Mediation as an Integrated Part of the Chinese Commercial Arbitration Process - Coursework Example

Running Header: Mediation as an integrated part of the Chinese commercial arbitration process Student’s Name: Instructor’s Name: Course Name & Code: Date of Submission: Introduction Mediation is the process whereby parties in conflicts can reach an agreement. The parties’ solution does not need to be governed by the fixed principles of law in coming up with a unique solution. Mediation process mainly utilizes various techniques of negotiation. A mediator is usually involved in facilitating and guiding the parties during the process of negotiation. Mediation atmosphere is intended to be non-adversarial. Mediator has a role of managing the process of mediation in a way which allows parties involved to show mutual respect for each other. However, the mediator has no powers of making any kind of decision. Ground rules are usually agreed in advance as they assist in minimizing confrontation. In general, mediation is the process by which two parties with the assistance of a neutral third party solve various disputing issues. They do so as they try to develop options, while considering alternatives as they reach a final consensus or final agreement in order to accommodate their needs or requirements. Mediation has a major notable characteristic of a third party being involved. The third party is usually chosen by both parties to act as a mediator. It has a role of assisting both parties communicate with each other in solving the problems rationally while resolving any type of misunderstanding between them. It also assists in clarifying the dispute issues while realistically negotiating a resolution of their dispute. Parties involved remain in control of the negotiations with mediator helping the parties communicate with each other while holding strictly confidential private meetings with each other. Mediation is used and promoted in most parts of China. It is regarded as an efficient and effective way of resolving the disputes in all private and public aspects. Mediation is taking root in China with relation to sectors like disputes in construction. In China, various professional bodies are developing mediation within their own bodies. Such bodies include Law Society of Hong Kong, The Hong Kong Bar Association, and Hong Kong Institute of Arbitrators among others. Mediation has been developed to resolve settlements that go beyond the legal remedies. Various law faculties in China’s Universities are developing mediation courses while they are actively promoting mediation process among its citizens. The judiciary in China has undertaken an active role in the utilization of mediation process in various civil cases. It has been seen as an important supplement to the proceedings of the court within China. Mediation has become the main feature of dispute resolution especially in the resolution of civil disputes. However, China government is insisting on the importance of educating public and legal professional on the importance of using and utilizing mediation as a way of solving disputes. The legal culture in China emphasizes on the importance of adopting and using mediation as a form of solving disputes between parties involved in conflicts. Mediation in Chinese commercial arbitration process Mediation process in the republic of China started many years ago. This emphasizes on amicable ways of resolving disputes between people or involved parties. In China, a dispute is usually regarded as an evil that disturbs the harmony which is believed to govern all aspects of social life. According to Chinese people, it is impossible to avoid dispute, however, the involved parties should take necessary steps to solve the main cause of the problem amicably either with the assistance of a mediator or among themselves. Various philosophical and social factors have been used in ancient China to clarify the existence and expansion of mediation. Such factors include philosophical basis, legal basis, social basis, and economic basis (JianFu Chen, 252). On philosophical basis, Confucianism has been seen as the basis of predominance for mediation in China. Confucius in China believed the main optimal dispute solution way was through mediation or moral persuasion rather than use and exercise of sovereign force. Mediation the ancient China afforded people a method that was socially acceptable in solving the disputes. Therefore, this was the main way that was preferred in solving the dispute. The key values of Confucian include loyalty (Yi), sincerity (Xin), benevolence (Ren), ritualism (Li), and wisdom. The morality of Confucian was based on empathy and sympathy with the key aim of pursuing social harmony. Litigation was seen as disgraceful conduct as it was a sign of total breakdown of social harmony. This made mediation to become the main way of solving any dispute that was arising among the people or parties. On economic basis, Chinese solved their economic problems such as land and personal properties through mediation. In China, the preference of mediation has its roots in the Chinese economic structure. Chinese economy historically was mainly of small scale peasant economy. People were self-employed and self reliant on their own land. They did not have to trade from the outside hence they relied on each other for assistance. This was interdependence between each other hence nobody wanted to make enemies. Therefore, they preferred mediation as a way of solving their disputes. This assisted in upholding harmony within the community. Mediation in the ancient China was regarded as an integral and vital part of the legal system. It was not only regarded as a way of solving disputes among the residents in ancient China. Solving of disputes