One of the concerns of many non-Chinese parties doing business in China is how disputes with their Chinese partners will be resolved. Litigation before the Chinese courts holds little appeal for foreign companies, given the inefficiency of the court system and the hometown advantage that Chinese parties enjoy. Arbitration – preferably offshore – is considered a better choice for non-Chinese parties, but even then an arbitral award in favour of the foreign party will need to be enforced in the Chinese courts if the Chinese party refuses to comply with the award. Arbitration is also a costly and lengthy process.
Mediation, therefore, becomes an attractive dispute resolution option. It is usually quick, cheap and less hostile than arbitration or the courts. But mediation is only as effective as the officiating mediator and a major challenge facing parties who agree to mediation will be to secure the appointment of a talented mediator well-suited to the circumstances of the dispute. The importance of careful mediator selection is heightened in a cross-border context, where the cultural, linguistic and legal differences between the disputing parties can be substantial.
