CHINA Law and Practice Contributed by: Peibing Qi, Na Gao and Shanshan Heng, Fangda Partners
4.4 Timing of ADR Occurrence of ADR Procedures
across China, and this new ADR procedure is still in the process of practical development. • People’s mediation system – PRC law also pro- vides for a people’s mediation system led by Peo- ple’s Mediation Committees; however, in practice, it is rarely applied to commercial disputes. 4.2 Requirements to Engage in ADR • Mediation conducted by the adjudicative body in litigation and arbitration proceedings – there are no mandatory formal requirements. All parties may spontaneously engage in settlement negotiations during litigation or arbitral proceedings, or may apply to the court or arbitral tribunal for media- tion. Provided that the disputing parties ultimately reach a settlement agreement, the court or arbitral tribunal may, based on such settlement agreement, issue a mediation document possessing the same legal effect as a judgment or arbitral award. • Independent mediation by commercial mediation organisations – pursuant to the relevant provi- sions of the Commercial Mediation Regulations, independent mediation proceedings conducted by commercial mediation organisations are premised on the mutual consent of both parties to participate in the mediation process. If this formal requirement is not satisfied, the commercial mediation organi- sations lacks jurisdiction over the dispute. 4.3 Impact of ADR • Mediation conducted by the adjudicative body in litigation and arbitration proceedings – as these ADR procedures are inherently embedded within litigation or arbitral proceedings, the initiation of mediation does not affect the parties’ right to ultimately resolve the dispute through litigation or arbitration. • Independent mediation by commercial media- tion organisations – if the parties fail to reach a final settlement agreement under the auspices of a commercial mediation organisation, the media- tion proceedings shall terminate, and the parties remain entitled to ultimately resolve the dispute through litigation or arbitration. However, factual admissions made by the parties during the media- tion proceedings may affect the court’s or arbitral tribunal’s determination of the relevant facts in subsequent formal legal proceedings.
ADR procedures involving settlement and media- tion typically occur where the disputing parties have relatively minor disagreements on factual and legal issues. Where the parties lack consensus, they will usually resort directly to litigation or arbitration pro- ceedings to resolve the dispute. ADR Procedures and Limitation Periods A party’s initiation of ADR procedures to assert its rights produces the legal effect of interrupting the statute of limitations, which shall be recalculated from such point in time. 4.5 Confidentiality Mediation Conducted by the Adjudicative Body in Litigation and Arbitration Proceedings With respect to court mediation in litigation, the medi- ation process shall, in principle, not be conducted in public, unless the parties agree otherwise. Mediation agreements shall not be made public, save for excep- tional circumstances where disclosure is deemed nec- essary for the protection of the state interest, the pub- lic interest or the lawful rights and interests of others. With respect to mediation in arbitration proceedings, given that arbitration itself is conducted in private gen- erally, both the mediation process and the resulting mediation agreement shall remain confidential (unless the parties agree to a public proceeding and no state secrets are involved). Independent Mediation by Commercial Mediation Organisations Pursuant to the relevant provisions of the Commercial Mediation Regulations, commercial mediation shall be conducted in private, unless the parties agree to pub- lic mediation and the matter does not involve special circumstances such as state secrets, third-party trade secrets or personal privacy. 4.6 Costs Because ADR procedures place greater emphasis on the mutual agreement of the disputing parties than formal legal proceedings, the allocation of costs is typically determined through negotiation between the parties.
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