Draft Law Potentially Lifts Prohibition on Ad Hoc Arbitrations in China

Arbitrations are by-and-large divided into two categories – those that are administered by an arbitral institution (institutional arbitrations) and those that are not (ad hoc arbitrations). Ad hoc arbitrations are usually cheaper and more flexible, but lack the support and supervision of a well-organised institution. As such, the Arbitration Law of the People's Republic of China ("Arbitration Law"), first released in 1994 and last updated in 2017, prohibited ad hoc arbitrations in China. This prohibition still remains as a general rule in the current legal system, although judicial authorities have made some small, case-by-case exceptions.

Almost 30 years later, China's arbitration system has undergone significant developments, and more and more scholars are advocating for ad hoc arbitration in China's domestic arbitration system.

On 30 July 2021, the Ministry of Justice of the People's Republic of China ("Ministry of Justice") published the Arbitration Law of the People's Republic of China (Amended Version) (Draft for Comments) (the "Draft Arbitration Law") for public consultation. The Draft Arbitration Law introduces for the first time the rules of ad hoc arbitration into the domestic arbitration regime. In this article, we examine the current position and comment on the three draft Articles that touch on ad hoc arbitration.

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