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The duty to attempt amicable resolution starting 1 April 2022

The duty to attempt amicable resolution starting 1 April 2022

The duty to attempt amicable resolution starting on 1 April 2022 尝试庭外和解的义务

Singapore courts have always been in favour of parties settling their dispute through various modes of alternative or amicable resolution, such as mediation. Starting from 1 April 2022, new procedures for conducting civil cases will take effect, and amongst a key feature of the Rules of Court 2021 (“ROC21”) is to further encourage – some might even say redirect – parties to settle their disputes through other means rather than in litigation. In particular, there is a whole new Order 5 devoted to this issue, which creates a more extensive duty to attempt amicable resolution.

Amicable resolution as the first step

The claimant is now required to “make an offer of amicable resolution before commencing” the suit. This is an express step that now extends to all civil suits before the suit starts, compared to the different regimes in the different courts where sometimes, parties are required to exchange offers to settle during the course of the suit. So now the defendant has an opportunity to avoid litigation, instead of hoping that the claimant will agree to mediation partway through the proceedings, and the claimant also does not have to worry about appearing weak by offering an olive branch so soon.

Does that mean that claimants hands are tied, especially if it needs to urgently obtain court orders to protect its interests (such as a freezing order to prevent the defendant from dissipating its assets)? Arguably not – the exception of “reasonable grounds” may be wide enough to include situations which would lead the claimant to apply for such orders without notifying the other party. It remains to be seen on whether this argument may be abused by parties or counsel who wish to leverage on the state’s resources to strong-arm the other party.

Offers and rejections must be in writing

In addition, an offer of amicable resolution (“OAR”) must be in written form, and be open for at least 14 days subject to parties agreement. In turn, the rejection must also be communicated in writing. This has several important implications for parties conducting civil cases:

  1. The offering party cannot use a short-lived offer to put pressure on his opponent.
  2. The recipient has to take a clear position in writing, which would have cost consequences if his response is unreasonable.
  3. Parties would now have a bit more time to consider their options, and also to muster or redirect their resources towards amicable resolution.

The Court’s power to compel amicable resolution

The previous judicial policy, although pro-mediation and pro-settlement, drew the line at facilitating such alternative dispute resolution methods. However under the new ROC2021, the court now has the power to order parties to attempt an amicable resolution process. Even if a party continues to refuse, the court has the power to order that party to submit a sealed document containing the reasons for refusal, which then can be opened at the conclusion of court proceedings to determine if the refusal at that time was a reasonable one.

Not only is this relevant in terms of legal costs, but it would also force parties to evaluate their positions and measure it against their business interests. It would also prevent parties from making afterthought submissions to justify their previous refusal, especially since the sealed document would be a contemporaneous record of the position. This would certainly deter parties or even counsel from making a cavalier refusal of any attempt to settle the dispute out of court.

Clearer cost consequences of refusing amicable resolution

At the conclusion of the trial, the court will now consider the refusal to attempt the process of amicable resolution as a relevant factor in ordering costs, since it is now listed expressly in the ROC2021.

A successful party can be penalised for not making any effort at amicable resolution, which would upset the traditional cost-benefit analysis of going to trial with a strong case. Even though such situations may be rare – for example, where the claimant is awarded only nominal damages despite having multiple heads of claim, which implies that the suit was not economically justifiable (but also raises questions of whether such cost-benefit analyses should be applied on hindsight) – the possibility remains open.

In additon, an unsuccessful party may be ordered to pay more costs for his refusal to attempt amicable resolution, even though it is not clear at the moment how this higher amount would be calculated. The possibility of higher costs should at least create a financial incentive to attempt amicable resolution.

A new landscape for mediation?

Looking at the new ROC2021, court users can now expect to be diverted out of the legal system to settle their disputes in more economically rational ways. Therefore, it is important to seek advice from counsel who are trained and experienced in mediation so as to maximise the opportunity to efficiently resolve business disputes.

Seeking advice on how to bring parties involved to mediation in order to resolve a dispute sooner? Email me or send a LinkedIn message to Boon Gan Ng.

新加坡法院一项来鼓励各方庭外解决纠纷,2022年4月1日起将实行关于庭外和解的规矩,扩大庭外和解的规范。

以庭外和解为先

起诉方在起诉之前,必须向对方提供庭外和解的建议。被告自然有机会避免审讯,不需等到起诉半途中才庭外和解,起诉方也无需担心显得弱懦。

虽然起诉方有此义务作为起诉的前提,但在紧急状况当下(例如需要获得冻结令,以防止对方消散资产)可直接开启法律程序。当然,法院很可能会尽量防范滥用此例外的起诉方。

书面的建议、拒绝信

 庭外和解建议不但必须以书面转送,也必须有至少14天的有效期(除非双方设定不同的有效期)。对方若要拒绝,也必须以书面沟通。从中可见:

  1. 法院不允许起诉方缩短有效期对被告施压。
  2. 被告不可无理拒绝,而法院可参考拒绝的原因,可能会惩罚无理拒绝的被告。
  3. 有了至少14天的有效期,能让双方做好庭外和解的准备。

法院可命令双方尝试庭外和解

之前法院通过管理案件的方式尽量鼓励双方庭外和解,但在2021法院规矩之下,法院酱油命令双方尝试庭外和解的权力。法院也可命令拒绝和解的一方交上封密的理由信,在审讯结束后参考拒绝放是否有拒绝和解的根据,在适当的情况下令赔偿对方的法律费用。这将使双方慎重考虑尝试庭外和解,防范在无理拒绝后捏造原因。

无理拒绝庭外和解的后果

法院不但能以更高的法律费用赔偿数额惩罚无理拒绝庭外和解的被告,也能惩罚无理否决庭外和解的起诉方,即使起诉方成功地起诉被告。虽然类似状况可能是例外(例如起诉方只受到名义上的损失),但除了成功的机率,起诉方也该考虑起诉的紧急效应。可见,法院希望双方在衡量纠纷解决方案当时倾向庭外和解。

庭外和解的新天地

由于新法院程序对双方尝试庭外和解的要求有所提高、加深,各方在寻求法律咨询时应当注重律师对庭外和解的意识、经验,才能避免法院的制裁。

需要通过庭外和解或其他非对抗性方式解决纠纷?不如通过电邮LinkedIn 寻求咨询。

Need Help With A Legal Dispute? 需要关于解决纠纷的法律咨询?

If you have any questions relating to business dispute prevention or how to settle a business dispute in Singapore, feel free to email or drop me a LinkedIn message. I will do my best to respond within 24 hours.

Or leave a message here (your personal particulars will not be shared with third parties without your permission).

若有关于商业纠纷防范、和解方案的疑问,可通过电邮或LinkedIn联系。我会尽量在24小时之内回复。

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Need Help With A Legal Dispute? 需要关于解决纠纷的法律咨询?