China Arbitration vs Litigation for Supplier Disputes: Cost, Time and Enforcement

On this page

You cannot simply choose arbitration after a supplier dispute starts. Arbitration normally requires a valid arbitration agreement; without one, Chinese court litigation may be the available route unless both parties later agree to arbitrate. The practical choice turns on the clause, likely recovery, cost, timing, enforceability and whether assets need to be preserved.

China arbitration or litigation: the short answer

Question	Arbitration	Chinese court litigation
Prior agreement	Usually requires a valid arbitration clause	Usually does not require a dispute-resolution agreement
Language and decision-maker	Parties may agree on language, institution and arbitrator process	Chinese court procedure and language rules apply
Cross-border enforcement	Awards may use the New York Convention framework	Judgment recognition depends on the destination jurisdiction
Cost	Includes institution and tribunal fees	Court filing fees are often lower
Asset preservation	Depends on the institution, seat and available court channel	Application may be made to the court with jurisdiction

For institution-specific questions, see CIETAC, HKIAC, and the HK-Mainland interim measures arrangement.

Last year a client came to me with a pretty clear-cut case: $50,000 in unpaid goods (not a huge amount, but not nothing either), no delivery, an arbitration clause pointing to CIETAC right there in the contract, solid evidence, and a Chinese lawyer he’d consulted said the odds were strongly in his favor. But he refused to file.

I’ve seen this too many times. Buyers come in with their paperwork, we talk for half an hour, and eventually the conversation circles back to the same question: can a foreigner actually win in Chinese arbitration? Then they sit on it. Three months. Sometimes over a year.

They carry around a set of assumptions: the system favors local companies, foreigners don’t get a fair hearing, awards are unenforceable even if you win. Some of that comes from news coverage, some from experiences twenty years ago, some is just guesswork.

Parts of it might have been fair two decades ago. Not anymore. Let me show you the numbers.

What the latest enforcement data shows

Start with one that surprises most people: in 2024, the Supreme People’s Court concluded 42 cases involving recognition and enforcement of foreign arbitral awards. The number of refusals was zero. Not one. That comes from the SPC’s Commercial Arbitration Judicial Review Annual Report (2024). The year before, in 2023, courts recognized and enforced 69 foreign awards. Only 3 were rejected, for reasons like exceeding the application deadline, inability to confirm the respondent’s identity, and the award already being challenged in its country of origin. Not bias. Procedural technicalities.

The global average enforcement success rate under the New York Convention sits around 73%. China runs nearly twenty points higher.

Now CIETAC’s own numbers. In 2025, CIETAC accepted 5,736 new cases with a total disputed amount of RMB 228.6 billion, up 20.98% year-on-year. That’s eight consecutive years above RMB 100 billion, and the first time it crossed 200 billion. Foreign-related cases hit 806, an all-time high, involving parties from 97 countries and regions. The average disputed amount in foreign-related cases was RMB 109 million per case. 82 of those cases had no Chinese party on either side.

One more angle: across CIETAC’s last five years of cases involving German parties (102 total), the German side’s win rate averaged around 40%. In 2024, that number jumped to 71%. I honestly can’t explain why that particular year was so good for German claimants. But the direction is consistent.

Why enforcement actually works

Most people see the good enforcement numbers without understanding the institutional mechanism behind them.

China acceded to the New York Convention in 1987 . There are now 172 contracting states. But the Convention alone doesn’t explain China’s track record. What really makes enforcement work is an internal court supervision system called the prior reporting mechanism (预报核制度).

Statute NY Convention Art. V

The Convention entered into force for China on April 22, 1987. Refusal grounds are confined to the exhaustive list in Article V, a core reason foreign awards are so rarely refused. SPC implementation notice - CICC

Term Prior reporting system

Created by SPC notices in 1995 and 1998, not by statute. A court inclined to refuse a foreign-related award must report upward, and only the Supreme People’s Court has the final word.

