Jurisdiction - Singapore
Reports and Analysis
Singapore – Upcoming Amendments To The International Arbitration Act.

5 May, 2012

 

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

 

INTRODUCTION

 

In a bid to augment Singapore’s growing reputation as a global arbitration hub, changes to the International Arbitration Act (“IAA”) were passed by Parliament on 9 April 2012.

 

The key amendments to the IAA include a relaxation of the writing requirement under the IAA, allowing courts to review negative jurisdictional rulings, providing statutory support for awards and orders by emergency arbitrators, and a clarification of a tribunal’s power to award interest.

 

RELAXING OF THE WRITING REQUIREMENT

 

Previously, the IAA only recognised arbitration agreements that were in writing but this requirement did not reflect commercial reality as arbitration agreements are often concluded orally and subsequently put in writing.

 

The amendments expand the definition of “arbitration agreement” in the IAA to include agreements concluded orally, by conduct or otherwise as long as their content is recorded in any form.

 

JUDICIAL REVIEW OF NEGATIVE JURISDICTIONAL RULINGS

 

Under the IAA, parties may not submit a dispute to the courts for judicial review if an arbitral tribunal had previously decided that it did not have jurisdiction under the IAA. 

 

The Law Reform Committee’s (“LRC”) Report on the Right to Judicial Review of Negative Jurisdictional Rulings (January 2011) highlighted that injustice is likely to arise if an arbitral tribunal wrongly makes a negative jurisdictional ruling in which case an aggrieved party will be left with no recourse.

 

The LRC also observed that permitting judicial review of positive jurisdictional rulings but not negative jurisdictional rulings is both “unfair and inconsistent”. Therefore, the LRC recommended allowing judicial review of negative jurisdictional rulings.

 

The LRC’s recommendation was adopted and the amendments allow parties to have recourse to Singapore courts in respect of both positive and negative jurisdictional rulings, at any stage of the arbitral proceedings.

 

The amendments also clarify that the court can make costs orders against any party when ruling that a tribunal has no jurisdiction.

 

EMERGENCY ARBITRATOR PROCEDURE

 

To address situations where parties require urgent relief even before the constitution of the arbitral tribunal, the Singapore International Arbitration Centre (“SIAC”) Rules 2010 introduced a procedure for the appointment of an emergency arbitrator empowered to order interim relief pending the constitution of the actual tribunal.

 

Similar procedures are provided for in the ICC Rules of Arbitration, International Centre for Dispute Resolution International Arbitration Rules and the Stockholm Chamber of Commerce Arbitration Rules and Expedited Rules. However, uncertainty surrounded the status of orders made by an emergency arbitrator under the IAA.

 

The amendments clarify that the terms “arbitral tribunal” and an “arbitral award” refer to the status of orders made by “emergency arbitrators” appointed by the SIAC or other arbitral institutions (both foreign and local).

 

The policy underpinning these amendments is to 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 the IAA regime.

 

THE POWER TO AWARD INTEREST

 

The IAA did not clearly provide for the arbitral tribunals’ powers to award interest.

 

The amendments explicitly provide for the tribunal’s powers to award interest, including the power to award simple or compound interest, and interest on costs awarded in the arbitral proceedings.

 

COMMENT

 

The amendments providing for judicial review of negative jurisdictional rulings and legislative support for emergency arbitrators reflect the maturity of Singapore law on international arbitration.

 

The provision of legislative support for emergency arbitrators is particularly novel as international consensus is yet to form on this issue.

 

Whilst the SIAC is not the sole arbitral institution providing for this procedure, no other major arbitration hub has enacted a statutory regime giving recognition to the status of emergency arbitrators and the interim orders that they make.

 

In paving the way for legislative support backing emergency arbitrators and their interim orders, the legislators have displayed a willingness to be at the forefront of arbitral developments rather than to follow the lead of other jurisdictions.

 

The introduction of judicial review of negative jurisdictional rulings is also significant in that it marks the first significant departure from the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”).

 

Up till now Singapore has been a faithful, and some say conservative, adherent of the Model Law. As aptly put by the authors of the LRC Report, the departure from the Model Law alone cannot be a reason to not adopt what is reasonable especially on an issue where a discernable international consensus is lacking.

 

This departure from the Model Law reflects Singapore’s coming of age and brings it in line with other arbitration hubs such as England, France, Sweden and the United States where judicial review of negative jurisdictional rulings is permitted.

 

 

For further information, please contact:
 
Chew Kiat Jinn, Director, Drew & Napier
 
Mahesh Rai, Drew & Napier
 

 

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