On November 4, 2024, the Arbitration Law of the People’s Republic of China (Draft Revision) (“Draft Revision”) was presented for its first review at the Twelfth Session of the Standing Committee of the Fourteenth National People’s Congress (“NPC”). Approved in principle by the State Council on July 31, 2024, this marks the official initiation of the legislative process for a major revision to the Arbitration Law.
China’s Arbitration Law was first adopted on August 31, 1994, and officially came into effect on September 1, 1995. And it underwent non-substantive amendments in 2009 and 2017. This is the first major revision of the Arbitration Law since its since its enactment and implementation. Typically, the Draft Revision requires at least two NPC readings, with final approval and enactment through a presidential decree. The process generally spans one to two years, though significant controversies can extend it to three readings or more, during which amendments are suggested and resubmitted until finalized.
The Draft Revision of the Arbitration Law of the People’s Republic of China, compared to the Arbitration Law of the People’s Republic of China (Revised) (“Draft for Public Comments”) issued by the Ministry of Justice (“MOJ”), has eight fewer articles while maintaining the same number of chapters. Key updates include affirming Party leadership in arbitration, clarifying the nature of arbitral institutions, enhancing judicial supervision, enabling online arbitration via information network platforms, introducing behavioral conservatorship, and improving service systems. Additionally, the Draft Revision eliminates provisions related to foreign-related arbitration, streamlining and clarifying the legal framework.
The following is an explanation of the changes in the Draft Revision.
1. Legal effects of online Arbitration
With the rapid development of information technology, Internet arbitration has gradually become an important means of dispute resolution. Article 11 of the Draft Revision explicitly recognizes the legal effect of online arbitration, responding positively to the development trend of information technology with legislation.
The introduction of online arbitration has solved traditional arbitration’s geographical and time limitations, and it is particularly efficient and convenient in cross-border trade and online contractual disputes. Online arbitration has significantly improved efficiency through such means as online submission of evidence, remote hearings and electronic award documents. At the same time, it will also bring new problems such as data security, authenticity and legality of electronic evidence. Therefore, the implementation of online arbitration needs to be accompanied by technical standards and regulatory mechanisms to ensure the fairness and security of the arbitration process.
2. Nature of the arbitral institution
Although the Arbitration Law has been in force for many years, the nature of the arbitration institution, whether it is an official judicial body or a civil organization, has yet to be clarified. Article 12 of the Draft Revision stipulates that arbitration institutions are non-profit legal persons of public interest. This provision provides a precise legal positioning and standardized development direction for arbitration institutions. At the same time, this positioning requires arbitration institutions to pay more attention to public welfare objectives in their operations. Also, it provides a legal basis for arbitration institutions to balance government support and market-oriented operations.
3. Registration of establishment, modification and deregistration of arbitral institutions
The Draft Revision makes detailed provisions on the procedures for establishing, changing, and canceling arbitration institutions, further standardizing the administration process of arbitration institutions. Among them, Article 13 improves the registration requirements for the establishment of arbitration commissions, Article 15 adds the obligation to register changes in specific matters, and Article 16 clarifies the system of deregistration in the event of the termination of an arbitration institution. These provisions provide a clear legal basis for the life-cycle management of arbitration institutions.
By introducing the requirements for registration of changes and deregistration, the Draft Revision achieves closed-loop regulation in the administration of arbitral institutions. It avoids legal problems arising from the change or termination of an arbitral institution. For example, how to deal with pending cases or archived documents after the cancellation of an arbitration institution; these specific issues can be solved through a sound cancellation system.
4. Appointment and removal of arbitrators
Arbitrators’ professional quality and ethics directly affect the quality of arbitral awards. Article 20 of the Draft Revision further clarifies the conditions for the appointment of arbitrators, for example, by requiring that persons who have been engaged in arbitration for eight years must have completed the unified pre-service training and by adding as a condition for appointment persons who have served as public prosecutors for eight years and who have a background in scientific and technological knowledge. In addition, the Draft Revision specifies the circumstances under which an arbitrator may be removed from office, such as dismissal from public office, revocation of a lawyer’s practicing certificate, or a senior title.
