Speech by Minister for Culture, Community and Youth and Second Minister for Law Edwin Tong SC at SCMA Webinar - Hybrid Dispute Resolution Mechanisms as the Wave of the Future: Perspectives from Singapore as a Maritime Hub

09 SEP 2021

9 Sep 2021 Posted in [Speeches]

Chairperson, Vice-Chairpersons, Members of the SCMA Board of Directors,
Panellists of today’s webinar,
Friends and colleagues,
Distinguished guests,
Ladies and gentlemen,

  1. A very good day to all of you joining us from all over the world.
  1. Let me start by expressing my appreciation to SCMA for being one of the supporting organisations of this year’s Singapore Convention Week 2021. It’s been a very exciting week for all of us, and hopefully, for you as the participants.
  1. This is of course a very different Singapore Convention Week from the one we had in 2019, where we welcomed more than 1,600 delegates from 70 countries to Singapore. But this is reflective of the times we are in, and we are very happy to be able to meet everyone nonetheless, albeit virtually.

Shipping and Maritime Industry Amid COVID-19

  1. It goes without saying that the world has turned topsy turvy due to the pandemic.

  1. The shipping and maritime industry is one of the industries which has felt the impact of COVID-19 very keenly, because of the various restrictions imposed by countries.

    a. To maintain the spread of the virus, ports were closed; containers and vessels from ports of high-risk countries were banned; crews were subject to quarantine periods; and port workers could not work or had to be subject to staggered work schedules.

    b. Supply chains were disrupted.

    c. There were massive delays.

  1. This resulted in unfulfilled deliveries, transportation delays, shipbuilding and ship repair delays, time and monetary losses by charterparties, and gave rise to more disputes in this period.

  1. This itself can be seen from the statistics:

    a. The London Maritime Arbitrators Association (LMAA) reported 3,010 arbitrator appointments in 2020, which is the highest number of LMAA arbitrator appointments since 2015.

    b. SCMA saw a 5% increase in its caseload in 2020, with more than half the disputants coming from outside Singapore.

Maritime Dispute Resolution

  1. When disputes occur, it is in the interest of parties to have them speedily and conclusively resolved, so that they can move forward.

  1. Arbitration is traditionally used in resolving maritime disputes, for a number of reasons:

    a. First, the resolution of maritime disputes requires highly specialised knowledge such as, on maritime adventure, bills of lading, maritime liens, ship and sister ship arrest. Parties would therefore prefer an arbitral tribunal which comprises not only those qualified in the law, but also experts with shipping or other relevant background. That’s why SCMA boasts an international panel of about 120 maritime arbitrators from at least 15 countries, and also plans to offer a specialised Maritime Arbitrator Accreditation Program to empanel new arbitrators, so that parties will have greater confidence in them.

    b. Second, certain cases also require specialised procedures which arbitral institutions can offer. For example, SCMA launched an Expedited Arbitral Determination of Collision Claims in 2013 for ship collisions, involving expert determination. It provides a fair, timely and also cost-effective means of determining liability for a collision when negotiations on apportionment of liability might have reached an impasse.

    c. Third, most maritime disputes are cross-border in nature. Arbitration renders awards that are enforceable in 168 contracting states to the New York Convention.

  1. Singapore has developed our arbitration landscape over the years to support disputing parties, including:

    a. Liberalising our regime, to allow parties to choose counsel and arbitrators of any nationality, and to use any governing law;

    b. Updating our legislative framework regularly, to keep pace with international best practices; and

    c. Also setting up SCMA in 2004, of course, because we recognise that the maritime community requires a specialist forum to resolve their disputes.

  1. This is necessary to support Singapore as the world’s top maritime centre for the 8th year running.
  1. Singapore is now ranked as the most preferred arbitration seat in the world, alongside London, in the 2021 Queen Mary University of London White & Case International Arbitration survey.
  1. But arbitration is not the only way to resolve disputes. Beyond arbitration, businesses may increasingly look to avoid escalation of disputes through mediation or hybrid solutions like arb-med-arb.

  1. SCMA has introduced the arb-med-arb protocol with the Singapore Mediation Centre (SMC) and Singapore International Mediation Centre (SIMC) in 2015.

    a. It allows parties to commence an arbitration; to stay the arbitration; and to try to resolve the dispute through mediation. And if it is resolved, the mediated settlement agreement is converted to an arbitral award which can then be enforced under the New York Convention.

    b. It combines the benefits of both mediation and arbitration – time and cost savings, and more importantly, preservation of business relationships; as well as the finality and enforceability of an arbitral award.

  1. While we now have the Singapore Convention on Mediation to enforce mediated settlement agreements internationally, it will take some time for it to become as powerful an enforcement tool as the New York Convention.

    a. 54 countries have signed since the Convention opened for signature in Singapore two years ago.

    b. This is promising, and we hope more will come on board soon.

Issues and Challenges with Hybrid Solutions

  1. But hybrid solutions are also not without their challenges. There are issues to be ironed out, in order for them to take off and become well-used.

  1. So, for example, interim relief.

    a. If a party requires urgent interim relief during the mediation phase, the question remains as to whether and if so, to whom such relief should be addressed.

    b. If this cannot be resolved within mediation, a party may have to terminate mediation to regain access to the arbitral tribunal for an order for interim relief.

  1. Second, the neutrals in a hybrid process.

    a. While both arbitration and mediation are confidential, mediation may prime parties to be more candid with the mediator than they may be in an arbitration.

    b. If the mediation fails and goes to arbitration, this may cause parties to fear that the arbitrator uses shared information against them in the arbitral award.

    c. Of course, this is a problem only if the same person is both the arbitrator and the mediator. For us, we recommend using a different neutral.

    d. But this practice differs internationally, and there are some who stipulate that the neutral should remain the same person in both arbitration and mediation.

  1. Next, complexity of multi-tiered clauses.

    a. A hybrid clause is often more complex than a pure arbitration or mediation clause.

    b. Unclear or ambiguous contract clauses may cause problems in commencing the subsequent arbitration/mediation proceedings, and might affect the recognition of the enforcement of the award.

Conclusion

  1. These are just some examples.
  1. I will leave the panellists to debate these issues in greater detail later. They are all experts in their fields, with extensive experience in dispute resolution or maritime work.
  1. Thank you once again for inviting me to speak, and I wish everyone a very fruitful discussion later on.
  1. Thank you.

Last updated on 9 Sep 2021