International Arbitration 2019

Last Updated August 23, 2018

Trends and Developments


Authors



Essex Court Chambers Duxton (Singapore Group Practice) is a Singapore Group Practice, comprising Singapore lawyers V K Rajah SC, Toby Landau QC, Chan Leng Sun SC, Colin Liew, Tham Lijing, and Calvin Liang. Essex Court Chambers Duxton operates on a Chambers model in Singapore and the region, with particular expertise in commercial, corporate and financial litigation, arbitration, public law and public international law. Members of Essex Court Chambers Duxton have expertise across the full spectrum of commercial, corporate and financial law, including banking and finance, civil fraud, corporate / chancery and offshore disputes. Various members are also available for instruction in complex criminal cases. The advocates at Essex Court Chambers Duxton advise and act in disputes both in Singapore and internationally. The members have a reputation for excellence, exceptional advocacy and providing client-oriented solutions.

Singapore has continued to develop as a centre for international arbitration and dispute resolution, with a respected survey on international arbitration in 2018 reporting that it is the third most preferred seat for arbitration globally, and the most preferred seat in Asia. In early 2018, the International Chamber of Commerce (ICC) opened an office in Singapore to manage regional cases before the International Court of Arbitration. 

The key contributors to Singapore’s success as an arbitral seat are:

  • the independence and efficiency of its public institutions, coupled with a strong tradition of the rule of law;
  • its central location within South-East Asia;
  • the robust approach of the Singaporean judiciary, which aims to offer maximum judicial support in arbitration and minimum intervention;
  • the continued development of the Singapore International Arbitration Centre (SIAC), which is recognised as a leading international arbitration institute;
  • the state-of-the art facilities and services to support the conduct of arbitration at Maxwell Chambers;
  • the broad and deep quality of legal services in Singapore, with world-class local and international firms taking on complex and high-value international disputes; and
  • the commitment of the Singaporean Government to creating the framework and structures that are conducive for international arbitration and dispute resolution.

The expansion of Asian economies will be matched by growing cross-border commercial activity, which in turn will lead to potential cross-border disputes and a corresponding increase in demand for dispute resolution services. These effects will be multiplied by ambitious infrastructure investments like the Belt and Road Initiative. As a neutral and international commercial hub strategically situated in Asia, Singapore is well placed to capture the increasing volume of dispute resolution work in Asia. 

SIAC – a Global Arbitration Institution Located in Singapore

SIAC had a record year in 2017, with the number of new cases filed being the highest since SIAC started in 1991, representing a 32% increase over new cases filed in 2016. The total sum in dispute for new cases filed with SIAC in 2017 amounted to USD4.07 billion (SGD5.44 billion). 

Befitting its nature as a global arbitration institution located in Singapore, SIAC continues to draw users from a wide geographical pool of 58 different common law and civil law jurisdictions. In 2017, the top foreign users of SIAC were Indian parties, followed by parties from China, Switzerland, Indonesia, Japan and South Korea.

SIAC is now the third most preferred arbitral institution in the world. With the ongoing expansion of Maxwell Chambers, Singapore’s dedicated dispute resolution complex, and the Government’s continued commitment to developing Singapore as a global arbitration hub, it is expected that SIAC will go from strength to strength.

SIAC continually reviews its rules to ensure that they embody international best practices. The 2016 SIAC Rules were the product of an extensive consultative process, with noteworthy features including the following:

  • fixing the fees payable to the tribunal and SIAC on an ad valorem scale based on the amount in dispute; 
  • a 16-day fixed fee emergency arbitrator mechanism;
  • the Expedited Procedure, under which an accelerated timeline applies so that the arbitral award will be rendered within six months of the constitution of the tribunal (this has proven to be extremely popular, with 430 Expedited Procedure applications received by SIAC as of April 2018);
  • the pioneering introduction of a procedure for early dismissal of claims and defences;
  • a framework for managing multi-contract disputes and the consolidation of arbitrations, so as to further SIAC’s aim of providing an efficient and cost-effective process for handling disputes arising out of, or in connection with, multiple contracts;
  • expanding the scope for the joinder of additional parties;
  • the removal of Singapore as the default seat of arbitration; and
  • empowering the Tribunal to issue an order or award for the reimbursement of unpaid deposits towards the costs of the arbitration.

Third Party Funding and Ethics

The Singapore government conscientiously monitors trends and users’ preferences in international arbitration. Taking note of the growing interest in third-party funding in international arbitration within the region, the Singapore government launched a public consultation in July 2016 to review the role of third-party funding in international arbitration and mediation and ancillary court proceedings. 

After taking feedback from the consultation process, Singapore decided to implement legislation permitting third-party funding within a controlled environment; this legislation came into force on 1 March 2017.

As part of the legislative amendments, the torts of champerty and maintenance have been abolished. A legal framework has also been created for the provision of third-party funding in, among other things, international arbitration. The legislation defines a “third-party funding contract” as a contract “by a party or potential party to dispute resolution proceedings with a Third‑Party Funder”.

The government worked closely with private stakeholders to ensure that the framework is both legally and commercially sound. The legislation is supplemented by the Singapore Institute of Arbitrators (SIArb) Guidelines for Third Party Funders, the Law Society of Singapore’s Guidance Note for Lawyers, and the SIAC Practice Note on Arbitrator Conduct in Cases Involving External Funding.

