Consensus and Compulsion: The Extra-territorial Effect of Chinese Judicial and Specially-Invited Mediation in Common Law Countries

A. Judicial Mediation

Integrating mediation into litigation is a default rule for civil adjudication under the CPL. ³⁷ Firstly, this is because the CPL provides that mediation shall be conducted in every civil lawsuit wherever it is appropriate, subject to a party's refusal. ³⁸ ‘Wherever appropriate’ refers to the scenario where the court obtains the consent of both parties and considers that the legal relationship involved in the case is straightforward and the facts of the case are clear. ³⁹ Therefore, medication can apply to a broad scope of civil or commercial disputes. ⁴⁰

Secondly, mediation can flexibly adapt to the civil adjudication procedure. It can be initiated not only by the parties but also by the people's court ex officio, except where a party explicitly rejects mediation. ⁴¹ Judicial mediation can be conducted after the case is docketed by the court either before the trial, ⁴² during the trial, or after the conclusion of the court's hearing but before the issuing of judgment. ⁴³ It can be conducted at both first instance or appellate proceedings. ⁴⁴

Parties can reach a settlement through judicial mediation based on their free will and such settlement must be without compulsion. ⁴⁵ The settlement should not infringe upon the legitimate rights and interests of others ⁴⁶ or violate the law. ⁴⁷ Once a settlement is reached, the people's court shall turn it into an MTS, which should set forth the parties’ claims, the facts of the case, and the result of the judicial mediation (i.e. the pronouncement of the rights and obligations of the parties). ⁴⁸ The MTS shall be signed by the judge(s) and the court clerk, be affixed with the seal of the people's court, and be served on both parties. ⁴⁹ A party can repudiate the agreement before the service of the MTS, and in that case, the MTS and the agreement would not come into effect. ⁵⁰ However, when the MTS is served on the parties and the parties have signed on the receipt, the MTS shall come into effect immediately when the relevant party last to receive the MTS acknowledges the receipt by signature. ⁵¹ When an MTS is issued by an appellate court and is served upon both parties, the original judgment of the lower court shall be deemed to have been set aside. ⁵²

Importantly, a legally effective MTS has the same binding force as a legally effective judgment: parties cannot bring a lawsuit on the same cause of action at a people's court; MTS is not appealable and can be executed and enforced by a people's court exactly like a legally effective judgment. ⁵³

B. Specially-Invited Mediation

Specially-Invited Mediation is mediation conducted by mediators or mediation institutions specially invited by people's courts based on parties’ consensus. ⁵⁴ Although both Specially-Invited Mediation and judicial mediation can be conducted after a case is docketed by a court either before the hearing, during the hearing, or after the hearing but before issuing the judgment, the Specially-Invited Mediation can also be conducted after a case is submitted to a court but before it is docketed. The scope of cases that Specially-Invited Mediation and judicial mediation can resolve is the same. The people's courts encourage the use of Specially-Invited Mediation to resolve disputes of property management, compensation for traffic accidents, protection of consumers’ rights, and compensation for medical injuries before a case is docketed. ⁵⁵

Like judicial mediation, Specially-Invited Mediation by a people's court should respect the equality and free will of the parties and their rights, and should not violate the law or damage the national and public interests, the lawful rights, and the interests of others. ⁵⁶ The process of both judicial mediation and Specially-Invited Mediation should be confidential, except as otherwise provided for by the law or agreed to by the parties. ⁵⁷ Unlike judicial mediation which takes place in the courthouse, the Specially-Invited Mediation may be conducted in other venues such as offices of commercial mediation organizations. ⁵⁸

If parties reach a settlement in a Specially-Invited Mediation conducted before the case is docketed at a people's court, the mediator should submit a copy of the settlement to the people's court for recording purposes. ⁵⁹ Parties can apply for the people's court to confirm the mediation settlement. ⁶⁰ The court that delegates the Specially-Invited Mediation should have jurisdiction to confirm the mediation settlement. ⁶¹ People's courts will not confirm a mediation settlement if it infringes upon the interests of the state or the public, harm the interests of a third party, contradict the true intention of the party concerned, or violate prohibitive provisions of laws and administrative regulations. ⁶² The confirmation proceeding is not an appellate proceeding. People's courts have discretionary power to decide whether to conduct review based on documents or call parties for questions. ⁶³ For example, where a people's court suspects that a party maliciously colluded with others, falsified evidence, fabricated facts or legal relationships, or infringed upon the lawful rights and interests of a third party, it will require the party to provide relevant evidence to prove no such activities exist. ⁶⁴ If the party fails to provide relevant evidence, the people's court shall not confirm the validity of the mediation settlement. ⁶⁵ If one party refuses to perform or fails to fully perform the judicially confirmed mediation settlement, the opposing party can apply to the people's court for enforcement like a judgment. ⁶⁶ Where parties fail to reach a settlement, the Specially-Invited Mediator shall transfer the written complaints of the parties and other materials to the people's court that delegates the case. ⁶⁷ Where the parties insist on instituting a lawsuit, the people's court shall docket the case following the law. ⁶⁸

