Herbert Smith Freehills ADR in Asia Pacific Guide – Spotlight on Singapore

On 16 February 2016, the Singapore office of Herbert Smith Freehills (HSF) officially launched the second edition of its “ADR in Asia Pacific” Guide series, with the latest edition placing the spotlight on Singapore (ADR Guide).

Amongst others, the ADR Guide features an interview with Ms Eunice Chua, Deputy CEO of SIMC, as well as an article that considers the SIAC-SIMC Arb-Med-Arb protocol titled “Med-Arb, Arb-Med and the Arb-Med-Arb protocol”. Excerpts from these are reproduced below.

INTERVIEW WITH MS EUNICE CHUA DEPUTY CEO OF THE SINGAPORE INTERNATIONAL MEDIATION CENTRE

Deputy Chief Executive Officer of the Singapore International Mediation Centre (SIMC), Eunice Chua, has been part of SIMC’s executive team since its inception in November 2014. Prior to that Eunice served as Assistant Registrar of the Singapore Supreme Court, a Magistrate of the Singapore State Courts and Assistant Director of the Singapore Mediation Centre (SMC). Here, she gives her insights into how mediation in Asia is changing, and SIMC’s contribution to that landscape with its innovative AMA Protocol.

Do you think there is a difference in Western and Asian attitudes towards adopting … hybrid dispute resolution mechanisms?

From my experiences working in Asia, I do think that Asian companies can see the benefits that alternative and hybrid dispute resolution mechanisms can provide although they are not as commonly used as in western companies. Anecdotally, the big Asian companies have very hierarchical structures, and their risk-taking appetite is smaller. When you look at these large companies, bosses are traditionally more familiar with litigation. Also, amounts recovered through litigation can seem larger than amounts agreed in ADR, at least before the time and monetary costs of litigation are factored into the equation.

Western companies may not be entirely comfortable with how mediation has developed in Asia, because some Asian courts have directed disputes to be settled by mediation instead of litigation. Such mediation may be conducted in a very directive, interventionist manner, which Western companies may not be open to, nor understand.

SIMC and SIAC are promoting hybrid dispute resolution as another alternative. They have introduced the AMA Protocol. This Protocol allows parties to commence arbitration, suspend arbitration to attempt mediation, and either return to arbitration if mediation proves unsuccessful, or if settlement is reached, record the settlement as a consent award in the arbitration … This assists with enforcement under the New York Convention.

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What can hybrid ADR mechanisms offer that traditional methods such as litigation or arbitration cannot?

This question takes me back to my days as an Assistant Registrar in the High Court. I witnessed many litigation cases where procedure was, and still is, used to hinder the opposing parties’ legal case. I think the procedural requirements in litigation, and sometimes arbitration, do get in the way of really getting to the heart of the dispute. You might win an interlocutory hearing but in the grand scheme of things it might not move the case forward towards a proper resolution.

In contrast, mediation … is not so concerned about procedural formalities. The focus is very much on what the parties need to move forward and what the ideal solution is. There is a strong emphasis on finding commercial business solutions.

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Another important stakeholder to ADR success is the legal adviser. Do you agree that if lawyers are not open to ADR, then it is unlikely parties will be receptive to including mediation or the AMA Protocol in a dispute resolution clause?

I agree that lawyers play a very important role in encouraging parties to try Arb-Med-Arb. Even in the mediation process itself, they play a crucial role. Mediators tell us that the best mediations they have conducted are those where the lawyers have done a lot of preparatory work, and have discussed what their clients really want and what they can give up. In such cases, the mediation plays out almost on its own.

I do like to think that most lawyers will not shy away from encouraging ADR just because they want to make money. Most lawyers know that they may be paid less for a dispute that goes to ADR, but they also need to discharge their professional duties to their clients and seek to maintain a long-term relationship with them. ADR has also been around for a long time and no one has gone out of business because of it.

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MED-ARB, ARB-MED AND THE ARB-MED-ARB PROTOCOL

SIMC supplements the array of international dispute resolution options available in Singapore. The new Protocol known as the Arb-Med-Arb Protocol (AMA Protocol), to be administered by SIMC in conjunction with SIAC, has the aim of promoting the use of mediation within the framework of international arbitration.

We consider the issues that hybrid dispute resolution procedures present, and how SIMC aims to tackle these through the AMA Protocol. We also set out a quick-reference flow chart, detailing the AMA procedure.

HYBRID PROCEDURES

The concept of hybrid arbitration/mediation procedures is not a new one. Various prominent institutions including the International Centre for Dispute Resolution (ICDR), the International Chamber of Commerce (ICC), the Hong Kong International Arbitration Centre (HKIAC) and CIETAC all recognise and support the use of mediation as a precursor to arbitration or during the arbitral process. Indeed, the Singapore International Arbitration Act, (Cap. 143A) (IAA) itself already contemplates the use of conciliators / mediators during the arbitral process. Sections 16 and 17 of the IAA in particular provide that an arbitrator may also act as a conciliator during mediation proceedings provided that parties consent.

There have been several perceived issues with hybrid procedures in the past which have resulted in relatively low rates of adoption. …

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THE AMA PROTOCOL IN A NUTSHELL

The new model AMA Protocol allows a party to commence arbitration under the auspices of SIAC, and then proceed to mediation quickly under the SIMC, then to resume arbitration if the mediation fails.

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Several key factors set the AMA Protocol apart from other hybrid procedures [i.e. Med-Arb; Arb-Med] mentioned earlier:

Speed and certainty of the process
Associated reduction in the risk of enforcement
Impartiality of arbitrators and mediators, and
Assurance of institutional support.

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Reproduced with the kind permission of Herbert Smith Freehills LLP.