Christian Liu<\/strong>, Legal Director at\u00a0Clyde & Co<\/strong><\/a><\/p>\n\n\n\n
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Clyde & Co<\/a>\u2019s Young Arbitration Group provides a unique insight into\u00a0international arbitration\u00a0issues through the lens of young international arbitration practitioners working across different jurisdictions. In this series with\u00a0Daily Jus<\/a>, Clyde & Co explores the evolving landscape of arbitration reforms<\/strong>, analyzing recent developments, legislative changes, and their impact on dispute resolution worldwide.<\/em><\/em><\/p>\n\n\n\n On 4th<\/sup> November 2024, the Draft Amendment to the Arbitration Law of the People’s Republic of China<\/a> (\u201cPRC<\/strong>\u201d) (\u201cthe Draft Amendment<\/strong>\u201d) was submitted for its first review at the Chinese National People’s Congress (\u201cNPC<\/strong>\u201d), following the publication of the Draft Amendments to the Arbitration Law for Comments (\u201cthe Draft for Comments<\/strong>\u201d) in 2021. This amendment marks a significant revision to the current Arbitration Law, which took effect in 1995.<\/p>\n\n\n\n Responding to the new challenges in both domestic and international arbitration, the Draft Amendment aims to resolve prominent issues in arbitration mechanisms, improving and refining the arbitration legal system that embodies Chinese characteristics as well as aligning with international practice. This article highlights the key proposals of the Draft Amendment.<\/p>\n\n\n\n For those engaged in or considering participation in arbitration proceedings in the PRC, the Draft Amendment introduces several notable changes as follows:<\/p>\n\n\n\n Article 11<\/strong> of the Draft Amendment allows for arbitration to be conducted online with the consent of the parties. It also provides that online arbitration proceedings shall have the same legal effect as those conducted in traditional in-person proceedings. This provision adapts PRC arbitration procedures to the modern digital landscape, facilitating more accessible and efficient dispute resolution on an international scale.<\/p>\n\n\n\n In 2021, the Draft for Comments proposed to expand the scope of arbitration agreements to include all agreements with a manifestation of intention to arbitrate. However, in Article 24 <\/strong>of the Draft Amendment, the elements required in the current Arbitration Law (i.e.<\/em>, a written form, a manifestation of intent to arbitrate, specification of the subject matter, and a choice of arbitral institution) remain unchanged.<\/p>\n\n\n\n Article 24<\/strong> also stipulates that, if the respondent does not challenge the existence of the arbitral agreement before the first hearing, it shall be deemed that an arbitration agreement exists between the parties. This amendment introduces the doctrine of implied consent<\/a>, which is currently found in the rules of multiple arbitration institutions, into PRC Arbitration Law.<\/p>\n\n\n\n Article 19 of the current Arbitration Law provides that the modification, rescission, termination, or invalidity of the underlying contract shall not affect the validity of the arbitration agreement. Article 27<\/strong> of the Draft Amendment goes further to reinforce the principle of separability of the arbitration agreement by extending the existing Article 19\u2019s list of contractual scenarios to include, i.e., formation, ineffectiveness and revocation.<\/p>\n\n\n\n Under the current Arbitration Law, a dispute regarding the validity of the arbitration agreement can be decided by the Arbitral Commission or by a PRC\u2019s Court. In contrast, in international arbitration, the arbitral tribunal has the power to rule on issues concerning its own jurisdiction, including the validity of the arbitration agreement (which is known as the doctrine of competence-competence<\/a>). Article 28<\/strong> of the Draft Amendment expands the current Arbitration Law to allow the parties to refer to the arbitral tribunal to determine the validity of the arbitration agreement. This expansion makes the arbitration process more efficient by reducing the need to involve the local courts.<\/p>\n\n\n\n Article 28 of the current Arbitration Law enables the parties to apply for property preservation in support of arbitration proceedings seated in the PRC. Article 36<\/strong> of the Draft Amendment makes an important addition to the system of interim measures by allowing the parties to apply for injunctions. This addition aligns with the PRC Civil Procedure Law. The primary purpose of this change is to offer parties more comprehensive legal protection during arbitration proceedings. Enabling parties to obtain injunctive relief could prevent the other party from taking specific action that might undermine the arbitration proceedings, such as transferring assets abroad or breaching confidentiality.<\/p>\n\n\n\n Under the current Arbitration Law, an application to set aside the arbitral award shall be made within six months from the date of receiving the award. Article 69<\/strong> of the Draft Amendment shortens the limitation to three months<\/strong>. This amendment could assist in expediting the enforcement process.