On 6 October 2020, the International Arbitration (Amendment) Act (the “Act“) was passed by the Singapore Parliament.
The International Arbitration Act (the “IAA“) was last amended in 2012. The arbitration landscape has significantly changed since then. In particular, Singapore has experienced a growing number of multi-party arbitrations, which may be delayed or stalled if the parties are unable to agree on a mechanism to appoint the tribunal, since the IAA did not provide for any default procedures to appoint arbitrators where more than two parties are involved. Similarly, a Court’s powers to enforce confidentiality obligations had been the subject of some debate in Singapore.
Background
Between 26 June and 21 August 2019, Singapore’s Ministry of Law conducted a Public Consultation to seek views on four proposals to amend the IAA:[1]
- Provision of a default mechanism for the appointment of arbitrators in multi-party disputes;
- Allowing parties, by mutual agreement, to request that the tribual decides on jurisdiction issues at the preliminary award stage;
- Provision of powers to the tribunals and Courts to support enforcement of confidentiality obligations in arbitrations; and
- Allowing parties to appeal questions of law to the Singapore High Court arising out of an arbitrlal award, provided that parties have agreed to opt-in to this mechanism.
The Bill introduces two of the four abovementioned proposals, while the Ministry of Law continues to study the two remaining proposals.
First Amendment: Default Procedure to Appoint Arbitrators in Multi-Party Disputes
Prior to the new amendments, the IAA did not provide for any default mechanism for appointment of arbitrators for disputes that involve more than two parties. When parties do not have any agreed-upon rules for the appointment of arbitrators, the lack of a default rule for the same presents an opportunity for a recalcitrant respondent to delay / stall multi-party arbitrations. With Singapore being an attractive venue for parties to conduct their arbitrations, there was a need for the IAA to address this gap by providing appropriate default procedures.
The Act introduces a new Section 9B to the IAA, setting out the default mechanism to appoint arbitrators to a multi-party dispute. The amendment will be particularly helpful for parties who do not have any agreement on the procedure to carry out the same. The amendment will also ensure that no party can abuse the lack of such procedure to delay / stall the arbitration, at the expense of the other parties expectations.
The new Section 9B of the IAA sets out the following default mechanism for arbitrator appointments:[2]
- The claimant, or all the claimants by agreement if there is more than one claimant, must appoint an arbitrator on or before the date of sending of the request for the dispute to be referred to arbitration and inform the respondent or respondents of the appointment on the date when the request for the dispute to be referred to arbitration is sent to the respondent or respondents;
- The respondent, or all the respondents by agreement if there is more than one respondent, must appoint an arbitrator and inform the claimant or claimants of the appointment within 30 days after the date of receipt of the request for the dispute to be referred to arbitration by the respondent, or by the last respondent to receive the request if there is more than one respondent; and
- The 2 arbitrators appointed under paragraphs (a) and (b) must by agreement appoint the third arbitrator, who is to be the presiding arbitrator, within 60 days after the date of receipt of the request for the dispute to be referred to arbitration by the respondent, or by the last respondent to receive the request if there is more than one respondent. If there is no agreement between the parties at either step (a) or (b), SIAC (being the Appointing Authority under the IAA) must, on the request of any party, appoint all 3 arbitrators and designate one of the arbitrators as the presiding arbitrator. If, however, there is no agreement between the arbitrators for the appointment of the presiding arbitrator, SIAC must, on the request of any party, appoint the presiding arbitrator.
Section 9B largely reflects equivalent provisions introduced in the latest versions of the SIAC, ICC and HKIAC Rules. Accordingly, it is likely to be most relevant to ad-hoc arbitrations or disputes where another institution is chosen to administer the arbitration. However, one difficulty that may arise in practice (which also exists with the SIAC, ICC and HKIAC Rules) is where there is no clear-cut distinction between the claimants and the respondents. Multi-party disputes frequently involve multiple cross-claims and counterclaims, which can blur the distinction between different “groups” of disputing parties. In such circumstances, the fallback position is likely to be that the arbitral institution appoints all three arbitrators. It therefore remains prudent and sensible to negotiate a bespoke mechanism for multi-party disputes in the relevant contract(s), rather than relying upon the default procedures under institutional rules or the IAA.
Second Amendment: Statutory Recognition of Court and Tribunal Powers to Enforce Confidentiality-related Obligations in Arbitration
In the past few years, Singapore Courts have had to grapple with the issue of their powers to enforce confidentiality-related obligations in arbitration.[3] While the Singapore Courts have found that they have inherent powers to enforce some of these obligations,[4] the Act hopes to expressly clarify both the Courts’ and the tribunals’ powers to enforce confidentiality-related obligations (as they apply between the parties).
It is imperative to note that the Act does not seek to codify or state what such confidentiality-related obligations are in Singapore-seated arbitrations. The content of such obligations are still determined by common law, institutional rules and/or party agreement. All the Act seeks to do is to make it easier to enforce such obligations through orders of the Court and/or the tribunal.
The Singapore Government hopes that the new amendments will strengthen the legal framework for international arbitration in Singapore and ensure that it remains responsive and relevant to evolving needs.
[1] https://www.mlaw.gov.sg/news/press-releases/public-consultation-on-proposed-amendments-to-the-international-arbitration-act#:~:text=PRESS%20RELEASES-,Public%20Consultation%20on%20Proposed%20Amendments%20to,Arbitration%20Act%20(%E2%80%9CIAA%E2%80%9D)&text=The%20Ministry%20of%20Law%20(MinLaw,June%20to%2021%20August%202019.
[2] Provisions reproduced from the Bill.
[3] See, BBW v BBX and ors [2016] 5 SLR 755.
[4] Ibid.
