Note: In cross-border contract negotiations, the dispute resolution clause is often left until the end. For many Chinese enterprises, choosing Singapore arbitration has become a familiar arrangement. Yet the reasons for choosing arbitration, whether mediation should be included and when a dispute is suitable for the Singapore International Commercial Court are often not analysed fully.
After a dispute arises, the first questions are usually: Can we win? How long will the arbitration take? When can we obtain an award?
These questions matter. But for a cross-border commercial dispute, the real assessment is not only when a successful award can be obtained. It is the total cost of resolving the dispute and whether the result can actually be implemented.
Litigation, arbitration and mediation are not mutually exclusive routes. Singapore’s dispute resolution system in recent years shows that different mechanisms can operate at different stages and connect through appropriate institutional arrangements.
For a Chinese enterprise, the decision is not simply which institution or procedure to choose. It is how to design a path that applies the necessary pressure, controls total cost and ultimately achieves performance and enforcement, taking into account the transaction structure, nature of the dispute, location of assets and commercial objectives.
The goal of dispute resolution is not merely to obtain an award, but to obtain a result that can be performed commercially and enforced legally.
01 The choice is not simply “litigation or arbitration”
In many cross-border contracts, the dispute resolution clause is reduced to two options: submit the matter to a court in a particular place, or submit it to a particular arbitral institution.
This approach can overlook a basic point: different disputes require different problems to be solved.
Some cases require the prompt issuance of a binding preservation order or injunction. Some involve multiple affiliated companies, guarantors or third parties whom an arbitration agreement may not be sufficient to bring into one proceeding. Some place a premium on confidentiality and industry expertise. Other disputes appear to concern payment or breach, but in substance involve shareholder exits, long-term supply, intellectual property licences, disposal of inventory or coordinated arrangements across several countries.
If an enterprise asks only which is “better”, litigation or arbitration, it will often be difficult to obtain an accurate answer.
Arbitration is generally attractive because of party autonomy, procedural confidentiality, the ability to select specialised arbitrators and the institutional basis for cross-border recognition and enforcement of awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention.
Compared with arbitration, which is based on the parties’ agreement, court proceedings may offer advantages in dealing with third parties who did not sign an arbitration agreement, issuing mandatory procedural orders, producing a public judgment and granting certain complex company-law remedies. Mediation does not decide who wins or loses, but it can address commercial arrangements that a formal adjudicative process cannot fully cover.
Dispute resolution is therefore not an abstract ranking of three procedures. It is an assessment of what the dispute needs to solve and what result the enterprise ultimately wants.
02 Arbitration provides certainty; mediation preserves commercial space
The most common misunderstanding of mediation is that it means giving way, or that proposing mediation shows a lack of confidence in the case.
In a cross-border commercial dispute, mediation is closer to risk pricing and a restructuring of the proposed solution.
An arbitral tribunal usually decides issues within the contract and the legal claims, such as payment of the price, compensation for loss, termination or liability for breach. But the company’s real needs may go far beyond the claims submitted to the tribunal.
For example, after a Chinese company disputes with an overseas partner, it may need to address not only the outstanding debt but also remaining orders, inventory, customer relationships, technology licences, release of guarantees and information to be published by both sides. An arbitral tribunal can determine legal responsibility, but it may not be able to redesign the parties’ future cooperation or exit arrangements.
Mediation allows the parties to discuss more flexible arrangements beyond legal responsibility, such as instalment payments, price adjustments, share buybacks, cross-licences, reallocation of regional markets or making the termination of litigation in another country part of an overall settlement.
This is also the important difference between professional mediation and ordinary business negotiation. A professional mediator does not simply tell both sides to “meet halfway”. With the assistance of a neutral third party, the parties reassess legal risk, the strengths and weaknesses of the evidence, the prospects of enforcement and their commercial interests.
Arbitration and mediation are therefore not a hard route and a soft route that replace each other. More accurately:
Arbitration provides pressure, a bottom line and certainty; mediation provides space to rearrange the commercial relationship.
03 Why start arbitration first and then move to mediation?
The Arbitration-Mediation-Arbitration mechanism established by the Singapore International Arbitration Centre (SIAC) and the Singapore International Mediation Centre (SIMC), commonly called Arb-Med-Arb or AMA, is a typical arrangement connecting different procedures.