<\/p>\n\n\n\n The current Arbitration Law defines the scope of foreign-related arbitration as “arbitration of disputes arising from foreign-related economic and trade, transportation, and maritime matters.<\/em>” Article 75<\/strong> of the Draft Amendment expands the scope of foreign-related arbitration cases, by using the broader language of “arbitration of disputes with foreign-related factors<\/em>“.<\/p>\n\n\n\n The seat of arbitration<\/a> refers to the legal location or jurisdiction under which the arbitration is conducted. Article 78<\/strong> of the Draft Amendment introduces this concept into the Arbitration Law, stipulating that if parties have not agreed on the seat of arbitration or if the agreement is unclear, the seat of arbitration shall be determined by the arbitration rules. If the arbitration rules do not specify a location, the arbitration tribunal shall determine the seat of arbitration that facilitates the resolution of the dispute. However, it is worth noting that this rule only applies to foreign-related cases.<\/p>\n\n\n\n For the first time, Article 79 <\/strong>of the Draft Amendments introduces the concept of \u201cad hoc\u201d<\/em> arbitration into the Arbitration Law. The new rule allows parties to resort to ad hoc <\/em>arbitration in disputes arising from foreign-related maritime matters, or in disputes with foreign-related factors between enterprises registered in pilot free trade zones. Ad hoc<\/em> arbitration features more flexible and efficient proceedings, fewer administrative overheads and more respect to party autonomy. This amendment provides more options for parties involved in foreign-related arbitration.<\/p>\n\n\n\n Article 83<\/strong> allows foreign arbitration institutions to set up offices within approved Pilot Free Trade Zones (\u201cPilot FTZs<\/strong>\u201d) in the PRC, enabling them to conduct foreign-related arbitration in accordance with national regulations. This change is aligned with the PRC\u2019s economic and social development goals and the broader political push for the opening of the PRC as a forum for international dispute resolution.<\/p>\n\n\n\n Article 89<\/strong> of the Draft Amendment allows arbitration institutions to handle international investment cases, aligning with the recent trend of an increase in investment arbitration cases in the PRC.<\/p>\n\n\n\n The Draft Amendments bring significant changes for both domestic and international arbitration. The introduction of provisions such as online arbitration, applications for injunctions, and the expanded scope of foreign-related disputes enhance the flexibility, accessibility, and overall effectiveness of arbitration in the PRC. These changes not only align the PRC\u2019s arbitration system with internationally accepted practices but also create opportunities for more efficient dispute resolution. For non-PRC entities, the ability to engage with foreign arbitration institutions within Pilot FTZs and the introduction of ad hoc<\/em> arbitration<\/a> offer greater autonomy and streamlined processes. For local PRC entities, the amendments provide a clearer and more predictable framework for resolving disputes, especially with the strengthened provisions on arbitrability and jurisdiction. Given the evolving nature of the PRC\u2019s arbitration law, seeking counsel from experienced arbitration lawyers becomes crucial to navigating these complexities. Their expertise will help ensure compliance with the new provisions and provide strategic guidance on the best methods for resolving disputes, whether domestically or internationally.<\/p>\n\n\n\n ABOUT THE AUTHOR<\/strong><\/p>\n\n\n\n Christian Liu<\/strong>\u00a0is a Legal Director in\u00a0Clyde & Co<\/strong><\/a>\u2019s\u00a0<\/a>Shanghai Office. \u00a0He represents both local and international clients and advises on a wide range of insurance and shipping-related disputes. He also has experience in handling disputes relating to road and air carriage, affreightment and international trade. Christian is a Member of the Chartered Insurance Institute and holds the Diploma in Insurance issued by the Chartered Insurance Institute.<\/p>\n\n\n\n *The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.<\/em><\/em><\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" PRC’s Arbitration Law evolves: new reforms enhance efficiency, global alignment & dispute resolution flexibility. 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Key Proposals of the Draft Amendment<\/strong><\/h2>\n\n\n\n
Online Arbitration (Article 11)<\/strong><\/h3>\n\n\n\n
The Existence of the Arbitration Agreement (Article 24)<\/strong><\/h3>\n\n\n\n
Separability Doctrine (Article 27)<\/strong><\/h3>\n\n\n\n
Competence-Competence (Article 28)<\/strong><\/h3>\n\n\n\n
Injunctive Relief (Article 36)<\/strong><\/h3>\n\n\n\n
Shortened Statute of Limitations for Annulment (Article 69)<\/strong><\/h3>\n\n\n\n
Expanded Scope of Foreign-Related Disputes (Article 75)<\/strong><\/h3>\n\n\n\n
Seat of Arbitration (Article 78)<\/strong><\/h3>\n\n\n\n
Ad Hoc <\/em>Arbitration (Article 79)<\/strong><\/h3>\n\n\n\n
Foreign Arbitration Institutions (Article 83)<\/strong><\/h3>\n\n\n\n
Investment Arbitration (Article 89)<\/strong><\/h3>\n\n\n\n
Impacts of the Draft Amendments<\/strong><\/h2>\n\n\n\n
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