China Dispute Resolution – Mediation as Reliable Option

On 31 December 2025, the State Council of China published the new Regulations on Commercial Mediation ( “Regulations”), which enter into effect on 1 May 2026. They are the first China-wide legal framework dedicated exclusively to commercial mediation. For enterprises and institutions, including foreign-invested / foreign enterprises and institutions (jointly “enterprises”), mediation offers an additional dispute resolution option alongside arbitration and litigation.

From an enterprise’s perspective, the Regulations can improve the business environment and reduce dispute resolution friction. They also align the domestic dispute resolution mechanism with international standards, promote cross-border enforceability and international participation, and enhance institutional credibility. All of these factors can directly benefit enterprises engaged in complex, high-value or cross-border transactions.

Below, we highlight the key aspects of the Regulation and the advantages that mediation can offer to enterprises.

Ministry of Justice as Regulator

Key aspects: Until the Regulations taking effect, there were no uniform nationwide provisions, only local regulations in pilot zones or industry rules at most. The new Regulations recognize mediation as a legal dispute resolution mechanism and regulate non-profit commercial mediation organizations as legal entities that are subject to licensing, supervision and accountability.

Earlier mediation bodies were, e.g., already established by the China Council for the Promotion of Internatiional Trade (CCPIT) in 1987. The Shanghai Commercial Mediation Center was established in 2011, with the approval of the Shanghai Municipal Commission of Commerce and the Shanghai Administration Bureau of Non-Governmental Organizations.

Notable under the Regulation is thus the introduction of the judicial authorities as regulator. As a pilot project, Shanghai made history by establishing the country’s first mediation organization under the supervision of the Ministry of Justice, the Shanghai Eastern International Commercial Mediation Center (SICMC), in early 2025. As another pilot, the German Chamber of Commerce in China and SICMC further jointly established a “Sino-German International Mediation Center”as virtual platform within SICMC in September 2025.

Advantages: The Regulations and establishment of instutions like SICMC and the Sino-German International Mediation Center will reduce uncertainty for enterprises, who shall be able to rely on government-registered mediation bodies that are subject to uniform national standards and supervised by judicial administrative authorities.

Matters eligible for mediation

Key aspects: The Regulations cover a wide range of commercial disputes that are eligible for mediation, including those relating to trade, investment, finance, transportation including logistics, real estate, construction and infrastructure, and intellectual property including technology-related transactions. The scope therefore closely aligns with the typical business activities of enterprises.

Advantages: enterprises can include commercial mediation clauses in future contracts,  safe in the knowledge that such clauses are legally supported and enforceable.

Fairness and neutrality

Key aspects: The Regulation places a strong emphasis on party autonomy. In particular, it reaffirms that mediation is strictly voluntary and that either party may refuse mediation. It also states that the parties may jointly select mediators (including foreign mediators) and agree on procedural rules, language and format (including online mediation). Regarding conflicts of interest and neutrality, the Regulations impose strict requirements on mediators, who must disclose conflicts of interest, withdraw where impartiality is reasonably questioned, and recuse themselves in related litigation or arbitration.

Advantages: These rules closely align with international norms for resolving disputes and address long-standing foreign concerns about neutrality and local protectionism by setting out the independence and ethical standards expected of mediators. In this way, the rules mitigate concerns about involuntary or government-driven mediation. Furthermore, the parties retain meaningful procedural control, which is often a decisive factor in cross-border contracts.

Foreign mediators possible

Key aspects: The Regulation expressly permits commercial mediation organizations to engage foreign mediators who have professional influence and credibility to participate in mediation. This brings the mediation framework closer to the models used by international institutions. It is expected that, e.g.,  SICMC appointed its first group of mediators on 18 January 2026, including the two authors Sebastian Wiendieck and Ralph Koppitz from RÖDL China.

Advantages: The permission for foreign mediators contained in the Regulation allows enterprises to appoint mediators familiar with international business practices, other legal concepts (e.g. Common Law) or industry-specific standards. This improves the comfort levels of foreign management and legal teams and enhances the perceived fairness and professionalism of the process.

Confidentiality and protection of trade secrets

Key aspects: The Regulations formulate robust confidentiality protections. Notably, mediation proceedings are non-public by default, information learned during mediation must be kept confidential and disclosure is permitted only with the written consent of all parties or where required by law. Therefore, commercial mediation can offer a safer environment for sensitive commercial information – especially compared to litigation in Chinese courts, where judgements and filings may be publicly accessible.

Advantages: Although the importance of strict confidentiality and the protection of proprietary information needs no further emphasis, this is particularly valuable in disputes relating to technology transfer, IP licensing, pricing, the supply chain or joint ventures.

Legal effect and enforceability of mediation agreements

Key aspects: According to the Regulation, commercial mediation agreements are legally binding, meaning the parties involved are obliged to fulfil them. Furthermore, if the other party does not fulfil their obligations under the mediation agreement, the parties may apply for judicial confirmation of the agreement according to the relevant provisions of China’s Civil Procedure Law.

Advantages: The legally binding nature of mediation agreements eliminates the ambiguity that previously existed concerning the legal standing of mediated settlements. Furthermore, once a mediation agreement has been judicially confirmed, it can be enforced in the same way as a court judgment, thus reducing the enforcement risk. This may further enhance confidence in using mediation for higher-value disputes.

Cross-border enforcement: In certain situations, commercial mediation can function as an effective cross-border dispute resolution tool rather than merely a domestic compromise mechanism. The Regulation states that the parties may apply for enforcement by competent foreign authorities in accordance with relevant international treaties. This is particularly relevant, e.g., in the context of the United Nations Convention on International Settlement Agreements Resulting from Mediation (to which China is a signatory), Belt and Road transactions and multi-jurisdictional supply chains.

No personal attendance

Key aspects: The Regulation provides that if mediators and parties agree, online mediation has equal legal effect to offline mediation.

Advantages: Online mediation can be a even more efficient way. Parties can reduce travel and logistical costs, achieve a faster resolution of disputes involving overseas headquarters and facilitate coordination among multinational stakeholders. This is of particular benefit to regional headquarters, shared service centers and companies managing disputes across multiple Chinese subsidiaries.

Relationship with other dispute resolution procedures

Key aspects: The Regulations aim to improve the mechanisms linking commercial mediation with litigation, arbitration, notarization and other systems. Mediation does not preclude other methods of resolving disputes.

Advantages: The Regulation enables foreign companies to optimize their dispute resolution strategy, rather than committing to a single approach from the outset. Mediation can be used before, during or alongside arbitration or litigation. Failed mediation does not prejudice subsequent formal proceedings, whereas successful mediation may shorten or even eliminate the need for litigation or arbitration.

Bottom Line

Although arbitration and litigation will continue to be essential, the new Regulations establish commercial mediation as a strategically appealing, legally robust and internationally compatible (parallel) option for enterprises and institutions operating in and with China. The Regulations provide  a credible, government-endorsed mediation framework that is aligned with international norms. Mediation under the Regulations can offer lower dispute resolution costs and timelines, particularly for mid-value disputes, as well as enhanced enforceability (including potential cross-border enforcement), greater procedural comfort, neutrality, confidentiality and contractual flexibility.