DISPUTE RESOLUTION 101: ARBITRATION,

MEDIATION AND ADJUDICATION

Introduction
Alternative dispute resolution (ADR); includes dispute resolution processes and
techniques that act as a means for disagreeing parties to come to an
agreement or resolution of their disputes, short of litigation in Court. It is a
collective term to describe the ways that parties can settle disputes, with (or
without) the help of a third party [1].

Three commonly used ADR mechanisms for commercial and construction

disputes are Arbitration, Mediation and Adjudication.
The use of ADR is on the upward trend in Singapore.

In 2016, the Singapore Mediation Centre (SMC), dealt with the highest number
of mediations in its 20-year history. It handled 499 cases in 2016 with a total
quantum of disputed sum of $775 million [2].

On the arbitration front, the Singapore International Arbitration Centre (SIAC)

posted stellar figures with 271 cases filed in 2015 at a total dispute quantum of
$6.23 billion [3].

Adjudication (which is only specific to disputes under construction contracts) is

believed to have also seen a record number of around 500 cases lodged in
2016.

This article provides a brief overview of Arbitration, Mediation and Adjudication

in Singapore.

Arbitration

Arbitration is a consensual process where parties agree to appoint an arbitrator

to adjudicate their disputes. The agreement to arbitrate is usually found in an
arbitration clause contained in a contract signed by the parties. Most
construction contracts include an arbitration clause.

Parties are free to select the arbitrator, who should ideally be a person familiar
with the area of industry that is the subject of dispute. For example, a senior
quantity surveyor can be appointed as the arbitrator for a dispute over the
value of variation works under a construction contract.

Parties are also at liberty to select the procedural rules governing the
arbitration.

There are two types of arbitrations – ad hoc arbitrations

and institutional arbitrations. Institutional arbitrations are those governed by
the rules of established arbitral institutions such as the SIAC [4], the Singapore
Institute of Arbitrators [5] or the International Court of Arbitration [6] while ad
hoc arbitrations are not subject to such rules.

Decisions made by the arbitrator (called arbitration awards) are binding on the
parties and are enforceable by the Singapore Courts as judgments of the
Court. Arbitration awards made in Singapore are recognised internationally by
countries who are signatories to the Convention on Recognition and
Enforcement of Foreign Arbitral Awards (Also known as the “New York
Arbitration Convention”)[7].

Parties who are dissatisfied with an arbitration award may appeal to the Courts
[8] or apply to set it aside [9]. However, this can only take place under limited
circumstances.

Mediation

Mediation is a process where disputants agree to negotiate and try to arrive a

settlement of their disputes with the help a neutral thi rd party mediator.
Mediation is similar to arbitration in that both parties must agree to use it as a
means of dispute resolution. Mediation may be carried out under the auspices
of the SMC [10] or the State Courts Centre for Dispute Resolution (if there is a
pending civil litigation in the State Courts) [11].

Parties may agree on a mediator failing which the mediator will be appointed
by the SMC or the State Courts. A mediator’s role is to help the parties come
together and open a dialogue to negotiate and/or settle their dispute. The
mediator cannot make any binding decisions or adjudicate on the merits of the
dispute. Mediations are without prejudice. Matters discussed and raised in
mediation cannot be tendered as evidence in Court if the mediation fails. If the
mediation is successful, parties will enter into a binding settlement agreement
to record the terms of settlement.

Adjudication

Adjudication is a statutory dispute resolution process specifically tailored for

progress payment disputes in construction contracts. It is provided by the
Building and Construction Industry Security of Payment Act (Cap 30B) (“SOP
Act”) with the purpose easing cash flow in construction projects.

Adjudication is available to a party (Claimant) who has carried out construction

woks and has not received payment. The process is engaged by the lodgement
of an adjudication application with the SMC. The dispute will heard and
decided by an adjudicator appointed by the SMC [12].
The adjudicator’s decision (called the Adjudication Determination) is
temporarily binding on the parties [13] and only resolves the dispute on a
single progress payment. Any other types of disputes, such as disputes
relating to defects or delays, must be dealt with elsewhere such as via
arbitration or mediation.

There is no right of appeal to Court. The Cou rt may however may set aside an
adjudication determination if there has been procedural impropriety (e.g.
breach of natural justice) or illegality (e.g. fraud) [14]

A claimant who has not received payment of the adjudicated amount has
several options to enforce the adjudication determination such as converting
the adjudication determination into a judgment of the Court; suspending work
and seeking direct payment from the principal of the respondent
[15]. Additionally, under some circumstances, the claiman t may claim a lien
over the goods supplied [16].

Concluding Remarks

ADR should be seriously considered as a viable alternative to litigation in the

Courts. The use of ADR is expected to increase with the recent
amendment [17] of the Civil Law Act to allow third party funding and the
upcoming Mediation Act which strengthens the legal framework for mediation in
Singapore [18].

Nevertheless, there are many factors to consider when determining the ideal
mode of dispute resolution including, but not limited to: the nature of the
dispute; the cost of resolving the matter; the amount of time it will take; and
whether there is an business relationship that should or could be salvaged. Its
best to seek proper legal advice before deciding on the mode of ADR to be
deployed.

Tan Joo Seng

Footnotes

[1] Wikipedia at https://en.wikipedia.org/wiki/Alternative_dispute_resolution

[2] Straits Times, 27 Jan 2017 at

http://www.straitstimes.com/singapore/singapore -mediation-centre-handles-
record-number-of-cases-in-2016-72-per-cent-more-than.
[3] http://www.straitstimes.com/singapore/singapore -international-arbitration-
centre-appoints-davinder-singh-as-new-chairman.

[4] http//www.siac.org.sg

[5] http//www.siarb.org.sg

[6] http://www.iccwbo.org

[7] http://www.newyorkconvention.org/

[8] Section 48 of the Arbitration Act (Cap 10)

[9] Section 49 of the Arbitration Act (Cap 10) and section 24 of the
International Arbitration Act (Cap 143A)

[10] http://www.mediation.org.sg

[11] https://www.statecourts.gov.sg/Mediation_ADR/Pages/An-
Overview%20of%20Mediation.aspx

[12] http://www.mediation.org.sg

[13] Section 21 of the SOP Act.

[14] Citiwall Safety Glass Pte Ltd v Mansource Interior Pte Ltd [2015] SGCA
42

[15] Part V of the SOP Act.

[16] Section 25 of the SOP Act.

[17] http://www.straitstimes.com/politics/spores -status-as-legal-hub-boosted-

by-changes-to-law

[18] https://www.mlaw.gov.sg/content/minlaw/en/news/public -
consultations/public-consultation-on-the-draft-mediation-bill.html