In brief
In Maxx Engineering v PQ Builders Pte Ltd [2023] SGHC 71, the General Division of the High Court of Singapore (“High Court“) dealt with the novel issue of whether a party could be compelled by a court order to refer a dispute to mediation pursuant to its contract with a counterparty, even if it did not want to mediate. The High Court held that it was just and equitable to order specific performance such that in effect, the relevant party was compelled to mediate in accordance with the bargain which they struck.
Key Takeaways
- Notwithstanding the fact the mediation is typically a consensual process, it is possible to obtain a court order to compel a party to refer a dispute to mediation in an appropriate case.
- Parties have to be careful when drafting their dispute resolution clauses. The courts will treat dispute resolution clauses like any other contractual clause, and will hold the parties to their contractual bargain. If a party seeks to deviate from the contractually agreed mechanism for dispute resolution, the courts will not hesitate to order relief which effectively holds a party to what they promised in their contract.
- In the event a dispute arises, a party should not assume that they can move immediately to litigation or arbitration without first considering the parties’ agreed mechanism for dispute resolution, or they might otherwise inadvertently incur more costs in rectifying any non-compliance with the agreed mechanism.
In Depth
In Maxx Engineering v PQ Builders Pte Ltd [2023] SGHC 71, the applicant had sought an order compelling the respondent to refer their dispute to mediation under the Singapore Mediation Centre (“SMC“) pursuant to a contract between them.
Clause 54 of the contract provided that in the event of a dispute, the parties “shall endeavour to resolve the dispute through negotiations” and “[i]f negotiations fail, the parties shall refer the dispute for mediation at the [SMC] in accordance with the Mediation Rules for the time being in force”. Clause 55 of the contract provided that if the dispute was not resolved by the parties in accordance with Clause 54, the parties shall refer the dispute for arbitration.
When a dispute arose between the parties, the respondent referred the dispute to arbitration pursuant to Clause 55, without referring the dispute to mediation. The respondent argued that it was not under a contractual obligation to refer the dispute to mediation before resorting to arbitration, because Clause 54 had stated that “[f]or the avoidance of doubt, prior reference of the dispute to mediation under this clause shall not be a condition precedent for its reference to arbitration…” [emphasis added].
The applicant agreed that Clause 54 did not oblige the parties to mediate before commencing arbitration, but argued that Clause 54 obliged the parties to attempt both mediation and arbitration so long as arbitration of the dispute had not been concluded.
The High Court agreed with the applicant’s contention and found that by its plain wording, Clause 54 imposed a legal obligation on the parties to refer their dispute to mediation, if negotiations failed. The High Court also found that it was just and equitable to order specific performance compelling the parties to refer the dispute to mediation, because (a) damages were not an adequate remedy if specific performance was not ordered, (b) the respondent would not suffer substantial hardship from the order, (c) an order for specific performance would not be futile as there was no evidence that mediation would be futile and (d) the order for specific performance would not be impractical as there was no serious difficulty in determining whether the respondent had taken specific and concrete steps to refer the dispute to mediation.
Accordingly, the High Court granted the applicant an order for specific performance to compel the respondent to refer the dispute to mediation.
This was the first reported decision in Singapore of a court ordering specific performance to compel a party to refer a dispute to mediation. It is also noteworthy that this decision dovetails with the greater emphasis by the courts on the amicable resolution of disputes in the Rules of Court 2021, which came into effect in April 2022.
Author
Celeste Ang
Celeste is a principal in our Dispute Resolution and Employment Practice Groups. Her practice encompasses corporate and commercial dispute resolution, investigations and compliance. She has significant experience acting for global clients in cross-border disputes and advising clients on ethics & compliance and regulatory issues in the context of risks analysis and mitigation and cross-border investigations. Celeste also has a particular focus in employment, particularly contentious employment work and employee investigations.
Celeste has been recognised as a 'Litigation Star' in the Labor and Employment space by Benchmark Litigation Asia Pacific 2023 and has been ranked Band 1 in Employment in Singapore by Chambers Asia-Pacific since 2019 to date. A client has commended Celeste for being "a fantastic partner who knows our industry well and has been our first contact for external legal work for many years." Celeste is also ranked as a Leading Individual in Labour and Employment in Singapore by Legal 500 Asia Pacific since 2019 and noted by clients as "an experienced litigator with a very sound knowledge of the law, who is also able to consider the client’s commercial concerns when providing advice" and in the foreign firms section as "great at connecting her entire network when the client needs additional service outside Singapore."
With over 20 years of experience, Celeste has represented a broad range of multinational clients across various industries in domestic and international arbitrations administered under major institutional arbitral rules, and in court proceedings, before the High Court, Appellate Division of the High Court and the Court of Appeal in Singapore. She has also advised clients from various industries, such as financial/financial services, healthcare & life sciences, energy, oil and gas and technology, on ethics & compliance and regulatory issues, and assisted clients in reviewing their processes to mitigate risks and in internal and external investigations (including cross-border investigations) on anti-bribery/anti-corruption, anti-trust, anti-money laundering, tax, customs/export control and fraud issues and incidents.
Celeste advises clients on a wide range of employment and employment-related issues, with a focus on contentious or potentially contentious issues, including termination of employment, dismissal, retrenchment, breach of fiduciary duties, enforcement of restrictive covenants and confidentiality obligations and protection of trade secret, and employee investigations. She has successfully represented employers on employment and employment-related disputes in the Singapore courts as well as in arbitrations and mediations.
Author
Pradeep Nair
Pradeep is a Local Principal in the Dispute Resolution Practice Group in Singapore. He advises and represents clients ranging from global corporations to tech start ups and individuals across all aspects of dispute resolution, including pre-litigation strategic advice, mediation, Singapore Court litigation and international arbitration. Pradeep also regularly advises and assists clients on a wide range of contentious and non-contentious employment law, investigations and compliance matters.
In The Legal 500 Asia Pacific rankings 2024, Pradeep was recognised as a "key lawyer" in Baker McKenzie Wong & Leow's Dispute Resolution, International Arbitration and Employment teams, with clients commending him for being “very commercially minded” and a “superb lawyer” (The Legal 500, 2024).
Pradeep graduated from Singapore Management University's double degree programme with degrees in Economics (BSc (Econ)) and Law (LL.B.), and was placed on the Dean's List for both fields of study.
Pradeep specialises in corporate and commercial dispute resolution, including international arbitration, civil and commercial litigation, and mediation.
On the employment front, Pradeep's practice has a focus on contentious or potentially contentious issues, including termination of employment, dismissal, retrenchment, breach of fiduciary duties, enforcement of restrictive covenants and confidentiality obligations and protection of trade secrets, and employee investigations. Pradeep also has significant experience in advising and assisting clients on compliance and regulatory issues in the context of cross-border investigations, compliance & ethics (ICE) matters.
