ADR In Singapore Developments And Trends.

Legal News & Analysis - Asia Pacific - Singapore – Dispute Resolution

24 February, 2016

 

KEY POINTS

 

Since the 1990s, Singapore has improved access to various ADR options to resolve disputes. With relative ease, parties may deploy alternatives to traditional court litigation or arbitration, and are actively encouraged to do so.

 

The Singapore government's enthusiastic support, partnered with backing by senior members of the judiciary over recent years, has driven the city state's embrace of ADR. Mediation's position as a hybrid process to complement the long-established arbitration framework is certainly one to watch. At Kuala Lumpur's Arbitration Week 2015, Singapore's Attorney General VK Rajah and Australian arbitrator Doug Jones both predicted an increase in the use of mediation in the coming years (especially given the success of hybrid mediation procedures in various jurisdictions). Given its support for ADR and the infrastructure already in place, Singapore is well placed to benefit from such trends in the future.

 

Singapore has taken proactive steps to promote the use of ADR in recent years. Various schemes and initiatives have been developed since the 1990s to encourage disputing parties to consider resolving their differences through ADR before resorting to formal legal proceedings.

 

These initiatives have mainly been driven by Singapore's courts and legislature, especially through the development of three main categories of institutionalised mediation: 

 

  • court-based mediation
  • private mediation, and
  • community-based mediation.

 

In this article we consider these interlinked developments, and summarise the position in relation to two other ADR processes, expert determination and dispute adjudication boards.

 

MEDIATION

 

The expansion of institutionalised mediation in the US and Europe in the 1970s and 1980s spilled over into Singapore in the 1990s, where it was used to complement existing court processes.

 

COURT-BASED MEDIATION

 

The first manifestation was introduced to the court system in 1992 when the judiciary incorporated Pre-Trial Conferences (PTCs) into civil cases before the Supreme and Subordinate Courts (Subordinate Courts were renamed State Courts in 2014). PTCs were led by a registrar who considered how to handle each case in the most efficient manner and encouraged the parties to discuss settlement on a without prejudice basis.

 

In 1994 the Primary Dispute Resolution Centre (PDRC) was established to provide alternative dispute resolution services within the court system, with judges specifically trained in ADR. The PDRC offered mediation and neutral evaluation for civil matters brought before the courts.
 

In 1996, PTCs were formalised though O34A of the Rules of Court of Singapore, which empowered the court to order the parties’ attendance at confidential PTCs, or to make other orders/directions appropriate for the just, expeditious and economical disposal of the dispute at any point once proceedings had commenced.

 

PRIVATE AND COMMUNITY-BASED MEDIATION

 

Around the same time, a Committee on Alternative Dispute Resolution was established to study how ADR could be promoted outside the courts. The committee found that there was a need for a framework that encompassed fast, inexpensive and non-confrontational mechanisms for conflict resolution. In July 1997, the committee made the following recommendations: (i) create a commercial mediation centre under the Singapore Academy of Law; and (ii) establish a network of accessible community mediation centres to foster community cohesion. The recommendations were quickly acted on, leading to the establishment of the Singapore Mediation Centre (SMC) in 1997 and a network of community mediation centres from 1998.

 

SPECIFIC SCHEMES

 

Subsequently, various pro-ADR schemes were introduced in the courts. These included the pre-action protocol for non-injury motor accident (NIMA) claims in 2002, where a judge would conduct neutral evaluation on the merits of the case, and the ADR Form introduced in 2010 at the Summons for Direction stage of civil disputes before the State Courts. The ADR Form requires parties and lawyers to certify that they have discussed ADR options and indicate on the form the decision they have reached as to its use. 

 

The success of these ADR schemes encouraged many organisations to establish independent ADR services, some of which are industry specific. Examples include: Eagles Mediation and Counselling Centre (a non-profit organisation providing family mediation and counselling services), the Consumer Association of Singapore Mediation Centre, the Financial Industry Dispute Resolution Centre, the Singapore Institutes of Surveyors and Valuers Mediation Centre, the Law Society’s SCMediate Scheme, and Law Society’s Cost Dispute Resolve scheme.

 

The Intellectual Property Office of Singapore (IPOS) and the World Intellectual Property Organisation Arbitration and Mediation Centre (WIPO Center) have also entered into a tie-up arrangement whereby, since January 2012, parties to any trademark proceedings pending before the IPOS may submit their dispute to mediation using the WIPO Mediation Rules. It is understood that all three cases referred to mediation under the IPOS-SIPO trademark mediation procedure have resulted in settlement.