If parties reach an agreement in a Specially-Invited Mediation conducted after the case is docketed at a people's court, the Specially-Invited Mediator shall submit the mediation settlement agreement to the people's court which will review it and make an MTS accordingly to close the case. ⁶⁹ The MTS can be enforced as a judgment. Where parties fail to reach a settlement during the Specially-Invited Mediation conducted after the case is docketed at a people's court, the case shall proceed to trial. ⁷⁰

In conclusion, mediation settlement reached by parties in Specially-Invited Mediation is like a contract between the parties without creating the final, preclusive, and res judicata effect of a judgment. If a mediation settlement contains a provision providing that a party can request a people's court to make a judgment accordingly when the other party fails to fulfil its obligations under a mediation settlement, this provision is unenforceable. ⁷¹ A party to a mediation settlement can bring a lawsuit in a people's court on the same cause of action against the other party. In contrast, a party to an MTS can neither bring a lawsuit in a people's court on the same cause of action against the other party nor appeal to a people's court at the next instance. An MTS is subject to retrial only in limited circumstances. ⁷²

A deeper comprehension of Specially-Invited Mediation can be achieved through an examination of its political motives and practical contributions. An illustrative case that exemplifies the application of this mechanism is the People's Court Mediation Online Platform.

A. Case law in common law countries

Case law in Canada, Hong Kong, New Zealand and Australia consistently demonstrates that a legally effective MTS creates finality and res judicata and can be enforced as a Chinese judgment.

Wei v Mei is a case concerned with the enforcement of an MTS at the Supreme Court of British Columbia in Canada. ⁹¹ The plaintiff, Wei, made two loans in China to a company named Fenghui. The defendants, Mei and Li, were the sole shareholders and officers of Fenghui. They were guarantors for Fenghui in relation to the loans. However, Fenghui, Mei and Li failed to repay the loans to Wei. On 14 March 2014, the parties reached an agreement at a judicial mediation conducted by the Intermediate People's Court of Tangshan City, Hebei Province, China (hereinafter ‘Tangshan Court’). ⁹² On 21 April 2014, the Tangshan Court issued an MTS based on the agreement. On 14 May 2014, the Chinese Court issued a Civil Ruling to correct a clerical error in the MTS. ⁹³ The Tangshan Court enforced both the MTS and the Ruling against Fenghui, Mei and Li in China. For example, the Tangshan Court placed Wei and Li on the list of dishonest persons subject to enforcement and froze their property in China. ⁹⁴ Payments were received by Wei in China in partial satisfaction of the MTS and the Ruling, which had been effected through voluntary payment and the enforcement actions of the Chinese Court. ⁹⁵ In March 2017, Fenghui, Mei and Li filed a petition for retrial at the Hebei High People's Court, which ultimately dismissed their petition. ⁹⁶ Li resided in British Columbia and directly or indirectly owned three properties with Mei there. Therefore, Wei applied to the British Columbia Supreme Court to enforce the Chinese MTS and the Ruling. Notably, the MTS was translated as ‘Civil Mediation Paper’ and the ‘April 2014 Chinese Judgment’ in the judgment issued by the British Columbia Supreme Court. ⁹⁷ The British Columbia Supreme Court concluded that the MTS and the Ruling were final and conclusive and should be enforced in Canada. In particular, G. K. Macintosh J held that: ⁹⁸

...(b) The Chinese Judgments [the MTS and the Ruling] are not appealable pursuant to the Civil Procedure Law of the People's Republic of China because the April 2014 Chinese Judgment [the MTS] is in the form of a consent order, and the May 2014 Chinese Judgment [the Ruling] is a ruling of the court to correct a clerical error in the April 2014 Chinese Judgment;

(c) The Chinese Judgments are conclusive and final under the Chinese law, as evidence by the enforcement measures taken by the Chinese Court from June 2014 to the present;

(d) A Petition for Retrial is not an appeal procedure. The filing of a Petition for Retrial does not affect the enforceability of the Chinese Judgments;

(e) A Petition for Retrial can only be made on the ground that the mediation violated the principle of voluntary participation or that the content of the mediation agreement violated the Chinese law;

(f) A Petition for Retrial with respect to the April 2014 Chinese Judgment, which was a Civil Mediation Paper, can only be brought within six months after it took effect. The limitation period for the Chinese Defendants to petition for a retrial expired on October 22, 2014.

