Singapore’s MinLaw launches Public Consultation on Amendments to International Arbitration Act

This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.

In June 2019, Singapore’s Ministry of Law (“MinLaw”) announced that it will be holding a public consultation on certain proposed amendments to the International Arbitration Act (Cap. 143A) (the “IAA”). This follows a written response provided on 1 April 2019 to a parliamentary question on whether MinLaw would consider reviewing the IAA to provide an avenue of appeal in relation to errors of law in arbitral awards.

We summarise the proposed amendments to the IAA – including 2 proposals from third parties – and provide brief comments.

1. Introducing a default mode of appointment of arbitrators in multi-party situations

Under the current IAA, the mode of appointment of arbitrators only applies to situations where there are two parties to the arbitration agreement. As multi-party arbitrations become increasingly more common, the proposed amendment provides for guidance under the IAA on the mode of appointment of arbitrators in multi-party cases.

2. Allowing parties to, by agreement, request the arbitral tribunal to decide on jurisdiction at a preliminary stage

At present, the IAA permits the arbitral tribunal to decide on the issue of jurisdiction either at a preliminary stage or when making the final award. The proposed amendment enables parties to jointly request the tribunal to decide on the issue of jurisdiction at a preliminary stage so that parties can enjoy savings in time and costs.

3. Recognising that an arbitral tribunal and the High Court have powers to enforce obligations of confidentiality in an arbitration

Confidentiality is one of the key features of arbitration. At present, parties and the tribunal have a duty of confidentiality under common law not to disclose confidential information obtained in the course of proceedings or to use them for any purpose other than in respect of the dispute. Most major arbitral institutions also have rules expressly providing for confidentiality in relation to all matters surrounding an arbitration. The proposed amendment to the IAA gives explicit recognition to the powers of the Court and the arbitral tribunal to enforce these duties of confidentiality.

4. Allowing parties to appeal to the High Court on a question of law in an award based on an opt-in mechanism

Currently, parties may only apply to the High Court to set aside an arbitral award on relatively limited grounds only – that is, on the grounds of fraud or corruption in the making of the award, or where there is a breach of the rules of natural justice, or where an award is in contravention of Singapore’s public policy.

The proposed amendment introduces an opt-in mechanism for parties to incorporate a right for them to appeal to the High Court on a question of law arising out of an arbitral award. This allows parties who prefer greater court supervision on issues of law to make a deliberate choice for curial supervision of such a nature. Parties who prefer the arbitral tribunal to have the final say on matters of law will remain unaffected as they can simply elect not to opt in to this new mechanism.

Apart from the 4 amendments proposed by MinLaw, 2 other third party proposals are up for consideration.

5. Allowing parties to agree to waive or limit the annulment grounds under the Model Law and the IAA

This is the mirror image of the 4th proposal above. Instead of broadening the grounds for setting aside an award, it seeks to further limit these grounds by giving parties the option to limit or waive, by agreement, the annulment grounds set out in section 24(b) of the IAA and article 34(2)(a) of the UNCITRAL Model Law (“Model Law”). Such an agreement can only be made after the award has been rendered.

6. Allowing the Court to have the power to order costs in certain arbitral proceedings

Presently, the High Court has no power to make an order on costs in respect of arbitral proceedings where an award has been set aside. This is problematic because the tribunal would usually be functus officio in such cases and will not be able to make any further orders on costs.

The proposal considers whether legislative amendments should be introduced to empower the High Court to make an order on costs after a successful application to set aside an award. The proposal also considers whether similar amendments should be made to the domestic Arbitration Act (Cap. 10).

Comment

• In the past decade, Singapore’s popularity as an arbitral seat has gone from strength to strength. The authoritative Queen Mary University of London’s 2018 International Arbitration Survey ranked Singapore as the third most preferred seat and the Singapore International Arbitration Centre as the third most preferred arbitral institution in the world. The proposed IAA amendments represent MinLaw’s continued efforts to promote Singapore as a global dispute resolution hub of choice for savvy and well-connected commercial parties.

• The proposal to give parties the power to appeal to the High Court against errors of law in an award is eye-catching. The opt-in mechanism is an important touch as it mitigates against potential criticism that the Singapore courts are seeking greater curial intervention in arbitral proceedings. Party autonomy is preserved as parties are at liberty not to incorporate this option to their arbitral proceedings if preferred.

• Conversely, parties that prefer minimal curial intervention to arbitral proceedings will welcome the proposal to limit the grounds for annulling an award under section 24(b) of the IAA and article 34(2)(a) of the Model Law.

• The proposal to allow the Court to make an order on costs in respect of arbitral proceedings where there has been a successful setting aside application is sensible and timely. Section 10(7) of the IAA already empowers the Court to make orders as to costs in respect of jurisdictional challenges, so there is no reason why such powers should not be extended to cases where the Court set asides an arbitral award.

• The public consultation is being held from 26 June to 21 August 2019. All feedback is to be submitted to MinLaw by post or email on 21 August.