March 2, 2026

China’s 2025 Arbitration Law Comes into Effect: Practical Implications for International Companies

Timothy Blakely, Yi-Jun Kang, Paul McKenzie, Gary Zeng, Cheryl Zhu, Lingeng Zhuang Morrison & Foerster LLP + Follow Contact LinkedIn Facebook X Send Embed

China’s amended Arbitration Law (the “ 2025 Law ”) came into force on March 1, 2026. It represents the most significant reform to China’s arbitration framework in three decades. The reforms do not fundamentally redesign the PRC arbitration regime, but clarify long-standing structural ambiguities, better align the framework with international practice, and enhance procedural certainty.

For international companies doing business in or with China, the changes warrant attention, since among other things they:

• codify the concept of the arbitration seat,
• expand access to foreign-related arbitration,
• strengthen court support for interim relief, and
• allow ad hoc arbitration within a limited scope. We discuss below the main implications of the 2025 Law and suggest key takeaways and areas of follow-up for international companies.

1. Broader Scope for “Foreign-Related Arbitration” (Article 78)

Disputes classified as “foreign-related” under PRC law benefit from a more flexible and internationally aligned arbitration regime than purely domestic cases. This includes greater latitude in selecting arbitral institutions and seats outside Mainland China.

The 2025 Law expands the statutory definition of foreign-related disputes beyond traditional categories such as foreign trade and maritime matters to include “other foreign-related disputes.” Although this phrase is not defined, it aligns with a broader judicial and regulatory trend toward a more functional assessment of foreign elements in commercial disputes—including the role of foreign investment, cross‑border contractual performance, or overseas assets.

Practical Implication:

Going forward, a broader range of disputes may be classified as “foreign-related” and enjoy the associated enhanced procedural flexibility. Companies involved in cross-border transactions with a China element should monitor latest judicial developments and, when structuring the dispute resolution clause for a new agreement, consider whether, with the expanded scope, disputes are eligible for more flexible arrangements such as the selection of an offshore seat or a non-PRC arbitral institution.

2. Concept of “Seat of Arbitration” Formally Recognized (Article 81)

The 2025 Law formally recognizes the concept of the arbitration seat—a foundational principle in international arbitration that had previously lacked a clear statutory foundation in PRC law. Article 81 provides that parties to a foreign-related arbitration may now agree in writing on the seat of arbitration. It further clarifies that an arbitral award is deemed to be made at the seat, and absent agreement to the contrary, the seat determines both the procedural law governing the arbitration and the court with supervisory jurisdiction.

Practical Implication:

Before the 2025 Law, PRC arbitration legislation did not clearly articulate the concept or legal consequences of an arbitral “seat.” This created uncertainty in cross-border disputes over which procedural law applied, which courts had supervisory authority, and the nationality of the award for enforcement purposes. In some cases, the PRC courts determined the nationality of an arbitral award by reference to the location of the foreign administering arbitration institution—even where the parties had agreed on a different seat—thereby introducing added complexity and risk in cross‑border enforcement strategy. Codifying the concept of the arbitration seat helps resolve these uncertainties and enhances predictability in matters such as annulment, judicial support, and enforcement. Companies should review their template arbitration clauses to ensure that seat designations are clear, reasonable, and aligned with their dispute resolution and arbitral award enforcement strategy.

3. Limited Introduction of Ad Hoc Arbitration (Article 82)

For the first time, PRC law expressly permits ad hoc arbitration in defined circumstances, including certain foreign-related maritime disputes and disputes involving enterprises registered in designated pilot-free trade zones and the Hainan Free Trade Port. Historically, arbitration in Mainland China has been institution-based.

Practical Implication:

In most cross-border transactions, institutional arbitration is likely to remain the preferred option due to the administrative infrastructure, established procedural rules, and enforcement track record of established arbitral institutions. However, companies operating in eligible sectors or zones may wish to assess whether ad hoc arbitration offers meaningful advantages in specific contexts.

