SINGAPORE INFRASTRUCTURE DISPUTE-MANAGEMENT PROTOCOL (“SIDP”) 2018
Effective management of differences or disputes in the context of mega construction or infrastructure projects
Background to the SIDP
1. The Singapore Infrastructure Dispute-Management Protocol (“SIDP”) 2018 was launched on 23 October 2018 by the Ministry of Law, and is aimed at the growing investment in infrastructure projects which are typically complex and involve multiple parties. As such, differences and disputes are sometimes unavoidable and can result in delays and higher costs, if not managed well.
2. On this point, the SIDP is a dispute management and avoidance process intended for use in construction projects of at least S$500 million in value in order to be cost-effective. It may be incorporated into construction contracts by the inclusion of an appropriate clause, an example of which is provided in the appendix to the SIDP. Please click here for a copy of the SIDP.
3. The SIDP builds on international best practices and introduces novel features to address the challenges that such mega projects may face:
- First, it takes a proactive dispute prevention approach through appointing a Dispute Board (“DB”) from the start of the project to help anticipate issues and prevent differences from escalating into full-blown disputes.
- Second, should disputes arise, it provides a wider range of methods which can help address the disputes that arise (set out below).
- Third, full professional and administrative support will be provided through the Singapore International Mediation Centre (“SIMC”) and Singapore Mediation Centre (“SMC”) which can help with identifying and appointing DB members as well as other administrative services.
Appointment of a DB
4. To assist parties to proactively manage differences to prevent these differences from escalating into full-blown disputes, the SIDP sets out a procedure for the appointment of a DB comprising 1 to 3 experts.
5. To kick-start the appointment process, any party, or parties acting jointly, may make a request for the appointment of a DB, pursuant to the SIDP, to either SIMC or SMC (Authorised Appointing Body – “AAB”).
6. Parties are free to agree on the constitution of a DB. However, if parties are unable to do so, the AAB (depending on which institution was requested to act) will make the necessary appointment(s).
DB Meetings and Site Visits
7. Once constituted, a DB follows the project ideally from start to finish, proactively helping parties manage issues that arise.
8. One of the ways in which a DB fulfils this function is in holding DB meetings and site visits. During these meetings and site visits, DB will review parties’ performance of their contractual obligations and, where necessary, assist parties in resolving differences.
9. Unless parties agree otherwise, DB is required by the SIDP to hold at least 3 DB meetings and 3 site visits every 12 months. An urgent DB meeting or site visit may also be held in circumstances of sufficient urgency.
Dispute Resolution
10. Should disputes arise, the SIDP also provides for a comprehensive process to facilitate their speedy and cost-efficient resolution.
11. This process starts off with a party filing a Referral of Dispute, which notifies the DB and the other party that a difference or dispute has arisen. The referring party has to specify which method of dispute resolution it prefers including:
- Mediation with the DB member(s) acting as mediator(s);
- The DB rendering an Opinion on the matter;
- The DB issuing a formal Determination;
- For the DB to decide on any of the above modes which it deems appropriate.
12. After considering the referring party’s proposed dispute resolution method and the other party’s objection (if any), the DB will issue directions as to the proper mode of dispute resolution.
13. While the DB is empowered to direct the usage of any appropriate dispute resolution method, there are three main methods provided under the SIDP. A summary of the different methods of dispute resolution is set out below:
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Mediation |
Opinion |
Determination |
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Description |
DB member(s) acting as mediator(s) to assist parties in coming to a mediated settlement on the issue(s). |
DB renders an opinion on the issue(s) through issuing directions to parties to enable it to render the opinion. |
DB renders a determination on the issue(s) through issuing directions to parties to enable it to render the determination. |
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Attributes |
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Finality |
A mediated settlement agreement, if reached, is final. |
Any party may, within 28 days of receiving the opinion serve a notice of objection to the whole or part of the opinion, with reason(s) for such dissatisfaction (“NOO”).
