In the world of business, disagreements are common. Where there is a predominance of competition, there will always be contestation. Nevertheless, there are occasions when these become antagonistic, necessitating some kind of legal intervention in the form of dispute settlement.
The process of resolving disputes by taking into account the requirements and goals of all involved parties is referred to as “dispute resolution,” and it is defined as “the process by which conflicts are resolved.” Litigation is the conventional means of resolving business disputes in Singapore. This technique requires each party to initiate legal proceedings in court, most of the time in conjunction with a corporate lawyer.
Arbitration and mediation are two of the most prevalent forms of alternative dispute resolution (ADR) that are used in today’s society.
Litigation as a form of Dispute Resolution
The process of taking legal action in the shape of civil proceedings is referred to as litigation, and it is used for the purpose of conflict resolution. It requires one party (the claimant) to initiate legal action against another party (the defendant).
A letter of demand can first be drafted by an attorney on behalf of the applicant and then delivered to the opposing party. This latter entity is under the obligation to cooperate with the demands or run the risk of being taken to court. In the event that the demands are not satisfied, the attorney may suggest initiating legal proceedings, particularly if there are no other methods of conflict settlement that are feasible. There are two methods that a legal proceeding can be initiated in Singapore according to the Rules of Court, which are as follows:
- Originating Claim
- Originating Application
Originating Claim
In accordance with Order 6 Rule 1 of the Rules of Court, civil actions that contain significant factual disagreements can only be initiated through the issuance of a an originating claim. These include, but are not limited to, claims for damages as a consequence of contractual breaches, road accidents, property damage, negligence, copyright infringement, fraud, and defamation. Defamation and fraud are also included in this category.
The originating claim is a formal document (Form 8) that is delivered to the party that you intend to take action against (the defendant). Subsequently, the defendant will have to file a notice of intention to contest or not contest the originating claim in Form 10.
Originating Application
An originating application (Forms 15 or 16) is a more straightforward and expedient procedure. A claimant may commence proceedings by an originating application when the dispute concerns matters of law and there is unlikely to be any significant dispute over the facts. This is the case when the statute applies. It does not involve any pleadings or other interlocutory proceedings and is typically dependent on affidavits that have been filed by appointed lawyers or by the plaintiffs themselves. In the event that certain prerequisites concerning an originating claimare met, the originating application is able to undergo any necessary modifications.
What do arbitration and mediation mean?
Arbitration and mediation both require the participation of an impartial third party. The neutral third party in mediation is referred to as the “mediator,” and their role is to facilitate the parties’ conversations. In these kinds of negotiations, the goal is for the parties to reach an arrangement that is satisfactory to both of them. This indicates that the arrangements were arrived at on a willing basis. When a dispute is settled through arbitration, the decision-making authority rests with an impartial third party, known as the “arbitrator.”
Mediation
Mediation is often used in disputes where the parties involved have an ongoing relationship, such as in divorce or business disputes. Mediation is a confidential process, and the mediator does not have the power to impose a decision on the parties. The mediator’s role is to facilitate communication and help the parties find a mutually acceptable solution.
‘Mediation’ is defined in section 3(1) of the Mediation Act 2017 (No. 1 of 2017) as:
“a process comprising one or more sessions in which one or more mediators assist the parties to a dispute to do all or any of the following with a view to facilitating the resolution of the whole or part of the dispute: (a) identify the issues in dispute; (b) explore and generate options; (c) communicate with one another; (d) voluntarily reach an agreement”.
In Singapore, mediation is recognised as an effective method of dispute resolution, and the Singapore Mediation Centre (SMC) is one of the leading providers of mediation services in the region. The Singapore Mediation Centre Act (Cap. 285A) provides for the establishment of the SMC and sets out the functions of the Centre. Since its inception on August 16, 1997, the SMC has reportedly handled 4,900 cases with a total value of more than S$10 billion. It settles about 70% of cases, with 90% of those being handled on the same day.
The UN Convention on International Settlement Agreements Resulting from Mediation, also called the Singapore Convention on Mediation, was signed by Singapore on August 7, 2019, and approved on February 25, 2020. The Singapore Convention on Mediation Act of 2020, which puts the Singapore Convention on Mediation into effect, was signed into law on February 4, 2020, and it went into effect on September 12, 2020. With the Singapore Convention on Mediation going into effect, commercial parties in cross-border disputes can go directly to the courts of countries that have signed and approved the treaty to enforce a mediated settlement agreement.
Arbitration
Arbitration is often used in disputes involving international parties or where the parties involved want to keep their dispute private. Arbitration can be faster and less expensive than litigation, and the arbitrator’s decision is final and binding.
Singapore is one of the preferred countries for arbitration because of its pro-arbitration stance and its reputation as a reliable and neutral venue for international arbitration. The Singapore International Arbitration Centre (SIAC) is a leading arbitration institution that offers world-class arbitration services. The International Arbitration Act (Cap. 143A) governs international arbitration in Singapore and provides for the enforcement of arbitral awards. Singapore, like many other countries that have adopted the Model Law, has passed domestic law (the International Arbitration Act, or “IAA”) that implements the Model Law. The Singaporean judicial approach to applying the IAA is heavily influenced by the principle of minimising judicial interference and a pro-arbitration ideology.
Why Singapore is one of the preferred countries for Arbitration?
The promotion of Singapore throughout Southeast Asia and beyond as a centre for the provision of legal services has been the top objective of the government of Singapore. Because of its consistent political and legal stability, a broad selection of experienced arbitrators, and strict adherence to international standards of conduct, it is the site of choice for impartial arbitration. As a result of the extremely high demand for these services, the Singapore International Commercial Court was established in 2016 in order to bolster the worldwide arbitration presence of the Singapore International Arbitration Center (SIAC). Even though they were having trouble implementing stringent lockdown measures during the Covid-19 pandemic, the country’s swift transformation to remote hearings has cemented their position as leaders in this field.
Within a few days of the declaration of national lockdowns, the SIAC had already published a number of notices that were in agreement with the most recent regulations. It was one of the first transitions to fully virtual platforms and included instructions for the use of a dedicated case management email for the purposes of e-filing and e-payment. In order to emerge in 2021 as Asia’s most popular seat of arbitration and the world’s second most popular seat of arbitration overall, Singapore has capitalized on its advantageous location, non-partisan foreign policy, legal, political, technological, and economic infrastructure, as well as a skilled and growing workforce. This has allowed Singapore to become the one of the most popular seats of arbitration overall.
Conclusion
In Singapore, there is a growing consensus in favour of the use of adjudication. In tandem with the increase in regional arbitrations, both governments and courts have adopted a pro-arbitration stance, paving the way for more people to use arbitration to settle their legal disputes. Institutions that administer arbitration in Asia have updated their procedures in order to better serve corporate clients. It is hoped that the arbitration scene will continue to thrive in the coming years, despite the fact that there have been some bumps along the road.
Please note that this article does not constitute express or implied legal advice, whether in whole or in part. If you would like an initial consultation or simply more information, please email us at info@silvesterlegal.com or contact:
Walter Silvester, Managing Director
