The Singapore Ministry of Law is seeking public feedback on a draft Mediation Bill. The Bill will give effect to one of the key recommendations of the International Commercial Mediation Working Group (ICMWG) in 2013, being the enactment of a Mediation Act (Act) to strengthen the framework for mediation in Singapore.

The other three recommendations of the ICMWG have already been implemented. As previously reported here, the Singapore International Mediation Centre and the Singapore International Mediation Institute were both launched on 5 November 2014. Withholding tax exemptions for non-resident mediators have been available since 1 April 2015.

The Mediation Bill

The draft Bill was prepared taking into account the ICMWG’s recommendations and other existing mediation legislation including the UNCITRAL Model Law on International Commercial Conciliation. As drafted, it will apply to mediations conducted under any mediation agreement where:

1.     the mediation is wholly or partly conducted in Singapore; or

2.     the mediation agreement provides for the applicability of the Act or the law of Singapore.

The Act will also apply to mediations conducted by or pursuant to a direction by a Family Justice Court, the High Court or the Court of Appeal.

Key provisions of the Bill:

The provisions of the Bill are novel and go some way to introducing certainty and strengthening the framework for mediation in Singapore.

·         Stay of court proceedings (Clause 8)

Whilst the court presently has the power to order a stay of pending litigation where parties enter into a mediation agreement, this is based on the court’s inherent jurisdiction. The draft Bill will provide a statutory basis enabling parties to a mediation agreement to apply to court for a stay of proceedings, and for the court to make interim or supplementary orders to preserve the parties’ rights, so long as the court proceedings relate to the subject matter of the mediation agreement.

·         Recording of settlement agreements as court orders (Clause 12)

An important limitation of mediation is that mediated settlements are only contractually enforceable between parties. The draft Bill aims to overcome this by allowing parties to apply to court to record a mediated settlement as an order of the court. The consultation process seeks feedback on whether this right should be conditional on the consent of all parties.

For the court to consider the application, the following conditions must be met:

·         the mediation must have been administered by a designated mediation service provider or conducted by a certified mediator;

·         the settlement agreement must be reduced to writing and signed by or on behalf of all the parties to the mediated settlement;

·         the settlement agreement must be in relation to a dispute for which no court proceedings have been already commenced; and

·         the application must have been made within 4 weeks after the mediated settlement agreement has been reached (though the court may extend the time).

The court retains discretion and may refuse to record a mediated settlement agreement as an order of court (where for example the mediation agreement is void/voidable on the grounds of incapacity, fraud, duress or mistake, the terms of the agreement would not be capable of enforcement as an order of the court, or where the making of the order would be contrary to public policy).

·         Confidentiality of mediation proceedings (Clause 9 to 11)

A key tenet of mediation is that it is a private and confidential process, although the exact scope and extent of this confidentiality is somewhat amorphous. The draft Bill introduces a measure of certainty by prescribing a general duty of confidentiality over all mediation communications, with clearly defined carve-outs and defined exceptions under which disclosure may take place. The Bill does not however set out the sanctions that will apply to a party for a breach of confidentiality, although the intention is that the usual remedies available at common law will apply.

·         Exceptions under the Legal Profession Act (Clause 16)

Under the Bill, participation by foreign mediators and foreign-qualified counsel in mediation sessions will not amount to the unauthorised practice of Singapore law. Whilst mediation proceedings are not commonly understood to involve the practice of law, to the extent that they do, this carve-out provides welcome certainty. It also mirrors the exceptions presently applicable to international arbitration under which participation by foreign arbitrators and foreign-qualified counsel in arbitration proceedings in Singapore and/or involving Singapore law do not amount to unauthorised practice of Singapore law.

Discussion

The proposed promulgation of a Mediation Act is a significant step and further testament to Singapore's commitment to cementing its position as the leading integrated dispute resolution hub in the region. It also comes hot on the heels of Singapore's hosting of the inaugural series of the Global Pound Conference (which was held on 17 and 18 March 2016), a worldwide conference series that brings together various stakeholders to debate the future of alternative dispute resolution. The Singapore International Dispute Resolution Academy and Herbert Smith Freehills are global platinum sponsors of the series. The Singapore Mediation Centre is also reporting increased caseloads.

On a broader level, the Bill exemplifies the renewed attention being given to mediation as a bona fide dispute resolution option in its own right. Long regarded as the “poorer cousin” to more formal processes such as litigation and arbitration, factors such as costs and the desire to preserve business relationships has brought the focus back to more conciliatory modes of dispute resolution such as mediation. This has in turn led to a number initiatives aimed at increasing the attractiveness of the process, including “arb-med” or “med-arb” hybrid protocols which enable parties to convert settlement agreements into consent awards (which we discuss here) and discussions around a possible UN Convention on the Enforcement of Mediated Settlements.

The Bill follows and builds on these developments. Like its “arb-med” counterpart, the ability to convert a mediated settlement into a binding and enforceable court judgment is highly significant and directly addresses one of the key limitations of mediation.

The consultation and feedback period ends on 28 April 2016. The enactment of the Act is keenly anticipated and will provide another shot in the arm for ADR in Singapore.

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Disclaimer

Herbert Smith Freehills LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.