and avoiding conflicts using mediation has been viewed as a significant way of promoting social harmony in China regardless of the evolution and rise of legal system as well as rapidly increasing commercial disputes. On legal basis, there were uncertain results from lawsuits. Many of the civil cases in the ancient past were regarded as criminal cases. These would have been resolved through meditation process. Formal law and processes of law were mainly concerned with punishment. This to a larger extent enabled rulers control the people which led to a massive corruption of government officials. This led to discouragement of dispute resolution through litigation but rather through other alternatives of settling disputes. On social basis, the Chinese basic unit was the basic group. This is where the individuals belong but not as the individuals themselves. Families were the most basic with emphasis on rules of customary law emphasizing that the older generation has authority over younger generation. Confucian morality was instructed by clans onto its members. Clans were mainly made of several families. Clans also assisted members on various ways of solving disputes. Social groups like clan, village, family, and guild were actively involved in assisting members of the society in solving disputes rather than involving government. These social groups actively encouraged disputing groups to exhaust all mediation processes in solving the arising disputes. Clans and guilds required all possible ways of solving disputes through mediation to be exhausted before calling for magistrate to intervene. This led mediation as the only alternative to solving the disputes among the people (Jakobson, 121). Mediation process has continued to dominate every aspect of Chinese society in case of any rise of disputes in the society. Other than the traditional legal culture, mediation prominence of mediation in modern China appears to be attributable to society’s Communist ideology, social conflict, and social control. Communism just like Confucianism is hostile to litigation. It places a lot of emphasizes on criticism-education, voluntarism and self-criticism. This broad approach follows Mao’s Zedong admonition that disputes need to be solved if possible through democratic methods, criticism ways, through education, persuasion ways, and through discussion. Disputes according to Mao’s Zedong admonition was not supposed to be solved through oppressive methods or through coercive ways. Therefore, most of the disputes involving civil cases are settled through extrajudicial mediation. This involves cajoling the parties into adopting values of conformity of the Communist Party. Mediation is still being used to solve disputes on its own, but in some instances, it is being used in combination with various adversarial procedural like arbitration. The system of modern mediation in China can be divided into five main categories. They include people’s mediation; this is type of mediation that is undertaken by people’s mediation committees. A second type of mediation is administrative mediation; this is usually undertaken by administrative departments or by local government. Institutional mediation is another type which is usually conducted by permanent mediation centers. Mediation within litigation or lawsuit proceedings is another crucial process. The last type of mediation is through arbitral proceedings. People’s mediation is usually carried out by people’s mediation committees (PMCs). This is a clear reflection of communist’s ideology. This mediation came into being during land revolution period that was established formally in 1954. People’s Mediation Committees were mainly used to articulate and even apply ideological principles and values towards assisting people in solving disputes through mediation. They encouraged people to solve disputes in a way that was consistent with national policy. PMCs continue to play a great role in civil disputes settlements as they are so far less politicized in China. They continue to maintain stability while solving the disputes through mediation throughout China. They continue to encourage various parties filing civil law suits to first try mediation process. This is through going to community and work with people’s mediators. People’s courts have a role of promoting mediation among the people by providing PMCs with guidance in their daily work. People’s Mediator Committee were 987,000 with 10 million mediators in China. This number has grown significantly with People’s Mediator Committee resolving over 5 million civil disputes with 94.8 percent success rate. This is a clear indication of how successful mediation as a way of solving disputes is successful through PMCs in China. This is exponentially increasing as a way of solving disputes involving various parties. The process of mediation within the people’s court system has also increased greatly in China. Combination of mediation with litigation is a practice of solving disputes which was created in the liberated areas towards reducing pressures on judicial courts in China. In 1991, there was adoption of Civil Procedure Law (CPL) in China. It emphasized that mediation required to be conducted under the consent of the parties. This is with the main goal of ascertaining the facts as well as distinguishing what is right and wrong. It also emphasized that any agreement reached should be between the parties and on their own free will with no compulsion at all. Nevertheless, if there is no accord that is arrived at through the process of mediation, then the court must give a judgment. According to Civil Procedure Law, the court must conduct mediation when trying a civil case according to parties’ consent and laws. This has made the practice of combining