Author: Lawyer Zhang Jingxinyue, PRC-qualified Lawyer | Singapore Registered Foreign Lawyer
Editor's Note: Recently, the author attended the interpretation session on the Commercial Mediation Regulation and the mediator training program at the Winstong Mediation Center, held at China University of Political Science and Law. During the training, Professor Yang Xiuqing, doctoral supervisor at China University of Political Science and Law, delivered a systematic lecture on the Theory and Practice of Commercial Mediation, while Deputy Secretary-General Wang Fang of the CCPIT Mediation Center drew on extensive practical experience in commercial mediation to share insights on the role positioning of commercial mediators, institutional development, and the future direction of foreign-related commercial mediation.
The Commercial Mediation Regulation was promulgated by the State Council and took effect on May 1, 2026. According to public information released by the Ministry of Justice, on December 31, 2025, Premier Li Qiang signed State Council Order No. 827 promulgating the Commercial Mediation Regulation. The legislative purpose of the Regulation is to standardize commercial mediation activities, effectively resolve commercial disputes, protect the lawful rights and interests of parties, promote the development of the commercial mediation industry, and optimize the business environment.
Commercial mediation is moving from its traditional sense of "urging reconciliation" and "quelling disputes and ending litigation" into a new stage of institutionalization, professionalization, and internationalization. For Chinese enterprises going global, cross-border trade, investment and financing, engineering construction, intellectual property cooperation, and cross-border commercial dealings, mediation should no longer be merely a remedial option after disputes arise, but should become part of contract design, dispute prevention, commercial relationship repair, and cross-border enforcement arrangements.
This article intends to analyze, from the perspective of foreign-related commercial dispute resolution and in light of the institutional arrangements of the Commercial Mediation Regulation, its impact on cross-border transactions, dispute resolution clause design, the effectiveness linkage of mediation agreements, and the synergy of China-Singapore dispute resolution mechanisms, and to propose corresponding practical response recommendations.
01 Commercial Mediation Is Not "A Pre-Lawsuit Pep Talk" but a Commercial Dispute Governance Mechanism
For a long time, many enterprises' understanding of "mediation" has remained at a relatively traditional level: having acquaintances mollify both sides, having the court preside over a mediation session, making mutual concessions, or handling mediation as a procedural step within litigation or arbitration. However, modern commercial mediation, especially cross-border commercial mediation, has gone far beyond this. The core value of commercial mediation is not simply to judge who is right or who is wrong, nor to force one party to make unilateral concessions, but to help the parties, within legal boundaries, redesign a more enforceable and more acceptable commercial arrangement. In cross-border transactions, what enterprises truly care about is often not merely "whether they can win." More often, what enterprises care about is:
- Whether the contract can still be performed;
- How payment, delivery, equity, technology, and channels can be rearranged;
- Whether the parties still have the possibility of continued cooperation;
- Whether the dispute will trigger multi-jurisdictional litigation, arbitration, preservation measures, and enforcement;
- Whether it will affect supply chains, financing, reputation, regulatory relationships, and subsequent market entry.
Therefore, the value of commercial mediation does not lie in replacing litigation or arbitration, but in pulling disputes back from "win-or-lose judgment" to "commercial arrangement." For enterprises going global, what is truly expensive is often not the attorneys' fees in a single proceeding, but the systemic costs arising from transaction interruption, relationship breakdown, asset freezing, supply chain disruption, and parallel proceedings across multiple jurisdictions. Commercial mediation is not a subsidiary of litigation; it is a front-end mechanism for commercial dispute governance. Its goal is not to produce a "mutual concessions" compromise, but to reconstruct, within legal boundaries, a commercial arrangement that all parties can and are willing to perform.
02 The Institutional Significance of the Commercial Mediation Regulation: Mediation Begins to Become Dispute Resolution Infrastructure
The Regulation clarifies that commercial disputes arising from trade, investment, finance, transportation, real estate, engineering construction, intellectual property, and other fields are subject to commercial mediation; at the same time, disputes concerning marriage and family, succession, guardianship, labor and personnel, consumer rights, and disputes that should be resolved by other means in accordance with law are not subject to commercial mediation. This scope of application itself demonstrates that what the Regulation governs is not "mediation" in the broad sense, but a professional dispute resolution mechanism oriented toward market transactions and commercial activities. In the past, many enterprises had the following questions about commercial mediation:
- Are mediation institutions well-regulated?
- Are mediators professional?
- Are mediation procedures governed by clear rules?
- Is the mediation process confidential?
