As a neutral venue for international arbitration, Singapore has become a world-class and modern arbitration centre. It provides a forum for all parties from around the world to resolve their commercial disputes through arbitration, which is widely recognised and appreciated by multinational companies as the preferred choice for cross-border dispute settlement. The 2010 Queen Mary International Arbitration Survey finds that Singapore is the top choice of arbitration seat in Asia and one of the top three in the world. The international commercial arbitrational system in Singapore is mature, the regulatory regime is transparent and clear-cut, the UNCITRAL Model Law on International Commercial Arbitration ("Model Law") is largely incorporated into the Singapore international arbitration regime, and all these make arbitration work more user-friendly in Singapore. Whenever commercial disputes involving foreign parties take place, Chinese companies may conveniently and effectively resolve differences, including debt recovery issues, by arbitration in Singapore. Chinese companies may integrate China's circumstances and take advantage of their increasing commercial bargaining power to make full use of Singapore's dispute resolution service, particularly its pro-arbitration policy its neutrality and international openness.
In offshore arbitration, Chinese companies may consider utilising the unique offering of arbitration in Singapore as follows.
- To make full use of the dispute resolution notion and culture in Singapore and the flexibility to influence the extent and scope of judicial intervention.
One of the commercial considerations for a company to choose arbitration is the privacy and confidentiality of arbitration as a dispute resolution mechanism, to ensure that the parties concerned and all the other participants in the dispute resolution process are strictly protected on a confidential basis regarding the existence of the contractual disputes from external parties and avoid negative effect on goodwill that may arise from court proceedings. However, it will depend on the arbitral framework and business culture of the seat of arbitration chosen by the parties concerned to effectively make use of judicial relief after staying away from court proceedings and therefore reducing commercial risks that may arise from arbitration.
The international arbitration regime in Singapore has adopted the Model Law and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention"). Based on the nature of the commercial disputes for arbitration and the principle of party autonomy, unless the disputed matter arising from a contract is not arbitrable, the contractual parties may reach an agreement to refer any disputes for private resolution through arbitration. The parties concerned may freely choose the seat of arbitration, the rule of law applicable to arbitration and the law governing a contract, and decide on the arbitration methods and procedures that are deemed by the parties to be convenient and effective. The arbitrators appointed under parties' agreement shall make a final award on the dispute in question.
The International Arbitration Act is the default lex arbitri in Singapore. In an arbitration under the International Arbitration Act, Singapore courts may not do anything that is unfavorable to international arbitration proceedings. On the contrary, a court may only be involved where a party makes an application to enforce an interim injunction issued by an arbitral tribunal or stay of proceedings issued by a party in violation of an arbitration agreement. In other words, courts in Singapore may only intervene with arbitration proceedings to the limited extent provided that such intervention will be supportive of the realisation of the will of the parties concerned to conduct arbitration and to the advancement of the arbitration proceedings. The commercial ramification of the above arbitration concepts and legal culture is to attract people from China and around the world to choose Singapore for international arbitration, to make full use of the principle of party autonomy and to exclude the intervention of courts of any country in commercial disputes.
In practice, some enterprises, due to various factors, generally wish to get an arbitrator to make an award in private on disputes arising from commercial transactions, the parties concerned may wish to get a court to make a final decision on certain matters. In such circumstances the Chinese and foreign parties may also come up with a plan for resolution through arbitration, leaving room for seeking court support to the arbitral process in exceptional scenarios. For example, it may be expressly provided in the arbitration clause of a contract that the Arbitration Act shall be the lex arbitri so that an arbitral award can be challenged when necessary in compliance with the express provisions of that legislation.
The Arbitration Act was originally the default law governing domestic arbitration proceedings in Singapore, which allows parties concerned to seek Singapore courts' support in arbitration proceedings. The Arbitration Act was based on the Model Law and the English Arbitration Act. Another special feature of the Arbitration Act is that a judge has the discretion to decide whether to stay court proceedings in the event that an arbitration agreement is found to have existed, and the contractual parties involved in the dispute are not required to settle their dispute through arbitration. In practice, making use of the Arbitration Act of Singapore and introducing well-founded support of a court in the arbitration proceedings to resolve disputes is indeed another commercial consideration and requirement for the parties concerned to achieve arbitral autonomy.
