Singapore, China agreement on BRI disputes

On 1 April, the Supreme Court of Singapore and China’s Supreme People’s Court signed a memorandum of understanding (MoU) about managing international commercial disputes involving China’s Belt and Road Initiative (BRI) through a litigation-mediation-litigation (LML) framework.

The MoU seeks to address the complexification of disputes. It is increasingly accepted that rights-based adjudication (litigation and arbitration) can be used with other interest-based modes of dispute resolution (mediation). Mediation can reduce the scope of a dispute even if the whole dispute cannot be settled.

Through the MoU’s preamble, the two courts expressly recognise that mediation may offer flexible, creative and efficient ways to resolve complex disputes on international trade and commerce in the context of the BRI.

The MoU contemplates an LML framework being developed and implemented by the Singapore International Commercial Court (SICC) and the China International Commercial Court (CICC). The courts agree that the framework will feature:

• Case management conferences for the court to determine procedural steps and to give case management directions;
• The court’s power to grant a stay of proceedings for the parties to undergo mediation;
• The mediation to be conducted on a “without prejudice”, private and confidential basis, and in accordance with mediation rules agreed to by the parties; and
• Any mediated settlement can be recorded by the court as a judgment for the purposes of recognition and enforcement.

The LML framework takes a leaf out of the arbitration-mediation-arbitration (arb-med-arb) mechanism, where a dispute is first referred to arbitration before mediation is attempted. The Singapore International Arbitration Centre (SIAC) and the Singapore International Mediation Centre (SIMC) jointly administer such a tiered dispute resolution mechanism.

Under the arb-med-arb mechanism, a mediated settlement may be recorded as a consent award for the purposes of recognition and enforcement.

The LML framework is also broadly similar to that established by the SICC earlier this year, in collaboration with the SIMC. The SICC-SIMC LML protocol came into effect on 12 January.

It is not yet clear whether the Singapore court will implement the LML framework under the MoU through the SICC-SIMC LML protocol or a different framework specially for BRI disputes. It would be possible for the Singapore court to draw up a BRI-specific LML protocol by, for example, tapping into existing provisions in order 28 of the SICC Rules 2021, for the management of cases on the specialised technology, infrastructure and construction (TIC) list.

The MoU is intended to cover disputes described as BRI international commercial disputes, defined as disputes on international trade and commerce including the carrying out of infrastructure development and construction works, the supply of goods and services for such works, and the financing of such activities in the context of the BRI. Such disputes are likely to fall within the scope of the specialised claims that may be managed on the TIC list, as set out in order 28 rule 2(3) of the SICC Rules 2021.

There could be synergy between some of the processes available for cases on the TIC list and the LML framework. For instance, there is a simplified adjudication process protocol that parties can agree to.

This is a cost-effective process under which the parties agree to exclude certain claims from the full adjudication process and to have those claims decided either by reference to the outcome of the parties’ main claims (e.g. for a party’s recovery under the excluded claims to be proportionate to that party’s recovery under its main claims) or through a simplified adjudication procedure without the need for factual evidence.

Where the LML framework is in place, and if parties are unable to settle a dispute through mediation, a possible mediation outcome (for cases that are also on the TIC list) may be for the parties to agree on the simplified adjudication process protocol under the TIC list, to streamline the rest of the litigation process with time and cost savings.

It remains to be seen whether the Singapore court will weave BRI-specific provisions into the LML framework under the MOU. For now, the Singapore court has the option to simply extend the plain-vanilla SICC-SIMC LML protocol to BRI disputes.

UNA KHNG is a director and head of the commercial disputes practice group at Helmsman in Singapore