Chinese Approach to Arbitration and Mediation in the Light of the Historical-Cultural Milieu of That Country

Introduction
As the world’s second-largest economy and a primary trading partner for Iran, China plays an increasingly significant role in shaping international rules. This evolution marks the end of its era of mere compliance with global norms, heightening the necessity of studying its approach. In this context, given the enduring relations between Iran and China, understanding its legal system’s perspective on dispute resolution is vital for the optimal drafting of bilateral instruments, from governmental memorandums of understanding to commercial contracts. Since the chosen dispute resolution method determines the final authority for interpreting agreements, this study primarily aims to elucidate China’s approach to arbitration and mediation as the most common dispute resolution methods. The research seeks to trace these approaches to their historical-cultural roots and analyze their impact on the country’s conduct in the international arena.
Methods
This research is based on a descriptive-analytical methodology, with data collected through library and documentary research. To achieve its objectives, the study examines a wide range of sources, including primary Chinese laws (the Arbitration Law and the Civil Code), classical texts related to Confucianism and Legalism, reputable academic articles in comparative law and Chinese legal studies, and an analysis of China’s practical procedures at both domestic and international levels (e.g., WTO cases). Through a systematic analysis of these sources, the study first identifies and describes key historical-cultural components such as the concepts of Li (moral suasion) and Fa (punitive law), the emphasis on social harmony, and the policy of litigation aversion. It then analytically explores the direct impact of these components on the nature and application of arbitration and mediation in contemporary China.
Results
The research findings indicate that China’s approach to dispute resolution is profoundly influenced by its historical-cultural context. Regarding arbitration, it was found that, contrary to the prevailing model in Western legal systems, this legal institution lacks a “contractual” nature based on the principle of party autonomy. Instead, it possesses an “administrative” nature and a “top-down” structure. In the West, arbitration is a “private” method shaped from the bottom up by the will of the parties; in China, it is considered a “public” method in which the state plays a significant role as the guardian of order and quality control. This approach manifests in restrictions such as the non-acceptance of ad-hoc arbitration for domestic disputes, jurisdictional control exercised by arbitration institutions and courts (rather than solely by the arbitrators), and the restriction of arbitrator selection to pre-approved panels. Furthermore, the tendency within the Chinese legal system to transform the role of an “arbitrator” into an “arbitrator-mediator” (Arb-Med), rooted in the cultural concept of Biantong (flexibility), is another unique feature of Chinese arbitration.
Concerning mediation, the findings reveal that it is the most pervasive and preferred method of dispute resolution in China. This preference is rooted in foundational cultural components such as the emphasis on “harmony,” the historical policy of “litigation aversion,” and the prioritization of social interests over individual rights, all of which stem from Confucian teachings. Due to its informal, flexible, and relationship-preserving nature, mediation is the primary tool for realizing these values. Its influence is evident at all levels, from judicial proceedings (which often commence with mediation) to arbitration procedures (the preference for Arb-Med). This approach is not confined to domestic borders but also appears in the international sphere, as China emphasizes amicable methods and negotiation over formal arbitration mechanisms in resolving disputes related to the Belt and Road Initiative (BRI) and many of its cases at the WTO.
Conclusions
China’s legal system exhibits a unique dual model in the realm of dispute resolution. Arbitration, despite adopting international appearances, remains an institution with an administrative nature under state control. In contrast, mediation, as a culturally ingrained method, is not only the preferred domestic approach but also a strategic tool in China’s foreign legal policy. Therefore, Iranian parties, when drafting contracts, should pay special attention to the Chinese preference for flexible and informal dispute resolution mechanisms.