I. The Issue
In cross-border negotiations, parties may favor arbitral institutions in their home jurisdictions, leading to clauses naming both mainland Chinese and overseas institutions. Such clauses take three forms: a “concurrent-choice” clause allowing either institution to be chosen; a “primary-and-fallback” clause referring disputes to a second institution if the first cannot accept the case; and a “party-specific” clause assigning a separate institution to each party. For the latter two, the institution with jurisdiction is usually identifiable at commencement. Concurrent-choice clauses, however, raise validity concerns if the parties fail to agree. This article examines their validity under Chinese law and proposes reforms in light of comparative practice.
II. Validity under Chinese Law
A. Statutory Framework
Article 27(2) of the Arbitration Law of the People’s Republic of China (2025 Revision) requires an arbitration agreement to specify three matters.[1] Article 29 allows the parties to clarify an absent or ambiguous designation by supplementary agreement, failing which the arbitration agreement is void.[2] Uncertainty is thus curable before invalidity follows. Article 5 of the Interpretation of the Supreme People’s Court concerning Some Issues on Application of the Arbitration Law of the People’s Republic of China (the “Arbitration Law Interpretation”) specifically addresses clauses naming two or more institutions: unless the parties agree on one, the arbitration agreement is invalid.
B. Judicial Practice
1. The Position under the Current Rules
Chinese courts generally follow the foregoing rules. In a 2013 reply, the Supreme People’s Court held an arbitration agreement invalid absent evidence that the parties had agreed on one institution[3]. The Qingdao Intermediate People’s Court reached the same conclusion even though one party had commenced arbitration before a mainland Chinese institution and it had accepted the case.[4] In a case involving two Chinese institutions, the Dongying Intermediate People’s Court distinguished an intention to arbitrate from the validity of an arbitration agreement: the latter requires agreement on a single institution, and principles of good faith or policies favoring transactions cannot override express requirements.[5]
2. The 1996 Reply and Its Subsequent Repeal
Before the Arbitration Law Interpretation, Chinese courts once held otherwise. In a 1996 reply concerning a clause naming both Chinese and foreign institutions, the Supreme People’s Court held that the designation was “clear and enforceable” and that either institution could be chosen to commence arbitration.[6] Although later repealed as inconsistent with the Arbitration Law Interpretation, the reply illustrates a pro-arbitration approach to concurrent-choice clauses.
III. A Brief Comparative Perspective
The UNCITRAL Model Law on International Commercial Arbitration places primary weight on the parties’ agreement to arbitrate, without requiring them to designate a particular institution or expressly treating an unclear designation as a ground for invalidity.[7] Thus, naming two institutions does not, by itself, render an arbitration agreement invalid under the Model Law.
The German Federal Court of Justice held in 2003 (III ZB 6/02) that an arbitration agreement may designate two arbitral tribunals.[8] In Shierkatz RLLP v. Square, Inc., a U.S. federal court likewise upheld a clause naming two administering institutions.[9] Both decisions give weight to clear consent to arbitrate; the German court recognized the claimant’s usual right to choose. Their key distinction from Chinese law is whether specifying a single institution is a condition of validity: these foreign approaches treat institutional selection as just procedural, whereas Chinese law makes aselected institution a requirement for a valid arbitration agreement.
IV. Conclusion and Implications
Under current Chinese law, a concurrent-choice clause naming a mainland Chinese and an overseas institution will generally be invalid if the parties cannot subsequently agree on one. Parties should therefore designate a single institution wherever possible. If two institutions have to be retained, the clause should either specify who may choose (e.g., the claimant), how the choice is exercised, and its exclusive effect, or expressly designate a governing law under which such concurrent-choice clauses are valid.
From a policy perspective, invalidating clauses merely for naming both domestic and foreign institutions may deprive Chinese arbitral institutions of opportunities to administer international commercial disputes and hinder China’s development as an international arbitration center. With the revised Arbitration Law now in force, reform of its judicial interpretation could draw on the 1996 reply and foreign practice to recognize the claimant’s right to choose an institution where the intention to arbitrate is clear. Such reform would respond to the needs of cross-border commerce and enhance the international standing of Chinese arbitration.
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Partner Omar Yang.