By establishing a mechanism whereby favorable conditions for arbitrators coexist with a negative list, the Draft Revision further safeguards the level of specialization and professionalism of the arbitration team. In particular, against the increasing number of scientific and technological disputes, adding new conditions for selecting arbitrators with scientific and technological backgrounds will effectively enhance the arbitration’s ability to deal with complex technological cases.
5. Adjustment of the validity of the arbitration agreement
1) Determination of the validity of the arbitration agreement
About the constituent elements of an arbitration agreement, the Draft Revision does not continue the direction of the Draft for Public Comments to make significant adjustments to the existing Arbitration Law, nor does it reflect the revision ideas in the Draft for Public Comments to relax the formal elements of the criteria for determining the validity of an arbitration agreement, and to delete the requirements on the subject matter of arbitration and arbitration committee. On the contrary, Article 24 of the Draft Revision follows the content of Article 16 of the current Arbitration Law in its entirety, making it clear that an arbitration agreement still needs to comply with the following four elements: the written form, the consent to arbitration, the subject matter of the arbitration, and the arbitration committee selected.
The relaxation of the formal elements of the arbitration agreement has become a trend in the development of international arbitration. For example, the UNCITRAL Arbitration Rules (UNCITRAL Rules) are more flexible in recognizing the form of the arbitration agreement, allowing for electronic documents and other forms of agreement. The Draft Revision continues the core provisions of the current Arbitration Law, reflecting the legislator’s emphasis on the stability of China’s arbitration system. However, it may contradict the goal of the modern arbitration system, which seeks to minimize the risk of invalidity of the arbitration agreement.
As for the situation of invalidity due to defects in some of the elements of the arbitration agreement, the future arbitration system may consider that a remedial mechanism should be introduced, such as allowing the parties to supplement the content of the agreement after the dispute has arisen, in order to ensure the validity of the arbitration agreement.
2) Presumption of intent to arbitrate
About the question of whether intent can be presumed through silence, Article 24(3) of the Draft Revision strictly stipulates that an arbitration agreement may be deemed to exist between the parties only if one party applies for arbitration without the other party denying it, after having been expressly prompted by the arbitral tribunal and recorded. This provision reflects a high degree of respect for the parties’ right to choose. Also, it confirms at the institutional level that the parties may form an arbitration agreement by way of silence, and its direction of revision is consistent with that of the Draft for Public Comments.
3) Mechanisms for the redress of grievances
“Opposition to the validity of the arbitration agreement” is an essential legal issue in arbitration practice. It refers to a legal act in which, in the course of the initiation or conduct of arbitration proceedings, the parties challenge the validity of the arbitration agreement, arguing that the arbitration agreement does not comply with the provisions of the law or that there are other deficiencies, and thus claiming that the arbitration agreement is null and void, partially invalid or unenforceable. The challenge has a direct impact on whether the arbitration proceedings can proceed.
The Draft for Public Comments puts forward proposals to shorten the objection period and unify the objection processing path, such as adjusting the objection period from “before the first hearing” to “within the period of defense”, and proposing that the authority to determine the validity of arbitration agreement be unified under the authority of arbitral institution or arbitral tribunal to conduct preliminary examination. It is also suggested that the authority to determine the validity of an arbitration agreement be unified under the authority of an arbitral institution or arbitral tribunal to conduct a preliminary examination and that the right of the parties to choose an arbitral institution or court to raise objections be abolished. The Draft Revision only formally adds an arbitral tribunal as one of the determination institutions, which fails to adequately respond to the disputes over the determination of the validity of arbitration agreements in practice and may require further optimization of the objection relief mechanism.
6. behavioral conservatorship
Article 36 of the Draft Revision introduces a new provision on preservation of conduct, i.e., an interim measure of constraint, such as the preservation of property or a request that the other party be ordered or prohibited from performing a certain act, that the arbitral tribunal or the parties apply to the court to prevent a party from performing an act that may result in irreparable harm to the other party or of safeguarding the enforcement of a final award. This new provision provides a flexible remedial tool for arbitration proceedings, such as in cases of intellectual property protection or emergency relief, where the preservation of conduct will play an important role.
7. Improvement of the system of service in arbitration
Article 38 of the Draft Revision makes express provision for service: on the one hand, priority is given to respecting the agreement of the parties as to the manner of service; on the other hand, the arbitration rules provide safeguard procedures to ensure service when the parties have not expressly agreed.
