6 May, 2016
Singapore took a first stride towards addressing the issue by becoming a signatory to the Hague Convention on Choice of Court Agreements (the “Convention”).
The Convention
The Convention, originally concluded in 2005, seeks to provide certainty in international litigation by allowing parties to choose the exclusive court in which any disputes arising under a commercial agreement will be resolved. Courts of member states will therefore have to respect exclusive jurisdiction clauses in commercial agreements by staying proceedings in favour of the courts of other member states. Courts of member states must also recognise and enforce judgments of the courts of other member states, subject to certain limited exceptions.
On 25 March 2015, Singapore followed in the footsteps of the EU and the USA by signing the Convention. Both the USA and the EU signed the Convention in 2009. Mexico acceded to the Convention in 2007. In December last year, the EU took the final step towards internal approval of the Convention. The deposit of the EU’s instrument of approval will then begin a three month period after which the Convention will enter in to force.
We anticipate that the Convention to come in to force later in 2015. We also understand that Singapore intends to ratify the Convention after it comes into force.
Impact on the SICC
Once the Convention is in force, parties to a commercial agreement will be able to agree to submit disputes to the exclusive jurisdiction of the SICC with the certainty that the courts of the US and EU countries (as well as any member states) will be obliged to recognise and enforce SICC judgments, albeit subject to certain limited exceptions.
In this way Singapore will be able overcome one of the issues which have the potential to hinder the appeal of using the SICC – enforceability. Given that the EU and US are two of Singapore’s largest trading partners, Singapore’s signature of the Convention provides an appealing incentive for parties to submit disputes to the SICC.
This development can be seen to give more strength to the nascent SICC. In the same manner, any increase in the profile of this court can only serve to increase the profile of Singapore as a regional and global dispute resolution centre. It now remains to be seen whether other countries in the Asia-Pacific region will follow Singapore’s lead and sign the Convention.
For further information, please contact:
Alastair Henderson, Partner, Herbert Smith Freehills
alastair.henderson@hsf.com
