Mediation and COVID-19 in Singapore

(This article was first published in the Volume 8 of RT ASEAN’s Review Times)

Covid-19 has brought much disruption upon business and commerce globally, disrupting supply chains, weakening consumer and business confidence, and leading to amongst others, unfulfilled contractual obligations. The pandemic has threatened commercial relationships and will lead to unavoidable disputes, as the virus shows no signs of ceasing. According to the SIDRA International Dispute Resolution Survey, demand for more efficient alternative dispute resolution mechanisms is on an unprecedented rise. [1] These findings are not surprising, given the fact that court processes have inevitably slowed down as a result of governmental lockdowns and the corresponding increase in time and costs for litigation. Mediation has therefore become the key resolution mechanism for many disputes, not only because of the benefits of efficiency and economy, but also because it allows businesses to conserve and direct their precious resources to other aspects, such as recovery and restructuring, during this uncertain period.

SIMC COVID-19 Protocol

In order to alleviate and assist in the resolution of disputes during the pandemic, the Singapore International Mediation Centre (SIMC) has launched the SIMC COVID-19 Protocol[2], which takes effect in the period from 18 May 2020 to 31 December 2020. It is designed to complement Singapore legislation dealing with COVID-19, where parties who enjoy relief under the COVID-19 (Temporary Measures) Act 2020 (the “Act”), can mediate at any time. As the Act places a moratorium that prevents parties from taking certain court actions against the other party, the Protocol provides an alternative forum for the parties to resolve their commercial disputes, without resorting to litigation.

Some key features of this Protocol have attracted tremendous attention. For example, the Protocol applies when a dispute is either (i) to a material extent caused by the pandemic or (ii) related to the Act. Also, parties who file for mediation under the Protocol pay a S$250 filing fee, which is much lower than the usual filing fee of S$1,000. Moreover, the Protocol also places great emphasis on efficiency, as SIMC will organize the mediation within 10 working days, and mandates that mediation is conducted online. Apart from that, cases will be matched with experienced mediators to facilitate settlement accordingly.

Under the Protocol, parties will enjoy reduced fees based on their dispute amount as 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

 

Singapore Convention on Mediation

Singapore is one of the leading countries in the facilitation of international mediation. In 2019, Singapore hosted the signing ceremony where 46 countries signed the United Nations Convention on International Settlement Agreements Resulting from Mediation, otherwise known as the Singapore Convention on Mediation (the “Convention”)[3]. To date, there are 52 signatory countries to the Convention. The purpose of the Convention is to ensure that cross-border settlements arising out of mediation are recognized as binding and enforceable, while still retaining the hallmark flexibility and efficiency in the mediation process. It will also facilitate international trade and commerce by enabling disputing parties to easily enforce and invoke settlement agreements.

With Singapore, Fiji, Qatar, Saudi Arabia and Belarus now having deposited their respective instruments of ratification or approval, the Convention will enter into force on 12 September 2020. Once the Convention is in effect, it will govern enforcement of cross-border settlement agreements, alongside the respective national procedural rules.

To conclude, mediation in Singapore contributes to a better business environment during COVID-19. Its availability also cultivates long-term commercial relationships and maintains harmony, facilitating stability and certainty for businesses. In such uncertain and unstable times, the option of mediation should not be overlooked, as it is a helpful tool for businesses to resolve disputes quickly at a lower cost.

[1] Singapore International Dispute Resolution Academy, SIDRA International Dispute Resolution Survey: 2020 Final Report (Choice of Dispute Resolution Mechanism), 5.

[2] The SIMC COVID-19 Protocol may be accessed at: https://simc.com.sg/simc-covid-19-protocol/

[3] The Convention Text may be accessed at: https://www.singaporeconvention.org/convention/about-convention/