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Lowtax International Legal Service - The Rise of Singapore as a Global Dispute Resolution Centre

By Lowtax Editorial
25 November, 2014


Thanks to Singapore’s status as one of South East Asia’s main business hubs and commercial centres, built on the foundations of a stable and predictable legal regime, this city-state has grown in stature as one of the world’s major centres for the arbitration of contractual and other disputes between international investors, the numbers of which have risen as an inevitable consequence of growing investor interest in the Asia-Pacific region. This feature summarises the main points of interest regarding the Singapore International Arbitration Centre (SIAC) and related developments as the Government seeks to increase Singapore’s influence in the field of commercial dispute resolution.

Singapore International Arbitration Centre

The SIAC is an independent, non-profit organisation which was established in 1991 to meet the demands of the international business community for a neutral, efficient and reliable dispute resolution institution in Asia. The SIAC is headed by a board of directors which comprises leading arbitration experts from the United States, United Kingdom, Switzerland, India, Korea and Singapore, and its staff are drawn from a variety of Asian and non-Asian jurisdictions including the United Kingdom, Canada, India, Malaysia, Belgium and of course, Singapore itself. The centre is housed at Maxwell Chambers in Singapore, a state of the art arbitration facility which comprises 14 custom-designed and fully equipped hearing rooms and 12 preparation rooms.

The total number of new arbitration cases taken on by the SIAC annually has grown sharply since 2008. In 2013, the Centre handled 259 new cases. This compares with 99 new cases in 2008 and 63 ten years ago. The total active caseload on December 31, 2013 was 619, making Singapore the leading venue for ICC arbitrations in Asia.

According to Professor Michael Pryles, Chairman of the SIAC, the growing number of arbitration taken cases taken on by the SIAC reflects the trust investors have in the Singapore legal system.

 “In short, Singapore is seen as a neutral venue for the holding of international commercial arbitration which is in a geographically convenient location and is supported by a physical, legal and political infrastructure that is sophisticated, skilled and of high integrity. There are few, if any, other venues in Asia which can claim all of these attributes,” he says.

Arbitration is a less formal procedure than court litigation, and it is conducted in private; confidentiality is generally a key advantage of international arbitration.

In arbitration, the arbitrator looks into the legal rights and wrongs of a dispute before making a decision. Once the arbitrator has arrived at a decision, it is binding on parties whether they agree with it or not. Arbitration has similarities to the way a court case is decided by a judge, except that the process does not take place in a courtroom, and it is not open to the public. As in a court case, there is usually a winning and a losing party in arbitration. 

In Singapore, parties are free to appoint their own arbitrators and can choose more practical procedures and rules for the conduct of an arbitration. Generally, arbitration is a more cost-efficient and expedient than court litigation. 

The SIAC has its own Arbitration Rules and the latest version dates from July 2010, which was adopted following an extensive consultation process with practitioners. The update also introduced a new Expedited Procedure for cases with a value below SGD5m or in cases of exceptional urgency. Additionally, the 2010 Rules introduced the appointment of an Emergency Arbitrator to assist parties who require emergency relief before the constitution of a Tribunal. 

SIAC arbitral awards are final and binding, and are generally enforceable in approximately 150 countries under the New York Convention, an international convention on the enforcement of arbitral awards (subject to any local legislation and/or requirements).

The SIAC generally administers commercial, construction/engineering, corporate, shipping/maritime, trade and insurance arbitrations. However, as the SIAC’s competence and jurisdiction to administer arbitrations is derived from the arbitration clause found in a contract, the types of disputes that it can administer are not necessarily limited to the above sectors. There is no maximum or minimum claim amount for cases to be administered by SIAC.

Arbitration proceedings are generally conducted in English, but the SIAC Secretariat is comprised of counsel who are fluent in a number of languages, including Chinese, Korean, French, Hindi and Malay. If the arbitration clause so requires, the SIAC is generally able to administer the case in languages other than English and has done so in the past, subject to translations being provided by the parties.

The SIAC is fully competent to administer arbitrations where the governing law is not Singapore law. It can also administer arbitrations where the seat of arbitration is not Singapore, and hearings in SIAC-administered arbitrations do not have to be held in the city. Indeed, almost 50 percent of the new cases filed in 2013 had no connection to Singapore.

There are generally no restrictions on foreign law firms engaging in and advising on arbitration in Singapore. Likewise, non-residents generally do not require work permits to carry out arbitration services in the city. Parties from over 50 different jurisdictions were involved in SIAC arbitrations in 2013.

Generally (and subject to the complexity of the dispute), awards in disputes with sole member tribunals are usually rendered within nine to 12 months, while awards in disputes with three-member tribunals are usually rendered within 12 to 18 months. Arbitrations administered according to the SIAC Expedited Procedure require awards to be rendered within six months from the constitution of a tribunal (subject to any extensions).

The SIAC maintains its own Panel of Arbitrators who are drawn from approximately 39 different jurisdictions. However, parties to a dispute are free to nominate arbitrators of their choice, whether from the SIAC Panel of Arbitrators or not.

Singapore is also seen as a low-cost arbitration centre. The case filing fee for Singapore parties is SGD2,140, and for non-Singaporean parties is SGD2,000, which compares favourably with other arbitration jurisdictions.

Normally, awards in SIAC arbitrations are enforceable outside Singapore; SIAC awards have been enforced in various jurisdictions including Indonesia, China, Hong Kong, India, Australia, the USA, Malaysia, Thailand, Vietnam and Jordan.

