Mainland China has not traditionally been seen as an arbitration friendly jurisdiction. However, the PRC government has taken significant steps over the years to make Mainland China competitive with other powerhouse arbitral hubs worldwide. These measures include several initiatives aimed at promoting arbitration as the preferred means for settling international commercial disputes as well as implementing measures to bring the PRC’s arbitral regime to be more in line with international practice.
For example, in an effort to follow the international trend of limited judicial intervention in arbitration, the PRC judiciary has, over the last two decades, developed a reporting system under which, for foreign-related arbitration cases, no PRC court can refuse enforcement or set aside of an arbitral award or invalidate an arbitration agreement without the Supreme People’s Court’s approval.
The legal framework for arbitration in Mainland China, the Arbitration Law of the People’s Republic of China (《中国人民共和国仲裁法》) , has remained substantially unchanged since its enactment almost three decades ago in 1994. The PRC government has, however, recognized the need to modernize its laws. In 2018, the PRC’s Ministry of Justice began the process of revising the PRC Arbitration Law, and on 30 July 2021, the PRC government has released its proposed revisions to the PRC Arbitration Law for public consultation.
One of the key objectives of the Draft Proposal is to resolve various deficiencies under the current PRC Arbitration Law. The current PRC Arbitration Law, while influenced by the 1985 UNCITRAL Model Law on International Commercial Arbitration, lacks many important concepts and principles that are fundamental to modern arbitration regimes: these include the concepts of the seat of arbitration, ad hoc arbitration, the principle of Kompetenz-Kompetenz, and an arbitral tribunal’s power to grant interim measures. The PRC Arbitration Law is also not clear on whether foreign arbitral institutions can administer arbitrations seated in the Mainland China. The Draft Proposal seeks to resolve the deficiencies under the current PRC Arbitration Law by expanding the PRC Arbitration Law to 99 provisions (19 articles more than the current version) and implementing ground-breaking amendments to the existing arbitral regime.
Please click here to read some of the key changes to the PRC Arbitration Law proposed by the PRC government.