The improvement of the service system solves the problem of delayed or irregular service of the notice of arbitration in practice; however, the Draft Revision does not further refine the specific requirements, such as electronic service, which may lead to disputes in the application of technology. It is recommended that judicial interpretations or arbitration rules supplement the improvement in the future.
8. Modalities for the selection of the presiding arbitrator
The new provision in Article 40 of the Draft Revision allows the arbitrators chosen by each of the parties to jointly select the presiding arbitrator in a manner that avoids disputes over impartiality that may arise from the unilateral appointment of an arbitrator by an arbitral institution and enhances the acceptance of the outcome of the arbitration by the parties.
Although the Draft Revision removes the provision allowing for the selection of arbitrators from outside the roster of arbitrators, the current system places greater emphasis on the uniformity of the rules and the administrative function of the arbitral institution, which helps to reduce procedural complexity and potential risks. However, the flexibility to select arbitrators from outside the roster is significant in certain high-end commercial disputes, and it is suggested that this option may be reconsidered in the future in the context of foreign-related arbitration.
9. Disclosure obligations of arbitrators
While the current Arbitration Law refers to the independence and impartiality of arbitrators, it does not specify the specific content and procedure of the disclosure obligation. Article 42 of the Draft Revision requires an arbitrator to disclose in writing, prior to his or her appointment or during the proceedings, circumstances that may affect independence or impartiality. If an arbitrator fails to comply with the duty of disclosure or conceals a material fact, a party may apply to the arbitral institution for recusal based on the arbitrator’s failure to disclose or concealment of information; furthermore, an arbitral award may be set aside or not enforced as a result of the arbitrator’s failure to comply with the duty of disclosure.
10. Arbitration accreditation procedures
Article 53 of the Draft Revision adds the requirement for expert witnesses to participate in hearings, drawing on the relevant provisions of the Civil Procedure Law. This provision makes up for the lack of transparency in the appraisal process in traditional arbitration and helps to enhance the authority and acceptability of appraisal opinions. However, the Draft Revision needs to clarify further the procedural safeguards for the parties’ cross-examination, which may lead to disputes in practice, thus affecting the efficiency of the arbitration process.
11. Dismissal of the parties’ request for arbitration
Article 58 of the Draft Revision introduces new circumstances for dismissing a claim for arbitration in cases of bad faith collusion or prejudice to the interests of the State or the public interest.
This provision introduces the principle of public policy exception into arbitration proceedings for the first time. However, the definition of “malicious collusion” or “harm to the public interest” may leave room for subjective determination in practice, and further refinement is needed to ensure the objectivity and authority of the decision.
12. Application for setting aside of an arbitral award
Two adjustments in the Draft Revision concerning setting aside arbitral awards:
1) Article 68 of the Draft Revision adds “invalidity of the arbitration agreement” as a circumstance for setting aside an arbitral award; 2) Article 69 of the Draft Revision shortens the time for applying setting aside an arbitral award from “within six months from the date of receipt of the award” to “within three months from the date of receipt of the award” in the current Arbitration Law.
The inclusion of the situation of an “invalid arbitration agreement” provides a higher requirement for the legitimacy of the arbitration procedure. The shortening of the time for applying for the setting aside of an arbitral award to three months reflects the pursuit of the efficiency of the award. However, it may also pressure the parties to prepare the materials for setting aside.
13. Broadening the scope of foreign-related arbitration and the seat of arbitration regime
The existing Arbitration Law does not deal with the “place of arbitration” concept. However, it only stipulates that foreign-related arbitration only applies to “disputes arising in foreign-related economic trade, transportation, and maritime affairs.” The Draft Revision cites the “place of arbitration” concept in Articles 78 and 84 and explicitly grants the parties the right to determine the place of arbitration by written agreement. At the same time, the Draft Revision encourages parties to engage in foreign-related arbitration by choosing a Chinese arbitration institution and using China as the place of arbitration.
Introducing this system will help enhance the flexibility and internationalization of foreign-related arbitration and further strengthen China’s competitiveness in international arbitration.
