Settle disagreements in a friendly way: in business, disputes can arise. These range from labour issues, financial issues, commercial issues, and more. Contractual disputes and disagreements often find resolution in courts of law. But alternate avenues for dispute resolution like mediation and arbitration are also common.

ALTERNATIVE Dispute Resolution or ADR is a term that refers to a variety of techniques for resolving disputes without litigation. Two of the better-known methods of ADR are arbitration and mediation. Both are time-tested, cost-effective alternatives to litigation.

In arbitration, the arbitrator looks into the legal rights and wrongs of a dispute and makes a decision. Once the arbitrator has arrived at a decision, it is binding on parties whether they agree with it or not. It is very much like the way a court case is decided by a judge, except that the process does not take place in a courtroom, and it is not open to the public. As in a court case, there is usually a winning and a losing party in arbitration.

Over 40 companies in Singapore are listed in the business listings as firms that specialise in arbitration or mediation. Besides private companies, the Singapore International Arbitration Centre (Siac), the Singapore Mediation Centre, the Industrial Arbitration Court, and the Singapore Institute of Arbitrators are other avenues for dispute resolution.

Siac, an independent, not-for-profit organisation, was established in 1991 to meet the demands of the international business community for a neutral, efficient and reliable. Funded initially by the Singapore government, it is now entirely self-sufficient.

On 1 April 2003, it ceased its corporate link with the Singapore Academy of Law and forged an affiliation with the Singapore Business Federation. Siac's operations are overseen by a broad-based board of directors composed of representatives from the international and local business and professional communities in Singapore. This brings an outward-looking Siac closer to the constituency it serves.

It is an arbitral institution that offers a neutral and independent venue in which parties can resolve their disputes. Siac provides institutional support for the conduct of arbitration. Among other things, this includes the appointment of arbitrators, the financial management of the arbitration, case management and arranging for hearing facilities and all other matters which facilitate the smooth conduct of the arbitration.

The arbitrators may be attorneys or businesspersons with expertise in a particular field. The parties control the range of issues to be resolved by arbitration, the scope of the relief to be awarded and many of the procedural aspects of the process. Arbitration is less formal than a court trial. The hearing is private. The arbitrators' decision, or award, is made in writing and is enforceable in a court of law.

Mediation, on the other hand, is a process in which an impartial third party facilitates communication and negotiation and promotes voluntary decisionmaking by the parties to the dispute. The mediator, essentially, helps parties to settle their disputes by a process of discussion and narrowing differences.

The mediator helps the parties to arrive at an agreed solution. He does not decide on the dispute. A successful mediation results in an agreement signed by the parties, whereas a contested arbitration results in a decision by the arbitrator without the agreement of the parties.

In mediation, there is no winning or losing party, because there is no binding decision without both parties agreeing to one. The mediators role is advisory. The mediator may offer suggestions but resolution of the dispute rests with the parties themselves. Mediation proceedings are confidential and private.

Retaining Control

GD Retnam, a trained civil engineer, has more than 20 years of experience in mediation in the construction industry. He is often called in to help facilitate the settlement process. He says that in normal negotiation, the parties achieve an agreeable outcome without the need for the involvement of any neutral third party.

"In arbitration, the neutral third party provides the opposing factions with a binding ruling after hearing each side argue its case. In mediation, a mediator is involved to help parties anticipate likely sources of future disputes in order to prevent them. Mediation opens the way to the exploration of options and the development of creative solutions that might not be as apparent when utilising a more adversarial process," says Retnam.

He explains: "What both arbitration and mediation have in common is control. Think of dispute resolution as a continuum with maximum control at one end and minimum control at the other. An example of maximum control might be thought of as any relationship in which disputes never arise. Minimum control would be a solution that is imposed upon the parties to a dispute by the public courts. ADR consists of every alternative in between."

The main advantage of ADR is that although the degree of control over the outcome varies from one method to another, in all methods the parties control the process.

"They are bound to agree to the procedures and to the individuals who will assist in the dispute resolution process. The parties can agree to fashion a process or combination of processes suited to the dispute between them," explains Retnam.

Most people and organisations do not want to become involved in lawsuits. Litigation can entail lengthy delays, high costs, unwanted publicity, and ill will. Appeals might be filed, causing further delay, after a decision has been rendered.

Arbitration and mediation, on the other hand, are usually faster and less expensive. Arbitration is also conclusive. The speed in resolution can be an advantage. In ADR there is no need to wait for your day in court. The only elements governing speed are the eagerness of the parties to end the dispute and the complexity of the cases to be resolved.

Most mediations can be completed in a few weeks while most arbitrations are decided within a few months of filing. Expedited resolutions for disputes where the parties agree that speed is of the essence or where the claims are not large or complex are common.

Expert Impartial Neutrals

Parties who resolve their disputes through ADR enjoy the assistance of neutrals who are already expert in the subject matter of their disputes. For example the Siac panel consists of expert and knowledgeable neutrals from many professions and industries.

Most arbitrators and mediators are neutrals who represent a broad spectrum of expertise. Participation by business executives and professionals as arbitrators is vital to the system. Because of their specialised knowledge and experience, the parties are not required to spend time educating the arbitrator about relevant industry practices and customs.

