SINGAPORE

Nandakumar Ponniya, Daniel Ho and Daljit Kaur

A. LEGISLATION AND RULES

A.1      Legislation

International arbitration continues to be governed by the International Arbitration Act (IAA), the Arbitration Act and the Arbitration (International Investment Disputes) Act, to which no legislative amendments have been made.

However, the Ministry of Law launched a public consultation[1] on proposed amendments to the IAA in June 2019, with changes likely to be made to enhance the current framework to provide parties with more options to tailor their international arbitration agreements to suit their unique purposes. The contemplated amendments to the IAA include (1) default appointment of arbitrators in multi-party situations; (2) allowing parties to request jurisdictional issues to be dealt with at a preliminary stage; (3) providing powers to arbitral tribunals and the courts to support the enforcement of confidentiality obligations; (4) an “opt-in” mechanism for parties to appeal arbitral awards to the High Court on questions of law; and (5) allowing parties to limit or waive their right to request annulment for one of the reasons set out in section 24(b) of the IAA and article 34(2) of the UNCITRAL Model Law.

In February 2019, the Singapore Academy of Law Law Reform Committee concluded a study on issues concerning costs in arbitration-related court proceedings. The Law Reform Committee’s report[2] recommended a legislative amendment to empower courts to make orders providing for costs of arbitration following a successful application to set aside an award in whole or in part under section 24 of the IAA or article 34(2) of the UNCITRAL Model Law. The report also proposed the introduction of new measures to provide guidance to the courts in making orders in respect of the costs of arbitral proceedings. These recommendations were also contemplated in the Ministry of Law’s public consultation on amendments to the IAA.

A.2      Institutions, Rules and Infrastructure

The main arbitral institution in Singapore is the SIAC, which is recognized as one of the top three most-preferred arbitral institutions in the world and the most preferred institution based in Asia.[3] The SIAC continued to extend its reach into East Asia, signing memorandums of understanding (MOU) with the Shanghai International Arbitration Center (SHIAC) in May 2019,[4] the Japan Association of Arbitrators (JAA) and the Japan International Dispute Resolution Center (JIDRC) in June 2019,[5] and the Beijing Arbitration Commission / Beijing International Arbitration Center (BAC/BIAC) in October 2019.[6] To promote international arbitration as the preferred dispute resolution mechanism for Belt and Road projects, the SIAC also co-hosted the 2019 Singapore Summit on Commercial Dispute Resolution in China with BAC/BIAC as part of its new partnership.[7]

Separately, the ICC has established the ICC Singapore Arbitration Group in June 2019 to promote ICC arbitration in the region.[8] In December 2019, the Permanent Court of Arbitration launched its Singapore office, which will promote Singapore as a venue for international arbitration and better serve the dispute resolution needs in the region.[9] 

B. CASES

B.1      Court of Appeal decides that an arbitral award made in the wrong seat will not be enforced

In ST Group Co Ltd and others v Sanum Investments Limited and another appeal,[10] the Singapore Court of Appeal held that once arbitration is incorrectly seated, any subsequent award would not be recognized or enforced by the courts in the absence of a waiver by the parties.

The Court of Appeal reasoned that arbitration proceedings derive their force and binding character from the parties’ agreement by free choice. As party autonomy is of central importance to the legitimacy and binding nature of an arbitral award, the courts must give full effect to the parties’ choice of the seat of arbitration.

In this case, the parties entered into a joint venture arrangement (“Master Agreement”), which included a complex multi-tier dispute resolution clause that provided for arbitration in Macau. The Master Agreement envisaged that the parties would enter into “sub-agreements ,” one of which was entered into on 6 August 2007 (“Participation Agreement”). The Participation Agreement provided for arbitration in Singapore under the SIAC rules. A dispute arose between the parties and the respondent commenced arbitration proceedings in Singapore under the SIAC rules. The SIAC‑appointed tribunal ruled in favor of the respondent, who then applied for leave to enforce the award in Singapore.

The Court of Appeal ruled that as the dispute arose over a term in the Master Agreement, which had provided for Macau as the seat of arbitration, the correct seat of arbitration should have been Macau. The SIAC arbitration was therefore incorrectly seated in Singapore and the court could not enforce the award to uphold the parties’ autonomy in choosing Macau as the seat of arbitration.

