A. LEGISLATION AND RULES
A.1 No Legislative Amendments to the IAA and AA in Singapore
International arbitration continues to be governed by the International Arbitration Act (IAA), the Arbitration Act (AA) and the Arbitration (International Investment Disputes) Act, to which there have been no legislative amendments in the past year.
A.2 Institutions, rules and infrastructure
The main arbitral institution in Singapore is SIAC, which is ranked second among the world’s top five arbitral institutions and the most preferred institution based in Asia. ICC statistics for 2020 showed that Singapore continued to be the most preferred seat for arbitrations in Asia and ranked sixth among the most frequently selected cities after Paris, London, Geneva, New York and Zurich. The SIAC continued to extend its global reach, most recently with its registration as a permanent arbitral institution under Russia’s Federal Law on Arbitration in May 2021. The SIAC has also signed memoranda of understanding with the Suzhou Industrial Park Administrative Committee, the Abu Dhabi Global Market Arbitration Centre, Arbitration Place in Canada, the Korea In-House Counsel Association, the Santiago Arbitration and Mediation Centre and Yonsei University Law School.
The SIAC set a new record with new case filings in 2020. It saw 1,080 new case filings, thereby marking the first time that SIAC’s caseload had crossed the 1000-case threshold. The total sum in dispute for 2020 was USD 8.49 billion (SGD 11.25 billion) which was a 4.9% increase from 2019. India was the top foreign user of the SIAC, with US and China being in the top-five foreign users of the SIAC.
Notwithstanding the lingering effects of the pandemic and the attendant disruptions to global travel and city re-openings, the SIAC, with its world-class facilities, and Singapore continue to be the preferred choice for parties to settle their disputes.
In the past year, there were a number of significant cases which further developed the law of arbitration in Singapore, in particular in relation to the following:
- The choice of law determining the arbitrability of the subject matter of disputes at the pre-award stage
- The tribunal’s broad powers to fashion relief in an arbitral award, which may have an effect on third parties
- When appeals on procedural matters from a tribunal’s decision will be allowed by the Singapore courts
- When an arbitral award may be set aside for breach of natural justice
- When the Singapore Courts would allow a stay of proceedings in favor of arbitration, conditional upon the exclusion of substantive matters for the tribunal’s determination
- When an arbitration agreement may be deemed to exist under the IAA and AA
- The circumstances under which indemnity costs may be awarded in an application to set aside an arbitral award
- The procedure for requesting a remittal of an award to the tribunal for procedural defects in the Singapore Courts.
In general, the Singapore courts have affirmed a commercial and practical approach to arbitration, which gives primacy to the parties’ intentions in choosing their dispute resolution forum. However, where the arbitral tribunal makes clear errors of fact in breach of natural justice, the Singapore courts will not hesitate to step in to correct any such errors.
B.1 Arbitrability of subject matter of disputes at pre-award stage
The jurisdiction of a tribunal is founded on the parties’ consent to arbitrate disputes. However, states retain the power to preclude certain types of subject matter from being resolved outside the national courts. While it is uncontroversial that certain subject matters are non-arbitrable, it is much less clear or established what system of law determines whether the subject matter is arbitrable. At the pre-award stage, two systems of law may possibly be relevant to determining subject matter arbitrability: the law of the arbitration agreement, or the law of the seat.
In Westbridge Ventures II Investment Holdings v Anupam Mittal  SGHC 244, the High Court concluded that the law of the seat applies to determine subject matter arbitrability at the pre-award stage.
In this case, the plaintiff and the defendant had entered into a shareholders’ agreement that contained an agreement to arbitrate, with Singapore chosen as the seat of arbitration and Indian law as the governing law. Following a dispute between the parties, the defendant commenced proceedings in the Indian courts claiming minority oppression and mismanagement under Indian law. The plaintiff thereafter applied for an anti-suit injunction in the Singapore courts, on the basis that the defendant had breached the arbitration agreement by commencing an action in the Indian courts. The defendant contended that its claims in the Indian courts were non-arbitrable under Indian law (being the law of the arbitration agreement) and accordingly, there was no breach of the arbitration agreement. Conversely, the plaintiff argued that the claim was arbitrable under Singapore law (as the law of the seat), such that the defendant’s commencement of a court action in India was in breach of the arbitration agreement.
