International Arbitration in China

China has developed a sophisticated international arbitration regime governed by the Arbitration Law (Zhongcai Fa, 仲裁法, 1994, revised 2017) and supported by major arbitral institutions, including the China International Economic and Trade Arbitration Commission (CIETAC), the Shanghai International Arbitration Center (SHIAC), and the Beijing Arbitration Commission (BAC). China’s status as a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) makes it a key jurisdiction for international arbitration enforcement.

The Arbitration Law and Lex Arbitri

The PRC Arbitration Law establishes the legal framework for domestic and international arbitration in China. The law applies to contractual and non-contractual disputes between equal civil subjects, excluding disputes involving marriage, adoption, guardianship, succession, and administrative disputes. The law requires a valid arbitration agreement in writing, specifying the arbitral institution.

The law distinguishes between domestic and foreign-related arbitration (shewai zhongcai). Foreign-related arbitration applies to disputes where one party is a foreign entity, the subject matter is located abroad, or the legal facts that establish, change, or terminate the civil legal relationship occur abroad. Foreign-related arbitration is subject to more flexible rules, including party autonomy in choosing procedural rules and the availability of interim measures from Chinese courts.

The Arbitration Law has been criticized for certain limitations: it requires institutional arbitration and does not recognize ad hoc arbitration; it requires the arbitration agreement to designate a specific institution; and it provides limited court support for interim measures. A draft revision of the Arbitration Law released in 2021 for public consultation proposed significant reforms, including recognition of ad hoc arbitration for foreign-related disputes, expanded interim measures, and improved grounds for setting aside awards.

CIETAC, SHIAC, and BAC

CIETAC (Zhongguo Guoji Jingji Maoyi Zhongcai Weiyuanhui) is China’s leading international arbitration institution, handling a significant volume of foreign-related cases. Established in 1956, CIETAC has administered tens of thousands of cases involving parties from over 100 countries. CIETAC maintains its own arbitration rules, which have been revised multiple times to align with international best practices, most recently in 2024. CIETAC also administers cases under the UNCITRAL Arbitration Rules and provides mediation services.

SHIAC (formerly CIETAC Shanghai) became independent in 2013 following a split with CIETAC and has established itself as a major international arbitration center. SHIAC administers cases in Chinese and English and maintains specialized rules for arbitration in finance, aviation, and maritime sectors. BAC has similarly developed an international reputation, particularly for commercial and construction disputes.

The competition among these institutions has improved service quality and procedural innovation. All major institutions now provide expedited procedures, emergency arbitrator mechanisms, and provisions for consolidation of multiple contracts. They have also introduced rules addressing international practices, including third-party funding, tribunal secretaries, and cybersecurity in arbitration.

Recognition and Enforcement of Foreign Awards

China acceded to the New York Convention on 22 April 1987 with two reservations: the reciprocity reservation (Convention applies only to awards made in other contracting states) and the commercial reservation (Convention applies only to disputes arising from commercial legal relationships). Chinese courts have applied the Convention broadly, and enforcement rates have improved significantly in recent decades.

The Intermediate People’s Courts exercise jurisdiction over applications for recognition and enforcement of foreign awards. The Supreme People’s Court established a reporting system (bao gao zhi du) in 1995 requiring lower courts to obtain SPC approval before refusing recognition or enforcement. This mechanism has ensured relatively consistent application of the Convention and reduced local protectionism.

Arbitration Agreements

A valid arbitration agreement under Chinese law requires: (1) an expression of the parties’ intention to arbitrate, (2) matters to be arbitrated, and (3) a designated arbitration institution. The requirement to designate a specific institution has caused difficulties where the parties have agreed to ad hoc arbitration or have designated a non-existent institution. Chinese courts have developed a substantial body of case law interpreting arbitration agreements, generally adopting a pro-arbitration approach that gives effect to the parties’ intention where possible.

The SPC has held that arbitration agreements that merely name a city without specifying an institution are valid if the city has only one arbitration institution. Similarly, agreements that refer to an institution’s former name remain valid. The SPC has also recognized the validity of agreements to arbitrate under the UNCITRAL Rules administered by a designated institution.

Public Policy Exception: Huating v Wandai

The Huating v Wandai case (2015) addressed the public policy exception under Article V(2)(b) of the New York Convention. The Shanghai No. 1 Intermediate People’s Court refused to enforce a CIETAC award on the ground that the underlying contract violated Chinese mandatory provisions relating to foreign exchange controls, making enforcement contrary to public policy.

The SPC reversed, holding that the public policy exception should be construed narrowly and that violation of mandatory provisions does not automatically constitute violation of public policy. The SPC established that public policy under the Convention should be limited to the most fundamental principles of Chinese law and social interest. The Huating v Wandai case aligned Chinese practice with the internationally accepted narrow interpretation of the public policy exception and confirmed China’s commitment to the New York Convention.