Lucy Reed, Nicholas Lingard and Robert Kirkness of Freshfields Bruckhaus Deringer consider the evolution of Singapore as an international dispute resolution hub
Singapore's status as a leading forum for legal services and international commercial dispute resolution is firmly established.
The Singapore International Arbitration Centre (SIAC) is one of the leading arbitration centres in the world. A visit to SIAC's website confirms that the number of new cases registered with SIAC more than quadrupled over the 10-year period between 2003 and 2013. In 2003, 64 new cases registered with SIAC; by 2013, the number had increased to 259 (www.siac.org.sg).
Of course, it is not just SIAC. Singapore is a popular seat for cases administered by other institutions, including the International Chamber of Commerce, where it is the fifth most popular seat globally and number one in Asia. Singapore also has concluded a Host Country Agreement with the Permanent Court of Arbitration (PCA) to host PCA-administered cases in the city-state, and the hearings in Asia-related ICSID cases are increasingly taking place in Singapore.
In November 2014, Singapore expanded its offering of ADR-services with the official launch of the Singapore International Mediation Centre (SIMC), which provides mediation services to the international business community, and is complementary to SIAC. A key innovation offered by SIMC is the so-called Arb-Med-Arb Protocol with SIAC, which allows a SIAC tribunal to recognise a settlement agreement arising out of SIMC mediation by rendering a consent award recording the terms of the parties' settlement.
Singapore International Commercial Court – transnational justice for Asia?
The most significant development in the range of legal services offered by Singapore arguably took place at the beginning of this year.
In January 2015, Singapore launched the new Singapore International Commercial Court (SICC). The Court derives its jurisdiction from the Singapore Supreme Court Judicature Act, which provides that, with effect from January 1 2015, 'there shall be a division of the High Court known as the Singapore International Commercial Court' (section 18A). Cases may come before the SICC in two ways. The first is where the parties have entered into an agreement to submit to the jurisdiction of the SICC, whether by including a clause in their agreement submitting any dispute between the parties to SICC's jurisdiction or by ad hoc agreement (section 18F). The second is where the High Court of Singapore transfers an existing action to the SICC (section 18J).
"A key issue for Singapore’s policy-makers will be how to establish a comparable enforcement regime to the New York Convention"
The new sections 18A-M of the Supreme Court of Judicature Act and Rules of Court relating to the SICC are a treasure trove for civil procedure enthusiasts and deserve detailed examination. It is likely that attorney generals are monitoring the SICC's procedural innovations to determine whether some or all of those features may be desirable in their own jurisdictions. The similarities and differences with the Dubai International Financial Centre Courts are also worthy of study. For present purposes, however, we confine ourselves to commenting on several features that are particularly intriguing to international lawyers, and likely to make SICC of interest to those in the financial and business communities.
First, the SICC will function as a truly international court, subject to the Supreme Court of Judicature Act and the Rules of Court. The SICC is able to determine international commercial disputes with no connection to Singapore whatsoever that have been brought between foreign parties and are governed by foreign law. Specifically, the SICC has jurisdiction to hear and try any action that is: (i) international and commercial in nature; (ii) may be heard and tried by the High Court of Singapore in its original civil jurisdiction; and (iii) satisfies any other conditions prescribed by Singapore's Rules of Court (section 18D).
The SICC judges are expressly not bound to apply the rules of evidence under the law of Singapore and may instead apply 'other rules of evidence (whether such rules are found under any foreign law or otherwise)' (section 18K). In addition, on matters of law, the SICC may order that any matter of foreign law be determined on the basis of submissions instead of proof (section 18L).
Second, the SICC will involve collaboration between Singapore judges and international judges. The Court's panel of judges is comprised of both members of the Singapore judiciary and international judges. The SICC bench for individual cases will be appointed by the Chief Justice. At the time of writing, there are 27 SICC judges: 15 drawn from the Singapore judiciary, including its Chief Justice and Senior Judge; and 12 international judges from both common and civil law jurisdictions, several of whom are specialists in particular fields of commercial law. They are: Justices Bergin, Giles and Heydon (Australia); Justice Griss (Austria); Justice Berger (State of Delaware, United States); Justices Rix, Thorley, Eder and Ramsay (England & Wales); Justice Hascher (France); Justice Reyes (Hong Kong); Justice Taniguchi (Japan). International judges may also sit on appeal from the SICC, if designated by the Chief Justice.
