Culture can profoundly affect a dispute resolution process. For indeed, far from merely a function of practical and procedural efficiency contemplated by disputing parties, the choice of a dispute resolution mechanism--whether mediation, arbitration or litigation-- within the forum of a certain society is strongly influenced by the peculiarities of tradition, culture, and legal evolution of that society. Such is the case in China. A heightened awareness of the theoretical and practical issues found in cross-cultural negotiations and arbitrations has taken hold among legal practitioners and the business elite, as the worldwide community increasingly interacts through commercial globalization and economic integration, and diverse societies at variegated levels of legal development confront each other with commercial disputes. Especially in China, disputing parties from different cultures now face a critical balancing act, weighing the positives and negatives when deciding between mediation or arbitration.

Of course, within the context of cross-cultural commercial dispute resolution, selecting a particular mechanism to resolve a dispute need not be an either-or choice. A blended approach (i.e., combining mediation and arbitration into one distinct process with two phases) can be a viable option for parties, depending on whether the lex arbitri or the institutional arbitration regime allows for such a blending. Allowing this blending to occur (and truly benefiting from it) will depend, inter alia, on the nuances of tradition, culture, and legal evolution.

Such nuances make China and Hong Kong's position regarding the blending of mediation and arbitration so interesting. China and Hong Kong share the same traditions, but each possesses divergent histories from the other. Both are at very different levels of legal evolution and economic development. However, despite their inherent differences under 'one country, two systems,' both entities have standing arbitration laws enabling a mediator (or 'conciliator') to also play the role of arbitrator to the same dispute. Yet, when it comes to implementing this law in the two most prominent institutional arbitration regimes in China and Hong Kong--the China International Economic and Trade Arbitration Commission ('CIETAC') and the Hong Kong International Arbitration Centre ('HKIAC') respectively--each has a distinct approach in allowing mediation to be blended with arbitration and addresses the potential cross-cultural issues differently. CIETAC allows for 'Med-Arb' for international commercial dispute resolution, while the HKIAC does not--though Hong Kong law explicitly permits it.

In this paper, I will first examine what I call the 'mediation-arbitration dichotomy,' that is, the debate over the pros and cons of mediation and arbitration, and the practical advantages and drawbacks of a blended Med-Arb process. I will then survey the Chinese situation and how the Confucian ethical tradition, the social imperatives in the 'rule of li,' and evolving legal culture influence how a dispute is ideally resolved. Lastly, I will focus on where the mediation-arbitration dichotomy and local culture converge through the divergent Chinese institutional approaches to Med-Arb in China and Hong Kong. I will delve into how their respective rules attempt to address commentator concerns of the practical drawbacks of Med-Arb. A good grasp of Chinese tradition and culture is necessary in comprehending how and why Med-Arb is allowed and considered advantageous in many instances. We will see that the varying institutional approaches are a reflection of each forum's evolution towards the Rule of Law.