On September 12, 2025, the 17th Session of the Standing Committee of the 14th National People’s Congress adopted the newly revised Arbitration Law of the People’s Republic of China (the “New Arbitration Law”), which will take effect on March 1, 2026. This legislative revision marks a fundamental transformation of China’s arbitration system after thirty years of implementation, with significance far beyond the textual adjustments themselves.
As a practitioner with twenty years of experience in international arbitration, I deeply appreciate the historic significance of this revision. The New Arbitration Law represents not only a systematic summary of arbitration practice since the implementation of the 1995 Arbitration Law, but also a strategic upgrade of China’s arbitration system in the new era.
From an international perspective, the new law achieves deep integration with the UNCITRAL Model Law on International Commercial Arbitration in several core institutional areas, reflecting China’s open attitude toward active participation in global governance. From the perspective of domestic practical needs, the new law precisely responds to real challenges such as digital economy development, free trade zone construction, and procedural efficiency enhancement, laying a solid institutional foundation for the high-quality development of China’s arbitration sector.
This article will provide an in-depth analysis of the major institutional innovations of the New Arbitration Law from both international comparative and domestic practical dimensions, and offer forward-looking practical advice for arbitration clients.
I. Institutional Breakthroughs from an International Perspective
1.1 The Seat of Arbitration System: A Fundamental Shift from “Institution-Based” to “Seat-Based”
The most revolutionary change in the New Arbitration Law is the formal establishment of the “seat of arbitration” system. Article 81 explicitly provides: “The parties may agree in writing on the seat of arbitration. Unless the parties have otherwise agreed on the applicable law for arbitration procedures, the seat of arbitration shall serve as the basis for determining the applicable law for arbitration procedures and the court with judicial jurisdiction. The arbitral award shall be deemed to have been made at the seat of arbitration.”
The profound significance of this change lies in its complete transformation of the basic logic of China’s arbitration legislation. The old Arbitration Law’s system design centered on the “location of the arbitration commission” essentially reflected an “institution-based” mindset, where the legal attributes of arbitration were primarily determined by the geographical location of the administering institution.
This approach created numerous problems in practice: an arbitration case managed by a Chinese arbitration institution but conducted overseas might still be considered a “Chinese award,” thus facing unnecessary complexity in international enforcement.
The “seat of arbitration” concept introduced by the new law is highly consistent with Article 20 of the UNCITRAL Model Law and Article 3 of the English Arbitration Act 1996, embodying the internationally mainstream “Seat-Based” philosophy. The seat of arbitration not only determines the applicable procedural law (lex arbitri), but also determines which country’s courts have supervisory jurisdiction over the arbitration and the “nationality” determination of the award.
This institutional innovation provides parties with unprecedented procedural design flexibility. For example, parties may choose the China International Economic and Trade Arbitration Commission (CIETAC) as the administering institution while agreeing that the seat of arbitration is Singapore, thereby applying Singapore’s International Arbitration Act as procedural law and having Singapore courts exercise judicial supervision.
Such arrangements have important strategic value in international commercial transactions involving enforcement in multiple jurisdictions, particularly as parties can choose the most favorable seat for award recognition and enforcement based on different jurisdictions’ enforcement environments and judicial attitudes.
1.2 Interim Measures System: From “Court Exclusivity” to “Collaborative Support”
The New Arbitration Law achieves important breakthroughs in the interim measures system. Although it did not fully grant arbitral tribunals independent interim measures authority as in the draft revision, it achieves “active support” from courts for arbitration interim measures applications through sophisticated institutional design.
Article 39 has dual significance: first, it clarifies that arbitration institutions may submit parties’ interim measures applications to people’s courts, and courts “shall handle them promptly in accordance with law,” demonstrating the judiciary’s positive supportive attitude toward arbitration procedures; second, more importantly, the new law allows “in urgent circumstances, parties to an arbitration agreement may apply to people’s courts for interim measures before applying for arbitration,” breaking the traditional temporal barrier between interim measures and the commencement of arbitration procedures.
This institutional arrangement aligns with the philosophy of Article 28 of the LCIA Arbitration Rules (2020 edition) regarding emergency arbitrators, both aiming to provide parties with timely and effective interim relief. Although the implementation paths differ, the effects converge.
The new system will significantly enhance the attractiveness of arbitration as a dispute resolution method. Parties can seek interim relief through arbitration channels at the first moment of commercial disputes, without worrying about losing timely protection opportunities by choosing arbitration. This change is expected to significantly promote the shift from litigation to arbitration and drive rapid development of China’s alternative dispute resolution (ADR) mechanisms.
