Debated in Parliament on 3 Feb 2020.
Order for Second Reading read.
Mr Deputy Speaker, on behalf of the Minister for Law, I beg to move, "That the Bill be now read a Second time."
Sir, this Bill implements the United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as the Singapore Convention on Mediation.
One of Singapore’s strengths lies in our being a vibrant international business and commercial hub that is open and connected to the world. We must continue to be so, to ensure that our economy remains vibrant and growing, amidst global uncertainties and disruptions.
Against this backdrop, one key area of focus in my Ministry's work has been to strengthen Singapore's legal and dispute resolution framework, to better serve the needs of international businesses that use Singapore as a base for their international commercial transactions. Singapore is one of the leading cross-border dispute resolution centres in the world and undergirding this is our trusted legal system and a strong rule of law. We also provide a comprehensive suite of international dispute resolution services to meet the varying needs of businesses. These include litigation, arbitration and increasingly mediation.
As part of efforts to strengthen our dispute resolution ecosystem, Singapore has invested in the development of international commercial mediation, including through building up institutions, developing capabilities and also updating our laws. For instance, the Mediation Act was enacted in 2017 to establish a framework for mediation, and to provide a more conducive environment in Singapore for international commercial mediation.
In the same vein, the Singapore Convention Signing Ceremony and Conference held in August last year was an important milestone for Singapore’s efforts in developing the dispute resolution landscape, on at least two levels. First, on a broader level, the Convention demonstrated Singapore’s thought leadership in international rule of law efforts and helped raise our position as an international dispute resolution hub to a new level.
Let me bring Members briefly through the steps which gave rise to the Convention. In February 2018, the UN Commission on International Trade Law or UNCITRAL Working Group on Dispute Settlement finalised the text of the Convention and the corresponding Model Law. Singapore contributed significantly to the development of the Convention at UNCITRAL. The Working Group was chaired by a Singaporean, and the Singapore delegation participated actively in the negotiations. Local industry experts were involved in shaping Singapore’s positions on the Convention, and also played an active role in contributing to the final outcome.
It took only three years – between 2015 and 2018 – to conclude an instrument dealing with enforcement of international settlement agreements resulting from mediation, when several past attempts failed. This exhibited the Working Group’s dedication to constructive and open dialogue in the face of numerous delegations coming from different backgrounds and having different perspectives. This is really, the same spirit of mediation that the Convention itself seeks to encourage.
On 20 December 2018, the UN General Assembly, in a momentous decision, adopted the Convention. It also authorised the signing of the Convention to be held in Singapore and authorised the Convention to be known henceforth as the “Singapore Convention on Mediation”. This is the first treaty named after Singapore among those concluded under the auspices of the United Nations, and bears testament to our extensive contributions to the development of international commercial mediation globally.
On 7 August 2019, the Singapore Convention Signing Ceremony and Conference was held in Singapore. Singapore hosted more than 1,500 delegates from 70 countries at the event. Forty-six countries signed the Convention on the day it opened for signature, while another 24 countries attended the signing ceremony to show their support for the Convention. The signatories included the world's two largest economies – the US and China; three of Asia's four largest economies – China, India and South Korea; and five of 10 ASEAN countries – Brunei, Laos, Malaysia, Philippines and Singapore.
The overwhelming response and turnout at the event was a powerful statement in support of multilateralism and a rules-based international order.
Subsequently, six other countries signed onto the Convention at the UN headquarters in New York, bringing the total number of signatories to the Convention today to 52.
Second, on a more specific level, the Convention is the missing third piece in the international dispute resolution enforcement framework, as many businesses today rely either on arbitration, enforced via the New York Convention, or on litigation, for cross-border disputes.
Mediation is rising in popularity due to a growing recognition of its benefits. It is cost-effective, flexible, efficient and also confidential. It allows parties to retain control over the outcome of their disputes. They control and in fact, design the architecture of the terms on which they come and reach a settlement on their dispute. It is attractive for businesses who wish to resolve their commercial disputes with an outcome that is mutually acceptable to both sides whilst preserving their long-term relationships and leaving open the possibility of working together in future. The conciliatory nature of mediation reduces the instances where a dispute leads ultimately to a complete termination of commercial relationships. Mediation therefore complements other modes of dispute resolution, as it can be used in conjunction with litigation or arbitration, and increasingly, it often is embedded into the system and it appears in both types of dispute resolution mechanisms.