Feng v Ye is a case decided by the High Court of New Zealand. ¹⁰² In this case, Feng commenced proceedings in China against Ye to settle their matrimonial dispute at the Futian People's District Court of Shenzhen City, China (hereinafter ‘the Futian Court’). Feng and Ye reached an agreement in a judicial mediation presided over by a judge at the Futian Court, who issued a ‘Paper of Civil Mediation’ (an MTS) which recorded what the parties had agreed to in the course of the mediation. ¹⁰³ The MTS required Ye to transfer two New Zealand properties to Feng. Part of the MTS was enforced in China; but because the properties were located in New Zealand, Feng had to commence proceedings to enforce the MTS against Ye in New Zealand. ¹⁰⁴ The High Court of New Zealand enforced the MTS and ordered Ye to transfer the properties to Feng. ¹⁰⁵ Namely, the High Court of New Zealand considered that the MTS was final and conclusive, created res judicata, and should be enforced as a judgment.

Bank of China Limited v Chen (hereinafter ‘Bank of China v Chen’), decided on 7 June 2022 by the New South Wales Supreme Court (hereinafter ‘NSWSC’) concerned the enforcement at common law in Australia of two MTS obtained from the People's Court of District Jimo, Qingdao Shi, Shandong Province China arising out of a financial loan dispute. ¹⁰⁶ A foreign judgment may be enforced in Australia either at common law or under the Foreign Judgements Act 1991 (Cth). ¹⁰⁷ As China is not designated as a jurisdiction of substantial reciprocity under the Foreign Judgements Regulation 1992 (Cth) schedule 1, the judgments of Chinese courts may only be enforced at common law. ¹⁰⁸ Harrison AsJ noted that the judgments of Chinese courts may be enforceable at common law. ¹⁰⁹ He found that there was jurisdiction in the international sense as the defendant's authorized legal representative had appeared before the people's court on her behalf, the parties had agreed to mediation, the representative of the parties came to an agreement during the mediation, and this was recorded in a transcript. ¹¹⁰ The parties’ representatives further signed the transcript and an MTS had been issued by the people's courts. ¹¹¹ Moreover, the MTS was final and binding as it had been signed by the parties. ¹¹² There was no problem of identity of parties and the MTS were for a fixed amount for principal and interest. ¹¹³ In relation to the central question of whether the MTS constituted a ‘judgment’, Harrison AsJ found in favour of the plaintiff. ¹¹⁴ Harrison AsJ first noted that this question should not be decided on the arbitrary basis of which of the many possible translations of MTS was preferred. ¹¹⁵ Moreover, the evidence of enforcement of civil mediation judgments as judgments in the jurisdictions of British Columbia, Hong Kong and New Zealand was helpful, although not determinative. ¹¹⁶ Rather, this question must be determined by reference to whether MTS constituted judgments under Australian law, accepting the plaintiff's submission. ¹¹⁷ The MTS was enforceable against the defendant immediately according to their terms in China and without the need for further or other order or judgment of the People's Court. ¹¹⁸ The parties could not vary or cancel the MTS without the permission of the People's Court of District Jimo. ¹¹⁹ The MTS also had the same legal effects as a civil judgment. ¹²⁰ Therefore, Harrison AsJ concluded that the civil mediation judgments were judgments for the purpose of Australian law as they established res judicata and were mandatorily enforceable, and had coercive authority. ¹²¹ In light of the analysis above, Harrison AsJ held that the Chinese civil mediation judgments were enforceable and dismissed the defendant's motion. ¹²²

In conclusion, case laws in Canada, Hong Kong, New Zealand, and Australia support the view that an MTS is a judgment in the sense that it creates a res judicata that puts an end to the proceedings between the parties conclusively and finally, precludes the parties from bringing a lawsuit on the same cause of action, and has mandatory enforceability and coercive authority. ¹²³ None of the judgments show that foreign judges in the recognition and enforcement proceedings are concerned about the dual role that Chinese judges may play in the mediation and adjudication proceedings. In all existing recognition and enforcement of Chinese MTS cases, MTS were treated as Chinese judgments. The inherent connection between judicial mediation and litigation appears to be advantageous for creditors seeking to enforce Chinese MTS abroad because it serves as a persuasive factor when presenting the case to foreign judges, reinforcing the argument that MTS should be regarded and treated akin to a Chinese judgment. Nevertheless, the number of existing recognition and enforcement of Chinese MTS cases is small, and the dual role of Chinese judges has not been raised as a defence in the recognition and enforcement proceedings. If the dule role is raised as a defence, the allegation must particularize the compulsion of the judge to the extent of partiality and bias against the losing party. A general allegation of the deficiency of the mediation system due to the dule role of judges is unlikely to succeed in defending the recognition and enforcement of Chinese MTS in common law countries. ¹²⁴ Furthermore, the Specially-Invited Mediation can better support the recognition and enforcement of MTS in common law countries, because it alleviates the procedural integrity challenge resulted from the dual role of judges.

