The Singapore Law Gazette

Kinks in the SIAC-SIMC Arb-Med-Arb Protocol

This article examines two areas where the SIAC-SIMC Arb-Med-Arb Protocol intersects with very typical applications in the arbitral process, namely, jurisdictional objections and interim measures; and considers the appropriate juncture at which such applications could or should be made under the Protocol.

Introduction

Since its launch in 2014, the Singapore International Arbitration Centre (SIAC) – Singapore International Mediation Centre (SIMC) “Arb-Med-Arb” Protocol (AMA Protocol) has been lauded for bringing the benefits of mediation to disputes referred to arbitration in Singapore. Two features of the AMA Protocol are worth noting. First, the arbitrator(s) and mediator(s) appointed under the AMA Protocol are separately and independently appointed by SIAC and SIMC respectively and will usually be different persons.¹ Clauses 4 and 5 of the AMA Protocol; http://simc.com.sg/arb-med-arb/. This ensures impartiality, which may not be present in traditional Med-Arb and Arb-Med procedures under which the same person acts as both the mediator and arbitrator. Second, the AMA Protocol facilitates the enforcement of any settlement reached at mediation as a consent award, which can be enforced in the same manner as an arbitration award under the New York Convention.

In this article, we explore two possible areas in the AMA Protocol which may require further clarification. The first concerns the appropriate juncture to raise jurisdictional objections within the AMA Protocol framework, in particular, whether jurisdictional objections should be determined before any mediation takes place. The second relates to whether a party can apply for interim measures while a mediation is ongoing. These areas are not expressly dealt with under the current AMA Protocol and it is suggested that clarifications to the AMA Protocol may be useful in these areas.

Brief Overview of the AMA Protocol

Broadly speaking, the AMA Protocol works as follows:

1. A party who wishes to commence an arbitration under the AMA Protocol files a Notice of Arbitration (NOA) with the SIAC;² Clause 2 of the AMA Protocol.

2. After the Respondent has filed its Response to the NOA (Response) and the tribunal has been constituted, the tribunal will stay the arbitration and inform the Registrar of SIAC that the case can be submitted for mediation at SIMC.³ Clauses 3–5 of the AMA Protocol.

3. The SIAC will then send the case file to SIMC, which will schedule a date for the mediation (Mediation Commencement Date). The mediation must be conducted and completed within eight weeks from the Mediation Commencement Date.⁴ Clauses 5 and 6 of the AMA Protocol.

4. If the mediation results in a settlement, the parties may request the tribunal to record their settlement in a consent award.⁵ Clause 9 of the AMA Protocol.

5. If the mediation is unsuccessful, the stay of arbitration proceedings will be lifted and the arbitration proceedings shall resume.⁶ Clause 8 of the AMA Protocol.

Jurisdictional Objections under the AMA Protocol

It is not uncommon for jurisdictional objections to be raised as preliminary issues in arbitral proceedings. This is expressly provided for under section 10(2) of Singapore’s International Arbitration Act (Cap 143A) (IAA), Article 16(3) of the UNCITRAL Model Law on International Commercial Arbitration (which has the force of law in Singapore by virtue of section 3 of the IAA) and Rule 28.4 of the SIAC Rules 2016. Where jurisdictional challenges are well-founded and/or can be separated from the merits, arbitrators may choose to separate the jurisdictional challenge from the merits and decide on the challenge first.⁷ The Chartered Institute of Arbitrators’ International Arbitration Guidelines on Jurisdictional Challenges (2015/2016 Edition) at paragraph 1(a) of the commentary to Article 4. This allows the parties to fully address jurisdictional objections and avoid the costs of litigating a case on the merits if jurisdiction is lacking.⁸ See Gary B Born, International Commercial Arbitration (Second Edition, 2014) at 7.05[E]

As the AMA Protocol does not expressly deal with jurisdictional objections, it is not entirely clear when such objections are to be determined under the AMA Protocol, in particular, whether they are to be determined before mediation. Notably, the AMA Protocol appears to envisage a mandatory stay of arbitration proceedings by the tribunal after the filing of the NOA and the Response for mediation to be conducted at the SIMC. This can be gleaned from Clause 5 of the AMA Protocol, which provides as follows:

“The Tribunal shall,after the exchange of the Notice of Arbitration and Response to the Notice of Arbitration, stay the arbitration and inform the Registrar of SIAC that the case can be submitted for mediation at SIMC. The Registrar of SIAC will send the case file with all documents lodged by the parties to SIMC for mediation at SIMC.” [Emphasis added.]