Furthermore, as the appellants had objected to the tribunal’s jurisdiction from the onset and did not participate in the SIAC arbitration, they did not waive their choice of Macau as the seat of arbitration. The court also held that it was unnecessary for a party resisting enforcement of an award arising out of an incorrectly seated arbitration to demonstrate actual prejudice arising from the wrong seat. Instead, it is sufficient that had the arbitration been correctly seated, a different supervisory court would have been available to the parties should court recourse be necessary.

B.2      Court of Appeal upholds parties’ choice of law governing the arbitration agreement even if it may invalidate the parties’ intention to resolve disputes by arbitration

In BNA v BNB and another,[11] the Singapore Court of Appeal held that whether the parties’ intention to arbitrate is enforced ultimately depends on the proper construction of the arbitration agreement. While important, the Court of Appeal warned that such intention cannot be given effect at all costs. The choice to arbitrate in a certain manner by identifying the seat and other aspects of the arbitration also has to be given effect to by the process of construction.

In this case, the parties had entered into a Takeout Agreement (TA) that was governed by PRC law. The arbitration agreement in the TA provided for disputes to be finally “submitted to the Singapore International Arbitration Centre (SIAC) for arbitration in Shanghai” but omitted to provide an express choice of governing law for the arbitration agreement itself. After a dispute arose, the respondents filed a Notice of Arbitration and the appellant responded by challenging the tribunal’s jurisdiction. The majority of the SIAC-appointed tribunal ruled that it had jurisdiction and the appellant applied to the Singapore High Court for a declaration that the tribunal lacked jurisdiction. The High Court dismissed the jurisdictional challenge ruling that the parties implicitly chose Singapore as the arbitral seat and that Singapore law governed the arbitration agreement. This decision was appealed to the Singapore Court of Appeal.

The central issue was the proper law of the arbitration agreement. Applying a three-stage inquiry, the Court of Appeal first held that the parties did not make an express choice of law for the arbitration agreement. There was however an implied choice based on the law of the substantive contract where the arbitration agreement was integrated into and formed part of the substantive contract, namely PRC law. The court found that as there was nothing to displace this implied choice and the dispute resolution clause had referred to “arbitration in Shanghai ,” the law of the arbitration agreement was accordingly PRC law.

The Court of Appeal rejected the respondents’ argument that the parties’ pre-contractual negotiations and the potentially invalidating effect of PRC law on the arbitration agreement could displace the implied choice of PRC law as the law of the arbitration agreement. First, it held that pre-contractual negotiations were not admissible as evidence because of the parol evidence rule. Second, the effect of the choice of law on the arbitration agreement was irrelevant since there was no evidence that the parties were even aware of the potential effect of the law of the arbitration agreement on the validity of the arbitration agreement. Finally, the Court of Appeal regarded the fact that Shanghai is not a law district (compared to Singapore) as irrelevant since it was common for commercial parties to only specify either the city or country in their arbitration agreements. Where parties have specified only one geographical location in an arbitration agreement, particularly where the choice is expressed as “arbitration in [that location] ,” that location ought most naturally to be construed as a reference to the parties’ choice of seat.

B.3      Court of Appeal decides that a party is not precluded from applying to set aside an arbitral award for lack of jurisdiction after refusing to participate in arbitral proceedings

In Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd,[12] the Singapore Court of Appeal held that a respondent to arbitration proceedings, who declined to participate in those proceedings because the respondent was of the view that they had been wrongly started or continued due to a lack of jurisdiction, was entitled to stand by while the claimant proceeded with the arbitration without losing the right to challenge the jurisdiction of the tribunal in setting aside proceedings before the supervisory court. Further, the respondent could let the opportunity to challenge the tribunal’s jurisdiction go unutilized without losing the right to raise the tribunal’s lack of jurisdiction as a ground to set aside the tribunal’s award.

In this case, Avant Garde Maritime Services (Pte) Ltd (AGMS) had commenced arbitration proceedings against Rakna Arakshaka Lanka Ltd (RALL). The parties subsequently reached a settlement that was encapsulated in a memorandum of understanding (MOU). Relying on the MOU, RALL wrote to the tribunal requesting that the arbitration be withdrawn. AGMS however subsequently sent a letter to the tribunal stating that it was “not in a position to withdraw” the arbitration in light of recent developments. The tribunal proceeded with the arbitration, which RALL did not participate in, and made a final award in favor of AGMS.

RALL then commenced proceedings to set aside the award on inter alia the ground that the tribunal lacked jurisdiction as the dispute had been settled by the MOU. AGMS argued that RALL was precluded from challenging the tribunal’s jurisdiction by virtue of article 16(3) of the UNCITRAL Model Law, which imposes a time bar of 30 days to appeal a tribunal’s preliminary ruling on its jurisdiction.

