COVID AND CONFLICT
In 2020, as the covid-19 pandemic brings the world to a near-standstill, the moving imagery of the tightrope-walker is more compelling than ever. Caught in this ongoing moment of uncertainty, we are being asked to reimagine many things – how we work, how we socialise, how we travel, and how we live as family units. We are also being asked to reimagine how we manage conflict – from the kitchen table to the boardroom table.
In commercial settings, countless arrangements have been disrupted, through no fault of either party – from travel to joint ventures. As a result, courts around the world are bracing themselves for a tsunami of cases that will consume them for years to come. For many businesses, this means that timely and affordable access to courts is not a realistic expectation. Recourse to arbitration is not always viable either, as arbitration faces challenges relating to the suspension of hearings by tribunals and parties alike. In this context, mediation has emerged as a seemingly pandemic-proof dispute resolution mechanism with the potential to deliver the timely and commercially sensible resolution of disputes needed by many clients to survive the global economic downturn.
MEDIATION 2020: FREEDOM WITHIN A FRAMEWORK
Mediation offers users the procedural agility and intuitive responsiveness of the tightrope-walker’s moving rod to navigate unprecedented change. At the same time, mediation is grounded in robust regulatory frameworks that keep parties’ feet moving forward on the thin wire that leads to resolution. In other words, mediation offers freedom within framework. It is precisely this freedom that gives commercial parties the opportunity to rise above entrenched adversarial positions and negotiate with their counterparts, in order to:
arrive at commercially sensible and innovative outcomes;
preserve business relationships; and
avoid further disruption to business activities, for example, through lengthy adversarial proceedings.
Further, the freedom to design mediation procedures and tailor outcomes to suit unique sets of disputants’ needs has encouraged a diversity of mediation practices that includes facilitative, expert advisory, wise counsel, settlement, transformative mediation and other approaches. Beyond this, mediation services are increasingly offered online and as a core component of mixed-mode dispute resolution procedures, such as arb-med-arb and other multi-tiered dispute management protocols. Mediation has also demonstrated its worth as a key risk assessment tool in making deals (deal mediation) and remaking deals that have gone wrong.
Mediation has come to represent a rich smorgasbord of dispute resolution choice. The diversity of mediation is well illustrated by the Singapore International Mediation Centre’s (SIMC) Covid-19 Mediation Protocol, which provides businesses with an expedited, economical and effective route to resolve international commercial disputes during the pandemic period. Under the Protocol, multiple variations are possible. Mediation may be offered face-to-face, online or in a blended on- and offline mode, allowing parties to circumvent the challenges posed by global travel restrictions. Diverse mediation practice models are also available. Single mediators or mediator teams from around the world may be appointed. Mediator appointments are made within 10 days and mediations generally take one day to settle at the SIMC.
FRAMEWORK
The growth of international mediation practice, with its appeal of freedom, has not occurred in a vacuum. It has been accompanied by the development of domestic and international legal frameworks. Mediation lawcanvasses a broad spectrum of regulatory activity on critical aspects of mediation. Specific mediation laws can trigger pathways to mediation procedures; others regulate aspects of procedure and mediator ethical standards. Mediation law also sets out the rights and obligations of participants involved in mediation – addressing topics such as confidentiality, admissibility of mediation evidence, and recognition and enforcement of (international) mediated settlement agreements (iMSAs).
By far the most significant regulatory development is the Singapore Convention on Mediation – a multilateral treaty that governs and facilitates the circulation of iMSAs across national borders. The Convention achieves this by recognising iMSAs as a new type of legal instrument in international law: neither a contract nor an arbitral award, iMSAs that fall within the scope of the Singapore Convention (article 1), and satisfy the conditions of the Convention, enjoy a unique status. Aggrieved parties are able to proceed to the courts of state parties to seek relief under the iMSA (article 3) by filing an application before that court and providing evidence that the iMSA, including those concluded via electronic means (article 2), resulted from mediation (article 4). Provided that the iMSA does not fall under any of the grounds for refusal of enforcement (article 5), it will be directly enforced. Notably, parties may opt out of the Convention by the terms of their iMSA (article 5(1)(d)). Additionally, if one party to the iMSA seeks to commence litigation or arbitration to contest issues that have already been settled, the iMSA may be raised as a complete defence to the commencement of such proceedings. There is no requirement for an iMSA to undergo a review process at the place where it was concluded, as there is no “seat” of mediation (unlike in arbitration). As a corollary of this, the Convention does not operate on a reciprocal basis – it is not limited to iMSAs resulting from mediations that took place in states that are parties to the Convention. Court review only occurs in the state of enforcement. The Convention has provisions on parallel claims (article 6) and more favourable enforcement regimes (article 7), and permits states to declare limited reservations (article 8).
The Singapore Convention is mediation’s equivalent of the New York Convention on Arbitration, which has catalysed the phenomenal growth in arbitration’s institutional capacity over the past 60 years and enabled arbitration to become the procedure of choice for international commercial dispute resolution. Are we to expect a similar trajectory for mediation? With the Singapore Convention already having more than 50 signatories and being set for ratification in September 2020, mediation’s institutional capacity is set to expand further. Already, international arbitration institutes have expanded their mediation services and organisations dedicated to the provision of international commercial mediation services have emerged, such as the SIMC and the Japan International Mediation Centre (JIMC). Yet another development has been institutions offering specialist international mediation services – including consumer e-disputes, family, intellectual property, investor–state disputes and state-to-state disputes.
