China is a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly known as the New York Convention), therefore it is possible to choose arbitration in countries other than China.
However, the key challenge of choosing arbitration outside China is the reluctance of Chinese parties to agree to it, instead arguing for the governing law or dispute resolution to be within mainland China. This is because many Chinese domestic companies are not very acquainted with foreign laws and dispute resolution mechanisms. Still, it is not technically impossible to persuade the Chinese party to choose foreign arbitration, particularly if the Chinese party has extensive global operations.
Considering the reluctance of Chinese parties to agree on foreign governing laws and arbitration in contracts, a compromise could be to choose arbitration in Hong Kong SAR. As a matter of fact, China’s Supreme People’s Court and the government of Hong Kong SAR have an agreement allowing the enforcement of interim measures orders from one territory into the other. This is a unique agreement that allows arbitration proceedings from Hong Kong SAR to be effectively enforced in mainland China.
The advantage of selecting Hong Kong SAR as the forum for arbitration is the territory’s renowned experience as global dispute resolution hub, which also benefits from the large presence of foreign judges and the recognition of English as official language for business and contracts. In addition, Chinese parties are generally more open to accept Hong Kong SAR as a compromise for arbitration.
It is noteworthy that in July 2021 the Ministry of Justice published a draft revision of the Arbitration Law for public consultation. Although not yet finalised, the revised draft brings changes about the requirement of unambiguous clauses of arbitration institution.