Chinese legislators on Saturday passed the People's Mediation Law on the final day of the bimonthly meeting of the Standing Committee of the National People's Congress (NPC), the top legislature.

The law establishes the people's mediation committee as the legal organization to resolve everyday disputes, and sets down the procedure for formation of such an organization within community committees.

The law stipulates that governments at county levels and above shall provide financial support for mediation work and shall honor and reward outstanding mediation committees and mediators.

The law encourages people to settle disputes at the neighborhood-level, outside of courts and arbitration.

To achieve that goal, the law streamlines the relation between mediation and other kinds of dispute resolution methods. It provides that courts at the grassroots level, as well as police offices, should inform parties involved in disputes about the possibility of solving such disputes through mediation.

The law also spells out that agreements reached in the mediation procedure are legally binding and can be enforced by courts upon one party's request.

Nonetheless, the law stipulates that mediation should be carried out in accordance with the parties' real intent. If one of the parties in dispute has explicitly refused to resolve the problem through mediation, the mediation should not be undertaken.

In China, people traditionally regard going to court as a very serious action, so resolving disputes through mediation has become popular.

China has more than 4.9 million mediators working in more than 800,000 mediation committees, according to the Ministry of Justice.

These organizations handled more than 7.67 million disputes last year, with a 97.2-percent resolution rate, while only 1 percent went on to litigation.