 

ADR IN THE HIGH COURT

 

In a similar vein to the ADR Form used in the State Courts, in 2013 the High Court Practice Directions were amended to allow a party to serve an ADR Offer when it wished to attempt ADR. Such an offer should be taken into account by the High Court when considering costs orders. 

 

PRESUMPTION OF ADR IN THE STATE COURTS

 

The State Courts adopted a "presumption of ADR" for all civil disputes through Practice Directions Amendment No.2 of 2012. It provides that "ADR should be considered at the earliest possible stage". Instead of trial, parties could instead opt for:

 

  • mediation at the PDRC
  • mediation at the SMC
  • neutral evaluation at the PDRC, or
  • arbitration under the Law Society's Arbitration Scheme (LSAS).

 

Due to the voluntary and consensual nature of ADR, the Practice Directions Amendment allows for parties to opt out of ADR if they so wish. However, in order to discourage parties from easily sidestepping it, the courts are technically permitted under the Rules of the Court to make adverse cost orders against successful parties who refuse to mediate or attempt ADR. To date, such orders have rarely been made. 

 

CURRENT TRENDS

 

Today, the use of ADR is well entrenched in the state courts. In March 2015, the state courts released impressive results of the 2013–14 PDRC survey of mediated claims within the Magistrate's Court jurisdiction:

 

100% of the parties surveyed indicated that mediation had reduced the total time they would have spent in court

95% of the lawyers surveyed agreed that mediation helped them to avoid additional legal costs

73% of the lawyers surveyed further indicated that participation in mediation had lowered their clients’ total litigation costs

 

PRESUMPTION OF ADR IN THE STATE COURTS

 

The State Courts adopted a "presumption of ADR" for all civil disputes through Practice Directions Amendment No.2 of 2012. It provides that "ADR should be considered at the earliest possible stage". Instead of trial, parties could instead opt for:

 

  • mediation at the PDRC
  • mediation at the SMC
  • neutral evaluation at the PDRC, or
  • arbitration under the Law Society's Arbitration Scheme (LSAS).

 

Due to the voluntary and consensual nature of ADR, the Practice Directions Amendment allows for parties to opt out of ADR if they so wish. However, in order to discourage parties from easily sidestepping it, the courts are technically permitted under the Rules of the Court to make adverse cost orders against successful parties who refuse to mediate or attempt ADR. To date, such orders have rarely been made.

 

94% of the lawyers surveyed agreed that mediation had given their clients a more favourable result than going to trial

81% of the parties surveyed agreed that mediation had helped them in their relationship with the other person

99% of the lawyers and parties surveyed agreed that they would recommend mediation to others

 

In a court users survey administered by Forbes Research Pty Ltd in 2014, more than 90% of the respondents agreed that mediation services provided by the courts through the PDRC contributed to early settlement, resulting in costs savings for litigants. According to the State Courts, the ADR services it provided led to more than 80% of civil claims and Magistrate’s Complaints referred for court ADR being successfully resolved in the survey period. 

 

DEVELOPMENT OF INTERNATIONAL ADR IN SINGAPORE

 

In April 2013, Chief Justice Sundaresh Menon and the Ministry of Law appointed Mr Edwin Glasgow CBE QC and Mr George Lim SC to co-chair a nine-member International Commercial Mediation Working Group (ICMWG). The ICMWG was tasked with devising plans to develop international commercial mediation in Singapore in response to the marked growth in trade and investment in Asia. An increase in demand for quality international ADR services was clearly envisaged.

 

The ICMWG's recommendations, submitted in November 2013 included:

 

Quality Standards

establish a professional body to set standards and provide accreditation for mediators

+

International Mediation Services

establish an international mediation service provider to offer a quality panel of international mediators and experts, as well as user centric innovative products and services

+

Legislative Framework enact a Mediation Act to strengthen the framework for mediation in Singapore

Exemptions and Incentives extend existing tax exemptions and incentives applicable for arbitration, to mediation

+

Judicial Support

enhance rules and court processes to encourage greater use of mediation 

 

The ICMWG's recommendations culminated in the launch of the Singapore International Mediation Centre (SIMC) and the Singapore International Mediation Institute (SIMI) in November 2014. SIMC offers mediation of cross-border commercial disputes, hosting a panel of internationally respected mediators drawn from around the world. One of the distinguishing features of SIMC is its hybrid Arb-Med-Arb Protocol (AMA Protocol), which is discussed in detail on pages 10-12 of this guide.