WHAT DO USERS SAY?
Courts, mediation institutions and individual mediators boast varying settlement rates of between 75 per cent and more than 90 per cent. The relatively low rate of litigation on mediated settlement outcomes suggests that most people stick to their deals. These statistics certainly make mediation a pragmatic alternative to arbitration and litigation, but they don’t tell the whole story.
SIDRA survey
A study spearheaded by the Singapore International Dispute Resolution Academy (SIDRA) examined 304 responses from users of international mediation, arbitration and litigation in nearly 50 countries. Users comprised both client users (corporate executives and in-house counsel) and legal users (lawyers and legal advisers).
Choice of dispute resolution mechanism and satisfaction levels
Users identified enforceability, neutrality/impartiality and cost (closely followed by speed) as the top factors influencing their choice of dispute resolution mechanism. When selecting litigation and arbitration, these factors remained priorities. By contrast, in the selection of mediation, enforceability was considered least important, reflecting users’ awareness of the absence of an expedited enforcement mechanism for iMSAs in 2019.
The plot thickens when we look at users’ satisfaction with these factors. Across all dispute resolution procedures, users were satisfied with their experience of neutrality and impartiality. In relation to mediation, users’ satisfaction level of expedited enforceability matched their low expectations of this factor. However, a significant gap between expectations and actual experiences emerges in relation to costs and speed in arbitration, and to a lesser extent, litigation. Tellingly, the SIDRA survey indicates that mediation enjoys higher satisfaction in relation to speed and cost (68 per cent of users were satisfied with the speed of mediation, and 65 per cent with its cost) as compared to litigation (speed 45 per cent; cost 48 per cent) and arbitration (speed 30 per cent; cost 25 per cent).
If we drill down further and distinguish between client and legal users, we find that client users’ satisfaction with costs (72 per cent) and speed (76 per cent) in mediation is even higher than that of legal users. Mediation is by far the leading choice of dispute resolution in respect of speed and costs, especially for client users. As reported in the Business Times:
The survey demonstrates [that] protracted adversarial proceedings such as litigation and arbitration can take its toll on all sides … Businesses today have an increased appetite for more creative, efficient and less confrontational forms of dispute resolution, including mediation.
Deep dive into mediation
Let’s look more closely at what users said about mediation. Client and legal users prioritised the following factors when selecting mediation:
impartiality/neutrality (86 per cent);
speed (85 per cent);
confidentiality (83 per cent);
flexibility of processes (82 per cent);
cost (81 per cent);
flexibility in choice of institutions/venues/mediators (77 per cent); and
clarity in rules and procedures (76 per cent).
An overwhelming three out of four users indicated satisfaction with their mediation experience in terms of these factors. Users’ prioritisation of procedural flexibility, as well as choice of institutions, venues and mediators, highlights the appeal of the freedom that mediation offers. Further, the significance users placed on a confidential, neutral forum with clear rules and procedures, led by an ethical and culturally fluent mediator, confirms parties’ desire for freedom to engage in full and frank negotiations within a clear culturally appropriate and confidential regulatory framework.
How do users relate to technology in mediation?
As social distancing has become a standard way of living and doing business during the global pandemic, online dispute resolution has the potential to become the “new normal” for mediation. This is especially so given the enthusiasm among client users for employing technology in mediation, as the SIDRA survey findingssuggest. Almost half (48 per cent) of client users (compared to 28 per cent of legal users) rated platforms for the conduct of virtual/online hearings as “extremely useful” or “useful”. Similar results were reported in relation to e-discovery/due diligence tools, negotiation support tools and analytics for appointment of mediators and/or counsel. In light of the global pandemic, we expect this trend to continue, which presents an opportunity for legal users to consider employing technology in mediation to address client expectations in this regard. Certainly, leading mediation institutions are incorporating technology into their back-end and front-end processes to complement and improve their suite of mediation services, according to SIDRA’s Digital Readiness Index.
Mediation in mixed-mode procedures
As indicated previously, users rated enforceability as the least important factor when selecting mediation. This suggests that users are more likely to favour mediation if they believe there is a reasonable chance of settlement and low risk of non-compliance. Conversely, where parties are concerned about finality/enforceability, they turn to mixed-mode procedures with mediation and arbitration components. These mixed-mode procedures promise the best of both worlds: expedited enforceability and preservation of business relationships. With the coming into force of the Singapore Convention, standalone mediation will take place within a robust international framework that parallels that of arbitration. In time, this may reduce the current appeal of mixed-mode procedures.
MEDIATION 2020 – NEXT PRACTICE?
Mediation 2020 represents next practice. It offers procedural freedom and party control of outcomes within a robust legal and institutional framework. While more legalistic dispute resolution procedures continue to be challenged by covid-19, mediation has demonstrated its capacity to deal effectively with extraordinary business disruptions at a time when the need for strong, flexible business relationships is greater than ever.
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