2025 in Review: Milestones in China’s Arbitral Framework

2025 marked a historically significant year for arbitration in China. More than three decades after the entry into force of the Arbitration Law of the People’s Republic of China (the “Chinese Arbitration Law 1994”), China promulgated the new Arbitration Law (the “Chinese Arbitration Law 2025” or the “Law”), ushering in the first comprehensive reform of its arbitration framework. The year also marked the 30th anniversary of China’s prior reporting mechanism for foreign-related arbitration and foreign awards. This post reviews these milestones in China’s arbitral framework.

Chinese Arbitration Law 2025: An Overview

On September 12, 2025, China promulgated the Chinese Arbitration Law 2025 that will enter into force on March 1, 2026, thereby announcing the long-awaited revision to the Chinese Arbitration Law 1994. This reform, widely regarded as the most significant and comprehensive modernization of China’s arbitration regime since 1994, is envisaged to improve the Chinese legal framework for international arbitration, align it more closely with international standards, and enhance China’s competitiveness as a seat for international arbitration.

One of the most notable breakthroughs lies in the Law’s express adoption of the seat of arbitration as the decisive factor in determining the lex arbitri and the courts competent to exercise supervisory jurisdiction. This is an important step towards further aligning Chinese arbitration with international practice, following earlier judicial decisions in which Chinese courts had acknowledged the relevance of the arbitral seat (see our earlier post).

As discussed in this blog post, the arbitration framework was historically characterized by mandatory institutional arbitration administered by “arbitration commissions,” exclusion of ad hoc arbitration, limited transparency and arbitrator accountability, and heavy reliance on courts for interim relief. The Chinese Arbitration Law 2025 permits ad hoc arbitration in a limited scope, as discussed in more detail below. The Law renames “arbitration commissions” (“仲裁委员会”) to “arbitration institutions” (“仲裁机构”), and enhances governance and transparency requirements. It also introduces changes to the legal framework for interim measures, expanding the categories of interim relief to include property, evidence, and conduct preservation, and allowing parties to apply directly to the competent Intermediate People’s Court for urgent interim relief even before arbitral proceedings commence. Nevertheless, tribunals themselves remain unable to issue enforceable interim measures, and court involvement continues to be central, even after tribunal constitution. The authors compare the Law with the English approach, which enables tribunals to grant interim measures while preserving broad court powers, including against third parties. By contrast, the Chinese Arbitration Law 2025 remains court-centric, with enforceable interim relief exclusively granted by the judiciary.

There are also other promising developments, including an expanded scope of eligible parties and arbitrable disputes, greater harmonization of the annulment grounds with the New York Convention, a shortened timeline for challenging arbitral awards, and expanded and expressly codified disclosure requirement for arbitrators.

The authors characterize the Law as “monitored liberalization” that represents meaningful progress within a still cautious, State-supervised framework.

From Momentum to Uncertainty: The Arbitration Law’s Reform Trajectory

The reform of the Chinese Arbitration Law 1994 followed a lengthy and complex process involving years of drafting, consultation, and legislative review. In particular, the process featured two draft revisions in 2021 and 2024 (the “2021 Draft” and “2024 Draft”, respectively), before culminating in the 2025 enactment.

The 2021 Draft was widely welcomed as signaling a strong commitment to align the Chinese arbitration system with international practice and to position China as a genuine international arbitration hub. By contrast, the 2024 Draft was criticized for retreating from several of those progressive proposals and for introducing new sources of concern.

Central among these criticisms were Articles 2 and 23 of the 2024 Draft, which emphasized the leadership of the Chinese Communist Party and governmental “supervision” of arbitration activities. These provisions were framed in abstract terms and offered little guidance on their practical operation. Critics argued that they risked undermining confidence in the independence and integrity of arbitration in China. These Articles have been partially adopted in Articles 2 and 26 of the Chinese Arbitration Law 2025.

The 2024 Draft also failed to fully adopt the principle of Kompetenz-Kompetenz. While allowing tribunals to rule on their own jurisdiction, it preserved the courts’ final authority in cases of parallel challenges, encouraging a “race to the courthouse” and diminishing efficiency and predictability. The Chinese Arbitration Law 2025 has retained the approach proposed in the 2024 Draft. As a result, the concerns previously expressed in relation to the 2024 Draft are likely to persist.

With respect to interim measures, the 2024 Draft maintained the courts’ exclusive authority and rejected the 2021 proposal to empower tribunals to grant such relief. It further expanded court powers to include “conduct preservation” orders, potentially forcing parties to litigate merits issues before courts and undermining arbitral efficiency. As noted above, the Chinese Arbitration Law 2025 retained the court’s exclusive authority to grant interim relief.

