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China’s Commercial Arbitration and Mediation Model Gaining Prestige

Friday, March, 23, 2012

With the increasing success rates of China’s commercial arbitration and mediation model, many other nearby nations are increasingly adopting it as a preferred style of dispute resolution. Originally, the adoption of this dispute resolution model was adopted by a few other Asian nations, but now Australia is increasingly adding tenets of China’s model, and this could be a signal that core ideas of China’s arbitration/mediation style could become somewhat uniform across Pacific nations.


How China’s Legal Arbitration and Mediation Model Works


A primary feature of China’s dispute resolution model is that it provides the opportunity to resolve the issue in mediation before proceeding on to arbitration. The procedure starts off as an arbitration, and the arbitration attorney or judge has the option to change the arbitration into a mediation. If the dispute is not resolved in this way, the proceedings can return to arbitration.


This strategy has a long history among the Chinese. Since the 1990s, the percentage of cases that were settled in mediation rose from about 20% to 30%. This success rate was noticed by other nations, but not without some concern and revision.


The Pros and Cons of This Arbitration/Mediation Model


On the plus side, this model of mixing commercial arbitration and mediation provides more flexibility, cost-efficiency, and time-efficiency than either procedure alone. It can also maintain good business relations between both parties, which is important in keeping the economies of these nations robust. The arbitrations are perfectly binding on the international level, so ultimately, involved parties can enter mediation with the assurance that if they cannot work out their dispute in mediation, it will be resolved with finality in arbitration.


The main concern that critics seem to have about this form of dispute resolution is that they do not believe that one person should be able to handle the dissimilar methods of arbitration and mediation. It can theoretically give rise to conflict of interest issues if the mediation returns to arbitration. To prevent this possibility, some countries have revised the process to have separate individuals moderate or arbitrate any given case.