Mediation, Arbitration or Litigation for a China-Related Dispute?

July 28, 2026 · Jay Zhifeng Chen

A commercial decision guide based on urgency, assets, enforceability, cost and the future business relationship

Key takeaways

• The dispute-resolution method should be selected with the contract, asset location and likely remedy in mind – not after a dispute has already escalated.
• A valid arbitration agreement must be clear and workable under the revised Arbitration Law effective from 1 March 2026.
• China’s International Commercial Court is a permanent adjudicative body of the Supreme People’s Court; its judgments should not be described as ordinary first-instance judgments with a direct appeal.

1. Begin with the commercial objective

Before selecting a procedure, define the practical objective: immediate payment, continued supply, preservation of assets, an injunction, a final damages award or a negotiated exit. Also identify the counterparty, available assets, limitation periods, evidence and the effect of escalation on the business relationship.

2. Negotiation and mediation

Negotiation is usually the fastest way to clarify facts and test whether a commercial solution remains possible. Mediation adds a neutral facilitator and can be conducted privately, through an institution, within arbitration or through a court. Neither process should be allowed to cause the loss of limitation periods, preservation opportunities or evidence.

A settlement should clearly state payment and performance obligations, releases, confidentiality, default consequences and enforcement. Where appropriate, consider whether the settlement can be converted into an enforceable arbitral award or judicial instrument.

3. When arbitration is the stronger option

Arbitration is often suitable for significant cross-border contracts where the parties want a chosen institution, seat, language and decision-makers, and where international enforcement under the New York Convention is important. It is less attractive when the clause is defective, the dispute value cannot justify the cost, or court powers against third parties are essential.

4. When Chinese litigation is the stronger option

Chinese litigation may be preferable when the defendant and assets are in China, urgent court preservation is central, the dispute falls within Chinese exclusive jurisdiction, or compulsory court procedures are needed. Cross-border service, identity documents, authorisation, translation and evidence formalities should be planned early.

5. A practical selection sequence

First protect limitation and preservation rights. Second, test whether a time-limited negotiated solution is realistic. Third, confirm the validity and scope of the existing dispute clause. Fourth, compare the likely decision, enforcement route, cost and timetable. Finally, commence the selected process before delay weakens the case.

Before you act

• Check limitation periods and preservation needs immediately.
• Identify the defendant, assets, evidence and desired remedy.
• Test the validity and scope of the existing dispute clause.
• Compare settlement, arbitration and litigation enforcement routes.
• Preserve privilege, documents, communications and electronic evidence.

How we can help

BizLawyerChina can assess jurisdiction and arbitration clauses, preserve evidence and assets, develop a settlement strategy, and coordinate arbitration or litigation involving Chinese counterparties and assets.

Principal official sources

• Arbitration Law of the People's Republic of China, effective 1 March 2026
• Civil Procedure Law of the People's Republic of China (2023 Amendment)
• New York Convention

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