- Are mediation agreements valid?
- Can mediation outcomes be linked to judicial procedures and cross-border enforcement mechanisms?
The significance of the Regulation lies precisely in bringing these issues into an institutional framework. It is not about turning mediation into "mini-litigation" or "mini-arbitration," but about equipping mediation with a clearer organizational foundation, procedural foundation, personnel foundation, and effectiveness linkage mechanism.
In this sense, the promulgation of the Commercial Mediation Regulation marks that Chinese commercial mediation is moving from an experience-based, relationship-based, low-cost dispute resolution method toward organizational, procedural, professional, and international development. This is particularly important for enterprises, because enterprises do not resolve disputes "to participate in procedures," but to reduce dispute costs, minimize transaction losses, maintain commercial relationships, and reach implementable solutions.
03 Mediation in Cross-Border Disputes: The Key Is Not "Amity" but "Enforceable Settlement Design"
In cross-border commercial disputes, many enterprises tend to understand mediation as "maintaining amity" or "having a talk first." From a practical perspective, however, the key to truly effective mediation does not lie in a mild tone of expression, but in whether the settlement ultimately reached can be performed, confirmed, and enforced.
If a cross-border mediation agreement merely states, "The parties have made mutual concessions and the dispute is fully resolved," it often falls far short of what is needed. A truly valuable cross-border settlement agreement should, from the outset, consider:
- Payment arrangements: Who is the paying party, and how should the currency, account, and payment route be arranged;
- Tax and compliance: How to handle tax burden, bank compliance, and foreign exchange routes;
- Performance timeline: Whether payment is in installments and whether an acceleration clause should be included;
- Delivery obligations: If equity, intellectual property, equipment, goods, or technical materials are involved, how subsequent delivery should be completed;
- Consequences of breach: If one party fails to perform, how the other party can quickly proceed to confirmation, arbitration, litigation, or enforcement;
- Asset enforcement: If assets are distributed across different jurisdictions, how future enforcement paths can be anticipated.
The Regulation provides that where a settlement is reached through commercial mediation, a commercial mediation agreement shall be prepared unless otherwise agreed by the parties, and shall state the main facts, disputed matters, content of the agreement, manner and time limit of performance, etc.; a commercial mediation agreement is legally binding, and the parties shall perform it. For cross-border transactions, this means that a mediation agreement cannot be regarded merely as a "settlement text," but should be treated as a legal document that needs to take into account contractual validity, procedural linkage, and the possibility of cross-border enforcement.
Of course, special attention should also be paid: a commercial mediation agreement itself is legally binding, but this does not mean that all mediation agreements naturally have compulsory enforceability. Whether judicial confirmation is possible, whether it can be enforced overseas, and whether relevant international treaties apply must be specifically judged in light of the content of the agreement, the mediation procedure, the jurisdictions of the parties, the law of the place of enforcement, and the conditions of application of relevant international treaties.
04 Dispute Resolution Clauses Also Need an Upgrade: "Amicable Negotiation" Is Not Enough
Many cross-border contracts contain clauses along these lines: "The parties shall resolve disputes through amicable negotiation; if negotiation fails, the dispute shall be submitted to arbitration or the courts." Such clauses appear commercially amicable, but from a dispute management perspective, they are often overly simplistic.
Once a dispute arises, "amicable negotiation" typically lacks a clear mechanism: How long should negotiation last? Who will preside? Is it confidential? Can separate meetings be held? Does it suspend limitation periods or proceedings? How does the process connect to arbitration or litigation after mediation fails? Can information disclosed during mediation be used in subsequent proceedings? If these issues are not pre-designed in the contract, they will further amplify mistrust after a dispute arises.
For enterprises going global, future cross-border dispute resolution clauses should not only address the question of "where to litigate," but also solve the problem of "how to preserve commercial solutions after a dispute arises." In cross-border trade, investment, engineering construction, technology cooperation, intellectual property licensing, and equity transactions, consideration may be given to designing mediation mechanisms in contracts more precisely, for example:
- The mediation institution or mediation rules;
- The mediation period, such as 30 or 45 days;
- The language and venue of mediation;
- The confidentiality of the mediation process;
- The linkage to arbitration or litigation after mediation fails;
- Where necessary, agreement on the relationship between mediation and emergency preservation or interim measures;
- For complex transactions, a tiered mechanism of "management-level negotiation + professional mediation + arbitration/litigation" may be reserved in the dispute resolution clause.
This is not to increase contract complexity, but to improve controllability after a dispute arises.
