If you are drafting a contract with a Chinese company, you might think writing "Arbitration in China" is specific enough. It is not.

The choice between Beijing vs Shanghai arbitration is not just about which city you fly to. It is a choice between two different legal worlds.

In 2012, a major event called the "CIETAC Split" happened. The Shanghai branch broke away from the Beijing headquarters to become its own independent group. 

This caused years of confusion. If you choose the wrong city or the wrong name in your contract, your entire arbitration agreement could be thrown out by a court.

With the 2025 Revision of the PRC Arbitration Law effectively formalizing the "seat of arbitration" concept (Article 81), the difference is bigger than ever. This guide will walk you through everything you need to know to protect your business.

The Key Takeaways

If you are in a rush, here is the bottom line on the Beijing vs. Shanghai debate:

• The "Split" is Real: "CIETAC Shanghai" no longer exists as a sub-branch of CIETAC Beijing in the way it used to. It is now an independent body called SHIAC. Confusing these names in your contract can make your arbitration clause invalid.
• Judicial Style: Beijing courts are strict about rules and regulations. They are close to the Supreme Court. Shanghai courts are known for being faster and more commercially minded, especially regarding finance and trade.
• Cost Difference: BAC (Beijing) lets you pay arbitrators by the hour for international cases. SHIAC (Shanghai) usually charges a percentage of the total dispute amount. Hourly rates are often better for huge claims; percentage rates are better for smaller ones.
• Ad Hoc Rules: Shanghai was the first to allow arbitration without a permanent institution (ad hoc) in its Free Trade Zone. Beijing is catching up, but Shanghai has more experience here.

The Institutional Divide: CIETAC vs. SHIAC

The most dangerous trap for foreign companies is the name game. You need to know exactly who you are hiring to resolve your dispute.

The History of the Split

For a long time, the China International Economic and Trade Arbitration Commission (CIETAC) in Beijing was the boss. They had a sub-commission in Shanghai. But in 2012, they had a disagreement over rules and leadership. The Shanghai sub-commission declared independence.

This split created two rival groups:

• Beijing (The Original HQ): This is still called CIETAC. If your contract says "CIETAC," the case is managed from Beijing. They did open a new branch in Shanghai, but it is just an office of the Beijing HQ.
• Shanghai (The Independent Power): The group that used to be the Shanghai sub-commission is now called the Shanghai International Arbitration Center (SHIAC). They are completely separate from Beijing.

Warning: If you use an old contract template that says "Disputes shall be submitted to the CIETAC Shanghai Sub-Commission," you are asking for trouble. Beijing might claim jurisdiction because it says "CIETAC." Shanghai might claim jurisdiction because it says "Shanghai Sub-Commission" (their old name). This leads to months of fighting in court before the arbitration even starts.

The Fix: Be specific. Write SHIAC if you want the independent Shanghai group. Write CIETAC (Beijing) if you want the headquarters.

👉 For more on drafting these clauses, check our guide on China International Arbitration.

Judicial Supervision: Regulatory vs. Commercial

Arbitration does not happen in a vacuum. It is supervised by local courts. If the losing party refuses to pay, you need a local court to seize their assets. This is where the "Beijing vs. Shanghai" choice really matters.

Beijing: The Regulatory Fortress

Arbitration in Beijing is supervised by the Beijing Fourth Intermediate People's Court (B4IPC). This court is unique. It was created specifically to handle cross-border trade cases and arbitration reviews.

The Vibe: Beijing is the political center of China. The judges here are very close to the Supreme People's Court. They are experts on the strict letter of the law.

• Pros: They are very predictable. They follow the rules exactly. If you have a complex case involving government regulations or state-owned enterprises (SOEs), Beijing courts understand the administrative landscape better than anyone.
• Cons: They can be conservative. They might interpret "public policy" (a reason to cancel an award) more broadly than courts in the south.

Because Beijing handles so many cases from the Beijing Arbitration Commission (BAC), they have deep experience. You can read more about that institution in our article on the Beijing Arbitration Commission (BAC).