The High Court agreed with the plaintiff and granted the anti-suit injunction. In the High Court’s view, applying the law of the seat to determine the issue of arbitrability at the pre-award stage was preferred over applying the proper law of the arbitration agreement. The High Court cited four main reasons for its conclusion:
Firstly, subject matter arbitrability (when raised at the pre-award stage before the seat court) is essentially an issue of jurisdiction. Given that the purpose of the non-arbitrability rule is to limit party autonomy where such autonomy conflicts with the public policy of the state being asked to give effect to the arbitration agreement, it should be the domestic law of the seat court that applies to determine if the subject matter is non-arbitrable.
Secondly, the same law should apply to arbitrability issues at both the pre-award and post-award stages, since it is uncontroversial that the seat court applies its own laws when determining non-arbitrability at the post-award stage, the same law should apply at the pre-award stage.
Thirdly, applying the law of the seat at the pre-award stage was more consistent with the policy to promote international commercial arbitration, and it would not be necessary nor desirable to give effect to foreign non-arbitrability rules which conflict with the public policy of the seat.
Fourthly, the weight of authority available leans in favor of the law of the seat being applied.
The High Court’s decision is presently the subject of an appeal.
B.2 Court of Appeal affirms tribunal’s broad powers to fashion relief
In the case of Bloomberry Resorts and Hotels Inc and another v Global Gaming Philippines LLC and another  SGCA 9, the Court of Appeal affirmed that an arbitral tribunal’s remedial powers are broad and akin to a court’s powers, as is set out in section 12(5)(a) of the IAA and section 4(2) of the AA. While a tribunal’s orders cannot bind a non-party to the arbitration, the tribunal can make an order which obliges a party to the arbitration to direct a third party (such as an agent or controlling shareholder) to cooperate or take certain steps. Nevertheless, a tribunal does not have the power to enforce its own awards, orders and directions as that is a matter squarely within the domain of the courts.
In the above-mentioned case, the tribunal had ordered the appellants to pay the respondents the value of shares in the appellants’ parent company (BRC), failing which, the respondents were entitled to sell the shares on the market and the appellants were to direct PMHI (BRC’s majority shareholder and the appellant’s controlling shareholder) to facilitate the sale of the shares (“Constructive Remedy“). The appellant applied to the High Court to set aside the award or, alternatively, to resist enforcement. The appellant argued, among other things, that the Constructive Remedy was a matter falling beyond the scope of submission to the arbitration. The High Court dismissed the appellants’ application. Thereafter, the appellants appealed.
The Court of Appeal agreed with the High Court and dismissed the appeal. The Court of Appeal noted that the tribunal’s order did not purport to bind PMHI (as a third party and non-party to the arbitration) and only imposed obligations on the appellants to direct PMHI to cooperate. The court also disagreed with the appellant’s argument that the tribunal had attempted to enforce its own orders. In the court’s view, the tribunal had fashioned the Constructive Remedy to compensate the respondents for the losses occasioned to them and did not seek to enforce its prior orders. The Constructive Remedy was a pragmatic solution to the realities of the situation, aimed at facilitating the sale of the shares. Similar to a court, the tribunal had fashioned a remedy in light of all the circumstances and could not be faulted for doing so.
B.3 “Back-door” appeals of a tribunal’s decision to the Singapore Courts will not be permitted
The principle of minimal curial intervention is a cornerstone of arbitration, as enshrined in article 5 of the Model Law. The Singapore courts are therefore loath to allow applications that amount to “back-door” appeals of a tribunal’s decision. This was evident in the Singapore Court of Appeal’s decision in Republic of India v Vedanta Resources Plc  SGCA 50.
The Republic of India (“India“) was a party to two separate but related arbitrations. Both arbitrations arose from the same bilateral investment treaty (BIT) and in the context of the same underlying transaction. To avoid conflicting decisions, India applied for cross-disclosure of documents between the two arbitrations. However, the tribunals in the two arbitrations reached different conclusions on the burden of proof regarding disclosure. One tribunal held that the burden of obtaining disclosure rested on the party seeking disclosure, whereas the other tribunal held that the burden rested on the party resisting disclosure.