mediation with arbitral proceedings develop in a great extent in China. This is the main reason why mediation is extremely popular in China as compared to other countries. China International Economic and Trade Arbitration Commission (CIETAC) have been influenced deeply by the Chinese Courts to empower its arbitral tribunals. This is to assist it in mediating arbitration cases from the establishment. Prior on the way to the passing of the Law of Arbitration, CIETAC attempted to settle its arbitration cases. This was so even though CIETAC’s first rules of Arbitration did not have provisions on mediation. They just had a provision which stated that an arbitration case required to be dismissed if the parties reached an agreement. CIETAC Rules of 1989 first provided mediation which clearly stated that CIETAC and its arbitral tribunals may mediate the cases that CIETAC has accepted. If an agreeable solution is arrived at upon through mediation by the involved parties, then the arbitral award should be rendered according to settlement agreement contents by the arbitral tribunal. According to statistics, most of the CIETAC arbitrations were solved through mediation from 1950 to 1980. CIETAC continued to be successful from 1980 to 1990 through combination of arbitration and mediation. CIETAC’s mediation practice has its own reasons of history other than Communist ideology’s and Confucian philosophy’s impacts. The arbitration system of China appeared and even developed in the planned economy environment. This is despite modern commercial arbitration process being a product of market economy. As an outcome, there were less laws that could be applied to disputes in the commercial sector before 1980s in China. In such instances with legal vacuum, arbitral tribunals was only able to decide cases according to the principles of reasonableness and fairness. They were only able to encourage the parties to solve their disputes through mediation while being assisted by arbitral tribunal. CIETACs initiative drives the Arbitration Law, 1995 towards permitting as well as encouraging actively the combination of arbitration and mediation. Mediation idea can be raised by either the arbitral tribunal or parties involved. Arbitral tribunal according to arbitration law may carry out mediation past rendering an arbitral award. However, arbitral tribunal must carry out the mediation proceedings in case the parties request. Despite the Chinese laws not allowing them to take an initiative, Chinese arbitrators usually take an initiative of assisting the parties involved to reach an amicable and acceptable solution. In case the parties agree on having mediation, then the arbitral tribunal starts the proceedings of mediation. According to Chinese arbitrators, parties become more prepared to consider the settlement when they begin realizing their position’s weakness as well as strength. This is through the process of pleading and even the exchange of witness statements and written submissions. After the completion of written submissions, various issues tend to crystallize while main issues of the dispute are narrowed down. It is believed that the process of mediation that is conducted thereafter is usually an effective one as the parties’ main issues are focused and addressed correctly. Combination of mediation and arbitration in China takes place during the ongoing process of arbitration. In case the first mediation proposal fails, the arbitrators may make another proposal to mediate after some hearing or taking evidence. A proposal for mediation can be raised several times during the proceedings before rendering an arbitral award. The model in China has an integration of mediation into arbitration that is most complete. Chinese arbitrators are extremely careful in ensuring that they do not express their opinions on the merit to the involved parties. This is mainly because the opinion by the party may affect their impartiality greatly. Arbitrators do not make a settlement that is concrete in CIETAC’s practice before the case is clear and parties know their relative positions. A clear proposal is usually made when at the last stage of mediation as the gap between the parties is narrowed down. A written mediation declaration or an approval award is drawn up by the arbitral tribunal in case the mediation directs to an agreement. However, the written mediation statement becomes legally effective after both parties sign for its receipt. Both a consent award and mediation statement is usually based on the terms of settlement. This is signed by the arbitrators while being sealed by arbitration institution. Mediation statement is served on the both parties. According to article 51 of the arbitration law, a mediation statement shall have the similar lawful consequence like an arbitral award. Lately, China has improved greatly towards accommodating the needs of foreign investors. This is through the adoption of arbitration. Arbitration has become institutionalized as Chinese economy continues to become more integrated over the last decade into the world economy. The Arbitral Tribunal in most cases and at some stage of the arbitration proceedings mediate between the parties that are involved in the disputes. There is encouragement of combining arbitration and mediation by Chinese Law of Arbitration. CIETAC arbitrators conduct conciliation during the proceedings of arbitration in almost 50 percent of the cases that are under their cognizance. The success rate has been at 40-50 percent with no dissatisfaction and complaints traced so far between the involved parties as well as the mediators who were involved in the arbitration-conciliation process. Advantages of mediation as an integrated part of the Chinese commercial arbitration process Combined