 

SIMI's primary function is as a professional standards body for the training, assessment and accreditation of mediators. It is also tasked with increasing public awareness of mediation. Tax and work pass exemptions have been put in place for non-resident mediators practising in Singapore.

 

The enactment of a Mediation Bill is expected sometime in 2016. It has been proposed that the Mediation Act contain a provision to the effect that mediated settlement agreements are enforceable as court orders. If enacted, this would substantially enhance the enforceability of successfully mediated cases.

 

EXPERT DETERMINATION

 

Expert determination involves the contractual parties appointing an independent third party with recognised expertise in the subject matter of the dispute to resolve the dispute. As such, the types of dispute that are referred to expert determination usually involve discrete technical or valuation issues rather than legal questions.

 

Expert determination is gaining popularity in Singapore and is most commonly seen in disputes concerned with the construction, intellectual property, energy and resources sectors. For example, the Singapore Institute of Architects (SIA) has provided in its Conditions of Contract the option for contracting parties to resolve their disputes via expert determination under the SIA Expert Determination Rules, which are amongst the first of their kind in Asia. Also, since 1 April 2014, the IPOS-WIPO Center tie-up also give parties to contentious patent proceedings before the IPOS an option to refer such disputes to expert determination under the WIPO Expert Determination Rules. 

 

A BINDING PROCESS

 

Expert determination is recognised in Singapore as a creature of contract. It has the advantage of being final and binding, resulting in greater certainty of outcome and advantages in cost and speed. Because an expert's remit is entirely dependent on agreement, parties are generally free to create their own rules for the determination process. An expert decision becomes, in effect, another term in the contract and the winning party may enforce the decision through the courts as a breach of the contract by the recalcitrant losing party (who agreed to be bound by the decision). Should a Singapore law contract provide that disputes are to be resolved by expert determination, the courts would recognise such an agreement. The case of Geowin Construction Pte Ltd (in liquidation) v Management Corporation Strata Title Plan No.1256 [2006] SGHC 245 confirms that the only errors a Singapore court may correct are those that appear on the 'face' of the decision. The expert's reasoning itself ought not to be re-examined. This would be synonymous to an appellate hearing and, thus, contrary to what the parties had contracted and "tantamount to rewriting the bargain" (Evergreat at 45).

 

As such, in Singapore, if two parties agree to employ expert determination, even if the expert makes a mistake (that is not dishonest nor in bad faith), the parties will still be bound by his/her decision. Errors of law or fact would not invalidate an award unless the expert acted ultra vires his contractual scope. Essentially, the expert need only adhere to the behaviour provided for in the contract between the disputing parties. If the parties want, for example, a thoroughly reasoned and analytical award, the contract must provide for it.

 

DISPUTE ADJUDICATION BOARDS (DABS)

 

DABs are a project-specific dispute resolution process, often comprising a panel of three persons (one appointed by each party with a neutral chairperson). DABs provide a binding decision pending subsequent determination by a court or arbitral tribunal, should the losing party fail to comply with the decision.

 

DABs are used primarily in the construction industry. The issue of enforcement of a DAB decision has been the subject of considerable debate and uncertainty in Singapore recently. The CoA's decision in PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (Indonesia) [2015] SGCA 30 handed down in May 2015 should clear the way for contractors to enforce DAB decisions going forward, providing important support for the ‘pay now argue later’ framework.

 

A full analysis of the CoA's decision can be found in our article on HSF Arbitration Notes1. In summary, the CoA:

 

  • clarified the differences in terminology between "partial" and "interim" awards capable of enforcement in Singapore under the International Arbitration Act (Cap. 143A) (IAA), and "provisional" awards which
  • are not;
  • held that insofar as an interim award was a final and binding determination on the specific question of whether the employer is contractually obliged to pay the contractor the disputed sum pending a separate award on the merits, the interim award was a final award under the IAA; and
  • held that a failure to comply with a binding DAB decision (here, to make payment) may be directly referred to arbitration.

 

The decision balances the interests of contractors and employers by ensuring that contractors continue to have necessary cashflow to continue operations, whilst preserving the right of employers to contest the merits of the claim(s) underlying the DAB decision. 

 

herbert smith Freehills

 

For further information, please contact:

 

Emmanuel Chua, Herbert Smith Freehills

emmanuel.chua@hsf.com