Written by Nicolas Tang
When a business relationship breaks down or a contractual obligation goes unmet, most people assume that going to court is the only option. In practice, litigation is just one of three principal ways to resolve a commercial dispute: the other two are arbitration and mediation, both of which are forms of alternative dispute resolution (ADR).
ADR has seen a significant rise in recent years, driven by growing recognition that court proceedings are not always the most efficient or proportionate way to resolve every dispute. Court dockets in many jurisdictions are congested, leading to lengthy delays; litigation can be costly and adversarial; and for cross-border disputes, enforcing a court judgment in another country can be difficult. Governments and judiciaries (including those in Singapore and Hong Kong) have actively encouraged parties to consider ADR where appropriate, both to ease the burden on public court resources and to give parties more control over how their disputes are resolved.
This article explains what litigation, arbitration, and mediation each involve, how they differ in process, outcomes, and cost, and what you should consider when deciding which route to take.
1. What Is Litigation?
Litigation is the process most people are familiar with: the resolution of disputes through the court system.
Process
A party initiates litigation by filing a claim in court. The matter then proceeds through several stages: the exchange of pleadings (formal documents setting out each side’s case), discovery or disclosure (the exchange of relevant documents), and ultimately a trial where a judge hears evidence and legal arguments before delivering a judgment. The specific court depends on the jurisdiction and value of the claim. For example, in Singapore, disputes are heard in the State Courts or the General Division of the High Court; in Hong Kong, the equivalent forums are the District Court and the Court of First Instance of the High Court.
Outcomes
The court issues a binding judgment. The losing party may appeal to a higher court. Court judgments are enforceable domestically through the court system, and remedies can include damages, injunctions (court orders requiring a party to do or refrain from doing something), and declarations of the parties’ rights.
Cost
Litigation costs vary significantly depending on the jurisdiction, complexity, and duration of the dispute. They typically include court filing fees, solicitors’ fees, and costs associated with document disclosure and expert evidence. In most common law jurisdictions (including Singapore, Hong Kong, and England) costs generally “follow the event”, meaning the losing party is usually ordered to pay a portion of the winning party’s legal costs.
More information:
Before filing a claim, most jurisdictions expect parties to comply with pre-action protocols: this usually means sending a formal letter of demand, setting out the nature of the dispute and the relief sought, and allowing a reasonable period for response. In Singapore, disputes up to SGD 250,000 are generally heard in the State Courts, while claims above that threshold are filed in the High Court. In Hong Kong, the District Court handles claims up to HKD 3 million, with larger claims proceeding to the Court of First Instance. For international commercial disputes, specialised forums exist in both jurisdictions: Singapore’s International Commercial Court (SICC) and Hong Kong’s courts both allow international judges and the application of foreign law. Once proceedings are commenced, the case moves through pleadings, discovery or disclosure, and the filing of witness statements or affidavits of evidence-in-chief, before proceeding to trial. Parties should gather and organise all relevant documentary evidence early (contracts, correspondence, invoices, and internal records) and engage solicitors before commencing proceedings, as procedural requirements vary by jurisdiction and missteps can result in delays or adverse cost consequences.
2. What Is Arbitration?
Arbitration is a private process where the parties agree to have their dispute decided by one or more independent arbitrators, rather than by a court. The framework for international arbitration is built on the New York Convention, which has been ratified and given domestic effect by most major commercial jurisdictions, including Singapore (through the International Arbitration Act) and Hong Kong (through the Arbitration Ordinance). Leading arbitral institutions in the Asia-Pacific region include the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC), both of which rank among the world’s most widely used.
Process
Arbitration begins when a party invokes an arbitration clause (a provision in the contract that requires disputes to be resolved by arbitration rather than in court). The parties then appoint an arbitrator (or a panel of three), agree on procedural rules, and the case proceeds through submissions, document exchange, and hearings, much like litigation but in a private setting.
A key difference is party autonomy: the parties have significant control over the process, including the choice of arbitrator, the language of proceedings, the seat of arbitration, and the procedural timetable.
Outcomes
The arbitrator issues a final award, which is binding on the parties. Unlike court judgments, arbitral awards are generally not subject to appeal on the merits; the grounds on which a court may set aside an award are very narrow. This finality is often cited as a significant advantage for parties seeking certainty.
Crucially, an arbitral award (whether made in Singapore, Hong Kong, London, or Paris) can be enforced in over 170 countries under the New York Convention, giving it far broader international reach than a domestic court judgment.
Cost
Arbitration costs include the arbitrator’s fees, the institution’s administrative fees, and the parties’ own legal costs. For smaller disputes, arbitration can be comparable to or even more expensive than litigation, because the parties bear the cost of the tribunal directly. For larger or cross-border disputes, however, the efficiency and enforceability of the process often make it more cost-effective overall.
More information:
Without a valid arbitration agreement, a party generally cannot compel the other to arbitrate. Parties should review their arbitration clause carefully, as it will typically specify the institution, seat, number of arbitrators, and governing law. To commence arbitration, the claimant files a Notice of Arbitration with the chosen institution, setting out the nature of the dispute, the relief sought, and the basis for jurisdiction.
In Singapore, arbitrations are most commonly administered by SIAC; for disputes with a nexus to Greater China, HKIAC is a leading alternative. Parties may also opt for the ICC International Court of Arbitration (headquartered in Paris), the London Court of International Arbitration (LCIA), or conduct ad hoc arbitrations without institutional administration.
