This article was featured in Jus Mundi‘s 2024 Arbitration Year in Review, in collaboration with VYAPs, a yearly collection of articles from jurisdictions all around the globe updating you on arbitration-related developments from the previous year.
THE AUTHORS:
Jingjing Li, Associate at Zhong Lun Law Firm
Yanbing Peng, Legal Counsel at Shenzhen Court of International Arbitration
Junzi Ni, Undergraduate Student at China University of Political Science and Law
Developments in Arbitration-Related Laws
In 2024, several laws were introduced in China and some of these new laws are particularly impactful in the realm of arbitration.
The Foreign State Immunity Law of the People’s Republic of China (“the Law”) came into effect on 1 January 2024, marking a significant shift in China’s approach to state immunity. China’s position of state immunity now has transitioned from absolute immunity to a relative immunity regime.
The Law provides a clear framework for defining the scope of foreign states’ immunity. Article 3 establishes the general principle of state immunity, while Articles 4, 5, and 6 address explicit and implicit waivers of immunity and their exceptions. The Law also outlines special exceptions to state immunity, including commercial activities (Article 7), contracts related to labor or services (Article 8), personal injury and property damage (Article 9), property rights (Article 10), and intellectual property (Article 11); notably, Article 12 of the Law introduces exceptions for state immunity in arbitration involving commercial and investment disputes, while excludes state-to-state arbitration. This provision aligns with practices in countries like the United States and the United Kingdom.
Another development worth noting is the undergoing amendment of the PRC Arbitration Law. The Draft of Arbitration Law of the People’s Republic of China (“the 2024 Draft”) was released for public consultation on 4 November 2024. This updated version adopts a more conservative stance compared to its 2021 Draft, which has sparked many debates. Some key points are as below.
- Arbitration Agreements: Under the existing China Arbitration Law, an arbitration agreement must specify a designated arbitration commission to be valid. The 2021 Draft proposed a progressive change by removing this requirement. However, the 2024 Draft reverses this proposal, keeping the original requirement for a designated arbitration commission (Article 24), which is criticized as a significant step back from the international alignment in the 2021 Draft.
- Injunctive Relief: Article 36 of the 2024 Draft extends the interim measures to include conduct preservation (i.e. injunctive relief). This amendment is important for parties to arbitrations involving intellectual property, equity investment, and other types of disputes where injunctive relief may be required to protect the interests of relevant parties.
- Seat of Arbitration: The current Arbitration Law does not specify the concept of “seat” of arbitration. Over the years, many judicial practices in China have started to recognize the concept of the “seat” of arbitration regarding issues of supervisory court and the nationality of the award, such as the Brentwood v. Guangdong Fa’anlong case and China First Heavy Machinery v. Aktiebolaget Sandvik Materials Technology case. Article 78 of the 2024 Draft now introduces the concept of seat, allowing parties to agree on it. This change, which aligns with international standards, applies solely to arbitration cases involving foreign elements, and it is uncertain whether and how the seat concept will apply to domestic cases.
- Ad hoc Arbitration: Under the current laws and regulations, ad hoc arbitration is restricted except in specific Free-Trade Zones (“FTZ”). Article 79 of the 2024 Draft extends this to include disputes arising in foreign maritime affairs and arising between enterprises established and registered in the Pilot FTZ with foreign-related factors. This extension is more limited compared to the broader provisions suggested in the 2021 Draft, which would have allowed ad hoc arbitration for all foreign-related disputes.
Judicial Supports to International Commercial Arbitration
In 2024, China’s judiciary has systematically strengthened its support for international commercial arbitration through landmark rulings and institutional innovations. The Supreme People’s Court (“SPC”) and specialized courts, such as the Beijing Fourth Intermediate People’s Court (“Beijing No. 4 Court”), have issued model cases to harmonize judicial review with global standards, enhance procedural efficiency, and promote cross-border enforcement. Below is a consolidated overview of key cases and reforms.
