Reed Smith Client Alerts

Authors: Gautam Bhattacharyya Simon Greer

Type: Client Alerts

SIAC is now one of the most prolific and important international arbitration centres. To mark 25 years since its establishment, SIAC has announced the release of the sixth edition of its arbitration rules, the SIAC Rules 2016, which will be effective as of 1 June 2016. A summary of the highlights of the SIAC Rules 2016, with the key changes, is set out below:

Improvements to the Expedited Procedure The Expedited Procedure under Rule 5 of the SIAC rules is a useful procedure available to parties to significantly cut down the timeframe of an arbitration in certain circumstances. Rule 5 of the SIAC Rules 2016 has been amended so that the maximum total value in dispute that can seek to utilise the Expedited Procedure is now SGD6 million (approximately £2.97 million or US$4.35 million as of today’s exchange rates). This now means a party may apply to the Registrar of SIAC asking for the arbitration to be conducted under the Expedited Procedure:

  • If the amount in dispute is less than the equivalent of SGD6 million (this is the aggregate of the claim and any counterclaim and set off)
  • If the parties agree; or
  • If the case is one of exceptional urgency

In addition, the Tribunal now has the discretion to decide whether a claim under the Expedited Procedure is to be determined by looking at documentary evidence alone.

Further, if there is any conflict between the terms of the parties’ arbitration agreement and the terms of the Expedited Procedure, the latter takes precedent.

Multi-contract disputes Multi-contract disputes are increasingly common in international arbitration and they have at times proved difficult to manage efficiently. Procedural requirements for commencement of arbitration and consolidation often have left parties expending considerable time and cost in trying to get essentially the same dispute, albeit involving multiple contracts, determined efficiently by the same Tribunal at the same time. Through amendments to Rules 6 and 8, SIAC has now given claimants two alternatives where it has disputes arising out of multiple contracts:

  • A claimant can file a notice of arbitration for each contract and at the same time submit an application for consolidation of the arbitrations; or
  • A claimant can file a single notice of arbitration for all the contracts, in which case it will be deemed to have commenced multiple arbitrations, albeit the notice of arbitration will be considered to be an application to consolidate all of those arbitrations.

Further, the SIAC Rules 2016 now enable a party to apply to the Court of Arbitration of SIAC to consolidate multiple arbitrations prior to the constitution of any Tribunal, without prejudicing its right to be involved in the appointment of the arbitrators. If a consolidation application is made after the constitution of a tribunal, then it will be the Tribunal who determines the application, in conjunction with the Registrar of SIAC.

Joinder/intervention The subject of parties joining or being joined to existing arbitrations is becoming an increasingly important consideration in international arbitration and it has often been a difficult issue to address, bearing in mind how critical it is to be clear on the scope of, and the parties to, an arbitration agreement. Nevertheless, multi-contract and multi-party disputes are common in international arbitration, and the major arbitration centres need to recognise this. Rule 7 of the SIAC Rules 2016 now enables both parties and non-parties to apply for either joinder or intervention. In addition, such application can be made either prior to the appointment of any arbitrator or following the constitution of the Tribunal.

Reasoning in relation to arbitrator challenges Although it is regrettable that such circumstances can arise in international arbitration, there can be times when parties are left with no choice but to bring issues as to an arbitrator’s impartiality or independence to the attention of the appointing body, so that it may be ruled upon. SIAC has supplemented its existing procedure for challenging arbitrators, as now, under Rule 15 of the SIAC Rules 2016, the Court of Arbitration of SIAC will provide reasoned decisions on challenges brought against arbitrators. This will hopefully increase transparency in how the Court of Arbitration of SIAC has considered and addressed points raised by parties as to the impartiality or independence of arbitrators, which are important issues. Further, the administrative fees for bringing an arbitrator challenge are now fixed at SGD8,000.

Seat of the arbitration The seat of an arbitration is a fundamental consideration for parties, as it will determine the procedural law which applies to the conduct of the arbitration and, normally, any appeal process in the courts of the jurisdiction in question. Under Rule 20 of the SIAC Rules 2016, Singapore will no longer be the default seat of the arbitration. The Tribunal will now have the power to determine the seat of the arbitration, unless it has already been agreed by the parties.

Reimbursement for deposits paid as a result of another party’s default Often in arbitrations, the claimant can find itself in a position where the respondent refuses and/or fails to pay its share of the costs of the arbitration. This then often leads to the claimant having to pay the respondent’s share, in addition to its own share, in order to progress the arbitration. This can be a very frustrating element in international arbitration. The SIAC Rules 2016, under Rule 26, now seek to address this type of situation by giving the Tribunal the power to make an order or award that gives reimbursement of unpaid deposits towards the costs of the arbitration, where one party has had to pay the other’s share of the deposits on behalf of that party.

Early dismissal of Claim(s) and Defence(s) A common complaint about arbitration proceedings is that eliminating unmeritorious or frivolous points made by another party quickly and early is often difficult. Often a party will find that frustrating points made by its opponent, that it believes are without any merit, are still on the table right through to the final hearing, causing it to incur substantial time and costs dealing with them.

SIAC has now brought in a procedure that may assist in addressing such a problem. Under Rule 28 of the SIAC Rules 2016, there will be a procedure akin to a summary judgment and/or strike-out application. Parties can now apply for a dismissal of a claim(s) or defence(s) within 30 days of the constitution of the Tribunal. Thereafter, the Tribunal will issue its decision on the application for dismissal within 60 days of the filing of the application. The Tribunal retains a discretion to determine whether the dismissal application itself is unmeritorious.

This is a welcome addition to the SIAC procedure, as it provides an efficient process for a party to use to address any frivolous or wholly unmeritorious points made by another at an early stage, which will hopefully lead to significant savings of time and costs.

Improvements in the efficiency of the Emergency Arbitration procedure Rule 29 and Schedule 1 of the SIAC Rules 2016 now provide that an Emergency Arbitrator will be appointed within just one day (as opposed to the previous position of one business day) of receipt by the Registrar of the application for emergency interim relief, and the requisite fees and deposits. In addition, the award of interim relief must now be delivered within 14 days of the appointment of the Emergency Arbitrator.

Further, in terms of costs, SIAC has now fixed the fees of Emergency Arbitrators at SGD25,000, providing an improvement in cost certainty and efficiency for parties utilising the Emergency Arbitration procedure.

Conclusion Overall, the additions and improvements found in the SIAC Rules 2016 are welcome and appear to demonstrate that SIAC is focussing particularly on the issues of efficiency and cost effectiveness, which are of course very important factors for users of international arbitration.

Singapore is arguably now the second most important arbitration centre in the world after London, and it is clear that SIAC is looking to be proactive in adapting and improving its rules and procedures so as to remain at the forefront of what is a very competitive market.

 

Client Alert 2016-140