Singapore

International arbitration continues to grow in Singapore. In a Parliamentary speech in April 2012, Singapore’s Minister of Law, Mr K. Shanmugam, stated that Singapore’s position ‘as the leading centre for arbitration in Asia is now cemented’. In June 2012, Singapore will host the 21st Congress of the International Council for Commercial Arbitration and this underlines Singapore’s status as one of the leading international arbitration venues in the world. In this article, we will review the significant developments in Singapore from September 2011 to April 2012.

International Arbitration (Amendment) Bill 2012

A key development was the tabling of the International Arbitration (Amendment) Bill (IA Amendment Bill) in Parliament. The IA Amendment Bill followed a public consultation that was held by the Ministry of Law in 2011. Once passed, the IA Amendment Bill will make various amendments to the International Arbitration Act (IAA) aimed at enhancing Singapore’s status as an arbitration hub. The IA Amendment Bill primarily amends the IAA in four areas:

• by broadening the definition in the IAA for arbitration agreements;
• by allowing the Singapore courts to review a ruling by an arbitration tribunal that it does not have jurisdiction to hear a dispute (negative jurisdictional rulings);
• by clarifying the scope of arbitral tribunals’ powers to award interest in arbitral proceedings; and
• by providing legislative support for the ‘emergency arbitrator’ procedure by according emergency arbitrators appointed under any arbitration rules the same legal status and powers as that of a conventionally-constituted arbitral tribunal.

Broadening of the definition of arbitration agreements

The IAA currently only recognises arbitration agreements that are made in writing. While most respondents to the public consultation supported the adoption of a more relaxed requirement, some gave feedback that the current written requirement did not accord squarely with commercial reality as arbitration agreements are often concluded orally and put into writing later.

Accordingly, the definition of an ‘arbitration agreement’ in the IAA will be amended to extend the IAA’s application to arbitration agreements concluded by any means (orally, by conduct or otherwise), as long as their content is recorded in any form. For instance, an arbitration agreement made orally, but subsequently documented through an audio recording, will fall within the scope of the IAA. This approach is line with option I of article 7 of the 2006 Amendments to the 1985 UNCITRAL Model Law on International Commercial Arbitration.

Review of negative jurisdictional rulings

At present, the IAA does not permit a Singapore court to review negative jurisdictional rulings made by arbitral tribunals but only the review of positive jurisdictional rulings made by arbitral tribunals pursuant to article 16(3) of the Model Law. This inconsistent treatment of negative and positive jurisdictional rulings has been criticised by some practitioners and academics, who argue that inequity is just as likely to arise from a negative jurisdictional ruling that is erroneously made, as from an erroneous positive jurisdictional ruling.

The majority of respondents to the public consultation supported the proposed amendment to allow review of negative jurisdictional rulings. However, a few respondents felt that the review of negative jurisdictional rulings should not be permitted as it would potentially deprive a party of its right of access to the court. In support of its decision to retain the amendment, the Ministry of Law referred to the fact that the Singapore Academy of Law’s Law Reform Committee’s Report on the Right to Judicial Review of Negative Jurisdictional Rulings (January 2011) highlighted that to permit review of positive jurisdictional rulings but not negative jurisdictional rulings is both ‘unfair and inconsistent’. One could also question if the right of access to the court is indeed denied in cases where the court overrules the tribunal and finds that the tribunal has jurisdiction - in such cases, the court itself has decided that the parties should be held bound by their arbitration agreement and have their dispute settled by arbitration and not the court. In the second reading of the IAA Amendment Bill, the minister of law, explained that the ‘absence of recourse against [negative jurisdictional] rulings may defeat the parties’ intention to arbitrate’.

The IA Amendment Bill seeks to rectify this perceived inconsistency by amending the IAA to allow parties to have recourse to Singapore courts in respect of both positive and negative jurisdictional rulings at any stage of the arbitral proceedings. Whilst this amendment does depart from the current position under the Model Law, it has been noted that other arbitration hubs such as France, England and Switzerland have adopted a similar approach. The IAA Amendment Bill will also empower the tribunal and the court to award costs against any party for the arbitral and/or court proceedings, when it rules that the tribunal has no jurisdiction.

Arbitral Tribunal’s power to award interest

The IAA currently does not clearly define the scope of arbitral tribunals’ powers to award interest and accordingly, the IA Amendment Bill aims to clarify the scope of these powers. In particular, the amendments will expressly prescribe that an arbitral tribunal has the power to grant simple or compound interest on monies claimed in arbitrations, and on orders for one party to pay the other party’s legal costs. Full discretion is therefore given to an arbitral tribunal to award interest.