Mediation has grown in popularity and use. A survey of participants at the 2016 Global Pound Conference found that a majority believed a greater emphasis on collaborative over adversarial process is a trend that will have the most significant influence on the future of commercial dispute resolution.
However, with all of that, the one key challenge that has been hindering the growth and adoption of mediation is the oft-cited difficulty faced by a party in ensuring that its counter-party – the party with whom it enters a settlement agreement – complies with the terms of the agreement.
While a mediated settlement agreement is contractually binding, it is not itself directly enforceable in the courts, unlike a court judgment or an arbitral award. This difficulty was also highlighted by the 2016 Global Pound Conference survey, where 51% of respondents indicated that legislation or conventions that promote the recognition and enforcement of settlements, including those reached in mediation, would most improve commercial dispute resolution. There is therefore a need for an effective, efficient and harmonised framework to enforce cross-border commercial mediated settlement agreements.
In response to this, the Convention puts in place a process for a party to enforce or invoke its settlement agreement in court. It is simple to use and allows businesses to maximise the benefits of mediation. Businesses can have greater assurance and certainty that mediation can be relied on to settle cross-border commercial disputes. This, in turn, promotes investor and business confidence. The Convention therefore facilitates the administration of international transactions by commercial parties, and we are hopeful that the establishment of a framework for the enforcement of such agreements will contribute to the development of harmonious international economic relations.
The Convention attained one of the highest number of first-day signatories for any UN trade convention, reflecting a recognition by the international community of the benefits that the Convention will bring.
The signing of the Convention marks the start of a long-term commitment by Singapore to promote the Convention and its adoption. In order for the Convention and therefore this Bill to enter into force, at least three states must deposit their instrument of ratification, acceptance, approval or accession. The Convention will enter into force six months after the third state deposits its instrument.
On Singapore’s part, we aim to be amongst the first countries to ratify the Convention, and will take steps to do so once this Bill is passed and Presidential Assent is obtained.
Let me now take Members through the key features of this Bill, which seeks to implement Singapore's obligations under the Convention. In putting together these provisions, the mechanism and also the framework, we consulted various industry stakeholders, including international dispute resolution institutions and experts and received their feedback both in terms of the philosophy behind the enforcement and also the practical aspects of enforcement.
The Bill is intended to operate in parallel with the Mediation Act 2017. That is the Act which Members will be familiar with, that deals with enforcement of mediated agreements domestically. It also preserves contractual remedies, with a view to giving commercial parties a broad suite of choices to enforce or choose to invoke their international mediated settlement agreements.
The key features of the Bill include the following.
The Bill relates to the cross-border enforcement of mediated settlement agreements and the invocation of such agreements as a defence. In other words, if a party chooses to act and bring a claim in breach of a prior mediated settlement agreement to which the claim applies, then the agreement can also be invoked as a defence.
It covers international settlement agreements resulting from mediation, concluded by parties to resolve a commercial dispute.
Agreements that are excluded from the Bill are those that (a) have been approved by a court or concluded in the course of court proceedings and are enforceable as judgments; (b) are enforceable as arbitral awards; and (c) relate to certain subject matters such as family, inheritance and employment law.
As mentioned, the Bill provides a range of options for parties seeking to enforce or invoke their settlement agreements in Singapore under the Convention. These are set out in clause 4 of the Bill. With these options, parties have the flexibility to decide on the most appropriate mode for their own particular situation and circumstance. This will help them to assess the options better and also save time and costs.
The Bill provides a "court order mechanism" for parties seeking to enforce or invoke their settlement agreement. So, a party can apply to the High Court to record its settlement agreement as an order of court, which can thereafter be used for the purposes of enforcement, or as I mentioned earlier as a defence, as the case may be. The procedure and the framework is similar to the enforcement of awards under the International Arbitration Act, which the legal and business communities would already be familiar with. It also provides greater certainty if future reliance on the settlement agreement is necessary.