However, the case law also brings important and unsettled questions such as controversies on the applicable law, challenges on the enforceability of the civil liability clause in MTS, and debates on the finality of MTS. These questions will be addressed in turn.

B. Controversies on applicable law

There is a debate regarding whether an MTS should be treated as judgment. The first view suggests that Chinese law as the law of the MTS-rendering court should be the exclusive applicable law to determine this comparison. ¹²⁵ The view focuses on the MTS rendering proceedings in China which is distinct from that for a judgment. For example, the proceedings of a judicial mediation are often confidential while a trial is typically open to the public. Therefore, this view argues that Chen is wrongly decided because Harrison AsJ held that the issue of whether the MTS should be treated as a judgment should be decided according to the law of New South Wales. ¹²⁶ The second view emphasizes the compulsory enforceability of an MTS: the MTS can be enforced in the same way as a judgment in China. ¹²⁷ The second view should be preferred because the comparison between an MTS and a judgment and the determination of the applicable law should be analyzed in the context of the recognition and enforcement proceedings instead of the MTS-rendering proceedings.

Australia and other common law countries can recognize and enforce a foreign judgment either according to common law or under a statute. Following the English tradition, in Australia, the Foreign Judgments Act 1991 (Cth) (hereinafter ‘FJA’) and Foreign Judgments Regulations 1992 (Cth) establish an extra-parte registration procedure for the recognition and enforcement of judgments. ¹²⁸ If a judgment debtor considers that a judgment should not be registered, the debtor can initiate an inter partes proceeding to set aside registration. ¹²⁹ However, the statutory regime for judgment recognition and enforcement is only available for listed countries. Since China is not in the list, Chinese MTS has to be recognized and enforced under the common law.

For a foreign judgment to be enforced under common law, four requirements must be met: (1) the foreign court must have exercised jurisdiction in the international sense; (2) the foreign judgment must be final and conclusive; (3) there must be identity of parties between the judgment debtors and the defendants in any enforcement action and (4) the judgment must be for a fixed, liquidated sum. ¹³⁰ If an MTS involves ‘the payment of a sum of money that is subject to the deduction of an as yet unascertained amount for costs’, its recognition and enforcement must be analyzed under the law of equity. ¹³¹ This includes an obligation of specific performance, ¹³² administration or payment of deceased estates ¹³³ and appointment of a receiver. ¹³⁴

In the judgment recognition and enforcement proceedings, the law of the judgment-rendering country (e.g. Chinese law for MTS) is not the exclusive applicable law. For example, the law of the judgment-enforcement country (e.g. English law) will be applied to determine whether the foreign court has international jurisdiction and the identity of the parties. ¹³⁵ The law of the judgment-rendering country will be applied to determine whether the foreign judgment meets the English law requirement of finality. ¹³⁶ Therefore, Chinese law is not an exclusive applicable law in the recognition and enforcement proceedings in common law countries.

In Chen, the parties had no dispute about international jurisdiction, the identity of parties, and the fixed amount of the MTS. The dispute centred on whether the MTS is final, creates res judicata effect, and has mandatory enforceability and coercive authority like a judgment. Harrison AsJ indicated that ‘[u]nder the common law, a “judgment” is an order of Court which gives rise to res judicata … and which takes effect through the authority of the Court …’ ¹³⁷ This follows the leading English authority on the finality of a foreign judgment, Nouvion v Freeman, which held that a Spanish judgment made in summary proceedings where the aggrieved party could have the matter re-litigated in plenary proceedings before the same court is not final and conclusive. ¹³⁸ Whether a foreign document is final and creates res judicata effect is often determined by the law of the rendering court. For example, in Schnabel v Lui, the New South Wales Court of Appeal in Australia held that the finality of the US judgment should be determined under the US law. ¹³⁹ However, this does not mean that the proceeding for judgment recognition and enforcement in Australia should be subject to the US law.

As a conclusion, common law must be applied to determine the nature of an MTS in the recognition and enforcement proceeding. Further, common law provides that different laws may be applied to determine whether a foreign document fulfils each of the four conditions for recognition and enforcement. It is exactly in this context that in Chen, Harrison AsJ held that whether the MTS is a judgment should be determined according to the law of New South Wales. ¹⁴⁰

C. Challenges to the Enforceability of Civil Liability Clauses in the MTS

Clauses providing guarantee or conditions for bearing civil liability in case of non-performance are not uncommon in the MTS. The clauses state the parties’ consensus on how to address the situation where one party fails to carry out its obligation according to MTS and the consequent civil liability for this party. Article 15 of the Supreme People's Court Provisions on Mediation regulates consensus-based civil liability: ¹⁴¹

If the guaranty terms or conditions for bearing civil liability specified in an MTS are fulfilled and a party applies for enforcement, the people's court shall enforce them according to law.

