Facing a dispute with your IT vendor but wish to avoid costly and long-drawn legal battles? Arbitration or mediation may be the
way to go.

Both Processes Provide Ways to Resolve Disputes Without Having To Resort to the Courts.
They Can Save Businesses Time and Money.

Disputes can happen when IT vendors and businesses do not agree.

What can businesses and their vendors do if they want to avoid a costly legal battle? Arbitration and mediation are the two main ways to resolve disputes (including IT disputes) without having to resort to the courts.

With both arbitration and mediation, confidentiality is preserved, for example, where an IT dispute involves parties' source codes or other programming data.

In deciding which method is best for the situation at hand, the parties need to consider if they are likely to come to an agreement with some help via mediation or would require an objective party to decide for them through arbitration.

Arbitration

Very broadly, arbitration is where the parties agree to refer their disputes to one or more persons (the arbitrator or arbitrators) who will, after hearing the parties, have to determine the rights of the parties in an impartial and fair manner, and whose determination (called an award) would be binding on the parties.

It is useful to consider arbitration (over court proceedings) for the following reasons:

• If there is a need to enforce an award made in Singapore in a number of countries in the case of a dispute involving cross-border transactions. Arbitration awards are recognised and enforceable in more countries compared with a judgment of the Singapore courts. An example is where the vendor has to implement the system in the different countries where their business has a presence in. For a list of countries in which an arbitration award in Singapore may be enforced, please refer to the United Nations Commission on International Trade Law (UNCITRAL).
  
  
• If time or cost is an issue, arbitration is generally more flexible than court proceedings and this could bring about savings in time and cost.
  
  
• Parties can agree at the outset or at the time of appointment on the qualifications or the expertise of the arbitrators. Appointing an arbitrator with the necessary expertise may potentially save time and costs. For example, the technical requirements or warranties that are typically found in a system supply or outsourcing contract would require niche expertise in a particular area of IT engagement.
  
  
• There is minimal court interference in arbitration proceedings and this may be an important factor to a party who, for various reasons, may not wish to be subject to the courts of the country of the other party.
  
  
• Subject to a few exceptions, an arbitration award is final. To better ensure finality, particularly in the case of a dispute having no international elements (such arbitrations do not usually carrying the right of appeal), parties can expressly exclude the right of appeal.

It is important to note, however, that arbitration may not be appropriate where a determination is sought to bind or affect third parties. An obvious example would be an IT dispute that involves a challenge to the validity of an underlying intellectual property right, such as a software patent.

In general, parties agreeing to an arbitration should do so in writing. It is advisable for such agreements to be signed by the parties or contained in an exchange of communications between the parties. This will help avoid disputes about the existence of an agreement to arbitrate. A well-drafted arbitration agreement would usually also provide for the place of arbitration, the applicable rules governing the arbitration, and the law applicable to the contract or dispute.

Singapore ranks very favourably as one of the leading centres of arbitration in the world. Some useful websites that touch on arbitration in Singapore include those of the Singapore International Arbitration Centre (www.siac.org.sg), the Singapore Institute of Arbitrators (www.siarb.org.sg) and the Law Society of Singapore (www.lawsociety.org.sg).

Mediation

Broadly, mediation brings the parties together with the aid of a mediator to consider and explore the possibility of settlement. If the parties agree to settle their dispute without going to court, the mediator will draw up a binding settlement agreement to be signed by the parties.

Parties choosing mediation will benefit from a more open and facilitative environment to resolve their dispute. They will also have more control over the outcome of the mediation (as the settlement agreement has to be consensual). However, as the mediator does not have any power to impose determinations on parties, time and resources may be lost if the dispute is not settled. The parties may end up seeking arbitration or litigation after mediation has failed.

As mediation usually proceeds on the basis that communications during mediation are without prejudice (that is to say, admissions made by a party will not be used adversely against the admitting party), mediation can facilitate settlement and the exploration of solutions which may not have been reached without frank and open discussions. In addition, rather than simply focusing on rights and obligations, parties can focus on the interests of the parties (which are not the same as rights) and bring other considerations into play.

The general experience with mediation in Singapore is that it has been successful. In this direction, the Subordinate Courts have embodied as part of its dispute resolution process, the opportunity for parties to engage in mediation. The principal mediation body in Singapore is the Singapore Mediation Centre which is a non-profit organisation guaranteed by the Singapore Academy of Law and dedicated to the promotion of amicable and efficient settlement of disputes.

Infocomm Public Education for SMEs

According to IDA's 2007 Annual Survey on Infocomm Usage by Enterprises, the top three barriers to infocomm usage in general by enterprises with no computer usage are:

• Cost of infocomm expenditure is too high (ranking 1);
  
  
• Level of infocomm skills is too low (ranking 2); and
  
  
• New versions of existing software are introduced too often(ranking 3).

You can contact the SME Infocomm Resource Centre (SIRC) located at Singapore Polytechnic to seek advice on how to minimise infocomm expenditures and to find out more about the workshops available to upgrade your infocomm skills.

For further details, visit www.sp.edu.sg/sirc.

Notes:

• This article has been contributed by the following committee members of The Law Society of Singapore: Dr Stanley Lai, partner and head of the Intellectual Property & Technology Department, Allen & Gledhill LLP; Andrew Chan Chee Yin, partner, Litigation and Dispute Resolution Department, Allen & Gledhill LLP; and Goh Zhuo Neng, pupil, Litigation and Dispute Resolution Department, Allen & Gledhill LLP.
  
  
• This article first appeared in The Business Times on 27 May 2008 and information is correct at the time of publication.

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