Against this backdrop, India applied to the Singapore court to obtain declaratory relief, arguing that it could disclose documents from one arbitration in the second arbitration without breaching any obligations of confidentiality or privacy. India hoped to use the court’s judgment as a persuasive tool to ask one of the tribunals to reconsider its orders.
The Court of Appeal rejected India’s application. Among other things, the Court of Appeal found the application to be a blatant violation of the principle of minimal curial intervention. For the court to entertain such applications would allow any party dissatisfied with a tribunal’s decision on a procedural matter which the party claims is not covered by existing case law, to invite the court to rule on the procedural matter to use the ruling as a tool to persuade the tribunal to reconsider its decision. The Court of Appeal also found that India’s attempt to obtain an abstract ruling of law to place pressure on the tribunal was vexatious and amounted to a relitigation of issues that had been placed before that tribunal.
B.4 Setting aside an arbitral award for breach of natural justice
An arbitral award may be set aside if there is a breach of natural justice. Two cases show the different situations where the Singapore courts would consider it appropriate to set aside an award on this basis.
B.4.1 CAJ v CAI  SGCA 102
In CAJ v CAI  SGCA 102, the defendant had raised an extension of time (EOT) defense for the first time in its written closing submissions. Although the claimant had responded to the defense in its own written closing submissions, the defense had not been raised during the oral hearing and so there had been no opportunity to adduce evidence or to cross-examine witnesses on the requested EOT. In its award, the tribunal accepted that there had been no direct evidence before it on the issue, but nevertheless considered itself capable of fairly and reasonably determining an appropriate EOT, in view of its own experience in these matters.
The Court of Appeal set aside part of the arbitral award, finding that this was a classic case of a breach of natural justice. The EOT defense was a completely new defense, which the claimant did not have notice of until its belated appearance in the defendants’ closing submissions. Further, the claimant did not have the opportunity to respond to the tribunal’s unarticulated “experience”, which the tribunal relied on to reach its findings.
B.4.2 Convexity Ltd v Phoenixfin Pte Ltd and others  SGHC 88
In Convexity Ltd v Phoenixfin Pte Ltd and others  SGHC 88, the General Division of the High Court (“High Court“) set aside an award in circumstances where the tribunal had allowed the introduction of an unpleaded issue for determination at a late stage in the proceedings, without the parties’ agreement. The first respondent had attempted to introduce an issue regarding penalty clauses (“Penalty Issue“) less than a month before the evidentiary hearing, and the tribunal initially decided against allowing the first respondent’s attempts to, among other things, call expert evidence and amend its pleadings, given the late stage of proceedings. At a subsequent oral hearing, however, the tribunal asked the claimant’s counsel to address the Penalty Issue. Following the oral hearing, the tribunal issued its final award which dismissed the claimant’s claims on the sole basis of the Penalty Issue. The tribunal held that the parties had agreed that the Penalty Issue would be an issue in the arbitration, irrespective of the pleadings. The claimant applied to set aside the award. The High Court found that the introduction of the Penalty Issue was a breach of natural justice. The tribunal erroneously thought that the claimant had agreed to the late introduction of the Penalty Issue into the arbitration and failed to consider the claimant’s clearly articulated objections to the same. The breach of natural justice caused the claimant real prejudice, as the introduction of the Penalty Issue would reasonably have made a difference to the outcome.
While cases of arbitral awards being set aside are uncommon, these two cases show that the Singapore courts will intervene when there are meritorious challenges, where a party has not been given an opportunity to respond, or where the tribunal had given its award based on a clear factual error.
B.5 Conditional stay of proceedings in favor of arbitration
Where parties agree to submit disputes to arbitration by an agreement to arbitrate and one party commences a court action in breach of the arbitration agreement, the other party will typically apply for (and obtain) a stay of those proceedings. In The “Navios Koyo”  SGCA 99, the question arose as to whether, in granting a stay, the Singapore courts can impose conditions on the grant of a stay, such that substantive issues which would otherwise be decided in the arbitration can be effectively excluded from the arbitration, including the defense of a time bar.
