The rise of hybrid mechanisms in international commercial dispute resolution: Mediation-Arbitration and Litigation-Mediation-Litigation
Mediation has been finally recognised as one of the mainstream methods of alternative dispute resolution or, as reframed by the SICC Singapore International Commercial Court , as “Appropriate Dispute Resolution”.
This addition to the previously more popular option of arbitration defines a landscape where claimants and defendants can choose the best method in accordance with their own characteristics and the ones of the dispute.
Newsletter No. 13 - A new meaning for “commercial litigation” in Asia
The Med-Arb in Malaysia, a new Rule of the Asian International Arbitration Centre (AIAC)
Whilst the SICC Singapore International Commercial Court has recently developed the LML Protocol complementing the Arb-Med-Arb protocol of the SIAC (Singapore International Commerce Centre), the AIAC had also improved its offer.
The Mediation Rules 2023 have substantially amended the Mediation Rules 2018 in order to provide a more elaborate version of their “Med-Arb” protocol.
The parties can now try and resolve their dispute in a more open manner, with a choice between two paths.
Il the Parties reach an agreement embodied in a settlement agreement, they may request its registration as “consent award” enforceable as a judgment under the New York Convention (New York Arbitration Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Award), which brings AIAC mediations closer to SIAC mediations.
Another useful improvement of the previous Rules is that, if the mediation does not result in a settlement within 60 days from the Notice of Mediation, the parties are deemed to have agreed to submit the dispute to arbitration in accordance with the AIAC Arbitration Rules 2023, recently amended to make them more compatible with UNCITRAL Rules, on terms already agreed about the seat of arbitration, the number of arbitrators and the language of the arbitration.
Bifurcation, another bridge between arbitration and mediation
Bifurcation can be a choice of the parties or a decision of the arbitral tribunal, admissible implicitly under several institutional Rules (UNCITRAL Arbitration Rules 2021, LCIA London Court of International Court of Arbitration Rules 2020, SIAC Arbitration Rules 2016) and expressly in the ICSID International Centre for Settlement of Investment Disputes Rues 2022.
Bifurcation is not part of the mediation process, but is not unrelated. For instance, the ICC Arbitration Rules 2021 refer explicitly to bifurcation as a means to resolve “cases of low complexity and low value” (Appendix IV - Case Management Techniques. Since bifurcation splits the process in separate steps leading to “partial awards”, typically dealing respectively with matters of jurisdiction, liability and quantum, it allows the parties to settle before the end of the process, especially if an award concludes to an absence of liability or to a minimal quantum.
Without including expressly the concept of mediation , bifurcation can lead to the arbitral tribunal acting de facto as mediator.
Bifurcation is not without its downside, it can make the arbitration more expensive because longer, one year longer on average according to the Journal of International Arbitration )Lucy Greenwood “Revisiting Bifurcation and Efficiency in International Arbitration Proceedings” 2019). It is also subject to its specific conditions, such as satisfying the “Glamis Gold Test”, nonetheless it is an interesting “bridge” to consider between arbitration and me
In conclusion, one cannot but observe the richness and flexibility of alternative (or appropriate) dispute resolution mechanisms for commercial disputes in Asia.
This is not limited to Singapore and Malaysia, mentioned in this Newsletter; it must also include Hong Kong and its Arb-Med-Arb, a protocol under which the arbitral tribunal can act as mediator during proceedings and, if the proceedings are successful, incorporate the terms of the settlement agreement into a consent award.
The parties and their counsel should therefore be encouraged to submit their disputes to an arbitration and mediation institution located in Asia, whether in Kuala Lumpur, Singapore, or Hong Kong in particular, and in the latter case, including for disputes involving Mainland China, with the Hong Kong branch of CIETAC (China International Economic and Trade Arbitration Commission), the oldest and most prestigious arbitral institution in the People's Republic of China.
This alternative choice to Paris, whose importance is undisputed, accompanying the shift of the global economy towards Asia, can only benefit French companies, which would thus demonstrate a spirit of balance between old and newer institutions.
This would be favourably received in Asia, where the predominance of institutions located in Europe is criticised, for example, that of the LCIA (The London Court of International Arbitration), which has been challenged by China, noting that the majority of international maritime traffic takes place in Asia.
The Chartered Institute of Arbitrators in London and the International Mediation Institute in The Hague, with which this author is affiliated, remain respected institutions as creators of standards for the international qualification of arbitrators and mediators. However, their implementation on the ground in Asia is taking place (albeit according to rules sufficiently integrated with global principles, notably through the reference to UNCITRAL) with Asian characteristics adapted to the realities of the new center of the world.
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The content above is purely for informational purposes, relating to a selected overview of legislative, regulatory and case law developments in the relevant geographical area, which is not and does not claim to be exhaustive.
It does not constitute legal advice in relation to any particular case and should not be regarded as such. A more detailed doctrinal study on any of the topics mentioned may be requested.
Philippe Girard-Foley is a Registered Foreign Lawyer accredited by the Supreme Court of Singapore before the Singapore International Commercial Court – Certificate of Full Registration under Section 36P Legal Profession Act (Chapter 61).