The Court of Appeal set aside the award on the basis that there was no dispute for the arbitral tribunal to rule on in light of the MOU. It also held that article 16(3) did not extend to a respondent who stays away from arbitration proceedings and has not contributed to any wastage of costs or the incurring of any additional costs that could have been prevented by a timely application under article 16(3). The Court of Appeal reasoned that the law does not compel a respondent to take part in arbitration proceedings and he is entitled to avail himself of all remedies that the law affords him when confronted with an award by a tribunal that he believes lacks jurisdiction.

B.4      Singapore International Commercial Court decides that it does not have the power to extend time limit imposed on bringing a setting aside application

In BXS v BXT,[13] the Singapore International Commercial Court (SICC) heard its first application to set aside an arbitral award and held that it did not have the power to extend the time limit imposed on bringing an application to set aside an award, particularly in circumstances where a setting aside application that has been brought out of time lacks merit.

In this case, the plaintiff applied on 9 November 2018 to set aside an arbitral award made on 12 June 2018. The defendant applied to strike out the plaintiff’s application on the ground that it was out of time under article 34(3) of the UNCITRAL Model Law, which states that a setting aside application may not be made after three months have elapsed from the date on which the party making that application had received the award. The plaintiff argued that it was entitled to a retrospective time extension and that the SICC had the power to do so.

After surveying the case law which did not reveal a consistent international practice in relation to the extension of time for setting aside arbitral awards, the SICC then looked to the natural and ordinary meaning of the language in article 34(3), which provides as follows:

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or if a request had been made under article 33, from the date on which that request had been disposed of by the arbitral tribunal.

The SICC held that the phrase “may not” imposes a mandatory limit and the right to apply to set aside an award is extinguished once the three months have passed.

Consequently, the SICC lacks the power to grant a time extension upon the expiry of three months because the power to extend time under the Supreme Court of Judicature Act applies only to deadlines for the taking of a procedural step, but not to extend a right of action which has been extinguished by a time limit under some written law. The SICC added that article 5 of the Model Law suggests that the Model Law is meant to be self-contained and the courts cannot invoke a statutory power that is extraneous to the Model Law to intervene in arbitration proceedings.

B.5      Court of Appeal decides that an anti-suit injunction against foreign proceedings in breach of the arbitration agreement would not be granted after judgment has been issued

In Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd,[14] the Court of Appeal held that it would be less willing to grant anti-suit and anti-enforcement injunctions where there has been a delay in bringing such applications and exceptional circumstances must be shown for the courts to grant such reliefs.

On anti-suit injunctions, the Court of Appeal reasoned that its jurisdiction to grant anti-suit relief must be exercised with caution because such relief can indirectly interfere with foreign proceedings. Comity considerations become relevant where there is a delay in bringing the application because more time, effort and expense will be wasted by the abandonment of proceedings which compliance with an anti-suit injunction would bring about. The Courts will also have regard to the extent to which the delay has allowed foreign proceedings to progress.

Similarly, because an anti-enforcement injunction proscribes the enforcement of a foreign judgment on pain of contempt proceedings in the jurisdiction where the injunction is granted, the Court of Appeal held that granting such relief is comparable to nullifying the foreign judgment or stripping the judgment of any legal effect when only the foreign court can set aside or vary its own judgments. Where a foreign judgment has already been delivered, exceptional circumstances, such as fraud or where the applicant had no knowledge that the judgment was being sought until after the judgment was rendered, must be shown for the court to exercise its equitable jurisdiction to grant anti-suit or anti-enforcement relief.

In this case, the respondent commenced enforcement proceedings to enforce its arbitral awards against the appellant in the Maldivian courts. The appellant resisted the enforcement application and lodged a civil action against the respondent for alleged misrepresentations and breach of contract claims similar to those it had sought in the arbitration proceedings. The respondent raised jurisdictional objections to the civil proceedings but the Maldivian Civil Court rejected the argument and ruled in favor of the appellant. Its judgment was also relied on to refuse the respondent’s enforcement of the arbitral awards. It was at this stage that the respondent applied for anti-suit and anti-enforcement injunctions against the appellant. By this time, the Maldivian courts had already delivered its judgments and an appeal was underway.

The Court of Appeal reversed the High Court’s decision to grant the reliefs sought in light of the respondent’s delay in bringing the application and the absence of any exceptional circumstances to justify granting relief. It added that the respondent could and should have simultaneously sought injunctive relief from the Singapore Courts while making jurisdictional objections in the Maldivian court.

