ARBITRATION IN SINGAPORE

Understanding Arbitration

Arbitration is considered an alternative dispute resolution (“ADR”) process in which the parties consent to place their dispute before an independent tribunal (consisting of at least a single arbitrator) to resolve the matter in a way that is binding on the parties. With arbitration, the parties can settle their differences in a confidential setting rather than taking the matter to Court.

The 2021 international arbitration survey by Queen Mary University of London (QMUL) and White & Case found that Singapore shared joint top position with London as the preferred venue for arbitration in the world. Singapore is also the most favoured venue for arbitration in the Asia-Pacific.

What kinds of disputes can be settled using arbitration?

Arbitration can be used to settle various kinds of civil matters. Aside from run-of-the-mill business and construction disputes, arbitration can also be used to settle disputes in employment, media and property matters.

What are some features of arbitration?

We set out some features below.

• Arbitration requires the consent of both parties. If one of the parties does not consent, then the dispute cannot be settled through arbitration. Parties to an ongoing dispute can also sign an agreement to settle their differences through arbitration.
• The parties are free to select their own arbitrator(s) who have the requisite experience that would assist in settling the dispute.
• In contrast to litigation in Court, arbitration is a private mechanism where the arbitrator(s) and parties have to keep all matters relevant to the proceedings (and the arbitral award) confidential.
• The award or order that is made by the arbitrator is binding in that the parties are obliged to abide by its terms. A party can ensure that the obligations that attach to an arbitral award are complied with by registering the award in Court. The Court would then be able to ensure that the other party meets its obligations under that award.

What are the advantages and disadvantages of arbitration?

Advantages	Disadvantages
Confidentiality. Proceedings are held behind closed doors and the award is not public, enabling parties to settle their differences without being concerned about the goodwill accumulated and established, or adverse effects of the outcome on the market.	Managing “difficult” parties. Arbitration does not provide as many choices when dealing with an unresponsive party, as opposed to court proceedings where a party can secure a default judgment against another.
Autonomy. Parties have some control over arbitral proceedings because they may be able to choose their arbitrators, the applicable rules and the venue for such proceedings to take place.	Time and Costs. Arbitration is not as quick a process, and hence a dispute that takes longer to resolve may incur more costs for the parties. However, this is mitigated considering that costs are generally easier to recover (or take a shorter time to recover) through arbitral proceedings than through litigation.
Finality. Awards are final in that the matter will not have to undergo several appeals, though proposals have been put forward to permit parties to choose to appeal on a question of law in the not-too-distant future.
Widespread enforceability of arbitral awards. As a State Party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, an award given in Singapore is enforceable in well over 160 countries.

 

What are the laws on domestic and international arbitration in Singapore?

Where the seat of arbitration is in Singapore, the relevant laws are:

• Arbitration Act 2001 (2020 Rev. Ed.) [“Arbitration Act”];
• International Arbitration Act 1994 (2020 Rev. Ed.) [“IAA”]; and
• Arbitration (International Investments Disputes) Act 1968 (2020 Rev. Ed.) [“IIDA”].

Domestic arbitration is regulated by the Arbitration Act, which covers any arbitration where the venue for arbitration is in Singapore and where Part 2 of the IAA is not applicable.

The IAA regulates international arbitrations (meaning any arbitration process that includes a cross-border feature) and non-international ones where parties have expressly agreed in writing for Part 2 of the IAA or the Model Law to come into play.

The IAA implements the Model Law on International Commercial Arbitration (“Model Law”) from the United Nations Commission on International Trade Law, which seeks to standardise arbitration laws across countries. The IAA integrates the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”).

The IAA provides that the Model Law has “the force of law in Singapore” save for Chapter VIII of the Model Law.

Pursuant to the IAA, an arbitration is international where:

• at least one party’s venue for business is outside of Singapore when the arbitration agreement was signed; or
• the venue for arbitration is located in a place outside of the country where the parties conduct their business; or
• any place where considerable responsibilities that attach to the business relationship are to be carried out is located outside of the country where the parties’ conduct their business; or
• the parties have specifically agreed that the content of the arbitration agreement concerns more than one country.

The IIDA implements the United Nations Convention on the Settlement of Disputes between States and Nationals of Other States.

What are the formalities?

