Seat in China, Enforceable in Europe: Key Takeaways from China’s Revised Arbitration Law

Effective from 1 March 2026, the newly revised Arbitration Law of the People’s Republic of China (the “New Arbitration Law”) has officially entered into force. This represents the most significant comprehensive revision of China’s arbitration system since its enactment in 1994.

We are pleased to present the key highlights of the New Arbitration Law and its substantial benefits for your company in resolving China-related commercial disputes.

I. A Solid Foundation: Enforceability of Chinese Arbitral Awards in Europe

Before discussing the changes introduced by the New Arbitration Law, we would like to emphasize an unchanging and solid foundation: China is a member state of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), which means that commercial arbitral awards rendered in China can be recognized and enforced in the courts of over 170 contracting states, including the vast majority of European countries.

II. Highlights of the New Law: Institutional Innovations Aligned with International Standards

One of the core objectives of this revision is to enhance the international competitiveness of China’s arbitration system and establish China as a preferred seat for international commercial arbitration. The New Arbitration Law incorporates numerous aspects that align with internationally accepted rules.

1. Introduction of the “Seat of Arbitration”, Clarifying the Nationality of Awards

The New Arbitration Law introduces the concept of the seat of arbitration. Parties may agree in writing on the seat of arbitration. This concept is critical because it determines the procedural law governing the arbitration and the “nationality” of the award.

The New Arbitration Law explicitly provides that an arbitral award shall be deemed to be made at the seat of arbitration. This means that the nationality of an award no longer depends on the “place of the arbitral institution’s headquarters” but on the seat agreed upon by the parties. This reform fundamentally resolves the long-standing issue of uncertainty regarding the nationality of awards in cross-border disputes. Specifically:

• For example, if the contract states that disputes shall be arbitrated by the International Chamber of Commerce International Court of Arbitration (ICC) with the seat of arbitration being Shanghai, the award is deemed to be made in Shanghai rather than in Paris. Prior to this reform, such an award would have been stateless—with no legal home in either France or China—creating an awkward legal limbo for enforcement.
• For the above award:
  (i) Any application to set aside the award in China now could be filed with a court in China;
  (ii) Enforcement of the award within China is governed by Chinese law;
  (iii) For recognition and enforcement outside China (e.g., in European countries), the award may be enforced as a Chinese award under the New York Convention, providing procedural clarity and predictability.

2. Introduction of Ad Hoc Arbitration, Enhancing Flexibility

The New Arbitration Law allows parties to opt for ad hoc arbitration, which is arbitration administered by the parties themselves without a standing arbitral institution, in foreign-related maritime disputes or disputes involving enterprises in specific regions such as pilot free trade zones.

For European companies seeking greater procedural control and reduced institutional administrative costs, this provides a new and flexible dispute resolution option.

3. Strengthened Court Support and Improved Interim Measures

The New Arbitration Law further reinforces judicial support for arbitration, achieving a triple breakthrough in interim measures: three types of measures + pre-arbitration measures + timely handling by the court.

4. Confirmation of the Validity of Online Arbitration, Enhancing Procedural Efficiency

In line with the trend of digitalization, the New Arbitration Law explicitly recognizes that online arbitration has the same legal effect as offline arbitration. Without the need to travel to China, this will significantly reduce travel costs and time, greatly enhancing the efficiency of cross-border dispute resolution.

5. Improved Arbitrator Disclosure and Co-arbitrators Mechanism

The New Arbitration Law introduces dual improvements in the arbitrator system:

• Enhanced disclosure obligations: The New Arbitration Law requires arbitrators to make a written disclosure of any circumstances that may give rise to justifiable doubts as to their independence or impartiality, enhancing tribunal transparency.
• Innovation in the method of appointing the presiding arbitrator: The power to appoint the presiding arbitrator has shifted from the institution’s head, or joint appointment by the parties, to “the two arbitrators trusted by the parties” (i.e., the co-arbitrators). Under the previous rules, as parties rarely reached a joint agreement, the presiding arbitrator was in most cases appointed by the institution’s head. This created an impression of administrative intervention and was limited by the head’s personal perspective. Under the New Arbitration Law, with the presiding arbitrator appointed by the co-arbitrators, the presiding arbitrator is appointed by the co-arbitrators, making consensus easier to achieve and improving efficiency. Moreover, this mechanism fully aligns with mainstream international arbitration practices.

III. Comprehensive Benefits for European Companies

In summary, the New Arbitration Law will bring the following concrete benefits:

• Enhanced Predictability: Even if you choose foreign institutions like the ICC, HKIAC, or SIAC to administer the case, as long as the seat is agreed to be in China, you will obtain a stable Chinese award that is capable of recognition and enforcement by European courts pursuant to the New York Convention.
• Improved Procedural Fairness: Enhanced interim measures, improved arbitrator disclosure obligations, and the presiding arbitrator appointment mechanism make the entire arbitration process more transparent and fairer.
• Cost and Efficiency Optimization: The legitimization of online arbitration and the introduction of ad hoc arbitration provide you with more flexible and cost-effective options.