Expanding the Menu: Arbitration, Mediation and Singapore’s New International Commercial Court
In recent years, the international dispute resolution landscape in Asia has evolved at a rapid pace. In particular, 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. There have been significant developments across Asia including major legislative changes, arbitration rules revisions, and the opening of new state-of- the-art facilities for mediation and arbitration. This article focuses on Singapore and Hong Kong.
A Rise up the Rankings: Seats and Institutions
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.
In its 2015 survey, the Queen Mary School of International Arbitration 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.
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 ICC and LCIA. HKIAC has been voted the most improved arbitral institution over the last five years, with SIAC coming in second place. This was based on factors such as reputation and recognition, efficiency, administration and the introduction of innovative features in the arbitral rules.
This increasing preference of HKIAC and SIAC is borne out by the steady rise in cases filed annually at each institution. SIAC has seen the number of new cases rise from 99 in 2008 to 222 in 2014. The number of new fully administered cases filed at HKIAC has risen from 16 in 2010 to 110 in 2014.
New features to the HKIAC and SIAC Arbitration Rules
In both Singapore and Hong Kong, there has been a pattern of regular revisions to the arbitral rules and laws to pioneer new developments, and to take account of international best practices developed elsewhere.
SIAC substantially revised its rules in 2010 (and further tweaked them in 2013, when it introduced the SIAC Court of Arbitration) and 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.
In July 2010, SIAC became the first arbitral institution based in Asia to introduce emergency arbitrator provisions. HKIAC followed in 2013.
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 SIAC (27 of which were granted). 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.
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.
Another innovation introduced by SIAC in 2010 is 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 SGD 5 million (approx. USD 3.6 million); (ii) the parties agree, or (iii) in cases of exceptional urgency. A similar provision is contained in the HKIAC Rules.
In Singapore, the expedited procedure has proved popular, with SIAC reporting a total of 216 applications since 2010 (of which 132 were granted). Singapore courts have demonstrated a willingness to uphold the application of the expedited procedure, even where the arbitration agreement was entered into before the expedited procedure was introduced into the SIAC Rules.
Guidelines on Use of Arbitral Secretaries
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, HKIAC has issued detailed provisions and is also offering the services of members of the HKIAC Secretariat to act as tribunal secretaries, while SIAC has introduced a practice note on the appointment of arbitral secretaries.
Developments in Mediation and Litigation
Looking beyond arbitration, Singapore has recently sought to expand its menu of international dispute resolution offerings, with the launch of the Singapore International Mediation Centre (“SIMC”) and the Singapore International Commercial Court (“SICC”) in the last year.
These developments 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.
Singapore International Mediation Centre
The SIMC was launched in November 2014 and provides mediation services targeted at 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.
Singapore International Commercial Court
The SICC was launched in January 2015, and received its first case in May 2015 (transferred from the Singapore High Court). The SICC operates as a division of the Singapore High Court, with appeals to be heard by the Court of Appeal.
Key features of the SICC include: (i) international judges, (ii) jurisdiction to hear international commercial disputes, (iii) power to join third parties, (iv) representation by foreign lawyers, (v) exclusion or limitation of right of appeal (by agreement), (vi) establishment of foreign law by submissions from counsel, (vii) not bound by domestic rules of evidence, (viii) more limited discovery / disclosure, and (ix) confidentiality.
Thus, the SICC shares some of the perceived advantages of international arbitration, but also some of the advantages of domestic court litigation. 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.
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. Ultimately, the success of the SICC will be measured by the demand for its services.
As regards upcoming developments, 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.
In addition, Hong Kong’s Law Reform Commission recently recommended that Hong Kong amend its laws to expressly permit third party funding of arbitration, and develop appropriate standards for funders.