Here’s how it works: if an intermediate people’s court reviews an arbitral award and decides to refuse enforcement, it cannot simply issue the ruling. It must first report upward to the higher people’s court at the provincial level. If the higher court also agrees to refuse, the matter gets escalated again, all the way to the Supreme People’s Court. The lower court cannot issue a final refusal until the SPC responds.

For foreign-related cases, it’s a three-tier reporting chain: intermediate court → higher court → SPC. Domestic cases use a two-tier system. Two special situations still require SPC review even in domestic cases: cross-provincial disputes, and any refusal based on “violation of public interest.”

This system was first established through SPC notices issued in 1995 and 1998, initially targeting foreign-related awards. It has expanded since. It’s not a statute passed by the National People’s Congress. It’s an internal court regulation.

And that creates a strange information gap: this may be the single most important institutional safeguard in China’s arbitration enforcement system, but the vast majority of commercial lawyers outside China have never heard of it.

In practice, the SPC has intervened in numerous cases where lower courts sought to refuse enforcement and directed them to enforce. The system was designed for one purpose: to curb local protectionism. It works.

So when enforcement does get refused, what’s the most common reason?

Invalid arbitration agreement. Not bias. Not corruption. A badly drafted clause.

I wrote about that lesson in detail in Article 2 of this series.

How much does China arbitration cost?

This is the question I get asked more than any other. And most people’s expectations are significantly off from reality.

A CIETAC case with roughly $200,000 in dispute (about RMB 1.45 million). Arbitration fees (registration plus handling) run somewhere between $8,000 and $15,000. For disputes under RMB 200,000, the minimum acceptance fee is just RMB 6,000, which is less than $900. Cases under Fee Schedule I also require a separate filing fee of RMB 10,000 at the time of registration.

Expensive? Depends who you’re comparing to.

ICC charges a $5,000 registration fee alone. Total fees for a comparable case often exceed $40,000. A 2015 study of LCIA cases showed a median cost of $97,000. SIAC is cheaper, with a median of $29,567, but still more expensive than CIETAC across most ranges.

None of these include legal fees. Legal fees vary too much to compare usefully. If you want to see the exact numbers for your dispute size, I built a free side-by-side comparator that calculates fees across CIETAC, ICC, SIAC, and HKIAC. For Hong Kong–seated cases specifically, the dedicated HKIAC fee calculator shows the 2026 schedule in both USD and HKD.

Most of the cases that come across my desk fall in the $100,000 to $500,000 range. Goods quality problems, purchase agreement breaches. In that range, the institutional fee is genuinely not the bottleneck.

The 2024 rules added something worth noting: the tribunal can now order the losing party to compensate the winning party’s reasonable costs, including legal fees. I’ll be honest, tribunals have been conservative on this. They won’t do it automatically. But if your contract has a cost-allocation clause (many do), the tribunal has a basis for ordering fee-shifting. That changes the cost calculus.

How long does China arbitration take?

For disputes under RMB 5 million (about $690,000), CIETAC’s summary procedure applies automatically . sole arbitrator. 20-day response period. Award due within three months of tribunal formation.

Statute CIETAC Art. 59 threshold

Article 59 of the 2024 CIETAC Rules applies the summary procedure when the amount in dispute is RMB 5,000,000 or less, unless the parties agree otherwise. The award is due within three months of tribunal formation. Official rules - CIETAC

Actual average: 105 days.

The tribunal can decide on documents alone if it considers the written materials sufficient, without scheduling a hearing. Most supply chain quality cases are arguing about whether the goods met the contractual specs. Written evidence usually does the job.

Ordinary procedure targets six months. Extensions happen, but CIETAC tracks its timelines publicly. Dragging too long hurts the institution’s reputation, so they have their own reasons to push cases through.

I handled a summary procedure case once, against a fabric supplier based in Shaoxing. From tribunal formation to the final award, 87 days.

The hearing was on the fourth floor of an office building near the Bund in Shanghai. Standard conference room setup. Two rows of fluorescent tubes overhead, one of them dead but nobody had bothered to fix it. A stainless steel thermos of Longjing tea at each corner of the table. The case itself was straightforward: contract had clear specs, SGS inspection report confirmed non-compliance, and the supplier didn’t even show up.

