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FROM PROHIBITION TO LIMITED OPENING: AD HOC ARBITRATION REFORM UNDER CHINA’S ARBITRATION LAW AND ITS ENFORCEMENT DILEMMAS

FROM PROHIBITION TO LIMITED OPENING: AD HOC ARBITRATION REFORM UNDER CHINA’S ARBITRATION LAW AND ITS ENFORCEMENT DILEMMAS

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Abstract: This article analyzes China’s cautious integration of ad hoc arbitration through the 2021 and 2025 Draft Amendments to the Arbitration Law, which initially expanded but subsequently restricted its application to foreign-related maritime disputes and Free Trade Zone (FTZ)-registered enterprises, reflecting persistent institutional and judicial reservations. Despite progressive enforcement in Shanghai’s FTZs, nationwide inconsistency and procedural ambiguities create significant uncertainty for investors, who face both opportunities for flexible dispute resolution and risks of unenforceability. The reforms particularly benefit cross-border investors utilizing FTZ structures and UNCITRAL Rules, yet the narrow scope excludes many commercial disputes and maintains China’s dual-track arbitration system. To optimize outcomes, investors should strategically qualify transactions as foreign-related, designate FTZ seats, and adopt recognized procedural frameworks, while China requires legislative expansion to domestic cases, clearer tribunal formation rules, and standardized model procedures. Complementary government measures should include specialized judicial training, institutional support systems, and enforcement harmonization to bridge regional disparities. These coordinated improvements would align China’s arbitration framework with international standards, enhance procedural predictability, and strengthen its position as an emerging hub for international commercial arbitration, ultimately benefiting both foreign investors and domestic commercial parties seeking efficient dispute resolution mechanisms.

Keywords: Ad hoc arbitration; China Arbitration Law reform; Institutional arbitration; Judicial enforcement; New York Convention; UNCITRAL Rules

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