CHINA: An Introduction to Dispute Resolution: Arbitration (PRC Firms)

Economic and Social Background

The development of arbitration in the People’s Republic of China (PRC) has been fundamentally propelled by the remarkable expansion of the national economy. During the past several decades, China’s economy has maintained steady growth. According to data released by the National Bureau of Statistics, China’s GDP reached RMB140.19 trillion in 2025, with total import and export value exceeding RMB45 trillion. This economic activity stretches across over 240 countries and regions, involving over 780,000 companies with import and export records.

China remains committed to advancing high-quality international co-operation and expanding co-operation in emerging fields. Data from the Ministry of Commerce shows that the completed contract revenue for China’s projects in the Belt and Road Initiative countries reached RMB1.1 trillion in 2025.

To echo such economic development, China endeavours to foster a world-class business environment that is market-oriented, law-based, and internationalised. Advancing arbitration reforms and substantially enhancing its credibility and competitiveness have therefore become a strategic focus.

Overview of Arbitration in China

Arbitration is a popular business dispute resolution mechanism in China. China has seen rapid growth in arbitration, backed by active government efforts to advance its development and integrate it with international standards.

By the end of August 2025, 285 arbitration commissions have been established nationwide, collectively handling over five million arbitration cases with a total dispute value exceeding RMB9 trillion, as suggested by the Ministry of Justice. Parties to arbitration are from more than 100 countries and regions, and the cases cover a multitude of sectors such as finance, e-commerce, construction, maritime, and intellectual property. With its arbitral awards recognised and enforced worldwide, China is steadily emerging as a preferred place for arbitration on a global scale.

China promotes a pro-arbitration judicial environment, where courts exercise strict caution in setting aside arbitral awards and actively support interim measures and enforcement. According to the latest data published by the People’s Supreme Court, in 2024, PRC courts ruled to set aside or partially set aside arbitral awards in only 245 out of 11,016 cases. In 26,770 out of 27,069 cases, courts granted the parties’ applications for interim measures in arbitral proceedings.

PRC courts continue to enhance inter-regional judicial assistance and support arbitration to resolve cross-border commercial disputes. In 2024, among the 62 cases involving applications for recognition and enforcement of arbitral awards from Hong Kong, Macao and Taiwan, PRC courts recognised and enforced 53 cases and permitted parties to withdraw applications in six cases.

In parallel, PRC courts consistently demonstrate a positive stance towards foreign arbitral awards. In 2024, 42 cases of recognition and enforcement of foreign arbitral awards were concluded, with no instances of refusal of recognition or enforcement. When examining the grounds for refusing recognition and enforcement under the New York Convention, PRC courts generally apply a stringent and narrow interpretation and tend to uphold the validity of the foreign arbitral awards.

Highlights: The Revision of the Arbitration Law

The Arbitration Law was enacted in 1995 which served China’s arbitration growth well. However, new challenges have emerged. In September 2025, after four years’ preparation and public consultation, the law was amended, with the amendments due to take effect on 1 March 2026. The new law aims to address modern commercial needs and endeavours to bring the system closer to international standards, positioning China’s arbitration sector for its next leap forward.

The revised Arbitration Law comprises eight chapters and 96 provisions. It covers extensive ground, including alignment with international norms, stronger judicial support for arbitration, and tighter qualifications for arbitrators, etc. Key highlights include the following:

• Introducing the Concept of the “Seat of Arbitration”: This concept had not previously been defined under the old arbitration law. The new law expressly provides that, unless the parties agree otherwise on the law governing the arbitral procedure, the procedural law applicable to the arbitration and the court with jurisdiction shall be determined based on the seat of arbitration; arbitral awards shall be deemed to have been made at the seat of arbitration. The revised Arbitration Law further sets forth the specific rules for determining the seat of arbitration – the parties may agree in writing on the seat of arbitration; in the absence or ambiguity of such agreement, the seat shall be determined under the parties’ agreed arbitration rules, failing that, by the arbitral tribunal based on the circumstances of the case and the principle of facilitating efficient dispute resolution. By aligning the definition of the “seat of arbitration” with internationally recognised practices, the revised Arbitration Law provides a clearer legal basis for ascertaining the nationality of an arbitral award and its recognition and enforcement in the PRC.
• Limited Recognition of Ad Hoc Arbitration: The revised Arbitration Law recognises the legality and validity of ad hoc arbitration at the statutory level for the first time, while limiting the scope to two types of cases – disputes arising from foreign-related maritime matters, and foreign-related disputes between enterprises registered within Hainan Free Trade Port and Free Trade Zones approved by the State Council. Subject to the foregoing conditions, the parties may freely select any internationally recognised arbitration rules to govern the arbitral proceedings and appoint qualified arbitrators who are not registered in the panel of any arbitral institutions. This change reflects the recognition of party autonomy and further enables businesses to adopt a popular form of arbitration which has been used steadily in specialised industries for decades.
• Confirming the Availability of Pre-Arbitration Interim Measures: The revised Arbitration Law prescribes that, under urgent circumstances, the parties may apply to the court for asset preservation, action preservation and evidence preservation before initiating arbitration, which provides a legal basis for pre-arbitration interim measures. The revised Arbitration Law further stipulates that courts shall handle all preservation applications promptly, demonstrating a supportive judicial stance towards arbitration.
• Supporting Arbitration Institutions to “Go Global” and “Bring In” International Players: The revised law includes a provision in its General Principles encouraging arbitration institutions to strengthen foreign exchange and co-operation. It also explicitly supports Chinese arbitration institutions in establishing offices abroad and conducting arbitration activities. Additionally, foreign arbitration institutions are permitted to set up offices and handle foreign-related arbitration cases in designated areas such as free trade pilot zones approved by the State Council and the Hainan Free Trade Port, in accordance with national regulations. This signals China’s firm commitment to further internationalising its arbitration system.
• Tightening Requirements for Arbitrators: The revision further refines the qualifications for serving as an arbitrator, introduces disclosure obligations, and improves arbitrator appointment procedures. These changes lay the groundwork for high-quality arbitration development.

The revision of the Arbitration Law marks an important step in the PRC’s vision to forge an international arbitration mechanism and an international arbitration hub. Inevitably, foreign-related and international arbitrations encounter challenges arising from differences in legal culture and social norms across jurisdictions. To navigate the cross-border disputes, the PRC is determined to deepen reforms to systematically align its arbitration framework with internationally recognised commercial arbitration rules and practices, all the while cultivating a skilled arbitration profession. By strengthening an open and inclusive arbitration environment, the PRC aims to position itself as a credible, efficient, and globally integrated forum for resolving disputes.