The International Arbitration Review: Singapore

Singapore has two legal regimes for arbitration: the Arbitration Act 2001 (AA) for domestic arbitrations and the International Arbitration Act 1994 (IAA) for international arbitrations.

i International arbitration

The IAA is the key statute governing international commercial arbitrations in Singapore. It provides that the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (the UNCITRAL Model Law) has the force of law in Singapore, subject to any applicable provisions of the IAA.² Under the IAA, an arbitration is deemed international if at least one of the parties to an arbitration agreement, at the time of the conclusion of the agreement, has its place of business in any country other than Singapore.³ Alternatively, an arbitration is deemed international if the place of arbitration, any place in which a substantial part of the obligations of the commercial relationship are to be performed, or the place with which the subject matter of the dispute is most closely connected is outside the country in which the parties have their place of business.⁴ Parties can also expressly agree that the subject matter of the arbitration agreement relates to more than one country, which would also make it international under the IAA.⁵

ii Domestic arbitration

The AA applies to any arbitration where the place of the arbitration is in Singapore and Part 2 of the IAA does not apply to the arbitration (in other words, where the arbitration is not deemed international under the IAA).⁶ Its enactment aimed to align Singapore’s domestic laws with the UNCITRAL Model Law, which was already the basis of the international arbitration regime in Singapore.⁷

iii Key features of international arbitration in Singapore

The key features of international arbitration can be described as minimal curial intervention and facilitation of arbitration. Pursuant to Section 6 IAA, the Singapore courts will customarily grant a stay of any court proceedings in favour of international arbitration where a party can establish that the party that instituted court proceedings is in breach of an arbitration agreement. The arbitral tribunal is given the competence to rule on its own jurisdiction, subject to the Singapore High Court’s ability to review this on the application of a party.⁸ A decision by the High Court in this regard is appealable only with the permission of the appellate court. Arbitrators are given broad powers in international arbitrations in Singapore. Pursuant to Section 12 IAA, an arbitral tribunal has the powers to make orders or give directions to any party for, among other things, discovery of documents, orders preserving property that forms the subject matter of the dispute, ordering security for the amount in dispute and issuing interim injunctions. Further, pursuant to Section 12A of the IAA, the General Division of the Singapore High Court is also empowered to make such orders for the purposes of an arbitration, meaning that the tribunal’s orders can be given bite where necessary. Awards made by the tribunal are binding on parties and may, with leave of the court, be enforced in the same manner as a judgment or order to the same effect.⁹

Singapore is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). Awards that are to be enforced in another country that is party to the New York Convention can be enforced after being authenticated or certified by a person who has been appointed to authenticate or certify awards or arbitration agreements in Singapore.¹⁰

A foreign arbitral award made in a convention country may also be enforced in Singapore either by action or in the same manner as an arbitral award made in Singapore.¹¹ Foreign arbitral awards made in a country that is not party to the New York Convention may also be enforced in Singapore by action or, with the permission of the General Division of the Singapore High Court, in the same manner as a judgment or order to the same effect.

Challenges to arbitral awards may be made only on certain, very limited, grounds. These include the following:

1. where the agreement was not valid under the law to which parties have made it subject;
2. the award deals with a dispute not contemplated by the terms of submission to arbitration;
3. the subject matter of the dispute is not capable of settlement by arbitration under the law of Singapore or a foreign state;
4. the award is in conflict with the policy of Singapore or a foreign state;
5. the making of the award was induced or affected by fraud or corruption; or
6. a breach of the rules of natural justice occurred in connection with the making of the award, by which the rights of any party have been prejudiced.

iv Singapore arbitral institutions

The Singapore International Arbitration Centre

The key institution for international arbitration in Singapore is the Singapore International Arbitration Centre (SIAC).

In 2022, SIAC handled a total of 357 cases, out of which 336 were SIAC administered cases and 21 were ad hoc appointments.¹² The nature of the claims are diverse, spanning, among others, trade, commercial, corporate, shipping, aerospace, insolvency, pharmaceuticals and insurance. The total sum of new case filings with SIAC amounted to US$5.61 billion in 2022, with a total sum in dispute for SIAC administered cases reaching US$5.49 billion.¹³ The highest sum in dispute for a single administered case was US$627 million.¹⁴ A total of 88 per cent of the case filings were international in geographical origin, with the United States, India and China emerging as prominent users of SIAC’s arbitration services in Singapore. There was also an increase in the number of cases filed by parties from the United States, Cayman Islands, Australia and Thailand compared with the previous year.¹⁵ The governing laws of 28 different jurisdictions were applied in disputes referred to SIAC in 2022, including China, India, Thailand, the United Kingdom, Indonesia, New York and Germany.¹⁶

SIAC also offers an ‘expedited procedure’ option for parties to resolve their disputes within six months where the amount in dispute does not exceed S$6 million if parties so agree or the case is one of exceptional urgency.¹⁷ This has proved a popular option as it provides quick and efficient decision-making. In 2022, SIAC saw 87 applications for expedited procedures, 48 of which were accepted.¹⁸

SIAC has a diverse pool of 340 arbitrators from over 36 countries, with a significant representation from Singapore, the United Kingdom, Australia and the United States.¹⁹ These arbitrators issued 161 awards in 2022. Notably, 11 awards or orders were issued by emergency arbitrators to address urgent interim relief.²⁰ The types of disputes heard by SIAC arbitrators encompassed trade-related matters, commercial disputes, corporate issues, maritime and shipping cases, construction disputes and other miscellaneous matters.²¹

Other institutions of note

The Singapore Chamber of Maritime Arbitration (SCMA) serves as an arbitration platform to address the unique needs of the maritime community, offering a specialised platform for maritime arbitration.²² By providing a dedicated space for resolving maritime disputes, the SCMA contributes to the efficient and effective resolution of conflicts within the maritime sector.