05 The New Role of Mediators: Not a "Mild-Mannered Lawyer" but a Neutral Transaction Reconstructor
A particularly noteworthy view from this training was that commercial mediators cannot simply follow the traditional advocacy mindset, but must possess the role consciousness of a "facilitator." In litigation or arbitration, a lawyer typically represents one party and aims to maximize that party's interests. The role of a mediator is entirely different.
A mediator is not someone who argues which side has the stronger legal case on behalf of one party, nor is simply a "go-between," but rather helps the parties, within a neutral framework, identify their true interests, risk boundaries, performance capacity, and alternative solutions. An excellent commercial mediator must understand both legal boundaries and commercial logic; must know both how a court or arbitral tribunal might decide, and what commercial outcomes enterprises can actually accept.
In cross-border disputes, this capability is even more important. Cross-border disputes often involve not only legal issues, but also language, culture, business customs, corporate governance, capital routing, regulatory requirements, and the enforcement environment. If a mediator only understands legal provisions without understanding the transaction background and enterprises' real needs, it is difficult to facilitate an enforceable solution. The truly competitive cross-border mediators of the future must understand both law and transactions; must understand the commercial customs of Chinese enterprises, and must also be able to express solutions in a rules-based language that international counterparties can understand. This is also key to the professional development of commercial mediation.
A mediator is not an advocate, nor an adjudicator, but a neutral facilitator. The professional value of a mediator lies in helping parties move from positional confrontation back to true interests, from legal disputes back to commercial arrangements, and to find performable solutions amid seemingly irreconcilable differences.
06 The Internationalization of Chinese Commercial Mediation: Not Just "Going Out" but Connecting in a Common Rules-Based Language
The Regulation explicitly supports commercial mediation organizations in establishing business institutions overseas to carry out commercial mediation activities; at the same time, according to the needs of economic and social development and reform and opening up, overseas commercial mediation organizations may be permitted to establish business institutions in accordance with the law within areas such as pilot free trade zones and the Hainan Free Trade Port to carry out foreign-related commercial mediation activities. This institutional arrangement sends an important signal: the development of Chinese commercial mediation is not only serving the domestic market, but is also being aligned with the international commercial dispute resolution system.
From a practical perspective, however, the internationalization of commercial mediation is not merely about "setting up points overseas" or "inviting institutions in." More importantly, it is about forming a dispute resolution language that is understood, trusted, and accepted by overseas counterparties. For Chinese enterprises, the difficulty of many cross-border disputes lies not only in "not understanding foreign law," but in the differences between Chinese and foreign parties' understanding of contract, performance, breach, concession, face, efficiency, evidence, and enforcement. Chinese enterprises may place greater emphasis on relationship maintenance and flexible handling; overseas counterparties may place greater emphasis on text, procedure, disclosure, and enforceability. Commercial mediation can precisely provide a buffer and conversion mechanism between the two.
In the future, truly valuable cross-border mediation services are not just about "understanding Chinese law," nor just about "speaking English" or "being familiar with overseas rules," but about being able to translate and bridge between the commercial realities of Chinese enterprises, the compliance requirements of overseas counterparties, international contract texts, and cross-border enforcement mechanisms.
07 A Singapore Perspective: From the Singapore Convention on Mediation to China-Singapore Dispute Resolution Mechanism Synergy
After the implementation of the Commercial Mediation Regulation, what deserves closer attention is how Chinese-style commercial mediation can form complementarity and linkage with Singapore's mature international dispute resolution ecosystem. Singapore has long been an important international dispute resolution center in Asia. In addition to the Singapore International Arbitration Centre, institutions such as the Singapore International Mediation Centre are also highly active in cross-border commercial mediation.
For Chinese enterprises going global, what deserves more attention in the future is not simply choosing between a Chinese mediation institution and an overseas mediation institution, but how to design, based on the transaction structure, contract counterparty, asset location, and enforcement needs, a mediation, confirmation, and enforcement pathway that can bridge China and overseas.
The signing of the Singapore Convention on Mediation and its implementation in certain jurisdictions have brought the issue of cross-border enforcement of international commercial mediation agreements to a higher level of institutional attention. According to information published by the China International Commercial Court, China signed the Singapore Convention on Mediation in August 2019; the Convention aims to address the cross-border enforcement of settlement agreements arising from international commercial mediation. In practice, however, it is still necessary to avoid simplistically understanding this mechanism as "mediation agreements can of course be enforced cross-border."
