Singapore: Singapore International Arbitration Centre

Last Updated: 21 May 2019
Article by STA Law Firm
Most Popular Article in Singapore, May 2019

Singapore has been growing in popularity for international arbitration with the support of the government's policy to facilitate the best arbitration Centre in the region. The tremendous growth of the Chinese and Indian economy in the last few decades drives Asian markets to the next level. Even though Singapore is a tiny city, The Singapore International Arbitration Centre (SIAC) manage to bring most of the commercial disputes from all over the world to the country for dispute resolutions. Among the other countries, the most members are from India amounting to 176 and China 77 in 2017. The Singapore parliament enacted the Arbitration Act supporting the growing objective of the institution. Similarly, the judicial body minimized its intervention with arbitration procedures in order to provide a smooth and independent process of the tribunals. At present SIAC compete with major arbitration institutions like AAA, LICA, and ICC in terms of procedural laws and facilities. The institution handled more than 450 new cases and administered 400 plus cases in 2017. Which is a tremendous growth from the last few years. Some parties choose SIAC as their dispute resolution Centre over other leading arbitration institutions for its unique setup and supportive institutional rules.

The primary object of the institution to provide a neutral and independent arbitration system for companies around the world. Specifically, the companies based in the region where the parties and lawyers can quickly travel to Singapore for their tribunals. The amended rules introduced in 2016 will apply for the disputes registered on or after 1st August 2016. The previous law was amended in 2013. The new amendments took place as the regulators decided to set up a new standard for the existing rules and to introduce new regulations. Comparing to the court systems where the procedural laws are not amended regularly, the introduction of new laws and changes in the existing procedural laws from the arbitration institutions help system to move forward. The changes in the rules demanded by the business community and the quickly changing nature of international arbitration institutions around the world. The leading institutions produce new rules which supplied the needs of the businesses. Hence, SIAC was forced to introduce amendments in order to facilitate a complete institutional law. The changes include but not limited to early dismissal of claims, expedited arbitration procedure, multi contracts, and joinder consolidations.

The corporates demand a faster and easier procedure with enforcement system from the legal system for a very long time. The foundation of the Alternative Dispute Resolution system itself is also a result of finding the easiest way to resolve commercial disputes. In that way, SIAC institutional rules on expedited arbitration procedure is a major change of new amendments. The procedure laid down a solution for the business disputes which require a quick solution. The parties can apply for the expedited procedure in pursuant to article 5 of the 2016 laws. The disputed amount must not exceed $ 6,000,000 and the parties must agree to conduct tribunal under the Expedited procedure. This amount is an increase of 1 million from the last amendment. Also, the parties can apply for disputes with exceptional urgency. All the leading arbitration institutions have recently introduced this procedure for the parties and the number of cases referred to expedited procedure increase day by day. The institution has conducted 150 plus disputes under this procedural law from its introduction in 2010. However, the procedure yet to be tested completely for different types of cases and practical implementation will require many amendments down the line. The early entry of the SIAC to this procedure is a good sign for the institution in relation to establishing a solid foundation for a quicker solution to commercial disputes. It is expected that regulators in Singapore will support the procedure after reviewing the practical implementation of the new system. Among the other institutions in the Asian region, the changed rules of SIAC provide a quick solution with fewer fees which attracts many businesses to enter SIAC as arbitration Center during the initial agreements.

According to article 34 of the SIAC rules, the fees of the tribunals are based on the amount in dispute. The leading institutions including the ICC and AAA also fix their fees depend on the amount in dispute. According to the Queens Marry research, the SIAC fees are on average among the other institutional fees. Comparing to the SIAC, LCIA charge far less from their parties as their method of fees is on an hourly basis. The recent amendments from the leading arbitration institutions can be effective where the institution charge on hourly basis. For example, a case referred to a sole arbitrator will be less charged for the parties than a one referred to three arbitrators. One of the leading reason for the parties to SIAC is the fees comparing to other institutions. The administrative fees of the SIAC are reasonable and average. However, the tribunal's fees charge according to the amount in disputes which method is criticized by scholars and legal experts among the parties. They point out that sometimes the arbitration institutions are more expensive than courts in overall. Attacking the fundamentals of arbitration that arbitration is cheaper than courts system. Hence, the SIAC may consider changing the fees structure of the institution to attract more parties in the coming amendments.