Singapore International Mediation Centre

Building on the success of the SIAC, Singapore is attempting to expand the range of dispute resolution services offered in the city.

The Singapore International Mediation Centre (SIMC) was officially launched by Chief Justice Sundaresh Menon and the Minister of Law, K Shanmugam SC on November 5, 2014.

The SIMC will be the first centre of its kind to focus on mediating international commercial disputes with a panel of internationally-respected mediators drawn from Africa, Asia, Australia and New Zealand, Europe and North and South America.

Mediation differs from arbitration in that the mediator tries to help parties to settle their disputes by a process of discussion and the narrowing of differences. The mediator endeavours to encourage the parties to arrive at an agreed solution and does not decide the dispute as an arbitrator does; a successful mediation results in an agreement signed by the parties, whereas a contested arbitration results in a decision by the arbitrator himself without the agreement of the parties.

There are no winners and losers as such in mediation, because there is no binding decision. Instead, the parties are free to agree on both legal and non-legal solutions suited to their interests and needs. 

Menon said of the SIMC: “These are exciting times for cross-border trade and investment. However, with every commercial transaction, complex or otherwise, there comes the risk of disagreement and dispute and SIMC will take its place among other service providers working to meet the needs of consumers in this environment. Mediators based in Singapore and elsewhere will also benefit from the establishment of SIMC, as this will open up new opportunities for them to expand their portfolio of cross-border work.”

Shanmugam added: “The launch of SIMC is a major milestone in Singapore’s development as a regional dispute resolution hub. SIMC’s mediation services will complement our successful arbitration sector and upcoming enhanced international litigation capabilities provided by the Singapore International Commercial Court. Our focus on offering this complete suite of dispute resolution options for international commercial cases sets us apart from other jurisdictions, and enhances our standing as a one-stop dispute resolution centre.”

At the launch event, the SIMC announced an Arbitration-Mediation-Arbitration (Arb-Med-Arb) service that it will be jointly offering with SIAC. Under the SIAC-SIMC Arb-Med-Arb service, a dispute may be referred to arbitration and then held in abeyance while mediation is attempted. If parties are able to settle their dispute through mediation, their mediated settlement may be recorded as a consent award. A consent award is generally accepted as an arbitral award, and, subject to any local legislation and/or requirements, is generally enforceable in approximately 150 countries under the New York Convention. If parties are unable to settle their dispute through mediation, they may continue with the arbitration proceedings.

At the launch event, SIMC announced an Arbitration-Mediation-Arbitration (or Arb-Med-Arb) service that it will be jointly offering with SIAC. Under the SIAC-SIMC Arb-Med-Arb service, a dispute may be referred to arbitration and then held in abeyance while mediation is attempted. If parties are able to settle their dispute through mediation, their mediated settlement may be recorded as a consent award. A consent award is generally accepted as an arbitral award, and, subject to any local legislation, is generally enforceable in approximately 150 countries under the New York Convention. If parties are unable to settle their dispute through mediation, they may continue with the arbitration proceedings.

In the coming months, the SIMC intends sign Memoranda of Understanding with other mediation centres in the region, to promote and develop mediation in Asia.

Singapore International Commercial Court

Singapore is also branching into new dispute resolution territory by targeting more complex, high-value cross-border commercial disputes, especially those governed by foreign law which would not otherwise be heard in the city. For this, the Singapore International Commercial Court (SICC) was created in 2014, intended to address the increase in international commercial litigation work arising from the growth in cross-border trade and investment in Asia.

The SICC will be established as a division of the Singapore High Court, meaning that SICC judgments can be enforced as judgments of the Supreme Court of Singapore. The new court will also feature a diverse panel of judges that will include eminent international jurists and existing Supreme Court Judges. Although court proceedings will be open, parties may apply for them to be confidential;

A major advantage for parties seeking to resolve disputes in the SICC is the flexibility to seek leave of court to apply alternative rules of evidence which they may be more familiar with. They will also be able to appoint foreign-qualified lawyers to represent them in court. The circumstances under which a foreign-qualified lawyer may appear in the SICC, namely, cases with no substantial connection to Singapore, or to address the court on matters of foreign law, will be set out in subsidiary legislation.

 “Singapore’s well-developed and business-friendly legal system, its respected judiciary, and the strong presence here of experienced commercial lawyers, both local and foreign, will enable the SICC to provide a unique service to users beyond Singapore”, says Co-chair of the SICC Committee, Senior Minister of State for Law, Indranee Rajah SC.

Co-Chair of the SICC Committee, Judge of Appeal, Justice V K Rajah added: “The SICC could attract cases which otherwise have no connection to Singapore, and provide litigants engaged in cross border disputes in Asia with a forum that has a closer geographical nexus to the dispute than traditional neutral choice of courts, which are outside Asia.”

Conclusion

Singapore isn’t without its rivals in the area of dispute resolution. Hong Kong for example enacted its Arbitration Ordinance in 2011, and its Government is very keen to enhance Hong Kong's status as a hub for international legal and dispute resolution services in the Asia Pacific region. The SIAC however, has the advantage of being well established and trusted, and the growing number of cases it is taking on reflects the confidence that litigants have in the Centre in particular and Singapore’s legal system in general. With Singapore pushing into new areas such as mediation and the adjudication of more complex international matters, its future as one of the world’s leading legal dispute resolution centres therefore looks assured.




 

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