proceedings of mediation have all the benefits which are attributed to settled outcomes or results. These are better than the decided outcomes from a court of law where only one person decides what the final conclusion should be. The parties involved in the dispute case are satisfied with the final outcome of the hearing hence nobody feels that the other has become favored by the outcomes. This eventually or in the long run helps in maintain the friendly and cooperative relationship between the parties involved in the disputes. There is appreciation of each party’s opinions hence no party feels that their efforts are undermined at all cost. Mediation through arbitration usually results to overall savings of costs as there are many operations which are involved. The only cost that is involved is that of the mediator who assists in the process of mediation. Mediation is also associated with the gain of efficiency towards the reaching of agreement or consensus. In the case whereby the mediation is combined with arbitration, the arbitrator already knows the case hence no need of educating another neutral party. This would include educating another party that is neutral. This would eventually result to added delays, expenses and duplication of work. In mediation process with arbitration, arbitrator may choose suitable time of offering services from tribunal for the purposes of settlement. Combination of arbitration in the mediation makes dispute resolution even more effective while producing a settlement that is agreeable to both the parties in dispute. Mediation in most occasions will result to an acceptable agreement or if no settlement is reached at all, then the ultimate arbitral award is at least acceptable. Involvement of a third party usually results to narrowing down of issues resulting to a solution that is more acceptable and predictable. Mediation is also acceptable and preferred mainly because the mediators involved are the ones whereby involved parties are comfortable with in the process of negotiation. In case one party feels that it is not comfortable with the arbitrator, then they request for the one who they think they are comfortable with. This is in the process of trying to look for fairness and comfort when solving the disputes. Mediation process ensures there is continuity of the relationship with no hostility between the parties involved. Mediation looks at the future and aims at ending the problem and not ending a relationship between the involved parties (Jinzhou, 90). Mediation resolves the disputes through generation of various options in the cases or disputes dealt with. Mediation leaves no room for any person or party to complain after the dispute is resolved. This is mainly because during the process of resolving the dispute, every party is given a chance of expressing its opinion. Therefore, the final decision reached is based on every party. It is seen as just and equity way of solving dispute with no one being involved towards. Mediation takes a few days to solve the dispute as compared to others like civil cases which take a lot of time which goes even for days. In some occasions, cases in the courts of law take years for justice to be done or trial to be reached. This makes the process less costly. There are no court related filing fees as this process may take place in any neutral ground or location. Mediation gives an opportunity to the parties involved to work together and come to an agreement. Mediation is usually private process which does not attract the attention of the media. It is not a subject to the public knowledge and what agreed is kept only by the involved parties. In China, mediation has been preferred as it focuses on the needs as well as interests. It examines the underlying causes of the problem while looking at the best solutions available to satisfy the needs of parties involved. Mediation process is usually less intimidating as compared to the process of going through the court. This is mainly because they are no procedures with strict rules that are involved. Due to this flexibility, process of coming up with an agreement is easier and quick. Mediation works towards reduction of number of issues in dispute thereby coming up with a quick solution to the conflict. Parties involved usually come up with a decision that affects their future in a more effective way. This usually leads to promotion of a positive relationship in their future. Mediation ensures that there are no risks of surprise due to unfriendly judges or hostile jury who usually decide on most cases (Lester, Mercurio, Daries and Leitner 124). Disadvantages of mediation as an integrated part of the Chinese commercial arbitration process One major disadvantage of mediation is to trust the mediator. This may affect greatly the information that conflicting parties are supposed to give out. As a result, there might be an effect that is negative on the mediation process and the entire communication process as well. Some parties may feel that the mediators may have some form of intimidation hence they have a feeling that mediators have some influence on the final consensus. This may deter the party’s spirit of coming up with a solution at their own will. In China, the mediation is not fully flexible as it may be required of mediation. Internationally, mediation institutions use variety of ways for mediators to contact and communicate with the parties involved. Such ways include email, telephone, and fax among others. However, in Chinese Arbitration-mediation, mediation must be carried out during the hearing process. This hearing takes place only at the predetermined moments at allocated institutions of arbitration only. This undermines the real process of mediation which can take any form of contact