China’s newly revised Arbitration Law marks the most significant overhaul of the country’s commercial dispute framework since 1994, but more work is needed to attract foreign parties to arbitrate in China, according to arbitrators and law scholars. The law aims to promote cities such as Beijing, Shanghai and Shenzhen to develop into international arbitration centers, competing with current global leaders like London and Singapore. But a harder question for Beijing is not the amount of energy or resources poured in, but whether foreign parties, particularly Western ones, will actually choose mainland China as a seat, according to arbitrators and legal scholars. The bottleneck is not legal design but trust, they said.
“An international arbitration center should be a place that everyone chooses as a base for arbitration, even if it has no connection to their country,” said Tao Jingzhou, an independent arbitrator at Arbitration Chambers and one of China’s earliest international arbitrators. Beijing’s drive to grow its arbitration capacity reflects more than a desire to attract a slice of a high-value professional services market. It also fits within a broader strategic effort that scholars describe as a deliberate buildout of China’s legal power in foreign affairs. “Beijing has been investing in upgrading China’s legal power under its foreign-related rule of law initiatives,” said Mark Jia, Associate Professor of Law at Georgetown University.
“Pushing arbitration is part of an effort to expand the jurisdictional reach of China’s adjudicative institutions.” With Chinese companies’ overseas investment, infrastructure work and trade footprint having expanded sharply over the past two decades, particularly through the Belt and Road Initiative (BRI), a steady flow of cross-border disputes has had to be resolved somewhere, most often in London, Singapore, Paris or Hong Kong.
“Given China’s significant international footprint in the Global South and through the Belt and Road Initiative, there has been and will be a steady stream of legal disputes that have to be resolved somewhere,” Jia said. “The appeal of attracting more transnational disputes to Chinese forums is ultimately that it may grant Chinese organizations and institutions more control over the outcome of important global disputes.” China’s long-standing insistence on institutional arbitration had been a notable outlier in the global arbitration community. In international practice, ad hoc arbitration, where disputing parties appoint arbitrators directly without going through an institution, is a long-established and flexible alternative to institutional arbitration.
The amendments of China’s Arbitration Law that came into effect earlier this year, for the first time, permit ad hoc arbitration in foreign-related maritime disputes and among enterprises registered in free trade zones, and also allow approved foreign arbitration institutions to open offices in those zones to handle international cases. Matthew Erie, Associate Professor at American University Washington College of Law, said that “the amendments are clearly significant and represent a gradual shift to align Chinese commercial arbitration practice with international standards”. However, the move was never easy, according to Tao. Tao said that he had urged Chinese legislators multiple times over the years to allow ad hoc arbitration, with little effect until this round of revisions. Although the change came more than three decades after the original law, he said it represented “significant progress”. China’s Supreme People’s Court (SPC), “has shown full respect for foreign arbitration outcomes, and this area has seen relatively little judicial intervention”, according to Tao. According to statistics from the SPC, Chinese courts concluded 42 cases in 2024 involving applications for recognition and enforcement of foreign arbitral awards, with none refused. According to a report by Queen Mary University of London, Beijing has risen to fourth in the global ranking of the most preferred arbitration seats, behind only London in first place and Singapore and Hong Kong tied for second.
However, experts said that the progress was still not enough. Chinese local courts still harbor “reservations” about ad hoc arbitration, Tao said. Erie said that the revised law “still does not conform to” the United Nations Commission on International Trade Law’s model law on international commercial arbitration, the global template most leading jurisdictions follow. Erie pointed to Chinese authorities’ reluctance to give arbitral tribunals full authority over their own jurisdiction, a principle known in international arbitration as competence-competence. For China’s arbitration business to go global, it must ensure “the independence of arbitration institutions” and “respect for contractual freedom”, Tao said.
China’s four major arbitration institutions, the China International Economic and Trade Arbitration Commission (CIETAC) in Beijing, the Shanghai International Arbitration Center, the Beijing Arbitration Commission, and the Shenzhen Court of International Arbitration, all reported steady growth in cross-border cases in 2024. But even at CIETAC, the most internationalized of the four, foreign-related cases accounted for just 13.4% of its total caseload of 6,013, the South China Morning Post reports.
