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9 June, 2016
The Singapore International Arbitration Centre (SIAC) has shown its resolve to remain at the forefront of international arbitration with some innovative features in the latest 2016 edition of its Arbitration Rules, which took effect on 1 June 2016.
Some of the changes may have a significant impact on how parties conduct their SIAC arbitrations. This is important not only for parties entering into new contracts and adopting the SIAC Rules 2016, but also those whose existing contracts do not stipulate any specific edition of the SIAC Rules.
Here are 7 points to note about the SIAC Rules 2016.
1. Consolidated arbitration for multiple contracts and/or multiple arbitrations
A new Rule 6 (on Multiple Contracts) and Rule 8 (on Consolidation) deal with the administration of multi-contract disputes. This is a significant step forward from the previous set of rules which were silent on the issue.
Rule 6 (Multiple Contracts)
Under the new Rule 6, a Claimant faced with multi-contract disputes may choose to:
a. File separate Notices of Arbitration in respect of the multiple contracts, and concurrently file an application to consolidate the arbitrations pursuant to Rule 8; or
b. File a single Notice of Arbitration in respect of disputes arising out of the multiple contracts.
In either case, a single filing fee is applicable. Additional filing fees may however be required in respect of each arbitration which is not ordered to be consolidated.
Rule 8 (Consolidation)
Rule 6 is complemented by the new Rule 8, which sets out a general provision on the consolidation of arbitrations.
Prior to the constitution of the Tribunal, a party may apply for two or more pending arbitrations to be consolidated into a single arbitration, provided the relevant criteria are met. Such application would be determined by the Court of Arbitration of the SIAC.
Arbitrations which may be consolidated are not limited to those where all parties have agreed in writing to the consolidation, or where all claims are made under the same arbitration agreement. Consolidation may also be ordered if the arbitration agreements are "compatible" and:
(i) The disputes arise out of the same legal relationship(s);
(ii) The disputes arise out of contracts consisting of a principal contract and its ancillary contract(s); or
(iii) The disputes arise out of the same transaction or series of transactions.
After the constitution of the Tribunal, a consolidation application may be made to the Tribunal notwithstanding any previous decision by the SIAC Court. The applicable criteria for an application to the Tribunal are slightly different and take into account whether different Tribunals have already been appointed in each of the arbitrations.
2. Clearer rules on joinder and intervention of parties
A new Rule 7 has also been added to the SIAC Rules 2016 to set out the procedure and criteria for the joinder of one or more additional parties to an arbitration. Rule 24(b) of the previous SIAC Rules 2013 merely provides that upon the application of an existing party, the Tribunal has the power to join a third party to the arbitration, provided the third party is a party to the arbitration agreement and has given written consent to the joinder.
Under the new Rule 7, an application to join one or more additional parties may be made by an existing party to the arbitration (i.e. joinder), or a non-party seeking to be joined (i.e. intervention). The applicable criteria are:
a. The additional party to be joined must be a party to the arbitration agreement; or
b. All parties (including the additional party to be joined) must have consented in writing to the joinder.
An application for joinder may be made prior to the constitution of the Tribunal, and will be decided by the Court of Arbitration of the SIAC. This is without prejudice to a party's and non-party's right to file an application for joinder or intervention to the Tribunal, after the Tribunal has been constituted.
3. Early dismissal of unmeritorious claims or defences
A brand new provision under Rule 28 allows a party to file an application for the early dismissal of claim(s) or defence(s). Such a procedure, while not unusual in court proceedings, is virtually unheard of under the rules of major international commercial arbitration centres. The SIAC is leading the market by including this new procedure in its 2016 Rules.
For early dismissal of a claim or defence, such claim or defence must be manifestly without legal merit, or manifestly outside the jurisdiction of the Tribunal.
An application for early dismissal must be made within 30 days after the constitution of the Tribunal. Thereafter, the Tribunal must be issue a decision within 60 days from the date of filing of the application.
It remains to be seen how the requirements for early dismissal will be applied by SIAC Tribunals. It is likely that the provision is intended to weed out only the clearest cases of unmeritorious claims or defences, especially because a full Statement of Claim or Defence may not even have been submitted within 30 days of the Tribunal's constitution.
4. Improvements to Expedited Procedure
The 2016 Rules also contain improvements to the popular Expedited Procedure under Rule 5.
The applicable monetary threshold has been increased from S$5 million to S$6 million, allowing more cases to enjoy the benefit of the Expedited Procedure.
Further, the Tribunal now has full discretion to determine whether an Expedited Procedure case is to be decided on the basis of documentary evidence only (i.e. without a hearing), thereby allowing a more expeditious disposal of cases. Previously, the dispensation of a hearing was subject to the parties' consent.
5. Streamlining of Emergency Arbitration proceedings
Provisions on Emergency Arbitration, which allow parties to seek emergency relief, have been streamlined to allow for quicker relief.
The SIAC will now appoint an Emergency Arbitrator within 1 day (instead of 1 business day) of receipt of an application for emergency interim relief and payment of administration fees. The new rules also set a time limit of 14 days for the Emergency Arbitrator to issue an award from the date of his appointment.
The fees of an Emergency Arbitrator have been fixed at S$25,000. This creates more certainty and predictability, compared to the previous rules which provided for a range of fees depending on the amount in dispute. The fixed amount is likely to benefit parties of high-value arbitrations the most.
6. Delocalisation of the seat of arbitration
In a controversial move, the SIAC Rules 2016 no longer provide for Singapore as the default seat of arbitration. Instead, failing parties' agreement, the seat of the arbitration is to be determined by the Tribunal (Rule 20).
Parties whose arbitration clauses do not specify a seat of arbitration should take note, given that the seat of arbitration has bearing on the procedural laws governing the arbitration.
7. Reimbursement of unpaid deposits towards costs of arbitration
Finally but certainly not least, Rule 26(g) of the SIAC Rules addresses the practical problem of parties to an arbitration (typically, Respondents) who fail to make the necessary deposits towards the costs of the arbitration to the SIAC.
In the past, the previous Rule 24(h) merely allowed the Tribunal to issue an award for unpaid costs of the arbitration. Parties had to seek creative solutions to obtain relief from the Tribunal after having to pay the deposits on behalf of their errant counterparties.
The new Rule 26(g) now expressly gives the Tribunal the power to issue an order or award for the reimbursement of unpaid costs towards the costs of the arbitration, where a party has paid another party's share of the deposits on their behalf.
As can be seen, the SIAC has made considerable efforts through the amendment of their rules to address the practical problems in arbitration today. It remains to be seen whether the solutions provided in the SIAC Rules 2016 are effective in addressing these problems.
For further information, please contact:
Prakash Pillai, Partner, Clyde & Co
prakash.pillai@clydeco.com