Shanghai: The Commercial Innovator

In Shanghai, your case is likely to be watched by the Shanghai Financial Court or the local Intermediate Courts.

The Vibe: Shanghai is the finance center. The judges here are used to dealing with international banks, shipping companies, and stock markets. They tend to care more about commercial reality than rigid formalities.

• Pros: Speed. Shanghai courts are statistically faster at processing enforcement requests. They are also very "pro-arbitration," meaning they rarely overturn an award unless there is a massive error.
• Cons: The jurisdiction map is messy. Because of the split between SHIAC and the new CIETAC branch, you need to be very careful about which specific court in Shanghai you apply to.

Cost Structures: How Much Will It Cost?

Legal fees are expensive. But the cost of the arbitrators themselves is a huge factor. Beijing and Shanghai have different ways of calculating this bill.

‍The Hourly Rate Advantage (Beijing)

The Beijing Arbitration Commission (BAC) was a pioneer. They realized that top international arbitrators (like retired judges from the UK or US) do not want to work for a fixed percentage. They want to be paid by the hour.

If you have a $100 million dispute, the "percentage fee" in Shanghai might be $500,000. But if the case is simple and settles quickly, that is a waste of money. 

In Beijing, if you choose hourly rates, you only pay for the time used. However, if the case drags on for five years, hourly rates can become more expensive.

The Percentage Advantage (Shanghai)

SHIAC generally sticks to the traditional Chinese method. You pay a percentage of the total claim. This is great for predictability. 

You know exactly how much it will cost before you start. It also discourages lawyers from wasting time, because the arbitrators do not get paid extra for long hearings.

The 2025 Arbitration Law Update

China is updating its Arbitration Law. The 2025 revisions are a big deal for foreign companies. They make the "Seat of Arbitration" official.

Article 81: The "Seat" is King

Before this update, China did not strictly define the "seat" (the legal home of the arbitration). We just had the "place where the hearing happened." Now, Article 81 creates a clear legal seat.

Why this matters: If you choose Beijing as the seat, the arbitration is governed by Beijing's procedural rules and Beijing's courts. If you need to preserve evidence (like freezing a bank account), the court at the "seat" handles it. 

By choosing Beijing or Shanghai, you are locking yourself into that city's judicial support system.

Article 45: Arbitrator Disclosure

Corruption and conflict of interest are worries for any foreign company. The new law (Article 45) forces arbitrators to disclose anything that might make them biased. Both Beijing and Shanghai institutions have updated their rules to match this.

However, Beijing's CIETAC has a "challenge" system where the institution itself decides if an arbitrator is biased. In many other countries, the court decides. This gives the institution a lot of power.

👉 To understand the broader landscape of how these laws apply, see our overview of Dispute Resolution in China.

Ad Hoc Arbitration: The Shanghai Pilot

"Ad hoc" arbitration means you do not hire an institution (like CIETAC or SHIAC) to run the case. You just hire three arbitrators and run it yourselves. This is common in shipping and commodities but was illegal in China for a long time.

Shanghai's Free Trade Zone (FTZ) Leadership

Shanghai is the leader here. They were the first to allow ad hoc arbitration for companies registered in the Shanghai Free Trade Zone. 

If your contract involves a Shanghai FTZ entity, you have the flexibility to design your own arbitration process. This is a huge benefit if you want to avoid institutional fees.

Beijing has recently launched a pilot program to allow this as well, but Shanghai has been doing so longer. If flexibility is your main goal, Shanghai is currently the safer bet for ad hoc arrangements.

Enforcement: Getting Your Money

Winning the arbitration is only half the battle. You still need to get paid. If the Chinese company refuses to pay, you have to go to court to enforce the award.

The "Reporting" System

Here is some good news. China has a "Reporting System." If a local court in Shanghai or Beijing wants to say "No" to your foreign arbitration award, they cannot just do it. 

