Opening Keynote Address by Mr Edwin Tong, Senior Minister of State for Law & Health, at Law Society Neutral Evaluation & Determination Forum

17 SEP 2018

17 Sep 2018 Posted in Speeches

Good morning, Mr Vijayendran, and also to Mr Chong Yee Leong and Mr Chia Chor Leong, the chair and co-chair respectively.^[1] My congratulations to the Law Society for launching the Neutral Evaluation and Determination Scheme, and relaunching the Law Society Arbitration Scheme, which, as we heard from Yee Leong earlier, now has added features to it. The implementation of the new scheme, is the much-needed third peg of the triumvirate, and this now broadens the range of out-of-court offerings to the public. Like its sister schemes, the new scheme is designed to be cost-effective and very much client-centric. So to give you an example of claims above $250,000, claims which would otherwise have gone to the High Court in Singapore, the neutral’s maximum fee is capped at $15,000. The new scheme also goes well beyond the tripartite processes of litigation, arbitration and mediation. These initiatives reflect the diversity of our dispute resolution landscape, and I will just pause for a moment to reflect on that.
Litigation and dispute resolution is a service. And it is a service to clients because they have a dispute that needs to be resolved. The resolution does not always have to end with both parties going their separate ways, or for there to be a winner or for there to be a loser. So it is in this context that ADR has been developed over the years. And I would also say that the development of ADR in Singapore represents a little bit of a microcosm of legal development in Singapore. I will make good that point by looking back at history, how we have come together over the years to develop ADR and looking at lessons in history in order to look forward, to see what else we can do to improve the landscape, and to enhance our legal services. I am confident, with the Law Society at the helm, that neutral evaluation will become another trailblazer, and I will explain that also in a minute.

The development of ADR in Singapore
Our standing as a dispute resolution hub did not occur by chance. Many of you know that it was deliberate by design, with the cooperation of the Government, along with the courts and the legal practitioners, through the Law Society. Over the years, we have strived to build Singapore’s reputation as a trusted forum for parties near and far to settle their disputes. There were two distinct but overlapping phases in this development – the first, largely in the 1990s, laid the foundations for ADR. ADR was not so well-known prior to that. And in the second phase, starting from the new millennium, we built on those foundations to broaden and also internationalise our services – the work that continues today.

The 1990s: Laying the Foundations
In the 1990s, ADR, as I said earlier, was not quite the in-thing. The main way to resolve disputes was through litigation in court. Arbitration was the main alternative, but its reach was far more limited than in the late 1980s and early 1990s than it is now today. Parties who preferred to cross swords in private could make arbitration agreements, but this really was also more common in specialised sectors such as insurance, shipping and construction. International arbitration was still nascent – the Singapore International Arbitration Centre (“SIAC”) was set up only in July 1991 and handled only two cases that year. Mediation, being in its infancy, was even more unheard of at that time, though things started to change when the then Subordinate Courts adopted the mediation process for civil disputes in 1994. But outside the courts, mediation was far from prevalent.
Then came 1996 when, in a watershed development, the then Minister for Law Professor S. Jayakumar announced the appointment of a committee to look into how ADR processes, particularly mediation, could be further promoted in Singapore. The committee’s report in the following year called for a “more comprehensive plan” to achieve this objective, to “resolve social and community conflicts in Singapore”. So the seeds of where we are today on mediation were really planted in 1996. The members at the time, including Law Society, saw the need for less costly, faster and non-adversarial mechanisms to resolve civil and commercial conflicts, which were expected to increase in tandem with social interaction and business activities. It was also deemed necessary to provide a way for disputes to be settled harmoniously to reduce the level of litigation in our society.
These recommendations were very quickly put in place. By August 1997, the Singapore Mediation Centre was launched to provide commercial mediation. By January 1998, the first Community Mediation Centre opened its doors in Marine Parade. With the building blocks well in place, we then devoted our energies towards globalising these services.