1.3 Limited Opening of Ad Hoc Arbitration: Institutional Wisdom of Prudent Innovation
Article 82 of the New Arbitration Law provides legal basis for ad hoc arbitration for the first time, but adopts a “limited opening” prudent strategy. The article provides that only “foreign-related maritime disputes or foreign-related disputes between enterprises established and registered in free trade pilot zones approved by the State Council, Hainan Free Trade Port, and other areas designated by the state” may agree to ad hoc arbitration.
This “limited opening” institutional design reflects the legislature’s deep considerations: on one hand, it recognizes the important status of ad hoc arbitration as one of the two basic forms of international arbitration, meeting the needs of experienced international commercial entities for procedural autonomy; on the other hand, by limiting the scope of application, it avoids potential procedural chaos and regulatory difficulties that ad hoc arbitration might bring.
Notably, the new law requires ad hoc arbitral tribunals to “file with the arbitration association within three working days after the formation of the tribunal the names of the parties, the seat of arbitration, the composition of the arbitral tribunal, and the arbitration rules,” ensuring procedural transparency and providing an information basis for possible judicial supervision.
The opening of ad hoc arbitration provides greater procedural design flexibility for high-end commercial entities in specific fields. In highly specialized areas such as maritime commerce and free trade zone financial innovation, parties can tailor the most suitable procedural rules and arbitrator selection based on the specific characteristics of their disputes. However, the success of ad hoc arbitration highly depends on the professional capabilities of the parties and their legal advisors, requiring thorough risk assessment when making this choice.
II.Precise Response to Domestic Practical Needs
2.1 Legal Confirmation of Online Arbitration: Institutional Adaptation for the Digital Age
With the vigorous development of the digital economy, online disputes have shown explosive growth. Traditional offline arbitration models face structural problems of high costs and long cycles when handling small-amount, high-frequency, cross-regional disputes. Article 11 of the New Arbitration Law explicitly provides: “Arbitration activities may be conducted online through information networks, unless the parties expressly disagree. Arbitration activities conducted online through information networks have the same legal effect as offline arbitration activities.”
The significance of this provision lies not only in providing clear legal basis for online arbitration, but also in establishing the basic principle of “equal effectiveness online and offline.” This highly aligns with the global trend toward digitalization of dispute resolution practices since the COVID-19 pandemic and provides institutional support for technological innovation and service upgrades by Chinese arbitration institutions.
Legal confirmation of online arbitration will significantly lower the threshold for dispute resolution, particularly for small and medium enterprises and individual consumers. It is foreseeable that major arbitration institutions will accelerate the construction of smart arbitration platforms and develop more convenient and efficient online dispute resolution services. Enterprises should place greater emphasis on standardized management and preservation of electronic evidence in daily operations to adapt to the requirements of online arbitration for evidence digitization.
2.2 Good Faith Principle and Prevention of Fraudulent Arbitration: Institutional Guarantee for Procedural Justice
Article 8 of the New Arbitration Law explicitly establishes the “good faith principle” as a fundamental principle of arbitration activities, a provision with important practical relevance. In recent years, individual parties have occasionally exploited the relative confidentiality of arbitration procedures to harm third-party interests through fraudulent arbitration and malicious collusion, seriously damaging the credibility of the arbitration system.
Article 61 further provides: “Where an arbitral tribunal discovers that a party unilaterally fabricates basic facts to apply for arbitration or parties maliciously collude in an attempt to harm state interests, social public interests, or others’ legitimate rights and interests through arbitration, it shall dismiss the arbitration request.” This provision grants arbitral tribunals the power to actively identify and sanction fraudulent arbitration, demonstrating firm commitment to procedural justice.
The establishment of the good faith principle requires all arbitration participants to act in good faith and avoid abuse of procedural rights. For enterprises, they should establish sound internal compliance systems and be alert to potential fraudulent arbitration risks from counterparties. Upon discovering relevant clues, they should promptly report to arbitral tribunals or judicial authorities to jointly maintain the healthy development of the arbitration system.
2.3 Modernization of Arbitration Institution Governance: Balancing Public Welfare Nature and Professionalization
Article 13 of the New Arbitration Law explicitly provides that arbitration institutions “are public welfare non-profit legal persons,” a characterization of important significance for regulating arbitration institutions’ operational models. Meanwhile, the new law makes detailed provisions on arbitration institutions’ internal governance, information disclosure, and supervision mechanisms in Articles 19 and 20, reflecting higher requirements for the professional and standardized development of arbitration institutions.