In Singapore, consistent with Article II of the New York Convention, an arbitration agreement must be in writing. Here, it means that so long as the contents of the agreement (including arbitration provisions as dispute settlement clauses) are set out in writing, regardless of how the agreement had been reached (e.g. verbally, through actions or other ways), this requirement would be met. Likewise, an arbitration agreement that is set out electronically can meet this requirement provided that its contents can be retrieved for reference at a later stage. For instance, an arbitration agreement can be reached over e-mail.

What matters can be settled with arbitration?

In Larsen Oil and Gas Pte Ltd v Petroprod Ltd (in official liquidation in the Caymen Islands and in compulsory liquidation in Singapore) [2011] 3 SLR 414, the Court of Appeal confirmed the judiciary’s openness to arbitration by interpreting arbitration provisions to cover most kinds of disputes. But the Court of Appeal also stated that disputes that were confined to a statutory insolvency regime would not be arbitrable. While the following matters were not expressly covered, it is understood that criminal law matters and matrimonial disputes are not considered arbitrable, in line with other common law countries.

Likewise, on international arbitrations, Section 11(1) of the IAA stipulates that any dispute can be referred to arbitration unless it is against public policy.

In AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company) [2021] SGCA 112, the Court of Appeal overturned a winding up order, and subsequently an issue over which party should pay for the liquidator’s fees was raised. The Court of Appeal had to consider its jurisdiction to order a party separate from the Company to pay such fees and if this was the case, the grounds for its jurisdiction. The Judge below had dismissed the Company’s application for creditor VTB Bank to pay the then liquidators’ fees and those of their solicitors. The Court of Appeal dismissed the Company’s appeal against this decision.

The Court of Appeal appreciated that the dispute came about from insolvency proceedings. It reaffirmed that the Courts have power over insolvency proceedings before it. Hence some insolvency matters were non-arbitrable in public interest. On its face, the dispute before the Court of Appeal appeared to fall under the purview of insolvency proceedings. Conversely, the dispute also seemed to come under the remit of the inclusive arbitration provision contained in the “Global Master Repurchase Agreement” (“GMRA”). The features of this case indicated that the bar that had been set in favour of arbitration had been met. The Court of Appeal acknowledged the intersection between the business dispute before it and the business dispute before the arbitral tribunal, considering that the Company’s claim for damages in the arbitration might have covered liquidators’ fees. As a result, the issue of who should pay for such fees could be seen as a dispute “in connection with” the GMRA as set out in the arbitration provision.

The Court of Appeal distinguished between insolvency matters on the one hand and the Company’s claim for damages for the infringement of the arbitration provision on the other. The Court of Appeal stated that while the issue of which party should pay for the liquidators’ fees were the result of winding up proceedings, it did not necessarily follow that this issue was non-arbitrable. It clarified that its observations in Larsen Oil and Gas Pte Ltd did not mean that all matters that were linked to insolvency law would be considered non-arbitrable. In this case, the Court of Appeal was not requested to exercise its jurisdiction in regard to insolvency. Here, the Court of Appeal’s jurisdiction from insolvency legislation which would render the dispute non-arbitrable was not invoked. Even if the dispute over the Court’s jurisdiction over costs was non-arbitrable, the dispute before the Court was not the same as the one before the arbitral tribunal.

The Court of Appeal reaffirmed that arbitration was based on mutual agreement. If the parties accepted that a dispute over a particular category of damages should be subject to arbitration, treated as an infringement of an arbitration agreement, then unless public interest (or the arbitrator’s powers) were in issue, the dispute could be arbitrable. The considerations for costs as opposed to damages for breach of contract were separate. The latter issue was not before the Court of Appeal. As a result, even though the dispute over the liquidators’ fees could fall under the purview of arbitration as arising from breach of contract (particularly the arbitration provision), this did not override the Court’s power to resolve the dispute over whether creditor VTB Bank should pay the liquidators’ fees.

In addition, the Court of Appeal held that the results of the separate proceedings would not be at odds with each other. If the Court of Appeal held in the Company’s favour and ordered VTB Bank to pay the liquidators’ fees, the Company would probably not recuperate those fees since it did not incur any loss from the Court’s order. If the Court of Appeal held in VTB Bank’s favour and ordered the Company to pay the liquidators’ fees, the Company would probably seek damages from VTB for breach of the arbitration provision, which would be assessed as an alleged breach of contract in the arbitration.

