In October 2015 the Singapore Chamber of Maritime Arbitration (SCMA) published the third edition of its arbitration rules. Notable revisions include wider powers for the tribunal to require security for costs, increased latitude for the SCMA to publicise redacted awards, express power to order interest post-award and costs penalties for parties unreasonably refusing to take part in mediation under the ’arb-med-arb’ model clause.
Background The SCMA began life in 2004 as part of the more famous Singapore International Arbitration Centre (SIAC), headquartered at Maxwell Chambers. However in 2009, as a result of industry feedback, the SCMA was re-constituted as a separate and distinct shipping industry arbitral body, more akin to the London Maritime Arbitrator’s Association (LMAA).
At that time, the SCMA’s rules were revised to reflect its new status as an arbitral body providing the framework for parties to resolve maritime disputes on an ad hoc arbitral basis with increased autonomy.
The re-formulation of the SCMA has proved successful and the SCMA has seen a rise in the number of references submitted to SCMA arbitration, with 25 in 2014, 30 in 2015 (to date) and an anticipated 50 references by the end of 2016.
The publication of the revised rules also marks the nearing of the end of Executive Director Lee Wai Pong’s stewardship of the SCMA, who has provided a steady hand on the tiller since his appointment in 2010.
Third edition of the SCMA rules On 11 November 2015, Lee Wai-Pong and Simon Davidson (head of the procedural committee and panel arbitrator) held a tea-talk on the recent revisions to the rules culminating in the publication of the third edition. Some of the notable changes are set out below.
Rule 13: Tribunal’s security for costs
Previously, the rules prescribed timelines for when security for costs should be provided in the case of oral- and documents-only hearings. The effect of the changes to rule 13 has been to provide the tribunal with greater discretion as to when security for costs should be provided and, in particular, rule 13.1 states: “The form of such security and when it shall be provided shall be in the Tribunal’s discretion”.
Rule 22: Juridical seat of arbitration
Rule 22 has been amended to more properly provide for a system of law rather than simply identifying Singapore’s International Arbitration Act as the relevant legislation. Accordingly, rule 22.1 now provides: “Where the seat of the arbitration is Singapore, the law of the arbitration under these Rules shall be Singapore law and the Act”.
Rule 23: Language of the arbitration
The wording of rule 23 has been amended to require the tribunal’s agreement (in addition to that of the parties) before the arbitration may be held in a language other than English. This is a belt and braces amendment to preclude an extraordinary (and potentially embarrassing) situation where the parties decided to proceed in a language in which the tribunal may not be proficient.
Rule 29: Booking fees
The revisions to the rules have seen the introduction of a new rule 29 concerning the payment of booking fees to the tribunal for hearings. The motivation for the new rule (which is distinct from rule 13 regarding the tribunal’s security for costs) is to encourage the parties to focus on settlement through the requirement of the parties to pay booking fees. In particular, the rules provide:
- The SCMA shall decide the amount of the booking fee payable per arbitrator (currently stated to be SGD$1,500 per day on the SCMA website)
- That figure shall be increased by 30 per cent and 60 per cent for hearings of estimated duration up to 15 and 20 days respectively
- Booking fees may be payable in non-refundable instalments at the discretion of the tribunal
Notably, the rules provide that the parties may bear the risk of loss of the booking fees (where the hearing is vacated or cancelled within three months of the start date) even where this may be due to the indisposition or untimely death of an arbitrator.
Rule 32: Closure of proceedings
Under the 2009 rules, the tribunal was obliged to inquire of the parties (in relation to any further proof to offer or submissions to make) before the tribunal was entitled to declare the proceedings closed and to proceed to an award. Under the new rules, this fetter is lifted to allow the tribunal greater flexibility.
Once proceedings are closed, the default position under rule 36.1 is that the tribunal should proceed to publish an award within three months of the proceedings being closed.
