Cultural advantages and practical dilemmas of the mediation system in the “Belt and Road” initiative

This study analyzes cultural advantages and practical dilemmas of the mediation system in international investment dispute settlements of the Belt and Road Initiative. With increasing position of developing countries in the global outward foreign direct investment (FDI) pattern, China's non-financial funding of nations alongside the Belt and Road in 2025 will attain 17.79 billion U.S. dollars. During the same period, the amount of engineering contracts between China and countries along the Belt and Road amounted to 141.46 billion U.S. dollars, accounting for 55.4% of the total amount. Supported by a large amount of data, the article points out that it is difficult for the existing international dispute resolution system to adapt to highly heterogeneous legal, cultural and political backgrounds of the countries covered by the Belt and Road. It is urgent to establish a more flexible and inclusive mechanism. The mediation system shows unique advantages in dealing with investment disputes due to its economy, flexibility, and controllability of the outcome. This paper further points out that China's legislation in international commercial mediation is delaying practice, which has not yet formed an institutional status alongside arbitration and litigation. In addition, the mutual recognition and enforcement of transnational judicial decisions are limited by principle of “reciprocity of facts”. The coverage of bilateral mutual legal assistance treaties is narrow, which affects the efficiency and expected stability. By analyzing the existing legislative texts, this paper proposes a path to build an international commercial dispute mediation mechanism with pluralistic coexistence, unified rules, and a sound system, which will provide theoretical basis and policy suggestions to enhance the level of law and business environment of “Belt and Road”.