Recognition and Enforcement of Arbitral Awards
Cross-Border Cooperation with Hong Kong:
- In G Company v. V Company, the Suzhou Intermediate Court expedited interim measures for a Hong Kong International Arbitration Centre (HKIAC) case, completing the process within seven days despite pandemic challenges.
- The Financial Company v. Salt Manufacturing Company case affirmed the enforceability of HKIAC awards 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 Hong Kong Special Administrative Region, even when tribunal composition changes occurred mid-procedure with party consent.
Belt and Road and Foreign Awards:
- In Art Mosaic Co. v. Hongguan Co. (case 1) the Foshan Court enforced an Uzbekistan Chamber of Commerce award under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (“New York Convention”), prioritizing treaty obligations over technical defects (e.g., unregistered company seals).
- Daesung v. Praxair (case 3) validated a Singapore International Arbitration Centre (“SIAC”) clause in Shanghai, confirming foreign arbitration institutions’ legitimacy under Chinese law.
Clarifying Arbitration Agreements and Procedures
Party Autonomy and Consent
- In Tianjin Hotel Management v. Hong Kong Company (case 3), the Tianjin Court upheld a flawed arbitration clause by applying Hong Kong law, emphasizing party intent over formal defects.
- Yi Hai International Ltd. v. Lianshun Co. (case 2) ruled that unsigned draft contracts with arbitration clauses became binding through parties’ conduct (email exchanges).
Procedural Integrity
- China First Highway Engineering Co. v. Tianbei Investment (case 7) annulled an award due to an arbitrator’s undisclosed prior ties to counsel, reinforcing disclosure obligations.
- Sun et al. v. Nanjing Sunfei Technology Co. (case 6) invalidated arbitration clauses added via unauthorized stamps or handwritten notes, mandating explicit consent in digital transactions.
Institutional Innovations and Efficiency
- Beijing No. 4 Court’s Reforms. As the centralized foreign-related arbitration court, it processed 74 cases (2023–2024) worth over RMB 10 billion. A “fast-track” system reduced average review times from 64.9 to 39.8 days.
- In Beijing Tech Company v. Information Company (case 9), the court enforced a tribunal-ordered interim measure under UNCITRAL Arbitration Rules 2021—a first in China—marks the first instance in China where a court explicitly enforced an interim decision issued by an arbitral tribunal, reflecting a deliberate effort to harmonize domestic judicial practices with global procedural norms.
Addressing Emerging Sectors
Sports Arbitration
- Ma v. Shanghai Football Club, China’s first sports arbitration judicial review case, upheld a China Sports Arbitration Commission award, clarifying jurisdiction boundaries under the revised Physical Culture and Sports Law of the People’s Republic of China.
Financial and Ancillary Agreements
- China Oceanwide Holdings v. Guo (case 5) ruled that arbitration clauses in main contracts do not bind subsidiary agreements (e.g., guarantees) without explicit consent, safeguarding procedural fairness.
China’s judicial system adopts a “balancing support and supervision” philosophy, balancing party autonomy with rigorous procedural oversight. By enforcing international treaties, streamlining cross-border enforcement, and integrating digital solutions, courts have positioned China as a competitive hub for resolving global disputes. Continued reforms aim to further align with global best practices, reinforcing China’s role in international commerce.
Developments in Arbitration Institutions
In 2024, many Chinese arbitration institutions, such as the China International Economic and Trade Arbitration Commission (“CIETAC”), the Shanghai International Arbitration Center (“SHIAC”) and the Shenzhen Court of International Arbitration (“SCIA”), have updated or amended their arbitration rules.
The CIETAC Arbitration Rules 2024 came into effect on 1 January 2024. The rules have important updates to match international practices. They add new features like third-party funding (Article 48) and early dismissal (Article 50). Parties must disclose relevant information of third-party funding, and tribunals may consider this when deciding costs. The new rules on early dismissal allow claims with no legal basis to be dismissed quickly. Further, tribunals may apply the CIETAC Guidelines on Evidence 2024 to simplify the process (Article 41). Parties can combine disputes under multiple related contracts in one arbitration (Articles 14, 19). They can also add contracts after arbitration starts. Failing to negotiate or mediate before arbitration does not block arbitration unless clearly required by law or the agreement (Article 12).
