In the past five years, the international dispute resolution landscape in Asia has evolved at a rapid pace. Singapore and Hong Kong have emerged as leading global centres for dispute resolution, and have been at the forefront of many institutional and legislative developments. But change has not been confined to these two jurisdictions. There have been significant developments across Asia in the race to offer users the next best thing in international dispute resolution. These include major legislative changes, arbitration rules revisions, and the opening of new state-of-the-art facilities for mediation and arbitration.1
This article focuses on Singapore and Hong Kong, as the leading international dispute resolution hubs in the region. It first discusses some of the key developments in international arbitration in those jurisdictions. It then explores two recent developments in mediation and litigation in Singapore, namely the launch of the Singapore International Mediation Centre and the Singapore International Commercial Court. Finally, it looks to the future, and identifies a few developments that are currently in the pipeline.
Developments in International Arbitration
A 2015 leading international arbitration survey ranks Hong Kong and Singapore as the third and fourth most preferred and widely used seats in International Arbitration globally, behind the traditional arbitration hubs of London and Paris. Singapore has also been voted the most improved arbitral seat over the past five years, with Hong Kong coming in second place. This was based on factors such as better hearing facilities, availability of quality arbitrators who are familiar with the seat, better local arbitral institutions and improvements to the national arbitration law..2
For instance, the HKIAC launched renovated and expanded premises in October 2012, not long after Singapore launched Maxwell Chambers, a dedicated centre for arbitration and mediation services in January 2010. The new Hong Kong Arbitration Ordinance came into effect on June 1, 2011, substantially based on the UNCITRAL Model Law on International Commercial Arbitration (including many of the 2006 revisions). Singapore’s International Arbitration Act was most recently updated in 2012.
In the same 2015 survey, HKIAC and SIAC are ranked as the third and fourth most preferred arbitral institutions, behind the institutional leaders for the past 10 years, the International Chamber of Commerce (“ICC”) and London Court of International Arbitration (LCIA). The HKIAC has been voted the most improved arbitral institution over the last five years, with the SIAC coming in second place. This was based on factors such as reputation and recognition, greater efficiency, high level of administration and introduction of innovative new features in the arbitral rules.3 This is also borne out by the steady rise in number of new cases filed at each institution. The SIAC has seen the number of new cases rise from 99 in 2008 to 222 in 2014 (down slightly from an all-time high of 259 in 2013). Reflecting a similar trend, the number of new fully administered cases filed at the HKIAC has risen from 16 in 2010 to 110 in 2014.4
The SIAC substantially revised its rules in 2010 (and further modified them in 2013, when it introduced the SIAC Court of Arbitration) and the HKIAC conducted a major revision of its rules in 2013. Among the “innovative features” introduced into the SIAC and HKIAC Arbitration Rules were provisions for emergency arbitrators, an expedited procedure, and guidelines on the use of arbitral secretaries.
- Emergency Arbitrators
In July 2010, the SIAC became the first international arbitral institution based in Asia to introduce emergency arbitrator provisions.5 This was followed by the HKIAC in 2013.6 These provisions allow a party to seek interim relief from an emergency arbitrator prior to the constitution of the tribunal and without having to resort to the courts. The SIAC Rules provide for the appointment of an emergency arbitrator within one business day and the HKIAC Rules provide for such an appointment to be made within two days. As of October 1, 2015, a total of 46 applications for emergency arbitrator relief had been filed with the SIAC (27 of which were granted, including in part and by consent).7 The procedure has a good track record in terms of both speed and effectiveness: SIAC emergency arbitrator orders or awards have been issued, on average, around 8 to 10 days after hearing the parties, and in some cases only two days after doing so.8 We understand that SIAC emergency arbitrator orders and awards have in most instances been voluntarily complied with, and where that is not the case they have been given effect to by courts, including outside of Singapore.9
The availability of emergency arbitrator relief is particularly useful in situations where interim relief from a court is either not available or would be ineffective, where confidentiality is a key concern, or where a creative interim solution is sought. The high degree of voluntary compliance with orders and awards of Emergency Arbitrators has been attributed to the fact that parties do not want to lose credibility before the main tribunal, once constituted.
