SBF IC Webinar: Mediation and Arbitration as Means to Resolve COVID-19 Related Disputes in Infrastructure Projects

Posted in Insights

In the third instalment of the Singapore Business Federation Infrastructure Committee (SBF IC) webinar, we shared how mediation and the SIMC Covid-19 Protocol are well-suited for construction businesses that have been affected during this period. 

SIMC Deputy CEO Mr Teh Joo Lin, SIAC Deputy Centre Director Ms Michelle Chiam and Mr Colin Chow, a director at the Ministry of Law, discussed the ways in which infrastructure disputes could be resolved effectively and expediently.

Businesses could arbitrate, mediate, or do a bit of both, depending on the nature and complexity of the dispute. They could, of course, also apply for relief under the Covid-19 (Temporary Measures) Act.

Close to 300 participants tuned in on Thursday (July 2) afternoon. If you missed the entire recording, you can view it here. We have also picked out some of the highlights from the panel discussion. 

We thank Mr Jeffrey Phang, SBF IC Director, for moderating the session.

“Covid-19 Act is not the solution”

Mr Chow stressed that the Covid-19 Act does not resolve the actual dispute, neither does it change the contract nor absolve parties from contractual obligations.

“(Think of it as) a ‘bandage to stem the bleeding’,” he said. “or rather, a kind of ‘legal circuit breaker’ where parties are given time and space to renegotiate new terms with their contractors.”

As resources are already very stretched during this period, he encouraged participants to be constructive about negotiations and come to a mutually acceptable outcome.

With over 60 per cent of respondents[1] indicating that their projects have been greatly impacted, and 47 per cent sharing that their projects have been delayed during this period, Covid-19 has done its damage across the infrastructure sector. 

“When settling the dispute, you want to be fair to all parties as every one has been impacted by the pandemic, not just you,” Mr Chow said. “If you are unable to negotiate, please mediate.”

“We could… mediate”

In mediation, parties are guided by a third-party neutral – the mediator – who facilitates negotiations between disputants. The process is structured, voluntary[2], flexible, confidential and without prejudice[3], allowing parties share concerns in ways they would not be able to in arbitration or before a judge. While the mediator may help disputants unearth underlying interests, parties ultimately have agency over the outcome of the discussions. If there is a settlement, the agreement can be enforced as a court order in Singapore. 

A participant asked what types of disputes were best suited for mediation.

“All kinds of disputes can be mediated,” Mr Teh responded. “The question to think about is: if there is a problem, and you want to settle it, what are the tools available and what factors would help me reach a satisfactory settlement?”

He stressed that counsel are paramount to the success of a mediation as they are in the best position to advise their clients to mediate one part of a complex dispute. They also have a responsibility to advise what they should do during a mediation session. This would help parties be in the right mind space in working towards a settlement.

“What if the disruptions continue?” 

Responding to the question of what would happen if the disruptions continue beyond 19 October 2020, Mr Chow said that the moratorium can be extended for another six months. In the meantime, the Singapore Ministry of Law is working closely with other government agencies to monitor the situation on the ground. 

In lieu of clarity, parties should try their best to work something out among themselves, using whatever is available – such as the SIMC Covid-19 Protocol, which also designed to complement the Covid-19 Act.

Mr Teh emphasised that parties can mediate at any time even after an Assessor’s determination. Parties can also mediate under the Protocol regardless of whether a dispute happened as a direct result of the pandemic. The fee structure would apply according to the three tiers of dispute quantum, which can be found on SIMC’s website. For instance, a SGD200,000 dispute could be mediated at SIMC, with each party paying no more than $3,000[4]. 

From an institutional perspective, the SIMC Covid-19 Protocol has received several queries from local and international parties, and SIMC is working with its overseas partners to develop something similar in those jurisdictions. 

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[1] During a live poll, respondents were asked if their projects have been impacted or delayed by the pandemic.

[2] In response to a question from the audience: Does the counter-party have to agree to attend a mediation, the answer is Yes. SIMC can approach the counter-party to seek their consent for mediation.

[3] The contents shared during the mediation cannot be used as evidence in an arbitration or court proceeding.

[4] Cost may vary. Terms and conditions apply. See http://old.simc.com.sg/simc-covid-19-protocol/