SHIAC has also released its Arbitration Rules 2024. The rules focus on fairness, efficiency, and clarity. For example, there are new rules for consolidated arbitration (Article 15) and third-party joinder (Article 41). They also simplify emergency arbitrator procedures by reducing waiting times (Article 25). Parties now have more choices for selecting arbitrators (Articles 30-32). SHIAC also makes it easier to conduct arbitrations online (Articles 10, 39). The rules also encourage green practices by promoting electronic submissions and reducing paper use (Articles 9, 85). SHIAC has added new transparency measures, such as allowing the publication of redacted awards (Article 11) and expanding disclosure requirements (Article 35).
In September 2024, SCIA announced amendments regarding Expedited Procedure to its Arbitration Rules to enhance efficiency in dispute resolution, which is effective from 1 October 2024. The amendments extend the scope of the Expedited Procedure and raise the upper limit for disputes qualifying under this procedure to RMB10,000,000. The amendments will apply to cases accepted on or after 1 October 2024, while earlier cases may adopt the changes with party consent.
Developments in China-Related ISDS Cases
According to the International Centre for Settlement of Investment Disputes (“ICSID”) database, a new case related to China was registered in 2024 – Bacanora and others v. Mexico. This case involves Oil, Gas, and Mining disputes and is filed under the China-Mexico Bilateral Investment Treaty (2008) (“BIT”) and the Mexico-United Kingdom BIT (2006). The case was officially registered on 21 June 2024. As of the date of this article, 13 January 2025, the arbitral tribunal has been constituted.
Developments were also observed in existing ISDS arbitration cases throughout 2024. For instance, in Fengzhen Min v. South Korea, the arbitral tribunal issued its final award on 30 May 2024, which fully supported Korea’s position. Subsequently, on 2 October 2024, Fengzhen Min filed an application for annulment of the award, which was registered by ICSID. As of the date of this article, ICSID has yet to decide on the annulment application.
Another noteworthy case is Zhongshan Fucheng v. Nigeria. This case was initiated in 2019 under the China-Nigeria BIT (2001), and the tribunal issued its Final Award on 26 March 2021, after which, Zhongshan Fucheng has sought to enforce the award in various jurisdictions. For example, in June 2024, the High Court of Justice (Commercial Court) in England and Wales granted final charging orders on two Liverpool properties owned by Nigeria. Nigeria had opposed the enforcement based on state immunity and claimed the properties were used for consular purposes rather than commercial activities. However, the court determined the properties were rented to private tenants and constituted commercial use, and therefore denied Nigeria’s immunity arguments, and granted the final charging orders, allowing enforcement against the properties. According to the public information, Zhongshan Fucheng is also pursuing enforcement proceedings against Nigeria in the United States, the British Virgin Islands and so forth.
ABOUT THE AUTHORS
Jingjing Li is an Associate of Zhong Lun Law Firm. She focuses on commercial arbitration, handling cases including international sales, joint ventures, technology, energy, construction, and intellectual property disputes under rules like HKIAC, CIETAC, ICC and SIAC rules. Jingjing also works on sports arbitration (CAS) and advises clients in investor-state disputes matters. She also assists arbitrators as tribunal secretary and tribunal assistant in managing cases. Jingjing is on the List of Arbitrators for Riot Games’ Esports (“EMEA”) Dispute Resolution. She is a member of the China VYAP Founding Committee.
Yanbing Peng is a Legal Counsel of the Shenzhen Court of International Arbitration. During her time at SCIA, she managed more than 100 international arbitration cases as the legal counsel and in charge of international promotion. Prior to joining SCIA, she worked as legal counsel for large multinational companies, responsible for domestic investment and financing business, as well as foreign-related legal affairs in several Asian countries, including Thailand, Nepal, Sri Lanka and Singapore. She is a member of the China VYAP Founding Committee.
Junzi Ni is currently an undergraduate student at the China University of Political Science and Law, specialising in private international law.
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