- Expedited Procedure
Another innovation introduced by the SIAC in 2010 was the expedited procedure. This is a procedure which provides for the arbitration to be determined by a sole arbitrator within six months after being appointed, with a reasoned award in summary form. Either party may apply for the adoption of the emergency procedure where: (i) the amount in dispute does not exceed the equivalent of SGD 5 million (approx. USD 3.6 million); (ii) the parties so agree, or (iii) in cases of exceptional urgency.10A similar provision is contained in the HKIAC Rules, with a HKD 25 million (approx. USD 3.2 million) threshold amount.11 In Singapore, the expedited procedure has proved popular, with SIAC reporting a total of 216 applications since 2010 (of which 132 were granted) as of October 1, 2015.12Singapore courts have also demonstrated a willingness to uphold the application of the expedited procedure under the SIAC Rules, even where the arbitration agreement was entered into before the expedited procedure was introduced into the SIAC Rules.13
It is of course open to the parties to agree in their dispute resolution clauses for the expedited procedure to apply to all disputes, and the SIAC provides a specific model clause for this.14 This may be useful for straightforward agreements and/or where significant amounts are not at stake. In more complex disputes, parties could also consider whether the threshold amount is appropriate. For instance, in large transactions, the parties may decide that a “small” dispute is one with less than, say, USD 10 million in dispute; the parties could therefore opt for the expedited procedure to apply in all disputes with a value of less than USD 10 million.
- Guidelines on Use of Arbitral Secretaries
The HKIAC and SIAC have also responded to concerns regarding the use of tribunal secretaries. In an effort to more clearly define the role of arbitral secretaries, the HKIAC has issued detailed provisions regarding the appointment, removal, remuneration and duties of tribunal secretaries and defining the tasks that can be performed by a secretary, subject to party agreement or tribunal direction.15 The HKIAC is also offering the services of members of the HKIAC Secretariat to act as tribunal secretaries. The SIAC has also introduced a practice note on the appointment of arbitral secretaries.16
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Thus, both in Singapore and Hong Kong, there has been a pattern of regular revisions to the arbitral rules and arbitration laws to pioneer new developments, and to take account of international best practices developed elsewhere. This process of regular upgrading and refinement has resulted in substantial convergence between the arbitration laws and institutional rules in Singapore and Hong Kong (as well as in other jurisdictions across the region). There still remain some key differences,17but these are really differences in emphasis rather than approach.
The choice of arbitral seat is a key decision for the successful resolution of any dispute. As a general rule, if a party is not willing to litigate in the courts of a particular jurisdiction, it should be wary of seating its arbitration there – because it is those courts which will supervise and support (or undermine) the arbitral process and rule on the validity of an arbitral award, if challenged. It is therefore not a good idea to experiment with seats. Beyond Singapore and Hong Kong, there are some other good seats in the region. But there are also plenty to be avoided. The best approach with arbitral seats (as with institutions) is to stick to the tried and tested, and to keep things simple. Within Asia, Singapore and Hong Kong are not the only options, but they are a good place to start.
Developments in Mediation and Litigation
Looking beyond the arbitration “market”, Singapore has recently sought to expand its menu of international dispute resolution offerings. Specifically, within the last year it has launched the Singapore International Mediation Centre (“SIMC”) and the Singapore International Commercial Court (“SICC”). These reflect a deliberate strategy by the Singapore government to build on its success as a hub for international arbitration by expanding its “product lines.” The stated goal is that the SIMC and SICC should be complementary of international arbitration and the SIAC, and not in competition with it.18
- The Singapore International Mediation Centre (SIMC)
The SIMC was launched on November 5, 2014 and provides mediation services targeted at the needs of parties in cross-border commercial disputes, particularly those doing business in Asia. The SIMC maintains an international panel of mediators, as well as a panel of technical experts who can be appointed to assist the mediator in the conduct of the mediation.