It may therefore be argued that jurisdictional objections are to be determined after the mediation has been unsuccessful and arbitration proceedings have resumed. This would conceivably be in line with the rationale of the AMA Protocol, which appears to be to promote the early settlement of disputes.

Without more, it appears that the AMA Protocol assumes that the tribunal has jurisdiction and that the mandatory stay in Clause 5 of the AMA Protocol operates on that assumption. Where there is a challenge to whether the AMA Protocol even binds a party, it is not logical to insist that it applies in any event. As a matter of contract law, it cannot be right that a party who insists that it is not bound be compelled to act as if it were. In such cases, a tribunal should be able to decide whether it has jurisdiction before mediation on the basis of the doctrine of competence-competence.

Indeed, the determination of jurisdictional objections after mediation has taken place may not be entirely satisfactory in all cases. Consider, for instance, a Respondent who is of the view that it is not a party to the contract containing the relevant AMA clause (and consequently the AMA Protocol). The Claimant may have, perhaps, dragged the Respondent into proceedings by bringing an agency claim. In that case, it may be more desirable for jurisdictional objections to be determined ahead of any mediation for the following reasons.

First, the determination of jurisdictional objections ahead of mediation may lead to time and costs savings. A Respondent who takes the position that it is not bound by the AMA Protocol as the tribunal has no jurisdiction should arguably not have to expend costs to mediate a dispute that does not concern it. Further, if a party’s jurisdictional objections are quite straightforward and upheld by the tribunal, this would bring an end to the proceedings and the Respondent would not need to incur the unnecessary expense of mediation and, if unsuccessful, arbitration proceedings.

Second, any mediation conducted in advance of the determination of a party’s jurisdictional objections may be less fruitful. A Respondent who is of the view that it has credible jurisdictional objections may be less likely to enter into any settlement before its jurisdictional objections are determined. In contrast, if the mediation is conducted after the jurisdictional objections have been determined and the tribunal has found that it has jurisdiction, the Respondent would likely be more willing to settle the matter to avoid having to go through the entire arbitration.

What, then, are the options for a party raising jurisdictional objections under the AMA Protocol?

First, assuming that arbitration proceedings are stayed after the filing of the Response and jurisdictional objections are to be heard after mediation, a party may choose to attend mediation to see if the matter can somehow be settled before the hearing of its jurisdictional objections.

Second, a party may, after the filing of the Response, apply to the tribunal and/or the SIAC (if the tribunal has yet to be constituted) for its jurisdictional objections to be determined before mediation. However, as this is not expressly provided for under the AMA Protocol, it is not entirely clear whether the SIAC and/or the tribunal will necessarily grant such a request.

In the event that the SIAC and/or the tribunal does not grant this request, a question arises as to whether a Respondent can apply to the Singapore High Court for relief, perhaps, in the form of a negative declaration that he is not bound by the AMA Protocol? The High Court generally declines to exercise jurisdiction where an arbitral tribunal has concurrent jurisdiction and there are no special circumstances to justify the application being made to the Court instead of the tribunal.⁹ See NCC International AB v Alliance Concrete Singapore Pte Ltd [2008] 2 SLR(R) 565 (“NCC International”) at [61] albeit in the context of interim measures. It is therefore questionable whether the fact that arbitration proceedings are stayed for mediation would justify an application for a negative declaration to the Court rather than the tribunal. More importantly, if such an application is permitted, it may be seen as a backdoor to obtaining a ruling on jurisdiction from the Court — a question which should be determined by the tribunal at the first instance.¹⁰ Section 10(2) of the IAA.