It should be highlighted that Singapore has adopted the abovementioned two-tier system for arbitration, i.e. two parallel sets of systems for international arbitration and domestic arbitration, and where the parties concerned choose Singapore as the seat of arbitration, they may freely choose either tier according to their wishes and requirements by taking into consideration the extent of judicial intervention. Regardless of the original form of dispute for arbitration, and regardless of whether it is international arbitration or domestic arbitration, the parties concerned may choose arbitration mechanism and governing law that meet their own requirements in view of risk prevention and judicial relief. Certainly, if the arbitration agreement does not provide for any governing law, the default position shall apply.
The transparent two-tier arbitration system adopted in Singapore is noteworthy. Chinese and foreign enterprises may consider choosing Singapore as the seat of arbitration when drafting arbitration clauses and swiftly use their preferred mechanism in practice so as to maximise their commercial benefits.
2. To bring into full play the characteristics of commercialisation of dispute resolution through arbitration in Singapore and settle disputes in a convenient way.
The original intention of an enterprise to choose arbitration is mostly to settle disputes in a flexible, simple, convenient, economic, speedy and effective way. If the parties concerned or their attorneys are familiar with international arbitration practice, rules and information and able to successfully appoint arbitrators to form a tribunal and the arbitrators and the parties concerned act in harmony, the arbitration proceedings will be able to progress smoothly according to the wishes of the parties.
In the negotiation of the international arbitration clause of some simple contracts, Chinese and foreign parties tend to consider choosing ad hoc arbitration, which does not require the support of an arbitration administration platform, i.e. all that is required is to state the mutual understanding directly and expressly in the contract for any dispute to be referred to arbitration in Singapore, and there is no requirement for any other special form or format. In the event of any dispute arising from the contract, the parties concerned shall conduct the administration of the arbitration directly by their own. In the event that Chinese and foreign enterprises choose ad hoc arbitration, procedural, administrative and financial matters that may be involved in practice generally include institution of the arbitration proceedings by either party; calculation and confirmation of the commencement of time limit by the parties; appointment of arbitrators by the parties to form a tribunal; negotiation of remunerations with the arbitrators; payment of the deposit, advances, remunerations and out-of-pocket expenses into the personal account of the arbitrators by the parties according to the instructions of the arbitrators; logistical arrangement of the venue for the proceedings and meetings, layout of the hearing facilities and the organisation of the administrative and supporting staff according to the instructions of the arbitrators. These procedural matters should not be a problem for those who are familiar with international arbitration practice.
On the other hand, in the course of negotiations of arbitration clause in a contract (especially a complicated contract), if the Chinese and foreign parties are not confident that both parties are familiar with all the steps and other details of the arbitration proceedings in the event of any dispute, they normally will consider choosing an existing arbitration administration service platform that is independent from the parties concerned and the arbitrators (tribunal), and conducting the arbitration in accordance with its arbitration and practice rules. The names, operative forms and organisational nature of these arbitration administration platforms are decided completely by their initiators, sponsors and decision-makers according to their own objectives. In Singapore, there are not only arbitration bodies established by the government but also various arbitration companies incorporated by individuals in accordance with laws of Singapore.
It should be highlighted that apart from the parties concerned and the tribunal, if a "fourth party" is introduced as the arbitration administrator and financial trustee to handle the various procedural, administrative and financial matters, such arbitration is normally referred to as "administered arbitration", commonly known as "institutional arbitration", while the aforesaid "ad hoc arbitration" is also referred to as "non-administered arbitration", where no institution is required to be introduced to participate in the administration of procedural matters. This is different from the literal meaning of the terms.
Chinese and foreign enterprises may choose ad hoc arbitration or institutional arbitration in the arbitration clause providing for Singapore as the seat of arbitration, taking into consideration the extent of convenience for dispute resolution.
3. To take unique advantages of the laws of Singapore to resolve foreign commercial disputes involving parties from certain countries or regions.