For the avoidance of doubt, the process of obtaining a court order under the Bill does not extinguish the underlying mediated settlement agreement. It preserves the status of the underlying mediated agreement. So, it is still an agreement after all, even if one chooses to invoke the court process for the purposes of enforcement or to raise it as a defence. Either party to the mediated settlement agreement is at liberty to use the underlying settlement agreement for enforcement or invocation in another country, which is a party to the Convention, which is precisely why there is such a Convention – for cross-border enforcement of the mediated settlement agreement. This, of course, will be subject to that country's own procedures for enforcement and/or invocation.
Next, where there are existing proceedings in the High Court or the Court of Appeal, a party can apply to court to invoke the settlement agreement as a defence, to prove that the matter in those proceedings had already been resolved by the settlement agreement, without the need to take out separate proceedings to rely on the agreement. This also helps save time and costs for parties.
Lastly, parties’ legal rights and remedies existing outside of the Convention will be preserved. This means that parties can, for instance, continue to rely on contractual principles to enforce or invoke their settlement agreement, should they prefer this route.
Next, clause 6 requires the applicant to provide certain documents and evidence to the Court with its application. The Court may also take into account an exhaustive list of grounds to refuse an application under clause 7. Where a settlement agreement has been recorded as an order of court, clause 8 enables a party to apply to set aside the court order under stipulated grounds. In Clause 9, if there are parallel proceedings in another court, tribunal or other competent authority, the Court hearing an application under the Bill may adjourn the hearing and order the other party to give suitable security for costs.
This Bill does not currently implement either of the two reservations allowed under the Convention. The effect of this non-implementation of the reservation is that firstly, the Convention and the Bill will apply to settlement agreements that the Government is a party to; and two, the Convention and the Bill will apply automatically to parties to a settlement agreement who may wish to enforce or invoke their agreement in a Singapore court under the Convention. Parties may however agree, through the terms of their settlement agreement, to opt out of the Convention. That is a choice given to the parties – you might decide that you wish to opt out of the modalities set out in the Convention.
Finally, the Bill makes related amendments to the Mediation Act 2017, which I mentioned earlier, and also to the Supreme Court of Judicature Act (SCJA).
In other words, it preserves a party's rights to go under the Mediation Act 2017 if you also qualify under the framework of that legislation.
The amendments to the SCJA provide the High Court with the jurisdiction to grant applications under the Bill.
Sir, in conclusion, let me reiterate that in developing our dispute resolution regime, we have sought to provide businesses with a full suite of user-centric options to resolve their cross-border disputes, whether through litigation, arbitration or mediation. With the introduction of the Convention, it is anticipated that more businesses will seek to avail themselves of the benefits that the mediation process provides, as adoption of the Convention becomes more prevalent globally. This Bill is an essential instrument that will enable parties to benefit from the framework that is already set out in the Convention, and it is a significant step in our overall efforts to strengthen Singapore’s dispute resolution framework. Sir, with that, I beg to move.
*Question proposed.*
Mr Deputy Speaker, first and foremost, let me declare my role as the advisor to the International Institute of Mediators (IIM).
This is a landmark Bill. It represents a significant major step for cross-border resolution of commercial disputes. This is with the hope that businesses will benefit with more certainty and assurance.
Sir, it is also about our Singapore branding, our badge as a global arbitration and mediation hub. Singapore had a major role in drafting the document. And what more, the Singapore Convention on Mediation was opened for signature on 7 August 2019, our Bicentennial year, and also named after us. It is an honour indeed.
Mediation is now getting more popular and thus more frequently used at both domestic and international platforms. Reading through the Bill, there are some unique pointers unlike other multilateral enforcement regimes, such as that it does not operate based on reciprocity between member states.
I have, Sir, several clarifications and queries.
Firstly, under section 6, subsection 4, pertaining to the certified translation into English of the settlement agreement if it is in other languages. Can the Senior Minister of State clarify if the service will be provided by a list of approved vendors globally or the parties involved will have to source for this themselves?