Both SIAC and HKIAC have recently introduced expedited procedures for faster resolution: under the SIAC Rules 2025, a “Streamlined Procedure” is available for disputes up to SGD 1 million (with awards issued within three months), and the Expedited Procedure threshold has been raised to SGD 10 million. HKIAC has similarly expanded its Expedited Procedure to cover disputes up to HKD 50 million (~USD 6.4 million), with awards targeted within six months.
3. What Is Mediation?
Mediation is a voluntary and informal process where a neutral third party (the mediator) helps the disputing parties reach a mutually acceptable settlement. Unlike a judge or arbitrator, the mediator does not impose a decision. The emphasis is on helping the parties themselves arrive at a resolution that everyone can agree to and walk away from, ideally without ever needing to proceed to arbitration or litigation.
Process
Mediation is considerably less formal than either litigation or arbitration. There are no pleadings, no rules of evidence, and no binding procedural timetable. The process is flexible and focused on dialogue rather than adversarial argument.
Mediation begins when both parties agree to participate, either because their contract contains a mediation clause, or simply because they choose to try it before commencing formal proceedings. Either party can also propose mediation at any stage of a dispute, even after litigation or arbitration has already begun. Sessions are usually conducted over one or two days. The mediator meets with both sides to explore the underlying interests behind each party’s position and facilitate negotiation toward a settlement. The entire process is confidential and conducted on a “without prejudice” basis, meaning that anything said during mediation generally cannot be used against a party in subsequent proceedings.
Outcomes
If the parties reach agreement, the settlement is recorded in writing and becomes a binding contract. Because the outcome is shaped by the parties themselves rather than imposed by a third party, mediated settlements often involve creative, practical solutions (such as restructured payment terms, ongoing supply arrangements, or mutual releases) that a court or tribunal would not have the power to order.
If mediation does not result in a settlement, the parties remain free to pursue litigation or arbitration. Even unsuccessful mediation, however, often narrows the issues and brings the parties closer to resolution.
A significant development is the Singapore Convention on Mediation, which entered into force in 2020. This treaty provides a framework for the direct enforcement of international mediated settlement agreements across signatory states, giving mediated settlements cross-border “teeth” for the first time.
Cost
Mediation is almost always the least expensive option. The mediator’s fees and venue costs are shared between the parties, and because the process is typically concluded within days rather than months or years, legal costs are substantially lower. Even where mediation does not succeed, it can narrow the issues in dispute and reduce the cost of subsequent proceedings.
More information:
Mediation services are offered by a range of institutions depending on the jurisdiction.
In Singapore, cross-border mediations are commonly administered by the Singapore International Mediation Centre (SIMC), while the Singapore Mediation Centre (SMC) handles domestic matters. In Hong Kong, the Hong Kong Mediation Centre (HKMC) and the Hong Kong International Arbitration Centre (HKIAC) both offer mediation services. Parties may also engage private mediators.
Once a mediator is appointed, the parties typically exchange brief mediation statements (sometimes called position papers) summarising their respective positions and the key issues in dispute; these are far shorter and less formal than the pleadings or submissions required in litigation or arbitration. The mediator may meet with parties jointly or in private “caucus” sessions. The SIAC-SIMC Arb-Med-Arb (AMA) Protocol allows parties to commence arbitration, stay it for mediation, and, if a settlement is reached, convert that settlement into a consent arbitral award, which then enjoys the same enforceability as any other award under the New York Convention.
4. Comparing Process, Outcomes, and Cost
| Litigation | Arbitration | Mediation | |
| Who decides? | Judge | Arbitrator(s) chosen by the parties | The parties themselves (mediator facilitates) |
| Binding? | Yes (subject to appeal) | Yes (very limited grounds for challenge) | Yes, if settlement is reached |
| Confidential? | Generally no (public record) | Yes (private by default) | Yes (without prejudice) |
| International enforceability | Limited (bilateral treaties) | Very high (New York Convention, 170+ states) | Growing (Singapore Convention on Mediation) |
| Typical duration | 1–3+ years | 6–18 months | Weeks to months |
| Cost | Moderate to high | Moderate to high | Low |
| Party control over process | Low (court-directed) | High (party autonomy) | Maximum (parties control outcome) |
| Preserves relationships? | Rarely | Sometimes | Often |
5. Which Approach Is Right for Your Dispute?
There is no universally “better” mechanism. The right choice depends on the nature of the dispute, the relationship between the parties, and what outcome matters most.
Litigation may be appropriate where you need the coercive power of the court: for example, to obtain an urgent injunction, or where third parties need to be joined to the proceedings. If other forms of dispute resolution have not been effective, litigation would be the only path left to pursue.
Arbitration is often the preferred choice for cross-border disputes, particularly where enforceability in multiple jurisdictions is important, or where the parties value confidentiality and the ability to select decision-makers with relevant expertise.
Mediation is well-suited to disputes where the parties have an ongoing commercial relationship they wish to preserve, or where a creative, non-binary outcome (rather than a win-lose judgment) would serve both sides better.
In practice, these mechanisms are not mutually exclusive. Many contracts now include multi-tiered dispute resolution clauses that require the parties to attempt mediation before proceeding to arbitration or litigation. Hybrid protocols such as the Arb-Med-Arb framework allow parties to move between processes strategically.
Whatever the nature of your dispute, the most important step is to understand your options early. At Farallon Law Corporation, we regularly advise clients on the most effective approach to dispute resolution, whether that involves negotiation, mediation, arbitration, or court proceedings. If you are facing a commercial dispute and are unsure where to begin, we are here to help you evaluate your position and chart the most appropriate path forward.
For tailored advice on your dispute, contact Farallon Law Corporation at info@fl.sg.