Arbitration law China: An update and what it means for German business
China’s reformed arbitration law will enter into force on 1 March 2026. Many of the changes codify existing practice (e.g., foreign arbitrators, online proceedings). Although German companies do not need to amend existing clauses, the reform offers both opportunities and risks. Companies should familiarise themselves with the advantages and disadvantages of the new regulations now.
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Opportunities for arbitration tribunals in China
- Foreign arbitrators: Non-Chinese nationals may now legally serve as arbitrators, providing legal certainty and internationalisation.
- Online proceedings: Save travel time and costs.
- Tribunal appointments: Parties will have more influence over appointing the third-party arbitrator.
- Evidence-taking: Tribunals may collect evidence themselves or request state support.
- Arbitration agreements: Lack of timely objection can be deemed consent, limiting delay tactics.
- Shorter deadlines: Challenges are now limited to three months, awards become final faster.
Choice of seat: With foreign elements, parties may freely choose the seat of arbitration, inside or outside China.
“We recommend reviewing existing and future arbitration agreements with regard to the seat, language, and composition of the arbitral tribunal. We assist you in drafting contracts.”
Richard Hoffmann, Lawyer, ECOVIS Rechtsanwaltskanzlei Richard Hoffmann, Ladenburg, Germany
Challenges of the new regulations
- Interim measures: Only state courts may grant them; tribunals lack this power.
- Ad hoc arbitration: Only allowed in narrow contexts, limiting flexibility.
- Foreign institutions: Their role in China remains legally unclear, risking conflicts.
- Shorter deadlines: Finality is quicker, but parties must react faster.
- Enforcement: Still dependent on Chinese courts.
Practical implications
For German companies, the reform requires closer attention to be paid when drafting arbitration clauses. Where cross-border matters are involved, the new freedom to choose the seat of arbitration should be used to specify clearly whether Beijing, Shanghai, Shenzhen, or even a location outside China applies. The explicit admission of foreign arbitrators also makes it worthwhile to stipulate that non-Chinese, e.g., German, arbitrators may be appointed.
Since interim measures can only be ordered by Chinese courts, companies should consider whether additional contractual safeguards are needed, explain the Ecovis experts. In addition, the reduced deadline for setting aside awards – from six to three months – means that businesses must be prepared to react much faster to protect their interests.
Ultimately, while the reform strengthens internationality, transparency, and efficiency, court control and ad hoc restrictions remain.
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