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18 July, 2016
On 1 August 2016, the 6th Edition of the Singapore International Arbitration Centre Rules (the "SIAC Rules 2016") will come into force. The SIAC Rules 2016 introduce noteworthy changes to the arbitration process, spurred by a desire to secure the position of the SIAC (and Singapore) as a world leader in international arbitration. Ronnie King and Sinyee Ong discuss the SIAC Rules 2016.
Introduction
The SIAC Rules 2016 contain revised provisions for disputes involving multiple contracts, consolidation of arbitrations, joinder, and other amendments designed to improve the efficiency of SIAC arbitration and increase the competitiveness of SIAC.
A potentially very significant new procedure for summary disposal of claims and defences (akin to summary judgment and strike out) has been created (Rule 29).
Multiple contracts and consolidation
The SIAC Rules 2016 now include provisions on multiple contracts and consolidation. Multiple disputes may be brought under a single arbitration proceeding so long as one of the following criteria is satisfied:
(a) all parties have agreed to consolidation;
(b) all claims in the arbitrations are made under the same arbitration agreement; or
(c) all the arbitration agreements are compatible, and the claims arise: (i) under the same legal relationship; (ii) out
of a principal contract and ancillary contracts; or (iii) the same transaction or series of transactions.
Parties may apply to consolidate on or after the filing of the notice of arbitration (Rules 6 and 8).
Applications may be made before or after the arbitral tribunal is constituted (Rule 8).
It is likely that applications will first be made to the SIAC Court and failing the grant of such application, be subsequently made to the tribunal. Applications made before the constitution of the tribunal will be reviewed by the SIAC Court, taking into account the views of the parties and the circumstances of the case. Should the SIAC Court reject the application, parties then have the option to apply to the tribunal once constituted.
The provisions may thus be used to allow consolidation in the typical multi-contract construction project (a separate briefing on this topic addressed to the construction sector will be released shortly), "string" sale of goods/cargoes and series of business dealings between the same parties.
Joinder and intervention
The SIAC Rules 2016 also include comprehensive provisions for joinder of additional parties (Rule 7). Previously, additional parties could be joined only if they expressly consented to joinder following a request to do so. This is no longer the case. Under the 2016 Rules, application for joinder and intervention may be permitted if all parties (including the additional party) consent or the additional party is prima facie a party to the arbitration agreement.
The process for joinder is similar to the process for consolidation. Likewise, applicants have "two bites at the cherry" and may apply for joinder both before and after the constitution of the tribunal. Of particular interest is the appointment of arbitrators. If joinder is granted before the tribunal is constituted, the prior appointment of any arbitrator(s) may be revoked. The additional party may then, together with the claimant/respondent, jointly nominate an arbitrator. If joinder is granted after the constitution of the tribunal, the additional party will have no say in appointment. It is deemed to waive its right to nominate an arbitrator or otherwise to participate in the appointment process. However, it retains its right to challenge an arbitral appointment.
Early dismissal of claims and defences
Rule 29 introduces a procedure for early dismissal of claims or defences which are: (a) manifestly without legal merit; or (b) manifestly outside the jurisdiction of the arbitral tribunal. An application under Rule 29 must state in detail the facts and legal basis supporting the application. The tribunal has a discretion as to whether it decides to entertain the application. If it does, the parties are then given the opportunity to be heard. An award on the application is to be rendered within 60 days of the date of the application, although the Registrar has discretion to extend time in exceptional circumstances.
This is a notable provision in institutional commercial arbitration practice and has the potential to address one of the criticisms levelled at arbitration, namely the lack of a mechanism to strike out unmeritorious claims or to obtain summary judgment on claims to which the respondent has no real defence. It remains to be seen how this provision is used in practice. In the hands of a robust tribunal, this could prove a very useful tool to secure cost-effective disposal of disputes. It may herald greater use of SIAC arbitration by banks in loan agreements where historically the absence of a summary judgment procedure has often led banks to prefer national court litigation.
Other noteworthy amendments
The SIAC Rules 2016 also bring about other noteworthy amendments designed to improve the efficiency and attractiveness of SIAC arbitration.
First, tribunals have greater autonomy over the conduct of expedited arbitration (Rule 5). Document-only arbitrations may now take place after the tribunal has consulted the parties. Party consent to document-only arbitration is not expressly required.
Second, arbitrator challenges are more transparent. Previously, the SIAC Court did not have to provide reasons for its decisions. Now, the SIAC Court is obliged to provide reasons for its decisions (Rule 16).
Third, reflecting the fact that half of SIAC's caseload does not have any connection with Singapore, the default seat of SIAC arbitrations is no longer Singapore (Rule 21). If parties have not determined the seat, this shall be determined by the tribunal.
Comment
Questions abound over how the new provisions will be applied in practice. For example, it is unclear what criteria the SIAC Court or tribunal will apply when deciding on consolidation/joinder. That said, client feedback in the construction sector has been very positive in relation to the new joinder and consolidation provisions. We have also heard interest from insurance sector clients who see scope for bringing claims involving insurance, reinsurance and insurance broking into the same arbitration.
It is also unclear whether tribunals will actually utilise the power to conduct document-only arbitrations given the tendency to allow requests for oral hearings for fear of enforcement difficulties. Furthermore, it remains to be seen how the summary judgment and strikeout procedure will be utilised.
The SIAC Rules 2016 offer a powerful collection of mechanisms to cater to multiparty/multi- contractual disputes and increase the efficiency of SIAC. These changes undoubtedly enhance Singapore's position as a leading hub for Asia- related dispute resolution.
Singapore's popularity is illustrated by recently published institutional statistics which indicate that SIAC's caseload has grown to a similar level to that of the LCIA while ICC statistics place Singapore as the most frequently chosen seat in Asia with 8 percent of ICC cases seated here.
For further information, please contact:
Ronnie King , Partner, Ashurst
ronnie.king@ashurst.com
