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Joel Martinsen over at Danwei has a good China law post on a Beijing Youth Daily article about mediation. That reminds me, I haven’t written anything on that topic for a while. No time like the present.

Before getting to that Beijing Youth Daily article, I should point out that the Supreme People’s Court has been pushing mediation as an alternative dispute resolution mechanism for a while now. For quite a few years, the judiciary was periodically given marching orders to push for settlements. I first saw this on an annual basis as judges looked for ways to clear their dockets prior to the Spring Festival. Sort of a customary thing, like paying your debts or cleaning the house before the holiday.

Things changed, though, when the goal of building a “harmonious society” was prioritized by Hu Jintao and China’s leadership in 2005. The policy ushered in a new economic policy of balanced growth as well as an emphasis on dealing with social problems:

Social conflicts are emerging in great numbers and in more varied forms, which are inevitable for China at the present stage.

But they must be properly handled in case they pose risks to the overall development of the country.

What sort of conflicts did the government have in mind? At the top of the list were those that threatened stability, including environmental and land disputes, labor relations, and (later on) product quality/food safety issues. The government of course actively discouraged resolution of these disputes via public demonstrations and violence, but neither did it encourage anyone to use the courts for dispute resolution. Indeed, judges got the message that some of these hot button matters should be resolved using alternative procedures, which in many instances meant ‘forced’ settlements.

A quick aside. Until recently, my experience with so-called mediation in China meant that a judge in a particular case was pushing for a settlement. That is not what mediation is in the normal sense and in most countries. Mediation is an alternative to litigation and arbitration whereby both parties agree to participate in a non-judicial and often informal process whereby a neutral party (the mediator) facilitates a resolution.

I’ve assisted on numerous China court cases over the years, involving commercial and intellectual property issues, where the judge has put pressure on the parties via the local attorneys to settle.¹ This is not mediation in the strictest sense, although that label is often used to characterize such settlements.

Back to policy. If you’re a judge and you want to clear your docket, or if your political orders suggest that settlements are now preferred to final judgments, then you do what you can to procure agreement between the parties. Fewer cases means fewer formal disputes, and a more harmonious society, at least at a superficial level.

An additional motivation for settlements, and perhaps even for real mediation, has also cropped up: busy courts and overworked judges. As the economy has grown, there are more commercial disputes (not to mention property crimes and other problems), the number of laws providing for civil suits has proliferated and, believe it or not, faith in the judicial system has risen — as a result, the number of formal disputes has skyrocketed. In some geographic areas, the year-on-year rise in suits filed has reached 100%, and this rate has been sustained for several years.

All of a sudden the political goals of building a harmonious society dovetail quite nicely in this area with overloaded dockets, and so we have a new reason to encourage mediation and other forms of alternative dispute resolution.

The Supreme People’s Court issued a guideline this week encouraging mediation, which coincides with the formal review process of China’s first mediation law, which is still in the first draft phase. The language of the guideline, as well as the legislative initiative, is basic harmonious society lingo:

When briefing the National People’s Congress Standing Committee, the country’s top legislative body, on the draft mediation law, Minister of Justice Wu Aiying also said that various kinds of social conflicts are emerging.

Unresolved civil disputes have resulted in school attacks and mass incidents across China in recent years.

The guideline requires local courts to develop a deep comprehension of the “unique advantage and important value” of mediation in addressing social conflicts, maintaining social stability and promoting a harmonious society.

The mediation efforts should be focused on the following types of cases: those that relate to people’s livelihoods and mass interests; those that possibly undermine social stability; those that are sensitive or receive extensive public attention; or those that involve petitions.

The general trend here is quite steady: maintain order by addressing disputes that threaten social stability. Keep these matters out of court as much as possible.

An important question then arises as to what mediation is ultimately going to look like in China. As I mentioned above, I’ve only seen coerced settlements in the past that usually involve the plaintiff being forced to compromise on damages or else face having the dispute placed in judicial limbo. This seems to be par for the course, as the Beijing Youth Daily report noted:

At a conference recently held by the Xicheng District Court on Alternative Dispute Resolution Mechanisms, a legal scholar made a claim that “without exception, mediation comes at the cost of concessions made by the complainant.”

My sense is that although there have been countless conferences, seminars, training sessions, and fact-finding trips by judges and members of the Ministry of Justice designed to get a handle on mediation, there is no general consensus on what real mediation in China is going to look like in the future. Building up rules and procedures will take time, and there are real challenges.

Indeed, the Beijing Youth Daily article itself was actually not on mediation in general, but the problem of enforcement. It turns out that a huge number of settlements are not voluntary executed. In other words, a settlement is hammered out by the parties, signed off on by the judge, and yet the defendant never implements the decision (e.g., pays money damages to the plaintiff).

This is a problem in a lot of countries that offer mediation as a form of alternative dispute resolution. In the U.S., some states mandate that the parties negotiate in “good faith,” and sanctions against attorneys can be brought against lawyers who use the proceedings to delay action or to gain valuable information on opposing counsel’s litigation strategy. Additionally, confidentiality is often seen as a crucial element of effective mediation, a principle that has been upheld by several U.S. courts, including the Supreme Court of California.

I don’t think China is ready for attorney sanctions yet. There is no real sense of professional responsibility here (rules exist, but enforcement is lax and training is non-existent), and I simply don’t see lawyers pushing back against a client who was negotiating in bad faith. Lawyers here follow their client’s instructions first and foremost.

As a first step in solving this execution problem with respect to settlements, protective orders need to be used liberally. This means that assets need to be discovered and frozen pending resolution of cases. Mechanisms are already in place to do this with respect to litigation, and are in fact used regularly. It’s simply too easy to move assets around or otherwise hide them prior to enforcement proceedings. The challenge, I suppose, would be in grafting this procedure onto a formal mediation process that takes place outside of normal litigation – that would require new regulations.

Law makers and judges have a lot of reasons, both political and practical, for putting mediation on the fast track, but it will definitely take a while before the present system of judge-forced settlements is transformed into a real procedure with trained mediators that disputants can trust. The draft law currently being reviewed is only the first step.
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1. Disclaimer: as a foreign lawyer, I am not allowed to litigate in China. My participation in local litigation has therefore been limited to coordination and acting as conduit between clients and licensed litigators. This is the case with all foreign lawyers here.

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Related posts:

1. China’s Harmonious Legal System II: Harmonious Mediation
2. Harmonious Litigation
3. China’s Harmonious Judges

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Post tags: alternative dispute resolution, judicial enforcement, mediation, settlements