- On the one hand, whether a mediation agreement falls within the scope of the Convention depends on whether it meets the conditions for an international commercial settlement agreement;
- On the other hand, specific enforcement still needs to be considered in light of the law of the place of enforcement, the ratification status of the Convention in relevant countries, the review standards of competent authorities, and the enforceability design of the agreement itself.
Therefore, from the perspective of China-Singapore cross-border business, what is more important in the future is not simply inserting the word "mediation" into a contract, but embedding the mediation mechanism into the entire dispute resolution system:
- At the front end, designing mediation procedures through contract clauses;
- At the middle stage, forming performable settlement solutions through professional mediation;
- At the back end, improving enforcement certainty through judicial confirmation, arbitration linkage, or international treaty pathways.
This is precisely where China-Singapore dispute resolution mechanisms can form complementarity in the future: China's commercial mediation system provides a clearer domestic institutional foundation, while Singapore's international dispute resolution system provides a more mature internationalized procedural environment and cross-border transaction context. The linkage between the two is not a simple substitution relationship, but rather institutional complementarity and pathway combination.
08 Practical Recommendations for Enterprises Going Global: Front-Load Mediation into Transaction Design
For Chinese enterprises that are currently conducting or about to launch cross-border business, we recommend at least re-examining dispute resolution mechanisms from the following perspectives:
First, at the contract stage, do not focus only on the court of jurisdiction or the arbitration institution; also consider whether to establish a professional mediation mechanism. Especially in long-term supply, technology cooperation, engineering projects, equity cooperation, and channel cooperation, mediation mechanisms help preserve space for continued cooperation between the parties.
Second, after a dispute arises, do not wait until the relationship has completely broken down to consider mediation. The window most suitable for mediation in many cross-border disputes often appears when the parties have already encountered performance differences but have not yet fully initiated litigation, arbitration, preservation measures, and public confrontation.
Third, mediation agreements should be designed according to the standard of "performable in the future, confirmable, and enforceable." Do not simply pursue pleasant language on paper. Payment, delivery, document cooperation, liability for breach, confidentiality obligations, and subsequent handling of disputes should all be specific and clear.
Fourth, foreign-related mediation requires advance consideration of the place of enforcement. Where are the counterparty's assets? Where might the agreement be enforced in the future? Does the relevant jurisdiction recognize and enforce mediation agreements? These issues should be taken into account at the settlement design stage.
Fifth, the role of lawyers in mediation also needs to be transformed. A lawyer is not only an advocate, but can also be a designer of dispute resolution solutions. Especially in cross-border disputes, lawyers should help clients judge when it is appropriate to insist on procedures, and when it is appropriate to achieve commercial loss mitigation through mediation.
Conclusion
The implementation of the Commercial Mediation Regulation does not mean that the importance of litigation and arbitration is declining. On the contrary, the effective linkage among commercial mediation, litigation, and arbitration will together constitute a more diverse and mature commercial dispute resolution system.
For enterprises going global, future dispute resolution capability should not be reflected only in "whether we can win a lawsuit," but also in "whether we can control costs, preserve transactions, reconstruct relationships, and form enforceable arrangements at an early stage of a dispute." Commercial mediation is not a subsidiary of litigation; it is a front-end mechanism for commercial dispute governance.
Against the backdrop of accelerating globalization of Chinese enterprises and increasingly complex cross-border transaction structures, the significance of the Commercial Mediation Regulation lies not only in providing a rules basis for commercial mediation, but also in promoting market entities to re-understand dispute resolution: a dispute does not necessarily mean the end of cooperation, and mediation is not merely about mutual concessions. Truly high-quality commercial mediation is about finding, within legal boundaries, solutions for complex commercial relationships that can still be performed, accepted, and implemented.
China-Singapore Legal News will also continue to monitor the linkage between China's commercial mediation system and Singapore's international dispute resolution mechanisms, providing more forward-looking dispute prevention and resolution solutions for Chinese enterprises going global, cross-border investment, and international cooperation.
Professor Yang Xiuqing, doctoral supervisor at China University of Political Science and Law
Deputy Secretary-General Wang Fang of the CCPIT Mediation Center
The eight-character motto of China University of Political Science and Law, intended to guide teachers and students in integrating personal conduct, work, scholarship, and service to society
Have you encountered situations in cross-border transactions or foreign-related dispute handling that were suitable for mediation but ultimately failed to enter the mediation process? Feel free to leave a comment and exchange views.
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Author | Lawyer Zhang Jingxinyue
This article is for informational reference only and does not constitute formal legal advice.
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.