Emergency arbitrator

The SIAC had in 2010 introduced an ‘emergency arbitrator’ procedure that provides for the appointment of an interim arbitrator pending the constitution of the actual tribunal for situations where parties to a dispute require urgent relief before an arbitral tribunal is constituted. The IA Amendment Bill amends the definitions of ‘arbitral tribunal’ and ‘arbitral award’ to clarify the status of orders made by such ‘emergency arbitrators’. The amendments accord emergency arbitrators with the same legal status and powers as that of any other arbitral tribunal and ensure that orders made by such emergency arbitrators are enforceable under Singapore’s IAA regime.

A few respondents in the public consultation highlighted that amending the definition of ‘arbitral tribunal’ in the IAA to include emergency arbitrators may have the unintended consequence of allowing parties to appeal to the High Court against the ruling of an emergency arbitrator as to his jurisdiction, which would unnecessarily protract the emergency arbitrator proceedings and defeat the purpose of the emergency arbitrator procedure. However, in accordance with treating emergency arbitrators on the same footing as other tribunals, it was felt that any jurisdictional ruling made by an emergency arbitrator should rightly be appealable. New provisions have however been introduced in the IA Amendment Bill to clarify that any appeal to the High Court or Court of Appeal on a jurisdictional ruling (including one made by an emergency arbitrator) shall not operate as a stay of proceedings.

Arbitration Dialogue 2011

Various arbitration practitioners and academics had voiced their views on the proposed changes to the IAA at the Ministry of Law’s Arbitration Dialogue 2011 held at Maxwell Chambers on 1 November 2011. Panellists and participants were generally supportive of the proposed amendments and felt that they would be beneficial to and further modernise Singapore’s legal framework for arbitration, although a few concerns were raised. There was particular interest in the new provisions of supporting the appointment of emergency arbitrators, and allowing parties to appeal to court against a tribunal’s finding that it has no jurisdiction to hear a dispute.

Representatives from the SIAC, Singapore Chamber of Maritime Association (SCMA), Maxwell Chambers, Singapore Institute of Arbitrators (SiArb) and the Economic Development Board (EDB) also gave positive updates on Singapore’s growing arbitration landscape. Justice Quentin Loh of the Singapore High Court spoke about the courts’ role in developing a greater spirit of internationalism in arbitration cases by considering foreign and international sources of law, particularly civil law concepts. Participants also discussed how Singapore’s alternative dispute resolution (ADR) system could be strengthened by developing other forms of ADR, such as mediation, in tandem with arbitration. Several potential areas for reform and development were also discussed, including the issue of contingency fees. In his opening speech, the minister of law outlined the dynamic approach in Singapore in resolving issues legislatively - ‘[when] we see a problem, and where it can be solved legislatively, we are in a position to do that within three to six months’.

The Arbitration Dialogue 2011 was another milestone in ongoing efforts to engage key stakeholders within the arbitration community and to provide a platform for the industry to network and contribute their views to further the development of Singapore as a legal services and international dispute resolution hub.

Foreign Limitation Periods Bill 2012

In conjunction with the tabling of the IA Amendment Bill, the Ministry of Law also tabled a Foreign Limitation Periods Bill (FLP Bill). The aim of this legislation is to clarify the applicable rules of limitation for not only arbitral, but also court proceedings. Specifically, once passed, the FLP Bill will clarify the issue of which country’s limitation laws apply to disputes that are litigated in Singapore (either in court or through arbitration), but which are governed by the law of another jurisdiction. The provisions of the FLP Bill make it clear that the applicable limitation period will be the rules of the law that govern the dispute.

Growth of international arbitration in Singapore

In 2011, the Singapore International Arbitration Centre (SIAC) consolidated its position as a preferred arbitration centre in Asia, handling 188 new cases. This is largely in line with the number of cases received in 2010, and shows that SIAC is maintaining the heights reached by the exponential growth from 2009 onwards, which marked the start of a new phase of SIAC’s development. For cases filed in 2011, the total sum in dispute amounted to S$1.32 billion. The average claim amount was S$7.03 million, an increase on S$6.82 million for 2010. The highest claim amount for 2011 was S$304 million, contrasting with the highest claim of S$261 million in 2010.¹

In last year’s chapter, we commented on the changes that SIAC introduced in the 2010 changes to its Arbitration Rules, ie, the introduction of an expedited procedure under a new Rule 5.1 and the provision for the appointment of an emergency arbitrator before a tribunal is constituted under a new Rule 26. In 2010, the SIAC reported that it received 20 requests for cases to be placed under an expedited procedure of which 13 cases were accepted. 2011 saw the first batch of expedited procedure cases proceeding to hearings and awards in the 6 month time limit prescribed by Rule 5.1. This process has proved particularly popular and SIAC reports that 8 per cent of its administered cases filed this year were conducted pursuant to the expedited procedure, involving parties from 14 countries across Asia, Europe, the Middle East and the USA.