There, the Singapore Court of Appeal held that it would be exceedingly slow to exclude substantive defenses from the jurisdiction of the tribunal. The Court of Appeal identified three factors that would be relevant to the exercise of the court’s discretion whether to impose such a condition, namely: (a) the reasons for the conditions being sought, and whether those reasons could have been obviated by the applicant’s own conduct; (b) whether the need for any of the conditions was contributed to or caused by the conduct of the respondent; and (c) the substantive effect on the parties of any condition that the court may impose.
Applying these factors, the Court of Appeal found that it was not appropriate to impose the condition that the appellant sought, namely that the respondent waives its right to rely on a defense of a time bar in an arbitration seated in London (as had been agreed under the parties’ arbitration clause). The appellant had argued that an unconditional stay would cause undue and disproportionate hardship to the appellant when it had done all that was reasonable to protect itself in light of the time bar. The Court of Appeal rejected the appellant’s contention. In the court’s view, any hardship was the result of the appellant’s own conduct in failing to commence arbitration from the very outset given the existence of the arbitration clause which had been incorporated in the relevant agreement between the parties. Moreover, there was no suggestion of any wrongdoing by the respondent that contributed to the appellant’s omission, and imposing the condition sought by the appellant would deprive the respondent of an accrued and substantive defense.
B.6 Deeming provisions in arbitration legislation have limited purpose
Section 4(6) of the AA and section 2A(6) of the IAA both provide that an arbitration agreement is deemed to exist where: (i) there is an assertion of the existence of an arbitration agreement in a pleading, statement of case, or any other document in circumstances in which the assertion calls for a reply; and (ii) this assertion is not denied by the other party. On an expansive interpretation, these provisions could be construed as operating to deem the formation of an arbitration agreement, even if there was no such pre-existing arbitration agreement.
The Court of Appeal in Cheung Teck Cheong Richard and others v LVND Investments Pte Ltd  SGCA 77 has rejected such an expansive interpretation of these deeming provisions. The Court of Appeal clarified that the abovementioned provisions serve a limited purpose of precluding parties (who have not denied the existence of an arbitration agreement) from relying on the absence of an agreement in writing to challenge the validity of the arbitration agreement. Those provisions cannot be construed so broadly as to allow the creation or formation of new arbitration agreements.
While the Court of Appeal’s decision concerned the scope of section 4(6) of the AA, the Court of Appeal also expressed the tentative view that section 2A(6) of the IAA also had the same limited effect since both provisions were substantially similar. In doing so, the Court of Appeal expressed doubt with respect to the reasoning adopted in an earlier High Court decision (Vitol Asia Pte Ltd v Machlogic Singapore Pte Ltd  SGHC 209) which appeared to assume that section 2A(6) of the IAA could deem an arbitration agreement into existence.
B.7 No default position regarding awarding indemnity costs in setting aside applications
Several Hong Kong decisions have taken the position that there should be a presumption of indemnity costs in the event of an unsuccessful application for setting aside an arbitral award. The Singapore Court of Appeal in CDM and another v CDP  SGCA 45 declined to follow the Hong Kong courts’ approach. Instead, the Court of Appeal reiterated the well-established principle in Singapore that the imposition of costs on an indemnity basis was dependent on there being exceptional circumstances to warrant a departure from the usual course of awarding costs on a standard basis.
B.8 Request for remittal must be made to the High Court and not the Court of Appeal
The remedy of remitting an award back to the tribunal is available where a party seeks to cure procedural defects in an award, without resorting to a setting aside of the award altogether. Specifically, article 34(4) of the Model Law provides that the court which is asked to set aside an award may suspend the setting aside application and give the tribunal an opportunity to resume arbitral proceedings or take such actions to eliminate the ground for setting aside. In CBS v CBP  SGCA 4, the Singapore Court of Appeal held that only the High Court, and not the Court of Appeal, had the power to order a remittal to the tribunal. This was because the “court” referred to in article 34(4) of the Model Law was the same court referred to in article 34(2) of the Model Law, namely, the High Court.
Accordingly, parties who wish to request for a remittal of an award back to the tribunal would be well advised to seek early advice on the merits of doing so, given that such a request must be made when a setting aside application is brought before the High Court.
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