What is the most efficient alternative, i.e. out of court, way to settle disputes? Arbitral institutions provide many options to the parties: “normal” arbitration, expedited arbitration, mediation, multi-tier dispute resolution providing for both mediation and arbitration …
A relatively recent option was presented by the Singapore International Arbitration Centre (SIAC) and the Singapore International Mediation Centre (SIMC). In November 2014, the SIAC and the SIMC introduced so-called hybrid proceedings called Arb-Med-Arb, i.e. Arbitration-Mediation-Arbitration. In the following, we want to look into this new approach to settling disputes and see what benefits AMA could have for the parties. We moreover want to discuss some of AMA statistics.
What is AMA?
AMA is a hybrid mechanism and combines arbitration and mediation. It contains in essence the following steps:
- The claimant initiates arbitration and files a notice of arbitration.
- The respondent files a response.
- The tribunal is constituted but immediately stays the proceedings.
- The parties attempt to settle their disputes by way of mediation.
- If the mediation is successful, the tribunal enters a consent award.
- If the mediation is not successful, the parties are referred back to arbitration.
SIAC and the SIMC are to date the only institutions which offer a model clause and clear rules on how AMA proceedings shall be conducted. The parties interested in AMA proceedings should add the following language to their arbitration agreement:
“The parties further agree that following the commencement of arbitration, they will attempt in good faith to resolve the Dispute through mediation at the Singapore International Mediation Centre (“SIMC”), in accordance with the SIAC-SIMC Arb-Med-Arb Protocol for the time being in force. Any settlement reached in the course of the mediation shall be referred to the arbitral tribunal appointed by SIAC and may be made a consent award on agreed terms.” (http://www.siac.org.sg/model-clauses/the-singapore-arb-med-arb-clause).
The AMA Protocol can be found here and contains 15 provisions on these hybrid proceedings. The Protocol provides amongst others that the mediation is conducted in accordance with the SIMC Mediation Rules. Moreover, pursuant to the Protocol, the mediation shall be concluded within 8 weeks from the commencement of the mediation.
While SIAC is the only arbitral institution that provides for a specific AMA Protocol, this does, however, not mean that arb-med-arb proceedings would not be possible under other institutional rules. The parties are always free to ask for a stay of the arbitration after the constitution of the tribunal and attempt settling the dispute by way of arbitration. In practice, however, it seems that parties do not go that route if arbitral institutions do not “institutionalize” the proceedings.
What are the benefits of AMA?
AMA intends to combine the crucial advantages of both arbitration and mediation:
- a successful mediation can lead to a result that satisfies both parties’ interests and that preserves the parties’ ongoing relationship
- a successful mediation is much cheaper and faster than arbitration
- SIAC arbitration is flexible and more efficient than many state court proceedings
- both, SIAC arbitration and mediation are confidential
- an arbitral award can be enforced in more than 150 member states to the New York Convention
Contrary to other hybrid arb-med proceedings, the AMA Protocol provides that the arbitrators and the mediator shall be different individuals. If the arbitrators act also as conciliators / mediators, there is a risk that they can afterwards no longer act as impartial and independent arbitrators. A mediator will, generally, become privy to without prejudice information which they would have to disregards when deciding as arbitrators. If the parties cannot be assured that the information disclosed in the mediation will not be used against them, they might not even disclose such information in the first place. In that event, however, the mediation makes little sense.
The disadvantage of AMA is of course that it enables a recalcitrant respondent to delay the resolution of the dispute by 8 weeks even if from the very beginning has no prospect of success.
The AMA Protocol was introduced in November 2014, i.e. three years ago. Since then, 9 cases were filed under the AMA Protocol. The amount in dispute in these cases ranged from EUR 925,000 – EUR 375,000,000. Unfortunately, it is not known how many cases were successfully settled and resulted in a consent award. It is submitted that the reason why not more cases have been referred to the AMA Protocol is because the proceedings have not yet received the attention they deserve. Arbitration lawyers should discuss with their clients whether AMA would be a promising alternative to the multi-tier dispute resolution clauses that can be found in many contracts.