Another innovation that parties have found useful is that of the emergency arbitrator. In 2011, there were two applications for an emergency arbitrator pursuant to Rule 26.2 involving parties from Asia, Europe and the USA. The SIAC highlighted the usefulness of the procedure by way of reference to an application it received a few days before Chinese New Year. The application related to a cargo of coal sitting in a Chinese port and which was rapidly deteriorating as the long holiday period loomed. The applicant contacted SIAC in the morning indicating their intention to file the application, filed their papers at 2pm and by 5pm an arbitrator of neutral nationality (a very experienced shipping lawyer) was appointed. The arbitrator gave his preliminary directions that same evening, a hearing was scheduled for the next day, and an order made.²

The SIAC is also leading the way in the area of technology by the introduction of the SIAC iPhone, iPad and BlackBerry applications, which offer users a very convenient way to consult the SIAC 2010 Rules and the IAA on the go. They also allow users to calculate the estimated costs of a SIAC arbitration and provide access to the CVs of the SIAC Panel of Arbitrators.

Case law

While there have been no new significant case law developments directly involving international arbitration proceedings before the Singapore courts since the publication of our last chapter, pending proceedings arising directly from a complex international arbitration played a key role in a recent application to the Singapore High Court made pursuant to section 15 of the Legal Profession Act. Our firm acted for an English Queen’s Counsel who sought to be admitted on an ad hoc basis to appear in the Singapore courts for the purpose of representing the claimants in setting aside proceedings that were taken out by one of the unsuccessful respondents in a SIAC arbitration. The High Court allowed the application and this decision was recently upheld by the Singapore Court of Appeal.

Re Joseph David QC [2011] SGHC 262 was the first application before the Singapore courts where the lead counsel in underlying arbitration proceedings was applying for ad hoc admission to appear in a Singapore court on matters immediately arising from the same arbitration proceedings. The respondent to this ad hoc admission application was the second respondent in the arbitration proceedings (the applicant under the setting aside proceedings) and vigorously objected to the ad hoc admission of David Joseph QC (the applicant) on the ground that the proceedings were not of sufficient difficulty and complexity to warrant admission of a Queen’s Counsel.

Justice of Appeal VK Rajah, sitting as a High Court judge, disagreed with the respondent and held that there were a number of factors that favoured the admission of the applicant. Rajah JA noted that there were at least three complex and difficult issues of law requiring determination in the setting aside proceedings, namely:

• whether a party was entitled to resist enforcement of an arbitration award in Singapore, when it did not take any steps to set aside the same within the statutorily prescribed period;
• whether a party had a right to revive its challenge based on the alleged lack of an arbitration agreement; and
• whether the enforcement of an award in Singapore was affected by a ruling in another country over the enforcement of the same award.

Rajah JA held that the issues which were identified were sufficiently complex and which justified the admission of a Queen’s Counsel and gave weight to the fact that the applicant was the claimants’ lead counsel throughout the lengthy and complex arbitration and had intimate knowledge of what had transpired. Another key factor in the High Court’s decision was that both the Singapore Attorney General and the Law Society of Singapore, as objective non-parties to the proceedings, supported the application. The Attorney General stated that it saw no reason from the point of view of the public interest to object to the application. In fact, the Attorney General submitted that admitting the applicant for this purpose would be consistent with the many amendments that had been made to the laws of Singapore in order to enhance the attractiveness of Singapore as a venue for international commercial arbitrations.

Rajah JA held that in view of the very strong emphasis on developing international arbitration law in Singapore, it would be very much in line with the wider public interests to admit the applicant in relation to the pending setting aside proceedings. However, Rajah JA did caution that the grant of this application did not necessarily mean that in future, every application involving a Queen’s Counsel for admission to argue in court proceedings related to arbitration proceedings in which the Queen’s Counsel had been the lead counsel would similarly be favourably viewed. Each application had to be assessed based on its own merits. It should be noted that Re Joseph David QC is in fact the last ad hoc admission application made under the regime provided under section 15 of the Legal Profession Act. This section was amended with effect from 1 April 2012 to widen the scope for ad hoc admission of Queen’s Counsel (and its equivalent) from overseas jurisdictions to appear in the courts in Singapore. The condition for the matter to contain sufficiently difficult and complex issues has now been removed and in its place, the following conditions apply (as set out in a notification published in the Government Gazette and issued by the chief justice after consulting the judges of the Supreme Court):

• the nature of the factual and legal issues involved in the case;
• the necessity for the services of a foreign senior counsel;
• the availability of any Senior Counsel or other advocate and solicitor with appropriate experience; and
• whether, having regard to the circumstances of the case, it is reasonable to admit a foreign senior counsel for the purpose of the case.

This change was primarily brought about to improve the pool of specialist advocates in commercial and financial disputes. It would not be surprising if in the appropriate cases, an ad hoc admission application from a Queen’s Counsel and their equivalent would be permitted for appearance in the Singapore courts in court proceedings concerning international arbitration matters.

Notes

1Statistics from the SIAC CEO’s Annual Report 2011

2SIAC CEO’s Annual Report 2011