Client Alert

Singapore Announces Amendments to Its International Arbitration Act

10 Sep 2020

On September 1, 2020, Singapore’s Ministry of Law introduced an International Arbitration (Amendment) Bill (the “Bill”) that proposes two changes to the International Arbitration Act (“IAA”), which governs the conduct of international arbitrations seated in Singapore. The first change is the addition of default processes and timeframes for appointing arbitrators in multi-party situations where the parties’ agreement does not specify an appointment procedure. The second change would explicitly recognize the powers of an arbitral tribunal and Singapore’s High Court to enforce confidentiality obligations. Singapore is a world class international commercial arbitration hub, and these changes aim to further enhance its legal framework for international arbitration.

BACKGROUND

The Bill is the culmination of a public consultation process that took place, and upon which we reported, last year. On June 26, 2019, Singapore’s Ministry of Law published a consultation paper seeking comments from the public on six proposals for amendments to the IAA. The proposed amendments included: (1) introduction of a default nomination procedure for arbitrators in multi-party arbitrations; (2) a requirement that arbitrators decide on jurisdiction at the preliminary stage if requested by all parties; (3) recognizing the power of an arbitral tribunal and Singapore’s High Court to enforce confidentiality obligations; (4) provision for parties to opt in to an appellate procedure on questions of law; (5) exclusion/limitation of set aside grounds under the Model Law and the IAA; and (6) empowerment of Singapore courts to order costs following set aside. We discussed these proposals in detail in our previous article. Ultimately, the Bill adopts two of the proposals made in the consultation paper.

NEW DEFAULT MODE OF APPOINTMENT IN ARBITRATIONS WITH THREE OR MORE PARTIES

The first amendment that the Bill proposes is the addition of a new section 9B of the IAA, setting out a default mode of appointment of arbitrators in multi-party situations where the parties’ agreement does not specify the procedure applicable where there are more than two parties. 

At present, section 9A of the IAA sets out a default procedure for the appointment of three arbitrators: Each party appoints one co-arbitrator, and the parties appoint the third arbitrator by agreement or, if no agreement is reached in 30 days, the appointing authority appoints the third arbitrator. Section 9A closely follows Article 11(3)(a) of the UNCITRAL Model Law on International Commercial Arbitration (1985, with amendments as adopted in 2006). However, this default procedure applies only to situations involving a single claimant and a single respondent. No provision is made for the possibility of multiple claimants and/or multiple respondents who might not be able to agree among themselves on a single co-arbitrator. 

This lacuna in the IAA contrasts with leading institutional rules, which have for several years stipulated default multi-party nomination procedures. In order to ensure the equality of the parties, the current versions of leading institutional rules typically provide that the relevant appointing authority shall select all three arbitrators where the parties on one “side” are unable to agree among themselves upon a co-arbitrator. See, e.g., SIAC Rules (2016), Rule 12.2; HKIAC Rules (2018), Art. 8.2(c); ICC Rules (2017), Art. 12(8); LCIA Rules (2020), Art. 8.1 (except where separate “sides” have been agreed in writing).

The Bill proposes the following default mode of appointment of arbitrators in an arbitration with three or more parties and three arbitrators:

  •   The claimant, or all the claimants by agreement if there is more than one claimant, must jointly appoint an arbitrator on or before the date of sending of the request for the dispute to be referred to arbitration and inform the respondent(s) of the appointment on the same date that the request for the dispute to be referred to arbitration is sent to the respondent(s).
  •   The respondent(s) must, by agreement if there is more than one respondent, jointly appoint an arbitrator and inform the claimant(s) of the appointment within 30 days after the date of receipt of the request for the dispute to be referred to arbitration by the respondent, or by the last respondent to receive the request if there is more than one respondent.
  •   The first and second arbitrators must by agreement nominate the third arbitrator, who is the presiding arbitrator, within 60 days after the date of receipt of the request for the dispute to be referred to arbitration by the respondent, or by the last respondent to receive the request if there is more than one respondent.
  •   If either side fails to appoint an arbitrator or fails to inform the other side of such appointment, upon the request of any party, the appointing authority must appoint all three arbitrators. The appointing authority may reappoint or revoke any appointment already made, and designate one of the three arbitrators as the presiding arbitrator.
  •   Where the first and second arbitrators are unable to agree on the appointment of the third arbitrator within 60 days after the date of receipt of the request for the dispute to be referred to arbitration by the respondent, or by the last respondent to receive the request if there is more than one respondent, the appointing authority must, upon the request of any party, appoint the third arbitrator, who shall be the presiding arbitrator.

The addition of a procedure for appointing arbitrators in multi-party situations addresses an important deficiency in the Model Law and the current IAA and is a welcome development as arbitrations with three or more parties are common.

New Recognition of Tribunal’s and high Court’s power to enforce confidentiality obligations

The IAA at present does not contain any express provision imposing a duty of confidentiality in relation to an arbitration or empowering the tribunal or the courts to enforce such obligations. However, under Singapore law, there is an implied common law duty on the parties to keep the arbitration and information surrounding the arbitration confidential, which operates as a default duty absent party agreement to the contrary in all Singapore-seated arbitrations. See, e.g., Myanma Yaung Chi Oo Co Ltd v Win Win Nu [2003] 2 SLR(R) 547; International Coal Pte Ltd v Kristle Trading Ltd [2009] 1 SLR(R) 945; AAY v AAZ [2011] 2 SLR 528.

Many institutional rules impose express confidentiality obligations on parties in relation to the arbitral proceedings and/or the award. See, e.g., SIAC Rules (2016), Rule 39; HKIAC Rules (2018), Art. 45; LCIA Rules (2020), Art. 30; but cf. ICC Rules (2017), Art. 22(3).  Arbitration legislation rarely does so, though there are exceptions such as section 17 of the Hong Kong Arbitration Ordinance.

The proposed amendment would not itself impose a confidentiality obligation, but would rather by new section 12(1)(j) to the IAA expressly empower the tribunal to enforce any existing obligation of confidentiality “(i) that the parties to an arbitration agreement have agreed to in writing, whether in the arbitration agreement or in any other document; (ii) under any written law or rule of law; or (iii) under the rules of arbitration (including the rules of arbitration of an institution or organisation) agreed to or adopted by the parties.” This clarification is a welcome amendment and should give tribunals confidence to respond to breaches of confidentiality appropriately.

CONCLUSION

The Bill is the latest in a series of amendments to the IAA, which was also amended in 2001, 2002, 2005, 2009, 2012, 2016, and 2019. The regularity of the amendments highlights the fast pace of innovation in arbitration legislation in Asia, as well as Singapore’s initiative to ensure that its arbitration legislation remains cutting edge and responsive to the needs of users, and competitive with regional rivals. The latest proposed amendments demonstrate that Singapore remains intent on cementing its status as one of the premier seats of international arbitration. It is important for arbitration users to regularly update their arbitration clauses with the help of experienced counsel to ensure consistency with current procedures and to take advantage of recent innovations.

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