Global Vantage: PRC Shake UP – The revised Arbitration Law of the People’s Republic of China comes into force

March 2026

Antony Smith and Cameron Baker

Earlier this month, a new Arbitration Law of the People’s Republic of China (“PRC Arbitration Law”) came into force, resulting in the first major changes to China’s arbitration framework since 1995. Seeking to modernise its arbitration regime, the reforms address arbitration seat recognition, streamlined processes and the impact of operating in the ever-expanding digital world.

In this latest edition of Global Vantage, Antony Smith and Cameron Baker unpack the key changes of this new PRC Arbitration Law.

Why was change needed?

Prior to the introduction of the new PRC Arbitration Law, China’s arbitration regime had seen minimal change since 1995, staying tied to government structures with limited flexibility allowed to the parties. Given the key advantages of arbitration include flexibility and confidentiality, the new law has sought to provide parties with this flexibility of a party-driven process and become more aligned with other jurisdictions and practices. The new changes include the recognition of determinations by foreign arbitration institutions and the efficiency of ad hoc arbitrations in limited circumstances.

Following a consultation process that began in 2021, the PRC Arbitration Law was adopted on 12 September 2025 and subsequently came into force on 1 March 2026.

What has been introduced by the new Arbitration Law?

Recognition of the Seat of Arbitration

The new PRC Arbitration Law introduces the concept of a seat for foreign-related arbitrations being agreed by the parties, with the seat subsequently determining the applicable procedural law (unless otherwise agreed by the parties) and the supervisory court.

Limited Recognition of Ad Hoc Arbitration

Ad hoc arbitration is a form of dispute resolution tailored by the parties themselves rather than administered by a professional institution. Previously, administration by an arbitration institution was required by Chinese law. The new PRC Arbitration Law allows certain foreign-related disputes to be run by the parties themselves, including the procedure for the arbitration and selection of the arbitrator.

Opening the Market to Foreign Arbitration Institutions

Previously, where an arbitration was administered by an offshore arbitral institution in Mainland China, issues could arise regarding the validity of arbitration agreements and the enforceability of the awards. The new PRC Arbitration Law provides for the recognition and enforcement of foreign arbitral awards by an award creditor in Mainland China on debtors with certain connections to the area.

Expanded Interim Measures

Measures providing for the preservations of assets, evidence and conduct (similar to injunctions) are contained in the new PRC Arbitration Law.

Digital and Online Arbitration

Provision for arbitration proceedings to take place online and awards made through such means have the same legal effect.

Reform of Arbitrator Appointment

Where there are two-party appointed arbitrators, a chair of the tribunal may be nominated.

Shorter Deadline for Setting Aside Awards

The time limit for applying to set aside an arbitral award has been reduced from six months to three months, seeking to improve efficiency.

When will we see the impact?

Only time will tell as to how effective the new PRC Arbitration Law is in modernising the arbitration framework in China. Already questions are emerging as for example, Article 27 states that ‘if a party files an application for arbitration and the other party does not raise a written objection regarding the existence or validity of the arbitration agreement prior to the first hearing, and remains silent after being reminded by the arbitral tribunal, the parties shall be deemed to have an arbitration agreement.’

This has prompted discussion regarding what is meant by the first hearing. Is this procedural or substantive? It remains to be seen whether the intended goal of a modern, efficient arbitration framework can be achieved where the PRC Arbitration Law allows one party to raise these objections after a number of steps have taken place prior to the first hearing.

Given the intent of the new PRC Arbitration Law is to modernise China’s arbitration framework in an attempt to compete with other jurisdictions, will there be a decree coming from the Chinese government for the adoption of the PRC Arbitration Law in contracts involving Chinese contactors? Given contracts for projects presently on foot do not contemplate the new PRC Arbitration Law and because dispute resolution by way of arbitration typically only arises at the end of a project, the full impact of the new law will only become evident in the coming years.

If you have any queries on the above, and how the new law might relate to your future contract opportunities or projects, please contact the following: