PRC’s new Arbitration Law: impact and guidance for Hong Kong arbitrations

Arbitration in the PRC

While mainland China’s primary international arbitration body, China International Economic and Trade Arbitration Commission (CIETAC), has been established since 1956, it would be several decades after that before the country developed a unified statutory framework for arbitration. The PRC Arbitration Law first took effect in 1995, marking a pivotal shift to support mainland China’s growing participation in global commerce.

To align its regime more closely with international standards, on 12 September 2025, the Standing Committee of the National People’s Congress adopted sweeping amendments to the PRC Arbitration Law (the Amended PRC Arbitration Law) that took effect on 1 March 2026. The revamped statute, including on recognition and enforcement, the onshore role of foreign institutions, and the growing acknowledgement of ad hoc arbitration, has been highly anticipated and widely welcomed.

Notable reforms

1. Seat of arbitration codified

   Article 81 of the Amended PRC Arbitration Law formally recognizes the parties’ right to choose the seat of arbitration. Article 81 also clarifies that absent party agreement to the contrary, the seat determines applicable procedural law, supervisory court, and the place where the award is deemed rendered. This reduces past uncertainty about award nationality in cases administered by offshore institutions inside mainland China.
    

2. Foreign arbitral institutions’ onshore role

   The revisions open the door for international arbitral institutions to administer foreign related arbitrations from designated Free Trade Zones (FTZ), Hainan Free Trade Port, or other approved areas in mainland China, as stated in Article 86 of the Amended PRC Arbitration Law. Parties, therefore, gain a wider range of institutional options, while the law maintains boundaries around purely domestic disputes.
    

3. Ad hoc arbitration

   For the first time, ad hoc arbitration is explicitly permitted in defined foreign related contexts. Eligible scenarios include certain foreign-related maritime disputes, or disputes between corporations registered in FTZ, the Hainan Free Trade Port, or other State-designated areas, as stated in Article 82 of the Amended PRC Arbitration Law.

   Parties may appoint an institution or proceed on an ad hoc basis, provided the tribunal is seated in China and composed of arbitrators meeting statutory criteria. Notably, where applications for interim relief arise (including preservation of property/evidence and orders to compel or prohibit certain acts), the ad hoc tribunal must forward such applications to the People’s Courts for handling.
    

4. Recognition and enforcement architecture strengthened

   The revisions clarify and modernize recognition and enforcement of awards, including the introduction of a clearer statutory framework for foreign arbitration and awards, as stated in Chapter 7 of the Amended PRC Arbitration Law reaffirming party autonomy over the choice of seat and aligning the grounds for set‑aside and non‑enforcement of foreign awards with international norms. Another notable revision is the narrowing of the window to apply to set aside an award from six to three months, as stated in Article 72 of the Amended PRC Arbitration Law. These revisions echo the UNCITRAL Model Law approach and reinforce finality.
    

5. Online arbitration

   Article 11 confirms that arbitration will be conducted online unless parties expressly disagree, formally codifying practices that matured during the pandemic years and underscoring efficiency.

   Overall, these changes are a welcome development for entities with a mainland China nexus.

Application to Hong Kong arbitrations

1. Alignment and cooperation between the regimes of Hong Kong and mainland China

   The reforms introduced by the Amended PRC Arbitration Law have practical significance for Hong Kong‑based parties and practitioners, since PRC arbitral awards are directly recognisable and enforceable in Hong Kong under a mutual enforcement regime.

   Under the Arrangement Concerning Mutual Enforcement of Arbitral Awards (2020) and the Supplemental Arrangement (2020) entered into between mainland China and Hong Kong, all eligible arbitral awards made pursuant to Hong Kong’s Arbitration Ordinance (Cap. 609) can be recognized and enforced in the mainland and all arbitral awards made pursuant to PRC Arbitration Law can be recognized and enforced in Hong Kong. Those arrangements also allow simultaneous enforcement in both jurisdictions, and enable parties to apply for interim preservation measures before or after enforcement applications are accepted, provided that arbitration qualifies under the arrangements.

   The Amended PRC Arbitration Law does not dilute this mechanism; rather, its reforms now align more smoothly with the existing mutual enforcement arrangement.
    

2. Interim Measures Arrangement (2019 Arrangement)

   Although the Amended PRC Arbitration Law governs mainland‑seated arbitrations, it operates alongside cross‑border mechanisms such as the mainland–Hong Kong Interim Measures Arrangement, which remains highly relevant for parties choosing a Hong Kong seat.

Practical takeaways

To leverage the Amended PRC Arbitration Law, parties seeking a mainland Chinese seat with international administration should:

• assess at the drafting stage whether the dispute is foreign‑related and whether the chosen institution can administer from an approved zone

• confirm the supervisory court early, and consider ad hoc arbitration only where expressly permitted.

Where mainland interim measures and coordinated enforcement are priorities, a Hong Kong seat administered by HKIAC preserves access to both the 2019 Interim Measures Arrangement and the 2020 Supplemental Arrangement.

Given that simultaneous enforcement in Hong Kong and the mainland is allowed (subject to no double recovery), parties may consider:

• building a dual‑track enforcement strategy into the contract

• updating internal guidelines to reflect the shortened three‑month set‑aside window for mainland‑seated arbitrations.

The Amended PRC Arbitration Law modernises the statutory framework, while Hong Kong’s strengthened institutional architecture continues to offer procedural sophistication and dependable pathways into mainland Chinese courts, remaining a major differentiator against other foreign jurisdictions. For parties with cross border exposure, the result is a more coherent and strategically navigable regime that is better equipped to support high value, multi jurisdictional disputes in the years ahead.

This article was co-authored by Trainee Solicitor, Susie Li.