One of the commercial considerations for Chinese and foreign enterprises to choose arbitration is the enforcement of the other party's extraterritorial assets or the extraterritorial enforcement of the other party's assets for necessary debt recovery. Whether made in ad hoc arbitration or institutional arbitration, in theory, an arbitral award may be recognised and enforced in all the 146 member states to the New York Convention. In practice, it is common that the countries or jurisdictions of the parties concerned do not recognise or enforce the other party's judicial decisions. In contrast to the limitations of the domestic and foreign civil judgment in cross-border enforcement, arbitration has irreplaceable advantages in resolving contractual disputes concerning foreign parties.
It should be highlighted that even if the government of a country joins the New York Convention on behalf of the country and the United Nations officially recognises the country as a member ("Member State"), the domestic legislative authorities of some Member States impose special regulations or reservations on the definition of "Member State" to the New York Convention and on the conditions for their recognition. Therefore, arbitral awards made in one Member State is not necessarily able to be recognised and enforced in all the other 145 Member States. For example, currently only less than thirty percent of the Member States are recognised by India, and arbitral awards made by the other 100 plus Member States including China (the Mainland China and Hong Kong Special Administrative Region etc) are not recognised in India. Some years ago, a Chinese bank applied to a court in India for the enforcement of an arbitral award made by an arbitration commission in Beijing. It was rejected and the case was re-litigated at a local court in India.
It can be seen that in choosing a seat of arbitration, what should be considered is whether the arbitral award is enforceable outside its border, especially in a specific country or region, and not simply its geographical location or other superficial factors such as the name of the place where the parties are located. This is to prevent legal risks that an award may be refused for enforcement and to reduce commercial risks that an overseas creditor's rights may not be exercisable.
As a neutral venue for international arbitration, Singapore is a Member State to the New York Convention that is not only recognised by the United Nations, but also recognised by the other Member States, and there is no technical problem in the recognition of its membership by countries such as India. When considering using the New York Convention as the basis for overseas dispute resolution, Chinese and foreign enterprises may choose Singapore as the seat of arbitration to reduce commercial risks.
Although most countries around the world have joined the New York Convention, some other countries have not. Some of these non-members are Commonwealth countries, and some of them have signed reciprocal agreements with Singapore. Therefore, if either party to a contract is from one of these countries, in which case the New York Convention does not apply to it, Chinese and foreign enterprises may still consider choosing Singapore as the seat of arbitration and swiftly utilising the advantages of the legal system of Singapore to enforce the other party's assets in certain non-member countries. For example, an arbitral award made in Singapore may be conveniently converted into a judgment of a Singapore court. By taking advantage of this point, Chinese and foreign enterprises may be able to exercise their creditor's rights under the Reciprocal Enforcement of Commonwealth Judgment Act and in the non-member countries which have signed reciprocal agreements with Singapore.
When Chinese and foreign enterprises choose a seat of international arbitration between China and foreign countries, Singapore has irreplaceable advantages in terms of enforceability of arbitral awards.
4. To bring into full play the expertise and cross-cultural advantages of the legal and technical experts in different industries in China to resolve cross-border commercial disputes involving Chinese enterprises.
Having chosen Singapore as the seat of arbitration, Chinese and foreign parties may take advantage of its neutrality, internationality and openness, not only bringing for themselves more room for arbitral autonomy, but also getting more extensive application for the commercial laws and regulations and business practice of the China in the international business world. This will be advantageous for the Chinese enterprises to take the initiative and voice in the international economic, trade and investment fields and industries, and at the same time for Chinese lawyers and professionals to have more international arbitration business.
The policy of liberalising legal service sector has been working in the international arbitration context in Singapore, under which foreign lawyers may not only handle arbitration cases governed by foreign laws but also international arbitration cases governed by laws of Singapore and represent clients from different countries in the international arbitration proceedings. The language used in the proceedings is not restricted and may be decided by the parties concerned or by the arbitrators appointed by them.
