Aside from arbitration or litigation, the only way for parties to attempt to resolve disputes is through constructive dialogue. Communicating through brokers and taking legal positions through solicitors (correctly or otherwise) frequently run counter to constructive dialogue.
Mediation involves the engagement of a qualified third party who may help parties bridge differences. Mediators do not determine disputes, but may nudge parties to carefully consider the merits of their legal positions and the consequences of a negative outcome. Many countries have legislation protecting mediation confidentiality, and enforceability of mediated settlement agreements (MSAs).
The Singapore Convention on Mediation, which has 55 signatories as of 17 September this year, allows cross-border enforcement and gives significant weight to MSAs in the maritime and international trade sphere. The Singapore Chamber of Maritime Arbitration (SCMA) launched a hybrid dispute resolution (Arb-Med-Arb) in 2015, which provides parties with flexibility and cost savings. Parties simply incorporate the Arb-Med-Arb clause into their contracts.
At the start of arbitration, parties are typically entrenched in their positions. As arbitration progresses, parties gain a clearer picture of the merits, and may lean towards settlement. Arb-Med-Arb is a perfect tool for parties to pause arbitration and mediate with a firmer intention to settle. Where the contract allows parties to do this, the proposer is not seen as surrendering or having “a weaker case”. This is a huge psychological benefit.
Many mediation centres also have clear time-bound protocols in place that prevent considerable potential delay of the process. The lack of administrative fees or frontloading of fees under SCMA’s self-administered model may further motivate parties to consider mediation.
If mediation succeeds, the MSA can be converted into a consent arbitration award enforceable in more than 160 New York Convention signatory jurisdictions. This provides greater peace of mind. Where mediation fails, parties simply revert to the paused arbitration.
Parties who wish to resolve disputes while preserving relationships will see value in this hybrid solution, where the opportunity to mediate remains available to parties until a final arbitral award is passed.
In Thailand, court procedures are sometimes significantly delayed, particularly where disputes are complicated, and witness examinations and hearings require a great length of time. To enhance the efficiency of court processes while maintaining accessibility to justice for all parties, many Thai courts have adopted electronic court systems (e-court). Unfortunately, the delays have not been resolved. The caseload is often increased due to situations where parties do not necessarily intend to proceed with litigation but do so as they have no other alternative.
Mediation is a tool to alleviate this issue. Previously, mediations in Thailand were mostly done through the courts after parties had submitted their claims. This is largely because most parties only trust a court-directed mediation, as parties would be able to seek a settlement through the court system at any time before the case becomes final. Since this type of mediation requires parties to commence an action in court, the process may not be satisfactory for parties that wish to obtain a commercial settlement. Further, some court-appointed mediators may not have sufficient business knowledge.
In 2019, the Thai government enacted the Mediation Act, which allows disputing parties to mediate without commencing litigation in court. There are limitations, for example, as to the subject matter (i.e. mediation of civil disputes such as land, inheritance and other disputes with the capital not exceeding THB5 million [USD150,000]).
Many institutions, such as the Thailand Arbitration Centre and the Thai Chamber of Commerce, are trying to establish and promote neutral alternative dispute resolution, including mediation by specialised professionals. This has led to a significant increase in mediation and alternative dispute resolution cases, mainly resulting from good facilities and well-equipped mediators who understand both the commercial aspects and alternative dispute resolution processes.
However, Thailand is not yet a signatory country of the Singapore Convention on Mediation, which may cause issues in enforcement abroad of mediation agreements made in Thailand, and vice-versa. While Thailand is attempting to promote mediation and alternative dispute resolution, more improvements are required and should be proceeded with, particularly on enforceability issues.
Naiyachon Tathong is managing partner at JTJB International Lawyers in Thailand and John Sze is deputy managing partner at JTJB in Singapore. Punit Oza, executive director of the Singapore Chamber of Maritime Arbitration, also contributed to this article
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