Understanding How Mediation in Commercial Disputes Work

Mediation in Commercial Disputes: An Alternative Dispute Method

Commercial disputes happen when there are disagreements between business entities. Disagreements stem from a variety of situations such as:

• breach of contract; and
• intellectual property infringements.

To resolve commercial disputes, disputing parties can choose to resolve the disagreement through litigation in court or to settle out of court through alternative dispute methods such as mediation or arbitration, which offer confidentiality and is less confrontational as compared to litigation.

A table showing the difference between Mediation and Trial

Understanding Mediation in Commercial Disputes

What is Mediation in Commercial Disputes?

Mediation is a voluntary and private process between two disputing parties facilitated by an independent and neutral party called a “mediator”. Mediators are accredited professionals trained to facilitate the resolution of conflicts between disputing parties.

In the process of mediation, the mediator simply facilitates the communication for both parties to reach a mutual agreement. The parties involved in mediation retain ultimate control over the decision of whether to settle the disagreement and on what terms.

When an agreement is reached, the terms are recorded and signed by the parties. This agreement will be legally recognised in court by virtue of the law of contract.

The Process of Mediation in Singapore

In Singapore, mediation can take place at designated dispute mediation service centres such as Singapore Mediation Centre (SMC) or at the Community Mediation Centre. The process of mediation can also be facilitated by law firms with lawyers who are accredited mediators.

A typical mediation session involves only the disputing parties and the mediator in a private session held in confidence. During this private session, the parties are provided with a safe space to voice out their issues and concerns, while the mediator facilitates and helps them reach a mutually agreeable solution.

Mediation for Cross-Borders Disputes

In August 2019, a new treaty ‘Singapore Convention on Mediation’ was implemented to strengthen Singapore’s role as a global hub for cross-border commercial disputes.

Essentially this provides the opportunity for commercial disputes across different countries to be resolved with the help of a mediator in Singapore.

When Should you Consider Mediation to Resolve Commercial Disputes?

Every commercial dispute varies depending on circumstances. There are times where mediation may not be an appropriate mode of resolution.

Mediation in commercial disputes can be an ideal form of resolution when:

• You are looking to end the dispute as soon as possible.
• You are looking to reduce the legal costs involved.
• You do not want to ruin your relationship with the other party
• Both parties desire to keep their disputes confidential to the public
• The law does not provide a solution that meets your real concerns. For instance, you may file a suit for defamation, but you may really be seeking an apology which cannot be ordered by the Court in a trial.
• You are looking for business-driven means to resolve your disputes.
• You face difficulties communicating with the other party which serves as an obstacle to resolving the disputes.

When Mediation is Not an Ideal Mode of Resolution to Resolve Commercial Disputes?

Using mediation to resolve commercial disputes may not be appropriate if you require the Court to make a decision on a legal issue such as interpreting a clause for your company’s standard contract or either party shows no desire to mediate.

If mediation is not feasible, arbitration can be a possible mode of resolution for commercial disputes.

Do you Need Help to Resolve a Commercial Dispute?

Commercial disputes can potentially disrupt the operations of a business. While it is entirely up to the parties involved to decide the best approach to resolve their dispute, it is still recommended to consult an experienced commercial lawyer to effectively address the issue and prevent it from escalating further.

If you are involved in a commercial dispute and require expert legal advice and services, do feel free to contact us.

Credits:
Photos are taken from Freepik