China’s Gradual Embrace of Ad Hoc Arbitration: The 2025 Amendment and Regional Experiments in Hainan and Beyond

Ad hoc arbitration, long excluded from China’s framework, was barred by the 1995 Arbitration Law of the People’s Republic of China (“PRC Arbitration Law”) requiring designation of an arbitration commission. This institutional requirement, often called the “Great Wall” of Chinese arbitration, reflected the country’s preference for administrative oversight and control.

In recent years, however, China has begun to cautiously experiment with ad hoc mechanisms in pilot free trade zones, such as those in Hainan and Shanghai, moving closer to international practice. These regional initiatives paved the way for the 2025 Amendment to the PRC Arbitration Law (the “2025 Amendment”), which for the first time formally recognises ad hoc arbitration under Article 82 of the new Arbitration Law.

This post traces China’s shift from prohibition to controlled experimentation, highlighting the first ad hoc maritime case in Hainan and analysing the mandatory filing mechanism—a novel but contested innovation under the 2025 Amendment.

The “Great Wall” of China—1995 PRC Arbitration Law Article 16

Ad hoc arbitration remains impractical nationwide in Mainland China largely due to Article 16 of the 1995 PRC Arbitration Law, often described as the “Great Wall” blocking alignment with international practice. Article 16 requires arbitration agreements with a Chinese seat to designate a specific “arbitration commission", and Article 18 renders any agreement that fails to do so null and void. These provisions mandate institutional administration, presenting significant challenges to recognising ad hoc arbitration in China.

This stance reflects China’s unique cultural and historical context, where China’s arbitration landscape did not develop organically. Instead, legislative interventions and government oversight, rather than market forces, have played a significant role in shaping it. Another barrier is the concern over “consent awards”—settlement-based awards that may be exploited to facilitate unfair or fraudulent settlements. Without institutional oversight, such awards are viewed as vulnerable to misuse and as potentially enabling parties to circumvent legal obligations and scrutiny.

Regional Exploration of Ad Hoc Arbitration in Hainan FTP

In recent years, however, Mainland China has sought to enhance its business environment and establish itself as a leading arbitration hub in the Asia-Pacific. As part of this effort, the country has gradually embraced ad hoc arbitration, aligning its practices more closely with international standards.

For example, Article 54 of the Hainan Free Trade Port Law of the People’s Republic of China, effective June 2021, authorised the Hainan Free Trade Port (“FTP”) to explore commercial dispute resolution mechanisms consistent with global practice. In mid-2024, the Hainan legislative body and the Hainan Arbitration Association adopted the Several Provisions on the Development of International Commercial Arbitration in the Hainan Free Trade Port and the Ad Hoc Arbitration Rules for the Hainan Free Trade Port, which took effect on July 1, 2024. Since then, ad hoc arbitration can be conducted in the Hainan FTP for commercial and maritime disputes between enterprises registered in the Hainan FTP, between enterprises registered in the Hainan FTP and overseas enterprises, and between overseas enterprises that designate the Hainan FTP as the arbitration seat.

First Cross-Border Maritime Ad Hoc Arbitration Case in Hainan FTP

On February 27, 2025, the first cross-border maritime ad hoc arbitration in the Hainan FTP was heard in Yangpu, Hainan’s largest economic zone. A Singaporean company and a Hainan-based company had initially agreed to arbitrate in Singapore but, given the low value of the dispute, chose instead to proceed with ad hoc arbitration in Hainan. With support from the Hainan Arbitration Association, the parties appointed an experienced arbitrator, arranged the venue, and received secretarial assistance. This inaugural case marks a milestone for Hainan FTP, reflecting China’s gradual embrace of ad hoc arbitration and its commitment to attracting foreign investment while strengthening its trade dispute framework.

Another key aspect of the case was the granting of interim measures. On February 27, the claimant, invoking the PRC Civil Procedure Law, applied to the Yangpu Tribunal of the Haikou Maritime Court to preserve a USD 15,000 bank deposit, and the court granted the order on the same day. This highlights two significant developments. First, Article 25(1) of the Ad Hoc Arbitration Rules for the Hainan Free Trade Port allows parties to petition courts directly for interim measures without first obtaining an arbitral institution's approval. Second, the Haikou Maritime Court issued the Notice on the Work of Centralized Jurisdiction for Arbitration Interim Measures, establishing a centralised jurisdictional mechanism to streamline and expedite interim measure applications within the court’s jurisdiction.

As interim measures have traditionally posed challenges in ad hoc arbitration in China, this case clearly demonstrates how recent reforms in the Hainan FTP enhance procedural efficiency and reinforce party autonomy in securing urgent relief.