Beyond 2000: Going International
By the mid-2000s, SIAC and SMC had done sufficiently well to put Singapore on the map as a viable and desirable “ADR” centre.
Our recent initiatives to entrench our status as an international dispute resolution centre are well-known. In mediation, we set up the Singapore International Mediation Centre (“SIMC”) and also enacted the Mediation Act for mediated settlement agreements to be recorded as court orders and to be enforced as such. In doing so, we adopted the recommendations of the 2013 Working Group to Develop Singapore into a Centre for International Commercial Mediation, which comprised local and international experts. In litigation, we set up the Singapore International Commercial Court (“SICC”) for matters with little or no connection to Singapore by offering a neutral, international platform. Through SIAC, SICC and SIMC, we are now able to provide international users with a full suite of dispute resolution services to choose from.
To inject even more vibrancy into our ecosystem, we have attracted key international institutions to locate in Singapore. These include: (i) the International Court of Arbitration of the International Chamber of Commerce (“ICC-ICA”); (ii) the Permanent Court of Arbitration (“PCA”); (iii) the American Arbitration Association International Centre for Dispute Resolution (“AAA-ICDR”); and (iv) the World Intellectual Property Organisation Arbitration and Mediation Center (WIPO-AMC).
Today, SIAC, SICC and SIMC have all grown in caseload and importantly, in stature – stature not just within Singapore with users such as yourselves, but in an international setting where there is a stronger concentration of users in the region, particularly in relation to initiatives such as the Belt and Road Initiative – and we are looking to build upon that. Last year, SIAC experienced a record-breaking caseload of 452 fresh filings, with over 80 per cent of its cases being international. In fact, Singapore and SIAC have become the top arbitral seat and institution in Asia respectively, based on a recent survey. This is an improvement of some leaps and bounds – for perspective, SIAC administered about 42 international arbitration cases annually between 2000 and 2005. So that is a measure of how far SIAC has come.
I have gone to some lengths to look back at history because, as I said at the outset, I believe, looking back at what we have done, and looking at how successful it has been, will give us a signal as to how to move forward and what are the steps we can take to further entrench our position as a neutral dispute resolution forum – one which third parties with little or no connection to Singapore can come and use our services, and enhance in that way our legal services offerings as well. Our achievements in this respect can enhance access to justice, bring many opportunities to the legal sector and enhance our value proposition to the world. From our story, one lesson that stands out is the success with which the legal profession has tapped the ideas, the abilities and the ambitions of our stakeholders to transform the already strong partnership between the profession, the Courts and the Government into one that enhanced Singapore as a venue and also strengthens our legal value propositions. This willingness to move forward, to anticipate and respond to new areas of opportunity has been transformative for the profession. And it is with this that I now turn to what else lies ahead for us.

The Next Chapter
To build on our success, I think we must first be aware of the environment that we are in. This will allow us to capitalise on the opportunities as they come. Here, I mention two important developments which many of you in this room will already be familiar with, if not very familiar with: (i) first, the growth of Asia, not just as an economy, but also as a source of jurisprudence and as a jurisdiction for dispute resolution; and (ii) secondly, the ever changing face of dispute resolution.

The Growth of Asia
The centre of economic gravity continues to shift towards Asia. ASEAN is today a growing economy; and you would have heard that by 2030, ASEAN will likely become the 4^th largest economy. behind only the United States, China and the European Union. That is in 12 years’ time. And what we do in these 12 years to be in that position and take advantage of this growth proposition will define where we might end over the next 25 years or so. Asia alone is expected to grow; over 6.0% this year, more than double the expected growth of other regions, and this is based on the Asian Development Bank’s latest 2018 outlook. ^[2]
An increase in disputes is a concomitant of a greater trade and commerce flow. As more local companies go global and international conglomerates enlarge their footprint in Asia to meet the needs of this growing market, we can expect a heightened demand for international dispute resolution services in the region. To illustrate the point, between 2012 and 2016, the Global Arbitration Review reported a 37 per cent increase in the caseloads administered by 11 arbitration institutions worldwide. So that is a 37 per cent increase in 11 worldwide arbitration institutions. When you deep dive into those numbers, you will see that the caseloads of institutions outside of Asia grew by 13 per cent, while those in Asia saw a spike of over 75 per cent, so one can see where the growth has been and will likely be, and how we should position ourselves, moving off these statistics, to see where the growth numbers and growth engines lie. The increase in Asia’s infrastructure needs alone – and we have over US$1.7 trillion per year from 2016 to 2030 – will necessarily also give a boost to the dispute resolution scene. And we must be well-placed to take advantage of this. As infrastructure projects are often capital-intensive, long-term and also complex, disputes often arise and when they do, they tend to be high-value. Physical infrastructure in itself enables commerce, facilitates trade and generates cross-border transactions, which in turn results in more commercial disputes. Not that I am wishing it on any project but it is a necessary aspect of commerce and I think everyone in this room is cognisant of that, and the role that we play is in bringing these services to bear in resolving the dispute in the best possible way.

