Beyond Arbitration: The Unintended Success of Litigation in Promoting Lex Mercatoria in China

Abstract

This paper challenges the traditional view that arbitration is the primary vehicle for promoting the application of lex mercatoria by arguing that, in China, the Supreme People’s Court (SPC) has played a more pivotal role than arbitration institutions in promoting its application in commercial dispute resolution. Through empirical analysis, the study demonstrates that arbitration in China faces institutional and regulatory limitations that hinder its capacity to effectively incorporate lex mercatoria. Conversely, the SPC has actively promoted the integration of international practices into China’s legal framework, providing necessary clarity and enforceability. The findings indicate that litigation has become the main vehicle for advancing lex mercatoria in China, contrary to the orthodox view. The SPC’s promotion has been instrumental in bridging legislative gaps and ensuring consistent application of international practices, while the shortcomings in arbitration are gradually being addressed as China continues to develop its foreign-related legal system.