Courts can mediate, but enforcement is another matter


Beijing Youth Daily, July 7, 2010

At the bottom of the front page of today’s Beijing Youth Daily is a short report on the problems that Beijing’s courts are having with ensuring that their mediated settlements are carried out:

At a conference recently held by the Xicheng District Court on Alternative Dispute Resolution Mechanisms, a legal scholar made a claim that “without exception, mediation comes at the cost of concessions made by the complainant.” In interviews, this reporter learned that the courts are strongly pushing mediated settlements, but the rate of voluntary execution for mediated settlements is far less than that for litigated settlements.

Survey data previously released by the Daxing Court shows that for nearly two years of mediated settlements, court enforcement was required in more than 30% of the cases, roughly the same the rate for court verdicts. For a time, enforcement of settlements mediated by the fourth chamber of the Haidian People’s Court was required 55.5% of the time. Survey data released by the Mentougou Court last week reveals that in the first five months of this year, the court had a mediated settlement rate of 62.5%, just 56.1% of which were voluntarily executed. This is 7 points below the voluntary execution rate of court verdicts. In other words, nearly half of all defendants, once they have promised to carry out repayment and other duties as stipulated in the mediation agreement, refuse to recognized it and “defect” back to their same deadbeat ways.

Reportedly, the current low rate of voluntary execution rate is due to three major factors. First, some courts and judges have a one-sided emphasis on a high mediation rate that is not effectively linked to trials and enforcement, and this has created an abnormal situation where there is too much mediation and too little enforcement. In addition, there are cases of malicious mediation in which people take advantage of mediation to draw out their case so as to collect sufficient evidence or transfer their assets. In other cases, an individual may take advantage of the opposing party’s eagerness to obtain the funds in question and use mediation to delay, reduce, or refuse debt payments, with no sincerity whatsoever.

The report notes some possible solutions. The Daxing court, for example, has introduced guarantee clauses into its mediation agreements to increase the financial burden for non-payment. The Haidian court has introduced penalty fees for late payments. And the Mentougou court is requiring the parties to demonstrate sufficient assets before the session convenes.

So who’s going to make sure the fine is paid?

Update (2010.07.08): Stan Abrams at China Hearsay has an informative post about mediation in China.

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