Beijing bank, debtor financial disputes decline after mediation introduced

A Beijing court said on Thursday it has seen a decline in financial cases since it joined hands with financial institutes to intensify mediation and innovate a mode of resolving such disputes.

The number of financial disputes in downtown Beijing's Xicheng district, where there are abundant banks, financial institutes and enterprises, had a sustained increase from 2017 to 2019, but from January to September this year, the figure began dropping, according to Shu Rui, deputy chief judge of the case filing division with the district's court.

Shu said the decrease is attributed to an innovative mode jointly developed by the court and the district's banks and financial institutes in June.

"In the past, banks often took debtors to court after failing to get them to pay back bank loans, but many debtors were still hard-pressed to return the money after litigation, as they had no capacity to repay, or it was a great burden to repay due to work and life difficulties at that time," he said.

"The situation not only made debtors desperate and brought bad debts to banks, but also created many disputes that overwhelmed the court and were hard to be implemented," he said.

To change the situation, the court coordinated more with banks, helping establish a communication platform between the financial institutes and debtors.

"We hope they can seek a repayment way that both sides are happy with through mediation," Shu said.

Banks can work out a plan on repayment in accordance with debtors' ability during mediation, or find third-party institutes or the court to help mediate, he said.

If banks and debtors agree on mediation, they can apply for a judicial confirmation to the court, he said, adding it diversifies resolution of financial cases and is humanized to help debtors return money as quickly as they can.

Compared with long-term litigation, solving such financial conflicts is much easier for debtors to accept and can end disputes more quickly, according to the judge.

As witnessed in the drop in financial cases in the first nine months of this year, banks also have seen timely repayment in the same period, he added.

Yao Li, deputy director of the operation and management department at the People's Bank of China, lauded the innovative mode of the court, saying it also set up a mediation team to help solve financial disputes last year and opened online access to offer more convenience for mediation.

As of Wednesday, the team has successfully mediated more than 1,000 financial disputes in the district, contributing to improving the efficiency of case resolution and helping save legal resources, he said.