Article 253 of the then CPL is Article 264 of the 2023 CPL. It provides for statutory civil liability calculated by the double interest rate for late performance of a legally effective MTS: ¹⁴²

If the person subjected to execution fails to fulfill his obligations concerning pecuniary payment within the period specified by a judgment or written order or any other legal document, he or she shall pay double interest on the debt for the belated payment. If the person subjected to execution fails to fulfill his or her other obligations within the period specified in the judgment or written order or any other legal document, he shall pay a charge for the belated fulfillment.

The relationship between Article 15 of the Supreme People's Court Provisions on Mediation and Article 264 of the 2023 CPL has created significant controversies in practice.

In Wang Xinrong et al v Great Hinggan Mountains West Lin Ji Forestry Bureau (hereinafter ‘Wang Xinrong’), ¹⁴³ the MTS provides that (1) the Defendant pays Plaintiff 558,799.10 RMB and the Plaintiff waives the liquidated damages of 517,176 RMB and (2) the above payment shall be made within 3 months after Plaintiff handles the financial affairs of the farms, and outstanding payment will cause the liquidated damages. The Defendant failed to pay the Plaintiff on time, so the Plaintiff applied to the Intermediate People's Court at the Heihe City Heilongjiang Province to enforce the MTS. The Enforcement Division of the Court transferred the fund of 558,799.10 RMB and its statutory double-interest civil liability payment calculated according to Article 264 of the CPL from the Defendant's account to the Plaintiff. The Plaintiff argued that the court should also enforce the amount of consensus-based liquidated damages (517,176 RMB) and its relevant statutory civil liability payment because the waiver of the consensus-based liquidated damages was subject to the condition that the Defendant would pay the principal within 3 months. According to the Plaintiff, the Defendant failed to make the payment on time; therefore, the waiver should not be effective.

The argument was rejected by the Enforcement Division of the Intermediate People's Court at the Heihe City Heilongjiang Province. Upon the Plaintiff's application to review, the High People's Court at the Heilongjiang Province affirmed the enforcement decision of the Intermediate People's Court. Plaintiff applied to the Supreme People's Court under the Procedure for Trial Supervision, which affirmed the Intermediate People's Court's decision. ¹⁴⁴ The Supreme People's Court invoked Article 15 of the Provisions on Mediation and held that the Intermediate People's Court at the Heihe City Heilongjiang Province enforced the principal and the statutory civil liability, so Plaintiff could not claim the consensus-based civil liability. The Supreme People's Court also noted that the amount of the statutory civil liability was more than the amount of the consensus-based civil liability specified in the MTS, so the plaintiff's legal rights and interests were not harmed.

Wang Xinrong should be contrasted with Fu Tingchen v Inner Mongolia Dingfulong Real Estate Development Co., Ltd. ¹⁴⁵ The MTS in Fu Tingchen provides that the Defendant shall transfer 3 million RMB to the Plaintiff within a certain date and in case of the Defendant's default, the Defendant shall make overdue payment to the Plaintiff with interest calculated according to the bank loan interest. The Defendant did not make payment, so the Plaintiff applied to the Intermediate People's Court of Hohhot, Inner Mongolia Autonomous Region for enforcement. The Plaintiff requested the enforcement division of the Intermediate People's Court to apply the statutory liability according to the CPL and order the Defendant to pay double interests. The Court rejected the Plaintiff's request because the MTS already contained a consensus-based civil liability provision, which should prevail over the statutory civil liability. The decision was affirmed by the High People's Court of the Inner Mongolia Autonomous Region, and by the Supreme People's Court under the Procedure for Trial Supervision. The Supreme People's Court refers to Article 15 of the Provisions on Mediation and held that since the Defendant paid the consensus-based civil liability, the Plaintiff could not ask for the statutory civil liability under the CPL.

Wang Xinrong and Fu Tingchen leave at least two questions. Firstly, whether the parties or the court can choose to apply either the consensus-based civil liability or the statutory civil liability and according to which selection standard(s). The second paragraph of Article 15 of the Provisions on Mediation states that the statutory civil liability is not applicable when the party who fails to carry out the MTS has assumed the consensus-based civil liability. Therefore, there seems to be a hierarchy between consensus-based and statutory civil liability: the former should prevail over the latter. However, in Wang Xinrong, the Defendant did not bear the consensus-based civil liability first. The court justified its approach of prioritizing the statutory over consensus-based civil liability by comparing their amount because the former is more than the latter and the Plaintiff will be protected. Should the court treat the Plaintiff and the Defendant impartially? Article 15 of the Provisions on Mediation is silent on whether the winning party or the enforcement court can compare the amount of the two types of civil liability and decide which one should be applied first. Therefore, in Fu Tingchen, the court does not allow the Plaintiff to choose the statutory civil liability.

