Eric J Jiang
Jingtian & Gongcheng, Beijing
jiang.jiaxi@jingtian.com

Introduction

On 20 December 2018, the General Assembly of the United Nations adopted the UN Convention on International Settlement Agreements Resulting from Mediation, known as the Singapore Convention on Mediation, (the ‘Singapore Convention’). A signing ceremony was held in Singapore on 7 August 2019, which witnessed the signing of the treaty by many major economies in the world, including the United States, China, India, Australia, Brazil, Nigeria and South Korea. The EU, the UK and Japan have not signed the treaty, but it is likely that they will sign it in the near future. The Singapore Convention went into force on 12 September last year. As of 9 November this year, it has 55 signatories, of which eight have deposited their ratifications.

The Singapore Convention was intended to be a uniform and efficient framework for the enforcement of international settlement agreements resulting from mediation, like the New York Convention on arbitration (the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards, signed in June 1958 in New York). It promotes mediation to a status as important as arbitration.

Mediation and conciliation are one and the same

Mediation or conciliation? Are they referring to two different types of dispute settlement mechanisms or one and the same thing? Many have argued that conciliation is different from mediation. Upon a careful examination, however, the most important differences so discussed are as follows: (1) they have different statutory bases in certain jurisdictions; and (2) conciliators are considered capable of playing more active roles than mediators.

It is the author's view that there are no differences between mediation and conciliation in China. Mediation has deep roots and a long history in China and mediators in China have always been capable of playing all active roles as may be necessary for working out a resolution to the dispute at issue. In contrast, mediation started late in certain foreign jurisdictions and the roles of mediators have always been carefully watched and intentionally contained – even if the roles of conciliators in certain foreign jurisdictions may still be subject to more restrictions than those of the mediators in China.

There is also only one proper Chinese phrase for either mediation or conciliation, which is Tiaojie (调解). When Hong Kong drafted the Mediation Ordinance, the drafters are said to have tried but failed to find two ostensibly different Chinese phrases respectively referring to mediation and conciliation.

Even in English literature, ‘mediation’ and ‘conciliation’ are now at times used interchangeably. When the UN Commission on International Trade Law (UNCITRAL) first adopted its model law on mediation in 2002, it was called the Model Law on International Commercial Conciliation. By the time the Singapore Convention was adopted in 2018, UNCITRAL changed the name to be the Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation.

Mediation everywhere and without a uniform mediation Act

Mediation is a tradition and is everywhere in China. The Chinese tradition prefers morality over law, harmony over confrontation, and mediation over adjudication. Even with the re-establishment of a legal system in 1979, mediation has always been an important part of dispute settlement in China. Government officials conduct mediation for labour disputes. Police conduct mediation for neighbourhood disputes. The People’s Mediation Committees conduct mediation for civil disputes in their communities. Arbitrators conduct mediation in the arbitration process. Judges conduct mediation in the trial, appeal and enforcement process. In the 1980s and 1990s, judges were even encouraged to avoid judgments and to mediate as many settlements as possible.

Surprisingly, there has been no uniform or framework mediation legislation in China. The law concerning mediation is scattered in many statutes, including the Civil Procedure Act and the Arbitration Act. There is one uniform People’s Mediation Act, but this Act is only concerned with mediation of civil (used here as against commercial) disputes by the People’s Mediation Committees which are organised by the lowest level of government.

Further, most, if not all, mediation in China is very closely related to governmental, judicial or arbitral authorities. Mediators on their own have no authority to empower the mediated settlement agreements for enforcement. The parties to such settlement agreements have to rely on contract law to sue for breach if the settlement agreement is not performed. However, for the settlement agreements mediated by the People’s Mediation Committee, the parties may jointly apply for affirmation by the court within a very limited period of time.

The rise of commercial mediation centres

The Singapore Convention and the discussions leading to its signing have made the Chinese think again about mediation. Professional commercial mediation centres have since been on the rise. As early as in 1987, the China Commission for the Promotion of International Trade (CCPIT) set up a commercial mediation centre, called the Beijing Mediation Centre. The CCPIT has since renamed it the CCPIT/CICC Mediation Centre, and spread such mediation centres to all of its local branches. The CCPIT mediation centres are said to have received about 3,000 cases in 2019, 514 of which were international. In the 2000s, the Supreme People’s Court of China initiated a ‘Diversified Dispute Settlement Mechanism Reform’ project, and propelled the setup of many commercial mediation centres in China. The Shanghai Commercial Mediation Centre was inaugurated on 8 January 2011, and has since become a member of the US-based JAMS, an internationally known mediation service.

Also, some Chinese arbitral institutions have since started to create commercial mediation centres. In 2006, the China Maritime Arbitration Commission established a maritime mediation centre. In 2018, the China International Economic and Trade Arbitration Commission set up a mediation centre. The Beijing Arbitration Commission and other arbitration commissions have set up their centres as well.

Further, with the publicity of the Singapore Convention in 2018, more and more commercial mediation centres have been set up in many Chinese cities, especially those with special economic development zones, such as Shanghai, Shenzhen and Haikou.

The future of commercial mediation

As discussed, mediation has always been popular in China, but its effective use, to a large extent, relies on the governmental, judicial or arbitral authority in a particular case. Standalone mediation, directly enforceable at the court, is rare in China.

Once ratified by the national legislature in China, the Singapore Convention  has the potential to boost international commercial mediation in China and other countries. Although the EU countries, the UK and Japan are not yet signatories, EU, UK and Japanese companies operating in a signatory country may still avail themselves of the enforcement mechanism under the Singapore Convention.

Also, the Singapore Convention may inspire domestic commercial mediation in China. As discussed, currently there is no direct enforcement mechanism for settlement agreements resulting from commercial mediation in China. Such agreements must be litigated for enforcement or entered as an arbitral award or judgment before they could be directly enforced. If the Singapore Convention is ratified in China, with the principle that mediated settlement agreements can be directly enforced, settlement agreements resulting from domestic commercial mediation in China may also become directly enforceable at the Chinese courts. That would make mediation a truly dispute settlement mechanism paralleling arbitration and litigation.

Conclusions

In summary, mediation may have a long history in China, but mediation or conciliation will remain a process concomitant to arbitration, litigation or other adjudication without a rule that duly mediated settlement agreements may be enforced directly. The very idea that a mediated settlement agreement may be enforced directly is the cornerstone of the Singapore Convention, and it is that idea that has been changing the perception of mediation in China, and may lead to substantial changes in commercial mediation in China soon.