MED 3: Mediation: Legal Framework & Basis

Legal Framework

• Legal sources define the basis, process, and requirements for mediation.
• Key statutes include the Mediation Act 2017, Community Mediation Centres Act 1997, and Family Justice Court Act 2014.
• Subsidiary legislation encompasses Mediation Rules 2017 and Family Justice Rules 2014.
• Practice Directions are issued by the Supreme Court, State Courts, and Family Justice Court.
• Case law interprets and applies mediation principles.

Basis of Mediation

• Mediation arises by agreement, statutes, or court/authorized body directions.
• Parties may contractually agree to mediate disputes before litigation.
• Statutes mandate mediation for certain disputes, such as building maintenance or employment claims.
• Courts can direct parties to attempt mediation under Rules of Court 2021 (O. 5, r. 3), emphasizing amicable resolution.
• Under the Rules of Court, the court may order parties to attempt to resolve disputes amicably.
• A party who refuses amicable resolution may be ordered to submit a sealed document stating the reasons for refusal.
• The court may suggest solutions for amicable dispute resolution at any time.
• Scenario:
• A construction contract includes a clause requiring mediation before arbitration and litigation
• The project experiences delays
• The contractor initiates court proceedings
• The defendant applies for a stay of court proceedings under Cable & Wireless Plc v IBM United Kingdom Ltd pending ADR, based on their agreement to mediate.

Mediation Act 2017

• Defined as a process involving mediators assisting parties to identify issues, explore options, communicate, and reach agreements voluntarily (Mediation Act 2017, s 3).
• Applies if mediation is wholly or partly conducted in Singapore or if the agreement stipulates Singapore law applies (Mediation Act 2017 s 6)
• Scenario
• A Singapore-based company, disputes with its Malaysian supplier
• They agree to mediate the conflict in Singapore
• The Mediation Act 2017 applies
• Scenario
• Two companies based overseas have a contract stating any mediation will follow Singapore law
• Disputes arise, the act applies even if the mediation occurs outside Singapore
• When any party to a mediation agreement initiates court proceedings, another party can apply for a stay of proceedings pending mediation (Mediation Act 2017 s 8)
• A person must not disclose any mediation communication to any third party (exceptions apply)
• "Mediation communication" includes anything said or done, any document prepared, or any information provided in the course of mediation, and encompasses a mediation agreement or mediated settlement agreement.

Without Prejudice Privilege

• Scenario:
• During a mediation about a workplace injury claim
• The company's CEO admits the workplace had safety issues
• Subsequently the company cannot use this admission as evidence if the mediation fails and the case goes to court
• A mediation communication cannot be admitted as evidence in court, arbitral, or disciplinary proceedings, except with the court's permission (Mediation Act, s 10).
• Even if a statement is not expressly made 'without prejudice' the law holds that it is made without prejudice because it was made in the course of negotiations to settle a dispute
• Scenario:
• A supplier sues a retailer for unpaid invoices
• During mediation, the retailer offers to pay 70% of the debt to settle the case.
• Mediation fails
• The supplier then attempts to present the retailer's offer as evidence of guilt in court
• This offer is inadmissible, protected by without prejudice privilege.
• A settlement agreement was subject to contract doctrines such as offer, acceptance, consideration, and an intention to enter legal relations.
• Exceptions on confidentiality and without prejudice privilege exist under s 9(2) and (3) of the Mediation Act 2017.
• Scenario
• Following a family business dispute settlement during mediation, one brother alleged the other had misrepresented asset values
• He can seek judicial recourse based on contract law - demonstrating the misrepresentation to void settlement

Mediated Settlement Agreement

• Requires offer, acceptance, consideration, certainty, and intent to enter legal relationships
• Includes scope of claim, disposal of court proceedings
• The checklist for settlement agreement includes governing law and jurisdiction
• Scenario
• A company involved in a cross-border dispute drafts a settlement agreement during mediation
• It includes a clause specifying Singapore law will govern contract interpretation and enforcement, demonstrating consideration of checklist
• No proceedings have commenced in court for which the agreement relates
• The application to make the settlement order must be made within 8 weeks after the settlement is made or longer if the court allows
• Parties can apply to a court to record a mediated settlement agreement as a consent order, provided requirements are met (Mediation Act 2017, s 12)

Court's Discretion - Mediation Act 2017

• The mediation is administered by a designated mediation service provider or conducted by a certified mediator
• The agreement is in writing and signed by or on behalf of all the parties to the agreement and, The agreement contains such information as may be prescribed.
• A court may refuse to record where the agreement is void or voidable because of incapacity, fraud, misrepresentation, duress, coercion, mistake or any other ground for invalidating a contract
• Any term of the agreement is not capable of enforcement as an order of court or where the subject matter of the dispute to which the agreement relates involves the welfare or custody of a child, one or more of the terms of the agreement is not in the best interest of the child or, The recording of the agreement as an order of court is contrary to public policy.
• Scenario: During a corporate dispute mediation, one party alleges undue influence, claiming they were pressured into accepting unfavorable terms. The court may refuse to record the agreement, assessing its voluntariness and fairness.
• Scenario
• Divorcing parents reach a mediated agreement stating the child will live overseas with one parent, restricting the other's access
• The court will refuse to record this agreement without assessing if the agreement is in the child's best interest
• Mediated Settlement Agreement in Family law, as was the facts in UJN v UJO is for the Court hearing the ancillary matters to consider the Settlement Agreement, whether it is binding, and if so, to what extent it is should be given effect.
• Enforcement of Settlement Agreement can be as a Court Order once recorded under s 12(5) or the Mediation Ac, or as a Contract with recourse for Breach / Repudiation

