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Embedding Mediation Into The SME DNA

In this Straits Times article, the Courts and the Law Society of Singapore have called on lawyers to embed mediation into the DNA of the fraternity.

However, I am perplexed: Why raise the issue of mediation only when you are at the doorstep of the Court?

You may not know that mediation can actually be negotiated and agreed upon before a contract is inked. An agreement that refers to disputes arising from a contract can be inserted as a clause in any contract. Once the clause is there, it becomes mandatory that the parties will try to resolve their dispute through the various mediation processes.

Case Study

Our client was a Singapore-based textile import and export company. It imports textile from countries like Malaysia and sells them via Korea to USA.

While such cross-border trades are common, it is equally common to see that such trades are only evidenced by invoices, bills of lading, delivery orders and shipping manifest. Most parties will not bother to make sure they have proper “buy/sell agreements”.

Regrettably, our client was embroiled in a multi-million dispute with one of its customers in a specific transaction. This single transaction caused a dispute that stretched over more than three years, without a firm resolution. In the end, our client became crippled financially and had to wind up their business.

In this case study, the lack of prior agreement to crucial matters contributed to the delay in resolution. These include matters such as which law to apply, which Courts to hear the dispute and whether mediation was possible.

Mediation Is Especially Important For SMEs

For small businesses with limited finances, long-drawn disputes will eventually wear you out. Unlike big businesses with the resources to sustain a “battle”, most small businesses do not have the same luxury.

Embedded mediation clauses in agreements favour the small businesses, as it gives them an opportunity to settle the dispute in a fast and economical manner.

Despite much publicity and support from our government and the encouragement from the law society and Courts for businesses to use written agreements and have such clauses embedded, the reality is that many small businesses continue to have a cavalier attitude towards a proper written agreement.

At VanillaLaw™, all of our online agreements hosted on VanillaLaw™Docs have embedded such mediation clauses. We encourage small businesses to use this free tool to protect themselves.

If you would like us to review your agreements, reach out to us today.

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