The highly anticipated revision to China’s Arbitration Law was formally passed on 12 September 2025 and will take effect on 1 March 2026. This marks the first comprehensive and systematic overhaul of the law since its inception in 1995. It reflects both the profound evolution of China’s arbitration practice in the past three decades and the country’s firm commitment to integrating into global economic governance and fostering a legal and international business environment.
The new law is set to profoundly impact commercial dispute resolution strategies, legal service models and China’s standing in international arbitration.
It falls short of what some practitioners had hoped for, yet it achieves significant breakthroughs in multiple key fields, driving China’s arbitration regime towards international best practices. This article analyses key amendments and the resulting opportunities and challenges for legal practice.
Seat of arbitration
Vincent Sun
Partner
Han Kun Law Offices
Tel: +86 139 1634 4808
E-mail: wei.sun@hankunlaw.com
A landmark shift in the new law is the formal adoption of the “seat of arbitration” for foreign-related cases. The former statute’s vague treatment of the seat had made the institution’s location a default stand-in, a practice that created persistent confusion over governing law and judicial review.
By defining the seat and how it is established, article 81 definitively resolves this by settling an award’s nationality and designating the competent court for annulment, thus eliminating a longstanding procedural void.
The “seat of arbitration” rule enhances procedural certainty, enabling parties to strategically select a seat (such as Beijing, Shanghai or Hong Kong) to define the applicable procedural law and judicial oversight standards, thereby increasing the predictability of the outcome.
When drafting international contracts, companies should recognise the strategic value of the “seat of arbitration” clause and select the optimal location based on factors such as the transaction’s nature, the counterparty’s location, the legal environment, and the availability of interim measures.
Ad hoc arbitration
Despite being a common feature internationally, ad hoc arbitration was subject to statutory silence under the former Arbitration Law, while its feasibility was cautiously explored via small-scale pilots under local regulations.
Zhao Yuxian
Senior Counsel
Han Kun Law Offices
Tel: +86 156 9213 2857
E-mail: yuxian.zhao@hankunlaw.com
The new law, incorporating lessons from these trials, accords ad hoc arbitration a limited legal status, representing a major step towards international integration. Article 82 stipulates that a circumscribed set of circumstances such as foreign-related maritime disputes, and disputes between enterprises in designated zones such as the Pilot Free Trade Zones and the Hainan Free Trade Port, may be resolved by arbitration directly before a party-appointed tribunal – that is, ad hoc arbitration.
Ad hoc arbitration introduces a new option outside the institutional framework, endowing parties with the autonomy to shape their procedural architecture and serving as a structural complement to the arbitration regime.
It also imposes heightened professional requirements on in-house counsel and external counsel. They are now expected to possess a nuanced understanding of procedural rule design and implementation, in addition to substantive legal expertise to adeptly match the arbitral process to the unique demands of each dispute.
Preservation mechanism
Although the Civil Procedure Law grants parties the right to apply for interim measures before arbitration, such applications were rarely upheld in practice due to the absence of explicit provisions in the former Arbitration Law. Similarly, applications for behavioural preservation during arbitration were also typically unsuccessful.
Article 39 of the new law resolves this ambiguity by explicitly recognising behavioural preservation as an available measure, permitting pre-arbitration applications in urgent circumstances under the Civil Procedure Law, and mandating that “the court shall handle such matters promptly in accordance with the law”.
These provisions establish a clear statutory basis for applications for both behavioural and pre-arbitration preservation.
Many contractual breaches and infringements are abrupt and persistent – for instance, a party collaborating with a third party in violation of an exclusive deal. Without immediate intervention, the aggrieved party faces continuous damage that a subsequent award may not rectify.
The mechanisms of pre-arbitration and behavioural preservation are powerful legal instruments designed for precisely such situations, offering a crucial boost to remedial efficiency.
It is a strategic imperative for enterprises to fully leverage pre-arbitration and behavioural preservation measures by proactively seeking court orders in disputes. This utilisation is crucial for their evolution from statutory rights into an operational reality.
Takeaways
The new Arbitration Law marks a pivotal moment for China’s arbitration system. Its key innovations – including adopting the “seat of arbitration” principle, recognising foreign-related ad hoc proceedings and codifying certain interim measures – create a more robust, modern and globally aligned framework.
These changes will not only make China a far more attractive seat for international arbitration but also offer businesses a broader range of high-quality options for resolving disputes.
Vincent Sun is a partner at Han Kun Law Offices. He can be contacted by phone at +86 139 1634 4808 and by email at wei.sun@hankunlaw.com
Zhao Yuxian is senior counsel at Han Kun Law Offices. He can be contacted by phone at +86 156 9213 2857 and by email at yuxian.zhao@hankunlaw.com
