After the Commercial Mediation Regulations: Revisiting the Arb-Med Interface in China

On 1 May 2026, the Commercial Mediation Regulations (the “Regulations”), issued by the State Council of China, came into force as China’s first administrative regulation dedicated to commercial mediation. Among other things, they define commercial mediation as an activity conducted under the auspices of a commercial mediation organisation (Article 2), set standards for those organisations and for their mediators (Articles 8 and 12), and place the sector, for the first time, within a clear regulatory framework.

The Regulations also address the enforcement of mediated settlement agreements. On the domestic side, they create no new enforcement mechanisms. Instead, they restate the three that already exist, namely judicial confirmation, arbitration and notarisation, and affirm the State’s commitment to strengthening the connection between mediation and those mechanisms (Article 7). The more notable advancement lies on the international side. Article 23 provides that, where a mediated settlement agreement is to be enforced outside China, a party may apply to the competent foreign authority under the applicable international treaties. That provision lays the groundwork for the application of the Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Convention”), which China signed in 2019 but has not yet ratified.

The Regulations are a milestone in China’s system of commercial dispute resolution. They offer a convenient occasion to review how arbitration and mediation are connected in Chinese dispute resolution practice, and consider how that connection may evolve. That interface, which practitioners call “arb-med linkage” (仲调对接), operates through three modes. In the first, the arbitral tribunal itself mediates during the arbitration. In the second, the mediation is conducted by a mediator whose role is separate from the tribunal’s. In the third, the parties settle before any arbitration begins, and then use arbitration to make their settlement enforceable. Each of these modes is explored future in this post.

Mode 1: The Tribunal as Mediator

This is by far the most common mode in China. Article 64 of the revised PRC Arbitration Law (which entered into force on 1 March 2026) carries forward the position under the previous law: the tribunal may mediate before rendering an award, and should do so if the parties wish. Where the mediation succeeds, the tribunal issues either a mediation statement (调解书) or an arbitral award based on the settlement, and the two carry equal legal effect within China under Article 64 of the PRC Arbitration Law. Only the award, however, can support enforcement outside China, since the mediation statement is a domestic instrument.

This mode is one of the most distinctive features of Chinese arbitration, since in China there is no assumption that the mediator and the arbitrator must be different persons. In the case of a three-member tribunal, the arbitrators usually act as co-mediators. Alternatively, the tribunal may authorise the presiding arbitrator to organise a separate mediation session after the close of the hearing; fundamentally, this remains an act of the full tribunal. Parties widely accept, and indeed value, a tribunal that also helps them settle, and the practice has a long and effective record. At the China International Economic and Trade Arbitration Commission (“CIETAC”), for example, about 22% of cases in 2025 were settled through mediation conducted by the tribunal. International practice, by contrast, has been more conservative, due to the view that an arbitrator who has seen a party’s settlement position may be influenced when later deciding the merits. In recognition of the difference in legal cultures, the use of the tribunal as the mediator rests entirely on the parties’ consent.

A further practical feature of tribunal-led mediation is worth noting. Although mediation may take place at any stage of the proceedings, the best settlement window in Chinese arbitration often arises at the close of the hearing, or shortly after. By contrast, in most international arbitrations, the window for settlement opens after the exchange of documents and before the hearing. Two features of Chinese arbitration explain this difference. The first is cost. Arbitration fees (consisting of the fees of the institution and the tribunal together) are commonly charged ad valorem by reference to the amount in dispute, and counsel are likewise typically engaged on a fixed or packaged fee basis rather than by the hour. The hearing itself therefore does not sharply increase what the parties pay, whereas in many international arbitrations it generates substantial fees, after which the parties are less inclined to settle. The second feature is the conduct of the hearing. Chinese tribunals tend to be more inquisitorial, so that the hearing gives the parties a clearer sense of the tribunal’s provisional view, and with it a sharper measure of their own risk. Settlement therefore becomes most realistic at that point, and the tribunal is well placed to assist the parties by acting as the mediator.

Mode 2: Separating the Mediator’s Role

Separating the mediator’s role from the tribunal’s is the prevailing international practice. A number of institutions now offer the two services independently while providing a mechanism to connect them, the Arb-Med-Arb Protocol of the Singapore International Arbitration Centre and the Singapore International Mediation Centre being a well-known example. The framework of the PRC Arbitration Law leaves room for the same arrangement: under Article 62, parties who settle by themselves after commencing arbitration may ask the tribunal to render an award on those terms. Where parties settle during an arbitration, the means open to them naturally include settling through a third-party mediator.

