OFFERING OPPORTUNITIES FOR MEDIATION TO ARBITRATION CASES

Legaltimes_SIMC

 

[Translated by Singapore International Mediation Centre]

Legal Times (Published on 7 May 2017)

OFFERING OPPORTUNITIES FOR MEDIATION TO ARBITRATION CASES

Singapore’s ‘Arb-Med-Arb’ Protocol

If the mediation is successful, the settlement can be converted into a binding consent award

“International Trends in Alternative Dispute Resolution: Arbitration-Mediation-Arbitration” was held at the Seoul Global Trade Center on 11 April 2017 and organized by the Seoul International Dispute Resolution Centre (SIDRC), the Korea Commercial Arbitration Board (KCAB) and the Singapore International Mediation Center (SIMC). The panelists for this seminar were Mr George Lim S.C. Chairman of the Singapore International Mediation Centre, Mr. Oh Jae-Chang, Partner of Haemaru Law, and Mr. Lim Sung Woo of Lee & Ko.

The three panelists were of the view that the high volume and speed of international commercial transactions today had created a need for an effective conflict resolution mechanism positioned between litigation and arbitration. The unique ‘Arb-Med-Arb’ process, where a dispute could be referred to mediation after parties had filed for arbitration, represented a mechanism that could be useful for disputing parties to achieve an enforceable outcome at a lower cost.

Co-hosted by SIDRC, KCAB, SIIVIC

Mr George Lim S.C has been a mediator and arbitrator for over 20 years. Drawing on his experience, he shared a case he mediated between a Singapore and Taiwan company that showed how mediation made it possible to settle disputes while preserving relationships. He observed that the final outcome, a renewed business relationship, was something that could not be achieved through arbitration or litigation.

Adjustable, flexible agreement

In addition, Mr. George Lim elaborated on the benefits of mediation including the time and financial savings, preservation of confidentiality, achievement of creative and flexible outcomes, and contribution to social harmony.

Amongst the SIMC cases that had used the unique Arb-Med-Arb process, many were referred because the dispute clause in their contracts required parties to refer disputes for resolution under the Arb-Med-Arb Protocol.

Under the Arb-Med-Arb Protocol, the Tribunal would stay the arbitration process and allow the parties to proceed for mediation within an 8-week window. Parties who cannot settle their disputes through mediation may continue with the arbitration proceedings. In the event of a settlement of the dispute by mediation between the parties, SIMC shall inform the Registrar of SIAC that a settlement has been reached. If the parties request the Tribunal to record their settlement in the form of a consent award, the parties or the Registrar of the SIAC shall refer the settlement agreement to the Tribunal and the Tribunal may render a consent award on the terms agreed to by the parties.

A consent award is generally accepted as an arbitral award and, subject to any local legislation and/or requirements, is enforceable in the approximately 150 New York Convention member states.

Commenting on the Arb-Med-Arb procedure of SIMC-SlAC, Mr Oh Jae Chang and Mr Li Sung Woo agreed with the merits of mediation as highlighted by Mr George Lim S.C., especially when the disputed amounts were small and the high cost of arbitration or litigation made it disadvantageous to pursue such processes. They noted that under the Arb-Med-Arb Protocol, parties were allowed to request for the arbitrator of the case to act as their mediator provided all parties expressly agreed to this.

Participants were also very interested in the efficacy and coordination of the Arb-Med-Arb procedure. Responding to their queries, SIMC Deputy Chief Executive Officer, Mr Aloysius Goh, shared that 6 out of SIMC’s 26 cases had adopted the Arb-Med-Arb Protocol. Two of them were reached partial settlement, two were settled before mediation commenced, and two cases had only been recently filed and had not yet been mediated.

SIMC Users Council Member, Ms Liz Kyo-Hwa Chung of Kim & Chang, observed that mediation was useful to help business partners reach creative and amicable outcomes. She further noted that the Arb-Med-Arb Protocol offered by the SIMC-SIAC was particularly useful as it enabled parties to obtain a binding order through mediation. Reflecting on arbitration and litigation, she reiterated that these were adversarial processes that would often inevitably lead to an escalation of the conflict and to greater costs and broken relationships.

SIMC-SIAC’s Arb-Med-Arb Procedure:

  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.

Choice of Mediator

Under the SIAC-SIMC Arb-Med-Arb Protocol, the arbitrator(s) and the mediator(s) will be separately and independently appointed by SIAC and SIMC respectively, under the applicable arbitration rules and mediation rules of each Centre. Unless the parties otherwise agree, the arbitrator(s) and the mediator(s) will generally be different persons.