Amicable dispute resolution in the People's Republic of China and its implications for foreign-related construction disputes

A combined mediation/arbitration process is unique to the People's Republic of China (PRC). This paper looks at how this amicable, out-of-court dispute resolution system works if the dispute is foreign-related, as defined under the Foreign Economic Contract Law. First, it outlines Chinese culture and its relation to the PRC legal framework and also to the amicable dispute resolution system discussed. Second, the system is appraised in the context of the uncertainty of the local judicial system. Third, distinctive features of domestic and foreign-related dispute resolution mechanisms are discussed by comparison with international practice. Finally, the amicable dispute resolution system for resolving construction disputes and its enforcement mechanisms are analysed, with statistical data to explain their implications for foreign investors in the construction industry of the PRC.