Secondly, the underlying policy not to apply both the consensus-based and statutory civil liability to a defaulting Defendant is to avoid double compensation. However, this underlying policy has a premise which is that the consensus-based civil liability, like the statutory civil liability, is to compensate the Plaintiff for the Defendant's future non-performance after concluding the MTS. This is the case in Fu Tingchen, where the MTS provides a calculation formula rather than a fixed number of civil liability and the calculation can be made based on the length of time of the Defendant's non-performance. In this case, if both the consensus-based and statutory civil liability are applied, the Plaintiff will be double compensated. However, compared with Fu Tingchen, it is less explicit that the waiver of liquidated damages in Wang Xinrong is to deter the Defendant from future non-performance. It is a fixed-amount waiver. In Wang Xinrong, the Supreme People's Court does not explain how parties reached this amount in the MTS and whether this amount is calculated based on Defendant's existing default. Neither the Supreme People's Court rules out the possibility that the waiver is Plaintiff's compromise to give up the compensation from the Defendant's existing default and exchange for the Defendant's expedited payment of the principal in 3 months. Namely, if the consensus-based liquidated damages are for the Defendant's existing default, its amount should be added to the principal, from where the statutory civil liability may be calculated.

At the recognition and enforcement proceedings in common law countries, courts may also need to consider how to enforce clauses providing guaranty or conditions for bearing civil liability in case of non-performance of the MTS. If such clauses address non-performance after the conclusion of the MTS, the enforcement court should consider avoiding double compensation by not enforcing the consensus-based civil liability and the statutory liability provided in the enforcement country at the same time. However, double compensation may not occur when the consensus-based civil liability is to compensate the Plaintiff for a Defendant's existing default. The challenge for an enforcement court is whether the MTS can provide enough information for the court to determine the nature of the consensus-based civil liability without considering the substance of the case. Therefore, parties are suggested to carefully draft their mediation settlement and the MTS-rendering Chinese court should be mindful in providing information such as the purpose and calculation of consensus-based civil liability in an MTS.

D. Debates on the finality of the MTS

Turning a judicial mediation agreement into an MTS or judicially confirming a mediation settlement, a people's court gives judicial sanction and coercive authority to what the parties have settled in the mediation, and in that way converts a mere agreement into a judicial decision on which a plea of res judiciata may be founded. The foundation of the plea of res judiciata is the finality of an MTS.

Although a legally effective MTS cannot be appealed, it can be set aside or revised through the Procedure for Trial Supervision. ¹⁴⁶ The Procedure for Trial Supervision is a retrial procedure for cases that have had final judgments rendered in the trial process. ¹⁴⁷ Under this Procedure, a people's court can initiate a retrial sua sponte, that is, without a party's motion, to set aside or revise an MTS when the judicial committee of that court discovers any error in it. ¹⁴⁸ Moreover, a party to an MTS can apply to a people's court to initiate a retrial against an MTS only on two grounds: (1) the judicial mediation violates the principle of voluntary participation or (2) the content of the MTS violates the law. ¹⁴⁹ The petition must be submitted within 6 months after the MTS comes into effect. ¹⁵⁰ Furthermore, if the Supreme People's Procuratorate or a procuratorate at a level higher than the court which rendered the MTS discovers that a legally effective MTS endangers the national interest or the social and public interest, the procuratorate shall lodge a protest to the court that rendered the MTS. ¹⁵¹ The court should decide whether to commence a retrial within 30 days after receipt of the protest against a legally effective MTS. ¹⁵² Wang Xinrong and Fu Tingchen are examples of retrials brought under the Procedure for Trial Supervision. ¹⁵³

