Singapore International Commercial Court: a new brand of litigation?

Singapore’s new International Commercial Court (SICC), which was launched at the beginning of the legal year, promises to offer a bold new method of resolving commercial disputes in South-East Asia and beyond. The establishment of the Court recognises that large, complex, commercial matters can be most effectively resolved by a bench of specialist judges according to bespoke procedures. This much is not new. Commercial courts have grown up around the world to meet the need for businesses to resolve disputes fairly and efficiently. This need has intensified as trade and commerce has grown increasingly international and parties have found themselves litigating in different quarters of the world. The launch of the SICC can be seen in that context as a response to the need for a dedicated commercial litigation forum in the region. But the ambitions for SICC are arguably higher than that. Informed by the current landscape for resolving commercial disputes, the Court ventures into unchartered waters in at least two respects. First, it offers parties a flexibility in procedure that is influenced by practices seen in international arbitration. Secondly, and arguably more importantly, the Court may cause the development of a jurisprudence that consolidates and harmonises the region’s commercial laws: a lex mercatoria for Asia. THE INTERNATIONAL COMMERCIAL DISPUTES LANDSCAPE At the risk of over-generalisation, arbitration has historically been a favoured means of resolving cross border disputes. Parties’ mutual reluctance to litigate in the (foreign) court of their contractual counterparties has contributed significantly to the growth in popularity of international arbitration. Although this makes arbitration the parties’ second preferred option of dispute resolution in many cases, there is a more attractive reason to arbitrate, namely the prospect of enforcing an arbitral award in over 150 countries who are signatories to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Other perceived benefits of arbitration are the flexibility of procedure and party input into the composition of the arbitral tribunal. Users and advisors have also become increasingly sophisticated in their approach to adapting the arbitral process to suit the case at hand. Concurrent with arbitration’s rise in popularity has been the creation of commercial courts in numerous countries. These have been established in response to the need to resolve increasingly complex business disputes coming before domestic courts that did not traditionally have experience of these commercial issues. For example, commercial courts for the Caribbean jurisdictions of the Cayman Islands and the British Virgin Islands have been established to hear cases of considerable importance, such as the Fairfield Sentry litigation concerning a feeder 0 Your Stamford Contact: Timothy COOKE, Director (England & Wales Bar) (Foreign Lawyer) DID: +65 6389 3072 [email protected] smart. We have what it takes. DISPUTE RESOLUTION 0 _____________________ _____________________ _______________________________ o o o fund’s investments placed with Bernard Madoff. A more recent creation is the Courts of the Dubai International Financial Centre, established to hear disputes from Dubai and the surrounding region. These courts owe much to the English Commercial Court, which has a much longer heritage and enjoys the confidence of businesses around the world for jurisprudence of the highest quality derived from a rich common law tradition, efficient justice, and access to the best in legal representation. All of these courts provide for disputes to be determined according to procedural rules of litigation. The judges are drawn from the judiciary and senior practitioners of common law jurisdictions such as England and Australia. In short, they provide a litigation process that is tailored to the business community’s needs. Turning to the region, foreign investment in Asia has given rise to a dramatic increase in the number of commercial disagreements in the region, and as a result, a correlative increase in the need for sophisticated means of handling such disagreements. It is no secret that international arbitration has become the mode of choice for resolving such disputes. However, here as in many places around the world, arbitration has received its fair share of bad press. Arbitration’s reputation as an expedient form of dispute resolution and a route to swift, final and binding decisions has been tarnished as some users have come to experience lengthy proceedings and high costs. Others have questioned the apparent benefit of finality of proceedings when some arbitral awards appear to display a sense of Solomonic justice rather than the logical rigour of a dispassionate court’s judgments. The innovative features of the SICC, coupled with ongoing efforts to have judgments of the Court recognised widely, underpin the potential of the Court. Undoubtedly, however, the ubiquity of the New York Convention remains a powerful factor when considering where to resolve commercial disputes. SICC: HYBRID PROCEDURAL RULES A moderated assessment of the benefits of arbitration has no doubt informed the contours of the SICC in terms of its constitution and procedure. The Singapore courts are already experienced in handling commercial disputes. The SICC builds on this experience to offer parties a specially modified litigation process that aims to offer litigants some of the flexibility and confidentiality of the arbitral process combined with familiar features of an independent, international judiciary and an appeal mechanism. There are numerous features of the SICC’s procedural rules that depart from Singapore’s rules of court that will be of technical interest to disputes lawyers. More generally, however, there are several areas which will be relevant to those considering the SICC to resolve disputes. smart. We have what it takes. DISPUTE RESOLUTION 0 _____________________ _____________________ _______________________________ o o o Rules of Evidence Parties used to the flexibility of shaping the procedure of their arbitrations will discover a measure of that flexibility in the SICC. They may agree on a set of evidentiary