Aviation Disputes 2025 Comparisons

China’s legal system is rooted in civil law, specifically based on statutes and codes, with civil law traditions strongly influencing its structure. China’s legal system operates with an inquisitorial system rather than an adversarial one. In this system, judges take an active role in investigating the facts of a case, questioning witnesses and directing the proceedings. Pre-trial depositions, as seen in common law systems, are generally not used in China. However, written submissions are often made by both parties, but oral arguments are also part of the trial process. Witness testimony is permitted and can be presented in court.

Court System

The PRC court system is structured into four tiers:

• Primary People’s Courts;
• Intermediate People’s Courts;
• High People’s Courts; and
• The Supreme People’s Court.

Courts establish specialised divisions for civil, criminal and administrative cases. There are no specialised courts/tribunals to hear aviation disputes, which are typically adjudicated by general civil and commercial divisions or intellectual property tribunals.

Timeline

The adjudication period for aviation-related cases varies depending on their complexity. PRC courts play a leading role in case management, with clear regulations governing case filing, judge assignment, trial proceedings and judgment issuance. The adjudication period for a first-instance trial is six months, while a second-instance trial is limited to three months. However, foreign-related cases are not subject to these statutory time limits and may take longer. Additionally, judges do not typically issue immediate rulings.

ADR

For international aviation disputes, ADR serves as a preferred mechanism, particularly for contractual matters. While encouraged, ADR participation remains strictly voluntary without legislative consequences for non-participation. This balanced approach preserves judicial efficiency while respecting party autonomy in dispute resolution.

Legal Basis

Arbitration in the PRC is governed by the Arbitration Law of the PRC, which applies to both domestic and foreign-related disputes. While the PRC is not a UNCITRAL Model Law jurisdiction, its arbitration framework is broadly compatible with the Model Law and incorporates international standards.

Legislative Development

The Draft Amendment to the Arbitration Law of 2024 is currently undergoing public consultation and has not yet been enacted.

Arbitration is a commonly chosen method for resolving international aviation disputes in PRC, particularly those involving foreign parties or cross-border contracts. Many aircraft leasing and financing agreements include arbitration clauses due to the enforceability of awards and the neutrality of the process. Major Chinese arbitral institutions such as CIETAC and BAC are frequently used in aviation-related cases. However, domestic parties may exhibit a preference for litigation due to its procedural conveniences in matters of preservation and service of process. ADR is encouraged for aviation disputes, although it is not mandatory.

PRC courts primarily determine jurisdiction based on the defendant’s domicile. For aviation-related disputes, jurisdiction may also be established in the court where the contract is performed or where the tort occurred. In cross-border cases, jurisdiction can be asserted if there is a substantial connection to the PRC, such as the location of the airframe or the airline’s office. At the hierarchical level, the competent court for first-instance proceedings – typically a primary or intermediate court – is largely determined by the amount in dispute.

Under the PRC Civil Code, the general limitation period for civil claims, including those related to aviation disputes, is three years. This period begins when the claimant knows or should have known that their rights were infringed. The limitation period is interrupted when the claimant asserts their rights against the defendant and may be suspended under certain statutory circumstances, such as force majeure events.

PRC law does not impose mandatory pre-action procedures, but courts encourage mediation or settlement before litigation. However, where foreign entities participate in legal proceedings within the PRC, notarised and apostilled constitutional and authorisation documents, and Chinese translation of supporting documents in foreign language(s) are required. Courts generally do not penalise parties for skipping pre-action steps unless required by law. Furthermore, there is no legal requirement for a defendant to respond to a pre-action letter.

A complaint must contain parties’ details, claims, factual basis and evidence. Plaintiffs may amend claims prior to the end of oral debate in the first hearing. However, amendment of claims may reset procedural timelines.

Service is typically conducted by the court, using methods such as personal service, registered mail or public announcement. For foreign defendants, service may be conducted under mutual legal assistance treaties or the Hague Service Convention. If the defendant has been duly served but fails to appear or submit a defence, the court may issue a default judgment.

Legal Representation

Only licensed PRC lawyers may represent clients in court. Foreign lawyers cannot appear in court but may act as advisers in international arbitration or cross-border matters.