An innovative feature of the SIMC is its interaction with the SIAC through a new “Arb-Med-Arb” protocol (“AMA Protocol”). The AMA Protocol provides for the use of mediation during the arbitral process, as follows: (i) a dispute will first be filed with the SIAC and the tribunal constituted; (ii) after the exchange of the Notice of Arbitration and Response to the Notice of Arbitration, the arbitration will be stayed pending the outcome of mediation at SIMC, to be completed within eight weeks; (iii) if a settlement is reached, the parties may request that the terms of the settlement be recorded by the tribunal in the form of a consent award; if not, the arbitration will resume.
The advantage of this process is that a successful mediation can result in a consent award (and therefore be directly enforceable), rather than just an agreement. Also, by allowing parties to commence arbitration before referring the dispute to mediation, the AMA Protocol presents a useful alternative to multi-tiered dispute resolution clauses (e.g., providing that parties first submit disputes to mediation, followed by arbitration). These clauses, if not properly complied with before commencing arbitration (as is common), could result in the tribunal lacking jurisdiction.19 They can therefore prove particularly problematic where contractual time bars or statutory limitation periods are due to expire. Also, by providing for mediation after the parties have exchanged their Notice of Arbitration and Response (rather than before), the AMA Protocol may increase the prospects of a successful mediation, as each party will have had an opportunity to set out its case in the arbitration and see the other side’s arguments.
The SIAC and SIMC provide a model clause for using the AMA Protocol.20 We think it is worth considering as an alternative to a traditional multi-tiered (mediation then arbitration) clause.
- The Singapore International Commercial Court (SICC)
The SICC was launched on January 5, 2015, and received its first case in May 2015 (transferred from the Singapore High Court).21
The SICC operates as a division of the Singapore High Court, with appeals to be heard by the Court of Appeal (Singapore’s highest court). Key features of the SICC include:
International Judges. In addition to the existing panel of Singapore judges, the SICC has local and international jurists appointed to its panel. These include current and former judges from the courts of Austria, Delaware, Dubai, England and Wales, France, Hong Kong and New South Wales.22The SICC Practice Directions provide that proceedings in the Court will generally be presided over by a single judge (but may be heard by three judges), and an appeal to the Court of Appeal will generally be heard by three or more judges.23
Jurisdiction to hear international commercial disputes. The SICC has jurisdiction to hear an action where: (i) the claim is of an international and commercial nature; (ii) the parties have submitted to the SICC’s jurisdiction in a written jurisdiction agreement; and (iii) the parties do not seek any relief in the form of, or connected with, a prerogative order (e.g., for constitutional claims). Even in the absence of the parties’ express submission to the SICC, the Singapore High Court may transfer cases to the SICC of its own motion, and has in fact already done this in at least one pending case.
Power to join third parties. The SICC has the power to join third parties (other than states or sovereigns of states) to the proceedings, with or without the third party’s consent.
Representation by foreign lawyers. Unlike regular High Court proceedings, foreign lawyers who are registered with the SICC can appear in “offshore cases” (cases with no substantial connection to Singapore). Among the first foreign lawyers registered with the court are King & Spalding partners John Savage and Stuart Issacs QC.
Exclusion or limitation of right of appeal (by agreement). Parties may exclude a right of appeal to the Singapore Court of Appeal, or may limit it to specified grounds. An agreement to exclude the right of appeal altogether would therefore render the SICC’s first instance judgment or order final and binding on the parties, with no further recourse.
Establishment of foreign law by submissions from counsel. Unlike in High Court proceedings under the domestic rules of evidence, the applicable foreign law can be established by submissions from counsel, rather than proven as a question of fact through expert evidence.24
Not bound by domestic rules of evidence. The SICC is not bound to apply any rule of evidence under Singapore law and may apply other rules of evidence (whether found in foreign law or otherwise) upon the application of a party. The court could, for example, decide to adopt the IBA Rules on the Taking of Evidence (“IBA Rules”) (commonly used in international arbitration) instead.
