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Singapore – State Strengthens Its Dispute Resolution Capabilities.

16 January, 2015

 

Legal News & Analysis – Asia Pacific – Singapore  Dispute Resolution

 

Singapore’s importance as a regional centre for dispute resolution is set to be bolstered by the establishment of the Singapore International Mediation Centre (“SIMC“). The SIMC increases the range of dispute resolution options available to companies looking to resolve their cross-border disputes in Singapore, sitting alongside the well-established Singapore International Arbitration Centre (“SIAC“).


Here, we briefly outline how this new institution might assist the resolution of cross-border disputes.

 

Background


The SIMC was officially launched on 5 November 2014 following the recommendations of an International Commercial Mediation Working Group.


The main purpose of SIMC is to provide a forum for international parties to resolve their disputes by mediation: a process of formal negotiation separate to more adversarial dispute resolution procedures such as arbitration and court litigation.  A copy of SIMC’s Mediation Rules can be found here.


In addition to SIMC’s standard Mediation Rules, it will also link-up with SIAC to promote international arbitration through a new Arb-Med-Arb protocol (the “AMA Protocol“). The concept of combining mediation and arbitration is not new. A number of institutions provide for it, including the International Chamber of Commerce (ICC), Hong Kong 

 

International Arbitration Centre (HKIAC) and the Japan Commercial Arbitration Association (“JCAA“).

 

Further, Japan’s Arbitration Law1 already permits one or more arbitrators to assist in any attempt to settle the dispute before them, provided that the parties consent.2


If parties wish to use the AMA Protocol they can either (a) include a model clause in their contract(s) or (b) if parties have already commenced a SIAC arbitration, refer their dispute separately to the SIMC for mediation at any stage.


The AMA Protocol


The AMA Protocol works as follows:

 

  • A claimant wishing to commence an arbitration will file a Notice of Arbitration with the Registrar of SIAC in accordance with either (i) the SIAC Rules or (ii) the UNCITRAL Rules;
  • The Registrar of SIAC will inform SIMC that an arbitration has commenced under the AMA Protocol within four working days from either (i) the start of the arbitration or (ii) the parties’ agreement to refer their dispute to mediation under the AMA Protocol;
  • After the respondent has filed its Response to the Notice of Arbitration, and the Tribunal has been constituted, the Tribunal will stay the arbitration for mediation at SIMC; and
  • Upon receiving of the case file from SIAC, SIMC will fix a date for the mediation to be conducted under the SIMC Mediation Rules (the “Mediation Commencement Date“). Unless the Registrar of SIAC, in consultation with the SIMC, grants an extension of time the mediation shall be completed within eight weeks of the Mediation Commencement Date.
 

If the parties can settle their dispute through the mediation, then the settlement will be presented to the Tribunal in the form of a consent award (addressed further below). But if the parties cannot settle, the SIAC arbitration can continue.


There are a number of features of the AMA Protocol that might be of interest to parties looking to resolve their dispute using this mechanism, in particular:

 

  • The AMA Protocol provides for the mediator(s) and arbitrator(s) to be appointed separately by SIMC and SIAC respectively. Due to concerns about procedural fairness and impartiality this will usually mean that different individuals are appointed. This can be important because parties may be less willing to make concessions or explain fully their position to a mediator if it ultimately falls to him or her to render an award as an arbitrator. However, the parties are free to waive any potential or actual conflict of interest that would arise if an arbitrator also acted as a mediator;
  • The mediation will be conducted on a confidential basis such that information disclosed cannot be subsequently used in the arbitration (although this matters less if a mediator also acts as an arbitrator), and all discussions will be conducted on a without prejudice basis; and
  • By linking the mediation with an on-going arbitration, the parties can submit a settlement agreement to the SIAC Tribunal in the form of a consent award. A consent award can be adopted by a Tribunal as an arbitral award and, subject to any local legislation and/or requirements, is generally enforceable as an award under the New York Convention. However, any matters dealt with in the settlement agreement that fall outside of the scope of the arbitration agreement (for example, if parties wish to commit to enter into a new contract as part of any settlement), would likely need to be encapsulated in a separate agreement.

 

 

Conclusions


The establishment of SIMC represents Singapore’s latest efforts to place it at the forefront of international dispute resolution. Mediation is not always a suitable dispute resolution procedure (particularly in cases where the relationship between the parties has deteriorated significantly) but statistics released by global mediation service providers indicate that where a dispute is referred to mediation, in the region of 70-85% of disputes are resolved successfully.3 Whether there is a significant take-up of the AMA Protocol remains to be seen.


In addition to SIMC, a separate Singapore International Commercial Court (“SICC”) is expected to open for business in the next year or so. It is suggested that the SICC, a division of the High Court of Singapore and part of the Supreme Court of Singapore, will be governed by a bespoke set of rules tailored to international commercial litigation. It will thus operate as an alternative to arbitrating a dispute with SIAC.

 

End Notes:

 

1 Law No.138 of 2003, section 38(4)

 

2 This position is reflected in the JCAA’s International Commercial Mediation Rules (Rules 8 and 11)

 

herbert smith Freehills

 

For further information, please contact:

 

Peter Godwin, Partner, Herbert Smith Freehills
peter.godwin@hsf.com


Dominic Roughton, Partner, Herbert Smith Freehills
dominic.roughton@hsf.com


David Gilmore, Partner, Herbert Smith Freehills
david.gilmore@hsf.com


Elaine Wong, Herbert Smith Freehills
elaine.wong@hsf.com


Christopher Hunt, Herbert Smith Freehills
christopher.hunt@hsf.com

 

Rob Javin-Fisher , Herbert Smith Freehills
rob.javin-fisher@hsf.com

 

Herbert Smith Freehills Dispute Resolution Practice Profile in Singapore

 

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