Legal Privilege

PRC law does not explicitly recognise work-product privilege. However, attorney-client privilege is upheld, protecting communications between a client and their lawyer. Notably, in-house counsel do not enjoy the same level of privilege as independent attorneys.

Court fees are charged cumulatively based on the amount in dispute and calculated according to a statutory fee schedule. In aviation disputes, the plaintiff or appellant must prepay court fees as instructed by the relevant court notice, typically before the commencement of first-instance or second-instance proceedings, as applicable. These fees are ultimately borne by the losing party. Generally, attorney fees are not recoverable unless stipulated in a contract. If a party disputes the allocation of litigation costs, they may apply to the court for reconsideration. Under PRC law, orders for security are generally not imposed.

Under PRC law, interim motions primarily address procedural matters, such as requests for the recusal of tribunal members. While courts may employ expedited procedures for straightforward cases involving relatively small claims, Chinese civil procedure does not formally recognise motions for summary judgment in the common law sense. That said, Article 156 of the Civil Procedure Law expressly authorises courts to issue partial judgments on discrete portions of claims when appropriate, providing a mechanism for resolving certain issues without awaiting full adjudication of the entire case.

Injunctive Relief

In Chinese aviation litigation, interim relief principally takes the form of property preservation measures. To secure such relief, claimants must file a formal application with the competent court, supported by preliminary evidence identifying the respondent’s assets for judicial verification. Applicants are further required to provide a court-approved guarantee, typically in the form of an insurance guarantee from insurance companies. In cross-border cases, preservation orders may cover assets within the territory of the PRC. Violations of preservation orders may lead to fines, detention, or criminal contempt charges.

Timeline

The standard review period for property preservation applications filed during ongoing litigation or arbitration proceedings typically ranges from two weeks to four weeks. However, in urgent circumstances, parties may seek pre-action preservation by filing directly with the court prior to initiating formal proceedings, though this remains relatively rare in practice. In such emergency cases, the court is statutorily required to render its decision within 48 hours of receiving the application. Should the court grant the preservation order, implementation must occur immediately without delay.

The PRC legal system does not employ a formal discovery process akin to common law jurisdictions. Instead, evidentiary exchange is primarily limited to documents and materials voluntarily submitted by the parties, though courts retain authority to order production of specific evidence upon application. The evidentiary framework permits both witness testimony and expert evidence to be presented, with parties generally bearing responsibility for providing proof to support their respective claims.

Chinese aviation litigation follows a structured adjudication process without jury participation. Proceedings primarily involve written submissions complemented by oral hearings, with expert testimony admitted either through party-appointed specialists or court-designated technical assessors. While hearings maintain a presumption of openness, courts may order closed proceedings when cases involve protected trade secrets or national security concerns.

Parties to aviation disputes may resolve their differences through private settlement, with the option to maintain confidentiality of terms. Where parties jointly request judicial confirmation, Chinese courts may formalise settlements through mediation agreements that carry the same enforceability as court judgments. However, such settlement agreements may be subsequently invalidated if proven to have been obtained through fraudulent means or under duress.

Relief Available to a Successful Litigant

A successful litigant can generally recover compensatory damages for losses suffered due to the other party’s wrongful actions. The damages aim to restore the plaintiff to the position they would have been in if the breach or harm had not occurred.

Scope of Damages

Under PRC law, the calculation of damages is based on actual loss. Punitive damages are generally not permitted. If the parties have agreed on liquidated damages, the court will not strictly adhere to actual losses but may adjust the amount in light of the actual harm suffered. Furthermore, there is no general cap on aviation damages. PRC courts may award pre- and post-judgment interest on damages.

For civil and commercial litigation in aviation matters, parties must file appeals to a higher court within 15 days for domestic cases or 30 days when foreign parties are involved. The appellate process constitutes a focused review rather than a de novo hearing, with the court examining only those factual and legal issues specifically challenged in the appeal. While new arguments and evidence developed after the initial proceeding may be presented during the second instance, courts generally prohibit amendments to claims that would exceed the scope of the original trial.

