Anticipating the Amended Arbitration Law: How Will Arbitration Commissions in China Evolve?

Hong emphasises the global significance of China’s arbitration reform, given China’s status as a major trade partner and a significant source of cross-border investment. He notes that international arbitration is part of China’s “soft power”, with Beijing aiming to develop prestigious arbitration institutions akin to the Singapore International Arbitration Centre. The current PRC Arbitration Law, effective since 1995, is considered outdated, necessitating substantial reforms to align with international practices.

The proposed amendments aim to modernise the arbitration framework, through measures such as removing the requirement to name a specific arbitration institution for arbitration agreements to be valid, recognising the concept of “place of arbitration”, and empowering arbitration tribunals to order interim measures. These changes are seen as significant steps toward international standards.

A central focus of Hong’s talk is the debate over ad hoc arbitration in China, which contrasts with institutional arbitration. Ad hoc arbitration, translated as 临时仲裁 in Chinese, is often misunderstood as temporary or makeshift. In reality, it refers to arbitration conducted without institutional oversight. The Chinese legal and intellectual context is deeply rooted in institutional arbitration, influenced by the administrative and executive power structures established in the 1990s.

Hong explains that institutional arbitration in China is seen as an extension of administrative power, which complicates the acceptance of ad hoc arbitration. Despite the distrust of ad hoc arbitration, there is recognition of its necessity, especially for international disputes. The draft amendments propose a hybrid model, allowing ad hoc arbitration for foreign-related matters while maintaining institutional arbitration for domestic issues.

Hong concludes by highlighting the complexity of China’s institutional reform and the evolving nature of arbitration commissions. He notes the gradual shift of some arbitration commissions from being government-affiliated to adopting new organisational forms such as social service groups to meet growing commercial demand.