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Singapore competes as an international dispute resolution centre

by Philip McMullan on 25 Nov 2016

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Singapore has been steadily growing in importance as an international dispute resolution centre in Asia Pacific in recent years. The Singapore International Arbitration Centre's (SIAC) 2015 annual report noted that the jurisdiction had enjoyed its best year since the body was founded in 1991. Not only was it a record year in terms of the highest ever number of cases filed (271), SIAC also reported that the cases involved the highest ever total of sums in dispute – S$6.23bn, around US$4.4bn.

Singapore is vying with Hong Kong for the top spot in Asia Pacific but still has some way to go. The Hong Kong International Arbitration Centre's (HKIAC) 2015 annual report records 271 arbitrations, 22 mediations and 227 domain name disputes. The total aggregate sums in dispute for arbitration matters were US$6.2bn, around a third more than Singapore. Hong Kong has a six-year head start on Singapore (HKIAC was founded in 1985), so it is not surprising that it hosts more international arbitrations. But now the city-state is bringing forward legislation to make alternative dispute resolution (ADR), whether arbitration or mediation, more accessible, hoping to close the gap on its rival.  

Making mediation easier in Singapore

At the beginning of November, Singapore's Ministry of Law submitted the Civil Law (Amendment) Bill 2016 and Mediation Bill 2016 for first reading in parliament.

First off, let's consider Singapore's Mediation Bill 2016, which aims to support international commercial mediation by strengthening the enforceability of mediated settlements.

The Bill will apply to all types of mediation (but is primarily aimed at international commercial mediation) and will codify a number of issues currently dealt with under common law, including confidentiality of communications in the context of mediation. The Singaporean authorities hope the move will provide greater certainty and clarity for commercial parties who opt to conduct their mediation in the jurisdiction.

The key features of the Bill fall into four broad categories, all designed to make mediation a realistic alternative to litigation by supporting the process and making enforceability more straightforward.

1. Stay of court proceedings provisions

The Bill provides parties with a statutory basis to apply to court for an order to stay on-going court proceedings, pending the outcome of mediation. Such provisions mirror what is available for arbitration, and will provide greater certainty and clarity to parties by ensuring that their legal position is preserved pending the outcome of the mediation.

2. Restrictions on disclosure and admissibility provisions

The Bill also contains provisions that preserve the confidentiality of mediation proceedings, and clarify the circumstances in which such communications can be disclosed, or else admitted into court as evidence. This effectively allows parties to discuss settlement without worrying about those discussions being relied upon by the opposition in a later court hearing.

3. Enforceability of settlement agreements resulting from mediation

Currently, if there is a breach of a mediated settlement agreement in Singapore, the aggrieved party needs to institute court proceedings to enforce the mediated settlement agreement as a breach of contract. The proposed changes will allow consenting parties to record a mediated settlement agreement as an order of court upon reaching their settlement. This will enable the settlement agreement to be directly enforceable as a court order, should there be a subsequent breach by one of the parties.

4. Exceptions under the Legal Profession Act currently applicable to arbitration will be extended to mediation

While mediation is not commonly understood to involve the practice of law, in certain cases the relevant law may be discussed during the mediation session. This amendment will make clear that participation by foreign mediators and foreign-qualified counsel in such mediation sessions will not amount to the unauthorised practice of Singapore law.

Third-party funding and arbitration

The other reform put forward, Singapore’s Civil Law (Amendment) Bill 2016, concerns third-party funding. As predicted by this blog, the door to third-party funding is being opened – although just a little.

The Bill will "provide that in certain prescribed categories of proceedings, third-party funding contracts are not contrary to public policy or illegal. These categories will be specified in subsidiary legislation after the Bill comes into force. The first category will be international arbitration (and related) proceedings."

So, third-party funders will be allowed to operate, but within clearly defined boundaries set out by the authorities, as the Bill states that "third-party funding may only be provided by an entity which meets the criteria set out in subsidiary legislation; and allow requirements to be imposed on funders through subsidiary legislation."

The government of Singapore understands that dispute resolution is a global concern and the fact that it has put forward these pragmatic reforms to its ADR framework is to be entirely welcomed; there is little doubt that the proposed provisions will pass into law in due course. However, whether Singapore or Hong Kong will win the race to become Asia Pacific's leading dispute resolution centre will take a little longer to play out.

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Topics: International Arbitration, ADR, Mediation

Philip McMullan

Written by Philip McMullan