14. the “ad hoc arbitration” system
Article 79 of the Draft Revision explicitly introduces the mechanism of “ad hoc arbitration” in foreign maritime disputes and foreign disputes of enterprises in FTZs, providing a flexible way of organizing the tribunal on an ad hoc basis. The provision gives the parties a choice between two modes of arbitration: 1) When selecting an arbitration committee, the parties may agree that an arbitration committee in China will conduct the arbitration. 2) By choosing ad hoc arbitration, the parties may agree on a specific place within the People’s Republic of China for the arbitration to be conducted by an arbitral tribunal composed of persons meeting the conditions outlined in Article 20 of the Arbitration Law.
This two-track selection model provides greater freedom for the parties while enhancing the flexibility of China’s arbitration system. It helps to attract more international commercial disputes to be settled in China.
15. Supporting the internationalization of arbitral institutions
The Draft Revision supports China’s arbitration institutions in establishing business establishments abroad. It simultaneously allows foreign arbitration institutions to carry out foreign-related arbitration activities in the FTZ by law. This creates legal conditions for China’s arbitration institutions to “go global” and enhances the attractiveness of internationalization for the FTZ.
[Comment]
The release of the Draft Revision marks a crucial step in the overall optimization and internationalization of China’s arbitration system. The revision is oriented to respond to modern commercial dispute resolution needs and has made various innovations centering on the flexibility, impartiality, and efficiency of arbitration. From the establishment of ad hoc arbitration and the seat of arbitration system to the expansion of the scope of foreign-related arbitration, the introduction of online Arbitration, and the clarification of the public interest positioning of arbitration institutions, the Draft Revision has fully absorbed the mature experience of international arbitration while maintaining the stability of the arbitration system, which provides a strong guarantee for the improvement of China’s arbitration system’s global competitiveness.
In addition, the Draft Revision also focuses on strengthening judicial support and supervision of arbitration activities, for example, by improving the mechanism for the setting aside of arbitral awards, increasing the number of measures for the preservation of acts, and optimizing the systems of service of process and disclosure obligations of arbitrators. This helps enhance the transparency and authority of arbitration proceedings and further resolves some long-standing points of contention in practice.
Overall, the Draft Revision demonstrates remarkable progress in enhancing the efficiency of arbitration, improving the arbitration rules, and promoting the internationalization of arbitration. As a significant update of China’s arbitration legal system, its adoption will inject new vitality into the construction of the rule of law and internationalization of China’s business environment. It will also win greater discourse power for China in international commercial dispute resolution.
China’s Arbitration Law was first adopted on August 31, 1994, and officially came into effect on September 1, 1995. And it underwent non-substantive amendments in 2009 and 2017. This is the first major revision of the Arbitration Law since its since its enactment and implementation. Typically, the Draft Revision requires at least two NPC readings, with final approval and enactment through a presidential decree. The process generally spans one to two years, though significant controversies can extend it to three readings or more, during which amendments are suggested and resubmitted until finalized.
The Draft Revision of the Arbitration Law of the People’s Republic of China, compared to the Arbitration Law of the People’s Republic of China (Revised) (“Draft for Public Comments”) issued by the Ministry of Justice (“MOJ”), has eight fewer articles while maintaining the same number of chapters. Key updates include affirming Party leadership in arbitration, clarifying the nature of arbitral institutions, enhancing judicial supervision, enabling online arbitration via information network platforms, introducing behavioral conservatorship, and improving service systems. Additionally, the Draft Revision eliminates provisions related to foreign-related arbitration, streamlining and clarifying the legal framework.
The following is an explanation of the changes in the Draft Revision.
1. Legal effects of online Arbitration
With the rapid development of information technology, Internet arbitration has gradually become an important means of dispute resolution. Article 11 of the Draft Revision explicitly recognizes the legal effect of online arbitration, responding positively to the development trend of information technology with legislation.
The introduction of online arbitration has solved traditional arbitration’s geographical and time limitations, and it is particularly efficient and convenient in cross-border trade and online contractual disputes. Online arbitration has significantly improved efficiency through such means as online submission of evidence, remote hearings and electronic award documents. At the same time, it will also bring new problems such as data security, authenticity and legality of electronic evidence. Therefore, the implementation of online arbitration needs to be accompanied by technical standards and regulatory mechanisms to ensure the fairness and security of the arbitration process.
