed to be made at the seat of arbitration, indicating that the nationality of the award is determined by reference to the seat of arbitration. The new amendment now codifies this approach at the legislative level for the first time, eliminating residual uncertainty, if any.

Introduction of Ad Hoc Arbitration

Another significant development is the formal recognition of ad hoc arbitration in specific foreign-related disputes.

Again, while ad hoc arbitration is widely accepted in many jurisdictions, it had not been permitted under Chinese law, which recognised only institutional arbitration. In recent years, certain local governments, including Shanghai and Beijing, have initiated pilot programs to explore ad hoc arbitration under specific conditions.[2]

These local pilot initiatives have provided practical experience and a testing ground for the introduction of ad hoc arbitration within China. Building on this experience, Article 82 of the revised law establishes a statutory basis for ad hoc arbitration in limited contexts. Specifically, parties may agree in writing to resolve disputes through ad hoc arbitration if the dispute involves (1) foreign-related maritime matters, or (2) enterprises registered in pilot free trade zones, the Hainan Free Trade Port or other designated areas.

In such cases, the tribunal must be constituted by arbitrators meeting the statutory requirements and must, within three business days of its formation, file details of the parties, the seat of arbitration, the composition of the tribunal and the applicable arbitration rules with the relevant arbitration association. The specific rules governing which arbitration association should receive such filings as well as the procedures for submission and any subsequent oversight are expected to be provided in future implementing regulations or guidance.

The law also provides that in ad hoc proceedings, applications for interim relief — including property preservation, evidence preservation or orders requiring or prohibiting specific conduct — shall be transmitted by the tribunal to the competent people’s court, which must address them in accordance with law. This ensures that ad hoc arbitrations have access to the same judicial support mechanisms as institutional proceedings.

The limited scope of ad hoc arbitration reflects a cautious but significant step that China has taken toward aligning with international practice. These sectors were deliberately chosen: maritime disputes are closely tied to international practice while free trade zones function as policy laboratories in which new mechanisms can be trialed under controlled conditions. By doing so, the legislature signals openness to practice in line with international norm while avoiding risks that could arise from more sweeping reforms.[3]

Opening China to Foreign Arbitral Institutions

The revised law also provides a framework for foreign arbitration institutions to operate in China.

Previously, foreign arbitral institutions including the ICC, HKIAC and SIAC could only establish representative offices in China and their scope of activities was limited to non-arbitral functions such as information exchange, market research and business liaison.

If the parties agree to submit their disputes to arbitration administered by foreign arbitral institutions seated in China, all substantive arbitration activities — including case administration, tribunal formation, hearings, fee collection and award issuance — will be managed by the overseas offices designated in the arbitration agreement. Since late 2023, pilot rules in cities such as Shanghai and Beijing have allowed foreign arbitral institutions to establish operational offices capable of managing arbitration proceedings. This practice has now been codified in Article 86 of the revised Arbitration Law, which provides that foreign arbitral institutions may establish operational offices in free trade zones,[4] the Hainan Free Trade Port or other designated areas, and conduct foreign related arbitration activities. This dual framework — allowing foreign institutions to administer arbitrations with China as the seat while establishing approved offices in designated regions — supports the growth of regional arbitration hubs, enhances local service capabilities and promotes the internationalisation of China’s arbitration market.

For practitioners and parties, this reform expands the range of institutional arbitration options and strengthens China’s appeal as a venue for cross-border dispute resolution.

Disclosure Obligation of the Tribunal

For the first time, the revised law codifies arbitrators’ disclosure obligations, reinforcing the transparency and credibility of arbitral proceedings.

Article 45 provides that if an arbitrator is aware of any circumstance that may give rise to reasonable doubts as to their independence or impartiality, the arbitrator must promptly disclose such circumstance in writing to the arbitration institution. The institution, in turn, is required to notify the parties in writing of both the tribunal’s composition and any disclosures made.

Although major domestic arbitration institutions have long established disclosure requirements in their institutional rules, the revised law elevates these obligations into statutory laws, thereby offering clearer and more uniform standards. Significantly, the law adopts the internationally recognised “justifiable doubts” test, which has become the prevailing threshold in international arbitration for determining when disclosure is required.

That said, important questions remain as to how Chinese courts will interpret and apply the concept of “justifiable doubts.” In practice, non-disclosure or insufficient disclosure has often been raised as a ground for refusing enforcement of or setting aside arbitral awards. However, the courts have adopted divergent approaches, particularly in cases in which the arbitrator’s employer has retained the law firm representing one of the parties to provide legal services.[5]

Looking ahead, it would be helpful for legislators and judicial authorities to clarify the standards for what constitutes “justifiable doubts” in order to harmonise judicial practice and enhance the predictability and consistency of decisions in arbitration-related cases.

