What if the Parties Agree that Their Disputes May Be Resolved by Arbitration or Litigation

If the parties agree that they may resolve their disputes through either arbitration or litigation, the arbitration agreement or arbitration clause shall be deemed invalid.

Provided, however, that the arbitration agreement shall be deemed valid if either party files a request for arbitration with an arbitration institution and the other party fails to challenge the validity of the arbitration agreement within the time period specified in the second paragraph of Article 20 of the Arbitration Law.

Where an arbitration agreement is held to be invalid or revoked, it shall be deemed absence of an arbitration agreement.

In such a case, the parties may enter into a valid arbitration agreement and refer the dispute to arbitration, failing which they may resolve the dispute through negotiation, mediation, or litigation.

References:

The Arbitration Law of the People's Republic of China

Interpretations of the Supreme People's Court on Issues Pertaining to the Application of the Arbitration Law of the People's Republic of China