What is Arbitration in Singapore?

The attractiveness of Singapore as a seat of arbitration is the combination of a number of factors. First, Singapore is known to have an independent judiciary that is particularly effective in dealing with complex legal issues related to arbitration. In addition, Singapore has a world-class infrastructure and facilities specifically dedicated to hosting arbitrations.
The Singapore International Arbitration Centre or SIAC is one of the arbitration institutions that deals with disputes where the parties have agreed to use an arbitrator. Therefore, parties to a contract may agree to submit their disputes to arbitration in accordance with the SIAC Arbitration Rules.

The founding act of the arbitration process is the arbitration agreement by which the parties express their willingness to resort to this particular mode of dispute resolution, i.e. to resort to an arbitral tribunal. The arbitration agreement may take the form of an arbitration clause or an arbitration agreement. The arbitration clause is included in the contract and provides for recourse to arbitration in the event of a dispute between the parties, whereas the arbitration agreement is entered into after the dispute has arisen, in which case the parties agree to submit the dispute to an arbitrator and not to a judge. The parties can then choose the arbitrators who will decide the dispute and the law that will apply. However, the freedom of the parties is not total since the mandatory rules of Singaporean law and international public policy must be respected.
The choice of law governing the contract allows the parties to anticipate which rules will govern their disputes. The parties are not obliged to choose a national law and can only refer to international conventions (e.g. the United Nations Convention on Contracts for the International Sale of Goods). However, international conventions do not deal with all the problems that may arise during the performance of a contract. Therefore, the choice of law of a State is desirable.
Various international sources govern international arbitration. This is the case of the New York Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. It is an important instrument of institutional arbitration. The European Convention of Geneva of April 21, 1961 on Arbitration in Relation to International Trade does not deal with the recognition and enforcement of foreign arbitral awards, but with the setting aside of arbitral awards. On the other hand, the International Centre for Settlement of Investment Disputes (ICSID) was created by the Washington Convention of 18 March 1965. It is an international organization within the World Bank Group that provides conciliation and arbitration facilities to settle investment disputes between Contracting States and nationals of other Contracting States.
In Singapore, there are two distinct legal regimes governing the arbitration process:

1. The domestic regime, which concerns arbitrations conducted pursuant to domestic arbitration agreements and is governed by the Arbitration Act.

2. The international regime, which concerns arbitrations conducted pursuant to international arbitration agreements and is governed by the International Arbitration Act (IAA).

How international is the arbitration?

An arbitration is considered to be international if:

1.  At least one of the parties has its place of business in a state other than Singapour at the time of the conclusion of the arbitration agreement.

2. The agreed seat of the arbitration is located outside the State in which the parties have their place of business.

3. Any place where part of the commercial relationship is to be performed, or the place to which the subject matter of the dispute is most closely connected, is located outside the state in which the parties have their place of business.

4. The parties have expressly agreed that the subject matter of the arbitration agreement concerns more than one State.
In order to determine the place of business of a party, the IAA provides that:

➤ If a party has more than one place of business, the place of business will be the one that has the closest relationship to the agreement
➤ If a party does not have a place of business, the reference to "place of business" is to be interpreted with reference to the habitual residence of that party
Arbitration in Singapore

The conditions for recourse to arbitration in Singapore

1. The necessary arbitrability of the dispute

Arbitrability consists in knowing whether a type of dispute can be settled by arbitration or not. The question arises as to whether or not the subject matter of a claim is reserved to the sphere of national courts. There is thus inarbitrability when only a state court can be seized.
The concept of arbitrability is found in Article II, paragraph 1 of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), which provides that each Contracting State shall recognize in writing an agreement “relating to a subject matter capable of settlement by arbitration“.
Thus, in order for the arbitrability requirement to be met, arbitral tribunals in principle determine arbitrability by specific reference to the law of the place of arbitration. If a dispute is not arbitrable under the relevant rules of that law, the award will be open to annulment in that country and may also preclude its application in another country. The arbitrability of a dispute thus varies from one country to another and depends on the openness of the State to arbitration.
This raises the problem of the multiplicity of countries and the complexity that this implies.
This is why the seat of the arbitral tribunal is often chosen by the parties. The arbitrators could then take into account the law of the seat of the arbitral tribunal. But for reasons of proximity, the seat of the arbitral tribunal is often chosen by the parties.

2. Preparation and validity of the arbitration agreement

The arbitration agreement is an agreement by which the parties to one or more legal transactions decide to submit the resolution of disputes arising or to arise out of their relationship to one or more independent and impartial persons: the arbitrator. The principle according to which arbitrators rule on their own competence is known as competence-competence. This principle is nowadays accepted in international conventions. For example, the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 18 March 1965, the European Convention on International Commercial Arbitration of 21 April 1961.

