Question

A Singapore private enterprise “VKIK” recently teamed up with “JGK”, a Singapore government-linked company which is listed on the Singapore Exchange) to develop virtual reality devices to help students learn various topics under the life sciences. They signed a contract to collaborate in a joint venture. Under this contract, the two companies have agreed to share profits generated from their joint venture on a 70%-30% basis, with JGK taking 70% and VKIK taking 30%. VKIK is responsible for coordinating the research and development of the products, while JGK is responsible for commercialising the products, including marketing and distributing the products for sale.

The virtual reality devices turned out to be a huge commercial success, and the sales were phenomenal. When VKIK received its share of the profits from JGK, the amount was less than what VKIK’s management expected. Based on VKIK’s own private investigations, they suspect that JGK has under-declared the amount of sales.

The management of VKIK is deciding whether to commence a civil lawsuit against JGK for the amount that they believe is owed to VKIK.

(a) Discuss the concept of the rule of law, and explain how it can promote business activity, using examples from the above scenario to support your answer. (5 marks)

(b) Describe briefly the different stages of the litigation process for a civil claim, stating clearly the role of VKIK at each stage if it was the party commencing the litigation. You are not required to cite the Rules of Court. (10 marks)

(c) Compare and contrast the features of litigation with one (1) other appropriate alternative dispute resolution method based on the facts in this scenario, and conclude with your recommended approach to the resolution of the dispute (assuming that you are employed by VKIK and the management of VKIK is seeking your views). In your answer, you should also provide justifications for your recommendation. (10 marks)

Answer 1

1. Rule of Law: It can be defined as the mechanism, norm, institution or practice that supports the equality of all citizens before the law, secures a non-arbitrary form of government, and prevents the arbitrary use of power.

A.V. Dicey gave three postulates of rule of law: 1. Everyone is equal before the law. 2. Sanctions backed by law. 3. Courts are the ultimate body and supremacy of court is ambivalent in a civilized society. Relation of Rule of law & Business activity:-

a) The rule of law explains a framework for how to act & operate. It holds everyone (people, businesses & government) accountable for their actions. In the absence of predictable rules and regulations to follow, doing business would be difficult to operate / chaotic.

b) In the absence of Rule of Law, it will be difficult to know how another party would act in any given situation & it would be too easy to be taken advantage of.

c) Due to the existence of the Rule of Law or legitimate regulations that are universally acceptable, it is a lot easier to ensure that organizations act predictably & responsibly.

As in the above case, it is evident that the JGK (Singapore-government linked company) has violated the rule of law by the arbitrary use of power & thus causing harm to VKIK (Singapore private enterprise). The act performed by the JGK company is a grievous violation of Business Ethics, Rule of law & the Contract signed by the two companies.

2. Civil Lawsuit or Civil Litigation:- A civil lawsuit is a dispute that is handled legally by the courts, as a personal injury lawsuit. They commonly involve individuals, groups of people, people & businesses, other entities, etc.

Steps in Filing a Civil Lawsuit

a) Consult with potential representatives for legal advice. In the above case VKIK company should consult with legal experts to make sure that they have a valid case against JGK company (as per the contract of profit sharing on 70:30 basis- JGK: VKIK) so that they do not waste their time & money in filing a case that is unlikely to be successful. VKIK should also be sure that the case falls within Singapore’s statute of limitations (Rules, time frame, etc). After the consultation, civil lawsuit case will follow:--

b) Pleadings:- Both parties, will file paperwork, in the right court (Federal or State), to explain their claim. The plaintiff will file a complaint that the company is alleged of wrongdoing, & the defendant will file an answer. Here VKIK company will be the plaintiff & JGK company will act as the defendant. As per the private investigation, VKIK believes that JGK has violated the terms of the contract.

c) Discovery:- After the pleadings process, both parties (VKIK & JGK) will enter discovery. A process in which both parties gather information to help strengthen their arguments. It is the longest part of the civil litigation process. Discovery begins after all pleadings have been filed & do not end until shortly before the trial.

d) Trial:- If the dispute is not resolved out of the court, then the civil lawsuit will move to trial. Before the trial begins, both parties submit a brief to the judge. A brief is a document that describes the argument & any evidence that the party will present during the trial.

Each party will present its cases using shreds of evidence, which can include documents, expert testimony, or exhibits that support its argument. In the above case, VKIK will present the contract signed with JGK company which highlights the profit-sharing ratio & the proof of their private investigation which explains that JGK company has under-declared the amount of sales. A closing argument is made by both parties after the presentation of the case. Then the judges deliberate for a while until a decision is reached. Any party can choose to challenge the decision if unsatisfied.

e) Appeal:- If a party does not agree with the result of the trial, they can appeal against the decision. In case of an appeal, the civil lawsuit is presented before an appellate court that reviews the previous proceedings of the lawsuit. Since this case seems to be tilted in the favor of VKIK, the Judge may give the decision in favor of VKIK i.e. JGK company may file an appeal if not satisfied with the decision.

3. Alternative Dispute Resolution (ADR):-- A technique to resolve disputes & disagreements between the parties by arriving at an agreeable settlement through negotiations & discussions. It is an attempt to establish an alternative mechanism other than litigation etc. It offers to facilitate the resolution of matters of business issues & others.

Types of Alternate Dispute Resolution mechanisms:-- Arbitration, Conciliation, & Mediation.

Arbitration: The parties involved in the dispute, choose the person to hear & determine their dispute through a consensus. The objective is to arrive at a fair resolution through an unbiased tribunal speedily & in a cost-effective manner.

Conciliation: The objective is to facilitate the settlement between the parties. The parties, however, are not obliged or are not bound by the conciliation, i.e. negotiations can be carried out until the parties arrive at a mutually agreeable settlement. An impartial individual called as the conciliator handles the entire process.

Mediation: A mediator is involved in assisting the parties. The conditions of the settlement are settled by parties in dispute. The third-party only acts as a facilitator to improve the dialogue between the parties.

Comparison of Litigation with Arbitration

Litigation	Arbitration
Formal as conducted in public court	Private as conducted between 2 parties
Time taking & long & tedious process. Takes years	Fairly quick process of dispute resolution
Parties have no say in appointing or selecting the Judge who decides /resolves the dispute	Parties have say in deciding together on an Arbitrator.
The process is very much costly	Costs are limited
Attorneys spend enough time to gather evidence, apply for motions, & in presenting their cases.	Parties are represented by attorney but their role is limited.

As an employee of the VKIK company, I would recommend the mechanism of Arbitration to adopted at first to resolve the issue in a friendly manner. The case in point is that as per the contract & private investigation, our company (VKIK) is having edge over JGK. i.e. There is stong probability in favor of us.