New Med-Arb Protocol: SIMC Mediation Settlement Agreements To Be Enforceable As SCIA Arbitral Awards

• Published date: 14 December 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Rajah & Tann
• Author: Mr Jonathan Yuen, Yu Zheng, Ang Leong Hao and Ang Tze Phern

Introduction

There has been a growing trend globally in recent years towards alternative dispute resolution mechanisms such as mediation. In 2021, the Singapore International Mediation Centre ("SIMC") administered disputes with a total value of over US$3 billion, equalling the total dispute value for the preceding six years (i.e. 2014 to 2020).

The strong trend towards mediation has been further aided by the Singapore Convention on Mediation (formally known as the United Nations Convention on International Settlement Agreements Resulting from Mediation) which was signed in 2020. In this regard, parties to the Singapore Convention are obligated to recognise and enforce international commercial settlement agreements, greatly improving the ease of international enforcement of settlement agreements. Indeed, despite the short span of time since it was opened for signature in August 2019, the Singapore Convention has 55 signatories as of December 2022, of which eight are parties to the Singapore Convention.

To further improve the enforceability of settlement agreements, SIMC and the Shenzhen Court of International Arbitration ("SCIA") launched the SIMC-SCIA Med-Arb Protocol ("Protocol") on 25 November 2022. The new Protocol allows for any settlement agreement resulting from mediation at SIMC to be recorded as an SCIA arbitral award, which can be efficiently and effectively enforced in China and elsewhere. The Protocol is the result of a 2020 Memorandum of Understanding ("MOU") between SCIA and SIMC. It provided that SCIA will include SIMC as one of its recognised mediation institutions, and that SCIA will refer cases to be administered by SIMC in appropriate cases.

We elaborate on the features and advantages of the new Protocol below.

Features of the Protocol

The Protocol applies to all disputes submitted to SIMC for mediation. This includes cases where arbitration proceedings have been first commenced at SCIA, then submitted to mediation at SIMC. Under the Protocol, if the submission is pursuant to an existing arbitration agreement between the parties, the parties agree that any dispute settled in the course of the SIMC mediation falls within the scope of the arbitration agreement. The arbitration will be suspended until SCIA receives the outcome of the SIMC mediation.

If a settlement agreement is reached, the Protocol dictates that any party may, with the consent of all parties to the mediation, apply to SCIA to record the settlement agreement as an arbitral...