Evolution in Dispute Resolution
And so as more of these disputes occur, our traditional conception of how they should be dealt with, and how they can be addressed needs to be reimagined. As I mentioned earlier, it was not that long ago that litigation was the mainstay of dispute resolution. Today, that is no longer the case. Arbitration and mediation are as popular, if not even more popular, especially in the Asian context. Some of you would know that with the Chinese BRI, there are going to be many projects along the BRI. With Asian culture, and in the Asian context, I personally see a lot more scope for the alternative aspects of dispute resolution – mediation and certainly neutral evaluation, which can leave both parties in a win-win situation and leave both parties intact, relationship-wise, to carry on with the project. And that is the value proposition of the neutral evaluation scheme.
A good example of a less traditional form of dispute resolution is the process that is being launched today. Neutral evaluation, started life at least in some earnestness and seriousness in 1985 in the United States District Court for the Northern District of California as a system where, at an early stage, cases are referred to third-party lawyers for evaluation. Unlike determination, the evaluation is not binding but is intended to help parties in their decision-making. ^[3]This proactive approach can be deployed before or during another dispute resolution process such as mediation. ^[4] Neutral evaluation has also gained traction in recent years, being adopted and adapted for use elsewhere, including in our own State Courts. In 2011, in a survey of corporate counsel in Fortune 1000 corporations – slightly dated but somewhat reflective of the trend – 36 per cent of the respondents reported having recent experience with this approach, compared to none in 1997. And I would imagine that over the last seven or eight years or so, that number would probably have increased. A few years ago, the English High Court in a case known as Seals and another v Williams (2015), also endorsed neutral evaluation in the context of a family inheritance matter. ^[5]
A “hybrid” process, which combines the different mechanisms together, ^[6] has also become more common. You will recall that infrastructure projects are large-scale complex projects made up of many contracts and sub-contracts, and these are often high-value, contentious ones. There is a role to play in the dispute resolution of such large contracts by not just one form or one chosen form of the dispute resolution mechanism. So one can appoint arbitrators for some key matters which have heavy legal disputes or legal content. Whereas for other matters, where the dispute is really a disagreement on something that can be managed, relationship-wise, mediation may be more appropriate. Where both parties see a need to still carry on with the project, in a win-win fashion, they can go for neutral evaluation. So it does not have to be a one-size-fits-all. One can adopt a hybrid process. This allows neutral evaluators attached to a project and who are called upon early enough to iron out differences using these processes even as they arise. And if the differences escalate into disputes, which become a bit more intractable, then one can consider the arbitration or litigation mechanisms.
It should therefore really come as no surprise that new ways to settle disputes are always emerging. Greg mentioned that this is the third and final instalment – well, perhaps there may yet be others downstream which we may not even have thought of but which may yet be employed as we revolutionise dispute resolution. Parties require diverse choices to cater to the peculiarities of their dispute. And a more subtle shift has been the move from dispute resolution to what legal thinker Richard Susskind calls dispute avoidance and containment. ^[7] So sometimes it is useful to upstream the dispute resolution mechanism to manage issues before a dispute even arises. And if the recent data from the Global Pound Conference Series is any indication, such upstream forms of dispute management are fast catching on. In one question, respondents had to prioritise, from seven options, what the most effective commercial dispute resolution processes usually involve. Pre-dispute or pre-escalation processes to prevent disputes was the third most popular choice, not far behind non-adjudicative dispute resolution methods, and the combining of adjudicative and non-adjudicative processes, which ranked first.
There is no doubt too as we move into the new age that information technology will support, replace or more likely disrupt the way disputes are settled. ^[8] Online dispute resolution already exists, and this is one tool which I think more and more are considering to be a serious viable option, or even as a substitute to arbitration or mediation. As artificial intelligence continues to draw from the well of human intelligence, it is not a stretch that one day AI can help to negotiate with parties to identify and locate, and also to bring parties together from two ends of a spectrum into a more common agreeable zone.