Still, 87 days to award was faster than I expected.

Can you freeze a Chinese supplier’s assets before the award?

This part is worth its own section, because most people have no idea this mechanism exists.

On October 1, 2019, the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings took effect between Hong Kong and mainland China. It allows parties in HKIAC-administered cases to apply directly to mainland courts for interim measures. Three types: asset preservation (freezing bank accounts), evidence preservation, and conduct preservation (injunctions).

Statute HK-Mainland interim measures

Signed on April 2, 2019 and effective October 1, 2019, the Arrangement covers property, evidence, and conduct preservation for Hong Kong-seated arbitrations administered by qualified institutions. Official text - HK DoJ

As of 2024, no other arbitration institution outside mainland China has this ability. Not ICC. Not SIAC. Not LCIA. Only HKIAC.

HKIAC’s published data, from 2019 through end of 2025:

A total of 178 applications processed: 171 for asset preservation, 2 for evidence, 4 for conduct
Total value of assets sought for preservation: RMB 45.3 billion (about $6.4 billion)
Mainland courts issued 133 rulings. Of the 106 rulings issued through end of 2024, 102 were granted and only 4 rejected, giving an approval rate of 96%
34 new applications in 2025 (40 in 2024, 19 in 2023, growing every year)
2025 applications sought approximately RMB 10.9 billion in preservation; roughly RMB 5 billion was granted
Most applicants were non-mainland parties: BVI, Cayman, Hong Kong, Singapore, South Korea, the US, and others

In a supply chain dispute, what does this mean in practice? One sentence: if you suspect your supplier is winding down operations or moving assets, you need to freeze their bank account before the arbitration concludes. Wait until you have the award and try to enforce, and the account might already be empty.

I’ve seen it happen. More than once.

On timelines: for pre-arbitration asset preservation (仲裁前财产保全), the court must rule within 48 hours of receiving the application. Once granted, you have 30 days to formally commence arbitration, otherwise the preservation is lifted. Pre-arbitration preservation typically requires security equivalent to the full amount sought. For preservation during ongoing arbitration, the security cap is 30% of the requested amount (per SPC rules, though actual practice varies by jurisdiction).

Statute CPL Art. 104 preservation

Civil Procedure Law Article 104 requires a ruling within 48 hours of acceptance, and the preservation lapses unless arbitration or litigation is commenced within 30 days. Security is mandatory. Full text - chinatax.gov.cn

I recommended HKIAC in Article 2 of this series. My reasoning at the time was “choose HKIAC if you can.” Looking back, I understated it. For cases where the supplier is on the mainland and you might need to freeze assets, the HKIAC preservation channel is something no other institution can offer you.

2026 rules to know: the 2024 CIETAC Rules

The 2024 CIETAC Rules (effective January 1) brought several updates. Three matter most for foreign parties.

Early dismissal. Article 50. If the other side’s claim or counterclaim “manifestly lacks legal merit” or “manifestly falls outside the tribunal’s jurisdiction,” you can now apply for early dismissal. The tribunal has 60 days to decide. This was modeled on UNCITRAL’s 2023 guidance on early dismissal. In plain terms: your supplier files a frivolous counterclaim to stall the proceedings, and now there’s a tool to cut it.

Emergency arbitrator. The tribunal hasn’t been formed yet, but you need urgent relief. Say the supplier is sending your proprietary molds to another factory. You apply for an emergency arbitrator. Decision within 15 days. Filing deposit: RMB 30,000.

Multi-contract consolidation. Previously, pulling multiple contracts into a single arbitration was quite restricted. The 2024 rules expanded this to contracts with a “connected subject matter” (牵连关系). If you have a purchase agreement, a quality addendum, and an NNN agreement with the same supplier, there’s now a path to consolidate them into one proceeding. One filing instead of three, which saves both time and money.