rules from a jurisdiction other than Singapore, or shape their own rules, to adapt the needs of their particular case or to reflect the traditions with which they may be more familiar. Parties may also dispense with the formal requirement to prove foreign law by expert evidence; instead their legal representatives may make submissions on foreign law. This approach is frequently adopted in international arbitration. Another nod to arbitral procedure is found in the rules on production of documents. Unlike litigation in the rest of the High Court, the common law concept of documentary discovery has been replaced with a procedure for documentary production closely modelled on that found in the IBA Rules on the Taking of Evidence in International Arbitration. Confidentiality The new Court takes a novel approach to matters of confidentiality. The default position under the rules provides that cases will be heard in public. However, a party may apply for an order that a case be heard in private, or that no person must reveal or publish any information or document relating to the case, or that the court file be sealed. Where a case is considered to be of major legal interest, the SICC will direct that such a judgment be reported, notwithstanding an order declaring that the matter is confidential. In such circumstances, matters considered by a party to be confidential, such as trade secrets, may be redacted from such a report or, where this is not practicable, the SICC may give directions for the judgment not to be published for a period of time (typically 10 years) after the date of the judgment. Costs Domestic rules of cost recovery are driven by public policy considerations that result in costs orders that, in commercial matters, do not reflect the sums invested by parties into the litigation process. The SICC (or the Court of Appeal hearing an appeal from the SICC) will not apply the costs rules applicable in the High Court. The starting point is the principle found in many common law jurisdictions, that ‘costs follow the event’ (i.e. the unsuccessful party must pay the reasonable costs of the successful party, unless the Court orders otherwise). Reasonableness will be determined according to all the relevant circumstances and may result in an apportionment of costs between the parties, a costs order against counsel personally or even a person who is not a party. smart. We have what it takes. DISPUTE RESOLUTION 0 _____________________ _____________________ _______________________________ o o o Representation Parties in the SICC may in certain circumstances be represented by ‘foreign’ counsel (i.e. lawyers not admitted to practise in Singapore). The possibility of representation by foreign counsel arises only in respect of “offshore” cases, i.e. cases which have no substantial connection with Singapore either because the dispute or the subject matter of the dispute is not governed by Singapore law, or because the only connection between the dispute and Singapore is the parties’ choice of Singapore law as the law applicable to the dispute. Right of appeal An appeal from the SICC to the Singapore Court of Appeal lies on a point of law or where the case concerns a matter of public importance. The composition of the Court deciding an appeal from the SICC may include, in addition to Singapore’s own appellate judges, one or more international judges. The availability of an appellate mechanism is an important safety valve in high value commercial disputes where parties’ desire for finality is relegated in favour for the correct application of their chosen law. By contrast, there is no avenue for an appeal from an arbitration award made in Singapore, and the grounds for setting aside such an award are very limited. This is to be compared with, for example, awards made in London, where a right of appeal, albeit limited, is preserved in its arbitration law. Joinder The SICC may join parties to proceedings, including those that have not voluntarily submitted to the Court’s jurisdiction by way of a jurisdiction clause. The ability for the Court to exert its coercive jurisdiction to join parties addresses a challenge commonly encountered in arbitration where an arbitral tribunal has no jurisdiction over a person who is not a party to an arbitration agreement. A LEX MERCATORIA FOR ASIA? In addition to Singapore’s judges, 11 international judges from across a range of locations and legal traditions have been appointed to hear cases at trial and appellate levels: a judge from the State of Delaware, USA, three judges from Australia, two former English Court of Appeal judges, a senior Queen’s Counsel of the English bar, a former judge and professor of law from Hong Kong, and three civil law judges/senior academics from Austria, France and Japan. This selection provides a wide pool of experience and traditions from which the SICC may assign judges for international disputes. smart. We have what it takes. DISPUTE RESOLUTION 0 _____________________ _____________________ _______________________________ o o o Cases will be heard before either a single judge or a panel of three judges. The composition of the bench may be tailored to suit the legal and cultural dynamics of a particular case. It is easy to draw a comparison with the appointment process of a tribunal by an arbitral institution from its panel of arbitrators. The key difference, of course, is that judges will not be open to the criticism directed towards arbitrators that they are, in reality or as a matter of perception, susceptible to the moral hazard of making decisions influenced by the identity of the party who nominated them, or the prospect of future appointments or nominations by a party, legal advisors or even other tribunal members. The international constitution of the SICC court raises the interesting prospect of a developing jurisprudence to address disputes arising out of the investment-driven economic growth of Asia. It remains to be seen how that jurisprudence will be received in the region, and in particular, how the Court’s interpretation of ‘foreign’ laws will be followed. That the SICC may become the source of norms for the commercial issues in Asia’s diverse legal traditions may prove to be a more enduring legacy than procedural innovation.