Key Points:

  • A new mechanism will be introduced to settle rural land disputes
  • More simplified procedures and more flexibility compared with the Arbitration Law  

The “Rural Land Contract Dispute Mediation and Arbitration Law of the People’s Republic of China” (the “Law”) was promulgated by the Standing Committee of the National People's Congress and will come into force on January 1, 2010.

The Law provides that mediation of certain disputes over rural land contracts may be heard by the rural land contract arbitration commission, which shall issue the written mediation result when a mediation agreement is reached. When a mediation agreement cannot be reached, the arbitration commission shall timely award its arbitration decision.

The promulgation of the Law offers new methods to resolve disputes over rural land contracts; the affected party may choose mediation, arbitration or litigation to resolve disputes. Article 2 of the Law provides the scope of disputes that shall be governed by the Law; however, disputes arising from requisition of collectively owned land and the compensation thereof will not be accepted by the rural land contract arbitration commission. They may be settled by means of administrative reconsideration or lawsuits.

Compared with the Arbitration Law of the People’s Republic of China (the “Arbitration Law”), the Law simplifies certain mediation and arbitration processes and formalities, and adds certain flexible practices according to the actual conditions of rural areas, which may lower the cost and improve the efficiency of the rural land contract commission.

Highlights of the Law include:

  • Arbitration agreements are not required. In the event of disputes over the contracted rural land, the parties may accept mediation, apply to the rural land contract arbitration commission for arbitration or directly lodge a lawsuit in court. Unlike the Arbitration Law, even without an arbitration agreement, the affected parties may directly apply for arbitration.
  • Much more flexible requirements. Written documents are not compulsory during the process. Whether a party is applying for mediation or arbitration, oral application is acceptable. The parties may also use fingerprints instead of signing.
  • More involvement of farmers in the arbitration tribunal. A rural land contract arbitration commission shall be concurrently formed by representatives from the local people’s government and from its relevant departments, representatives from relevant people’s groups, representatives from rural collective economic organizations, farmer representatives, and professionals in law, economics and other relevant specialties. In particular, the number of farmer representatives and professionals in law and economics shall account for at least half of the arbitration commission.
  • No fees for mediation or arbitration. According to Article 52 of the Law, no fees may be charged to any party for the arbitration. The operational funds for the arbitration work shall be financed by the fiscal budget.  

The Law also seeks to promote the professional ethics of arbitrators (such as restrictions on conflicts of interests) and outlines penalties for arbitrator malpractice. However, considering the social development of China’s rural areas, the measures for selecting members of the rural land contract commission are not specific, and supplementary measures are needed to ensure the efficient operation of rural land contract commissions