According to Nouvion v Freeman, ‘[i]n order to establish that [a final and conclusive] judgment has been pronounced, it must be shown that in the court by which it was pronounced, it conclusively, finally, and forever established the existence of the debt of which it is sought to be made conclusive evidence in this country, so as to make it res judicata between the parties’ (emphasis added) ¹⁵⁴ Therefore, a foreign judgment that can be appealed to a superior court remains final and conclusive, although the enforcement court may stay the execution pending the outcome of the appeal. ¹⁵⁵ The challenges of the Procedure for Trial Supervision on the finality of MTS is whether the court that rendered the MTS retain the right to reopen the MTS. In China, the court that rendered the MTS can reopen it under the Procedure for Trial Supervision if: (1) the MTS is rendered by the court of first instance; (2) either party involves many persons or both parties are citizens and (3) any other circumstance as decided by the judicial committee upon discussion. ¹⁵⁶ Notably, Rules 55(c) and 60(b) of the 2022 Federal Rules of Civil Procedure in the US allow a party who demonstrates ‘good cause’ may set aside a final judgment. ¹⁵⁷ However, different from the Chinese Procedure for Trial Supervision where parties can apply to the trial court for retry, any motion to set aside a US judgment cannot be brought directly in the trial court under the 2022 Federal Rules of Civil Procedure. A motion would have to be made to the Court of Appeals to remand the Motion to the trial court. ¹⁵⁸ If the motion is successful, the trial court that rendered the original judgment would consider whether to relieve the party from a final judgment. Therefore, the thorny issue is under Nouvion, how to address the finality of a judgment that may be reopened in a retrial procedure by the court that rendered the judgment previously?

This question is addressed in Ainslie v Ainslie by the High Court of Australia. ¹⁵⁹ The case concerns whether an order made by a court in Western Australia based on a separation agreement between a wife and a husband was final. The order provided separation between the couple, maintenance paid by the husband to the wife, and cost. Regarding the maintenance, the order indicated the court ‘may, on the application of the married woman or of her husband, and upon cause being shown upon fresh evidence to the satisfaction of the Court at any time, alter, vary, or discharge any such order, and may upon any such application from time to time increase or diminish the amount of any weekly payment ordered to be made’. ¹⁶⁰ Citing Nouvion, the High Court held that the maintenance section of the order was not final because no finally fixed sum in the nature of a ‘debt’ existed. ¹⁶¹ Nevertheless, the High Court held that ¹⁶²

… too widely to say that, because the Court that makes an order may revise it or discharge it, that conclusively shows the order is not final … The true rule is to see whether or not the Legislature has by its enactment left the order entirely floating, so as to speak, as a determination enforceable only as expressly provided and in the course of that enforcement subject to revision, or whether the order has been given the effect of finality unless subsequently altered. This can only be ascertained by constructing the Act as a whole.

Ainslie is followed by Schnabel v Lui, which concerns the recognition and enforcement of a US default judgment in Australia. The Supreme Court of New South Wales held that ¹⁶³

In this case, on this issue, the Court is primarily concerned to determine the status of the US judgment under the US law and that will depend upon the construction and the effect of the applicable US Rules. The test of finality is the treatment of the judgment by the foreign tribunal as res judicata. A default judgment may be enforceable as a final and conclusive judgment even though it is liable to be set aside in the very court that rendered it. The approach that has been adopted is that until the steps are taken to set the judgment aside the judgment is enforceable as a final and conclusive judgment.

Therefore, at least two references can be drawn regarding the finality of MTS at the recognition and enforcement proceedings in common law countries. Firstly, the finality of MTS should be determined under the Chinese law rather than the law of the enforcement state. ¹⁶⁴ Secondly, the judge needs to construct the Chinese Procedure for Trial Supervision as a whole and determine whether an MTS has been given the effect of finality unless subsequently altered. ¹⁶⁵ Under Chinese CPL, an MTS cannot be appealed and is final and legally effective upon serving both parties; the enforcement of a legally effective MTS can only be suspended when an order is made by a court to retry the case under the Procedure for Trial Supervision. ¹⁶⁶ Although the Procedure for Trial Supervision allows the court that renders an MTS to retry the case in limited circumstance, the Procedure does not intend to make the finality of an MTS ‘floating’. This is demonstrated by the general rule of the Procedure for Trial Supervision that a retrial should be conducted by a people's court higher than the MTS rendering court. ¹⁶⁷ Moreover, allowing an MTS rendering court to retry the case is an exception to the general rule and aims to facilitate dispute resolution in special cases. For example, if an MTS involves multiple individuals from either party or if both parties are citizens, such disputes might be more effectively resolved by leveraging local communities. Therefore, a retrial should ideally be conducted by the court that initially rendered the MTS, often situated in close geographical proximity to the local community. ¹⁶⁸ Further, when the court that rendered the MTS decides to retry the case, the MTS loses its finality and cannot be enforced in common law countries. ¹⁶⁹

A. Judicial assistance agreements concluded by China with common law jurisdictions

Judicial assistance agreements ratified by China and common law jurisdictions treat an MTS as a judgment. The typical examples are the judicial assistance agreements concluded between Mainland China, Hong Kong and Singapore, respectively, for mutual recognition and enforcement of judgments.