Seizing the Opportunities
These latest trends bring opportunities that we hope we can seize. To maintain our lead as a premier centre for dispute resolution in Asia, we have expanded our gateway to the world by tripling the size of Maxwell Chambers. We frequently update our laws – Greg mentioned the omnibus insolvency bill: it is in the oven, I hope it will be cooked shortly – and actively immerse ourselves in multilateral discussions that push the frontiers of dispute resolution. Just recently, you would have heard that our discussions at the United Nations culminated in a new international convention that will allow international parties to enforce their mediated settlement agreements across borders, just as the New York Convention provides for the enforcement of arbitral awards across borders. So I think the prospective Singapore Convention on Mediation which will be signed in Aug 2019 will be a game-changer. It will put Singapore on the international map, it will show our thought leadership in this field and it will enhance Singapore’s reputation as being a neutral forum precisely for the purpose of resolving contentious matters. To keep our pulse on the dispute resolution space, we also set up SIDRA – the Singapore International Dispute Resolution Academy – together with SIAC and the other institutions to lend further thought leadership to this area.
As lawyers, we do have to catch up with the whole suite of offerings that we now have. Like Yee Leong, when I browsed the rules,^[9] I too realised there is much to be learned, and much to be gained. There are always opportunities to enhance knowledge and I am very delighted to see close to 200 participants today. That signals how important this is to the Bar and signals how progressive lawyers wish to be in terms of their offerings to clients. Because it is no longer just telling a client that when you have a dispute, let us file a claim in court and try to have it resolved. One has to bear in mind where the client is coming from, what the client’s business needs are, how will the dispute resolution platform, whichever one is chosen, best enhances not just the client’s legal position on this contentious area, but his overall business and economic activity. And it is in that context that we now have a suite of options available to us – at least three ADR options. Choosing the best one is not necessarily easy, but I encourage lawyers to be plugged in to the client’s needs to discern which one method or combination of the methods will best suit. So with that I would like to once again extend my congratulations to the Law Society for this, its progressive thought leadership, and Greg and his team, together with Chor Leong and Yee Leong, have taken this bold step forward. I think there will be very engaging conversations today. Feel free to raise as many difficult questions as possible to both of them. I have appeared before Chor Leong before, I know he can withstand all the difficult questions and will throw back some at you. Yee Leong has been a colleague for the past eight years or so – he would encourage you to ask him as difficult questions as possible. He told me not to say that but I could not let him get away with this!

Conclusion
So I end by saying that it has been 20 years since the ADR committee released its recommendations in 1997. If you compare where we were in 1997 to where we are in 2018, one can say quite modestly that we have done reasonably well to bring us to where we are; but the challenge is in the next 20-25 years and where we go forward in those next 2 ½ decades or so. We have got to start now. It is notable that in 1997, the ADR Committee members, including Law Society, noted that the success and progress of those new schemes really depended on an expanded and very open-minded understanding of the subject, and a continued experimentation and also embracing of new and novel ideas. These words, I would suggest, ring true even more so today, 20 years on. With this in mind, I hope that you will take a keen interest in the sessions that follow. I wish you a very successful and informative Forum. Thank you once again for the privilege of being here to address you.

^[1] Chair and co-chair of the Law Society’s ADR Committee
^[2] Asian Development Bank, Asian Development Outlook 2018, April 2018.
^[3] ADR Principles and Practice at 2-030.
^[4] Susan Blake, Julie Browne, Stuart Sime, The Jackson ADR Handbook (Oxford University Press, 2013) (“Jackson”) at 22.05.
^[5] Seals and another v Williams [2015] EWHC 1829 (Ch).
^[6] Arnold Ingen-Housz (ed), ADR in Business: Practice and Issues across Countries and Cultures, Volume II (Wolters Kluwer Law & Business, 2011) (“ADR in Business”) at p 366.
^[7] Richard Susskind, Tomorrow’s Lawyers (Oxford University Press, 2013) at pp 85–86.
^[8] Tania Sourdin, “Justice and Technological Innovation” (1 Dec 2015), Journal of Judicial Administration (Volume 25, 2).
^[9] Law Society Neutral Evaluation and Determination Scheme Handbook; Law Society Arbitration Scheme Handbook 2017.

Last updated on 21 Sep 2018