Under the mechanism, the parties first commence SIAC arbitration. The arbitration is then stayed and the dispute is referred to SIMC for mediation. If mediation succeeds, the parties may ask the tribunal to record the settlement as a consent award. If mediation does not resolve the dispute, the arbitration resumes.
The value of this mechanism is not merely that it places arbitration and mediation in sequence.
First, arbitration has already been commenced, which reduces the risk that one party will use mediation to delay the matter indefinitely.
Second, as the arbitration progresses, both sides must continue to incur costs, submit evidence and face the risk of a final award. This often encourages the parties to assess the case more realistically.
Third, after a successful mediation, converting the settlement into an arbitral award can, where the conditions are met, use the cross-border enforcement framework for arbitral awards and make the outcome more certain.
This does not mean that every contract should mechanically include an Arb-Med-Arb clause.
If one party urgently needs asset preservation or other interim measures, if the commercial relationship has completely broken down, or if a party participates in mediation only to delay, mediation may have limited practical value. Whether to include mediation should be assessed by reference to the type of dispute, the parties’ relationship, asset distribution and ability to perform. A multi-layer clause should not be treated as a standard configuration.
04 The Singapore International Commercial Court is not the opposite of arbitration
The Singapore International Commercial Court (SICC) forms part of Singapore’s Supreme Court system and is a division of the General Division of the High Court. It mainly handles international and commercial disputes. Together with SIAC and SIMC, it forms a different component of Singapore’s international dispute resolution system.
For a Chinese enterprise, the SICC deserves attention not because it is necessarily superior to arbitration, but because some disputes may be better suited to a court procedure.
For example, litigation may be advantageous where a dispute involves several parties that did not sign an arbitration agreement, requires strong court orders, or where the enterprise wants a public judgment with reasoning that may have precedential value.
Conversely, arbitration may be more attractive where the enterprise values confidentiality, the selection of specialised arbitrators or future enforcement in several New York Convention States.
The SICC also performs judicial functions related to international arbitration. For an international arbitration seated in Singapore, applications concerning annulment, recognition and enforcement of an award may be heard by the SICC under the applicable rules.
This shows that courts and arbitration are not simply competitors. Courts provide an independent dispute resolution route and also support and, where necessary, supervise arbitral proceedings.
05 How does “litigation–mediation–litigation” work?
The SICC and SIMC have also established a Litigation-Mediation-Litigation mechanism, known as LML.
Under this mechanism, a case already commenced in the SICC may be referred to SIMC for mediation. If mediation succeeds, the litigation can be terminated, or the parties may apply for an appropriate court order reflecting the settlement. If mediation does not resolve the entire dispute, the unresolved issues may return to court for determination.
This arrangement shows that litigation and mediation are not an either-or choice.
Court proceedings can clarify the parties’ claims, the scope of the dispute and the main legal issues, and provide a basis for necessary coercive measures. Mediation can preserve the possibility of a commercial solution at the appropriate stage.
Even when mediation does not resolve every issue, it may narrow the dispute and reduce the matters that the court must decide later.
From an enterprise perspective, the significance of procedural coordination is not that every case must go to court first and mediation second. It is that an enterprise does not have to abandon other solutions merely because one procedure has already begun.
Commencing litigation or arbitration does not mean that the case must proceed all the way to judgment or award. Mature dispute management requires the parties to reassess settlement conditions, enforcement risks and commercial objectives at different stages of the case.
06 The cost of dispute resolution is much more than lawyers’ and institutional fees
The amount of a successful award is not the same as the commercial value that the dispute can ultimately realise.
When comparing litigation, arbitration and mediation, enterprises often calculate lawyers’ fees, arbitration fees and expert costs first.
But the real cost of a cross-border dispute also includes management time, employee time, witness preparation, disclosure of commercial information, relationships with customers and suppliers, financing effects, corporate reputation, and the later cost of recognition and enforcement in several jurisdictions.
Even after obtaining a successful award, its commercial value may be limited if the counterparty has no executable assets or if its main assets are located in a difficult enforcement jurisdiction.
By contrast, a settlement with a somewhat adjusted amount but a clear payment schedule and reliable security may better serve the enterprise than a full-value award that can only be enforced years later.
The effectiveness of dispute resolution cannot therefore be judged only by:
How quickly the award was issued;
How large the successful amount was;
How much the arbitration or litigation cost.
The enterprise should also ask:
Can the counterparty perform?
In which countries or regions are its main assets located?
Do the parties still need to continue working together?
Are there related disputes?