Conduct of Lawyers

• Rule 8A – Conduct of ADR process
• Rules 5(2)(j), 17(1)
• Lawyers must advise clients to consider ADR and provide sufficient information (Supreme Court Practice Directions 53).
• Lawyers must be respectful, courteous, act in good faith, advance clients’ best interests, and advise on mediation.
• Scenario
• a lawyer is representing the victim of professional misconduct
• the lawyer would act in good faith to settle the case with mediation
• advise the client of ADR and its benefits.
• Attorneys should advise their clients on potential adverse costs orders for any unreasonable refusal to engage in ADR.

Duty to advise on meditation

• Observation in Lock Han Chng Jonathan (Jonathan Luo Hancheng) v Goh Jessiline [2007] SGCA 56 at [45]: The role of counsel in pursuing their clients' interests in a court of law where paltry monetary claims were involved was to exercise the degree of responsibility expected of an officer of the court and advise their clients to settle the dispute with minimum fuss and minimum cost
• Example: Maxx Engineering v PQ Builders Pte Ltd [2023] SGHC 71: Where the High Court dealt with the issue of whether a party can be compelled, through the remedy of specific performance, to refer a dispute to mediation in line with their contractual obligations the parties' choice to refer their dispute to mediation should be respected
• Scenario:
• A construction firm's lawyer faces a client reluctant to mediate payment issues
• Referencing Maxx Engineering, the lawyer explains the contractual obligations to mediate and the court's respect for the reference

Conduct of Parties and Costs Consequences

• Rules of Court 2021
• deals with the process and considerations for amicable resolution
• Supreme Court Practice Directions 2021
• reiterates the professional duty of advocates and solicitors to advise their clients to consider ADR and provide appropriate information.
• Parties must consider amicable dispute resolution (Rules of Court 2021 (O. 5, r. 1)).
• Failing to adhere to the duty to consider may lead to adverse costs orders (Rules of Court 2021 (O. 21, r. 2(2)(a)))
• Scenario: Following an accident, a claimant refuses to negotiate with the insurance firm and launches litigation. The court considers this refusal when determining who bears costs, citing claimant's failure of amicable resolution.

Rules of Court 2021

• Duty to consider amicable resolution of disputes before commencing and during the course of any action or appeal.
• A party is to make an offer of amicable resolution before commencing the action unless the party has reasonable grounds not to do so - and cannot reject
• A party to any proceedings must not reject an offer of amicable resolution unless the party has reasonable grounds to do so.
• Court emphasizes that parties that do not adhere to the duty may face consequences on costs
• An offer of amicable resolution must be open for acceptance within a reasonable period of time and in any case, for at least 14 days, unless the parties otherwise agree.
• The terms of an offer that has been made and not accepted must not be relied upon or made known to the Court until after it, has determined the merits of the action or appeal and if one, is dealing with the issue of costs.
• Any offer of amicable resolution which does not state an expiry date expires once the Court has determined the merits of the action or appeal to which it relates unless the offeror has stated otherwise.
• The court must have regard to all relevant circumstances, including — (a) efforts made by the parties at amicable resolution. It is a general rule of unreasonable to stay silent, regardless whether an outright refusal, or a refusal to engage in the type of ADR requested, or to do so at the time requested.
• The costs of mediation work could also have been taken into account by the Court when awarding party-and-party costs.
• Test for unreasonable refusal of ADR is Halsey v Milton Keynes General NHS Trust (Halsey Checklist, non-exhaustive):
• The nature of the dispute; (b) the merits of the case; (c) the extent to which other settlement methods have been attempted; (d) whether the costs of the ADR would be disproportionately high; (e) whether any delay in setting up and attending the ADR would have been prejudicial; and (f) whether the ADR had a reasonable prospect of success.
• "silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable"

State Courts Practice Directions 34

• A “presumption of Alternative Dispute Resolution" applies to all civil claims filed in the State Courts. For this purpose, the Court may refer appropriate matters for parties to attempt the amicable resolution of disputes through one of the Court alternative dispute resolution modalities (“Court ADR modalities”) during a case conference.
• As the use of Court ADR modalities gives parties the opportunity to resolve their disputes faster and more economically compared to determination at trial, parties who wish to undergo Court ADR at an earlier stage must file a request using Form 2 of Appendix A1 to these Practice Directions.
• Where the Court is of the view that an ADR (including Court ADR) process is suitable, and the party/parties have opted out of the ADR process for reasons deemed to be unsatisfactory, this conduct may be taken into account by the Court when making subsequent costs orders.