Arbitrators appointed by the parties are not restricted by nationality or specialisation, or in any memberships or qualifications of any country, organisation or private arbitration body, as long as they are recognised by all the parties concerned and do not deprive interest from a case. In international commercial disputes involving Chinese factors, especially in international arbitration with Chinese law as the substantive law, Chinese lawyers and professionals with a legal or industrial background are suitable to be appointed as counsels or arbitrators for international arbitration in Singapore.
Among international arbitration cases involving Chinese factors handled in Singapore in the recent years, some of them are foreign economic contractual disputes where both the applicant and the respondent are from the same city in China, some of them are international business contract disputes between Chinese and foreign enterprises, some of them are international project contract disputes between Chinese enterprises located overseas and foreign enterprises, and some of them are international arbitration cases where both parties are foreign enterprises with no China background but use PRC law as the substantive law. The Chinese and foreign enterprises involved in these disputes with Chinese factors or China background are widely distributed in such industries as international trade, telecommunications, power, petrochemical, coal mining, iron and steel metallurgy, professional equipment manufacturing, shipbuilding, automobile, aviation, international construction, shipping, biopharmacy, international advertising, film and television media etc. The arbitrators appointed by Chinese enterprises are not restricted by any panel of arbitrators. In addition to international practising arbitrators, there are Chinese lawyers, legal academics and experts and consultants from major PRC companies or other state-owned enterprises. In these arbitration proceedings, either English or Chinese is used, or both languages are used simultaneously in hearings and in the drafting of the arbitral award. Singapore is the only foreign country that lists Mandarin as one of the state’s official languages.
It is those Chinese and foreign enterprises with a China background that have chosen Singapore as the seat of arbitration, together with other multinational companies and participants appointed by them and the existing Singaporean arbitrators and interested parties, that have formed an integrated international arbitration market in Singapore.
5. To fully utilise expertise of lawyers and the legal environment in Singapore to bring into full play its advantages in arbitration.
Having chosen Singapore as the seat of arbitration, Chinese enterprises may appoint arbitrators with Chinese nationality and arbitration counsels with Chinese lawyer qualifications to run arbitration in Singapore. Their rights and obligations in participating arbitration proceedings are the same as those of Singaporean lawyers. They may handle cases independently.
In practice, as most international arbitration proceedings are conducted in the common law approach and Singapore is a common law country, civil PRC lawyers are willing to work with Singaporean lawyers. Singaporean lawyers who are proficient in both the English and Chinese languages are able to help their mainland Chinese clients and attorneys understand the technical terms used in the context of the common law and reduce legal risks under the common law.
As mentioned earlier, one of the features of the legal culture in Singapore is an international vision and way of thinking in support of arbitration with appropriate intervention. Therefore, in addition to fully utilising the arbitration rules, Chinese parties and their attorneys may authorise Singaporean lawyers to handle the relevant matters, fully utilise the advantages of arbitration, conduct legal proceedings in relation to the arbitration, protect the rights and interests of their clients and help them gain the maximum commercial benefits by taking advantage of the various judicial reliefs granted to the parties concerned from different countries by arbitration laws of Singapore. For example, Singaporean lawyers may help their Chinese clients to apply to a competent court in Singapore for the enforcement of interim injunctions and preservation of property in arbitration proceedings, or apply for the enforcement of various forms of arbitral awards; to apply to a competent court in Singapore for staying legal proceedings instituted by either party in violation of an arbitration agreement; to appeal to the High Court of Singapore and challenge the jurisdiction of an arbitration tribunal in case there are evidences to prove the nonexistence of an arbitration agreement or in any other cases; to apply to a competent court in Singapore for setting aside an arbitral award in compliance with the express provisions of the applicable laws and so on. In comparison with other countries outside the territory of China, English-Chinese bilingual Singaporean lawyers may help their Chinese clients to clarify testimony in court before a Singaporean judge more effectively.
In comparison with any other countries, Singapore is an unique venue for Chinese enterprises to resolve their commercial disputes outside the territory of China, and it is also an ideal neutral place for Chinese and foreign parties to conduct arbitration or other dispute resolution activities. Chinese companies may take advantage of the perfect arbitration platform in Singapore formed by its arbitration cultural and concepts, commercial nature, legal culture and systematic characteristics so as to maximise the advantages in dispute resolution through arbitration.