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2 August, 2016
The sixth edition of the Singapore International Arbitration Centre (“SIAC”) rules was issued on 30 June 2016 and comes into effect on 1 August 2016 (“2016 Rules”).
The amendments to the 2013 version of SIAC’s rules (“2013 Rules”) are aimed at assisting users of SIAC to resolve disputes in an efficient and cost-effective manner. There are a number of updates, as well as new provisions on multiple contracts, consolidation, joinder and early dismissal of claims and defences. We set out below a summary of the changes in the 2016 Rules and consider their potential impact.
Herbert Smith Freehills’ Global Arbitration Team has produced a Step by Step Guide to Arbitration under the 2016 SIAC Rules. To receive a copy, please contact asia.publications@hsf.com.
1. Multiple contracts (Rule 6)
The 2016 Rules introduce a process for the commencement of proceedings in respect of disputes arising out of two or more contracts. A claimant in a multi-contract dispute may:
(i) file multiple Notices of Arbitration in respect of disputes under each contract, and concurrently apply to consolidate the proceedings; or
(ii) file a single Notice of Arbitration for all disputes, which will be deemed to be an application to consolidate all proceedings.
Any party may also make an application for consolidation, even after separate sets of arbitration proceedings have been commenced. The new rules governing the consolidation of proceedings (Rule 8) will apply.
Where a claimant files multiple Notices of Arbitration, the Registrar will accept a single filing fee for all arbitrations sought to be consolidated, although additional filing fees would have to be paid where the application for consolidation is rejected. Similarly, where the claimant”s request for consolidation is rejected, it will have to file further Notices of Arbitration in respect of each arbitration that has not been consolidated, and pay additional filing fees for each.
2. Consolidation (Rule 8)
Consolidation is a process by which two or more separate proceedings are combined into one single set of proceedings. Rule 8 of the 2016 Rules states that parties may consolidate proceedings by either applying to the Court of Arbitration of SIAC (the “Court”) prior to the constitution of the Tribunal, or to the Tribunal itself, if consolidation is requested after its constitution.
A party may file an application for consolidation if:
(i) all parties have agreed to the consolidation;
(ii) all the claims in the arbitration are made under the same arbitration agreement; or
(iii) the arbitration agreements are compatible, and:
- the disputes arise out of the same legal relationship;
- the disputes arise out of contracts consisting of a principal contract and its ancillary contract; or
- the disputes arise out of the same transaction or series of transactions. (Rule 8.1)
- If a Tribunal has already been constituted, the arbitrations can only be consolidated if the same Tribunal has been constituted in each of the arbitrations or no Tribunal has been constituted in the other arbitration(s).
These changes are an improvement on the 2013 Rules, which were silent on consolidation. This new provision, in tandem with the new rules on joinder and multiple contracts, gives parties dealing with multiple contract scenarios both increased flexibility and greater certainty.
3. Joinder of additional parties (Rule 7)
Under new Rule 7 of the 2016 Rules, both parties and non-parties to an arbitration agreement may apply to be joined to, or intervene in, an arbitration that is pending under the Rules. The application for joinder may be made before or after the constitution of the Tribunal provided that:
(i) the additional party to be joined is prima facie bound by the arbitration agreement; or
(ii) all parties, including the additional party, have consented to the joinder of the additional party.
Applications for joinder of additional parties made prior to the constitution of the Tribunal are to be made to the Registrar, whereas applications after the constitution of the Tribunal are to be made to the Tribunal itself.
Where an application for joinder is granted, the date of receipt of the application for joinder shall be deemed to be the date of commencement of the arbitration in respect of the additional party.Where an application for joinder is granted before the Tribunal is fully constituted, the Court may revoke the appointment of any arbitrators appointed prior to the decision on joinder, although this is without prejudice to the validity of any act done or Award made by the arbitrator prior to the joinder of the additional party.
