Mediation centre set to help firms avoid expensive and time-consuming court battles

The Singapore Construction Mediation Centre (SCMC), which focuses in the construction industry to help firms avoid expensive and time-consuming court battles, has been launched on Tuesday (12 March) by the Singapore Contractors Association (SCAL).

The dedicated centre was set up after the association noted an increasing demand for mediation in construction disputes, mostly common payment disputes, defects and liquidated damages between main contractors and sub-contractors.

SCAL president Kenneth Loo said, “Time management is crucial to achieve profitability in construction projects. Hence, it is essential that parties involved in disputes move quickly to resolve them with minimum impact on the respective companies.”

Construction disputes have been handled by the Singapore Mediation Centre (SMC) since 1997. According to figures from SMC, more than 4,000 matters of various kinds have been mediated at the SMC since its establishment.

It also noted that forty percent of the disputes it handled in 2017 were construction related, the most common alongside company and shareholder disputes.

SCAL spokesman stated that lengthy and costly court trials affect the profitability of the firms involved and may damage their reputation.

According to SCAL second vice-president and SCMC chairman Wilson Wong, the inaugural panel of SCMC mediators comprises 24 individuals who hold high management positions in companies within the construction industry and have experience in mediating construction disputes.

Minister of State for National Development Zaqy Mohamad, who was the guest of honour at the launch, said, “The construction value chain involves many stakeholders with different interests. We recognise that disputes will happen from time to time. However, we should always strive to encourage the early and amicable resolution of potential disputes.”

In his speech, he said that an update on changes to the Building and Construction Industry Security of Payment Act, which Parliament passed last October, will establish the Act to a fast and low-cost adjudication system for parties to resolve payment disputes.

Ho noted that the changes will be rolled out in the second half of this year, which include raising the minimum interest rate for late payments to 5.33 per cent a year, up from as low as 1 per cent a year previously.

At least one of the parties in the dispute has to be a SCAL member or registered under SCAL’s Singapore List of Trade Subcontractors to seek mediation through SCMC.

The mediation fees range from S$800 to S$4,300 per day per party, depending on the claims amount.

Currently, SCAL has about 3,000 members.

The new mediation centre will start its operations from today (Wednesday).

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