Report reveals ‘increasing openness’ to arbitration in China

The Supreme People's Court of China’s 2023 Annual Report on Judicial Review of Commercial Arbitration revealed the people’s courts at all levels across China concluded more than 16,000 commercial arbitration judicial review cases throughout the year, which was a year-on-year increase of 5%.

Although there were over 10,600 applications for arbitral awards to be revoked, only 552 arbitral awards were revoked by the people’s courts at all levels. The courts also enforced 69 overseas arbitral awards.

In addition, the number of arbitration judicial review cases handled by the Supreme People's Court has dropped in recent years, from 350 cases in 2021 to just 29 cases in 2023, reflecting an average annual decline of 71.08%.

Mohammed Talib, an arbitration expert at Pinsent Masons, said the report illustrates the importance of arbitration to the resolution of disputes in China.

“The low ‘set-aside’ rate may be surprising to some, but it reflects China's pro-arbitration stance,” he said.

“The report reveals active judicial exchanges between Chinese courts and foreign courts and arbitral institutions to support the development of arbitration. This reflects China's increasing openness and desire to align with international best practices in arbitration.”

According to the report, a total of 607,000 arbitration cases were handled by arbitration institutions across the country, which was a year-on-year increase of 27.8%. More than 3,100 of these cases were foreign-related arbitration cases, reflecting a year-on-year increase of 8.28%

The report also highlighted recent legislative developments which reflect the growing importance of arbitration in China. 

Rachel Turner, an arbitration expert at Pinsent Mason, said: “After extensive consultation, the most recent legislative work plan issued in May by the General Office of the State Council indicates that the reforms through the amendment to China’s Arbitration Law are a high priority with further amendments circulated on the advanced proposals.”

“The reforms are crucial to support arbitration in China and we expect further developments on this in the next year,” she said.

Additional changes include implementation of the recently reformed Sports Law – which is expected to lay a foundation for a sports arbitration system – and amendments to the Foreign State Immunity Law implemented on 1 January allowing for China to adopt a restrictive approach to immunity.

Alice Wang, an arbitration expert at Pinsent Masons, highlighted the Supreme People's Court’s recently implemented ‘one-stop’ diversified resolution mechanism for international commercial disputes as a further example of China’s increasing openness to arbitration.

“By enhancing the dispute resolution framework, China is positioning itself as a pivotal player in global commerce. The establishment and enhancement of its ‘one-stop’ diversified resolution mechanism further underscores this ambition, creating new opportunities for parties and international legal practitioners,” Wang said.