Key Implications of the New Arbitration Law in China

In September 2025, the Standing Committee of the National People's Congress adopted a substantially revised Arbitration Law of the People's Republic of China (the "New Arbitration Law"), which will take effect on 1 March 2026. This amendment constitutes the most comprehensive and systematic revision of the Arbitration Law in its thirty-year history. The revisions address multiple areas - including institutional openness, the seat of arbitration and temporary (ad hoc) arbitration, digitalization of procedures, and investment arbitration - and mark a significant advance in the internationalization and legal modernization of China's arbitration framework. This article reviews the principal amendments under the New Arbitration Law and, drawing on practical considerations in foreign-related and cross-border dispute resolution, analyzes their likely impact on parties and sets out key practical responses for arbitration practice in China.

The New Arbitration Law reaffirms China's policy orientation toward international cooperation and institutional openness in arbitration. It encourages domestic arbitration institutions to establish business presences overseas and permits foreign arbitration institutions to lawfully set up operational offices in designated zones such as pilot Free Trade Zones and the Hainan Free Trade Port to carry out foreign-related arbitration activities. Several well-known international institutions - for example, the Singapore International Arbitration Centre (SIAC) and the International Court of Arbitration (ICC) - have already begun establishing representative offices or business desks in China.

China also encourages parties to foreign-related disputes to choose Chinese arbitration institutions and to designate China as the seat of arbitration. Together, these measures indicate China's evolving role in the global arbitration ecosystem - shifting from a "rule-taker" to a more active "rule-shaper". As procedural rules are refined and institutional safeguards strengthened, China is providing foreign enterprises with a more predictable, transparent, and internationally compatible forum for dispute resolution.

The New Arbitration Law expressly provides that arbitration may be conducted online via information networks and confirms that online proceedings have the same legal effect as in-person proceedings. Many Chinese arbitration institutions have already built comprehensive online systems enabling end-to-end digital case management - from filing and service to hearings and award issuance. For cross-border arbitration in particular, this recognition significantly improves procedural efficiency while preserving fairness and substantially reducing time and travel costs.

The law also respects party autonomy regarding procedural mode: if one party expressly objects to an online hearing, the proceedings should be conducted offline. Particularly in complex cases involving extensive evidence, parties should carefully consider whether an in-person hearing is likely to produce the best evidentiary and advocacy outcome.

The New Arbitration Law introduces a "tacit recognition" mechanism regarding the validity of arbitration agreements: if a claimant alleges the existence of an arbitration agreement when filing for arbitration and the respondent does not deny that allegation prior to the first hearing, the tribunal - after drawing attention to and recording the respondent's silence - may deem that an arbitration agreement exists between the parties.

This provision helps to reduce procedural disputes and prevents parties from derailing arbitration on the basis of formal defects in the arbitration clause, thereby enhancing procedural efficiency and the stability of arbitral awards.

The New Arbitration Law clarifies the availability of pre-arbitration interim measures, enabling parties to apply to the courts for preservation relief before arbitration proceedings are formally instituted. This allows early judicial intervention to prevent asset dissipation, destruction of evidence, or disclosure of trade secrets, thereby strengthening the protective function available prior to arbitration.

The law also expressly includes "behavior preservation" (orders requiring a party to cease or to perform specific acts) within the scope of preservable measures, giving courts the flexibility to tailor interim relief according to case needs. This is particularly useful in cross-border IP or unfair competition disputes. For example, a company facing trade-secret leakage in the Chinese market may seek a behavior-preservation order requiring the alleged infringer to stop using or disclosing the confidential information and to preserve evidence, thereby containing risk before arbitration or any subsequent litigation commences.

To safeguard the independence and impartiality of arbitration, the New Arbitration Law codifies an arbitrator's duty of disclosure: arbitrators must promptly disclose to the administering institution any circumstances that may give rise to reasonable doubts as to their impartiality. Prior to this revision, many Chinese arbitration institutions had already incorporated disclosure obligations into their arbitration rules as a foundational safeguard for arbitral independence and impartiality.

