The pioneering guidelines issued by the China International Economic and Trade Arbitration Commission (“CIETAC”) regarding the use of artificial intelligence (“AI”) in arbitration will test the organization’s ability to adopt appropriate measures reassuring all stakeholders that AI-facilitated arbitration can deliver efficient results without compromising accuracy, confidentiality, and fairness.

The test is complicated by the potential for CIETAC to handle disputes arising from special types of “administrative agreements”, wherein the nature of those agreements establishes both “administrative” and “civil” relationships between the two parties—e.g., a local government on the one side and a private party on the other—and consequently renders such disputes arbitrable, as decided by China’s Supreme People’s Court.  The possibility of having governments participate in AI-facilitated arbitration presents difficult problems to those aspiring to see wider application of AI in dispute resolution.

Administrative Agreements

Article 12 of China’s Administrative Litigation Law authorizes courts to handle lawsuits brought by “citizens, legal persons, or other organizations” when there are allegations, inter alia, that administrative organs have failed to perform certain types of agreements such as “government franchise agreements” and “agreements on the compensation for land and housing expropriation”.  This is an important foundation upon which private parties can rely to hold administrative organs accountable and seek legal remedies.

The exact coverage of Article 12 of the Administrative Litigation Law was, however, unclear.  In November 2019, the Supreme People’s Court issued the Provisions on Several Issues Concerning the Adjudication of Administrative-Agreement Cases (“Judicial Interpretation on Administrative Agreements”) to provide some guidance.  Effective as of January 1, 2020, this judicial interpretation explains in Article 1 that administrative agreements as referred to in Article 12 of the Administrative Litigation Law are agreements “containing rights and obligations under administrative law” that are entered into by administrative organs and “citizens, legal persons, or other organizations” to “achieve administrative management or public service goals”.

Article 2 then instructs Chinese courts to handle lawsuits brought by “citizens, legal persons, or other organizations” if these lawsuits concern one of several types of “administrative agreements” listed under the provision.  The final item on this list contains the catch-all phrase “other administrative agreements”.  Such an expansive list and the broad expressions used in Article 1 show the inclination of the Supreme People’s Court to give private parties opportunities to seek remedies through litigation.

Administrative Agreements and Arbitration

The Supreme People’s Court’s preference for courts, rather than other dispute resolution mechanisms, to handle disputes arising from certain types of administrative agreements is expressed in Article 26 of the Judicial Interpretation on Administrative Agreements.  The provision states that where the parties to such an administrative agreement have agreed on an arbitration clause, the Chinese court handling the dispute should declare the clause invalid, “unless otherwise provided by laws, administrative regulations, or international treaties concluded or acceded to by China”.

“This preference for litigation over arbitration is subject to a qualification explained by the Supreme People’s Court in its reply to the High People’s Court of Chongqing Municipality, […].”

This preference for litigation over arbitration is subject to a qualification explained by the Supreme People’s Court in its reply to the High People’s Court of Chongqing Municipality, when the Chongqing court was seeking instructions from the highest court regarding the validity of an arbitration clause included in an administrative agreement.

At issue was that a technology company and the government of a certain district in Chongqing had signed an “investment agreement”, in which the company agreed to invest in a 3D laser measurement project in the district in return for various support from the district government, including some subsidies.  The technology company breached the agreement and the district government requested that the technology company return the subsidies and pay compensation.

The key question raised by the High People’s Court of Chongqing Municipality was whether the arbitration clause in the investment agreement should be determined to be invalid by virtue of Article 26 of the Judicial Interpretation on Administrative Agreements.  The Supreme People’s Court’s answer was negative.  According to the highest court, because the investment agreement had “the dual nature of being an administrative agreement and a civil contract” and the dispute concerning the technology company’s return of the subsidies and payment of compensation was “civil” in nature, this dispute could be resolved through arbitration.

Artificial Intelligence and Legislation on Administrative Agreements

“As studies are being conducted to examine the possibility of formulating a piece of legislation on administrative agreements, more details about these agreements […] are expected to be released for discussion in the near future.”

The reply sent by the Supreme People’s Court to the High People’s Court of Chongqing Municipality was brief.  As studies are being conducted to examine the possibility of formulating a piece of legislation on administrative agreements, more details about these agreements, especially the criteria for determining whether an administrative agreement also establishes a “civil relationship” between the parties, are expected to be released for discussion in the near future.

It should be noted that, in late October, a group of experts and scholars from the Supreme People’s Court and China’s top universities such as the China University of Political Science and Law, Peking University, and Tsinghua University, shared their thoughts about the potential content of the legislation on administrative agreements.  It was emphasized that the determination of the law applicable to a “complex public-private partnership” should not be affected by the title given to the contract but should be determined by the nature of the dispute, i.e., whether the dispute concerns “a relationship involving property-related rights and interests” or “the legal use of public power”.  If it is the former, the dispute may be resolved by arbitration or even mediation.

In the Guidelines on the Use of Artificial Intelligence Technology in Arbitration (Trial) issued by CIETAC in July, there is no reference to administrative agreements.  The guidelines, however, provide useful information about potential risks associated with the use of AI in arbitration.  As a government and a private party may resolve, through arbitration, their dispute arising from an administrative agreement that is also “civil” in nature, should they also be encouraged to use AI during the arbitration process?

Although, according to the current version of the CIETAC’s guidelines, AI technology should only be used to assist in less important tasks such as legal research, the collection, review, and analysis of evidence, as well as the drafting of cross-examination questions, the potential participation of government bodies in AI-facilitated arbitration adds another level of complexity to this type of arbitration.  For example, how can private parties ensure that AI systems used by governments to prepare their arguments in disputes involving administrative agreements are not empowered with data available only to the governments, potentially placing the private parties at an informational disadvantage?  To address this problem, both sides could, arguably, be required to use the same AI systems run by an independent entity (such as CIETAC).  Yet, inputting government data involved in these disputes into such AI systems may lead to concerns about unauthorized transfer and public disclosure of the data, which could be sensitive.

All of this complexity suggests that a sensible approach is to discourage the use of AI in arbitration involving administrative agreements until experts overseeing the development of AI-facilitated arbitration and administrative agreements can find satisfactory solutions to balance all the interests and address related concerns.

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• The citation of this article is: Dr. Mei Gechlik, Arbitration, Artificial Intelligence, and Administrative Agreements, SINOTALKS.COM^®, In Brief No. 62, Nov. 26, 2025, https://sinotalks.com/inbrief/ai-arbitration-administrative-agreement.
  The original, English version of this article was edited by Nathan Harpainter.  The information and views set out in this article are the responsibility of the author and do not necessarily reflect the work or views of SINOTALKS^®. ↩︎

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