Investment treaty practice

Model BIT

Does the state have a model BIT?

No.

Preparatory materials

Does the state have a central repository of treaty preparatory materials? Are such materials publicly available?

There is no publicly available repository of treaty preparatory materials. The IIAs entered into by Singapore, and the related press releases, may be accessed from the Ministry of Trade and Industry website (see: http://www.mti.gov.sg).

Scope and coverage

What is the typical scope of coverage of investment treaties?

Typically, ‘investor’ and ‘investment’ are defined broadly. The definition of ‘investors’ generally includes both natural persons (usually referred to as ‘nationals’) and juridical persons (companies or enterprises). In certain investment treaties, the government and government agencies of a contracting party are included in the definition of an investor (eg, see Qatar-Singapore BIT, Kuwait-Singapore BIT, UAE-Singapore BIT). Investors covered are ‘foreign’ investors, who are not nationals of the host state in which the investment is made.

Certain investment treaties require the investments to be approved in writing, by the respective government or the relevant agency (eg, article 2 of the Kuwait-Singapore BIT, article 12 of the UK-Singapore BIT and article 1(1)(ii) of the Germany-Singapore BIT).

Typically, the investment treaties apply to investments made before or after the treaty enters into force, and ‘investment’ is broadly defined (eg, ‘every kind of asset permitted by each contracting party in accordance with its laws and regulations’), followed by an illustrative list, which is not exhaustive, and generally includes the following:

  • movable and immovable property as well as other rights in rem such as mortgages, liens or pledges;
  • shares, stocks, debentures and similar interests in companies;
  • claims to money or to any performance under contract having an economic value;
  • intellectual property rights, know-how and goodwill; and
  • licenses, authorisations, permits, and similar rights conferred pursuant to applicable domestic law.

A common exception to the applicability of investment treaties is in matters of taxation in the territory of either contracting party, unless otherwise provided. Such matters are generally governed by an avoidance-of-double-taxation treaty between the two contracting parties (eg, article 2(3) of the Qatar-Singapore BIT, article 4(5) of the Iran- Singapore BIT and article 5(2) of the Mauritius-Singapore BIT).

Protections

What substantive protections are typically available?

The substantive protections are similar in most investment treaties and include provisions concerning expropriation, fair and equitable treatment (FET), full protection and security (FPS), MFN and NT.

Expropriation

It is common for the definition of expropriation to include both direct and indirect expropriation (‘measures having effect equivalent to nationalisation or expropriation’).

The provisions relating to expropriation are similar in most investment treaties. You can also find various exceptions detailed in the treaty text. For example, annex 2 of the ACIA provides that ‘non-discriminatory measures of a member state that are designed and applied to protect legitimate public welfare objectives, such as public health, safety and the environment, do not constitute indirect expropriation.’ Footnote 17 of Chapter 9 (Investment) of the TPP clarifies that ‘public purpose’ refers to a concept in customary international law. There are also certain exceptions relating to the expropriation of land.

FET and FPS

The provisions according FET and FPS to investments are similar in most BITs, especially those concluded before 2000. Typically, it is generally worded as investments shall be ‘accorded fair and equitable treatment and shall enjoy full protection and security’.

The FET provisions in recent multilateral treaties are more prescriptive. For example, article 11 of the ACIA outlines what constitutes FET and clarifies that denial of justice would amount to breach of FET: ‘For greater certainty: (a) fair and equitable treatment requires each member state not to deny justice in any legal or administrative proceedings in accordance with the principle of due process; and (b) full protection and security requires each member state to take such measures as may be reasonably necessary to ensure the protection and security of the covered investments. A determination that there has been a breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this article.’

Article 6 of the Investment chapter in SAFTA has a very detailed FET provision, and makes a reference to the customary international law minimum standard of treatment of aliens as the standard of treatment to be accorded. FET and FPS do not require treatment in addition to or beyond that which is required by the customary international law minimum standard. It also includes an obligation not to deny justice in criminal, civil or administrative adjudicatory proceedings in accordance with the principle of due process. The FET provision further mentions that the mere fact that a party’s action or inaction is inconsistent with the investor’s expectations does not constitute a breach of FET obligation. A similar provision is found in article 9.6 of the TPP.

The recently signed EU-Singapore IPA also has a detailed FET clause that includes denial of justice (see ‘Update and trends’).

MFN and NT

The provisions according MFN and NT are similar in most investment treaties, and exceptions to their operation are also commonplace.

