By: Thabiso Faith Mutumhe
On March 1, 2026, China’s amended Arbitration Law took effect, marking the first substantive revision of the statute since its original promulgation in 1995 and concluding years of debate over the scope of reform.[1] The amendment was widely anticipated to align Chinese arbitration practice with the United Nations Commission on International Trade Law (“UNCITRAL”) Model Law on International Commercial Arbitration, particularly after a bold 2021 draft proposed sweeping changes that international practitioners praised.[2] However, the final version retreats from many of the 2021 draft’s most significant proposals, and the result sits uneasily between modernization and institutional caution, prompting the question of whether China’s arbitration framework can compete with established international seats at a time when cross-border disputes are surging.
The UNCITRAL Model Law provides the international benchmark for national arbitration statutes, emphasizing party autonomy, tribunal authority, and minimal judicial intervention.[3] The 2025 amendment moves toward this benchmark in some respects but diverges conspicuously in others.[4] Among its most notable shortcomings is the continued requirement that a valid arbitration agreement must designate a specific arbitration institution, rather than adopting the agreement-centered approach standard in international practice.[5] Under the UNCITRAL Model Law, parties need only express their consent to arbitrate; the amendment’s institutional orientation means that an agreement naming no specific institution—common in many cross-border contracts—may not survive judicial scrutiny under Chinese law.[6]
The amendment does introduce a limited form of competence-competence, empowering arbitral tribunals to determine their own jurisdiction, and to rule on the validity of arbitration agreements for the first time.[7] Yet court authority remains prioritized: if one party seeks a tribunal ruling on jurisdiction while the other goes directly to a Chinese court, the court decides.[8] Perhaps most critically, the amendment retains the rule that only courts, not arbitral tribunals, may grant interim relief, despite the 2021 draft’s proposal to empower tribunals in this area.[9] This stands in stark contrast to the UNCITRAL Model Law, which has authorized tribunal-ordered interim measures since its 2006 revision, and to the practice of virtually every major international arbitration seat.[10] For foreign companies involved in time-sensitive commercial disputes, the inability to obtain urgent relief directly from the tribunal and the efficiency inevitably lost in routing applications through Chinese courts represents a meaningful procedural disadvantage.[11]
The amendment does contain genuine progress. Ad hoc arbitration appears in Chinese legislation for the first time, though its availability is restricted to foreign-related maritime disputes and disputes involving enterprises in designated free trade zones.[12] The law also codifies online arbitration proceedings, introduces the concept of an arbitration place for foreign-related cases in alignment with international norms, and reduces the time limit for setting-aside applications from six to three months.[13] Additionally, the amendment maintains a dual-track system for challenging arbitral awards.[14] Courts may set aside domestic awards on grounds that include substantive merits review, such as an arbitral tribunal’s alleged misapplication of law, while foreign-related awards face a narrower standard more consistent with international practice.[15] Foreign arbitration institutions, including the International Chamber of Commerce and the Singapore International Arbitration Center, are now permitted to establish branches in State Council-approved free trade zones.[16] Still, they remain excluded from operating elsewhere in mainland China, a retreat from the 2021 Draft’s more open approach.[17]
These reforms arrive at a particularly consequential moment. Escalating global tariff disputes and supply chain disruptions are driving an unprecedented surge in cross-border commercial arbitrations, and parties increasingly scrutinize whether a given seat’s legal framework supports efficient, enforceable dispute resolution.[18] For foreign companies that contract with Chinese entities, the amendment’s institutional orientation and court-centric interim relief model mean that drafters must craft arbitration clauses with particular care.[19] The limited scope of ad hoc arbitration and the dual-track challenge system create additional complexity for multinational businesses operating in or with China.[20] As geopolitical tensions continue to reshape global trade relationships, the adequacy of China’s arbitration framework will directly affect whether businesses view Chinese arbitration institutions as viable alternatives to established seats such as Singapore, Hong Kong, and London.[21] The 2025 amendment signals China’s desire to modernize, but in an era demanding bold alignment with international standards, progress with conservatism may not be progress enough.
[1] See Arbitration Law of the People’s Republic of China (promulgated by the Standing Comm. Nat’l People’s Cong., Aug. 31, 1994, rev. Sept. 12, 2025, effective Mar. 1, 2026), https://www.acerislaw.com/wp-content/uploads/2025/10/Chinas-Arbitration-Law-2025-Eng.pdf [https://perma.cc/U488-VEYA]; Yanfei Zeng, Amendment of the Chinese Arbitration Law – One Step Backward After Two Steps Forward, Glob. Arb. News (Dec. 30, 2025), https://www.globalarbitrationnews.com/2025/12/30/amendment-of-the-chinese-arbitration-law-one-step-backward-after-two-steps-forward/ (on file with the American University Business Law Review).
