China’s New Arbitration Law: Friendly to International Investment Arbitration?

ABSTRACT One goal of China’s newly modified Arbitration Law (AL) is to promote its application in investment arbitration. This article analyses the motivations for major revisions as well as their content, policies, and processes in the context of international investment law and through theoretical lenses of domestication, internalisation, and internationalisation. It argues that the revision of the AL is a timely and self-beneficial alternative to the existing ISDS mechanism of investment treaties for China to address the challenges in its overseas investment and to facilitate the Belt and Road Initiative (‘domestication’). To this end, the major legal constraints limiting investment arbitration in China have been revised and the new AL incorporates prevailing international norms (‘internalisation’). Furthermore, China has legalised recent policies that welcome foreign arbitration institutions and promote the global presence of Chinese arbitration institutions via foreign–domestic collaboration (‘internationalisation’). A critical evaluation of the new AL, however, reveals ambiguities and unsettled issues in several revisions when applied to investment disputes. As these ambiguities and issues will negatively affect the attractiveness of PRC-seated arbitrations, China should address them when enacting the new AL and make extra efforts to establish a pro-arbitration ecosystem in line with international standards.