In 2006, the Supreme People's Court and the Hong Kong Special Administrative Region concluded the Arrangement between the Mainland and the Hong Kong Special Administrative Region on Reciprocal Recognition and Enforcement of the Decisions of Civil and Commercial Cases under Consensual Jurisdiction (hereinafter ‘the Arrangement’). ¹⁷⁰ Article 2 of the Arrangement indicates that ‘a judgment, in the case of the Mainland, includes any judgment, ruling, MTS, and order of payment …’. A legally effective MTS rendered by a people's court in Mainland China can be enforced in Hong Kong in the same way as a Mainland judgment under the Arrangement.

Similarly, in 2018, the Supreme People's Court and the Supreme Court of Singapore concluded a Memorandum of Guidance on Recognition and Enforcement of Money Judgments in Commercial Cases. Article 1 of the Memorandum defines ‘judgment’ as ‘any decision, whatever its designation, rendered or made by courts and with court seal’. ¹⁷¹ An MTS is signed by the presiding judge(s), sealed, and rendered by the people's court, so is considered as a judgment under the Memorandum. A legally effective MTS can be enforced in Singapore in the same way as a Mainland judgment under the Memorandum.

B. Hague Conventions

Both the Choice of Court Convention and the Judgments Convention cover judicial settlements and provide that they should be enforced in the same manner as a judgment. ¹⁷² Both Conventions define judicial settlements as a legal document concluded before the court in the course of proceedings and are enforceable in the same manner as a judgment in the State of origin. ¹⁷³ Trevor Hartley & Masato Dogauchi, Explanatory Report of the Hague Convention of 2005 on Choice of Court Agreements (2013) explain that: ¹⁷⁴

In France and other civil law countries, [judicial settlements] are contracts concluded before a judge by which the parties put an end to litigation, usually by making mutual concessions. Parties submit their agreement to the judge, who records it in an official document. A judicial settlement is different from a consent order in the common law sense (an order made by the court with the consent of both parties) since a consent order is a judgment and may be recognised and enforced as such under Article 8 of the Convention. On the other hand, a judicial settlement is different from an out-of-court settlement, since it is made before a judge, puts an end to the proceedings, and is usually enforceable in the same manner as a judgment. For these reasons, a special provision [Article 12] is devoted to it in the Convention.

MTS rendered in a judicial mediation is a judicial settlement under both Conventions. MTS made by a judge who confirms a settlement agreement reached in a non-judicial mediation may also be covered by both Conventions. Although the settlement agreement is not made in front of a judge, upon judicial confirmation, it becomes an MTS rendered by a court and can be enforced as a judgment in the state of origin.

C. The Singapore Mediation Convention

The Singapore Mediation Convention serves as an alternative to enforce the mediation settlement agreement for parties who choose not to seek judicial confirmation. The Convention is for the recognition and enforcement of settlement agreements resulting from mediation and concluded in writing by parties to resolve commercial disputes. ¹⁷⁵ It does not apply to ‘settlement agreements: (i) [t]hat have been approved by a court or concluded in the course of proceedings before a court and (ii) [t]hat are enforceable as a judgment in the State of that court (emphasis added)’.^176,177 According to travaux préparatoires, this exclusion aims to avoid possible overlaps or gaps with other existing or future international instruments, such as the Hague Choice of Court Convention and the Hague Judgments Convention. ¹⁷⁸ ‘Approved by a court or concluded before a court’ means, if during court proceedings, the parties settle their dispute through mediation without any court assistance, such settlement agreements would fall outside the scope of the Singapore Convention as long as the settlement agreement was enforceable as a judgment in the state where court proceedings began. ¹⁷⁹ Moreover, settlement agreements reached during court proceedings but not recorded as judicial decisions are also excluded by the Singapore Convention as long as the settlement agreement was enforceable as a judgment in the state where court proceedings took place. ¹⁸⁰ ‘Enforceable as a judgment’ should be determined by considering ‘whether settlement agreements approved by a court or concluded before a court were enforceable as a judgment “in the State of that court”’. ¹⁸¹

Settlement agreements reached in Specially Invited Mediation after a case is docked by a people's court would not be eligible for recognition and enforcement under the Singapore Convention if the settlement agreement is confirmed by a judge as a judgment in China. However, a settlement agreement reached in Specially-Invited Mediation before a case is docket may benefit from the Convention as long as the agreement is not confirmed by a judge. This is because the mediation does not take place during court proceedings and cannot be enforced as a judgment in China.

The Singapore Convention can enhance the certainty of recognizing and enforcing Chinese mediation settlements aboard because it limits the grounds for refusing to recognize and enforce a mediation settlement. ¹⁸² The grounds include the null and void, unbinding, provisional and subsequently modified settlement agreement; unclear or incomprehensible obligations in the settlement agreement; contradiction to the terms of the settlement agreement; serious breach of standards applicable to the mediation and mediator; doubts to the mediator's impartiality or independence; contradiction to the public policy of the enforcing state; and subject matter being incapable of settlement by mediation. ¹⁸³