Over the past few weeks our China lawyers have been assisting a client with an administrative lawsuit in a trademark review rejection case. After filing the law suit our client was surprised to learn we are required to complete a mandatory mediation process prior to the formal trial. We explained this is a new regulation in accordance with a litigation reform policy introduced by the People’s Supreme Court, which entered into effect last summer.
The reform policy initiated by the Supreme Court establishes a mandatory pre-litigation settlement mechanism specifically for administrative disputes (i.e. disputes with a government agency).
Under the new policy, a court has the ability to require parties to undergo a mediation procedure in certain situations where the court believes mediation is the best way to achieve a substantive resolution of the dispute. The court may guide the mediation process itself, or the parties may utilize a neutral third party.
If an agreement is reached through this pre-litigation mediation and the parties jointly apply for judicial confirmation of the mediation agreement, the Court may confirm the validity of the mediation agreement and issue a mediation statement, effectively finalizing the mediated agreement. However, if the two parties fail to successfully reach an agreement at mediation, the court will proceed with a full court trial and hearing.
Mediation discussions have a protected status, so that a party is not able to present evidence at a later trial which was obtained via the mediation process, except as relating to facts which are not disputed between the parties.