Formal requirements:

An arbitration agreement may take the form of an arbitration clause in the contract or a separate agreement.
The only formal requirement is that the arbitration agreement must be in writing. An arbitration agreement is deemed to be in writing if its contents are recorded in any form (section 2A, LPN).
The main substantive requirement is that the parties have a clear intention to arbitrate their dispute. Therefore, even if an arbitration agreement contains some ambiguity or uncertainty, the court will endeavour to give effect to the agreement if an intention to arbitrate can be discerned.

Separate arbitration agreement:

A separate arbitration agreement is not required. A valid arbitration agreement may take the form of an arbitration clause in a contract or a separate agreement (section 2A(2), IAA).
If the parties seek to incorporate an arbitration clause by reference to another document, they must do so specifically. The wording must be sufficient to demonstrate a clear intention of the parties to submit any dispute to arbitration, and Singapore courts tend to interpret such wording restrictively.

Substantive requirements:

The AIA does not explicitly provide for mandatory provisions. The principle is that the arbitration rules adopted by the parties are applicable to the extent that they are “not inconsistent with any provision of the UNCITRAL Model Law or Part II of the AIA (Section 15A, AIA)“.
However, there are a limited number of statutory provisions that are fundamental to Singapore arbitration law and from which the parties generally may not derogate, such as:

➤ The power of courts to stay proceedings on a matter covered by an arbitration agreement (section 6, IAA)
➤ Grounds for setting aside an arbitral award (section 24, IAA; article 34, UNCITRAL Model Law)
➤ Grounds for challenging an arbitrator (Article 13, UNCITRAL Model Law)

An optional arbitration clause, in that the parties can choose to arbitrate their dispute, is also valid. The Singapore courts consider that this helps to promote arbitration as a means of dispute resolution (WSG Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka from 2002).

The procedure for requesting arbitration in Singapore

1. Commencement of the Proceeding

The proceedings are initiated when the Request for Arbitration is received by the Secretariat of the Center (Rule 3 of the SIAC Rules). The request must contain the following information:

➤ The full names, capacities, addresses and other contact information of each party and its representatives
➤ References to and copies of any relevant agreements, including the arbitration agreement(s)
➤ The proposal for the appointment of one or more arbitrators
➤ The payment of the registration fee

Once the Request for Arbitration has been received, the Respondent has 14 days to respond. The Respondent must include in its Answer comments on the nature and circumstances of the dispute giving rise to the claims and its position on the decisions requested.
Since 2010, each party has the possibility of requesting the implementation of an accelerated procedure. To do so, Rule 5 of the SIAC Rules requires that one of the following conditions be met in order to initiate this procedure:

➤ The amount at stake is less than or equal to SGD 6,000,000,00
➤ All parties want to use this procedure
➤ It is an exceptional emergency

2. The constitution of the arbitral tribunal

1. In the case where a sole arbitrator is appointed :

In the case of the appointment of a sole arbitrator, the parties have the possibility to designate him by mutual agreement, this designation will have to be validated by the center. In the absence of agreement between the parties, the President of the Center shall make the appointment.
Unless otherwise agreed, the time limit for the parties to appoint the sole arbitrator shall be 21 days from the date of the commencement of the proceeding.

2. If More Than One Arbitrator Is Appointed

Rule 11 of the SIAC Rules governs the procedure for appointing three arbitrators. In this regard, each party is requested to appoint one arbitrator. If a party fails to nominate an arbitrator within 14 days of receipt of the nomination made by the other party, the appointment shall be made by the Chairman of the Center. Unless otherwise agreed by the parties, the third arbitrator who shall serve as chairman of the arbitral tribunal shall be appointed by the President of the Center.

Are there any requirements as to the independence and/or impartiality of the arbitrators?

A person may not act as an arbitrator if there are justifiable doubts as to his or her impartiality and independence (Article 12, UNCITRAL Model Law).

3. The conduct of the arbitration in Singapore

First, the arbitral tribunal must hold a conference with the parties. The purpose is to organize the conduct of the arbitral proceedings and to establish a timetable for the proceedings.

Secondly, during the course of the arbitral proceedings, the arbitral tribunal may always convene the parties for the purpose of adopting new procedural measures that it deems appropriate. Unless the parties agree otherwise, the arbitral tribunal shall agree on the language of the proceedings and the seat of the arbitration.

Then, according to Rule 20.2 of the SIAC Rules, the claimant to the proceedings shall submit to the arbitral tribunal and to the respondent a statement of claim within the time limit previously determined by the arbitral tribunal.

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The Arbitral Award

The arbitral award is the final outcome of the arbitration proceedings. Indeed, it is the decision taken by the arbitral tribunal in view of the outcome of the dispute. Whether the award is domestic or international, it is made by an arbitral tribunal or an arbitral institution specified in the arbitration agreement.
The reference text for international arbitration is the New York Convention of June 10, 1958. In its article 1 paragraph 2 “Arbitral awards” means not only awards made by arbitrators appointed for specific cases, but also those made by permanent arbitration bodies to which the parties have submitted themselves.
It defines the award as the act, the instrumentum that organizes the decision of the arbitral tribunal.