Modernization of arbitration institution governance will enhance the professional standards and social credibility of the entire industry. When choosing arbitration institutions, parties should pay greater attention to the completeness of their governance structures, transparency of information disclosure, and effectiveness of internal supervision mechanisms, as these factors will directly affect the quality of arbitration services and the credibility of awards.
III. Forward-Looking Recommendations for Arbitration Clients
3.1 Strategic Thinking in Arbitration Clause Design
The implementation of the New Arbitration Law requires parties to adopt more strategic thinking in arbitration clause design. Traditional “one-size-fits-all” standard clauses can no longer meet the complex needs under the new legal framework, making refined and customized clause design an inevitable trend. Therefore, we recommend:
1、Strategic Selection of Seat of Arbitration: When agreeing on the seat of arbitration, comprehensive consideration should be given to multiple factors including the legal environment of that jurisdiction, the judiciary’s friendliness toward arbitration, availability of interim measures, and risks of award annulment. For cases involving enforcement in multiple jurisdictions, the choice of seat of arbitration often has decisive significance.
2、Prudent Assessment of Ad Hoc Arbitration: For qualified foreign-related disputes, parties may consider agreeing to ad hoc arbitration, but must make detailed provisions for arbitrator appointment procedures, applicable rules, hearing arrangements, etc., and fully assess the professional capabilities and willingness to cooperate of both parties.
3、Multi-Tiered Dispute Resolution Mechanisms: It is recommended to establish progressive dispute resolution mechanisms of “negotiation-mediation-arbitration” in arbitration clauses, both demonstrating respect for business relationships and providing multiple options for economical dispute resolution.
3.2 Strategic Use of Procedural Tools
The New Arbitration Law provides parties with a richer toolkit of procedural tools. How to strategically use these tools will directly affect the effectiveness and cost of dispute resolution. Therefore, we recommend:
1、Timely Application for Interim Measures: Once discovering that the counter party has actions such as asset transfer or evidence destruction that may harm one’s interests, the necessity and feasibility of applying for interim measures should be immediately assessed. The new law’s provision allowing interim measures applications before arbitration provides parties with greater strategic flexibility.
2、Digital Transformation of Evidence Management: With the popularization of online arbitration, electronic evidence will become mainstream. Enterprises should establish standardized electronic evidence management systems to ensure the integrity, authenticity, and traceability of key evidence.
3、Reasonable Use of Online Hearings: For cases with relatively simple factual disputes or smaller amounts in controversy, proactively suggesting online hearings can significantly save costs and improve efficiency. However, the reliability of technical conditions should be ensured to avoid affecting hearing effectiveness due to technical problems.
3.3 Design of Global Enforcement Strategy
In the context of economic globalization, cross-border disputes are increasing, and the global enforceability of arbitral awards has become a key indicator for measuring dispute resolution effectiveness. Therefore, we recommend:
1、Pre-Assessment of Enforcement Feasibility: Before initiating arbitration procedures, comprehensive assessment should be conducted on the enforcement feasibility of future awards, including the distribution of the counterparty’s main assets, relevant jurisdictions’ compliance with the New York Convention, and local courts’ judicial practices.
2、Multi-Jurisdictional Collaborative Strategy: For complex disputes involving multiple jurisdictions, it may be necessary to initiate legal procedures simultaneously or successively in different countries. This requires legal teams to have cross-jurisdictional coordination capabilities and deep understanding of procedural time limits and evidence rules in various jurisdictions.
3、Full-Process Control of Compliance Risks: In cross-border transactions and dispute resolution, compliance risks cannot be ignored. Laws and regulations such as the U.S. Foreign Corrupt Practices Act (FCPA) and the EU General Data Protection Regulation (GDPR) may have significant impacts on dispute handling and enforcement.
In conclusion, the promulgation and implementation of the New Arbitration Law marks the entry of China’s arbitration system into a new stage of historical development. From an international perspective, the new law achieves deep integration with mainstream international rules in core systems such as seat of arbitration, interim measures, and ad hoc arbitration, reflecting the international level and open and inclusive development philosophy of China’s arbitration system.
From a domestic practical perspective, the new law precisely responds to real needs such as online arbitration, procedural integrity, and institutional governance, providing solid institutional support for the high-quality development of China’s arbitration sector. For arbitration clients, the new law brings unprecedented opportunities while also raising higher professional requirements.
Under the new legal framework, clients need to re-examine and optimize their dispute resolution strategies with the assistance of professional lawyers, fully utilize the institutional dividends provided by the new law, and construct more efficient, economical, and enforceable dispute resolution solutions.
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