Mediation, Conciliation and Arbitration (ADR) in China
Blog – Satya S.K Mandiga
China is opening its doors to outside commerce like never before. Variously styled as "socialist modernization" or "socialist democracy, China's renewed efforts indicate that its goal truly is to stimulate its economy by modernizing industry and agriculture, speeding development of science and technology, and increasing its level of trade with the West. As part of this trend, China's "socialist legal system" is undergoing major reform as well.
Unfortunately, trade and commerce sometimes lead to disputes. Thus, among the most important aspects of any legal or commercial system are its methods for resolving comfiercial disputes. This principle is also true in China. People with international business experience often observe that nonjudicial dispute resolution is the norm in China,' and among Asian nations generally. As a result, foreign trade and foreign investment contracts in China usually have arbitration clauses. China's dispute resolution process is well developed.
It involves several steps. These are negotiation, conciliation followed by nonbinding recommendations, and then, if necessary, formal arbitration. Mediation and conciliation are also developed means of resolving disputes. For example, millions of Chinese citizens serve as mediators. Due to United States common law tradition, dispute resolution focuses on litigation and judicial processes. But, as American trade continues to increase in China and elsewhere, American lawmakers have recognized the need for United States institutions to honor dispute resolutions reached through non-judicial processes, and the need reflects the same recognition by the program's sponsors, participants and attendees The United States Court of Appeals for the Ninth Circuit recently noted that the strong federal policy favoring arbitration "applies with equal force to international contracts."' To this end,
Congress adopted the Convention on Recognition and Enforcement of Foreign Arbitral Awards China acceded to the Convention in 1987.
In China, the law and practice encourage the use of conciliation (mediation) in arbitration. According to the Chinese Arbitration Law and the Chinese Arbitration Rules, if both parties in the process of arbitration voluntarily seek conciliation or agree to conciliation when consulted by the arbitration tribunal, the arbitration tribunal shall conduct conciliation at any time before an arbitration award is rendered. This is what we call the Combination of Arbitration and Conciliation and what you call the use of conciliation in arbitration.
Normally, there are three stages in the process of arbitration in China:
1. The stage of finding and establishing facts;
2. The stage of applying the law, the terms of the contract, the trade usage and the principle of fairness and reasonableness (equity) on the basis of the facts found at the first stage to distinguish the liabilities between the parties; and
3. The stage of discussing and deciding the case by the arbitration tribunal.
When conducting conciliation, the arbitration tribunal in China is required to:
1. Respect the free will of the parties;
2. Find out the facts of the case, distinguish right from wrong between the parties and determine the liabilities of the parties while abide by law, adhere to the terms of the contract, follow international practice and observe the principle of fairness and reasonableness (equitable principle); and
3. Examine the evidence submitted by the parties.
The principal focus of it is the definition and various forms of ADR and the organization and work of Conciliation Center of China Council for the Promotion of International Trade (CCPIT) / China Chamber of International Commerce (CCOIC), the most prominent promoter of ADR in China.
Conciliation Center of China Council for the Promotion of International Trade (CCPIT)/ China Chamber of International Commerce (CCOIC) (hereinafter referred to as the Conciliation Center) was established in 1987, then called Beijing Conciliation Center. From 1992, it has established 40 sub-centers mainly within the sub-councils of CCPIT in various provinces, municipalities and major cities. The conciliation centers scattered throughout China has formed the so-called conciliation network. The network chiefly deals with international (foreign-related) cases, using a set of uniform conciliation rules, i.e. the CCPIT Conciliation Rules. The mission of the Conciliation Center and its sub-centers is to provide a formal conciliation framework which accords with international practices and standards, thereby improving trading and investment environment of China.
The conciliation network that covers the entire Chinese mainland has, down till 2001, accepted more than 3000 cases. Parties involved in the conciliation spread over more than 30 countries and regions. The collective and strenuous efforts all these years have resulted in a high degree of professionalism and the resolution of 80% of the cases the conciliation network deal with.
The Conciliation Center does not accept cases over the following disputes:
1. Marital, adoption, guardianship, support and succession disputes;
2. Administrative disputes required to be handled by administrative authorities by law;
3. Labor disputes and disputes within the agricultural collective economic organizations over contracted management in agriculture
The fact that conciliation is not only a preferred method of dispute resolution in China for historical and cultural reasons, but it has proved to be an effective means of resolving commercial disputes, particularly those of international character, that attention of businessmen and legal commentators is merited to identify and expand the techniques which may serve to build up a business community having higher degree of trust and more efficient and effective means of realizing justice.
Satya Mandiga –Blog
On Official Project Camp
Shanghai , china – 11/08/2012