Even so, this mode has been uncommon in China to date for two reasons. First, parties are accustomed to having the arbitrator mediate, which produces an enforceable instrument directly and adds no separate mediation cost. Second, until the Regulations, Chinese commercial mediation organisations and mediators were not subject to any dedicated regime, so that the professionalism of a standalone mediation was difficult to judge and parties’ confidence in it was limited. This is precisely the gap the Regulations address, by setting entry and conduct requirements for organisations and mediators. With that foundation in place, how far the separate-mediator route grows remains to be seen.

Mode 3: Converting a Pre-Arbitration Settlement into an Award

The third mode is the most distinctive, and the least discussed internationally. Chinese arbitration practice accepts that the parties may first settle their dispute and then commence arbitration in order to make the settlement enforceable. The PRC Arbitration Law does not expressly provide for this, but the rules of China’s leading institutions do. Provided the original contract or the settlement agreement contains an arbitration clause referring to the institution, or the parties expressly agree to make such an application, they may ask the institution to appoint an arbitrator to review the settlement agreement and render an award on the settlement terms. Under Article 47(10) of the CIETAC Rules, for example, the Chairman of CIETAC may appoint a sole arbitrator for that purpose. Similarly, the Beijing Arbitration Commission adopted dedicated Med-Arb Expedited Rules for such cases in 2025, and Article 49(2) of the Arbitration Rules of the Shenzhen Court of International Arbitration provides to like effect.

The arbitrator’s role in this mode, being the confirmation of a settlement’s enforceability, differs from adjudication in the ordinary sense. His/her task here is chiefly to examine the authenticity of the underlying transaction and of the settlement, so as to guard against sham or collusive arrangements. The PRC Arbitration Law addresses that concern in Article 61, which requires a tribunal to reject a claim based on fabricated facts, or on collusion aimed at harming the State, the public interest, or the lawful rights of others. The arbitrator may perform a similar function where the parties settle in the course of an arbitration. The settlement sometimes includes matters beyond the claims submitted, and Chinese institutions generally permit the tribunal to render an award on those terms, as a package resolution, without requiring separate claims to be filed, though a fee may be charged for the additional matters.

Within China, this mode operates smoothly and raises no difficulty at the enforcement stage. Across borders, however, it could encounter obstacles. Pursuant to Article I(1), the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), extends only to awards arising out of “differences between persons”. Where the parties had already settled and no genuine difference remained at the time of commencement of arbitration, an enforcing court may therefore doubt that what it is asked to enforce is an award of the kind the New York Convention contemplates. The same point may in addition give rise to challenges to arbitrability under Article V(2)(a) and on public policy grounds under Article V(2)(b). For these reasons, the conversion of a pre-arbitration settlement agreement into an arbitral award is little used in international disputes.

To balance the benefits of settlement against the risk of non-enforcement, experienced practitioners often choose to commence arbitration when a settlement in a cross-border dispute is close to finalisation and only take the final steps to conclude the settlement thereafter. The dispute is therefore still pending as at the commencement of arbitration, so that the award rests on a genuine unresolved difference and the enforcement risk is much reduced.

Conclusion

The Regulations will not change the predominant use of the arbitrator-as-mediator practice in Chinese arbitration, which is efficient, familiar and well-matched to how Chinese arbitration is priced and conducted. What the Regulations may do is encourage parties to consider a wider range of options: now that commercial mediation is a regulated profession, the separate-mediator route commands more confidence, as does an escalation clause making mediation a condition precedent to arbitration. Such clauses have historically worked poorly in China because standalone mediation was unregulated and parties hesitated to trust it.

The Singapore Convention would carry this one step further. As the Convention gains wider international application, a mediated settlement agreement could be enforced abroad directly, without first being converted into an arbitral award. This would allow the parties to withdraw the arbitration, or obviate the need to initiate one, thus saving costs. Until then, converting a settlement agreement into an arbitral award remains the practical route in China. Either way, the interaction between arbitration and mediation in China continues to develop, and the arrival of the Regulations is an opportune moment to consider its future direction.