2. Nature of the arbitral institution
Although the Arbitration Law has been in force for many years, the nature of the arbitration institution, whether it is an official judicial body or a civil organization, has yet to be clarified. Article 12 of the Draft Revision stipulates that arbitration institutions are non-profit legal persons of public interest. This provision provides a precise legal positioning and standardized development direction for arbitration institutions. At the same time, this positioning requires arbitration institutions to pay more attention to public welfare objectives in their operations. Also, it provides a legal basis for arbitration institutions to balance government support and market-oriented operations.
3. Registration of establishment, modification and deregistration of arbitral institutions
The Draft Revision makes detailed provisions on the procedures for establishing, changing, and canceling arbitration institutions, further standardizing the administration process of arbitration institutions. Among them, Article 13 improves the registration requirements for the establishment of arbitration commissions, Article 15 adds the obligation to register changes in specific matters, and Article 16 clarifies the system of deregistration in the event of the termination of an arbitration institution. These provisions provide a clear legal basis for the life-cycle management of arbitration institutions.
By introducing the requirements for registration of changes and deregistration, the Draft Revision achieves closed-loop regulation in the administration of arbitral institutions. It avoids legal problems arising from the change or termination of an arbitral institution. For example, how to deal with pending cases or archived documents after the cancellation of an arbitration institution; these specific issues can be solved through a sound cancellation system.
4. Appointment and removal of arbitrators
Arbitrators’ professional quality and ethics directly affect the quality of arbitral awards. Article 20 of the Draft Revision further clarifies the conditions for the appointment of arbitrators, for example, by requiring that persons who have been engaged in arbitration for eight years must have completed the unified pre-service training and by adding as a condition for appointment persons who have served as public prosecutors for eight years and who have a background in scientific and technological knowledge. In addition, the Draft Revision specifies the circumstances under which an arbitrator may be removed from office, such as dismissal from public office, revocation of a lawyer’s practicing certificate, or a senior title.
By establishing a mechanism whereby favorable conditions for arbitrators coexist with a negative list, the Draft Revision further safeguards the level of specialization and professionalism of the arbitration team. In particular, against the increasing number of scientific and technological disputes, adding new conditions for selecting arbitrators with scientific and technological backgrounds will effectively enhance the arbitration’s ability to deal with complex technological cases.
5. Adjustment of the validity of the arbitration agreement
1) Determination of the validity of the arbitration agreement
About the constituent elements of an arbitration agreement, the Draft Revision does not continue the direction of the Draft for Public Comments to make significant adjustments to the existing Arbitration Law, nor does it reflect the revision ideas in the Draft for Public Comments to relax the formal elements of the criteria for determining the validity of an arbitration agreement, and to delete the requirements on the subject matter of arbitration and arbitration committee. On the contrary, Article 24 of the Draft Revision follows the content of Article 16 of the current Arbitration Law in its entirety, making it clear that an arbitration agreement still needs to comply with the following four elements: the written form, the consent to arbitration, the subject matter of the arbitration, and the arbitration committee selected.
The relaxation of the formal elements of the arbitration agreement has become a trend in the development of international arbitration. For example, the UNCITRAL Arbitration Rules (UNCITRAL Rules) are more flexible in recognizing the form of the arbitration agreement, allowing for electronic documents and other forms of agreement. The Draft Revision continues the core provisions of the current Arbitration Law, reflecting the legislator’s emphasis on the stability of China’s arbitration system. However, it may contradict the goal of the modern arbitration system, which seeks to minimize the risk of invalidity of the arbitration agreement.
As for the situation of invalidity due to defects in some of the elements of the arbitration agreement, the future arbitration system may consider that a remedial mechanism should be introduced, such as allowing the parties to supplement the content of the agreement after the dispute has arisen, in order to ensure the validity of the arbitration agreement.
2) Presumption of intent to arbitrate
About the question of whether intent can be presumed through silence, Article 24(3) of the Draft Revision strictly stipulates that an arbitration agreement may be deemed to exist between the parties only if one party applies for arbitration without the other party denying it, after having been expressly prompted by the arbitral tribunal and recorded. This provision reflects a high degree of respect for the parties’ right to choose. Also, it confirms at the institutional level that the parties may form an arbitration agreement by way of silence, and its direction of revision is consistent with that of the Draft for Public Comments.