Singapore is currently the only jurisdiction in the Asia-Pacific region (other than Australia) that has implemented specific legislation on third-party funding for arbitration. Hong Kong SAR is widely expected to follow, although the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016 has still not been passed by the Legislative Council.

There have been at least two Singapore-seated third-party funded international commercial arbitrations since the new legislative regime came into effect.

Other than third-party funding, there has been renewed interest in grappling with the persistent problem of maintaining ethical conduct in arbitration. The ethical standards required of arbitrators are relatively uncontroversial but maintaining them is not so easy, as Chief Justice Sundaresh Menon demonstrated in his CIArb Presidential Lecture 2016. Most arbitral institutions set a code of conduct for arbitrators operating under their rules; for instance, SIAC has published a Code of Ethics for appointed arbitrators.

It is even harder to address the question of ethics concerning party-representatives in arbitration. SIArb launched its Guidelines on Party-Representative Ethics in April 2018, noting that the lack of uniformity in standards “contributes to unnecessary delay, misunderstandings and expense.” Some commentators, most notably V K Rajah SC, have advocated that it is in Singapore’s “enlightened self-interest” to take the lead in “address[ing] the very patent desire by users of the arbitral process for enforceable ethical standards” and “ensur[ing] that all matters seated here are ethically policed by common standards.” 

Respecting and Promoting International Arbitration

Recent case law has continued to underscore Singapore’s firm commitment to encouraging the use of international arbitration and to party autonomy.

For instance, the Court of Appeal revisited the issue of whether shareholder disputes were arbitrable in L Capital Jones Ltd v Maniach Pte Ltd [2017] 1 SLR 312, holding that minority oppression claims were generally arbitrable, unless they raised specific public policy considerations against arbitration. The courts will take a robust case management approach to the problem of disputes straddling arbitration and litigation at the same time, as not all parties and not all reliefs sought fall within the scope of an arbitration agreement. In light of this, as well as the Court of Appeal’s earlier decision in Tomolugen Holdings Ltd v Silica Investors Ltd [2016] 1 SLR 373, it is likely to become increasingly common for shareholder agreements to provide for such disputes to be resolved via arbitration, and that the courts will be prepared to give directions to manage the process. 

In BLY v BLZ [2017] 4 SLR 410, the High Court reaffirmed the principle of minimal curial intervention in relation to the court’s statutory power under s 10(9) of the International Arbitration Act to stay the arbitral proceedings pending the determination by the court of a challenge to the tribunal’s jurisdiction. Upholding the primacy of the arbitration proceedings, the High Court ruled that there had to be special facts and circumstances before a stay would be granted. 

In addition, in Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Private) Limited [2018] SGHC 78, the High Court recently decided that, where a party fails to challenge a tribunal’s jurisdictional ruling within the 30-day period provided for in Art 16(3) of the Model Law read with s 10(3) of the International Arbitration Act, it would be precluded from relying on that jurisdictional objection in any setting aside proceedings pursuant to Art 34(2)(a)(iii) of the Model Law. This will undoubtedly encourage parties to ensure that all challenges to a tribunal’s jurisdiction are determined as soon as possible, so as to prevent an unnecessary waste of time and costs. 

Finally, January 2018 also saw the Singapore Court of Appeal grant rights of admission to an Indian senior advocate to argue issues of Indian law in an application to set aside an ICC award, in Re Harish Salve [2018] 1 SLR 345. This is the first time a non-English foreign lawyer has been granted ad hoc rights of audience in the Singapore courts, and reflects a progressive approach to the admission of foreign counsel before Singapore courts, particularly in the exercise of their supervisory powers over Singapore-seated arbitrations involving complex issues of foreign law. 

Concluding Remarks

A consistent theme through these developments is the close attention that Singapore pays to the arbitration eco-system. Legislative adjustments are made where necessary to correct faults that show up in practice and, sometimes, to improve on what is already working, just because they can be made to work better. Jurisprudence is being developed at a healthy pace to guide arbitration practice. Maxwell Chambers is already a model for many jurisdictions, but has been upgraded to make it the world’s first “smart hearing” facility through the use of technology. And there is the soon-to-be completed development of Maxwell Chambers Suites, which will add 120,000 square feet of office space for dispute resolution services related to arbitration. 

All told, it is an exciting time to be in arbitration practice in Singapore.

Essex Court Chambers Duxton (Singapore Group Practice)

19 Duxton Hill
Singapore 089602

+65 6817 9173

+65 6920 7611

clerksroom@essexcourtduxton.com https://essexcourtduxton.com/
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Authors



Essex Court Chambers Duxton (Singapore Group Practice) is a Singapore Group Practice, comprising Singapore lawyers V K Rajah SC, Toby Landau QC, Chan Leng Sun SC, Colin Liew, Tham Lijing, and Calvin Liang. Essex Court Chambers Duxton operates on a Chambers model in Singapore and the region, with particular expertise in commercial, corporate and financial litigation, arbitration, public law and public international law. Members of Essex Court Chambers Duxton have expertise across the full spectrum of commercial, corporate and financial law, including banking and finance, civil fraud, corporate / chancery and offshore disputes. Various members are also available for instruction in complex criminal cases. The advocates at Essex Court Chambers Duxton advise and act in disputes both in Singapore and internationally. The members have a reputation for excellence, exceptional advocacy and providing client-oriented solutions.

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