The Future of Foreign Arbitration in the People’s Republic of China: Current Developments and Challenges Ahead

Abstract

The increased commercial interaction between China and the rest of the world leads to disputes, many of which are resolved through international commercial arbitration. Whereas the arbitration industry in the “People’s Republic of China” (PRC) has been protectionist, recent developments suggest that foreign arbitration institutions may have increasing access to the market, a potential boon to foreign and Chinese parties alike. This article analyses the most recent developments in the area of non-mainland arbitration institutions acting as service providers in mainland China and the potential impact of these developments on Sino-foreign disputes. There have been two notable advancements in foreign arbitration in recent years: (1) the permission given to foreign arbitral institutions to administer foreign-related arbitrations in the Shanghai Lin-Gang Pilot Free Trade Zone, and (2) 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. Taken together, these developments open the gate to foreign arbitration institution in mainland China, and are signs of progress place at the cusp of the reform of the 1994 China Arbitration Law. Yet there are lingering obstacles to the internationalization of commercial arbitration in China. Accordingly, this article introduces the existing international arbitration regime in mainland China; assesses what the recent developments mean in the context of Sino-foreign disputes; sheds light on possible challenges associated with the changes; and makes recommendations for the on-going reform of arbitration in China.