3) Mechanisms for the redress of grievances
“Opposition to the validity of the arbitration agreement” is an essential legal issue in arbitration practice. It refers to a legal act in which, in the course of the initiation or conduct of arbitration proceedings, the parties challenge the validity of the arbitration agreement, arguing that the arbitration agreement does not comply with the provisions of the law or that there are other deficiencies, and thus claiming that the arbitration agreement is null and void, partially invalid or unenforceable. The challenge has a direct impact on whether the arbitration proceedings can proceed.
The Draft for Public Comments puts forward proposals to shorten the objection period and unify the objection processing path, such as adjusting the objection period from “before the first hearing” to “within the period of defense”, and proposing that the authority to determine the validity of arbitration agreement be unified under the authority of arbitral institution or arbitral tribunal to conduct preliminary examination. It is also suggested that the authority to determine the validity of an arbitration agreement be unified under the authority of an arbitral institution or arbitral tribunal to conduct a preliminary examination and that the right of the parties to choose an arbitral institution or court to raise objections be abolished. The Draft Revision only formally adds an arbitral tribunal as one of the determination institutions, which fails to adequately respond to the disputes over the determination of the validity of arbitration agreements in practice and may require further optimization of the objection relief mechanism.
6. behavioral conservatorship
Article 36 of the Draft Revision introduces a new provision on preservation of conduct, i.e., an interim measure of constraint, such as the preservation of property or a request that the other party be ordered or prohibited from performing a certain act, that the arbitral tribunal or the parties apply to the court to prevent a party from performing an act that may result in irreparable harm to the other party or of safeguarding the enforcement of a final award. This new provision provides a flexible remedial tool for arbitration proceedings, such as in cases of intellectual property protection or emergency relief, where the preservation of conduct will play an important role.
7. Improvement of the system of service in arbitration
Article 38 of the Draft Revision makes express provision for service: on the one hand, priority is given to respecting the agreement of the parties as to the manner of service; on the other hand, the arbitration rules provide safeguard procedures to ensure service when the parties have not expressly agreed.
The improvement of the service system solves the problem of delayed or irregular service of the notice of arbitration in practice; however, the Draft Revision does not further refine the specific requirements, such as electronic service, which may lead to disputes in the application of technology. It is recommended that judicial interpretations or arbitration rules supplement the improvement in the future.
8. Modalities for the selection of the presiding arbitrator
The new provision in Article 40 of the Draft Revision allows the arbitrators chosen by each of the parties to jointly select the presiding arbitrator in a manner that avoids disputes over impartiality that may arise from the unilateral appointment of an arbitrator by an arbitral institution and enhances the acceptance of the outcome of the arbitration by the parties.
Although the Draft Revision removes the provision allowing for the selection of arbitrators from outside the roster of arbitrators, the current system places greater emphasis on the uniformity of the rules and the administrative function of the arbitral institution, which helps to reduce procedural complexity and potential risks. However, the flexibility to select arbitrators from outside the roster is significant in certain high-end commercial disputes, and it is suggested that this option may be reconsidered in the future in the context of foreign-related arbitration.
9. Disclosure obligations of arbitrators
While the current Arbitration Law refers to the independence and impartiality of arbitrators, it does not specify the specific content and procedure of the disclosure obligation. Article 42 of the Draft Revision requires an arbitrator to disclose in writing, prior to his or her appointment or during the proceedings, circumstances that may affect independence or impartiality. If an arbitrator fails to comply with the duty of disclosure or conceals a material fact, a party may apply to the arbitral institution for recusal based on the arbitrator’s failure to disclose or concealment of information; furthermore, an arbitral award may be set aside or not enforced as a result of the arbitrator’s failure to comply with the duty of disclosure.
10. Arbitration accreditation procedures
Article 53 of the Draft Revision adds the requirement for expert witnesses to participate in hearings, drawing on the relevant provisions of the Civil Procedure Law. This provision makes up for the lack of transparency in the appraisal process in traditional arbitration and helps to enhance the authority and acceptability of appraisal opinions. However, the Draft Revision needs to clarify further the procedural safeguards for the parties’ cross-examination, which may lead to disputes in practice, thus affecting the efficiency of the arbitration process.
11. Dismissal of the parties’ request for arbitration
Article 58 of the Draft Revision introduces new circumstances for dismissing a claim for arbitration in cases of bad faith collusion or prejudice to the interests of the State or the public interest.