The upshot of the above is that if there is an arbitration agreement (and/or a dispute settlement clause in a contract that provides for arbitration), the Courts would be reluctant to find that the matter is non-arbitrable in the absence of public policy grounds or an issue over the arbitrator’s powers, though the Court might still exercise its own jurisdiction, if it found a related but separate basis for it to do so.

What are unilateral arbitration provisions?

A unilateral arbitration provision is one where one or more contracting parties can invoke arbitration to settle the dispute at the time it occurs. A well-crafted arbitration provision that reflects the intentions of the contracting parties to allow one or more of them to invoke arbitration can be enforced in Singapore.

What are multi-layered dispute settlement provisions?

A multi-layered dispute settlement provision sets out different stages of reaching a settlement before the dispute is escalated through arbitration or going to Court. For instance, contracting parties may expressly provide for working through their issues or mediation, and may only resort to arbitration if those avenues for dispute settlement are exhausted.

In International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and another [2014] 1 SLR 130, the Court of Appeal found that if a dispute settlement provision expressly requires parties to work through their issues or to mediate before resorting to arbitration and if they do not do so, the arbitral tribunal will not have the power to resolve the dispute. If such stages are expressly contemplated in the contract, the parties would have to exhaust those other avenues before they can invoke arbitration proceedings.

When will a Court refrain from settling a dispute in favour of arbitration?

If the dispute concerns an international arbitration regulated by the IAA, the Court must stay proceedings unless the Court understands that the arbitration agreement is “null and void, inoperative or incapable of being performed”. If the dispute is a domestic one regulated by the Arbitration Act, the Court can determine whether or not to stay proceedings so that arbitration can take place.

What happens when the main agreement between the contracting parties that includes the arbitration provision is not enforceable?

The Courts in Singapore applies its understanding of severability (i.e. that an arbitration provision is treated as separate from the main agreement despite being included in it). If the contract is unenforceable, this does not necessarily mean that the arbitration provision is also unenforceable. It must be demonstrated that the arbitration provision is unenforceable as well (e.g. on the basis that it is void).

 

What happens when an arbitration provision does not expressly set out procedural rules?

An arbitration provision that does not do so might still be enforceable, provided that the provision shows the contracting parties’ intention to settle their differences through arbitration. When no specific procedural rules are mentioned, the parties would be considered to have consented to ad hoc arbitration. The procedure in the Model Law would be followed unless the parties or the arbitral tribunal resort to other rules.

How is the arbitrator appointed?

The selection of arbitrators is usually done in accordance with the procedure that the parties have agreed upon. Parties are free to decide who to be appointed as arbitrator unless they set their own limits in the arbitration agreement and/or provision.

Rules from various bodies provide for the selection of arbitral tribunals should the parties fail to provide for one in the arbitration agreement and/or provision. For instance, pursuant to the Rules of the Singapore International Arbitration Centre (“SIAC Rules”), where the parties cannot reach consensus on the selection of the one and only arbitrator within 21 days of having been given a Notice of Arbitration, the President of the SIAC Court of Arbitration would select an arbitrator as soon as practicable. Likewise, where the arbitral tribunal must comprise 3 arbitrators and one of the parties does not select an arbitrator within 14 days, the President of the SIAC Court of Arbitration would select the arbitrator on that party’s behalf.

What if parties take issue with her or his appointment?

Either party can oppose the selection of an arbitrator. Rules from various bodies set out deadlines to do so. The SIAC Rules provide that the SIAC Court of Arbitration that determines whether or not the challenge is successful is to provide reasons for its decision unless the parties agree otherwise. The administration costs for such a challenge is S$8,000 (without including Goods and Services Tax). This fee is non-refundable.

Either party can also oppose the selection of an arbitrator by taking the matter to Court, but the procedure for doing so would be subject to the Rules of Court.

If one of the parties opposes the selection of arbitrator, the other party could agree with or dispute the challenge. The arbitrator could also voluntarily remove herself or himself from the proceedings. If the other party disputes the challenge, the relevant body that oversees the arbitration will determine the matter, and its determination cannot be appealed against in litigation.

