By Victor Looi
The Singapore International Arbitration Centre (“SIAC”) revised its arbitration rules earlier this year as part of its efforts to be among the world’s leading arbitration institutions. Numerous key changes were made to enhance the efficiency and cost effectiveness of arbitration. This blog examines several new or changed provisions in the SIAC Rules 2016 that are of great relevance to arbitration practitioners and users alike.
Previously, a party could file an application to invoke the expedited procedure as provided for under Rule 5, if the amount in dispute did not exceed S$5m. This upper limit has now been increased to S$6m (Rule 5.1(a)). The modification recognises the growing quantum of disputed sums in recent years and ensures that parties in a sizeable number of cases are able to rely on the expedited procedure today.
Next, the arbitral tribunal has been granted the power to decide the dispute based on documentary evidence only, instead of having to hold a hearing (Rule 5.2(c)). Such discretion may expedite the tribunal’s decision-making process and simultaneously reduce parties’ expenses.
Also, the tribunal may discontinue using the expedited procedure should further information subsequently emerge, which shows any of the following: (a) that the disputed sum which previously was below S$6m, has escalated beyond S$6m; (b) that the parties who previously agreed to the expedited procedure, are no longer in consensus on the use of such a procedure; or (c) that the dispute, which was previously of “exceptional urgency”, is no longer as pressing (Rule 5.4).
Multiple contracts and consolidation
Where the disputes between parties concern several contracts, the claimant may now “file a Notice of Arbitration in respect of each arbitration agreement invoked and concurrently submit an application to consolidate the arbitrations pursuant to Rule 8.1”, or “file a single Notice of Arbitration in respect of all the arbitration agreements invoked which shall include a statement identifying each contract and arbitration agreement invoked and a description of how the applicable criteria under Rule 8.1 are satisfied” (Rule 6.1). Before making the application for consolidation, it must be shown that (a) all parties have consented to the consolidation; (b) all the claims in the arbitrations are made under the same arbitration agreement; or (c) the arbitration agreements are compatible with one another, and (i) the disputes originate from the same legal relationship(s); (ii) the disputes originate from contracts comprising a main contract and its ancillary contract(s); or (iii) the disputes originate from the same transaction or series of transactions (Rule 8.1). Based on these criteria, the Court of Arbitration of SIAC (“Court”) will then decide if it should grant the application in whole or in part (Rule 8.4).
Should the Court reject a party’s application, the party is not precluded from applying to the newly constituted tribunal for a consolidation of arbitrations subsequently (Rule 8.4). The criteria in this case (Rule 8.7) are similar to those in Rule 8.1, save for the additional condition under limbs (b) and (c), that the “same Tribunal [must have been] constituted in each of the arbitrations or no Tribunal [must have been] constituted in the other arbitration(s)”.
The consolidation described above can aid the efficiency of dispute resolution for multi-contract situations, thereby saving time for both the parties and the tribunal, as well as reducing costs. Also, the arrangement averts the possibility of inconsistent decisions arising from different arbitrations. Finally, the fact that parties have not one, but two opportunities to apply for the consolidation of arbitration evidences the SIAC’s commitment towards streamlining the arbitration process in multiple-contract scenarios.
Before the tribunal is constituted, a party or non-party may now apply to the SIAC Registrar for additional parties to be joined in the arbitration as long as (a) the latter are, at first sight, bound by the arbitration agreement; or (b) all parties have agreed to the joinder (Rule 7.1).
There are two issues that have emerged here, which might undermine the effectiveness of this rule. First, there is arguably insufficient clarity as to the situations in which a party is prima facie bound by the arbitration agreement. This is due to the dearth of relevant case law. In the future, this concern can be addressed more satisfactorily with the development of such case law. Secondly, parties involved in arbitration often disagree on many issues. Thus, it may be that a party objects to the opponent’s request for joinder of an additional party simply because such a joinder would be in the opponent’s interest.
Another point to note is that, like in the case of consolidation, if the Court rejects a party’s initial application for joinder, the party is not precluded from subsequently again applying to the newly constituted tribunal for the joinder (Rule 7.4). In this case, the applicable criteria (Rule 7.8) are similar to those in Rule 7.1.
Challenge of arbitrators
With the introduction of the SIAC Rules 2016, parties that seek to challenge the appointment of arbitrators must pay a non-refundable fee of S$8,560 (for Singapore parties) and S$8,000 (for overseas parties) when filing a challenge (Rule 15.3 read with the Schedule of Fees). The imposition of such a fee can deter parties from mounting unwarranted challenges solely for tactical reasons.
Meanwhile, the Court is now required to substantiate its decision on the challenge of arbitrators, unless otherwise agreed by the parties (Rule 16.4). This can help parties to understand the rationale behind the decision, thereby improving procedural justice.
Seat of arbitration
If parties do not reach a consensus on the seat of arbitration, the seat will no longer be Singapore by default, but will instead be decided by the tribunal (Rule 21.1). While this might result in greater flexibility for the tribunal, it comes at the expense of certainty for the parties. Given the importance of ascertaining the seat of arbitration as early into the proceedings as possible, it is therefore preferable that parties make express provisions for the seat ab initio in their arbitration agreements. This is to reduce the chances of any inter-party disputes regarding the seat of arbitration arising subsequently.
Early dismissal of claims and defences
The SIAC Rules 2016 allow a party to apply for the early dismissal of a claim or defence if the “claim or defence is manifestly without legal merit”, or if the “claim or defence is manifestly outside the jurisdiction of the Tribunal” (Rule 29.1). The tribunal may then allow such an application to proceed. In such a case, the tribunal will grant the parties an opportunity to present their arguments, and subsequently will decide whether to grant the application for early dismissal in whole or in part (Rule 29.3). Regardless of the final outcome, the tribunal is required, save in extenuating circumstances, to make its order or award on the application within 60 days of the date on which the application was filed (Rule 29.4).
The aforementioned procedure, which is akin to an application for summary judgment in court proceedings, is an unprecedented initiative that is unseen across major arbitration institutions in the world, such as the Hong Kong International Arbitration Centre and the International Chamber of Commerce. Such a procedure can be immensely beneficial to parties seeking to put an end to baseless claims or defences by opponents who still insist on continuing with arbitration proceedings. Through the early dismissal of such claims or defences, the party making the application for the dismissal is able to save costs and effort better used otherwise. While there may be concerns that parties abuse this procedure by making unmeritorious applications for early dismissal, these concerns can be mitigated through the tribunal’s decision to award costs against rogue applicants (rule 37).
Emergency interim relief
A party that intends to seek emergency interim relief before the tribunal has been constituted may apply to the Registrar for such relief. Subsequently, if the President of the Court decides that the application should be accepted, he or she appoints an Emergency Arbitrator within one day of receipt of the application, subject to the payment of the relevant fees (Rule 30.2 read with Schedule 1). This is juxtaposed with the time period of one business day in the previous version of the rules. The revision ensures that emergency arbitrators can be appointed expeditiously if the situation calls for it, even if the application was made on a Friday, over the weekend, or during a public holiday.
As seen, the various changes to the SIAC Rules have been geared towards facilitating the efficient, effective, and just resolution of disputes in arbitration proceedings. The SIAC certainly deserves credit for pioneering the “early dismissal procedure” as well as introducing vital provisions that other major arbitration institutions have similarly adopted. That said, the world of arbitration is a dynamic one, and major arbitration institutions are constantly competing for a larger share of the global pie. Therefore, it is salient that the SIAC constantly seeks the feedback of various stakeholders so as to improve its existing processes and develop new mechanisms where required. It is only through these means that the SIAC can stay relevant and well-regarded.