This provision introduces the principle of public policy exception into arbitration proceedings for the first time. However, the definition of “malicious collusion” or “harm to the public interest” may leave room for subjective determination in practice, and further refinement is needed to ensure the objectivity and authority of the decision.
12. Application for setting aside of an arbitral award
Two adjustments in the Draft Revision concerning setting aside arbitral awards:
1) Article 68 of the Draft Revision adds “invalidity of the arbitration agreement” as a circumstance for setting aside an arbitral award; 2) Article 69 of the Draft Revision shortens the time for applying setting aside an arbitral award from “within six months from the date of receipt of the award” to “within three months from the date of receipt of the award” in the current Arbitration Law.
The inclusion of the situation of an “invalid arbitration agreement” provides a higher requirement for the legitimacy of the arbitration procedure. The shortening of the time for applying for the setting aside of an arbitral award to three months reflects the pursuit of the efficiency of the award. However, it may also pressure the parties to prepare the materials for setting aside.
13. Broadening the scope of foreign-related arbitration and the seat of arbitration regime
The existing Arbitration Law does not deal with the “place of arbitration” concept. However, it only stipulates that foreign-related arbitration only applies to “disputes arising in foreign-related economic trade, transportation, and maritime affairs.” The Draft Revision cites the “place of arbitration” concept in Articles 78 and 84 and explicitly grants the parties the right to determine the place of arbitration by written agreement. At the same time, the Draft Revision encourages parties to engage in foreign-related arbitration by choosing a Chinese arbitration institution and using China as the place of arbitration.
Introducing this system will help enhance the flexibility and internationalization of foreign-related arbitration and further strengthen China’s competitiveness in international arbitration.
14. the “ad hoc arbitration” system
Article 79 of the Draft Revision explicitly introduces the mechanism of “ad hoc arbitration” in foreign maritime disputes and foreign disputes of enterprises in FTZs, providing a flexible way of organizing the tribunal on an ad hoc basis. The provision gives the parties a choice between two modes of arbitration: 1) When selecting an arbitration committee, the parties may agree that an arbitration committee in China will conduct the arbitration. 2) By choosing ad hoc arbitration, the parties may agree on a specific place within the People’s Republic of China for the arbitration to be conducted by an arbitral tribunal composed of persons meeting the conditions outlined in Article 20 of the Arbitration Law.
This two-track selection model provides greater freedom for the parties while enhancing the flexibility of China’s arbitration system. It helps to attract more international commercial disputes to be settled in China.
15. Supporting the internationalization of arbitral institutions
The Draft Revision supports China’s arbitration institutions in establishing business establishments abroad. It simultaneously allows foreign arbitration institutions to carry out foreign-related arbitration activities in the FTZ by law. This creates legal conditions for China’s arbitration institutions to “go global” and enhances the attractiveness of internationalization for the FTZ.
[Comment]
The release of the Draft Revision marks a crucial step in the overall optimization and internationalization of China’s arbitration system. The revision is oriented to respond to modern commercial dispute resolution needs and has made various innovations centering on the flexibility, impartiality, and efficiency of arbitration. From the establishment of ad hoc arbitration and the seat of arbitration system to the expansion of the scope of foreign-related arbitration, the introduction of online Arbitration, and the clarification of the public interest positioning of arbitration institutions, the Draft Revision has fully absorbed the mature experience of international arbitration while maintaining the stability of the arbitration system, which provides a strong guarantee for the improvement of China’s arbitration system’s global competitiveness.
In addition, the Draft Revision also focuses on strengthening judicial support and supervision of arbitration activities, for example, by improving the mechanism for the setting aside of arbitral awards, increasing the number of measures for the preservation of acts, and optimizing the systems of service of process and disclosure obligations of arbitrators. This helps enhance the transparency and authority of arbitration proceedings and further resolves some long-standing points of contention in practice.
Overall, the Draft Revision demonstrates remarkable progress in enhancing the efficiency of arbitration, improving the arbitration rules, and promoting the internationalization of arbitration. As a significant update of China’s arbitration legal system, its adoption will inject new vitality into the construction of the rule of law and internationalization of China’s business environment. It will also win greater discourse power for China in international commercial dispute resolution.