One more change related to money: third-party funding disclosure. If one party has outside funding for the arbitration, the 2024 rules now require disclosure. The tribunal’s conflict-of-interest review needs this information.

2026 rules to know: the revised Arbitration Law

The revised Arbitration Law was passed on September 12, 2025 and takes effect on March 1, 2026 . It’s the first comprehensive revision since 1995. The scope is real.

Statute Arbitration Law 2026

Adopted September 12, 2025 and effective March 1, 2026, the first comprehensive revision of the 1994 law adds the seat of arbitration, free-trade-zone offices for foreign institutions, and limited ad hoc arbitration. Official text - NPC

Two changes matter most for cross-border work.

The “seat of arbitration” concept enters Chinese law for the first time. This is a technical point, but it matters. International arbitration has operated on a “seat-centric” model for decades: the seat determines the procedural law, the nationality of the award, and the supervisory court. Chinese law previously had no equivalent concept, which created ambiguity about the legal status of awards made in China by foreign institutions. The new law resolves this.

Foreign arbitration institutions can now establish operational offices in China. Limited to free trade zones and the Hainan Free Trade Port. Previously, foreign institutions could only set up representative offices with no case-management authority. Pilot programs in Shanghai and Beijing started in late 2023. The new law codifies this.

There’s also a narrow opening: limited ad hoc arbitration has been introduced. No institutional administration required; parties form the tribunal themselves. Restricted to foreign-related maritime disputes and disputes between enterprises registered in free trade zones. The tribunal must file with the arbitration association within three working days of formation.

China has never previously permitted ad hoc arbitration. Every arbitration had to go through an institution. That door is now open. The scope is narrow, but the opening itself is a signal.

If you’re weighing whether it’s time to pursue arbitration, you can reach out to me directly. I can review your contract, your clause, your evidence, and tell you what cards you’re holding.

References

CIETAC, Arbitration Rules 2024, including Articles 50 and 59 and Appendix III (Emergency Arbitrator Procedures): https://www.cietac.org/sfs/cms/Uploads/202312/2024%20Arbitration%20Rules-EN.pdf
Department of Justice (HKSAR), Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the HKSAR: https://www.doj.gov.hk/en/mainland_and_macao/pdf/arbitration_interim_e.pdf
Supreme People’s Court, Notice on Implementing the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Acceded to by China: https://cicc.court.gov.cn/html/1/219/199/411/698.html
NPC Standing Committee, PRC Arbitration Law (2025 revision, effective March 1, 2026): http://www.npc.gov.cn/npc/c2/c30834/202509/t20250912_447762.html
PRC Civil Procedure Law (2023 amendment), including Article 104: https://shenzhen.chinatax.gov.cn/sztax/zcwj/zxwj/202401/67cd12a593644e9da5cefd585c2f09b5.shtml

This article is the fourth in the “China Supply Chain Disputes — What Every Buyer Should Know” series. Previous: Your Supplier Ghosted You After the Deposit — Now What?. Next: How to Prepare Evidence That Actually Holds Up in Chinese Arbitration.

Frequently Asked Questions

Do I need an arbitration clause to arbitrate against a Chinese supplier?

Usually yes. Arbitration is based on party agreement, so the contract normally needs a valid arbitration clause unless both sides agree to arbitrate after the dispute begins.

Is CIETAC or HKIAC better for a China supplier dispute?

It depends on the clause, seat, language, cost, enforceability and preservation needs. CIETAC is a major Mainland institution; eligible Hong Kong arbitrations may offer a route to seek interim measures from Mainland courts.

Is arbitration cheaper than suing in China?

Not always. Chinese court filing fees may be lower, while arbitration adds institutional and tribunal fees. The commercially relevant comparison also includes language, procedure, confidentiality, cross-border enforcement and legal fees.

Can I freeze a Chinese supplier's assets before the award?

Potentially. The route depends on the forum and timing. Chinese litigation and eligible arbitration proceedings may support applications to Mainland courts for asset preservation, usually with supporting evidence and security.