Arb-Med-Arb: The Future of Dispute Resolution?

What is Arb-Med-Arb?

Preserving relationships and maintaining confidentiality during a dispute has increasingly become a priority for savvy commercial parties.

Parties are therefore constantly exploring fresh avenues of Alternative Dispute Resolution (“ADR“) in order to minimise legal costs, preserve commercial relationships andachieve an expeditious resolution.

The Singapore International Arbitration Centre (“SIAC“) has collaborated with the Singapore International Mediation Centre (“SIMC“) to offer parties the Arb-Med-Arb Protocol (“AMA Protocol“), an attractive ADR option.

Under the AMA Protocol, parties who have commenced arbitration are to refer their dispute to mediation. If the mediation is successful, parties can then record their settlement agreement before the arbitral tribunal as an enforceable consent award.

The Stages

The AMA Protocol is relatively straightforward and easy to follow:

  1. Party A commences arbitration by filing a Notice of Arbitration (“NOA“) against Party B under the auspices of the SIAC.
  2. Party B files a Response to the NOA.
  3. The arbitral tribunal (“Tribunal“) is constituted.
  4. The Tribunal stays the arbitral proceedings and the dispute is referred to mediation under the SIMC.
  5. The SIMC mediation is to be completed within 8 weeks from the mediation commencement date.
  6. If the dispute is settled at mediation, parties can request that the Tribunal record their settlement in the form of a consent award.
  7. If the dispute is not resolved at mediation, the arbitral proceedings will resume.

Benefits of AMA

  1. The AMA process combines the advantages of mediation and arbitration into one to provide parties with an affordable and potentially expeditious ADR option.
  2. AMA allows parties to enjoy the confidentiality that arbitration provides, whilst retaining the flexibility of mediation so that parties can preserve their commercial relationships. This has taken on additional relevance in the present legal landscape as many contemporary contracts contain multi-tiered dispute resolution clauses obligating parties to use their “best endeavours” to resolve disputes before resorting to legal proceedings.
  3. The AMA Protocol provides parties with the option of recording their settlement agreement as a consent award, which is treated as an arbitral award and enforced in the same manner. This aids in the enforcement of settlement agreements as SIAC awards are recognised under the New York Convention.
  4. Mediation can help parties to avoid the pitfalls of interlocutory applications that frequently arise in arbitration / court proceedings, and to focus instead on the crux of the dispute and parties’ commercial interests.
  5. Under the AMA Protocol, the arbitrator(s) and mediator(s) are separately and independently appointed under the relevant arbitration and mediation rules to avoid issues of potential conflict of interests.
  6. SIMC’s mediators are independently certified by the Singapore International Mediation Institute (SIMI). The SIMC’s panel of mediators therefore meets the requisite high professional standards required to mediate complex cross-border disputes. The SIMC also has a panel of technical experts who can assist mediators in cases involving highly technical issues.

Model Clause

The SIMC and SIAC provide parties with Arb-Med-Arb Model Clauses that could be incorporated into their contractual agreements.

FAQ

Q: Are parties free to select the mediator(s) of their preference or are there any restrictions placed on the choice of mediators?

A: Yes. Parties are free to decide on their mediator(s) of choice from SIMC’s panel of mediators or any other mediator. If they cannot agree, a mediator will be appointed by the SIMC.

At last count, the SIMC’s panel of mediators consists of more than 65 mediators across multiple jurisdictions, with expertise in different areas of commercial practice, language skills and mediation styles. The aim is presumably to provide parties with the most appropriate mediator for their case.

Q: Are there any restrictions on the number of mediators that parties/the SIMC can appoint?

A: There is no prescription as to the number of mediators parties may wish to appoint. Notwithstanding so, generally, a single mediator is jointly appointed by the parties. If parties cannot agree, the SIMC will appoint a mediator on their behalf.

Q: How would mediation affect the timelines of an arbitration?

A: No impact. Once the mediation commences, the arbitral proceedings will be stayed.

If no final settlement is reached at mediation, the arbitral proceedings will resume.

Q: Must the AMA Clause be contained in the original contract between parties? Can parties choose to adopt the AMA Protocol later on down the road?

A: The AMA Clause does not necessarily need to be contained in the original contract between parties.

Parties can also adopt the AMA Protocol after a dispute has arisen. Both parties’ consent would be required.

Other Highlights

  • Since its launch in November 2014, the SIMC has received nine (9) cases, where the disputed sums range from just under SGD 1.5 million to more than SGD 600 million. These cases cover multiple sectors, including construction, oil and gas, shipping, aviation and sale/supply of goods and services.
  • The parties involved include companies from Singapore, the Cayman Islands, Germany, India, Korea, Laos, Macau, Malaysia, Myanmar, Taiwan, Thailand, the United States and Vietnam.
  • Three (3) of the nine (9) cases have been commenced under the AMA Protocol. Of these, two (2) cases proceeded for SIMC mediation after the commencement of arbitration; the other case went through the AMA process after the AMA clause in the parties’ original contract was triggered.

By Wei Ming Tan, International Dispute Resolution and Arbitration Lawyer
https://singaporeinternationalarbitration.com/2016/05/25/arb-med-arb-the-future-of-dispute-resolution/