INTERNATIONAL COMMERCIAL MEDIATION

AuthorGloria LIM LLB (Hons) (National University of Singapore), LLM (Harvard); Graduate Certificate in International Arbitration (National University of Singapore); Advocate and Solicitor (Singapore); Director (Legal Industry Division) and Registrar, Legal Services Regulatory Authority, Ministry of Law, Singapore.
Publication year2019
Citation(2019) 31 SAcLJ 377
Published date01 December 2019
Date01 December 2019
I. Introduction

1 The signing of the United Nations (“UN”) Convention on International Settlement Agreements Resulting from Mediation in

20191 (“Convention on Mediation”) will mark a significant milestone for the development of international commercial mediation globally and enhance the attractiveness of mediation as an effective option for cross-border dispute resolution.

2 Singapore, an active proponent and early adopter of the proposed Convention, will host the signing ceremony and be among the first few countries to embrace the new Convention. The hosting of the signing ceremony is a rare honour for Singapore, and emblematic of the significance Singapore has placed on developing its international commercial mediation framework in recent years.

3 The transformation and development of Singapore's mediation landscape from its initially domestic orientation to its current international focus required careful design, planning and implementation. In this article, the author will trace the development of Singapore's emerging international commercial mediation framework, its domestic underpinnings and its evolution against the backdrop of broader efforts to develop Singapore as an international dispute resolution hub. The author will also map key aspects of Singapore's reforms in the area of international commercial mediation against the conceptual model that undergirds the development of Singapore's international dispute resolution framework.

II. Contextual backdrop

4 Singapore, an island nation, is home to a high concentration of multinational corporations, organisations and start-ups. It has consistently ranked as one of the most competitive nations and best places for business.2 Situated at the heart of Southeast Asia, and within a seven-hour flight radius of most countries in the Asia-Pacific, Singapore serves as a key node and gateway for businesses serving the Asia-Pacific region. It also serves as a launchpad and strategic location for access to major and emerging markets in Southeast Asia, China and India.

5 In recent years, Asia has experienced significant development and growth. It has become the fastest-growing region in the world, contributing to more than 60% of global growth.3 The Asian Development Bank has projected that Asia could account for half of

global gross domestic product by 2050.4 It is estimated that US$1trn will be invested under China's Belt and Road Initiative (“BRI”), with many projects situated in Asia.5 Around 33% of all outbound investments related to the BRI flows through Singapore, while 85% of inbound BRI investments makes their way to China through Singapore.6

6 Nestled in the centre of this economic activity, demand for Singapore's legal and dispute resolution services has likewise been on an upward trend. The value of legal services exported from Singapore more than doubled, from S$363m in 2008 to S$867m in 2017. The value of legal services exported as a percentage of operating receipts also showed an increase during the same period.7

7 The Global Arbitration Review estimated that between 2012 and 2016, there was a 37% increase in cases administered by 11 arbitration institutions worldwide. While caseloads of institutions outside Asia grew by 13%, caseloads of institutions in Asia grew by more than 75%. Singapore's flagship arbitration centre, the Singapore International Arbitration Centre (“SIAC”), saw a new record for the highest number of new case filings and administered cases in 2017. The caseload figures have grown year on year, and increased by more than five times since the last decade. Around 83% of new cases filed in 2017 involved international parties. SIAC was also ranked as the most preferred arbitral institution in Asia, and third out of the top five arbitral institutions in the world.8 International dispute resolution organisations based in Singapore have also experienced similar growth. According to statistics released by the International Chamber of Commerce (“ICC”), Singapore retained its position as the number one ranking place of ICC arbitration in Asia in 2017, the eighth year in which it was ranked as ICC's top arbitration seat in Asia.9

8 The correlation between law, business and the demand for dispute resolution is perhaps best encapsulated in a speech delivered by

the Minister for Law, K Shanmugam, at a conference in 201510 where he observed:

Law essentially follows business. As businesses grow in this part of the world, we can also expect demand for legal services to grow to support regional commercial activity. One key area is of course dispute resolution. With increased commercial activity, it is natural that the need for dispute resolution will also rise.