Other Ad Hoc Arbitration Cases As Mainland China’s Regional Pilot

Besides the Hainan FTP, several other ad hoc arbitration cases have emerged in China’s free trade zones. On June 30, 2023, a cross-border dispute between a Mainland resident and a Hong Kong company was resolved through ad hoc arbitration, under the Ad Hoc Arbitration Rules of the China Maritime Law Association, with Qingdao as the seat. This is the first ad hoc arbitration case since Mainland China adopted ad hoc arbitration in free trade zones. (See a previous post on this.)

Beyond the selected free trade ports and zones, in August 2024, two Shanghai-registered companies resolved their maritime disputes through ad hoc arbitration, designating Shanghai as the seat. This marked China’s first foreign-related maritime ad hoc arbitration, as Shanghai’s ad hoc arbitration has been permitted for foreign-related commercial and maritime affairs since the implementation of the Measures to Promote Shanghai’s Ad Hoc Arbitration on Foreign-Related Commercial and Maritime Affairs (Trial).

The 2025 Amendment and the Introduction of Ad Hoc Arbitration

On September 12, 2025, China promulgated the new Arbitration Law, comprising eight chapters and ninety-six articles, effective March 1, 2026. One of its most notable innovations is Article 82, which introduces ad hoc arbitration for the first time under Chinese law.

Under Article 82, ad hoc arbitration is permitted only in two narrowly defined circumstances: (i) foreign-related maritime disputes, covering disputes involving maritime transport, ship operations, and marine insurance; and (ii) foreign-related disputes between enterprises registered within State Council-approved pilot free trade zones, the Hainan FTP, and other designated areas.

These restrictions effectively establish a dual-track system within China’s arbitration regime. While a small subset of parties may now opt for ad hoc arbitration, institutional arbitration remains the only lawful mechanism for all domestic and most other foreign-related disputes. This cautious design reflects China’s gradual and controlled approach to arbitration reform—testing ad hoc arbitration within regions that already have a high degree of openness and legal maturity.

Within its scope, Article 82 grants parties significant procedural autonomy: parties are free to appoint arbitrators who meet the general qualification standards under Article 22, without being confined to institutional rosters, and to choose arbitration rules of their preference. This includes widely recognised frameworks, such as the UNCITRAL Arbitration Rules or sectoral rules like those of the China Maritime Law Association, or even bespoke procedural rules tailored to the dispute.

A novel but contested feature is the mandatory filing requirement under Article 82: the tribunal must file details of the parties, the seat, the composition of the tribunal, and the arbitration rules with the China Arbitration Association within three working days of its constitution. The legal effect of this filing requirement, however, remains unclear. It is uncertain whether the filing requirement serves a mere administrative purpose, a precondition for the tribunal’s legitimacy, or even a prerequisite for the enforceability of awards.

This ambiguity poses risks: a losing party might seek award annulment by arguing that failure to file violates the “statutory procedure” under Article 71, potentially rendering the award vulnerable to challenge.

At the same time, Article 82 explicitly integrates ad hoc arbitration into the judicial support framework for interim measures, enabling tribunals to request court assistance for asset, evidence, and injunctive preservation. Importantly, it also elevates the China Arbitration Association into a quasi-regulatory role, signalling a shift toward a multi-layered governance model that combines legislative regulation, judicial supervision, and industry self-regulation.

However, the provision does not resolve a common procedural failure in ad hoc arbitration: a party’s refusal to cooperate in tribunal formation. The 2025 Amendment leaves open whether arbitrators may be appointed by an institution, a court, or the China Arbitration Association, leaving a gap that will likely require further clarification through future judicial interpretations or local rules.

Conclusion

The gradual introduction of ad hoc arbitration in China reflects a balance between innovation and institutional control. From early experiments in the Hainan FTP and Shanghai to legislative recognition under Article 82 of the new Arbitration Law, China’s approach remains cautious yet forward-looking.

Article 82 of the new Arbitration Law, a milestone in liberalizing arbitration practice, introduces a mandatory filing requirement—a novel but controversial innovation that underscores the tension between flexibility and oversight. Together with its limited geographic and subject-matter scope, it ensures that ad hoc arbitration develops within a supervised pilot framework, minimizing systemic risks while still allowing for experimentation.

Recent cases in Hainan and other pilot zones show that China is gradually building the procedural infrastructure and judicial support needed for ad hoc arbitration. Yet, until broader legislative and judicial clarity emerges—particularly on tribunal formation and the legal effect of the mandatory filing requirement—institutional arbitration will remain dominant.

In sum, China’s cautious opening toward ad hoc arbitration signals evolution, not revolution—a pragmatic step toward harmonising domestic arbitration with international standards while preserving its governance model.