Which authorities regulate arbitration in Singapore?

There are several arbitral bodies based in Singapore. The SIAC implements its own arbitration rules and also oversees ad hoc arbitration proceedings.

What is a model arbitration provision?

The SIAC suggests the model arbitration provision below:

SIAC MODEL CLAUSE

In drawing up international contracts, we recommend that parties include the following arbitration clause:

 

Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration administered by the Singapore International Arbitration Centre (“SIAC”) in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (“SIAC Rules“) for the time being in force, which rules are deemed to be incorporated by reference in this clause.

The seat of the arbitration shall be [Singapore].*

 

The Tribunal shall consist of _________________** arbitrator(s).

 

The language of the arbitration shall be ________________.

 

APPLICABLE LAW

 

Parties should also include an applicable law clause. The following is recommended:

 

This contract is governed by the laws of _________________.***

 

______________________________________________

* Parties should specify the seat of arbitration of their choice. If the parties wish to select an alternative seat to Singapore, please replace “[Singapore]” with the city and country of choice (e.g., “[City, Country]”).

** State an odd number. Either state one, or state three.

*** State the country or jurisdiction

 

Can parties have arbitral proceedings accelerated or fast-tracked? What is the procedure?

The period of arbitration differs from case to case, though broadly arbitration proceedings tend to take a year at the minimum to conclude.

The SIAC Rules provide for an expedited process for disputes in which the amount in dispute is not over S$6 million, or if the parties consent to the expedited process, or for matters which are truly urgent. The party seeking to invoke the expedited process would have to submit such an application before the arbitral tribunal is formed.

The expedited process under the SIAC is comparable to the conventional arbitration proceedings under it, save for the SIAC Registrar’s discretion to set faster deadlines. Also, save for exceptional cases, the tribunal must give an award within 6 months from its inception. The SIAC Rules prescribe that only one arbitrator is to oversee the expedited arbitral process unless the President of the SIAC Court of Arbitration decides that the matter calls for more.

If there is any inconsistency between the parties’ arbitration provision and the expedited process, the latter would take precedence. For instance, the SIAC President might select one arbitrator to oversee proceedings even if the parties expressly provided for a 3-member arbitral tribunal.

Can a party apply to strike out baseless, trivial or vexatious claims and/or defences?

In a procedure comparable to summary judgment in Court proceedings, either party can apply for early dismissal of claims or defences on the ground that the claims or defences are legally deficient or the claims or defences are clearly beyond the arbitral tribunal’s jurisdiction.

If the arbitral tribunal accepts the application, it will determine whether to accede to the submission for early dismissal after hearing from the parties. The tribunal is to determine the matter within 60 days of the submission for early dismissal. It remains open to the tribunal to decide that the application for early dismissal itself is without merit.

How are proposals to settle the matter handled in arbitration proceedings?

Proposals to settle the dispute are often made “without prejudice”. Consequently if the tribunal gives the offer’s recipient less than the amount that was offered, the offeror can reveal the offer to the tribunal to seek a ruling that the recipient bear the offeror’s fees payable from the date of the offer, since the recipient could have accepted the more favourable offer in the first place. This “Calderbank Offer” is not expressly set out in the main arbitration rules, but arbitration tribunals have wide discretion over costs, and could well be able to consider this offer and its conditions in making such a determination.

Is the dispute before the arbitral tribunal confidential?

Yes, and this has been affirmed by Singapore’s Courts. However, if either party applies to Court to enforce or oppose an arbitral order, confidentiality might be affected because Court proceedings are documented. For international arbitration proceedings that go before the Court (e.g. for enforcement of an arbitral order), or where parties to domestic arbitration proceedings agree that the Model Law applies, the IAA permits parties to apply for the proceedings to be held in private. In proceedings that are not in “open Court”, the parties can seek a Court order that certain information be withheld from publication.

Can an arbitral tribunal issue holding or temporary (interim) orders?

Yes. For domestic arbitrations, section 28(1) of the Arbitration Act enables an arbitration tribunal to mandate that parties provide security for costs as well as discovery. For international arbitrations, or where parties to a domestic arbitration agree that the Model Law applies, section 12(1) of the IAA provides for the same.