This type of collaboration is likely to extend beyond the judiciary. Foreign lawyers may apply to be registered to appear and be heard by the SICC. The right of a foreign lawyer to make submissions before the SICC is limited to matters of foreign law, which means that in practice, there is likely to be an increasing need for commercial parties to instruct joined-up teams of Singapore-based and international counsel.
One of the most intriguing features of the SICC is the potential for this type of collaboration to influence the lawyers and judges involved in international commercial disputes before the SICC. For instance, Singapore judges sitting on matters as part of an SICC bench will participate in commercial decisions that may be relied upon by judges in other jurisdictions, including potentially on issues arising under the law of those jurisdictions. Moreover, as a division of the Singapore High Court, an SICC judgment is likely to be a persuasive authority in domestic civil proceedings, especially where Singapore law, as opposed to foreign law, was the governing law of the dispute before the SICC.
Third, the SICC Rules of Court incorporate a number of features from international commercial arbitration practice. For instance, the SICC has the power to make a range of orders that are designed to protect the confidentiality of the proceedings, including that the case be heard in private, the parties not disclose any information about the case, and sealing the case file. Similarly, proceedings before the SICC may involve more limited disclosure such as that adopted by tribunals in international commercial arbitration proceedings where parties' disclosure obligations are limited to the documents upon which they rely, subject to specific requests from other parties. Although an SICC judgment may be appealed to the Court of Appeal of Singapore, parties are able to opt out of the right to appeal. These features mean that an SICC bench has significant discretion as to how to tailor its proceedings in a case before it.
What about enforcement?
An important difference remains between a SICC judgment and an award issued by an international arbitral tribunal. The arbitral award will benefit from the enforcement regime under the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), whereas the SICC judgment will not.
"Singapore’s neighbours can draw confidence from the fact that Singapore’s conduct has been entirely consistent with its professed commitment to international rule of law"
Although an SICC judgment will be capable of enforcement in jurisdictions with which Singapore has entered into reciprocal enforcement schemes, a key issue for Singapore's policy-makers will be how to establish a comparable enforcement regime to that afforded to arbitral awards under the New York Convention.
Singapore's policy-makers and diplomats are taking steps to address this issue. On March 25 2015, Singapore signed the 2005 Convention on the Choice of Court Agreements, which has also been signed by Mexico, the United States and the European Union. The Convention will enter into force on October 1 2015.
Under the Convention, states parties agree to respect a decision to resolve a dispute by way of an exclusive choice of court or forum selection clause. In other words, if the parties to a dispute have selected Singapore's courts as the exclusive forum for the resolution of their dispute, states parties to the Convention will be bound to recognise and enforce that judgment in their own courts, subject to limited grounds of appeal.
The challenge ahead for Singapore is to negotiate with other states, particularly in Asia, to ensure comparable rights to enforcement of Singapore court judgments in as many jurisdictions as possible.
It is likely to be some years before the success of the SICC can be assessed, since it will take time before parties include SICC dispute-resolution clauses in their agreements, and still more time before actual disputes emerge in serious volumes.
In our view, however, the SICC can fairly be acknowledged as a creative commercial dispute resolution option. It is extraordinary for a sovereign state to place its judiciary and the resources of its justice system at the disposal of commercial parties, regardless of their connection with that state. The challenge is now for SICC judges to produce judgments which will convince commercial parties to select the SICC as their preferred dispute resolution forum out of an increasingly diverse array of international dispute resolution options, including SIAC and SIMC.
Beyond commercial disputes
Singapore markets itself to the international business community as a safe and reliable forum for the settlement of their international commercial disputes. However, focusing on commercial disputes alone would ignore some of the more interesting features of Singapore's evolution as a centre for international dispute settlement.
On August 31 2015, Singapore's Ministry of Law signed a Joint Declaration with the President of the International Tribunal for the Law of the Sea (ITLOS). Under the Declaration, Singapore committed to making facilities available to a special chamber of the Tribunal or the Tribunal, if it determines that it would be appropriate to sit or exercise its functions in Singapore.
