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Singapore – The Development Of The International Commercial Court.

12 December, 2013

 

Legal News & Analysis – Asia Pacific – Singapore – Dispute Resolution

 

Background

 

At the start of 2013, Chief Justice Sundaresh Menon mooted the possibility of creating the Singapore International Commercial Court (“SICC”) as an international forum for court- based commercial dispute resolution both within and beyond Asia. This is in light of increasing investment, cross-border transaction, and disputes in the region.


A 19 member committee, co-chaired by Indranee Rajah S.C., Senior Minister of State for Law and Education, and Judge of Appeal VK Rajah, was formed to study the viability of the SICC. On 29 November 2013, the SICC Committee submitted its report (the “Report”) to the Ministry of Law. The Ministry of Law is considering the SICC Committee’s recommendations, and has published the Report as part of its public consultation.


In this article, we introduce and discuss some of the key features of the proposed SICC, and its practical impact on users.


Key Features Of The SICC

 

The pertinent aspects of these recommendations are highlighted as follows.


Organisation


The SICC will be a division of the Singapore High Court and part of the Supreme Court of Singapore. A panel of SICC Judges consisting of existing Supreme Court Judges and Associate Judges (intended to be drawn from key jurisdictions around the world) will be appointed.


In general, decisions of the SICC will be appealable to the Court of Appeal. This SICC Court of Appeal will also be drawn from the SICC panel.

 

Caseload


The SICC will deal primarily with international commercial disputes. The caseload will consist of cases where:

(i) The parties have agreed to use the SICC after the dispute has arisen;

(ii) The disputants are parties to international commercial transactions, and they have agreed through their contract to submit disputes to the SICC; and

(iii) The Chief Justice has transferred cases from the Singapore High Court to the SICC.


Joinder Of Parties


It is intended that the SICC will have the power to join third parties to proceedings, even without their consent, and even if they are not present in Singapore.


Representation


Generally, representation of parties will follow the rules of representation before the Singapore High Court, in that only members of the Singapore bar can represent parties, subject to the discretion of the Court to admit Queen’s Counsel or foreign lawyers on an ad hoc basis.


However, special rules will apply for cases which have no substantial connection to Singapore, meaning cases where Singapore law is not the governing law or where the choice of Singapore law is the sole connection to Singapore. In such cases, foreign counsel may appear before the SICC if they are registered with the court.


Confidentiality


SICC proceedings would as a general rule take place in open court. However, for cases which have no substantial connection to Singapore and where the parties agree that confidentiality is desirable, appropriate measures will be taken to maintain such confidentiality. Parties can also unilaterally apply to the court for confidentiality.


Appellate Review


The Report also proposes that parties can contractually limit their right to appeal against SICC decisions, including abolishing the right of appellate review altogether.

 

Proof Of Foreign law


In line with the international character of the SICC, the Report proposes that foreign law will not be treated as issue of fact, and that it need not be proven by way of expert evidence. This is a significant departure from the way in which national courts – at least in common law jurisdictions – treat foreign law. This will therefore require a change in the Evidence Act and raises the question as to whether the SICC will, in other respects, adopt the Evidence Act.


Enforcement


As with ordinary judgments, judgments of the SICC may be enforced in other jurisdictions through reciprocal enforcement provisions or through a common law action on the judgment debt.


It has been proposed that these avenues of enforcement may be complemented by model SICC dispute resolution clauses which waive the parties’ rights to defend against an action based on an SICC judgment in all jurisdictions.


The SICC Committee has also recommended enhancing the enforceability of SICC judgments through government diplomacy, such as through multilateral and bilateral government agreements, and through court-to-court arrangements.


Observations


A few observations may be suggested at this preliminary stage.


An Alternative To International Arbitration?


One question that inevitably arises is whether the SICC can serve as an alternative forum to international arbitration for the resolution of international disputes. There are a number of factors which may speak in the SICC’s favour. These include:


(a) The power of the SICC to join third parties even without their consent: This may resolve a recurring problem in arbitration, which is that the jurisdiction of a tribunal is limited only to those who are parties to the arbitration agreement. This often causes difficulty in string contracts or where the “real” parties to the dispute may not be the signatories to the arbitration agreement.

(b) The inability of parties to appoint their judges: It had long been assumed that the right of parties to choose their arbitrators was one of the great virtues of arbitration. This method of constituting a tribunal has come under serious criticism recently as it raises doubts as to the impartiality of party-appointed arbitrators. A court-appointed coram will be attractive to those belonging to the latter school of thought.

(c) The ability to contract out of any review: Under the regimes of most countries, including Singapore, some limited review of arbitral awards is possible. Although some see this as necessary to ensure accountability, others see the possibility of a challenge as a serious incursion on the finality of awards. Under the SICC, parties can agree not to subject their judgments to any further review or appeal.

(d) The availability of default judgment: As the SICC is a court-based form of dispute resolution, default judgment ought to be available in cases where a party simply fails to participate or flagrantly violates the rules of procedure. This is an advantage over arbitration to the extent that tribunals faced with a recalcitrant party, nevertheless still have to receive the evidence of the claimant and ensure that the claimant has proven its case.

(e) The treatment of foreign law: Consistent with the trend in international arbitrations, cases under the SICC will not require parties to plead foreign law or to prove foreign law through experts.


These procedural innovations are coupled with:


(a) Confidentiality: Where the dispute has ‘no substantial connection’ to Singapore, parties can agree to maintain the confidentiality of the proceedings. The mere fact of Singapore law being the governing law is not sufficient to constitute a substantial connection to Singapore.

(b) Choice of representation: Similarly, where the dispute has ‘no substantial connection’ to Singapore, parties have a choice of representation.


International Enforcement Of SICC Judgments


Whether the SICC can pose a challenge to arbitration will ultimately depend on the enforceability of SICC judgments, which has been discussed above.

The Report appears to recognise the difficulties in enforcement of SICC judgments.

 

There are suggestions for reciprocal enforcement arrangements and for stepping up efforts to sign bilateral and multilateral conventions. Though this shifts the burden onto diplomatic channels, if successful, it will provide a more secure and effective enforcement mechanism.


One interesting suggestion raised in the Report is for parties to write the international enforceability of the SICC’s decision into their contracts. It is not immediately clear if such an agreement can override an enforcement court’s prerogative to refuse enforcement under its own rules of private international law.


Concluding Words


The time is certainly ripe for the introduction of a court-based dispute resolution mechanism for the settlement of international commercial disputes in the region. A dedicated international commercial court is an appropriate development and will further enhance Singapore’s standing as a regional hub for dispute resolution.


A copy of the SICC’s report may be accessed at this link.


Rajah & Tann

 

For further information, please contact:

 

Kelvin Poon, Partner, Rajah & Tann 

kelvin.poon @rajahtann.com


Paul Tan, Partner, Rajah & Tann 

paul.tan@rajahtann.com


Rajah & Tann Dispute Resolution Practice Profile in Singapore

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