4. Stronger Judicial Support and Procedural Safeguards

The 2025 Law enhances the role of the PRC courts in supporting arbitration, and strengthens procedural safeguards designed to improve fairness, efficiency, and enforceability:

• Emergency Interim Relief (Articles 39 and 58). **** The 2025 Law broadens the availability of court‑ordered interim measures beyond property and evidence preservation orders to include conduct preservation. It also permits parties, in urgent circumstances, to apply directly to a PRC court for interim relief—including before arbitration proceedings are formally commenced. Courts are required to determine such applications promptly in accordance with the Civil Procedure Law.

Practical Implication:

For arbitrations seated in Mainland China, the expanded availability of conduct preservation from PRC courts may materially strengthen parties’ leverage. The reform also brings the scope of interim measures available for Mainland-seated arbitrations more closely in line with those available to Hong Kong–seated arbitrations under the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the HKSAR. Where Mainland assets, counterparties, or evidence are involved, legal teams should take full account of these enhanced preservation tools in their dispute planning and seat-selection strategy from the outset.

• Deemed Existence of Arbitration Agreements (Article 27). Article 27 provides that where a party asserts the existence of an arbitration agreement in its application for arbitration and the opposing party does not deny it before the first hearing, the agreement will be deemed to exist, provided that the tribunal has reminded the party of this consequence and recorded the matter. However, since the statute does not clarify whether “hearing” includes procedural hearings, respondents intending to challenge the existence or validity of an arbitration agreement should raise an objection at the earliest possible stage—ideally before any procedural or case management conference.

Practical Implication:

Jurisdictional challenges must now be carefully managed and escalated quickly. Internal dispute protocols should ensure that underlying arbitration clauses are carefully reviewed immediately upon receipt of a claim.

• Arbitrator’s Duty of Disclosure (Article 45). Earlier iterations of China’s Arbitration Law imposed an impartiality obligation on arbitrators, but no proactive disclosure obligation. The 2025 Law now requires arbitrators to disclose any circumstances that may give rise to reasonable doubts as to their independence or impartiality.

Practical Implication:

Codifying a clear disclosure duty aligns the PRC framework with international standards and is likely to enhance transparency in Mainland China-seated proceedings. It may also reduce the risk of successful challenges to awards, including at the enforcement stage in foreign jurisdictions.

• Shortened Time Limit for Setting Aside Awards (Article 72). **** For arbitrations seated in Mainland China, the deadline to apply to set aside an award has been reduced from six to three months.

Practical Implication:

Post-award review timelines need to be accelerated. Companies should ensure that internal escalation and decision-making procedures allow sufficient time to assess grounds for challenge within the shorter window.

• Clearer Framework for Recognizing and Enforcing Foreign Arbitral Awards (Article 88). The 2025 Law provides a clearer statutory basis for the recognition and enforcement of arbitral awards rendered outside the PRC, supplanting provisions previously scattered among the Civil Procedure Law and judicial interpretations of the Supreme People’s Court.

Practical Implication:

The substantive grounds for refusing recognition and enforcement remain aligned with the New York Convention framework. However, the 2025 Law’s clearer articulation of these grounds enhances transparency and strengthens the coherence of the enforcement regime. This may offer international companies greater confidence when evaluating enforcement prospects in Mainland China and when selecting an offshore seat for a China-related dispute.

Takeaways

The 2025 Law is evolutionary not revolutionary. Its practical impact will depend on judicial application in the coming years. Nonetheless, international companies doing business in or with China should consider:

• Reviewing transaction structures to assess whether foreign-related classification may be available. **** Where appropriate, arbitration clauses—particularly provisions concerning seat designation and institutional choice—should be tailored accordingly, and agreements should clearly reflect relevant foreign elements that support access to the foreign-related regime;
• Reassessing interim relief strategy in disputes involving Mainland China assets, conduct, or evidence;
• Updating internal dispute protocols to reflect shorter set-aside deadlines and earlier jurisdictional objection requirements; and
• Monitoring judicial practice, especially regarding interpretation of “foreign-related” disputes. [View source.]

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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