Article 28 stipulates the laws related to The Competence principle. The arbitration tribunal has the power to decide its own jurisdiction of the institution in relation to the matter in dispute. This extends in relation to validity, existence, or scope of the arbitration agreement. For example, if a party raise an issue mentioning the tribunal has the power to solve issue A and B in the contract but not X and Y. Accordingly, the tribunal does not have jurisdiction to conduct the arbitration on matters X and Y. In such circumstances, the tribunal can study and understand the matter X and Y in order to determine if the tribunal has jurisdiction to decide on matters X and Y. However, the tribunal must be very careful in choosing the jurisdiction over the issue as the parties can later challenge during the enforcement level using Article 5 of the New York Convention. The registrar of the institution also granted the power to refer the matter of jurisdiction to the courts for its discretion. Article 21 of Chapter 6 of the Singapore Arbitration Act stipulate a similar law as well. Nevertheless, the courts in Singapore are supportive of the arbitration process and therefore they minimize their intervention. The minimum intervention also can give confidence to the common man that arbitration is independent. If the matter goes to courts and bounces back to arbitration in every stage, the trust towards arbitration among the parties will be eliminated as they will start thinking arbitration is controlled by the local courts of that jurisdiction. If one party to the arbitration is from outside Singapore and if they had to go through a stage passing court of Singapore for every stage, their trust in the system of arbitration will be reduced. The London arbitration Centre is a good example with a strong legal system which only intervenes in the required stage of arbitration. SIAC also follow the same strategy and courts interventions are minimal.

Application for early dismissal for claim or defense is another procedural development from the recent amendments. This is a new regulation introduced from article 29 of the institution law. The step is to ease the procedure of claim where the party can prove the claims question of merit or jurisdiction is not valid. The claims must be backed by legal arguments and facts of the matter. The application also provides room for the arbitrator to understand any possible loophole in the matter for a latter dismissal. If the parties had to go through an entire tribunal process and the case dismissed, that will be a waste of time and money for the party. Also, the trust of the arbitration procedure will be questioned. Therefore, the early application for claim or defense is set up for a strong foundation to move forward after this stage with a strong belief that there will be no further changes or claims in the tribunal.

The tribunal requires all the parties to the arbitration including the administrative and arbitrator to comply with the confidentiality of the matter. Confidentiality considered to be the main reason for some parties to choose arbitration over litigation. A court system may publish all the cases against a company and it puts a company into a vulnerable position during investment strategies. An arbitration process can keep all the information related to the matters confidential and only parties can be available for the information. The institutional rule also gives power to the tribunal to take action against any breach of confidential matters. The institution also provides the facility of possible mediation before the arbitration. Mediation also protects the confidentiality of the parties and things shared with a mediator will not be brought up in a court of law against the same parties. Also, during the mediation process, the mediator separately discuss with both the parties about their matter and parties can request the mediator to protect the confidentiality of some of the matters they discussed during the process. Mediation under SIAC is conducted in a professional manner and the institution supports meditation. However, generally, a dispute starts in a commercial context with a disagreement on a matter and continued with disagreements during the negotiations. Therefore, the parties seek legal supports to make a decision on behalf of them. However, during the negotiation, the parties may don't share their confidentiality information's like financial positions. Therefore, a mediator can help find a better solution understanding the matters in detail as well as keeping confidentiality of shared details from the parties. The mediation process is encouraged by the UNCITRAL model law as well.