The 2016 Rules have expanded SIAC’s joinder provisions, which restricted joinder to parties to the arbitration agreement, with that party’s written consent (Rule 24(b) 2013 Rules).
4. Early dismissal of claims and defences (Rule 29)
The 2016 Rules include an early dismissal mechanism, which offers parties a way to dismiss a claim or a defence that is manifestly without legal merit, or manifestly outside the jurisdiction of the Tribunal, at an early stage of the proceeedings. This is similar to summary judgment procedures available in the courts of some jurisdictions.
An application for early dismissal must state in detail the facts and legal basis supporting the application. The Tribunal may, in
its discretion, allow the application to proceed (alternatively, it may decide not to hear an application that it considers to be wholly unmeritorious). If the Tribunal decides to hear the application, it must, after giving the parties the opportunity to be heard, decide whether to grant, in whole or in part, the application for early dismissal.
If the application is granted, the Tribunal shall make an order or Award on the application, which may be in summary form, within 60 days of filing the application. The process is therefore intended to be relatively swift.
SIAC is the first major arbitration centre to introduce such a rule (although the draft rules of the Stockholm Chamber of Commerce (SCC) include a similar provision). It will be welcomed by many, particularly those in the banking sector wishing to easily and quickly enforce straightforward debt claims, for example. While in theory the ability to dismiss manifestly unmeritorious claims and defences will increase efficiency and discourage the use of arbitration as an oppressive tool, in practice it remains to be seen how wiling arbitrators will be to employ the mechanism.
5. Enhanced Emergency Arbitration procedure (Schedule 1)
The 2016 Rules amend SIAC’s existing Emergency Arbitrator procedure, with the aim of increasing speed and cost-efficiency.
(i) An Emergency Arbitrator must now be appointed within one calendar day of receipt by the Registrar of an application for emergency interim relief and the payment of the relevant fees and deposits, rather than one business day as in the 2013 Rules;
(ii) Any challenge to the appointment of an Emergency Arbitrator must be made within two calendar days of the Emergency Arbitrator’s appointment, rather than one business day under the 2013 Rules;
(iii) The order or award of interim relief must be issued within 14 days of the appointment of the Emergency Arbitrator, unless exceptional circumstances prevent this;
(iv) The fees of an Emergency Arbitrator are fixed at SGD 25,000, rather than calculated as a proportion of a sole arbitrator’s maximum fee (unless the Registrar determines otherwise).
As in the 2013 Rules, the Tribunal, once constituted may reconsider, modify or vacate any interim Award issued by an Emergency Arbitrator. The 2016 Rules further empower the Tribunal to consider an Emergency Arbitrator’s ruling on his or her own jurisdiction.
The use of Emergency Arbitrators is increasing in Singapore. The latest amendments to the Emergency Arbitration regime mean this trend is likely to continue, as parties become more familiar with the proceedure and as the SIAC continues to tailor the use of Emergency Arbitrators to commercial parties.
6. Expedited Procedure (Rule 5)
Before the Tribunal is constituted, a party may apply to the SIAC Registrar for the arbitration to be conducted in accordance with the Expedited Procedure. At least one of the following criteria must apply:
(i) the amount in dispute does not exceed SGD 6,000,000 (as opposed to SGD 5,000,000 under the 2013 Rules”);
(ii) (ii) the parties so agree; or
(iii) (iii) in cases of exceptional urgency.
The Expedited Procedure allows parties access to a more efficient and simplified arbitration procedure.
Under the Expedited Procedure, the Registrar can abbreviate any time limits in the Rules, the dispute will generally be decided by a sole arbitrator(who may decide, in consultation with the parties, to determine it on the basis of documentary evidence only), and the award shall be rendered within six months of the date on which the Tribunal is constituted. The 2016 Rules confirm that the Expedited Procedure may be applied even where the arbitration agreement contains conflicting provisions. Conversely, the Tribunal may also order that arbitral proceedings no longer be conducted in accordance with the
Expedited Procedure. If so, the arbitration will continue under the normal SIAC procedures.