B.6      Court of Appeal decides that a stay of court proceedings would be granted only where there is a real and imminent risk of overlapping issues in separate legal proceedings

In Rex International Holding Ltd and another v Gulf Hibiscus Ltd,[15] the Court of Appeal clarified when a stay of court proceedings should be granted on the ground of case management. Typically, the issue of case management arises when there is some overlap in the parties to the arbitration and the issues engaged in the arbitration and the court proceedings. There must, therefore, be the existence or at least the imminence of separate legal proceedings giving rise to a real risk of overlapping issues, without which it would be premature to consider or grant a case management stay.

In this case, the respondent commenced court proceedings against the appellants in respect of wrongdoings in relation to joint ventures between the parties. The appellants sought a stay of the proceedings, relying on a dispute resolution clause in a shareholders’ agreement entered into by their subsidiary and the respondent, which provided for arbitration. The appellants, however, were not privy to that shareholders’ agreement and were neither bound by nor entitled to invoke it on their own. Nevertheless, the High Court upheld the Assistant Registrar’s decision to grant a conditional stay.

The Court of Appeal held that the stay should not have been granted in the first place since there was no arbitration agreement that applied to the dispute in the court proceedings. It added that had the High Court considered the substance of the putative arbitration, it would have been clear that the putative arbitration was a largely illusory one since the appellants’ subsidiary was not being sued by the respondent and did not have any claims to bring against the respondent either.

 

[1] Ministry of Law, Public Consultation on Proposed Amendments to the International Arbitration Act, 26 June 2019, https://www.mlaw.gov.sg/news/public-consultations/public-consultation-on-international-arbitration-act.

[2] Singapore Academy of Law Law Reform Committee, Report on Certain Issues Concerning Costs in Arbitration-related Court Proceedings, February 2019, https://www.sal.org.sg/Portals/0/PDF%20Files/Law%20Reform/2019-02%20-%20Costs%20in%20Arbitration-Related%20Court%20Proceedings.pdf.

[3] SIAC, SIAC is Most Preferred Arbitral Institution in Asia and 3rd in the World, 10 May 2018, https://www.siac.org.sg/69-siac-news/568-siac-is-most-preferred-arbitral-institution-in-asia-and-3rd-in-the-world.

[4] SIAC, SIAC Signs Memorandum of Understanding with the Shanghai International Arbitration Center, 27 May 2019, https://www.siac.org.sg/images/stories/press_release/2019/[Press%20Release]%20SIAC%20Signs%20MOU%20with%20the%20Shanghai%20International%20Arbitration%20Center.pdf.

[5] SIAC, SIAC Signs Memoranda of Understanding with the Japan Association of Arbitrators and the Japan International Dispute Resolution Center, 6 June 2019, https://www.siac.org.sg/images/stories/press_release/2019/[Press%20Release]%20SIAC%20Signs%20Memoranda%20of%20Understanding%20with%20the%20Japan%20Association%20of%20Arbitrators%20and%20the%20Japan%20International%20Dispute%20Resolution%20Center.pdf.

[6] SIAC, SIAC Signs Memorandum of Understanding with the Beijing Arbitration Commission/ Beijing International Arbitration Center, 15 October 2019, https://www.siac.org.sg/images/stories/press_release/2019/[Press%20Release]%20SIAC%20Signs%20MOU%20with%20the%20Beijing%20International%20Arbitratio….pdf.

[7] BAC, 2019 Singapore Summit on Commercial Dispute Resolution in China Successfully Held, 29 October 2019, https://www.bjac.org.cn/english/news/view?id=3604.

[8] Singapore Business Federation, ICC Singapore Arbitration Group to raise Singapore’s profile in international arbitration and dispute resolution, 26 June 2019, https://www.sbf.org.sg/icc-singapore-arbitration-group-to-raise-singapore-s-profile-in-international-arbitration-and-dispute-resolution.

[9] PCA, Permanent Court of Arbitration launches office in Singapore, 11 December 2019, https://pca-cpa.org/wp-content/uploads/sites/6/2019/12/20191211-Press-Release-PCA-Office-Launch-English.pdf.

[10] [2019] SGCA 65.

[11] [2019] SGCA 84.

[12] [2019] SGCA 33.

[13] [2019] SGHC(I) 10.

[14] [2019] SGCA 10.

[15] [2019] SGCA 56.