Mediation and COVID-19

Singapore
This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.

The COVID-19 pandemic has led to unprecedented disruptions in the way businesses and individuals conduct their activities. In these uncertain times, it is crucial for businesses to seek more efficient and economical means to resolve their commercial disputes. To this end, many believe that mediation is can be the preferred dispute resolution forum for businesses, as it preserves the relational and commercial considerations for the future. In this update, we review some of the key developments relating to mediation in Singapore.

Update on the Ratification Status of the Singapore Mediation Convention

In December 2018, the Singapore Convention on Mediation (the “Convention”) was introduced to provide a harmonized framework for international settlement agreements resulting from mediation. The Convention directly addresses the main problem of mediation as a dispute resolution forum, which is a lack of enforceability of settlement agreements. The Convention ensures that cross-border settlements arising out of mediation are recognized as binding and enforceable, while still retaining flexibility and efficiency in the mediation process.

Since the date of the Convention Signing Ceremony on 7 August 2019, 52 countries, including the United States and China, have become signatories to the Convention:-

Participant

Signature

Ratification / Acceptance / Approval / Accession

Afghanistan

7 Aug 2019

 

Armenia

26 Sep 2019

 

Belarus

7 Aug 2019

 

Benin

7 Aug 2019

 

Brunei Darussalam

7 Aug 2019

 

Chad

26 Sep 2019

 

Chile

7 Aug 2019

 

China

7 Aug 2019

 

Colombia

7 Aug 2019

 

Congo

7 Aug 2019

 

Democratic Republic of the Congo

7 Aug 2019

 

Ecuador

25 Sep 2019

 

Eswatini

7 Aug 2019

 

Fiji

7 Aug 2019

25 Feb 2020

Gabon

25 Sep 2019

 

Georgia

7 Aug 2019

 

Grenada

7 Aug 2019

 

Guinea-Bissau

26 Sep 2019

 

Haiti

7 Aug 2019

 

Honduras

7 Aug 2019

 

India

7 Aug 2019

 

Iran (Islamic Republic of)

7 Aug 2019

 

Israel

7 Aug 2019

 

Jamaica

7 Aug 2019

 

Jordan

7 Aug 2019

 

Kazakhstan

7 Aug 2019

 

Lao People's Democratic Republic

7 Aug 2019

 

Malaysia

7 Aug 2019

 

Maldives

7 Aug 2019

 

Mauritius

7 Aug 2019

 

Montenegro

7 Aug 2019

 

Nigeria

7 Aug 2019

 

North Macedonia

7 Aug 2019

 

Palau

7 Aug 2019

 

Paraguay

7 Aug 2019

 

Philippines

7 Aug 2019

 

Qatar

7 Aug 2019

12 Mar 2020

Republic of Korea

7 Aug 2019

 

Rwanda

28 Jan 2020

 

Samoa

7 Aug 2019

 

Saudi Arabia

7 Aug 2019

5 May 2020

Serbia

7 Aug 2019

 

Sierra Leone

7 Aug 2019

 

Singapore

7 Aug 2019

25 Feb 2020

Sri Lanka

7 Aug 2019

 

Timor-Leste

7 Aug 2019

 

Turkey

7 Aug 2019

 

Uganda

7 Aug 2019

 

Ukraine

7 Aug 2019

 

United States of America

7 Aug 2019

 

Uruguay

7 Aug 2019

 

Venezuela (Bolivarian Republic of)

7 Aug 2019

 

In February 2020, Singapore and Fiji became the first two countries to deposit their instruments of ratification of the Convention at the United Nations Headquarters in New York. With Qatar depositing the third instrument of ratification on 12 March 2020, the Convention will enter into force 6 months afterwards, i.e. from 12 September 2020. In addition to this, Saudi Arabia became the fourth country to ratify the Convention on 5 May 2020.

Accordingly, from 12 September 2020, the respective courts of the countries that have ratified the Convention (which are Singapore, Fiji, Qatar and Saudi Arabia so far) will administer enforcement of cross-border settlement agreements in accordance with the conditions of the Convention and their respective national rules of procedures. Once the Convention comes into effect in September 2020, it will provide another set of rules for international dispute resolution along with the New York Convention and the Hague Convention on Choice of Court Agreements.

SIMC COVID-19 Protocol

In an effort to provide an efficient means for resolving disputes during the COVID-19 period, the Singapore International Mediation Centre (the “SIMC”) launched the SIMC COVID-19 Protocol (the “Protocol”) to be in force from 18 May 2020 to 31 December 2020.

The Protocol is aimed at providing businesses with a more economical route to resolve their commercial disputes. For example, the filing fee of SGD 250 under the Protocol is much lower than the usual filing fee for a mediation in SIMC, which is about SGD 1,000. The Protocol is also designed to complement the recent legislation enacted by the Singapore Parliament to provide temporary COVID-19-related relief, which is the COVID-19 (Temporary Measures) Act 2020 (the “Act”). Therefore, the Protocol specifically applies to a dispute which is (i) either caused by the COVID-19 pandemic, or (ii) related to the Act. As the Act places a moratorium that prevents parties from commencing certain litigation actions against each other, the Protocol provides an alternative forum for the parties to resolve their commercial disputes through non-litigious means.

The summary of the mediation procedure under the Protocol is set out below:

  1. The parties first file for mediation through a specific request form provided by SIMC, along with the filing fee of SGD 250.
  2. Within 10 working days of the filling, SIMC will organise the mediation.
  3. Cases will be matched with experienced mediators to facilitate settlement.
  4. Mediation is conducted online.

Under the Protocol, parties will enjoy reduced fees based on their dispute amount. Generally, the total fee payable per party is based on the fee schedule below.

Dispute Value (SGD)

Total Fee Payable per Party

Less than $1 million

$3,000

$1 million – $5 million

$6,500 or 0.3% of the dispute value, whichever is lower

More than $5 million

$10,000 or 0.13% of the dispute value, whichever is lower

SIMC also retains the discretion to exercise flexibility in appropriate cases.

Most mediations at SIMC are concluded within a day or two and the successful settlement rate is about 80%. Therefore, the mediation procedure under the Protocol allows businesses to effectively divert their resources away from potential legal proceedings, so that they can instead be directed towards addressing more pressing challenges posed by the COVID-19 situation.

MOU between SIMC and Shenzhen Court of International Arbitration

On 17 June 2020, SIMC signed a Memorandum of Understanding (the “MOU”) with Shenzhen Court of International Arbitration (“SCIA”) to support businesses and projects under the Singapore-China (Shenzhen) Smart City Initiative.

Pursuant to the MOU, SIMC and SCIA will provide a “mediation-arbitration” framework for businesses. Under this framework, any resulting settlement arising out of a mediation administered by SIMC will be recorded as an arbitral award under the SCIA Rules. Therefore, settlements arising out of SIMC-administered mediations can now be enforced as SCIA awards in China and elsewhere, giving a greater finality to the parties’ settlement outcomes. This MOU essentially now allows parties to mediate with Chinese parties and enforce the settlement in China. Furthermore, SIMC will be regarded as SCIA’s recognised mediation institution, with SCIA referring its cases to be resolved through mediation at SIMC in the appropriate circumstances.

Conclusion

The recent developments highlighted above will play a significant role in promoting mediation in Singapore as an effective forum to resolve cross border disputes. Not only will mediations in Singapore be more expeditious and economical, but they will also lead to more enforceable settlements between the parties. Therefore, businesses will have the option of choosing mediation as their effective mode of dispute resolution, which will also help them to maintain their commercial relationships for the future.