Rule 36: The award
Rule 36.9 concerning the publicising of SCMA awards has been amended to make it easier for the SCMA to publicise awards made by SCMA tribunals. Whereas previously the SCMA was obliged to give the parties notice of its intention to publicise redacted awards (thus expressly providing the parties with an opportunity to object), the SCMA now has the right to publicise the redacted award unless either of the parties objects to such publicising in writing within 60 days of the publication of the award.
The revision which shifts the onus onto the parties is likely to be welcomed by academics and practitioners and will also have the effect of show-casing the SCMA. It is understood that the SCMA eventually hopes to provide an annual publication of redacted awards.
Although it is suggested in the commentary on the rules that the identity of members of the tribunal shall also be concealed, it is our understanding that this remains to be seen. On one hand, it would clearly be helpful for parties contemplating the appointment of a tribunal to be able to identify a particular arbitrator’s view on certain issues and for tribunals to be held accountable for their decisions and judicial deliberation, although such knowledge may lead to ‘arbitrator’ shopping by parties.
Rule 37: Currency and interest
Rule 37.2 has been amended to grant the tribunal express power to award interest after the date of the award. This brings the rules in line with the 2012 changes to the International Arbitration Act, which provided tribunals with increased powers to award interest.
In terms of the amount of interest to be awarded, informal enquiries of SCMA panel arbitrators suggest that, given the low-interest rate climate, an award of interest of around 4 per cent (either simple or compounded) would not be unusual.
Rule 41: Costs
New rule 41.4 is primarily designed for use within proceedings arising out of the SCMA arb-med-arb model clause and provides the tribunal with power to penalise parties for unreasonably refusing to participate in mediation: “…the Tribunal may take into account any unreasonable refusal by a party to participate in mediation.”
The potential difficulty with the rule is that the mediation proceedings (which shall not be performed by any members of the tribunal) are confidential. In practice it is therefore anticipated that submissions relating to the parties’ participation in mediation would be sealed and presented to the tribunal only in relation to costs following publication of the tribunal’s award.
Rule 45: Exclusion of liability
The exclusion of liability rule has been strengthened in favour of the SCMA, chairman, tribunal and related parties by removing the right of the parties to take action where an act or omission can be shown to have been in bad faith.
The rationale for the rule change is to afford the SCMA, chairman, tribunal and related parties greater protection. This brings the rules in line with the wide exclusions found under the SIAC and ICC rules.
Rule 46: Small claims
The small claims expedited procedure limit has been increased from US$75,000 to US$150,000, to reflect industry feedback that claims under US$150,000 should be classified as ‘small’ and made subject to the expedited procedure.
The SCMA website has recently been updated and includes a comprehensive fees section. At the time of publication of this alert, the arbitrators’ fees for small claims are capped at US$5,000 (or US$8,000 where there is a counterclaim). Recoverable costs are also capped at US$8,000 (or US$10,000 where there is a counterclaim).
Rule 47: Expedited Arbitral Determination of Collision Claims (‘SEADOCC’)
Rule 47 introduces the SEADOCC claims at schedule B of the rules. SEADOCC aims to provide a fair, timely and cost-effective means of determining liability for a collision in circumstances where it has not been possible or appropriate to reach such an apportionment of liability using other means of dispute resolution. Under SEADOCC, the arbitrator can decide both liability and quantum.
It is our understanding that no collisions have been determined under the SEADOCC rules as yet. This may reflect the sophisticated nature of the practitioners in the region who are often able to reach an agreed view on liability in these matters.
Emergency relief & expedited procedure It is notable that the SCMA has not sought to introduce any type of emergency relief or expedited procedure, examples of which have been introduced by the rules of other arbitral bodies such as the SIAC or ICC.
Although considered by the SCMA (and leaving questions of enforcement of interim relief aside), the main reason for this is that the application for emergency relief or an expedited procedure would require the SCMA to adjudge whether such emergency relief or expedited procedure was warranted on the basis of facts in any given matter. Conceptually, this does not sit well with a non-administering arbitral trade body which is trying to develop and encourage party autonomy in the resolution of maritime trade disputes.
Further commentary on the third edition to the rules can be found at http://www.scma.org.sg/.
Client Alert 2015-319