The Complex and Evolving Legal Status of Ad Hoc Arbitration in China

Abstract

The current People’s Republic of China (PRC) Arbitration Law rejects ad hoc arbitration by requiring the arbitration agreement to specify an arbitration institution. However, such rejection does not constitute a barrier to the enforcement of foreign ad hoc arbitration awards under the New York Convention. To determine the validity of a foreign ad hoc arbitration agreement, China adopts a conflict-of-laws approach in ascertaining its applicable law. Recent years have witnessed China’s initiative to experiment with ad hoc arbitration in its Free Trade Zones (FTZs). The draft revised PRC Arbitration Law published by the Chinese Ministry of Justice (MOJ) in 2021 proposes allowing foreign-related disputes to be resolved by ad hoc arbitration. This article argues that the legal status of ad hoc arbitration in China demonstrates a complex and evolving nature. It notes that while complete legalization of ad hoc arbitration in China is unlikely in the short term, its legal status will continue to evolve, reflecting the complicated relationship between China’s bureaucratized arbitration regime and its increasingly sophisticated arbitration market. Ad Hoc Arbitration, Legal Status, PRC Arbitration Law, Article 16, Article 18, Conflict-of-Laws Approach, Enforcement of Foreign Arbitration Awards, New York Convention, Free Trade Zones, China’s Bureaucratized Arbitration Regime