For an arbitration agreement to be enforceable under PRC law, it must satisfy four key requirements: (i) be in written form; (ii) demonstrate clear intent to arbitrate; (iii) specify both the arbitrable subject matter and a designated arbitration institution; and (iv) contain no competing court jurisdiction clause.

PRC courts generally adopt a pro-arbitration stance, upholding valid arbitration clauses and applying the doctrine of separability to preserve the arbitration agreement’s validity even when the main contract is invalid. In determining the governing law for arbitration agreements, courts typically honour the parties’ chosen law or, in its absence, default to PRC law as the arbitration seat’s jurisdiction.

The Principle of Competence-Competence

The Chinese legal system does endorse the principle of competence-competence in arbitration. For instance, Article 6.1 of the CIETAC Arbitration Rules explicitly states that “CIETAC has the power to determine the existence and validity of an arbitration agreement and its jurisdiction over an arbitration case. Such power is delegated to the arbitral tribunal once it is formed”.

Challenge of the Tribunal’s Jurisdiction

Pursuant to Article 20 of the Arbitration Law, a party may challenge the tribunal’s jurisdiction in court any time before the first hearing of the arbitration.

Court’s Intervention on Jurisdictional Matters

When it comes to jurisdictional issues, the courts in China typically adopt a deferential stance. According to Articles 20 and 58 of the Arbitration Law, the courts can only get involved in jurisdictional issues if a party files a challenge to the jurisdiction or the final award.

Extension of the Arbitration Agreement to Third Parties

Due to the privity of contracts, arbitration agreements in China generally only bind the contractual parties. An arbitration agreement can only apply to third parties under specific conditions including but not limited to: (i) the arbitration agreement between the insured and the third parties binds the insurer’s subrogation right under the Insurance Law; (ii) in practice, some courts have upheld the extension of the arbitration agreement from the main contract to the collateral contract. It is also noteworthy to mention that the condition (i) is only applicable to non-foreign third parties, while the condition (ii), in practice, is not limited to non-foreign third parties.

Under PRC law, arbitration proceedings enjoy confidentiality protections. Article 40 of the Arbitration Law mandates private hearings unless parties agree otherwise. Institutional rules like the CIETAC Arbitration Rules further prohibit participants (including parties, arbitrators, and witnesses) from disclosing case details. While parties may consent to disclosure, the system otherwise maintains confidentiality.

Notably, China’s arbitration framework does not recognise binding precedent (stare decisis). Each case is decided independently, eliminating any need to reference prior awards and thereby reinforcing confidentiality obligations.

Under PRC law, while arbitral tribunals themselves lack the authority to grant preliminary or interim relief, parties to arbitration proceedings may apply for such measures before competent Chinese courts. Notably, under recent judicial co-operation arrangements between Mainland China and Hong Kong as well as Macau, parties engaged in arbitrations seated in these jurisdictions – including cases administered by institutions such as the Hong Kong International Arbitration Centre (HKIAC) – may seek property preservation measures through Mainland Chinese courts.

Under PRC law, there is no explicit provision requiring claimants to provide security for respondents’ costs.

Governing Law and Rules

The procedural aspects of arbitration in China are primarily governed by the Arbitration Law and its judicial interpretations; and institutional arbitration rules (eg, CIETAC, BAC, SHIAC).

Mandatory Procedures

In practice, unless otherwise agreed by the parties, the arbitral tribunal may conduct the proceedings in such manner as it deems appropriate. In all circumstances, the arbitral tribunal shall act fairly and impartially, ensuring that both parties have a reasonable opportunity to present their case and arguments.

Usually, the arbitral tribunal shall hold a hearing for the case; however, if the parties agree and the tribunal consents, or if the tribunal considers a hearing unnecessary and obtains the consent of both parties, the case may be decided solely based on written submissions.

Under the PRC Arbitration Law and Civil Procedure Law, the following individuals may serve as representatives or agents: licensed lawyers; basic-level legal service providers; close relatives or employees of a party; and citizens recommended by the party’s community, employer, or relevant social organisations.