The Singapore arbitration felt behind in relation to multi-contract and multi-party disputes. According to the Singapore annual report, the disputes related to construction and engineering take up to 25% in total. However, leading institutions like ICC introduced provisions in their 2012 rules itself and attracted parties with multiparty disputes mainly construction-related companies around the world. Therefore, some of the construction-related disputes did not come to the SIAC arbitration Institution. Not only the multi-parties in the constructions but also some of the leading tech companies also subcontract their assignments and involve multi parties to their works. Therefore, a new big market has opened for the arbitration institutions. These tech companies and entrepreneur startups not happy to go to the courts and waste their time and money. The reason includes their future can be dependent on the judgement of the dispute in place. For example, an innovative product found using multiparty cannot come to the market for sale unless the dispute between these parties is sorted out. The regulators of the SIAC understood these demands of the companies and cater the regulations to fulfil their needs.

The emergency arbitrator is appointed for the matters where parties seek emergency relief from the tribunal. The procedure requires the parties to submit in detail regarding the nature of relief they seek and the reason for the same. The discretion of accepting the emergency arbitrator application is with the President of the tribunal considering all the relevant factors. This step from the SIAC can also be considered making arbitration available for diverse situations and minimizing courts intervention during the process. Prior to this rule the parties who required an emergency relief had to file an application in the relevant courts. The parties must notice in prior if the institutional rules allow the emergency arbitrator to give an "award" or "order". Similarly, whether the award from the emergency arbitrator can be enforced using the New York Convention. The SIAC institutional rules in this regard stipulate as "The Tribunal may, at the request of a party, issue an order or an Award granting an injunction or any other interim relief it deems appropriate. The Tribunal may order the party requesting interim relief to provide appropriate security in connection with the relief sought". Accordingly, it is in the discretion of the arbitrator to give an award or an order under the SIAC institutional rules.

Further, the final award and enforcement of an award using the New York Convention complete the arbitration process under the SIAC. The institutional rules require the arbitrators to finalize the submission of all evidence and documents of the procedure before granting an award. The distinguish difference between arbitration and the other ADR system is the ability of enforcement of awards using the New York Convention. A party can enforce their award in any member countries to the statute. More than 100 countries are party to the New York convention including Singapore. Therefore, the investors of one country can file an arbitration with a party from another country keeping in mind that they can enforce the award later on. The Singapore arbitration act also promotes this procedure in article 46 by recognizing an arbitration award as local courts award. The article mentions as "An award made by the arbitral tribunal pursuant to an arbitration agreement may, with leave of the Court, be enforced in the same manner as a judgment or order of the Court to the same effect". UNCITRAL and other arbitration mechanisms require the member states to provide full enforcement mechanism under their country law. The Singapore act caters full protection for the enforcement mechanism.

Finally, unlike a court system, the arbitrations are generally designed to avoid appeal systems. The appeal in a court system has both upside and downside. The downside is it takes a lot of time for the parties to get a final decision. Generally, the investors and consider about the timeframe of starting of a trial till the end. They make their business decisions and strategies according to that final judgements. Should the opponent make an appeal, the business will have to wait longer than expected timeframe. Considering all these problems, the Singapore Arbitration Act has limited the option of appeal. The same can be noted with Article 5 of the New York Convention which gives only a few limited objections for an arbitration award. SIAC is appreciated by the legal community for following international rules and guidelines on enforcement of an award.

The SIAC arbitration institution always tries to perfect their regulations from starting of a tribunal till the end. They are carefully designed to uphold the fundamentals of international arbitration. The foundation principles of International Arbitration like party autonomy, competence principle, limited procedural steps, reasonable fees structure, use of technology, and enforcement of an award can be noticed under the SIAC arbitration as well. The leading institutions including the SIAC complete with each other on shaping and changing their rules to provide best arbitration tribunal for the parties. The focus is more on providing a better and faster dispute resolution system to the businesses around the world. Which is one of the reasons for the amendments of SIAC rules within a very short period of time. They study the way institution applied its expertise on matters presented to them. Changes of the procedural laws are based on these studies and understanding of international arbitration. The legal experts appeal for amendments in procedures related to the court systems court for decades. On the other hand, arbitration institutions make changes in their procedural laws within few years of time frame. Hence, arbitration under the SIAC rules may suit the most for the developing Indian and Chinese companies in the region. Similarly, for the companies around the world looking for the best arbitration mechanism in the Asian region.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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