With respect to tribunal composition, the law adds an option whereby the co-arbitrators may jointly appoint the presiding arbitrator - supplementing the existing methods of joint party appointment or appointment by the institution. This approach preserves party autonomy while promoting the tribunal's professional functioning and impartiality.

The New Arbitration Law further refines the rules on service of arbitral documents, explicitly respecting party autonomy; where parties have not agreed on service methods or their agreement is unclear, service shall follow the applicable arbitration rules - enhancing procedural transparency and operational convenience.

The law also imposes strict measures against abusive arbitration conduct: if a tribunal determines that a party has fabricated facts or colluded in arbitration, it must dismiss the claim. This strengthens oversight, conserves judicial and arbitral resources, and promotes a more reliable dispute-resolution environment.

The New Arbitration Law shortens and standardizes the time limit for parties to apply for the setting aside of an arbitral award to three months from the date of receipt of the award, applying to both domestic and foreign-related cases. This uniform and shortened period helps parties better understand the timeframe for judicial remedies and reduces procedural uncertainty.

Parties involved in arbitrations seated in China should promptly assess, upon receipt of an award, whether grounds for annulment exist and decide within the three-month period whether to initiate a setting-aside application, lest they forfeit their opportunity for judicial relief.

The "seat of arbitration" is a fundamental concept widely adopted in international arbitration. It refers to the place where the arbitral award is made and determines the procedural law applicable to the arbitration (lex arbitri) as well as the courts having supervisory jurisdiction. The New Arbitration Law introduces the concept of the seat of arbitration for the first time, providing that parties may designate the seat by written agreement. Unless otherwise agreed by the parties, the procedural law governing the arbitration and the courts with jurisdiction shall be determined by the seat. Once an award is rendered, only the courts at the seat have the authority to set it aside.

Parties to foreign-related contracts should consider, based on commercial arrangements and the nature of potential disputes, selecting a seat that has a mature arbitral and judicial system in order to secure greater stability and procedural transparency.

The New Arbitration Law establishes a "temporary arbitration" mechanism, under which certain foreign-related maritime disputes or disputes between enterprises registered within designated areas may be submitted to ad hoc arbitration seated in China by written agreement. The tribunal should be constituted by qualified arbitrators and proceed under the parties' agreed rules, and the tribunal's formation must be reported to the arbitration association within three working days.

This mechanism offers parties a more diverse set of options for resolving disputes in China: they may opt for institutional arbitration to benefit from standardized case management and administrative support, or choose ad hoc arbitration for greater procedural autonomy and flexibility in dealing with cross-border disputes.

For the first time, the New Arbitration Law explicitly includes international investment arbitration within the remit of Chinese arbitration institutions, providing a clear domestic legal basis for the administration of investor–state disputes by such institutions. As a result, foreign investors will have additional options to pursue arbitral relief directly in China, potentially reducing the costs and complexity associated with cross-border procedures.

As Chinese enterprises accelerate their international expansion, disputes in the field of foreign investment have grown in both frequency and complexity. Prior to this revision, several domestic arbitration institutions had already developed and implemented investment-arbitration rules, thereby accumulating institutional foundations and practical experience. In that context, foreign investors engaging in China-related projects should assess factors such as an institution's substantive expertise, degree of internationalization, case-management capabilities, and track record of awards when selecting an arbitration forum with seasoned experience and international competitiveness.

The revision of the Arbitration Law both systematizes three decades of arbitration practice and represents an important step in fully aligning China's arbitration regime with international norms. Improvements across procedural digitalization, pre-arbitration interim measures, ad hoc arbitration, and investment arbitration together provide a more efficient and certain framework for foreign enterprises investing and resolving disputes in China.

For foreign enterprises, it is essential to understand and effectively leverage the institutional innovations introduced by the New Arbitration Law. At all stages of contract drafting, performance, and dispute management, parties should carefully evaluate the choice of seat, the arbitration institution, and the applicable rules, and make strategic use of mechanisms to balance procedural efficiency with the protection of rights. Overall, the implementation of the New Arbitration Law is expected to enhance the international credibility of Chinese arbitration and foster a more transparent, stable, and predictable legal environment for cross-border commercial activity.