18 July, 2016
The Singapore International Arbitration Centre (the “SIAC”) has firmly established itself as a leading international arbitration institution, particularly in recent years. 2015 was by all accounts a milestone year: 271 cases filed (the highest ever) by parties from 55 jurisdictions. The total sum in dispute of $6.23 billion was also the highest ever recorded in SIAC history. But the SIAC isn't taking its foot off the pedal. In fact, barely three years after the release of the SIAC Rules 2013, the SIAC has now released the sixth edition of its rules which will come into effect on 1 August 2016 (“SIAC Rules 2016”).
The changes introduced by the SIAC Rules 2016 are bold, innovative and designed with the user in mind. They send a clear message to the international arbitration community that the SIAC is keenly aware of (and responsive to) the practical and commercial needs of users for greater efficiency, speed and certainty in the arbitration process.
Early Dismissal of Claims and Defences
Perhaps the boldest move yet is the introduction of an innovative mechanism for 'Early Dismissal of Claims and Defences', a world's first as far as major international commercial arbitration centres are concerned. This mechanism allows for the early dismissal of claims or defences on the basis that (a) the claims or defences are manifestly without legal merit; or (b)the claims or defences are manifestly outside the jurisdiction of the Tribunal. The Tribunal will issue its order or award within 60 days of the filing of the application. The inclusion of this Early Dismissal mechanism squarely addresses an often cited criticism of arbitration which is that unlike in litigation (in common law jurisdictions) where summary judgments are available and often relied upon by parties to secure quick resolutions in appropriate cases, there were no similar mechanisms in arbitration under the rules of the major international arbitration centres. The inclusion of the Early Dismissal mechanism will invariably save parties time and costs in the appropriate cases. It is our view that the process will most often be successfully used in straightforward debt or invoice claims.
Changes to the rules on Multiple Contracts, Consolidation, Joinder and Intervention by non-parties
The SIAC's new rules respond to the user's need for greater efficiency and cost-effectiveness when dealing with disputes arising out of or in connection with multiple contracts and promote more efficient adjudication of disputes arising out of or in connection with them. They save parties' time and costs and also reduce the risk of inconsistent decisions and awards. A similar approach by the SIAC has been taken in relation to joinder or intervention by non-parties to a dispute. The changes reflect further progressive thinking and commercial-mindedness on the part of the SIAC by allowing both parties and non-parties to apply for joinder or intervention. The application may be made either prior to the appointment of any arbitrator (in which case the application will be made to the SIAC Court), or after the constitution of the Tribunal. If the application for joinder or intervention prior to the appointment of any arbitrator is successful, the joined party may participate in the appointment of the arbitrator(s).
Default Seat of the Arbitration is no longer Singapore
In a significant change, the SIAC has removed any notion of a default seat of arbitration under the SIAC Rules 2016. Instead, failing an agreement by the parties on the seat of the arbitration, it will be for the Tribunal to determine. This effectively delocalises the seat of the arbitration in recognition of the increasingly international nature of the cases that the SIAC administers (84% of new cases filed with SIAC in 2015 were international in nature, and 42% had no connection with Singapore whatsoever).
Emergency Arbitrator and Expedited Disputes procedures
The SIAC has now managed to make its already quick Emergency Arbitrator procedure even quicker – the SIAC's time for appointment of an Emergency Arbitrator used to be within one business day of receipt by the Registrar of an application for emergency interim relief and payment of the administration fees and deposits. The SIAC Rules 2016 now shorten this time to one day, no doubt in recognition of the odd coincidence that most applications for emergency interim relief tend to be received late on a Friday evening. An emergency arbitrator typically takes about 8 to 10 days to render an interim order or award after having heard the parties. The SIAC Rules 2016 now require the Emergency Arbitrator to issue the same within 14 days of his or her appointment. In terms of the Emergency Arbitrator's fees, these have been fixed at SGD 25,000 in order to ensure that the emergency arbitration proceedings remain cost-effective. Overall, these changes reflect the business needs of users for certainty, speed and efficiency and they will only serve to make the SIAC's already popular Emergency Arbitrator procedure even more attractive to users.
The SIAC's Expedited Procedure, which requires a final Award to be made within six months from the date when the Tribunal is constituted, has proved to be popular amongst users because of the potential savings in time and costs.
The SIAC Rules 2016 raise the monetary threshold for the applicability of the Expedited Procedure by 20% from SGD 5 million to SGD 6 million. This will allow more cases to benefit from taking advantage of the Expedited Procedure. In order to help parties stick to the six-month timeline the rules now allow the Tribunal to decide that the dispute is to be determined on the basis of documentary evidence only. Further, in the event of conflict between the terms of the parties’ arbitration agreement and the terms of the Expedited Procedure, the latter takes precedence.
Additional Changes
Consistent with its wish to enhance transparency and clarity on the decision process on challenges brought against arbitrators, the SIAC Court will now issue reasoned decisions on all challenges to arbitrators (something that it already does in practice). Another interesting mechanism being implemented is the Challenge Fee Provision which is intended to curtail delaying tactics and to ensure that one party is not unfairly burdened by an increase in the administration fees. A party challenging an arbitrator will – within the time set by the Registrar – pay a fee of SGD 8,000, failing which the challenge shall be considered as withdrawn.
Conclusion
The timely and user-friendly changes in the SIAC Rules 2016 further bolster the SIAC's already stellar reputation as a leading international commercial arbitration centre, not just within Asia, but also globally. The introduction of the 'Early Dismissal of Claims and Defences' mechanism also demonstrates that the SIAC will not shy away from being a leader amongst other arbitral institutions and to be bold and innovative when it comes to implementing changes to its Rules in an effort to bring greater efficiency and costs-savings to the arbitration process.
With thanks to Estelle Brisson for her contribution to this article.
For further information, please contact:
Jonathan Choo, Partner, Bird & Bird
jonathan.choo@twobirds.com