Seamus Lim, an industrial arbitrator says: "For example, parties to a construction industry dispute might select an architect, engineer, or a lawyer with sufficient practice in construction law to serve as their mediator or arbitrator. The subject matter expertise of the neutral reduces the time typically required to attempt to educate a judge or jury about the technical elements of a dispute, and raises the confidence level of the parties that the result of the process will be well-informed."

In labour-management relations, impartial experts arbitrate disputes arising out of the application and interpretation of collective bargaining agreements. For instance, the Industrial Arbitration Court recently ruled on a dispute between Singapore Airlines and Alpa-S, the airline pilots' association (see box).

Informality and Flexibility

Alternative dispute resolution is conducted in a manner that is more businesslike than litigation. Each party tells its side of the story to the arbitrator in an atmosphere that is less formal than a court proceeding.

Where a court must apply complex rules of evidence, and the decision of the trial judge can be overturned for admitting evidence that should have been excluded, arbitrators may admit any evidence which might be relevant.

Arbitrators will discount questionable testimony and evidence, such as obvious hearsay, but the relaxed rules of evidence do allow each side to present their case in a more informal manner.

The parties better understand the process and feel confident that they had the opportunity to present their entire situation. Since the parties control the process, they enjoy tremendous flexibility.

Arbitration, mediation, and other forms of ADR are generally not open to public scrutiny like disputes settled in court. The hearings and awards are usually kept private and confidential, which helps to preserve positive working relationships.

Lim says that in the end, in business, time saved is money saved: "Many of the costly procedures associated with formal court processes, such as filing appeals and motions can be eliminated. ADR processes are designed to be faster, more streamlined, and more informal than litigation."

Perhaps the biggest advantage is the finality that ADR brings to disputes. Arbitration awards have extra-territorial enforceability in over 120 countries under the New York Convention. Generally, arbitration can also be more cost-efficient and speedier than court litigation. Mediation agreements are also legally enforceable. Arbitration awards are final and subject only to limited review by the courts, unless parties agree in advance that awards will be advisory only.

A380 Pilots Get More Pay

IN A decision in June 2007, the Industrial Arbitration Court of Singapore (IAC) ruled that Singapore Airlines (SIA) pilots flying the ultra-large Airbus A380 will earn more then those operating Boeing 747-400s and other wide-bodied airliners.

The IAC panel decided that SIA captains operating the A380 will earn S$700 more per month more than captains on the 747-400 and first officers will earn S$450 more than a 747-400 first officer, says the Air Line Pilots Association-Singapore (Alpa-S), which describes the ruling as "a good outcome".

It says the base pay of a 747-400 captain is S$10,000 a month so an A380 captain will earn S$10,700. The court's ruling falls short of what the union had been demanding but still falls on the side of what the union wanted.

Alpa-S had asked that A380 captains get a base pay of S$11,000 a month and first officers S$10,660, while the airline was asking that an A380 captain and first officer earn less than a 747400 pilot and first officer respectively and instead have their salaries about the same as a Boeing 777 captain and first officer respectively.

The matter went to the arbitration court because the two sides were unable to negotiate an agreement. SIA has 19 A380s on order and its first is due to be delivered in October 2007, making it the first airline in the world to operate the ultra-large aircraft. The airline says the court's ruling "gives us some certainty" and "ends the issue" over A380 pilot wages "as far as we and the pilots' union are concerned".

This was part of a broader push by the airline to end the disparity between what pilots on different widebody types earn so that in future it would be easier to get pilots to switch to other aircraft types. Currently it is difficult, for example, for the airline to get 747-400 pilots to switch to 777s because the base pay is lower

Singapore as a Regional Arbitration Centre

SINGAPORE has emerged as a regional arbitration venue due to its advanced infrastructure, efficiency, open economy and pro-business environment, integrity and transparency, and as abridge between multi-cultural and international community. It is committed to promoting arbitration as a means of resolving commercial disputes.

After a quarter of a century of development, building up an arbitration-friendly environment and capabilities, Singapore has grown to be the venue of first choice for international businesses when it comes to resolving disputes in a neutral third country in Asia.

Singapore hosts arbitrations of all kinds. Covering a range of subject matters, some are administered by institutions, such as the Singapore International Arbitration Centre and the Paris-based International Chamber of Commerce. Many more are managed by the parties themselves--ad hoc arbitration and arbitration according to United Nations Conference on International Trade Law (Uncitral) Rules.

Increasingly, more parties from abroad choose Singapore, not because their contract has any connection with Singapore, but for the many advantages that Singapore has to offer as the seat of their arbitration. Its appeals include:

* Being an independent neutral third-country venue

* Adoption of Uncitral Model Law--the cornerstone of Singapore's law on international commercial arbitration.

* Being party to the New York Convention on enforcement of arbitration awards makes Singapore arbitration awards enforceable in most countries of the world.

* Strong tradition of the rule of law.

* Maximum judicial support of arbitration, minimum intervention.

* Freedom of choice of counsel in arbitration proceedings.

* A strong arbitration institution--the Singapore International Arbitration Centre.

* Competent arbitration professionals--lawyers, arbitrators, and experts.

* Excellent support facilities and services.

* Lower cost than in almost any other major centre of arbitration.