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Proposed changes to Singapore's arbitration laws
Practical Law UK Legal Update 8-518-7965 (Approx. 3 pages)
Proposed changes to Singapore's arbitration laws
by Practical Law
| Published on 03 Apr 2012 • Singapore |
Alastair Henderson (Partner) and Sean Izor (Associate), Herbert Smith LLP
On 8 March 2012, the Government of Singapore introduced an International Arbitration (Amendment) Bill and a Foreign Limitation Periods Bill to Parliament. These Bills reflect Singapore's continuing efforts to fine tune its arbitration laws and maintain its position as one of the world's leading international arbitration forums.
The Ministry of Law began a one month public consultation on 21 October 2011 seeking feedback on proposed amendments to the International Arbitration Act (IAA) and the enactment of a new Foreign Limitation Periods Act (see Legal update, Proposed amendments to Singapore's International Arbitration Act and Article, Singapore: round-up 2011/2012).
The Bills were introduced in Parliament on 8 March 2012 and it is anticipated that, unless subject to amendment, they will be passed in the next four to six weeks (if not earlier).
A summary of the proposed legislative changes is set out below.
International Arbitration (Amendment) Bill 2012
The International Arbitration (Amendment) Bill 2012 (IA(A) Bill) identifies four areas of proposed reform to the current IAA:
- Relaxation of the current requirement that arbitration agreements be in writing. The definition of "arbitration agreement" in the IAA will be broadened to include arbitration agreements concluded by any means, as long as they are recorded, contemporaneously or subsequently, in any form. The amended definition would encompass, for example, arbitration agreements concluded orally or by conduct and later recorded in writing, or by email or by audio recording. The change is intended to bring the legislative regime into line with commercial reality.
- Review of negative jurisdictional rulings. Under the current framework, the Singapore courts are only entitled to review an arbitral tribunal's ruling on jurisdiction where that ruling is positive (that is, where the tribunal decides that it has jurisdiction). The IA(A) Bill gives the courts similar power to review a tribunal's decision to refuse jurisdiction, no matter whether the tribunal has refused jurisdiction at the outset of the proceedings or at any stage thereafter. The IA(A) Bill also confirms that tribunals and courts have power to make costs orders against any party when ruling that the tribunal does not have jurisdiction. This negates concerns that a negative ruling on jurisdiction implies a consequent lack of power to make a related costs award.
- Arbitral tribunals' powers to award interest. The scope of tribunals' powers to award interest is not clearly defined under the IAA. The IA(A) Bill clarifies tribunals' power to award simple or compound interest on the principal amounts claimed and on amounts awarded in respect of costs. The IA(A) Bill also clarifies that sums payable under awards will carry interest from the date of the award at the rate prescribed for judgment debts, unless the award otherwise directs.
- Emergency arbitrator procedure. In certain circumstances, parties may require urgent relief prior to the formal constitution of an arbitral tribunal. The IA(A) Bill follows the Singapore International Arbitration Centre's recent lead in providing for the appointment of an interim emergency arbitrator pending the appointment of the permanent tribunal. To ensure that the emergency arbitrator procedure is effective, the IA(A) Bill amends the definition of "arbitral tribunal" to include emergency arbitrators, thus giving the latter the same legal status and powers as arbitral tribunals appointed under standard procedures. The IA(A) Bill also ensures that their orders are enforceable through an appropriate amendment to the definition of "arbitral award".
Finally, the IA(A) Bill also makes consequential amendments to the domestic arbitration law, the Arbitration Act (Cap. 10), to reflect the substance of the changes described above.
Foreign Limitation Periods Bill 2012
The Foreign Limitation Periods Bill 2012 (FLP Bill) clarifies which country's limitation laws will apply to disputes which are heard in Singapore (whether in litigation or arbitration) but which are governed by the laws of another jurisdiction. It provides that in such cases, limitation will be determined by the law that governs the substantive dispute. Where, for example, a contractual dispute is initiated in Singapore in relation to a contract governed by the law of England, the FLP Bill provides that the applicable limitation period will be determined by English law as the law that governs the dispute, rather than by the law of Singapore.
This rule is subject to two exceptions. The first is where its application would conflict with public policy. The Bill explains that a conflict with public policy would arise where the application of the rule "would cause undue hardship to a person who is, or might be, a party to the action or proceedings". The second exception stipulates that where the law of the relevant foreign jurisdiction provides for extension or interruption to a limitation period during the absence of a party to the proceedings from any specified jurisdiction, that part of that law shall be disregarded for the purposes of the proceedings in Singapore. The FLP Bill disapplies this exception where it would conflict with public policy or cause undue hardship to a party to the action.
Whilst the Ministry has acknowledged that the proposed amendments to the IAA are not without controversy, it believes the changes will make Singapore's arbitration legislative framework "even more arbitration friendly" and, coupled with the clarifications to limitation legislation, "will ensure that Singapore remains an attractive venue for international arbitrations".
We will continue to report on developments.