The most recent Queen Mary University of London 2021 International Arbitration Survey (the “Survey”) – a leading and authoritative survey on international arbitration highlights how Singapore was ranked equally with London and top of the Survey as the most-preferred seats of arbitration, cementing its longstanding reputation as a safe arbitral seat.
So, what is the secret behind The Little Red Dot’s success in transforming itself into one of the most prolific international dispute resolution hubs?
Historical origins of arbitration in Singapore
The origins of arbitration in Singapore can be traced back to the colonial Straits Settlement which comprised of British territories located in Southeast Asia including Singapore. During the colonial rule, Singapore emerged as a major trading port in Southeast Asia. Consequently, the need for an effective dispute resolution mechanism became apparent. Prior to the Raffles’ Regulations of 1823, which provided for the first establishment of the courts, there were no regular courts in Singapore.
Even when it was still part of the British colony, Singapore already embraced arbitration. This can be seen from the 1890 Ordinance on Arbitration, which provided parties with a means of submission to arbitration and granted power to the courts to refer parties to arbitration. The 1890 Ordinance on Arbitration was replaced by the Arbitration Ordinance of 1953, which was subsequently renamed as the Arbitration Act 1953. Over the years, the Arbitration Act underwent several revisions culminating in the Arbitration Acts of 1994 and 2001 (see below).
Today, there are two applicable arbitration regimes in Singapore regulating – (i) the domestic arbitration regime, the Arbitration Act 2001 (revised in 2020) (the “AA”); and (ii) the international arbitration regime, the International Arbitration Act 1994 (revised in 2020) (the “IAA”).
The AA and the IAA adopt the UNCITRAL Model Law with minor amendments. Baring a few mandatory provisions, the IAA enables parties to derogate from it and craft a procedure that suits them, so long as that procedure is not inconsistent with it. The adoption of UNCITRAL Model Law along with the wide allowance given for party autonomy, catapulted Singapore’s popularity as a safe arbitral seat.
Since 1986, Singapore has a party to the New York Convention which provides for a mechanism of enforcement of arbitral awards in 172 countries. The AA and IAA, sets out limited grounds for setting aside an arbitral award, largely in line with the UNCITRAL Model Law. This strengthens Singapore’s credibility as a favoured seat of arbitration, by ensuring the finality of the arbitral awards.
Relevance of arbitration
Arbitration is different from traditional court litigation where parties are bound by the rigid procedure of the Court. Arbitration enables the parties to choose the procedure but also provides an opportunity for them to choose the persons resolving the dispute.
In 2021, almost 40% of the global Foreign Direct Investments inflows were into Asia. Presently, Singapore is a contracting State of a total 54 bilateral investment treaties and 60 multilateral treaties, free trade agreements and regional cooperation agreements investment.
The state-of the art Maxwell Chambers in Singapore houses some of the prominent arbitration institutions under a single roof. To name a few: ICC International Court of Arbitration, Permanent Court of Arbitration, and Singapore International Arbitration Centre.
Furthermore, Singapore’s strategic location, its world class infrastructure, and its reputation for a sophisticated legal system, as well as budding economic activities makes the country an extremely desirable economic partner, but also increases the likelihood of cross-border disputes.
With lockdowns arising out of the COVID-19 pandemic, many national courts shut down temporarily or accepted only the most urgent cases. The international arbitration community on the other hand, quickly adjusted to the “new normal” and carried on with business as usual. For example, Maxwell Chambers pivoted from being a physical centre for hearings to providing virtual hearing services in a short span of time. This is another example of how arbitration is and should be the most preferred manner of resolving commercial disputes.
With Singapore’s resources, proven commitment, and track records of its national Courts and Government, Singapore will continue to be an international dispute resolution hub for commercial, trade, and investment disputes.
*The views expressed herein are those of the authors and do not necessarily reflect the views of the ICC or the ICC International Court of Arbitration. The authors express their gratitude to Angela Shiqi Zhang for her valuable research.
For further information, please contact:
Akhil Chowdary Unnam, Deputy Counsel, International Court of Arbitration of the International Chamber of Commerce
Irene Mira, Deputy Director, ICC DRS South Asia