Next, can the Senior Minister of State please outline if the courts of signatory countries will handle applications to enforce or clear parties involved?
Some major nations have not ratified the Convention. Are there specific reasons or considerations for this? With a Bill as this under the umbrella of the United Nations, it would be excellent to have as many nations come on board and if not so, the reasons, perhaps could be addressed adequately. I believe there are also some inconsistencies with the fundamentals of commercial mediation in the Western jurisdiction. Perhaps the Senior Minister of State is probably more well-versed with this, and if it is possible, perhaps he can enlighten us on some of the possible reasons for this.
Can I also clarify with the Senior Minister of State that as long as a settlement is intended and will result from mediation, then that commercial case will qualify for enforcement under the Convention, regardless of its place of origin or the nation of origin?
Sir, mediation is an art, with the science part of it as well. The mediation industry is variable across different countries and jurisdictions. Its recognition is also variable. For example, in the UK, it has a well-known reputation and history of being strong in arbitration.
What is important in considering this Bill is the fact that mediation will be driven very much by the local framework, culture and emphasis. Mediator recognition, training and qualifications also vary across the globe. Cultural diversity will exist and we know that "culture can, indeed, trump strategy". In view of all these factors, how do we ensure some degree of consistency and standardisation?
Another concern is on the requirement of having "the mediator signing the document". A mediator's document is quite different from a witness' statement in Court, for example. In some places, the mediator may not be comfortable to have his or her name and documents appear and be utilised in a Court of law. Mediators may disagree to sign the Settlement Agreement and, if they are not comfortable with this, to be also subpoenaed as witnesses. How then should these cases be handled?
Some cases or disputes put up for mediation may span a period of time, maybe even years, and agreement may not have been reached at the first sitting. If an agreement is then eventually reached, how can we prove that it is actually settled through mediation and not due to other platforms, alternatives and various permutations of interventions, during the course of the matter in question?
Another query I have on this is: will an agreement arising from mediation now be enforceable with the passing of this Bill? Can the Minister please clarify as well?
Finally, will two parties in dispute seeking enforcement apply to the Courts of the State or country whereby the majority of the assets are located or can this be otherwise? Who can decide on this? And what if both parties are at loggerheads pertaining to this?
So, these are some of the clarifications I have. Pending these, I support the Bill.
Mr Deputy Speaker, Sir, I declare my interest as an accredited mediator with the Singapore Mediation Centre as well as a Fellow in the Singapore Institute of Arbitrators. I rise in support of this Bill, which seeks to enhance the dispute resolution landscape within Singapore, by giving greater recognition towards mediation and international commercial settlement agreements.
The benefits of mediation are four-fold. First, mediation accords parties greater control over the outcome and resolution of the matter, which contrasts with long-drawn Court trials, where the outcome of a case rests in the Judge’s hands. Second, the contents of parties' disputes are kept confidential, unlike litigation where parties' dirty linen and affairs are often aired in Court. Third, legal costs are reduced, as parties no longer have to pay for their lawyers' fees and Court fees once a settlement has been reached. Lastly and most importantly, parties' relationships are preserved and this is essential where parties wish to continue business relations with each other.
As Singapore recognises the benefits of mediation and continues to develop its position as a leading global dispute resolution hub, mediation institutions and schemes will take on an increasingly important role. At present, we have the Singapore Mediation Centre (SMC), which has mediated over 4,000 matters to-date. The settlement rate is approximately 70%, with more than 90% of the settled disputes resolved within a day. To-date, the SMC has received positive feedback. Many individuals have saved time and costs and would likewise recommend the SMC to others involved in disputes.
Apart from the SMC, we also have the International Institute of Mediators (Singapore) Limited (iiM), which was established as a result of its founding members’ commitment to develop and promote the mediation profession on a global basis. Aside from the regular mediation sessions conducted by its members, the iiM additionally provides education and training for those who aspire to become trained mediators.
