Mediation for Investors in China

By: David Matz

In October I was invited to give the keynote address in Shanghai at a two-day training for the mediators of the China Securities Investors Service Center Co. This NGO was formed eighteen months ago by the Chinese equivalent of the US Securities and Exchange Commission to help investors in stocks and futures who feel they have been treated unfairly or illegally. The NGO provides legal help if litigation is needed and mediators where their service is seen as useful.

There are 200 mediators on the panel throughout China. Many are employed in a wide variety of jobs in the securities industry; others are lawyers or professors. One hundred and thirty one mediators attended the training; the NGO paid for their travel and hotel. As mediators they work on a volunteer basis. Though they have already begun to handle cases, they have had little mediation training. Judging from their comments during class and break, many are very sensitive to issues of neutrality; they also understand mediation to depend on the mediator’s suggestion of the “right” outcome. My presentation of an alternative, process-focused, model did not noticeably alter the view they came with. This is not surprising, as I thought I detected an institutional assumption that many investors are ill treated in the marketplace.  I wondered whether some or even many of the investor complaints might reflect financial expectations that were not fulfilled because the market failed to rise, but I was told several times that this was not the root issue.

As far as I know, the creation of this panel is the first major step in China to establish an organized mediation program aimed at a single industry, one that has the potential to establish training, quality control, and troubleshooting.  I heard talk, but found no confirmation, that other industries are also setting up mediation programs.