29-8-2024 (SINGAPORE) In a world where cross-border business disputes can escalate rapidly, Singapore is cementing its position as a neutral ground for conflict resolution, particularly for Chinese companies engaged in international projects. The recent signing of a memorandum of understanding between the Singapore International Mediation Centre (SIMC) and the China International Contractors Association marks a significant step towards this goal.
The SIMC, a non-profit organisation at the forefront of Singapore’s efforts to become a global dispute resolution hub, has been quietly but effectively resolving complex international disagreements. Mr George Lim, the centre’s chairman, boasts an impressive 75 per cent success rate in dispute resolution through mediation.
“Mediation offers a path of mutual understanding and compromise,” Lim explains. “It’s not about winning or losing, but finding a way for both parties to move forward together.”
Lim’s approach, which includes the disarming gesture of serving tea to create a more amicable atmosphere, has proven effective in navigating even the most contentious situations. He recounts a recent success story involving a multimillion-dollar airport project where an Asian construction company and a Chinese state-owned enterprise were at loggerheads over payment issues.
“After two years of stalemate, representatives from both companies came to Singapore,” Lim recalls. “Within a day, we had brokered a mutually satisfactory payment arrangement. This is the power of mediation – it preserves business relationships and opens doors for future collaboration.”
The benefits of mediation are particularly attractive to Chinese companies involved in Belt and Road Initiative projects. These ambitious infrastructure endeavours, spanning multiple countries, often involve partnerships between Chinese and foreign firms. When inevitable challenges such as cost overruns or delays occur, disputes can arise.
Mr Xin Xiuming, vice-chairman of the China International Contractors Association, sees great value in Singapore’s mediation services. “SIMC’s professionalism and international influence make it an ideal venue for resolving disputes, even for Chinese companies,” he states. “The voluntary nature of mediation means we can always explore other options if an agreement isn’t reached.”
The demand for such services is likely to grow. In the first seven months of 2024, members of the China International Contractors Association secured contracts worth US$134 billion from foreign companies, representing a 25 per cent increase from the previous year.
Mediation offers several advantages over traditional litigation or arbitration. It’s typically faster and more cost-effective, allows for private resolution without public scrutiny, and most importantly, helps preserve business relationships. As Lim puts it, “When you sue, it’s win or lose. Mediation allows both sides to save face and find common ground.”
While China has signed but not yet ratified the Singapore Convention on Mediation, the SIMC reports no issues with enforcing mediation outcomes in China thus far. This bodes well for the future of international dispute resolution in the region.
As more Chinese companies seek partnerships with foreign firms for large-scale projects, Singapore’s role as a trusted mediator is set to expand. The city-state’s reputation for neutrality, coupled with its sophisticated legal infrastructure, makes it an ideal venue for resolving complex international disputes.