Strengthened Evidence-Gathering Powers

The revised law enhances arbitral tribunals’ ability to collect evidence. Historically, parties in China were expected to bear the burden of producing evidence, while tribunals had only limited investigative powers; for example, unlike courts, they could not issue investigative orders to third parties.

In particular, arbitration in China has no concept of mandatory discovery or document production, which remains largely unfamiliar in practice. Consequently, parties with fewer resources often struggle to obtain even the foundational evidence necessary to advance their claim. Coupled with a high threshold for evidentiary proof — closer to “high probability” than the “balance of probabilities” standard common in common-law jurisdictions — this context underscores the need for remedial measures in arbitration.

The revised law addresses this imbalance by granting tribunals the discretion to collect evidence independently and to seek assistance from relevant authorities or institutions when necessary. This discretionary authority functions as a procedural safeguard, addressing information asymmetry and balancing evidentiary opportunities while aligning arbitration practice with China’s substantive justice orientation, which emphasises an inquisitorial approach and the active role of tribunals in uncovering the truth rather than relying solely on adversarial presentation.

That said, this safeguard is neither automatic nor mandatory. The law provides no specific criteria for exercising this discretion. A tribunal may hesitate to exercise it for fear of being perceived as favoring one party. In the circumstances, it will require clear guidance from judicial authorities on the procedures and standards for its proper implementation to ensure that this discretionary authority is both practicable and effective.

Promotion of Procedural Efficiency

The revised Arbitration Law also underscores a clear policy emphasis on procedural efficiency and the prompt exercise of rights.

Article 11 formally recognises the validity of online arbitration, giving proceedings conducted online the same legal effect as those conducted offline unless a party expressly objects. In practice, many Chinese arbitration institutions had already adopted online procedures, especially since the pandemic, including video hearings and electronic submission of materials. This provision effectively codifies existing practice, providing a statutory guarantee of the validity and enforceability of arbitration proceedings conducted online.

Compared with international practice, where procedural communications are often conducted directly between parties and arbitrators via email or other electronic platforms, China’s arbitration has historically remained institution-driven, with arbitration centers managing filings and routinely processing hard copy documents. The new law reinforces the legal effect of electronically conducted proceedings while preserving institutional oversight. This dual approach is designed to improve procedural efficiency and maintain the reliability and integrity of the arbitration process within China’s institutional framework.

The new law also shortens the time limit for applying to set aside an arbitral award from six months to three upon receipt of the award, significantly reducing the post-award “limbo period.”

In urgent cases, parties may apply to the court for property or evidence preservation even before arbitration commences, ensuring swift protection of assets and evidence.

Conclusion

The new PRC Arbitration Law marks a significant step toward greater openness and flexibility in China’s arbitration framework. By recognising ad hoc arbitration and permitting foreign arbitral institutions to establish offices in China, the law enhances the choices available to foreign businesses when negotiating dispute resolution clauses. Complementing these legislative developments, regional initiatives such as the Beijing International Commercial Arbitration Center Regulations (adopted on 26 September 2025) further demonstrate China’s commitment to building a modern, internationally aligned and high-credibility arbitration ecosystem that supports institutional innovation and professional excellence.

Nevertheless, the practical impact of these reforms will depend on how they are received and implemented. The restriction limiting foreign arbitral institutions to cases involving foreign elements may reduce the appeal of those institutions, while the lack of clarity around the definition and scope of “foreign element” underscores the need for consistent judicial interpretation. Ensuring such clarity will be essential to fostering a predictable, competitive and internationally aligned arbitration environment.

At the same time, certain differences from prevailing international practices still persist. For instance, arbitral tribunals remain unable to grant interim measures, and courts continue to have priority in ruling on jurisdictional challenges even when tribunals possess concurrent competence. These features reflect the Chinese legislature’s cautious, incremental approach — one that balances reform with control — while leaving open the path for the continued evolution of Chinese arbitration toward closer alignment with global standards.