It is worth noting that a Respondent who raises jurisdictional objections under the AMA Protocol may choose not to attend any mediation and wait for the arbitration proceedings to resume at end of the eight-week period or if the mediation terminates earlier.¹¹ See Rule 5.3 of the SIMC Mediation Rules which allows the SIMC to stay or terminate the mediation if any requisite deposit is not paid. The Respondent may also adopt this course of action if the SIAC and/or the tribunal declines a party’s request to have its jurisdictional objection determined before mediation at the SIMC. This approach is not without difficulty as the tribunal may subsequently find that it has jurisdiction and that the Respondent is bound by the AMA Protocol. In such a case, the tribunal may insist that procedures be followed and that the Respondent participate in mediation proceedings, in which case further delays and costs might result. In this context, it is worth noting that in International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd [2014] 1 SLR 130, the Court of Appeal upheld a multi-tiered dispute resolution mechanism providing for several stages of negotiation as a precondition to arbitration and stressed that “where the parties have clearly contracted for a specific set of dispute resolution procedures as preconditions for arbitration, those preconditions must be fulfilled”.¹²International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd [2014] 1 SLR 130 at [62].

It may be argued that the AMA Protocol has some flexibility as it does not expressly preclude parties from applying to the SIAC and/or the tribunal to have their jurisdictional objections determined before mediation. However, as mentioned above, it is not clear how such an application would be dealt with by the SIAC and/or the tribunal and whether such an application would even be entertained. In view of the abovementioned difficulties, it is suggested that the AMA Protocol be amended to expressly provide that a Respondent may apply to the tribunal to have its jurisdictional objections determined before mediation and that the tribunal may then, in its discretion, decide to hear the jurisdictional objections as a preliminary question. This would make clear that a tribunal is not obliged to stay all proceedings (including the hearing of jurisdictional objections) immediately after the filing of the Response. From the perspective of a user of the AMA Protocol, certainty in this area is to be welcomed.

Interim Measures

The AMA Protocol does not expressly provide for the application for interim relief. It is therefore not obvious whether a party who is urgently seeking interim relief (eg, to preserve evidence or prevent dissipation of assets), can apply for such relief in the event that the arbitration proceedings are stayed and the case-file has been transferred to the SIMC.

Notably, Clause 7 of the AMA Protocol allows for the termination of the mediation and the resumption of arbitration proceedings prior to the expiry of the eight-week period if the dispute cannot be settled by mediation. However, as a party who seeks interim relief may not wish to terminate mediation proceedings completely, Clause 7 does not solve the problem.

Can a party apply to the High Court for an order seeking interim relief where the arbitration proceedings are stayed for mediation? Section 12A(6) of the IAA provides that the High Court shall make an order for interim measures only if or to the extent the arbitral tribunal has no power or is unable for the time being to act effectively.

During the second reading of the bill amending the IAA to include section 12A,¹³Singapore Parliamentary Debates, Official Report (19 October 2009) Vol 86 at Col 1628. the Minister for Law, Mr K Shanmugam, gave examples of situations where the tribunal is unable to act effectively, including the following:

1. Where the foreign arbitral tribunal has power to make an interim order but that order cannot otherwise be enforced in Singapore apart from an application under section 12A;

2. A party applying to Court for relief before the arbitral tribunal has been fully or properly constituted;

3. A party applying to Court for relief against a non-party to the arbitration, which an arbitral tribunal has no power over; and

4. Where the arbitral tribunal is unable to hear an urgent application for interim relief sufficiently quickly.

It is doubtful whether the present situation in which the tribunal has stayed proceedings for an ongoing mediation would fulfil the criteria under section 12A(6), ie, that the arbitral tribunal has no power or is unable for the time being to act effectively. After all, as the tribunal would have been constituted, it is questionable whether the tribunal is precluded from acting effectively simply because arbitration proceedings have been stayed for the SIMC to arrange for the conduct of mediation.

For the avoidance of doubt, it is proposed that the AMA Protocol be amended to expressly include a provision allowing the tribunal to hear interim relief applications without prejudice to any ongoing mediation.

Conclusion

The AMA Protocol has much to commend for enhancing Singapore’s profile in the alternative dispute resolution sphere and there has been an increase in the inclusion of the SIAC-SIMC “Arb-Med-Arb” Model Clause in contracts and in cases commenced under the AMA Protocol. It is suggested that the proposed clarifications in relation to the areas outlined above could further enhance the efficacy and usefulness of the AMA Protocol.