Keynote Address by Minister Indranee, at SIMC Signature Event - MNCs For Mediation – From Disputes To Deal-Making
30 Aug 2023 Posted in [Speeches]
Mr George Lim, SC, Chairman of SIMC
Honourable Judges
SIMC Board Members
SIMC International Mediators and Specialist Mediators
Distinguished guests, ladies and gentlemen,
Introduction
1. I wish everybody a very good morning.
2. I am so glad to be here and to be among many friends. Having been from the legal profession myself, it is great to see so many of my former colleagues and friends here.
3. Today’s event is one of the many interesting events that we have organised for you as part of the Singapore Convention Week 2023, also known as “SC Week”. We hope that you will find it interesting and useful, and our focus today, as George has indicated in his address is “Mediation for MNCs”.
Mediation in History
4. For as long as human beings have lived together in societies, there has been a need to resolve conflicts. Even more so since the beginning of trade and commerce.
5. Mediation is one of the oldest forms of conflict resolution. We find reference to it in the earliest civilisations – apparently, the Sumerians practised it, as did the Phoenicians in their trade.
6. On a slightly more recent historical scale, Great Britain’s mediation of a dispute between Portugal and Brazil in 1825, is a notable example of how mediation can play a crucial role in conflict resolution. Great Britain played the role of a third-party mediator in the conflict, after Emperor Dom Pedro declared Brazil’s independence from Portugal in 1822. Great Britain’s mediation efforts gave rise to the signing of the Treaty of Rio de Janeiro in 1825, which officially recognised Brazil’s independence. So you can see that that mediation had far-reaching consequences that continue through the course of history.
Advantages of Mediation
7. The value of mediation has therefore been long recognised and indeed, you are all here today because you recognise its value.
8. Its advantages are well-known:
a. It is cheaper and faster relative to other modes of dispute resolution.
b. It is flexible, as it enables non-legal solutions to legal problems. As George mentioned just now, they may be able to revive a company and a joint venture.
c. It helps to preserve long-term relationships, as the outcome is something which both sides have willingly agreed. It allows for win-win, rather than win-lose.
9. Let me share a case study discussed during SIMC’s SC Week event last year, as it serves as a good example of the advantages of mediation and its increased prominence as a dispute resolution tool.
a. Last year’s event was titled “Mediating a $1Billion International Dispute” and featured a complex, multi-jurisdictional dispute between a US fuel cell manufacturer, FuelCell Energy, and a South Korean private energy producer, POSCO Energy.
b. This complex energy dispute spanned 5 ICC arbitrations across three jurisdictions – London, Seoul and Singapore.
c. Had it been fought out, it would have taken months, if not years.
d. The parties – wisely – chose mediation, conducted by SIMC. Even more wisely, they chose George as the mediator – and managed to reach a settlement in just 3.5 days!
e. Just consider how much time and costs were saved, not to mention goodwill and relationships.
10. At a time when dispute resolution is becoming more complex, with partnerships and transactions increasingly involving parties from across multiple jurisdictions, each with their own unique business environment and cultural norms, a good understanding of the cultural differences between the parties becomes increasingly crucial for successful mediations – as well as the personal touch of the mediator.
11. The case study that I mentioned reflects that. I gather that the successful mediation started with a pot of tea and mini mooncakes which George hand-carried to Seoul. As he shared last year, it was not just an act of hospitality, but also allowed him to gain insights into the parties’ personalities, which is crucial for a mediator – you need to understand and appreciate the people that you are dealing with and hoping to be a bridge for.
Why Mediation Use Remains Relatively Lower
12. We have seen a rise in mediation as a means of resolving disputes since the Singapore Convention on Mediation entered into force on 12 September 2020.
13. The Convention’s entry into force was a significant development in international commercial dispute resolution. Businesses can now seek enforcement of a mediated settlement agreement across borders by applying directly to the courts of countries which have signed and ratified the treaty. This harmonised enforcement framework helps parties save time and costs, which are the reasons why parties choose mediation in the first place.
14. Yet, mediation is still a relatively less popular form of dispute resolution, as compared to arbitration and litigation. According to the Singapore International Dispute Resolution Academy (SIDRA)’s International Dispute Resolution Survey 2020, mediation was the least-used dispute resolution mechanism, with only 26% of respondents using it for international dispute resolution between 2016 and 2018, compared to 74% for arbitration and 49% for litigation. So we have to ask ourselves, why is this so?