I am also pleased to share that NTUC’s Freelancers and Self-Employed Unit (UFSE) and iiM have inked a collaboration agreement in December 2019 to better serve the needs of the freelancer community in Singapore. This is one of the many initiatives illustrating the Labour Movement's commitment towards its freelancer members, ensuring that they have an appropriate avenue for amicable dispute resolution. With this collaboration, NTUC UFSE members will be able to enjoy discounted rates for mediation services provided by iiM.
Turning now to the international commercial sphere, with the increasing prevalence of global and international trade between countries, coupled with Singapore’s open and highly developed free-market economy, the need for cross-border mediation resources and enforceable international settlement agreements becomes particularly crucial. It is against this commercial backdrop that this Bill is commendable.
Under the new Bill, international commercial settlement agreements may be recorded as an order of Court which can then be more readily enforced in the same manner as a judgment by the High Court. This is an improvement from the long-standing position where mediated settlement agreements are typically only binding contractually between parties and not directly enforceable as a Court Order. By the same token, the settlement agreement may also be invoked by a party as a defence against a claim that has already been settled. This prevents settled disputes from being re-litigated, which saves parties’ time and costs as well as judicial resources.
While the Bill is no doubt commendable, I have the following questions and clarifications for the Senior Minister of State. The Bill only applies to international commercial settlement agreements resulting from mediation and does not extend to settlement agreements concluded for family, inheritance and/or employment disputes.
First, is there a reason why the Bill is not extended to these other areas of dispute? If so, would the Minister be willing to share the reasons? Also, does the Minister foresee that there should be a similar Bill covering these other areas, given today's globally interconnected world, where many individuals opt to work around the globe, having assets typically situated in different parts of the world and where transactions cut across borders?
Second, given the growing freelancer community and, especially for those who look to venture overseas, whether digitally or in person, would the Bill also cover intellectual property rights?
Third, I understand that the Court retains the discretion to refuse the application to record the agreement as a Court Order if there was a serious breach by the mediator of the applicable standards. What are some examples of serious breaches by the mediator which would warrant the Court’s refusal of the application? And is it necessary to refuse enforcement, especially if commercial entities have been properly advised and have the freedom to enter into such settlement agreements?
Fourth, we do see a greater trend towards mediation over the years, especially with the implementation of the Mediation Act in 2017 and the various mediation institutions in Singapore. I have also seen some choosing mediation over litigation, while others opt to use mediation in conjunction with litigation. Would the Minister foresee a further increase in disputes resolved as a result of the new Bill and, if so, to what extent? Would the Minister also be able to share some of the views and concerns of the legal fraternity as well as the business community, in response to this new Bill? Sir, clarifications notwithstanding, I stand in support of this Bill.
Mr Deputy Speaker, Sir, please allow me to declare my interest as the Chairman of Sakae Holdings Limited, President of Singapore Manufacturing Federation (SMF), Vice-Chairman of the Singapore Business Federation (SBF) and Vice-President of the Singapore National Employers Federation (SNEF). I rise in support of the Bill.
As a representative of the business community, I strongly believe in the benefits of mediation. I constantly advocate mediation as the initial avenue for dispute resolution as the flexibility and advantages that mediation offers are wide-ranging. The benefits of mediation vis-à-vis arbitration and litigation are frequently cited to be time and cost efficiency, confidentiality, non-confrontational character and, many times, the business relationship may continue after a mediation settlement is reached.
I believe I can say that, lawyers apart, one of the most stressful things in life for the everyday man on the street would be to be hit with legal matters, especially a full-blown litigious trial. The stress, worry and uncertainty are exacerbated by a largely adversarial process that takes much time and, indeed, resources away from the real business of doing business.
Hence, the business community will benefit if mediation becomes a widely-accepted and recognised avenue for dispute resolution. With mediation, the options for settlement are wider in scope than the monetary compensation available through arbitration or litigation and parties have a chance to negotiate settlement options without prejudice to their legal rights and in a non-pressure cooker atmosphere.
The confidential nature of mediation also protects companies from unwanted public scrutiny. Most business relationships are complex and forged over time and, as such, I believe most would seek to preserve the relationship where possible. As the awareness for mediation grows, I see this as a cost- and time-efficient option for companies to resolve disputes.
