China’s Supreme People’s Court (SPC) has pledged to strengthen cooperation with commercial federations to promote mediation in resolving business disputes, aiming to better protect the legitimate rights and interests of enterprises and support the development of the private sector. The SPC and the All-China Federation of Industry and Commerce (ACFIC) released details of 10 notable cases, highlighting the role of cooperation between judges and business experts in resolving disputes involving private enterprises. “Commercial experts can apply their business acumen and experience to craft targeted solutions for resolving disputes among private enterprises. They can harness the benefits of mediation, such as low cost, high efficiency and the preservation of amicable relations,” the Court said. “This approach is conducive to achieving a win-win outcome by facilitating creditor repayments, providing relief to debtors and mending cooperative relationships,” it added.
In one case, a small company that primarily supplied materials received numerous orders from a construction engineering enterprise for a project. Although the two sides had not signed a formal contract, their continued transactions involving supply, delivery and payment established a de facto sales relationship. After repeated demands for payment of CNY224,700 went unanswered, the small company filed a lawsuit against the construction engineering enterprise at the Pingshan District People’s Court in Shenzhen, Guangdong province. As the facts of the dispute were clear and both parties agreed, the court referred the case to mediators from the local commerce federation for pre-litigation mediation.
During their preliminary investigation, the mediators found that neither side disputed the amount owed. Instead, the main disagreement concerned how and when the debt should be repaid. The mediators explained the legal risks and commercial implications to both parties. The construction engineering enterprise was warned that failure to repay the debt could damage its reputation and future business prospects, while the supplier was informed that mediation could provide a quicker resolution with safeguards incorporated into the agreement. The mediators also adjusted the repayment schedule to better match the construction company’s cashflow situation, easing the supplier’s concerns over indefinite delays. The dispute was ultimately resolved through mediation, and the court subsequently confirmed the legal validity of the agreement.
The SPC praised the cooperation between the court and local business experts, saying mediation provides a cost-effective and efficient alternative to litigation. “For private companies, especially small and micro ones, such solutions resolve their problems and support their ongoing business operations,” the top court said, as reported by the China Daily.