The Joint Declaration is significant because the Tribunal is an independent judicial body established under the 1982 United Nations Convention on the Law of the Sea to hear disputes concerning the interpretation or application of the Convention between sovereign states. The Joint Declaration therefore suggests that Singapore's ambitions extend beyond establishing itself as a centre for the resolution of commercial disputes between private parties. Singapore's Minister for Foreign Affairs and Minister of Law, K Shanmugam, said as much in comments recorded in the joint press release issued by Singapore's Ministry of Law and the President of the Tribunal on September 1 2015. According to Minister Shanmugam, the Joint Declaration "demonstrates Singapore's commitment to the international rule of law by facilitating access to ITLOS in order to serve the needs of the states of this region, with a view to promoting the peaceful settlement of disputes relating to the Law of the Sea".
The Joint Declaration is a timely and practical initiative. It makes common sense to host disputes between two or more Asian states in the Asia-Pacific region, rather than in Hamburg, Germany.
Practise what you preach
The extent to which Singapore is able to cement for itself a role as the leading neutral venue in the region is likely to be aided by its voluntary submission of inter-state disputes to international arbitration and, critically, to abide by the decision.
A recent example is the joint decision by Singapore and Malaysia to submit a dispute over the alleged liability of a majority Malaysia-owned joint venture company (60% owned by Malaysia; 40% owned by Singapore) to pay Singapore development charges for three parcels of land, to international arbitration (the Railway Lands case). On October 30 2014, an ad hoc tribunal comprising Lord Phillips of Worth Matravers, the former President of the Supreme Court of England & Wales (Chairman), Bruno Simma, a former Judge of the International Court of Justice (nominated by Malaysia) and Murray Gleeson AC, the former Chief Justice of the High Court of Australia (nominated by Singapore), issued an award which held, on the question put to it by the parties, that the joint venture company would not have been liable to pay development charges.
For our purposes, the significance of that decision lies in Singapore's response: following the release of the award, Singapore and Malaysia issued a joint statement confirming that they were satisfied with the arbitral process and that they agreed to abide by and fully implement the decision. The joint statement also affirmed that both countries 'have demonstrated our common commitment to settling disputes in an amicable manner, in accordance with international law'. Singapore goal to become the neutral venue of choice for the resolution of disputes not just between commercial parties but also between sovereign states can only be furthered by its own compliance with the international rule of law.
First published by our sister publication IFLR magazine. Take your free trial today.
Freshfields Bruckhaus Deringer
About the author
Lucy Reed is based in Singapore and is global co-head of Freshfields' international arbitration and public international law groups. She has represented private and public clients in more than 100 complex commercial and investment treaty arbitrations, focusing on energy and Asia disputes. She also sits on the SIAC Court, the ICC Governing Body (one of only two law firm representatives), the LCIA Court, as well as on several arbitrator panels.
Reed was awarded the 2014 Asia Women in Business Award for Best in Dispute Resolution. She is co-author of the leading treatise on the SIAC Rules, A Guide to the SIAC Arbitration Rules (Oxford University Press), as well as Guide to ICSID Arbitration (Kluwer) and Freshfields' Guide to Arbitration Clauses in International Contracts (Kluwer).
Reed is a registered foreign lawyer entitled to appear before the Singapore International Commercial Court.
Freshfields Bruckhaus Deringer
About the author
Nicholas Lingard is a partner in Freshfields' international arbitration group based in Singapore and Tokyo. An experienced international arbitration counsel and advocate, he represents clients in commercial and treaty cases, and frequently counsels clients on public international law issues and disputes, particularly in Asia. He is an expert member of the Energy Charter Treaty Secretariat's Legal Advisory Task Force, and writes and speaks widely on international arbitration. He is co-author of the leading Japanese practice text on international arbitration.
Lingard is a registered foreign lawyer entitled to appear before the Singapore International Commercial Court.
Freshfields Bruckhaus Deringer
About the author
Robert Kirkness is a senior associate in Freshfields' international arbitration group based in Singapore. He is an experienced counsel and has represented public and private clients before international tribunals in a number of complex commercial and investment treaty arbitrations. He has also advised states, corporations and international organisations in commercial and investment treaty cases, and frequently counsels clients on public international law issues. Prior to joining Freshfields, Kirkness appeared as counsel before all levels of the New Zealand court system, including in several precedent-setting cases before the Supreme Court of New Zealand
Kirkness is a registered foreign lawyer entitled to appear before the Singapore International Commercial Court.