Appendix: Comparison of the Relevant Legal Provisions: Before and After

Topic	Previous Laws	Current Laws
Formal recognition of seat of arbitration	Article 290 of the PRC Civil Procedure Law (2021 Amendment) A party seeking recognition and enforcement of an arbitral award made by the foreign arbitration institution shall apply directly to the intermediate people’s court…, and the people’s court shall process the application in accordance with an international treaty concluded or acceded to by the People’s Republic of China or under the principle of reciprocity.	Article 304 of the PRC Civil Procedure Law (2023 Amendment) A party seeking recognition and enforcement of an arbitral award made outside the territory of the People’s Republic of China that has legal effect may apply directly to the intermediate people’s court….and the people’s court shall handle the application in accordance with international treaty concluded or acceded to by the People’s Republic of China or under the principle of reciprocity.
	No relevant provision in the Arbitration Law (2017).	Article 81 of the PRC Arbitration Law 2025 The parties may agree on the seat of arbitration in writing. Unless the parties have otherwise agreed on the applicable law of the arbitration procedure, the seat of arbitration shall serve as the basis for determining the applicable law of the arbitration proceedings and the court with jurisdiction. An arbitration award is deemed to have been rendered at the seat of the arbitration.
Introduction of Ad Hoc Arbitration	No relevant provision in the PRC Arbitration Law 2017.	Article 82 of the PRC Arbitration Law 2025 Where the parties agree in writing to refer to arbitration a foreign-related maritime dispute or a foreign-related dispute arising between enterprises formed and registered in a pilot free trade zone created with the approval of the State Council, the Hainan Free Trade Port or other areas designated by the state, they may choose to refer the dispute to an arbitral institution or select the People’s Republic of China as the seat of arbitration and refer the dispute to an arbitration tribunal consisting of persons who meet the conditions prescribed in this law for arbitration in accordance with the agreed arbitration rules, and the arbitration tribunal shall, within three working days of its formation, under recordation with the arbitration association regarding the names of the parties, the seat of arbitration, the composition of the arbitration tribunal, and the rules of arbitration. Where a party applies for property or evidence preservation, or requests an order that the other party take or refrain from taking certain actions, the arbitration tribunal shall refer the application to the people’s court in accordance with the law, and the people’s court shall handle it in a timely manner in accordance with the law.
Opening China to Foreign Arbitral Institutions	No relevant provision in the PRC Arbitration Law 2017.	Article 86 of the PRC Arbitration Law 2025 Arbitral institutions are supported in establishing business offices outside the territory of the People’s Republic of China to carry out arbitration activities. Based on the needs of economic and social development, reform and opening up, foreign arbitral institutions may be allowed to establish business offices in the free trade pilot zones created with the approval of the State Council, the Hainan Free Trade Port and other areas and carry out foreign-related arbitration activities in accordance with the relevant provisions issued by the state.
Disclosure Obligations of the Tribunal	No relevant provision in the PRC Arbitration Law 2017.	Article 45 of the 2025 PRC Arbitration Law Where an arbitrator falls under any circumstance that may cause the parties to reasonably doubt his or her independence or impartiality, the arbitrator shall disclose the circumstance in writing to the arbitral institution in a timely manner. The arbitral institution shall notify the parties in writing of the arbitrators’ written disclosures and the composition of the arbitration tribunal.
Strengthened Evidence-Gathering Powers	PRC Arbitration Law 2017 Article 43: Parties shall provide evidences in support of their own arguments. The arbitration tribunal may, as it considers necessary, collect evidences on its own.	PRC Arbitration Law 2025 Article 55: A party shall provide evidence in support of its own claims. The arbitration tribunal may, as it considers necessary, collect evidence on its own initiative, and may, when necessary, request relevant entities to provide assistance in accordance with the law.
Time Limit for Setting Aside Awards	PRC Arbitration Law 2017 Article 59: A party that wishes to apply for setting aside the arbitration award shall submit such application within six months from the date of receipt of the award.	PRC Arbitration Law 2025 Article 72: A party that wishes to apply for revocation of the arbitration award shall submit such application within three months from the date of receipt of the award.
Online Arbitration	PRC Arbitration Law 2017 None	PRC Arbitration Law 2025 Article 11: Arbitration activities may be conducted online on an information network unless the parties explicitly disagree to it. Arbitration activities conducted online on an information network have the same legal effect as offline arbitration activities.
Pre-arbitration Asset and Evidence Preservation	PRC Arbitration Law 2017 None	PRC Arbitration Law 2025 Article 39: In case of emergency, a party to an arbitration agreement may, before applying for arbitration, apply to the people’s court for property preservation or request the people’s court to order that the other party take or refrain from taking certain actions in accordance with the relevant provisions of the Civil Procedure Law of the People’s Republic of China. If a party applies for preservation, the people’s court shall handle it in a timely manner in accordance with the law. Article 59: In case of emergency, a party to an arbitration agreement may, before applying for arbitration, apply to the people’s court for evidence preservation in accordance with the relevant provisions of the Civil Procedure Law of the People’s Republic of China. If a party applies for evidence preservation, the people’s court shall handle it in a timely manner in accordance with the law.