Can the result be recognised and enforced where enforcement is needed?
Will the solution create new tax, regulatory or corporate-governance issues?
The “lowest overall cost” does not mean choosing the cheapest procedure at any price. It means balancing the legal result, commercial result and enforcement result.
07 How should a Chinese enterprise design its dispute resolution path?
For a Chinese enterprise, dispute resolution arrangements should begin at the contract drafting stage rather than after a dispute arises.
First, distinguish the substantive governing law, arbitral rules, seat, law applicable to the arbitration agreement and place of enforcement.
Choosing SIAC arbitration does not automatically mean that Singapore law governs the substantive contract issues. Choosing Singapore as the seat does not mean that every dispute will be decided on its merits by a Singapore court.
Second, determine the function of litigation, arbitration or mediation from the transaction risk.
If the transaction involves several affiliated parties, complex shareholder remedies or a third party that must be included, the enterprise should assess the scope of the arbitration agreement carefully. If the transaction places a high value on trade secrets, specialised decision-making and cross-border enforcement, arbitration may be more suitable.
Third, a multi-tier dispute resolution clause must be operational.
The clause should make clear who may commence negotiations, how long they last, whether mediation is a precondition to arbitration, and whether urgent preservation measures are restricted by a precondition. A clause with too many tiers or unclear time limits may create new procedural disputes rather than reduce cost.
Finally, the enterprise should reassess the possibility of mediation at different points after a dispute arises.
The period after a notice of dispute, after the main evidence has been exchanged, after expert opinions have been prepared and before the formal hearing may each provide a window for renewed negotiations. Mediation should not be only a last resort when the case is difficult to continue; it can also be a proactive part of the dispute strategy.
Conclusion | From procedural choice to dispute management
The maturity of a dispute resolution system cannot be judged only by the number of arbitrations, the mediation success rate or how quickly an award can be issued.
More important is whether the parties can enter the procedure that best fits the dispute as it develops, whether a mediation agreement, arbitral award and court judgment can connect effectively, and whether the result can be performed commercially and, where necessary, recognised and enforced legally.
The significance of Singapore’s litigation, arbitration and mediation mechanisms is not that they provide a fixed answer for Chinese enterprises.
Not every cross-border contract is suitable for Singapore arbitration. Not every arbitration should include mediation. More procedural layers do not necessarily make dispute resolution better.
For a Chinese enterprise, the starting point should be the transaction and the dispute:
Which parties are covered by the contract, and where are the main assets? Will the parties still need to cooperate after the dispute arises? Does the enterprise need monetary compensation, an injunction, a shareholder exit or an overall arrangement that can reorganise the commercial relationship? After a judgment or award is obtained, where will enforcement be sought?
Only after answering these questions can an enterprise make a genuinely suitable choice among litigation, arbitration and mediation.
The goal of dispute resolution is not merely to obtain an award, but to obtain a result that can be performed commercially and enforced legally.
Practical guidance
A cross-border contract’s dispute resolution clause should be designed by considering the transaction parties, governing law, type of dispute, arbitral seat, asset locations and possible enforcement countries together.
The arbitral institution, arbitral rules, seat, substantive governing law and law applicable to the arbitration agreement are different concepts. The commencement method and time limits for negotiation or mediation, and their relationship with urgent preservation measures, should also be stated as clearly as possible.
Copying a model clause or mechanically combining negotiation, mediation and arbitration may not reduce the cost of dispute resolution. It may instead create new jurisdictional and procedural disputes.
Specific projects should be analysed in light of the contract, transaction structure, asset distribution and the law of the relevant jurisdictions. This article is a general practical discussion and does not constitute legal advice on any specific matter.
Main references
- Singapore International Commercial Court, Litigation-Mediation-Litigation Framework.
- Singapore International Commercial Court and Singapore International Mediation Centre, Litigation-Mediation-Litigation Protocol.
- Singapore International Mediation Centre, SIAC-SIMC Arb-Med-Arb Protocol and Model Clause.
- Singapore International Commercial Court, Applications under the International Arbitration Act 1994.
- United Nations Commission on International Trade Law, United Nations Convention on International Settlement Agreements Resulting from Mediation and Status Information.
- United Nations, Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958).
The research and institutional information in this article is current as of July 2026. Applicable laws, institutional rules, procedures and treaty status may change. Specific matters should be assessed by reference to the laws and official materials in force at the relevant time.
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.