Mediation growing in importance as way to settle business disputes

A dispute in an Asean country between a developer and an architectural firm went on for years but mediation settled the case within a day.

When all seemed lost and a soured relationship seemed headed for arbitration after the developer had terminated the contract for alleged breaches, both parties agreed to explore mediation first at the Singapore International Mediation Centre (SIMC).

The case, cited by SIMC chief executive Chuan Wee Meng, underscored the growing importance of mediation as a faster and cheaper way to settle commercial disputes.

“The turning point came when it became clear that the dispute was not merely about financial compensation – there was an issue of professional recognition as well,” he said.

“We believe that mediation is a time-and cost-efficient means of resolving disputes while preserving commercial relationships. This is especially important during this challenging period.

“This is why we launched the SIMC Covid-19 Protocol, which provides an economical, efficient and effective way for parties to resolve their disputes during this period.”

The protocol, which focuses on international matters, enables businesses to address disputes in a way that is commercially driven, future-oriented and helps overcome challenges posed by the pandemic, added Mr Chuan.

It was designed to complement legislation on Covid-19. In Singapore, parties who enjoy relief under the Covid-19 (Temporary Measures) Act can mediate at any time – even after an assessor’s determination.

“We work with our mediators and stakeholders to provide reduced and fixed rates so that parties can resolve their conflicts outside of court through mediation. This is our way of contributing to the business community during this pandemic,” said Mr Chuan.

Mr Chuan, who mediated the recent case with senior lawyer Francis Goh from Harry Elias Partnership, who is also SIMC ambassador and specialist mediator, said the dispute involved a new building project in an Asean country, between a developer and an architectural firm.

“While the mediation started out antagonistic between the parties, at the end of the mediation, the representatives were engaged in friendly conversation, putting them on the road to reconciliation.”

EFFICIENT WAY

We believe that mediation is a time-and cost-efficient means of resolving disputes while preserving commercial relationships. This is especially important during this challenging period.

SIMC CEO CHUAN WEE MENG

GOOD TO ENLIST HELP

I think it is good to enlist the help of your mediation institution. They can often try to facilitate talks that get the mediation started, before embarking on mediation proper.

MS EUNICE CHUA, executive director of the Financial Industry Disputes Resolution Centre.

RECENT RENAISSANCE

Mediation has enjoyed a recent renaissance, particularly following the Covid-19 pandemic as parties seek to reduce or avoid costs spent on resolving disputes.

MS YVETTE ANTHONY, OC Queen Street counsel.

Mr Chuan added: “The last thing I heard was the developer saying to the architect, ‘See you next week. We will take you to the site to show you the building.’ Apparently, the architect had not stepped foot onto this award-winning development.

“To me, this is what mediation is about: to achieve a beautiful reconciliation to a seemingly intractable problem by addressing what is truly important to the parties.”

Against the backdrop of Covid-19, more are suggesting mediation as a means to settle disputes.

Some 79 per cent of participants polled at a webinar titled Preparing For The Storm – Gearing Up For Disputes After Covid-19 earlier this month chose mediation as a better way of resolving disputes compared with arbitration, which seeks to impose a ruling after hearing parties rather than find a mediated solution mutually worked out by the parties.

The 117 participants who signed into the webinar included higher management and operations executives, as well as in-house counsel and practising lawyers, said the Singapore Business Federation (SBF), which partnered the event with the ICC (International Chamber of Commerce) Singapore Arbitration Group.

OC Queen Street counsel Yvette Anthony said: “Mediation has enjoyed a recent renaissance, particularly following the Covid pandemic as parties seek to reduce or avoid costs spent on resolving disputes.”

However, parties should note that the strength of their respective cases would be a factor as well in mediation, she added.

Premier Law partner Navin Joseph Lobo said the firm is noticing an increased use of multi-tier dispute resolution clauses in commercial contracts, which require the parties to refer their disputes to mediation before any litigation or arbitration proceedings can start.

He said this showed a growing appreciation for the advantages of mediation, such as the preservation of business relationships.

“There is recognition that the pandemic has widespread impact on parties’ abilities to fulfil contractual obligations as opposed to cases of deliberate breach where parties can become entrenched in their legal positions. This type of dispute makes it easier to resolve by a mediated settlement,” he said.

Mr Chuan said since the Covid-19 pandemic, SIMC has received more queries from parties in the region and more case filings.

He added that since SIMC’s launch in November 2014 as specialists in the mediation of cross-border commercial disputes, parties from Singapore and abroad have filed more than 120 cases with SIMC, with a total dispute value of over $4 billion.

Apart from the SIMC, which focuses on international disputes, there is also the Singapore Mediation Centre (SMC), which focuses on local disputes.

SMC has mediated more than 4,500 matters worth over $10 billion since August 1997, when it was launched.

According to its website, about 70 per cent of its cases are settled, with 90 per cent of them resolved within a day.

At the recent SBF webinar, panellist Eunice Chua was asked about how an in-house lawyer can convince management which resists mediation for commercial dispute resolution, seeing it as a sign of weakness to choose such an option.

“One suggestion is to use a risk analysis or cost benefit analysis, pointing to the 70 per cent to 80 per cent success rate in mediation, weighed against the time, the value of the dispute and the cost to be incurred compared to going to arbitration and to court,” said Ms Chua, executive director of the Financial Industry Disputes Resolution Centre.

She added: “Ultimately, in mediation, what you put in is what you get out of it. I think it is good to enlist the help of your mediation institution.

“They can often try to facilitate talks that get the mediation started, before embarking on the mediation proper.”

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