Overall, despite China’s stated ambition to attract foreign-related arbitration, the 2024 Draft was widely seen as a missed opportunity that risked reinforcing, rather than alleviating, foreign parties’ hesitations about choosing Mainland China as an arbitral seat. Certain criticized proposals in the 2024 Draft, including the limited Kompetenz-Kompetenz and the courts’ exclusive power to grant interim measures, were eventually retained in the Chinese Arbitration Law 2025.

Moderated Embrace of Ad Hoc Arbitration

The Blog also analyzed the evolution of ad hoc arbitration in China. It traditionally went unrecognized under the Chinese Arbitration Law 1994, which required disputes to be administered by arbitration commissions agreed by the parties. While the 2021 Draft proposed to allow ad hoc arbitration for foreign-related commercial disputes, the 2024 Draft reversed course, limiting the use of ad hoc arbitrations to foreign-related maritime disputes and Free Trade Zone (“FTZ”) enterprises, and reinstating the requirement that a valid arbitration agreement must include an agreed arbitration commission.

In parallel, several regions have pioneered initiatives to experiment with ad hoc arbitration at the local level. In Shanghai, regulations and practical measures were introduced to support ad hoc arbitration for foreign-related disputes, including those involving non-FTZ and foreign companies. Local arbitration bodies have issued supporting rules, and Shanghai saw its first maritime ad hoc arbitration award in July 2024. Regional experiments of ad hoc arbitration were also observed in the Hainan Free Trade Port (“FTP”), where the first foreign-related maritime ad hoc arbitration was heard on February 27, 2025.

Our Blog analyzed how regional initiatives culminated in the Chinese Arbitration Law 2025. Article 82 formally recognizes ad hoc arbitration, but only for foreign-related maritime disputes and foreign-related disputes between enterprises registered in State Council-approved pilot FTZ, the Hainan FTP, and other designated areas. Within the scope of permitted ad hoc arbitration, parties are free to choose arbitrators who meet the general qualification requirements under Article 22, without being confined to institutional panels. Article 82 also introduces a mandatory filing requirement with the China Arbitration Association—a novel and potentially contentious feature. While the Law marks significant progress, ad hoc arbitration remains tightly regulated, with unresolved issues around tribunal formation in the absence of all parties’ agreement and the legal effect of the filing requirement. China’s approach thus appears to be gradual, balancing innovation with institutional control. Institutional arbitration continues to dominate pending further legislative and judicial clarification.

30th Anniversary of the Establishment of China’s Prior Reporting Mechanism

Aside from the promulgation of the Chinese Arbitration Law 2025, last year marked the 30th anniversary of China’s prior reporting mechanism for foreign-related arbitration and foreign awards, which was established in 1995, as reported on the Blog. This mechanism arose from the need to ensure consistent application of the New York Convention after China’s accession to the treaty in 1987, especially given the inexperience of local courts with international arbitration and the risk of local protectionism in earlier times.

By this mechanism, the Supreme People’s Court (“SPC”) requires intermediate courts to report cases involving the invalidity of arbitration agreements or refusal to enforce foreign arbitral awards for higher-level review, culminating in SPC approval for any negative rulings. This centralized oversight has unified legal standards, curbed local protectionism, and clarified ambiguities in statutory law. Despite its successes, the mechanism faces challenges: it is not codified in statutory law, lacks mandatory publication of SPC decisions, has no set timelines for proceedings, and excludes party participation. Future reforms may address these issues by integrating the mechanism into the Civil Procedure Law, mandating transparency, setting deadlines, allowing party involvement, and expanding its scope to uncertain enforcement scenarios.

Conclusion

The enactment of the Chinese Arbitration Law 2025 makes the past year a particularly meaningful milestone in the development of Chinese arbitration. Following years of twists and turns, the Law reflects a calibrated effort to align China’s arbitration framework more closely with international practice through a model of controlled liberalization. Nevertheless, it remains to be tested whether the level of modernization and internationalization of the Law meets market expectations.

2025 also marked the 30th anniversary of the prior reporting mechanism, a practice-based tool that has played an important role in safeguarding the effect of international arbitration and foreign awards in China. At the same time, the mechanism faces challenges including lack of statutory basis and concerns about timelines and procedural transparency.

Overall, 2025 was a year of notable progress in Chinese arbitration, accompanied by enduring challenges and open questions. With the new Law scheduled to enter into force on March 1, 2026, this year may offer answers to some of these questions, or give rise to new questions.