The enforcement of dispute resolution clauses in commercial disputes is usually a matter of procedural importance. Giving effect to dispute resolution clauses (e.g., a choice of court agreement, an arbitration agreement, or an agreement to mediate) upholds parties’ expectations when they conclude contracts, ensuring that the compromises made during contractual negotiation, which are clearly reflected in the terms of the contract, are upheld. Unfortunately, the enforcement of agreements to mediate is a rarely-addressed matter in the Singapore courts. In spite of the advent of the 2017 Mediation Act (No. 1 of 2017), under which section 8 of the Act specifically provides the Singapore courts with powers to enforce agreements to mediate, the provision has so far been seldomly invoked.

It is useful to study how courts interpret agreements to mediate, as the methodology may be applied in like cases.

This article brings to our attention of an unreported judgment from the Singapore District Court, where the outcome of the case could have turned on the enforcement of an agreement to mediate concluded between the parties. This judgment is worthy of deeper analysis because it may be applied in future cases where agreements to mediate are similarly brought to the Singapore court for enforcement. It is useful to study how courts interpret agreements to mediate, as the methodology may be applied in like cases. Yet this article will serve as a reasoned critique to the approach adopted by the Singapore District Court, in Zhongguo Remittance Pte Ltd v Samlit Moneychanger Pte Ltd and others [2020] SGDC 73 (“Zhongguo Remittance”).

The common law on enforcing agreements to mediate

As a general rule of thumb, the common law has developed to accommodate the enforcement of adequately-drafted agreements to mediate favourably. Recently, this sentiment has been evidently expressed by the Technology and Construction Court of the Queen’s Bench Division in England in Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2246 (TCC). Justice O’Farrell ruled (at para 32) that the English court “has a discretion to stay proceedings commenced in breach of an enforceable dispute resolution agreement [(including agreements to mediate)]. In exercising its discretion, the court will have regard to the public policy interest in upholding the Parties’ commercial agreement and furthering the overriding objective in assisting the Parties to resolve their disputes.”

Furthermore, the court opined (at para 58):

“There is a clear and strong policy in favour of enforcing alternative dispute resolution provisions and in encouraging parties to attempt to resolve disputes prior to litigation. Where a contract contains valid machinery for resolving potential disputes between the parties, it will usually be necessary for the parties to follow that machinery, and the court will not permit an action to be brought in breach of such agreement.”

Enforceability of agreements to mediate in the Singapore District Court

The case of Zhongguo Remittance from the Singapore District Court provides an interesting contrast to the trend in the common law which favours such enforcement. The parties were in dispute over an unlawful means conspiracy and harassment claim. On 3 November 2017, the Plaintiff sought a judicial remedy against the 1st to 3rd Defendants from the Singapore District Court. The parties subsequently entered into a Consent Judgment on 3 July 2018. In it, the 1st to 3rd Defendants agreed to cease their offensive actions against the Plaintiff. Furthermore, all parties had agreed to the following dispute resolution clause, which contains an agreement to mediate, in clause 8 of the Consent Judgment, reproduced below:

“8. […] Any future dispute arising between the parties, including but not limited to disputes arising out of or in connection with this Settlement Agreement, such as any question regarding its existence, validity or termination, shall be submitted for mediation. The aggrieved party shall submit a request to the Singapore Mediation Centre for mediation within 21 days of the dispute arising. Such party to the mediation must be represented by a representative who has the authority to negotiate and settle the dispute. Unless agreed by the parties, the mediator shall be appointed by the Singapore Mediation Centre. The mediation shall take place in Singapore in the English language and the parties agree to be bound by any settlement agreement reached. Should the parties fail tor (sic) reach a settlement through mediation, then the parties may proceed to resolve the dispute in through (sic) the courts and/or the law enforcement agencies of the Republic of Singapore. For avoidance of doubt, the parties shall be deemed to have failed to reach a settlement if either party serves written notice terminating the mediation.”

In May 2019, the Plaintiff sought to enforce the Consent Judgment against the 2nd and 3rd Defendants for non-compliance, by applying for an order of committal. To stave off the contempt proceedings, the 2nd and 3rd Defendants sought to rely on the agreement to mediate in clause 8 of the Consent Judgment.

The verdict

Citing the Singapore High Court in Ang Boon Chye and another v Ang Tin Yong [2011] SGHC 124, District Judge Jiaying Koh astutely noted (at para 10) that where the Plaintiffs had voluntarily undertaken not to take out committal proceedings (for instance, by agreeing to a dispute resolution clause which provides for alternative enforcement mechanisms), the Defendants may successfully stave off the Plaintiff’s application for an order of committal.