9 Against this backdrop, Singapore's dispute resolution framework and services have been developed to serve the needs of the growing numbers of international businesses operating out of Singapore. In devising this framework, significant attention has been paid to understanding the requirements of commercial users, and the need to modernise and evolve swiftly against a dynamic and constantly changing business landscape.

III. Early beginnings – An eclectic and phased approach

10 The approach to building up Singapore's dispute resolution framework has always been a collaborative one, involving both public and private sector input and participation. The building blocks for a comprehensive Alternative Dispute Resolution (“ADR”) system in Singapore were laid in the mid-1990s, when a high-level committee on ADR (“ADR Committee”) comprising both public and private sector representatives11 was appointed by the then Minister for Law and Minister for Foreign Affairs, S Jayakumar, in 1996 to look into how ADR

processes and, in particular, mediation, could be further promoted in Singapore. Chaired by the then Minister of State for Law and Home Affairs, Ho Peng Kee, the ADR Committee was tasked to review the current uses and consider new uses for ADR processes in Singapore.

11 In the ADR Committee's report12 that was submitted to the Government in July 1997, the ADR Committee opined that having studied the experience of other countries:13

… Singapore can take an eclectic approach. We should select the best features from these and other countries to set up a national framework for promoting ADR processes. The ADR Committee examined various models, and decided to take a measured and phased approach to promoting ADR processes, and in particular, mediation in Singapore. This will enable us to learn from the implementation process and fine-tune it, where necessary.

12 The ADR Committee contemplated an ADR model that was pervasive and adapted to suit the Asian culture and perspectives. Summarised in the ADR Committee's report as a national policy, the promotion of ADR and mediation in particular was recommended “as reflecting aspects of our Asian tradition and culture which are worthwhile preserving. Government should lead by formulating a policy statement to this effect”.14

13 The ADR Committee recognised that “every society will have to consider which process or combination of processes best serves its needs”.15 In this vein, the ADR Committee proposed a conceptual model for how mediation should fit into the overall Singapore national infrastructure for court-based and non-court-based mechanisms to resolve not only commercial but also community disputes. The model as envisaged by the ADR Committee is depicted in Diagram I below.

Diagram I: Conceptual model of conflict resolution16

14 As can be seen from the diagram, the conceptual model described by the ADR Committee was at that time built upon a domestic frame of reference, taking into account the then nascent ADR landscape in Singapore, and the domestic civil and social mediation needs at that time, while at the same time laying the foundation for the future development of commercial mediation. This conceptual model, which took into account Singapore's unique Asian cultural and social context as well as the economic and political context of the times, formed the basis for the establishment of Community Mediation Centres (“CMCs”) to deal with community disputes, and the Singapore Mediation Centre (“SMC”) to deal with commercial disputes.

15 The framework has served Singapore well over the years. Since their establishment in 1998, the CMCs have handled more than

9,000 community disputes.17 The settlement rate has remained consistent at around 75%.18 Likewise, since establishment, more than 3,600 matters have been mediated at SMC with a settlement rate of about 70%, with 90% of them being resolved within one working day.19 Both institutions have recently celebrated their 20th anniversaries and are now well recognised as the leading institutions for mediation in their respective spheres of influence.
IV. Singapore's international dispute resolution ecosystem – Developing an “international suite”

16 With the basic foundations laid, the impetus for developing Singapore's international commercial mediation regime gained momentum in the early 2010s. By then, Singapore had an active and thriving domestic mediation landscape. In the area of arbitration, Singapore had also developed its unique prototype for a thriving international arbitration “ecosystem” founded upon (a) Singapore's brand of trust anchored by a legal framework grounded in the rule of law; (b) strong judicial support; (c) strong institutions; (d) a critical mass of deep talent and expertise; and (e) purpose-built supporting physical infrastructure that was ergonomic and attentive to users' needs.20

17 Taking a leaf from the growth story of Singapore's arbitration system, it was assessed that an international commercial mediation framework could be built on a similar scaffolding, with steps taken to address deficiencies in the existing framework and introduce new innovations to increase Singapore's service offerings and enhance user choice. Together...

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