As the President of SMF, I have personally facilitated dialogue between SMC and SMF. The hope of both parties is to bring greater awareness of the options and advantages of mediation to the manufacturing community and thus fostering greater acceptance of this avenue of dispute resolution.
The team at the SMC has shared that 90% of mediation cases are concluded within one day. This is really amazing, as compared to the significantly longer processes of arbitration and litigation with the corresponding higher professional service fees that one would have to pay.
It is my hope that more trade associations and chambers will take the lead in spreading what mediation is and help our society to be one that is less litigious. It is in this context that I firmly place my support behind this Bill.
Perhaps the main reason why companies hesitate to consider mediation as an avenue of dispute resolution was the lack of an enforcement mechanism, especially in the event of cross-border interests. As there was a lack of a cross-border framework for mediated settlement agreements, parties are only able to seek enforcement of the settlement agreement under contract law. By passing this Bill as a step towards ratifying the Singapore Convention, mediation will now be further seen as one that does not waste time and one that can produce desired outcomes.
The Singapore Convention on Mediation, formally the UN Convention on International Settlement Agreements Resulting from Mediation which was adopted on 20 December 2018 and opened for signature on 7 August 2019, is an international agreement governing the recognition of mediated settlements across different countries.
The UN General Assembly adopted this agreement on 18 December 2018 and it is very heartening that the agreement has since been signed by 52 states since it was opened for signature since then.
With a global framework in place, businesses should have greater confidence to settle international disputes through mediation. As noted by Prime Minister Lee Hsien Loong at the signing ceremony, "This will help advance international trade, commerce and investment."
The ratifying of the Convention in the near future will be a step forward for the international business community as signatory states move to standardise enforcement of mediation settlements in their respective jurisdictions. Once again, businesses will not see benefits overnight as legislation takes time to be enacted. However, we hope to be able to lay the groundwork and build awareness in the immediate future.
This Bill is timely, especially with the recent coming into force of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union–Singapore Free Trade Agreement (EUSFTA). As a trade federation, SMF has increasingly encouraged our local companies to look beyond our shores and seek out business partners in new markets for growth.
In the Singapore Business Federation National Business Survey 2019/2020, 76% of firms which indicated that they intended to expand were keen to venture into the ASEAN region, similar to 2018/2019 levels. The top three destinations in the survey were Vietnam, Indonesia and Malaysia.
In 2019, SMF welcomed 21 international business delegations and hosted eight business matching sessions for the local and international business representatives. The Enterprise Europe Network (EEN) Singapore Chapter is managed by SMF and, in the lead up to the ratification of the EUSFTA, saw an increase in interest from local business owners during the visits and business-matching sessions for the European delegations.
Of course, finding a viable business partner does not happen over one business-matching session. The process usually requires a long period of discussion and gestation before an agreement is finalised. Forging business relationships in new markets is a challenging endeavour, especially in markets with very different cultures and regulatory requirements. With increased cross-border commercial transactions, it is expected that differences will arise. As such, a mediation framework that is internationally recognised is much needed for a fair and efficient way to resolve disputes in a timely manner.
In Singapore, the business community is fortunate to operate in a stable environment built on the trust and respect of Government, employers and employees. Within this tripartite partnership, mediation has long been the preferred tool to resolve disputes, especially since the Tripartite Alliance for Dispute Management (TADM) was established in April 2017.
In reply to a written question in Parliament in August last year by my fellow Nominated Member of Parliament, Ms Anthea Ong, Minister Josephine Teo provided statistics, which in my humble opinion, has shown TADM's commendable rates on successful settlements and enforcement. Mediation actually embodies the key tenets of open communication and trust that lie in the foundation of our Tripartite Partnership. My hope is for mediation to continue to be seen as a viable first approach to not only resolve employer and employees disputes but as an avenue to resolve business disputes as well.
As Trade Association Chambers, we need to be committed to advocate and educate the business community with the on-going changes to business legislation and the subsequent benefits of mediation to companies. Once this Bill is passed, I believe our work begins. With that, Mr Deputy Speaker, Sir, I support the Bill.
Deputy Leader.
PAPERCUTS