15. For businesses, there could be many reasons behind parties not choosing mediation to resolve their disputes:
a. Traditionally, litigators have viewed offering mediation as a sign of weakness showing a lack of confidence in one’s case;
b. Parties may fear that the other party will come to know of their secrets during the mediation process, which makes it difficult to return to arbitration or litigation thereafter;
c. Or alternatively, maybe that they just do not wish to compromise; or
d. They have little confidence that mediation will work, given its non-binding nature.
16. Having practised as a lawyer for many years before I joined the government, I fully understand these concerns and reasons . In fact, as a litigator, many of them would have run through my mind as well.
17. But I would say that some of these concerns are due to misconceptions and there are ways around them:
a. Instead of appearing weak or overeager, proposing mediation indicates to the other party that you value the business relationship, and this encourages open dialogue. Mediation clauses could be included in the contract upfront so neither party needs to appear weak when the dispute is brought to a mediator.
b. Since parties have control over the process, they similarly remain in control of what they choose to disclose during the mediation process. Instead of discussing certain issues during the joint session, parties can have private caucuses with the mediator, to discuss the options to reach a resolution, or consult their advisors in private.
c. While coming to a settlement may entail some compromise, this needs to be considered in terms of what is gained in terms of time, costs and preservation of business relationships. Parties also often do not factor in what fighting it out really means in terms of stress, and what an individual has to undergo when subjected to cross-examination. It is usually just before you step into the cross-examination box, the witness box, that the parties really think about that. But by that time, it is probably a little late. And just as parties can control what they choose to disclose during mediation, they can ensure that certain lines are not crossed in the settlement negotiations.
d. The concern that the other party would not uphold the mediated settlement agreement can be addressed, because there are laws and protocols that uphold mediation outcomes. So a key one is contained in the Singapore Convention on Mediation, which enables mediated settlement agreements to be enforced in the courts of countries which have signed and ratified the treaty. In Singapore, our Mediation Act, allows parties to apply to record their agreements as an order of court, if certain conditions are met. Once recorded as an order of court, it will be enforceable in the same way as a court order or a judgement.
18. There is therefore much to be gained by mediation as a mode of dispute resolution and we should encourage global adoption of mediation.
Call for Support for Mediation
19. I understand that more than 40 MNCs and associations will be signing a declaration of intent later, to support the use of mediation.
20. Thank you for being the trailblazers and setting an example for other businesses.
21. To reap the benefits of mediation, we need more people to be familiar with it and use it. Therefore, please spread the word, to those in your organisations; to fellow industry players, partners and suppliers; and to your governments, in case they have not signed the treaty.
22. On our part, the Singapore Government will continue to develop the mediation sector, and encourage other countries to sign and ratify the Singapore Convention on Mediation. There is no downside to signing and ratifying the Convention. It merely provides parties with another option when considering the most appropriate mechanism to resolve their disputes. If for some reason it does not work out, the avenues of litigation and arbitration are still there, and can be pursued as mediation does not preclude them.
Our Plans for Taking Mediation Forward
23. We will continue to work with our institutions and experienced mediators to develop the next generation of mediators to ensure that there will always be a continuous pipeline of skilled and competent mediators to serve business needs.
24. We will uphold the standards of those mediators, so that you can be assured that if you choose to mediate your dispute in Singapore, the process is fair; and the mediators are performing their roles with integrity, neutrality and competence, so that the likelihood of a successful mediation is higher.
25. With the COVID-19 pandemic accelerating the legal sector’s adoption of technology, we will continue to explore ways to leverage technology to support mediation. Examples include:
a. Continuing to provide and enhance virtual options for mediation, which will save time and cost;
b. Using AI-powered platforms for mediators to review documents more efficiently; and
c. Training mediators and mediation counsel to enhance the quality of mediations held online.
Conclusion
26. In closing, let me once again thank the trailblazers with us this morning, and the friends from and of SIMC who have been pivotal in the development of the mediation movement.
27. Today’s signing is yet another significant step to the greater use of mediation by businesses to resolve international commercial disputes.
28. Thank you all very much and I wish you all a very fruitful dialogue and session today.
Last updated on 30 August 2023