The SIAC Rules provide that on the application of either party the tribunal can issue an injunction or other temporary relief, but could order the applicant to put down security for the requested relief.

How does the arbitral tribunal decide on costs?

The tribunal has a wide discretion on how to allocate costs, and neither the legislation nor the rules of various bodies restrict such discretion. In addition, the judiciary generally does not disturb a tribunal’s decision as to costs on the basis of proportionality, or for policy reasons.

Despite such wide discretion conferred on tribunals, broadly costs “follow the event”, such that the party that wins can seek and be granted reasonable costs from the losing party. The tribunal might also consider the parties’ behaviour during proceedings in determining costs. A party that behaves unreasonably may have to bear additional costs.

Under various arbitration rules, the costs of arbitration are often distinguished from the costs accumulated by the parties. Costs of the arbitration may cover amongst others: (i) the tribunal’s fees; (ii) administrative fees and (iii) cost of specialist expertise that the tribunal might need. Conversely, costs accumulated by the parties often include amongst others: (i) costs of engaging counsel; (ii) cost of specialist expertise sought by either party. Unless otherwise expressly agreed, an arbitral tribunal generally can make orders as to the costs of arbitration and costs accumulated by the parties.

How is an arbitral award given effect in Singapore?

Generally, an arbitral award is treated as if it was a ruling from the High Court of Singapore. Order 34 Rule 14 of the Rules of Court 2021 enables a party to submit an application to implement an arbitral award. The application must be supported with an affidavit that shows the arbitration agreement as well as the award (or a copy of the same). The affidavit must also set out the main or most recently known place of business of the parties. The affidavit must affirm that the award has not been adhered to, or the degree to which it has not been adhered to.

The losing party has 14 days (or an alternative period determined by the Court where the order is served overseas) to oppose the enforcement of the arbitral award. If no opposition is submitted or if such opposition fails, the winning party can have the award implemented and treated as if it was a ruling from the High Court of Singapore, along with available remedies.

How can a party oppose an arbitral award given in Singapore?

A party can apply to set aside an arbitral award given in Singapore for any of the reasons stipulated in Article 34(2) of the Model Law and section 24 of the IAA, which additionally enables the High Court of Singapore to set aside an arbitral award if it was given in circumstances involving fraud or corruption or if a breach of natural justice in relation to the award has occurred.

For international arbitration proceedings or where the parties to a domestic arbitration proceeding agree that the Model Law applies, a party that opposes an arbitral award can challenge the arbitration tribunal’s jurisdiction by submitting an application to Court under section 10 of the IAA.

Can an arbitral award from another country be enforced in Singapore?

Singapore Courts will give effect to arbitral awards that were secured in countries that are State Parties to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Effectively, arbitral awards from over 150 countries can be enforced in Singapore.

Can Singapore Courts decline to give effect to an arbitral award from another country?

The Singapore Courts can decline to do so only in certain circumstances. Section 31(2) and (4) of the IAA provides that the Singapore Courts can only decline to do so on the following grounds:

• a party was unable to legitimately conclude an arbitration agreement when that agreement was made;
• the arbitration agreement was invalid under the applicable law or under the law of the State where the award was given;
• a breach of natural justice had taken place – a party did not have enough notice of the arbitrator’s selection or the arbitration proceedings, or could not set out its case in such proceedings;
• broadly, the award covered issues that the parties did not wish to refer to arbitration;
• the arbitral process did not comply with the parties’ agreement or the law of State in which the arbitration had been conducted;
• the award is yet to legally take effect on the parties or has been set aside or temporarily stayed by the relevant authority of (or pursuant to the laws of) the country in which the award had been given;
• the matters arising from the dispute are non-arbitrable under Singapore law;
• the award’s implementation would not accord with Singapore’s public policy.

In which countries can arbitral awards given in Singapore be enforced?

Broadly, arbitral awards given in Singapore can be enforced in any State Party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. At the time of writing no countries have made a reservation to decline to give effect to Singapore arbitral awards.

DISCLAIMER

As mentioned, the information above is not intended to be legal advice, but is meant to give you some understanding of the criminal process in Singapore generally. Hence, you should not see the information contained here as a comprehensive guide. Trident Law Corporation excludes liability for loss suffered by any person resulting in any way from the use of, or reliance on, this information.

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