As with the new summary dismissal procedure, the Expedited Procedure is attractive to parties, particularly in the financial services sector, who seek quicker resolution of disputes than may be available under the standard procedures of SIAC and other major arbitral institutions.
7. Delocalising the Seat of the Arbitration (Rule 21)
Given the increasingly international nature of SIAC cases, and its diverse pool of users, Singapore is no longer the default seat of arbitration under the 2016 Rules. Unless the parties agree otherwise, the determination of the seat of arbitration will be left to the Tribunal having regard to all the circumstances of the case. The exception is emergency interim relief procedings using an emergency arbitrator, in which the default seat remains Singapore .
This change in the rules reinforces the need for parties to state the seat clearly in the arbitration agreement.
8. Close of proceedings (Rule 32)
Under the 2016 Rules, the Tribunal shall declare the proceedings closed “as promptly as possible” after it is satisfied that there is no further evidence to be considered. Whilst the Rules do not specify a fixed deadline for awards to be rendered, this rule aims to reduce the time in which awards are rendered. Under Rule 32.3, the Tribunal shall submit its draft award to the Registrar not later than 45 days from the close of proceedings, unless the parties agree or the Registrar decides otherwise.
9. Other notable changes
Parties should also note the following:
(i) Any notice, communication or proposal shall be deemed to have been received if it is delivered to the addressee
personally or “to its authorised representative”.
(ii) Responses to Notices of Arbitration should now include, where possible, any plea that the Tribunal lacks jurisdiction. This should encourage parties to raise jurisdictional challenges as early as possible.
(iii) Any objection that the Tribunal is exceeding its jurisdiction must now be raised within 14 days after the matter of the Tribunal’s jurisdiction arises during the arbitral proceedings. Under the 2013 Rules, the requirement was to raise such objections “promptly”.
(iv) The President may now, at any stage of the proceedings, request the parties and the Tribunal to convene a meeting to discuss the procedures that will be most appropriate and efficient for the case. This serves as an additional layer of supervision, which should help avoid unnecessary delays;
(v) SIAC will now charge a minimum administration fee of SGD 3,800, payable for all cases, unless the Registrar determines otherwise. In exceptional circumstances, the Registrar may direct the parties to pay a supplementary fee, in addition to that prescribed in the applicable Schedule of Fees. It is not yet clear how this discretion will operate in practice, but we anticipate that it would only apply in unusually large and complex cases.
(vi) A party will be deemed to have waived its right to object if it proceeds with the arbitration without raising an objection in relation to a failure to comply with any rules, tribunal directions or requirements under the arbitration agreement;
(vii) The 2016 Rules introduce a “Challenge Fee” of SGD8,500 (SGD8,560 for Singapore parties, including GST), payable by parties who wish to challenge the appointment of an arbitrator. If a party fails to pay the Challenge Fee within the time period set by Registrar, the challenge shall be withdrawn.
(viii) Rule 27 of the 2016 Rules expressly provides that the Tribunal has the power to issue an order or award for the reimbursement of unpaid deposits towards the costs of the arbitration.
Conclusion
While the summary above reflects the major changes, there are numerous other amendments which have been made to increase certainty in the 2016 Rules. These amendments reflect SIAC’s commitment toward the creation of a “state-of-the-art procedural framework”, and will ensure that SIAC continues to be ahead of the curve and a global international arbitration centre of choice.
The 2016 Rules are timely, in light of growing criticism by some of arbitration as a form of dispute resolution and the growth of international commercial litigation. The increased certainty and flexibility introduced by the latest round of amendments go a long way to meeting the concerns of parties, and should increase confidence among legal practitioners, arbitrators and commercial users of the 2016 Rules.
For further information, please contact:
Peter Godwin, Partner, Herbert Smith Freehills
peter.godwin@hsf.com
