Pinsent Masons reports that China’s Arbitration Law is undergoing its most significant reform since its inception. The revised law, which will take effect on 1 March 2026, follows a multi-year consultation process.
Rachel Turner, an arbitration expert at Pinsent Masons said, “Broadly adopting the changes from the 2024 draft law, the new law aims to modernise China’s arbitration framework and align it with international standards, endorsing significant concepts such as the ‘seat’, the separability of an arbitration agreement from the main contract and the Kompetenz-Kompetenz principles relating to a tribunal’s ability to rule as to its own competence on the issues before it.”
The law has adopted the ‘seat’ concept for foreign-related cases, which is prevalent in other international arbitration rules and regulations, and did not previously exist in Chinese legislation or arbitration. The ‘nationality’ of the arbitral award was previously often determined by the location of the arbitration institution.
The 2025 Arbitration Law reaffirms the principle of the independence of arbitration agreements. It also consolidates provisions from the current 2017 Arbitration Law and the Civil Code, while expanding the scope to clarify that an arbitration agreement remains valid even if the underlying contract is not formed, has not taken effect, or has been rescinded. The law also reinforces the arbitral tribunal’s authority to determine the validity of the contract where relevant to the dispute.
It has also endorsed the ‘Kompetenz-Kompetenz principle’ introduced in the 2021 draft; however, it has included an important caveat: the tribunal holds the power to review the validity of an arbitration agreement, but if the parties disagree, the court retains the power to decide.
The scope of the provisions applicable to foreign-related arbitration now extends to the arbitration of disputes related to foreign matters. This broadens the types of disputes eligible for foreign-related arbitration provisions, allowing for flexibility in the face of future developments.
Ad hoc arbitration can advance in foreign-related disputes arising from maritime matters and between enterprises registered in pilot free trade zones. This approach reflects China’s gradual alignment with international arbitration practices, while taking into account its domestic realities.
Another key update in the 2025 Arbitration Law concerns interim measures, which now explicitly cover both property preservation and conduct preservation, as well as injunctions. Additionally, in urgent circumstances, parties may apply to a competent court for interim measures, including property preservation, evidence preservation, conduct preservation, and injunctions, even before an application for arbitration proceedings is made.
Susan Wang of Pinsent Masons said: “The new arbitration law aligns with the global trend toward greater transparency and efficiency, which are key drivers in the ongoing modernisation of arbitration frameworks worldwide.”
“Together with the recent guidelines relating to AI in arbitration and the updates to Chinese arbitration institution rules, China is seeking to place itself at the forefront of arbitration thinking and practice,” she said. Follow the link to review the full report and further commentary from Pinsent Mason’s personnel.
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