Mediation organizations must play role in securities and futures settlement

( Updated : 2018-12-04

A document on building alternative dispute resolution mechanisms for securities and futures disputes was released on Nov 30.

The document, aiming to protect investors' legal rights and promote a sound development of the capital market, was jointly issued by the Supreme People's Court (SPC) and the China Securities Regulatory Commission (CSRC). The scope of alternative dispute resolution mechanisms and the judicial confirmation system of mediation agreements were specified in the document.

Mediation organizations are encouraged to be involved in resolving securities and futures disputes.

Disputes related to contracts and tort liability caused by investment in securities, futures and funds between natural persons, legal persons and unincorporated organizations are to be tackled with mediation methods.

Agreements concluded by mediation organizations have the general nature of civil law contracts which can be submitted to courts for registration as court orders if signed by the mediator and sealed by the mediation organization.

The document also says that courts should pass over disputes to mediation organizations when the case is not recorded as a court file. even when the case has been registered it should be entrusted to mediation organizations and mediators should be engaged in the litigation to encourage the parties to resolve disputes with that method.

Securities and futures regulators could entrust items related to investors' rights protection to mediation organizations when dealing with large public disputes.

In addition, group disputes of civil compensation caused by illegal acts such as false statements, insider trading and market manipulation must be subject to a demonstration case which has been affirmed by the courts with regard to applicable and unified regulations.

The fact finding methods and applicable standards established by the demonstration cases will lower investors' cost in defending their rights and improve efficiency of dispute settlement.