They have to report the case up to the High Court, and eventually to the Supreme People's Court in Beijing.

This system prevents local corruption. A local judge cannot protect his friend's company by canceling your award. He knows the Supreme Court will review his decision.

Commercial Arbitration in China

Both Beijing and Shanghai are excellent at this. They handle thousands of cases a year. Unlike courts in smaller cities, judges in Beijing and Shanghai understand international business terms like "CIF Incoterms" or "Letter of Credit."

👉 For more details on how this process works practically, read our deep dive on Commercial Arbitration in China.

Which City Should You Choose?

So, who wins? Beijing or Shanghai? There is no single winner, but there is a right choice for your specific contract.

Choose Beijing (CIETAC or BAC) If:

• You are dealing with a large State-Owned Enterprise (SOE). Beijing rules carry more political weight.
• You want to pay arbitrators by the hour (use BAC).
• You want the most "official" and traditional route (use CIETAC).

Choose Shanghai (SHIAC) If:

• Your partner is in the Shanghai Free Trade Zone or the Yangtze River Delta.
• You want a faster, more commercially minded court system.
• You prefer a fixed-cost fee structure so you can budget for the litigation risk.

Conclusion

The differences between Beijing and Shanghai arbitration are technical, but they have huge financial consequences. It comes down to cost, court culture, and institutional rules.

Beijing offers the stability of the capital and the flexibility of hourly rates at the BAC. Shanghai offers the speed of a financial hub and the innovation of the Free Trade Zone. The most important thing is to stop using generic "China Arbitration" clauses. Be specific. Name the institution clearly. Choose the seat intentionally.

Final Thought: Your arbitration clause is the "prenup" of your business deal. Nobody wants to look at it while they are in the honeymoon phase, but if things go wrong, it is the only thing that matters. Take the time to get it right.

FAQs: Beijing vs Shanghai Arbitration

Can I choose a foreign language for arbitration in Beijing or Shanghai?

Yes. Both CIETAC (Beijing) and SHIAC (Shanghai) allow you to choose English as the language of arbitration. However, you must write this in the contract. If you do not write it down, the default language will likely be Chinese (Mandarin). This can double your costs because you will have to translate every single document.

Is Hong Kong better than Beijing or Shanghai?

Hong Kong is a separate jurisdiction. It uses Common Law (like the UK or US), while Beijing and Shanghai use Civil Law. Hong Kong is generally considered more "neutral" for foreign companies, but it is also much more expensive. If the Chinese company has all its assets in mainland China, arbitrating in Beijing or Shanghai can be faster for enforcement.

What happens if I choose "CIETAC Shanghai" in my contract today?

If you sign a new contract today using the name "CIETAC Shanghai Sub-Commission," you are creating a mess. CIETAC Beijing will claim the case belongs to their new branch. SHIAC will claim it belongs to them. You will likely end up in court fighting over jurisdiction. Avoid this name completely. Use "SHIAC" or "CIETAC Beijing."

Can foreign lawyers represent me in Beijing or Shanghai arbitration?

Yes. Unlike in Chinese courts (where you must hire a local Chinese lawyer), arbitration is open. You can use your American, British, or Australian lawyers to argue the case in Beijing or Shanghai. However, it is highly recommended to have a Chinese co-counsel to help with local law issues.

How long does the whole process take?

A typical arbitration in Beijing or Shanghai takes between 6 to 12 months from start to finish. This is much faster than the Chinese court system, which can take years if there are appeals. Arbitration awards are final—there is no appeal on the merits of the case.

What are the filing fees?

Both institutions charge a "Registration Fee" just to open the file. This is usually around 10,000 to 20,000 RMB. Then you pay the administration fee and the arbitrator's fee. Most institutions have a "Fee Calculator" on their website so you can check the exact amount before you file.

About the Author: This guide is maintained by the dispute resolution team at Choi & Huang. Our team uniquely blends Western and Eastern legal traditions, masters dual systems of civil and common law, and excels in multilingual legal expertise.