More limited discovery / disclosure. The document production rules in the SICC are similar to those found in the IBA Rules, requiring parties to make specific requests to produce documents on grounds of relevance and materiality, as compared to general discovery in domestic court proceedings, which require production of all relevant documents within the party’s possession.
Confidentiality. While the default position in commercial arbitration is confidentiality, proceedings before the SICC take place by default in open court. However, parties can agree on confidentiality (although the Court is not bound by party agreement) or apply to the Court for a confidentiality order. The Court may order that the case be heard in camera, that no person must reveal or publish any information or document relating to the case, and/or the Court file be sealed.25
Thus, the SICC shares some of the perceived advantages of international arbitration over domestic court litigation. For instance, it is not bound by domestic rules of evidence, foreign law is determined on the basis of party submissions, rather than evidence, parties can be represented by foreign counsel, and although not the default position, parties can eliminate any right of appeal (by agreement) and can provide for confidentiality.
Possible advantages that the SICC holds over international arbitrations are the availability of third party joinder, summary and default judgment and appeal (although parties may agree to limit or exclude their rights of appeal).
At the same time, the SICC lacks key features of arbitration, such as the parties’ ability to nominate their arbitrator(s), and crucially, the relative ease of enforcement of arbitral awards.
An SICC judgment is a judgment of the Singapore Court and its enforceability depends on the principles governing the recognition of foreign judgments in the relevant enforcement jurisdiction. As a judgment of a division of the High Court of Singapore, SICC judgments can be enforced through reciprocal arrangements with several commonwealth jurisdictions, including the UK, Australia, New Zealand, Malaysia and India, as well as in Hong Kong. The hope is that the number of jurisdictions in which SICC judgments can be enforced will increase further with the entering into force of the 2005 Hague Convention on Choice of Court Agreements on October 1, 2015. The Hague Convention (for judgments) is intended to operate as a parallel regime to the New York Convention (for arbitral awards), providing for recognition and enforcement of foreign judgments of one state in the courts of another state (subject to limited exceptions).26 However, while 156 countries are parties to the New York Convention as of October 2015, the Hague Convention has only entered into force in 27 countries (Mexico and the European Union member states except Denmark) and has been signed but not yet ratified by Singapore and the United States.
The SICC website provides model clauses for submission to the jurisdiction of the SICC before and after a dispute arises, and for the exclusion and limitation of the right and scope of appeal.27
The SICC is an innovative development, offering parties a hybrid alternative – an Asia-based dispute resolution mechanism which is neither traditional domestic court litigation nor international arbitration. It could have particular appeal for parties who instinctively prefer court litigation to arbitration (e.g., because of the availability of third party joinder, summary judgment, open court proceedings, or a right of appeal) but still want to have their choice of counsel represent them before an international panel seated in Asia.
Ultimately, the success of the SICC will be measured by the demand for its services, which will be driven by parties putting SICC clauses in their agreements. With the first cases (transferred from the High Court) working their way through the system, and with a number of unanswered questions, most end-users (and their counsel) are adopting a “wait and see” approach.
As regards upcoming developments, the SIAC is currently revising its arbitration rules to implement changes to provisions on consolidation and joinder, emergency arbitrators and expedited procedures and investment arbitration, with the revised rules to be released in mid-2016.28
In addition, Hong Kong’s Law Reform Commission, recently recommended, in a report published on October 19, 2015, that Hong Kong amend its laws to expressly permit third party funding of arbitration, and develop appropriate ethical and financial standards for funders.29 In Singapore, the government consulted on this issue in 2011, but declined to amend the International Arbitration Act in 2012 to permit third party funding in arbitration.30 However, it remains a recurring topic of debate, particularly since many other leading dispute resolution centres permit some form of third party funding.31 If Hong Kong follows through with the Law Reform Commission’s proposals, we would expect that Singapore will not be too far behind.