While the requirements for domestic litigation and international arbitration largely overlap, arbitration institutions may issue specific rules further clarifying or expanding these criteria. For example, Article 22 of the CIETAC Arbitration Rules expressly permits foreign representatives to participate in arbitration proceedings.

In China, the parties are entitled to recover legal costs in arbitration typically based on the arbitration rules. For example, CIETAC Arbitration Rules state that the arbitral tribunal has the authority to determine, in its award, that the losing party shall reimburse the winning party for reasonable expenses incurred in the course of the proceedings, based on the specific circumstances of the case. In assessing the reasonableness of such expenses, the tribunal shall duly consider factors including the outcome of the arbitration, the complexity of the case, the actual workload of the winning party and/or its representatives, and the amount in dispute.

Under PRC law, parties must submit preliminary evidence to substantiate their claims or defences during the pleading stage. While the tribunal may request supplementary evidence during hearings if deemed necessary, there is no formal discovery process akin to common law systems. Instead, parties bear primary responsibility for gathering their own evidence, though the court may order the production of critical evidence upon request. Witness statements are generally submitted in writing, but oral testimony may be required at hearings. Cross-examination is permitted, though its application tends to be less adversarial than in common law jurisdictions.

In arbitration, evidentiary rules are more flexible and party-driven. For instance, under Article 41 of the CIETAC Arbitration Rules, arbitrators may apply the CIETAC Guidelines on Evidence, aligning with international standards. While the arbitral tribunal can request evidence and draw adverse inferences for non-compliance, it lacks the power to compel document production directly.

Validity of an Arbitral Award

Under Article 58 of the PRC Arbitration Law, an arbitral award must meet several key requirements to be valid and enforceable. If any of these conditions are not met, the award may be challenged and set aside. These requirements include: (i) the existence of a valid arbitration agreement; (ii) the arbitral award must not exceed the scope of the arbitration agreement or the arbitral tribunal’s authority; (iii) the arbitration tribunal’s composition and procedures must comply with legal requirements; (iv) the evidence relied upon in the award must not be forged; (v) the opposing party must not have concealed material evidence that could affect the fairness of the arbitration; and (vi) the arbitrators must not have engaged in misconduct, such as embezzlement, bribery or perversion of justice.

Time Limit for Award Issuance

Most institutional arbitration rules impose a deadline for rendering an award. For example, Article 51 of the CIETAC Arbitration Rules requires the arbitral tribunal to issue an award within six months of its formation. However, this period can be extended indefinitely if the arbitration institution deems it necessary and justified, as provided under Article 52 of the CIETAC Rules.

Types of Remedies

Arbitral awards may grant both monetary and non-monetary remedies. Monetary compensation typically includes liquidated damages, but punitive damages are permitted only in limited statutory circumstances (eg, product liability or food safety violations). Non-monetary relief may include specific performance, injunctions to cease certain conduct or declaratory judgments.

Under PRC law, parties may challenge but not appeal an arbitral award. The grounds for challenging an arbitral award are strictly defined by the Arbitration Law and cannot be expanded contractually by the parties.

According to Article 58 of PRC Arbitration Law, a party may apply to set aside an arbitration award if they can provide evidence proving that the award involves one of the following circumstances: (i) there is no valid arbitration agreement; (ii) the matters decided in the award exceed the scope of the arbitration agreement or the arbitral authority of the arbitration commission; (iii) the formation of the arbitration tribunal or the arbitration procedure did not comply with statutory requirements; (iv) the evidence on which the award is based was forged; (v) the opposing party withheld evidence that could have affected the impartiality of the arbitration; or (vi) the arbitrators engaged in embezzlement, accepted bribes, acted for personal gain or otherwise violated the law in handling the case. Given these limited grounds, Chinese courts generally adopt a deferential approach to arbitral awards and do not review their substantive content when determining whether to set them aside.

A party has very limited access to another party’s asset information and usually can obtain details on company shares and intellectual property through open sources such as the Enterprise Credit Information System. Also, a party cannot access other people’s accounts.

After a court judgment or arbitral award is issued, a party may apply to the court for enforcement. During the enforcement proceedings, the court will search for the defendant’s assets through its internal information system, which is connected to banks, real estate authorities and other relevant institutions.

