The Singapore Parliament recently passed the Mediation Act as part of the government’s initiative to grow Singapore as a destination for international dispute resolution, by strengthening the legislative framework for international commercial mediation.
This update looks at the key features of the Mediation Act (the Act) and when businesses can consider adopting mediation as an alternative mode of dispute resolution.
Key Features of the Mediation Act
Application of the Act: The Act does not apply to all mediations in Singapore. It only applies to mediations either conducted wholly or in part in Singapore, or conducted elsewhere provided that the mediation agreement provides that the Mediation Act or Singapore law applies to the mediation. The Act does not apply to mediations conducted under the auspices of any written law.
The Act has the following four key features:
1. Enforceability of Mediated Settled Agreements
Currently, mediated settlement agreements are enforceable only by suing in contract. Parties can record their mediated settlement agreements as court orders only if the dispute had been before the courts.
The Act now provides an expedited process for parties to enforce their mediated settlement agreements, by allowing such agreements, even those that had never been before the courts, to be recorded as court orders. To take advantage of this process, the following criteria must be met:
- all parties must agree to apply to court to have the settlement agreement recorded as a consent order;
- the settlement agreement must be in writing; and
- the mediation must have been administered by an approved mediation service provider or a certified mediator.
2. Confidentiality of Mediation Communications
Currently, the confidentiality of mediation discussions is governed by a mixture of common law privileges, equitable remedies and the parties’ agreement. In practice, this gives rise to uncertainty as to whether particular communications relating to mediation are confidential in a given situation.
The Act now makes clear that, subject to certain narrow exceptions, discussions during the course of mediation are confidential and cannot be disclosed to third parties or in court or arbitral proceedings. This protection extends to any communications, documents, or information provided in the course or for the purpose of mediation.
3. Stay of Legal Proceedings Pending Mediation
The Act also allows parties to a mediation agreement to apply for a stay of court proceedings in relation to the same dispute. This allows parties to be sure that their legal positions in any ongoing litigation will be preserved pending the outcome of their mediation.
4. Foreign Counsel and Mediators
Finally, the Act removes the restrictions on the practice of Singapore law for mediation counsel and mediators. These restrictions, found in the Legal Profession Act, do not apply to mediations administered by an approved mediation service provider or a certified mediator. This will afford parties greater flexibility in appointing their own counsel and mediators in such mediations.
When to Consider Mediation in Cross-Border Disputes
Given the greater enforceability of mediated settlement agreements, businesses should consider their dispute resolution options in light of the key features of the Act. Further, the following factors make mediation an attractive option for businesses in cross-border disputes:
- Parties who intend to preserve the business relationship after the resolution of the dispute;
- Parties who value having control over the outcome of the dispute;
- Parties who prefer a business-oriented dispute resolution process;
- Parties who want to preserve confidentiality of the dispute and its resolution;
- Parties who want a time-saving and cost-efficient dispute resolution process.
With a plethora of advantages, the Mediation Act is much welcomed as it addresses the oft-cited disadvantages of mediation such as the lack of enforceability and certainty. Once the Mediation Act comes into effect, businesses may want to consider how best to tailor their dispute resolution clauses in their commercial agreements to take advantage of the benefits that mediation offers.
Should you wish to discuss the impact of this development and how to take advantage of the various dispute resolution mechanisms available in Singapore, please contact the team at Baker McKenzie Wong & Leow.