Umbrella clauses

Not all investment treaties contain umbrella clauses, which protect contractual commitments entered into between a foreign investor and a state contracting party. An example of an umbrella clause is article 12(1) of the Singapore-Ukraine BIT that states: ‘Each Contracting Party shall observe commitments, made in accordance with its laws, additional to those specified in this Agreement, it has entered into with respect to the investment of the investors of the other Contracting Party.’ For example, see BITs with Germany (article 8), China (article 15) and the Czech Republic (article 15(2)).

Dispute resolution

What are the most commonly used dispute resolution options for investment disputes between foreign investors and your state?

Singapore has not been a party as a host state or respondent to an investment dispute with foreign investors so far.

Most of the investment treaties have provisions dealing with dispute resolution applicable to foreign investors. The common mechanisms for investor-state dispute resolution include ICSID, the ICSID Additional Facility Rules and arbitration under the UNCITRAL Arbitration Rules.

Multi-tiered dispute resolution provisions require parties to resort to alternative modes of dispute resolution (eg, negotiations) for a certain period. There may be provisions encouraging the amicable settlement of dispute through negotiations (eg, article 13 of the Mauritius-Singapore BIT and article 11 of the Iran-Singapore BIT).

There are also dispute resolution provisions in certain treaties that allow a dispute to be referred to local courts in addition to arbitration or conciliation. For example, under the Qatar-Singapore BIT, the investor may submit a dispute to:

  • the competent court of the host state;
  • ICSID, if the ICSID Convention is applicable to both the parties;
  • the ICSID Additional Facility Rules;
  • an ad hoc tribunal under the UNCITRAL Rules; or
  • any other arbitral institutions in accordance with any arbitral rules, as agreed to between the parties [Article 10(2)].

Once the investor has submitted the dispute to any of the aforementioned dispute settlement mechanisms, the choice shall be final.

The ACIA has provisions for Conciliation (article 30), Consultations (article 31), and a claim may be submitted, at the choice of the disputing investor to:

  • courts of the disputing member state, provided such courts have jurisdiction;
  • under the ICSID Convention;
  • under the ICSID Additional Facility Rules;
  • under the UNCITRAL Arbitration Rules;
  • to any regional centre for arbitration in ASEAN; or
  • if the disputing parties agree, to any other arbitration institution.

The resort to any one of the above fora or arbitration rules, excludes the others (article 33). The EU-Singapore IPA provides for a two-tier investment court (see ‘Update and trends’).

Confidentiality

Does the state have an established practice of requiring confidentiality in investment arbitration?

There are no laws explicitly referring to the requirement of confidentiality in investment arbitration.

For Singapore-seated international arbitrations, the governing legislation, the International Arbitration Act (Chapter 143A) (IAA), does not explicitly impose an obligation of confidentiality. However, a party may apply to have hearings otherwise than in open court, and for other measures to preserve the confidentiality of the proceedings in relation to arbitration (sections 22, 23 of the IAA). An implied obligation of confidentiality in arbitrations has also been recognised by the Singapore courts (AAY v AAZ [2011] 1 SLR 1093 and Myanma Yaung Chi Oo Co Ltd v Win Win Nu and another [2003] 2 SLR(R) 547).

Specific provisions relating to transparency and confidentiality may be found in IIAs (eg, article 39 of the ACIA) (see ‘Update and trends’ for transparency provisions in the EU-Singapore IPA).

Insurance

Does the state have an investment insurance agency or programme?

Enterprise Singapore has Political Risk Insurance Scheme (PRIS) for qualifying Singapore companies to receive premium support for PRI policies. Enterprise Singapore will support 50 per cent of the premium for up to the first three years of each PRI policy, subject to a cap of S$500,000 per qualifying Singapore-based company. A typical PRI policy covers risks such as: expropriation, currency inconvertibility and transfer restrictions, political violence, breach of contract by the host government and non-honouring of sovereign financial obligations. The eligibility criteria for the PRIS includes:

  • the global headquarters based in Singapore;
  • at least three strategic business functions in Singapore;
  • an annual turnover not exceeding S$500 million;
  • an annual total business spending of at least S$250,000 in Singapore for each of the past three years; and
  • a minimum paid-up capital of S$50,000.

Further details about the PRIS scheme can be found at: https://ie.enterprisesg.gov.sg/assistance/global-company-partnership/access-to-financing/political-risk-insurance-scheme.