Interpreting the scope of the agreement to mediate, the court definitively ruled that such proceedings would fall comfortably within its scope (i.e., of “any future dispute arising between the parties”).

However, with respect, the court took a contrived reading of the condition precedent value of the agreement to mediate. On plain reading of clause 8, it appears that the parties have agreed (and have clearly provided for the necessary mechanisms in mandatory terms) that they shall first proceed to mediation at the Singapore Mediation Centre (SMC) to resolve their disputes in relation to compliance with the Consent Judgment. If they fail to reach a mediated settlement agreement, then they may proceed to the Singapore courts to resolve their disputes.

Instead, District Judge Koh opined (at para 12) that “there was only an agreement not to resolve the dispute through the courts if all parties reached a settlement through mediation. This would mean that all parties would have to agree to mediation once the aggrieved party submitted the request to the Singapore Mediation Centre.” It is submitted that the court’s reading of the clause completely uproots the underlying intention of the parties, who have in clear (and mandatory) terms provided for a two-tier mechanism for dispute resolution: i) mediation shall be the forum of first resort; if that fails, ii) the parties may proceed to the Singapore courts.

Furthermore, even if the court’s reading of the agreement to mediate is to be endorsed, it is, with respect, puzzling why the court gave weight to the fact that the 1st Defendant would not – according to evidence from the SMC – like to proceed for mediation, when it allowed the Plaintiff to breach clause 8 by allowing them to proceed with their suit in the Singapore District Court without first fulfilling the condition precedent to mediate (see para 12). The committal proceedings by the Plaintiff were only brought against the 2nd and 3rd Defendants, so it is unclear how the reluctance of the 1st Defendant to proceed to the SMC for mediation would have any bearing on the enforceability of the agreement to mediate, vis-à-vis the 2nd and 3rd Defendants.

The court decided not to enforce the agreement to mediate, and allowed the committal proceedings against the 2nd and 3rd Defendants to proceed. However, as the Plaintiff was unable to satisfactorily prove (in accordance with the appropriate legal standard) in court that the Defendants had breached their obligations to comply with the Consent Judgment, the court dismissed the Plaintiff’s application for an order of committal.

Critique

It is submitted that the Singapore District Court ought to have approached the analysis and interpretation of the agreement to mediate in clause 8 of the Consent Judgment with a little more precision. With respect, it is perhaps too far of a stretch to read into the clause, as District Judge Koh had done, that “there was only an agreement not to resolve the dispute through the courts if all parties reached a settlement through mediation.”

It is submitted that the parties were likelier to have conceived clause 8 as a precisely-framed two-tier dispute resolution mechanism: first, they shall proceed to mediation to resolve all relevant disputes covered by the clause; and only if that fails to result in a mediated settlement agreement, they may, secondly, escalate the issue to the chosen court (i.e., the Singapore court). The condition precedent of mediation before litigation forms the essence of the dispute resolution clause.

However, it is acknowledged that under some unique circumstances where the court – on consideration of the demeanor of the parties before it – thinks that enforcing an agreement to mediate may result in an abuse of process, there may be strong cause for it to allow for a breach of that agreement, to better serve the interests of justice (see Yashwant Bajaj v Toru Ueda [2018]SGHC 229, at para 84). For instance, where there is demonstrable evidence in court that the party relying on the agreement to mediate has applied it as a delay tactic to stall proceedings, the court may find strong cause to refuse to enforce that agreement. Examining the judgment of Zhongguo Remittance, it is unclear if the District Judge found that such an abuse of process has occurred, but that possibility remains open for the court to pursue in future cases.

Conclusion

It should be emphasised that this case comment reports a precedent from a court that is subordinate to the High Court of Singapore: its precedential value will be subject to review in the superior courts (i.e., the High Court and Court of Appeal of Singapore). Nevertheless, it is hoped that the Singapore courts would in future be open to adopt a precise appreciation and reading of agreements to mediate. In many circumstances, parties would have simply agreed that mediation is a condition precedent to litigation or arbitration, without further embellishing considerations. The unsuccessful outcome of the Plaintiff’s case in Zhongguo Remittance should underscore the usefulness of administering agreements to mediate effectively to channel case files which have an arguable prospect of success away from the court dockets into alternative (and appropriate) dispute resolution forums.

Shouyu Chong, Research Fellow, SIDRA; PhD Research Student, Centre of Construction Law & Dispute Resolution, King’s College London

Shouyu Chong

Posted by Shouyu Chong

Shouyu is a PhD Research Student at the Centre of Construction Law & Dispute Resolution, King’s College London. He is funded by the Centre of Construction Law & Dispute Resolution, and the Society of Construction Law, to research on jurisdiction and arbitration clauses in KCL.

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