or communication (Huang, 21). Due to the less time it takes to solve up a dispute, it may deter some parties or people as they may feel it is extremely quick. Some parties may feel that there is rush in trying to come up with a resolution. Some people feel that they want to take their time and think on how to solve a problem without being rushed. This affects the process of mediation greatly as some parties may feel their decision is compromised. Mediation process does not require a lawyer in order to solve the dispute. However, some people feel that they must have a lawyer to represent them towards that process. The only third party required is the mediator. This may require the other party to approve the other party to have a lawyer to represent it. This request may not be acceptable by the other party hence hindering the outcome or the entire process of mediation. The agreement in the mediation process is legally binding. However, due to the absence of their lawyers in the process of agreement, some people or parties may hesitate to sign the agreement. This is especially so if the agreement is in form of written word. The mediator involved in the meditation process is somebody who is outside the involved parties. The individual is very likely to have no skills in process of resolving disputes. This may be a person who has never been involved in the process of resolving cases. This can be a major hindrance towards reaching a conclusion or making the process of mediation successful. Lawyers have a lot of experience when it comes into matters to do with cases. However, there are not considered to be mediators in most occasions. The main role of the mediator is to assist the involved parties to come up with a solution and not to make a verdict. Most people or parties who want to settle an argument usually prefer using litigation as they want final result to come from the judge. Another major disadvantage of mediation is that, one or either parties or people involved can withdraw from the mediation process at any moment. This is very likely if one party is not happy with the mediation process. This may eventually lead to withdraw of one party completely or for sometimes. This eventually hampers the process of making and getting final decision. On some instances, some parties may be extremely passive. This may give a chance to one party to bulldoze the other. This may eventually lead to the final agreement of mediation favoring the stronger party or person. This eventually may not lead to a good solution as expected from the process of mediation. However, the mediator is supposed to ensure that there is no party that takes advantage of the other. In case the process of mediation does not succeed, this may lead to parties facing the trial. This may lead to parties wasting time and money which is very expensive for them. Conclusion Effectiveness and efficiency of mediation as a way of solving the dispute has become more successful in Hong Kong as a result of support it receives from the society. Various training programs on the importance of mediation have been developed in China. Mediation venues have been made more available in various areas of China at the community levels. This has been improved through ensuring that there is provision of adequate information about the process of mediation to the related parties. China has improved its efforts through the training of mediators as well as ensuring they provide enough skills to mediator resolvers. This is to assist in ensuring they give out quality services in the process of mediation in case of disputes between involved parties. In ensuring that the mediators assisting in mediation process are effective, there is standard setting and accreditation of mediators. This is through the utilization of one or even more bodies that have been set up in China. Mediation in China takes and resolves almost all types of cases in the entire region. Such cases include family, building, construction, and economic cases among others. However, some cases do not require mediation at all cost. These are the cases whereby the dispute is volatile and there is no good faith between the disputing parties. Such situations do not encourage the use of mediation in trying to solve the dispute. In case the parties want to establish a legal rule, then the mediation process is not applicable in solving the conflict. There is need for embracing as a vital part of arbitration. There can be a great part of arbitration law reform that is perceptible in every part of the world. This is mainly because it is a more simple, quick and cost effective way of solving out the disputes. It is important for western arbitrators to learn from the Chinese international arbitration. This approach has a lot of benefits as compared to other ways of resolving disputes. Various parties who have undergone through the process of mediation have found it working. They have found some merits on the use or utilization of meditation. There is need to inform involved mediators on the importance of doing or undertaking an effective mediation process that satisfies the involved parties very well. The involved parties should as well appreciate the role of mediators involved in mediating process in ensuring the process is effective. Works Cited Huang, J. The dynamics of China’s Rejuvenation. New York: Palgrave, 2004. Jakobson, L. A million truths: A decade in China. New York: M. Evans & Company, 2000. JianFu Chen, Chinese Law: Context and Transformation. Shenyang: Martinus Nijhoff Publishers, 2008. Jinzhou, T. Arbitration law and practice in China. Beijing: Kluwer Law International, 2008. Lester, Mercurio, Daries and Leitner. World Trade Law: Text, Materials and Commentary. Oxford and Portland: Oregon, 2009. Read More