Following to our previous article [click here to read it] on November 8th, the National People’s Congress (NPC) website of China released the Arbitration Law (Amendment Draft), with a deadline for feedback on opinions set for December 7th. The draft amendments to the People’s Republic of China Arbitration Law (PRCAL), as we see it, help modernize China’s arbitration system, making it more flexible and compatible with international practices. This analysis below highlights the key changes, comparing them to the current law and examining their potential impacts.
- Expansion of Arbitrable Subjects
The draft, with its Article 3, clarifies that disputes between entities with equal civil status such as individuals, corporations, and other organizations may be arbitrated. This broader scope allows arbitration to play a larger role in resolving various types of commercial conflicts, aligning with international practices.
- Ad Hoc Arbitration for Foreign-Related Maritime and Free Trade Pilot Zone Disputes
A major change in the draft is the introduction of ad hoc arbitration, which is permitted under certain conditions, as outlined in Article 79. This article specifically allows ad hoc arbitration for foreign-related maritime disputes or disputes between enterprises within China’s free trade pilot zones. This flexibility allows parties more autonomy in structuring their arbitration procedures, which is particularly appealing for international entities. The requirement for filing key details with the Chinese Arbitration Association ensures compliance while offering parties the freedom of ad hoc arbitration, aligning with international norms like the UNCITRAL Model Law.
- Recognition of Foreign Arbitration Institutions
The draft promotes the establishment of foreign arbitration institutions in China. Article 83 explicitly allows these institutions to set up branches within China’s free trade pilot zones, enabling them to conduct foreign-related arbitration directly in China. This provision represents a step toward opening China’s arbitration market to international players, offering foreign parties more choices in institutional arbitration within China’s jurisdiction.
- Enhanced Interim Relief Provisions
The draft grants expanded powers for interim relief. Article 36 allows arbitral tribunals to issue various forms of interim measures, including asset preservation orders and conduct-specific injunctions, which previously could only be granted by courts. This aligns with international standards by enabling arbitral tribunals to better protect parties’ rights before final awards are issued, adding a level of security that can be particularly important in commercial disputes.
- Competence-Competence Principle
The draft includes the competence-competence principle in Article 28, empowering arbitral tribunals to rule on their own jurisdiction. By giving tribunals initial authority over jurisdictional challenges, the draft minimizes potential delays caused by court interventions. Court involvement is limited to appeals after the tribunal has made a decision on jurisdiction, which deters jurisdictional objections aimed solely at stalling proceedings, thus streamlining the arbitration process.
- Arbitration Committee Requirements and Enhanced Transparency
Except for the provisions of Article 79, outlined above, the draft maintains the requirement for arbitration committees, detailed in Articles 12 to 21. These sections outline the roles, governance, and oversight responsibilities of arbitration committees, reinforcing their necessity in the framework. Additionally, the draft mandates that committees follow clear transparency guidelines, including publishing arbitration rules, fee standards, and annual reports. These measures aim to strengthen the reliability and integrity of arbitration in China, building confidence for foreign investors and other stakeholders in the arbitration process.
Conclusion
The PRC Arbitration Law’s proposed amendments signal a comprehensive modernization, making the framework more accessible and aligned with international practices. By introducing ad hoc arbitration, improving interim relief provisions, and enhancing the roles of arbitration committees with stricter transparency requirements, the draft provides both domestic and international parties with a more robust and versatile arbitration option. If enacted, these reforms could bolster China’s status as an arbitration-friendly jurisdiction and encourage broader use of arbitration in resolving commercial disputes.
