Further to our earlier posts (here and here) highlighting material from our recently updated Guide to Dispute Resolution in Asia Pacific, we now feature in part 3 the responses from New Zealand, Pakistan, Philippines, Singapore, Taiwan, Thailand and Vietnam to the question whether parties to litigation or arbitration are required to consider or submit to ADR procedures before or during proceedings.
Although the use of mediation and other forms of ADR is relatively common, there is usually no mandatory requirement to engage in these procedures.
The Arbitration Act does not expressly require the parties first to consider or submit to any ADR procedures.
There is also no express requirement that a party do so in the context of litigation, although judges have the power to convene a judicial settlement conference any time prior to trial (and during a trial, with the parties' consent). The parties are required to attend the conference and to attempt to settle the dispute. However, the use of judicial settlement conferences is uncommon.
Otherwise, at any time during a proceeding, a judge may, with the consent of the parties, make an order directing the parties to attempt to settle their dispute through ADR.
Absent a court order to engage in alternative dispute resolution, there is generally no cost consequence if a party declines to participate. However, increased costs may be awarded if a party does not have reasonable justification to refuse a settlement offer, and a party may be disentitled from seeking costs in respect of the period after it rejects a settlement offer that would have been better than the judgment ultimately made in its favour.
There is no law at present that mandatorily requires the parties to consider or submit to any form of ADR before or during proceedings. However, most commercial contracts require the parties to try to resolve disputes by following certain agreed procedures, before resorting to arbitration or litigation.
Further, the court may, where it considers necessary, adopt ADR methods, including mediation, conciliation or any such other means, with the consent of the parties, so long as it is not inconsistent with the provisions of the CPC.
There have been significant developments in Pakistan relating to ADR in recent years. The Karachi Centre for Dispute Resolution (KCDR) was established in Karachi as a mediation centre in collaboration with the International Finance Corporation of the World Bank (IFC) to provide an ADR mechanism for resolution of commercial disputes. The IFC’s objective is to promote ADR/mediation for settlement of commercial disputes, especially involving small and medium sized enterprises, by developing a professional cadre of mediators, improving court systems for better case management, and establishing the KCDR. The High Court of Sindh and selected civil courts will refer cases to the KCDR.
During the pre-trial stage in civil actions, the parties are required to state in their pre-trial briefs whether or not they are willing to submit to alternative modes of dispute resolution. To this extent, therefore, the parties to a litigation are obliged to consider the possibility of ADR but they are not necessarily required to submit to it. However, in the pre-trial stage, the parties are generally referred to mediation to try to settle the case amicably.
The Supreme Court issued A.M. No. 11-1-6-SC-PHILJA on 11 January 2011 entitled “Consolidated and Revised Guidelines to Implement the Expanded Coverage of Court-annexed Mediation (CAM) and Judicial Dispute Resolution (JDR)”. The Guidelines provide for a “three-stage process.” The first stage is the CAM where the judge refers the parties to the Philippine Mediation Center (PMC) for mediation. If the parties fail to settle at this first stage, a second attempt is made at the JDR stage, where the JDR judge acts as a mediator/conciliator/early neutral evaluator in a continuing effort to secure a settlement. If there is still no settlement during the second stage, the mediator/judge must turn over the case to another judge who will try the unsettled case. The trial judge “shall continue with the pre-trial proper and, thereafter, proceed to try and decide the case. The third stage is during the appeal where covered cases are referred to the PMC-Appeals Court Mediation (ACM) unit for mediation”. Only specified cases under the issuance are referred to CAM and JDR, which includes special proceedings for the settlement of estates, the civil aspect of Quasi-Offenses under Title 14 of the Revised Penal Code, and the civil aspect of estafa (fraud), theft and libel.
Executive Order No. 78, s. 2012 also mandates the inclusion of provisions on the use of ADR mechanisms in all contracts involving public-private partnership projects, build-operate and transfer projects, joint venture agreements between the government and private entities and those entered into by local government units.
On the other hand, in arbitrations, parties are not required to consider or submit to alternative dispute resolution before or during proceedings, but may do so. In fact, in a domestic arbitration, an arbitrator is expressly prohibited from acting as a mediator in the same proceedings and all negotiations towards settlement of the dispute are expressly required to take place without the presence of arbitrators. Under the ADR Act, the parties may agree to refer one or more or all issues arising in a dispute or during its pendency to other forms of ADR.
All non-injury motor accident claims and personal injury claims filed with the State Courts (formerly known as the Subordinate Courts) must proceed to Court Dispute Resolution (CDR) for neutral evaluation within eight weeks after the memorandum of appearance has been filed.
Save for this, submission to any alternative dispute resolution forum is generally voluntary, although encouraged. In the Subordinate Courts, parties frequently resort to the free mediation service provided by the courts. The Supreme Court also provides a mediation service through the Singapore Mediation Centre (SMC), although it is not free.
Although submission to ADR is voluntary, a party's unreasonable refusal to mediate or engage in other types of ADR may result in the court penalising the party in costs when making a cost order.
Under the Code of Civil Procedure, the following matters shall be subject to mediation by the court before the relevant action is initiated:
- disputes arising from a relationship of adjacency between real property owners or superficiaries, or other persons using the real property;
- disputes arising from the determination of boundaries or demarcation of real property;
- disputes among co-owners of real property arising from the management, disposition, or partition of a real property held in undivided condition;
- disputes arising from the management of a building or of a common part thereof among the owners of the shared title or persons using the building;
- disputes arising from an increase or reduction of rental in relation to real property;
- disputes arising from the determination of the term, scope and rental of outer surfaces of a property;
- disputes arising from a traffic accident or medical treatment;
- disputes arising from an employment contract between an employer and an employee;
- disputes arising from a partnership between the partners or between the undisclosed partners and the nominal business operator;
- disputes arising from proprietary rights between spouses, lineal relatives by blood, collateral relatives by blood within the fourth degree of relationship, collateral relatives by marriage within the third degree of relationship, or head of the house or members of the house;
- other disputes arising from proprietary rights where the price or value of the object in dispute is less than NTD 100,000
In any case pending in the Court of First Instance, where the court considers there is a possibility of settlement and with the consent of the parties, it is the practice of the court to stay the proceedings and refer the matter to mediation. In mediation, issues in dispute will be heard by an independent third party in an attempt to reach a settlement of some or all of those issues. The Thai Arbitration Institute will generally offer parties arbitrating under its rules the option of a TAI-facilitated mediation, if they wish to do so.
As a matter of practice, the courts will require the parties to a dispute to attend at least two conciliation meetings prior to a court hearing in order to encourage the parties to reach a settlement.
With regard to domestic arbitration, there is no requirement under the Law on Commercial Arbitration that the parties hold conciliation meetings or submit to any other alternative dispute resolution proceedings.
Vietnamese law encourages mediation as an ADR mechanism. Pacific Mediation Commission (PMC) under PIAC was established to develop mediation services in Vietnam. A successful mediation results in an enforceable agreement between the parties, mutually satisfactory to both parties.