The service of the NOO shall render the objected part(s) of the opinion non-binding.
Any part of an opinion not objected to shall be binding and complied with by the parties unless and until an arbitral tribunal or court decides otherwise.
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The determination is binding on the parties upon their receipt and shall become final and cannot be contest unless objected to by any parties.
Any party may, within 28 days of receiving the determination, serve a notice of objection to the whole or part of the determination, with reason(s) for such dissatisfaction (“NOD”). Any part not objected to shall become final.
The dispute or the part objected to shall then be fully resolved by arbitration or the courts. Unless and until an arbitral tribunal or court decides otherwise, the parties remain bound to comply with any determination rendered.
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Enforcement |
Where a party fails to comply with a mediated settlement agreement / opinion which has become binding / determination (whether binding, or final and binding), the other party may seek enforcement by referring such failure to the courts or arbitration, in which proceedings the non-compliant party is precluded from raising any issue as to the merits of the underlying dispute as defence to such enforcement.
However, any such order or award made in relation to a binding but not final mediated settlement agreement / opinion / determination, shall not prejudice either party’s right to have the merits of the dispute finally determined in court or arbitration.
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Interaction with Building and Construction Industry Security of Payments Act
14. The SIDP does not preclude parties from making an adjudication application under the Building and Construction Industry Security of Payments (“SOP”) Act. Parties may still pursue their rights under the SOP Act while concurrently initiating or undergoing the dispute resolution processes provided in the SIDP, subject to provisions of the SOP Act.
Conclusion
15. The SIDP is noteworthy for the fact that it offers a comprehensive dispute avoidance and management process that begins much further upstream in a project’s life cycle. It empowers DB with a range of informal and formal tools to nip issues in the bud before they escalate into disputes.
16. Where a dispute is unavoidable, the SIDP also provides a spectrum of resolution methods to minimize the risk of a protracted conflict. For these reasons, the SIDP appears to be well-suited in helping parties navigate the challenges and uncertainties of large-scale infrastructure construction projects.
NOTE: The content of this article is for general information only and does not constitute any form of legal advice. Please seek specific legal advice regarding your specific circumstances
Eversheds Harry Elias – Construction & Engineering
Eversheds Harry Elias’ Construction & Engineering practice is a leading practice in Singapore and the region consisting of a dedicated team that is well equipped to advise on both front-end and dispute resolution work. Prominent projects that the practice group has advised on include Marina Bay Sands Integrated Resort, Singapore Flyer and One Marina Boulevard. The team continues to be involved in some of the most exciting infrastructure and construction projects in Singapore and the region including the ongoing Tuas Terminal mega port project.
Together with Eversheds Sutherland, which is one of the largest global full service law firms, with 69 offices in 34 countries, our global Construction & Engineering practice covers key jurisdictions across the world and includes many lawyers listed in leading legal directories including Chambers, Legal 500, Asialaw Profiles and Benchmark Litigation.
We are therefore well placed to provide advice on and support for issues on major construction and infrastructure projects.
Eversheds Sutherland Asia Pacific Alliance (ESAPA)
Leveraging on the strong network of relationship firms, Eversheds Sutherland had launched the Eversheds Sutherland Asia Pacific Alliance (ESAPA) which covers over 40 countries in Asia Pacific and offers our clients access to the combined knowledge of our relationship firms across the region. Our ESAPA member firms are provided with access to training and knowledge sharing programmes, while promoting the highest standard of legal service across Asia.
For further information, contact:
Tan Chau Yee
Head, Construction & Engineering
Partner, Eversheds Harry Elias
ChauyeeTan@eversheds-harryelias.com
+65 6361 9850
Justin Chia
Partner, Eversheds Harry Elias
JustinChia@eversheds-harryelias.com
+65 6361 9880
Chua Jian Zhi
Senior Associate, Eversheds Harry Elias
Jianzhi@eversheds-harryelias.com
+65 6361 9339