The prevailing party must submit an application for enforcement to the competent court, which is typically the court that rendered the judgment or the court where the defendant’s assets are located. The court will then review the application and issue an enforcement notice, requiring the defendant to comply within a specified period, usually ten to 15 days. If the defendant fails to comply, the court may take various enforcement measures, such as seizing or freezing assets (eg, bank accounts or real estate), auctioning property to satisfy the judgment, or adding the debtor to a public credit blacklist. In cases involving aviation-related judgments, such as aircraft seizures, enforcement may require co-ordination with the Civil Aviation Administration of China (CAAC) to immobilise or repossess the aircraft.

Enforcement fees are typically calculated based on the claim amount and are deducted from the enforcement proceeds, meaning the applicant is not required to prepay the fees. In terms of time, simple cases may be resolved within three to six months, while more complex cases – such as those involving asset tracing or cross-jurisdictional co-ordination for aviation assets – can take one to two years or longer.

Under PRC law, which follows a two-instance trial system, a defendant dissatisfied with a first-instance judgment may file an appeal within 15 days of its issuance. If the second-instance judgment remains unfavourable, the defendant retains the right to petition for a retrial, though such a petition does not automatically suspend enforcement unless the court specifically orders a stay upon initiating retrial proceedings. Valid grounds for appeal or retrial include errors in factual findings or legal application, improper service of process, or the discovery of new evidence, among other procedural or substantive defects.

In addition to appellate remedies, defendants may oppose enforcement by filing an objection to enforcement, challenging procedural irregularities in the enforcement process itself. Such objections might target improper execution methods, or violations of mandatory enforcement procedures. However, objections cannot dispute the merits of the underlying judgment – only the manner of its enforcement.

Under PRC law, a party seeking recognition and enforcement of a foreign judgment may apply to a PRC court based on either a bilateral treaty between China and the country where the judgment was issued or, in the absence of such a treaty, the principle of reciprocity. Generally, the applicant must submit a written application, the original judgment or a certified copy, and proof of the judgment’s validity and finality. Documents originating from abroad must be notarised and apostilled to be admissible in PRC courts.

Court fees for enforcement largely depend on the amount in dispute. The recognition process has no statutory time limit and typically takes six to 12 months, while the timeframe for subsequent enforcement proceedings depends on the availability of asset leads.

Under PRC law, a foreign aviation-related judgment’s enforcement may be challenged on grounds including lack of finality, jurisdictional defects, or invalid service. Public policy objections or non-reciprocity may also bar enforcement. The merits of the underlying judgment generally cannot be re-examined, but limitation issues (eg, expired enforcement period) may be raised. A party may appeal an enforcement order, and enforcement may be set aside if legal defects are proven. Special aviation treaties (eg, Montreal Convention) may also apply.

China is a contractual state to the 1958 New York Convention, and has made two reservations, namely the reciprocity reservation and the commercial reservation.

The prevailing party need first apply for recognition of the award to the Intermediate People’s Court. The court will review the application and generally grant recognition unless the award contravenes Article 5 of the New York Convention. If the court rejects the application, it is required to escalate the case to the Supreme People’s Court for a final ruling.

Once the Intermediate People’s Court recognises the award, the enforcement procedure will proceed, which is largely the same as the enforcement of domestic judgments. It is important to note that, under Chinese law, the process for recognition and enforcement does not vary depending on the type of award.

Grounds for challenging an arbitral award under PRC law include invalid arbitration agreement, lack of proper notice, arbitrator misconduct, non-arbitrability of the dispute, or violation of public policy. PRC courts generally require the award to be final and binding under the law of the seat. If the award is subject to appeal or set-aside proceedings abroad, enforcement may be refused or adjourned. PRC adheres to absolute sovereign immunity unless waived.

In March 2025, the draft amendment to the Civil Aviation Law was released for public comment, addressing gaps in the original law regarding airspace division, general aviation support and technical regulation.

On 25 January 2025, the Foreign Civil Aircraft Rules published by the State Council of the People’s Republic of China came into force, which further improves the legal system of civil aviation, safeguards national security and public interests and promotes international aviation co-operation.