1. The end of the hearing

According to Rule 32.1 of the SIAC Rules, the arbitral tribunal shall, as soon as practicable after the last hearing on the issues to be determined in the award, or after the presentation of the last permitted written submissions, declare the proceedings on the issues to be determined in the award closed.
It shall notify the Secretariat of the Center and the parties to the proceedings of the date of closure.
As a rule, once closure has been declared, it is not possible to reopen the proceedings. However, the arbitral tribunal may, on its own initiative or at the request of one of the parties, reopen the proceedings if no award has yet been made.
Before making its award, the arbitral tribunal shall transmit a copy of the award to the Secretariat within 45 days of the date of the closure of the hearing. If no changes are proposed by the Secretariat, the latter shall send a certified copy to the parties.
Thus, at the end of this hearing, the arbitral tribunal makes an award.

2. The making of the award

About form and content :
Generally speaking, the rules on international arbitration do not impose rules on form.
However, the New York Convention of 1958, in its article IV.1, provides that “in order to obtain recognition and enforcement, the parties shall furnish, at the same time as the application, the duly authenticated original of the award or a copy of such original meeting the conditions required for its authenticity“.
On reading this article, one can see the need to have recourse to a written award.

3. The recognition and enforcement of awards

First of all, under the domestic regime, any award made by an arbitral tribunal may, with the permission of the court, be enforced as if it were an order of that court. This principle applies irrespective of whether the seat of the arbitration is in Singapore or elsewhere.
In the case of foreign awards, under the international regime, an award may, with the permission of the High Court, be enforced as if it were a judgment or order of the High Court. A foreign award may be enforced in the same manner and may be invoked in any legal proceedings in Singapore. Since there is no appeal on the merits under the IAA, a refusal to enforce an award can only be made if the grounds for setting aside the award exist.
Section 31 of the IAA sets out the grounds that an applicant must show for the High Court to refuse enforcement of a foreign award. These grounds are, in substance, the same as those in section 34 of the Model Law, which deals with the grounds on which an award may be set aside, which we will detail in the next paragraph.

4. Setting aside the award

Regarding the setting aside of arbitral awards, in accordance with Section 48 of the Arbitration Act and Articles 34(1) and (2), the application to set aside the award must be based on one of the following elements:

➤ A party to the arbitration agreement was under disability
➤ The arbitration agreement is not valid under the law to which the parties have subjected it, or if not so specified, under the laws of Singapore
➤ The party making the request was not given proper notice of the appointment of an arbitrator or of the arbitration proceedings or was not given an opportunity to present its case
➤ The award relates to a dispute not contemplated or not falling within the conditions for submission to arbitration, or contains decisions on matters not subject to arbitration, except that if the decisions on matters subject to arbitration can be separated from those not subject to arbitration, then only that part of the award which contains decisions on matters not subject to arbitration may be set aside
➤ The composition of the arbitral tribunal or of the arbitral proceedings is not in accordance with the agreement of the parties, unless such agreement is contrary to any provision of this Law from which the parties cannot derogate, or, in the absence of such agreement, is contrary to the provisions of this Law
➤ The making of the award was induced or affected by fraud or corruption
➤ A violation of the rules of natural justice occurred in the making of the award by which the rights of a party were prejudiced

Similarly, the application to set aside is legitimate if the Court finds that:

➤ The subject matter of the dispute is not capable of settlement by arbitration under this Act
➤ There is a conflict with public policy

An application for annulment may not be filed after the expiration of three months from the date of receipt of the award by the applicant.

Arbitration in Singapore

Does the statute of limitations apply to arbitration proceedings?

The same limitation periods apply to arbitration proceedings as to court proceedings. If the arbitration is commenced and the award is set aside (in whole or in part), the time between the commencement and the setting aside may be excluded from the calculation of the limitation period (section 8A, IAA).
The applicable limitation period depends on whether Singapore or foreign law applies to the substance of the dispute:

1. If Singapore law applies: a party has six years to bring an action in contract or tort.

2. If foreign law applies: the limitation period under that foreign law is determinative.

What legal fee structures can be used? Are the fees fixed by law?

The law does not set the fees to be charged by lawyers or arbitrators in an arbitration in Singapore.
In institutional arbitration in Singapore, the arbitral institution sets the administration costs and the arbitrators’ fees. These may be calculated on the basis of the amount in dispute (as is the case in SIAC) or on the basis of an hourly rate for the arbitrator.
In recent years, Singapore has amended its laws to allow for third party funding of international arbitration (and related proceedings, including enforcement and mediation). As a result, there are a number of active third-party funders, including:

➤ Burford Capital
➤ MFI Bentham (which recently merged with Omni Bridgeway)
➤ LCM Finance

Singapore law does not expressly provide specific limits on the fees and interest that funders can charge. This is largely a matter for negotiation between the funder and the funded parties. However, sections 5A(2) and 5B(2) of the Civil Law Act provide that a financing contract must not be contrary to public policy. It is therefore possible for the Singapore courts to take into account the level of fees and interest in determining whether a financing contract is in accordance with public policy.

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