[2] See Zeng, supra note 1 (noting that the 2021 Draft Amendment “proposed a more reasonable legislative structure and adopted sophisticated rules of the international standards, such as the UNCITRAL Model Law”).
[3] UNCITRAL Model Law on International Commercial Arbitration, U.N. Comm’n on Int’l Trade Law, U.N. Doc. A/40/17, annex I (June 21, 1985), as amended in 2006.
[4] See Zeng, supra note 1; see also Dalal Alhouti, Key Developments in International Arbitration for 2026, Charles Russell Speechlys (Jan. 15, 2026), https://www.charlesrussellspeechlys.com/en/insights/quick-reads/102m23k-key-developments-in-international-arbitration-for-2026/ (on file with the American University Business Law Review) (characterizing the amendments as “progress with conservatism”).
[5] See Arbitration Law of the People’s Republic of China, art. 27; Zeng, supra note 1 (observing that the Amendment remains “arbitration institution orientated, instead of, as generally accepted in the international standards, arbitration agreement orientated”).
[6] See, e.g., Simon Hui et al., Amended Law Expands Arbitration Options for Businesses Operating in China, Paul Hastings LLP (Nov. 6, 2025), https://www.paulhastings.com/insights/client-alerts/amended-law-expands-arbitration-options-for-businesses-operating-in-china [https://perma.cc/AHR4-XZ2Y].
[7] See Arbitration Law of the People’s Republic of China, art. 31.
[8] Zeng, supra note 1.
[9] See Arbitration Law of the People’s Republic of China, art. 39; China’s New Arbitration Law 2025: Overview of Key Changes, Aceris L. (Oct. 19, 2025), https://www.acerislaw.com/chinas-new-arbitration-law-2025-overview-of-key-changes/ (on file with the American University Business Law Review) (noting that interim measure powers “remain exclusively vested in local courts”).
[10] See UNCITRAL Model Law on International Commercial Arbitration, U.N. Doc. A/40/17, annex I (1985), as amended in 2006.
[11] Zeng, supra note 1.
[12] See Arbitration Law of the People’s Republic of China, art. 82.
[13] See Hui et al., supra note 6 (listing the currently designated free trade zones); Christian Liu, Spotlight on the New Arbitration Law, from the People’s Republic of China, Clyde & Co (Jan. 16, 2026), https://www.clydeco.com/en/insights/2026/01/spotlight-on-the-new-arbitration-law-from-the-peop [https://perma.cc/QB7L-225X]; Arbitration Law of the People’s Republic of China, arts. 72, 81; Danny Leung, Landmark Reform of the Arbitration Law of the People’s Republic of China, Bird & Bird (Oct. 21, 2025), https://www.twobirds.com/en/insights/2025/china/landmark-reform-of-the-arbitration-law-of-the-people’s-republic-of-china [https://perma.cc/M2PS-6R3A].
[14] See Zeng, supra note 1 (noting that the Amendment “went back to the old legislative model to provide two sets of rules” for domestic and foreign-related cases).
[15] See Arbitration Law of the People’s Republic of China, arts. 71, 83; Aksel Kolstad, China Arbitration Law Reform. An Overview, Harv. Int’l Arb. L. Students Ass’n (Feb. 10, 2026), https://orgs.law.harvard.edu/hialsa/2026/02/10/china-arbitration-law-reform-an-overview/ [https://perma.cc/LQ6Z-6CX7].
[16] Arbitration Law of the People’s Republic of China, art. 86; see also Hui et al., supra note 6.
[17] See Arbitration Law of the People’s Republic of China, art. 86; contra Zeng, supra note 1 (contrasting Article 86 with the 2021 Draft Amendment, which “generally provides equal treatment to the foreign arbitration institutions as the domestic ones”).
[18] See Arne Fuchs & Tom Cummins, International Arbitration in 2026: 5 Themes for Turbulent Times, Ashurst LLP (Jan. 12, 2026), https://www.ashurst.com/en/insights/international-arbitration-in-2026-5-themes-for-turbulent-times/ [https://perma.cc/HM38-NPFC].
[19] See Aceris L., supra note 9 (cautioning that “users should remain mindful of the practical implications of court involvement”); Hui et al., supra note 6 (noting that restrictions on institutional designation “may reduce the appeal” of arbitration for foreign parties).
[20] See Kolstad, supra note 14; Vanessa Fung et al., China Adopts Major Amendments to Arbitration Law, Effective 1 March 2026, Reed Smith (Nov. 21, 2025), https://www.reedsmith.com/articles/china-adopts-major-amendments-to-arbitration-law/ [https://perma.cc/F258-5QP4] (framing the amendments as requiring “strategic considerations for industry players”).
[21] E.g., Fung et al., supra note 18; Aceris L., supra note 9.