In 2022, the SCMA recognised the need for expedited resolution of ship collision disputes and developed the Expedited Arbitral Determination of Collision Claims (SEADOCC). SEADOCC aims to assess liability within five months, limiting evidence to a summary of facts and specific documents. Parties who agree to SEADOCC accept the arbitrator’s liability determination. To strengthen SEADOCC, a dedicated subcommittee consisting of select arbitrators and nautical assessors was formed.²³

Additionally, the SCMA introduced the Singapore Bunker Claims Procedure (SBC Terms) to address disputes arising from bunker sales and supply. Recognising the need for cost-effective resolution, the SBC Terms shorten time frames for pleadings and submissions. Awards, typically based on documents, are rendered within 14 days of the final filing.²⁴ For bunker claims as low as US$100,000, a faster summary procedure can be pursued while ensuring due process.²⁵ The SBC Terms have been incorporated into industry standards, further establishing their credibility and applicability.²⁶

In addition, Singapore is home to the regional offices of key international arbitration institutions. These include the World Intellectual Property Organization Arbitration and Mediation Center, which is its first overseas office outside Geneva; the International Chamber of Commerce’s International Court of Arbitration; the Permanent Court of Arbitration (PCA); and the American Arbitration Institution’s International Centre for Dispute Resolution.²⁷

i Developments affecting international arbitration

Conditional fee arrangements for international arbitration

On 4 May 2022, amendments to the Singapore Legal Profession Act 1966 (LPA) came into effect that now permit conditional fee agreements to be reached between clients and solicitors in arbitration proceedings in Singapore. Under the LPA, a conditional fee agreement is defined as:

an agreement relating to the whole or any part of the remuneration and costs in respect of contentious proceedings (whether relating to proceedings in Singapore or any state or territory outside Singapore) conducted by a solicitor, a foreign lawyer or a law practice entity, which provides for the remuneration and costs or any part of them to be payable only in specified circumstances, and may provide for an uplift fee.²⁸

An uplift fee means that the conditional fee agreement may provide that the solicitor may be paid a higher amount for a particular item of work in the event of a specified circumstance than he or she would be paid if the circumstance did not happen. For example, a solicitor may now agree that the client will pay him or her a 50 per cent uplift on a fee in the event that the arbitration award is successfully obtained for his or her client. However, a solicitor may not reach an agreement with his or her client to be paid a portion or percentage of the eventual damages awarded.

The above is likely to facilitate arbitration proceedings in Singapore by permitting a broader range of flexible fee options for clients and solicitors. This will be particularly facilitative where the outcome of the arbitration is uncertain and the client is concerned about the recovery of legal fees.

SIAC Model Clause recommends an option for SIAC to be the supervisory Singapore court for international arbitrations

SIAC revised its recommended Model Clause in the past year. The revised SIAC Model Clause includes an elective provision that allows parties who choose Singapore as the seat of arbitration to explicitly designate the Singapore International Commercial Court (SICC) as the supervisory court for their arbitration proceedings, rather than the General Division of the Singapore High Court (which is the default). This elective provision enables parties to designate SICC as the judicial body responsible for overseeing the arbitration process. If parties choose to explicitly designate SICC as the supervisory court in their arbitration agreement, any supervision of the arbitral process will be automatically conducted by SICC instead of the General Division of the Singapore High Court.

SICC is a superior court in Singapore that was established exclusively to hear transnational commercial matters. The international nature of this court is its distinguishing feature. Foreign judges with expertise in various jurisdictions and their respective laws are present at SICC, allowing them to efficiently handle cases with a significant international law element. The SICC judges are international and hail from both the civil and common law traditions. Countries including France, Australia, the United States, Japan, India and Canada are all represented by judges sitting in the SICC. This elective provision is a convenient way of signalling to parties whose disputes heavily involve foreign law that they have a further option in terms of the seat court in Singapore in the form of the SICC.

ii Arbitration developments in local courts

The Singapore courts will determine subject matter arbitrability with reference to any relevant local or foreign public policy

In Anupam Mittal v. Westbridge Ventures II Investment Holdings [2023] 1 SLR 349, the Singapore Court of Appeal overturned the holding of the Singapore High Court in the same case that the question of whether a dispute was ‘arbitrable’ (meaning whether or not a dispute was capable of arbitration) should be decided at the pre-award stage by the law of Singapore rather than the law governing the arbitration agreement. The Singapore Court of Appeal instead preferred a ‘composite’ approach, in which the Court looked at whether the subject matter was arbitrable under both Singapore’s public policy and the public policy of any state whose law governed the arbitration agreement.

By way of background, the appellant and respondent were shareholders in a company founded by the appellant. The parties had a shareholders’ agreement that contained an arbitration clause. The shareholders’ agreement was governed by Indian law, while the arbitration agreement referred any ‘dispute relating to the management of the Company or relating to any of the matters set out in this Agreement’ to arbitration in Singapore, thus making Singapore the seat of the arbitration.

The parties’ relationship subsequently soured when the respondent expressed an interest in exiting the company. This led to the appellant commencing proceedings before the National Company Law Tribunal in Mumbai, India (the NCLT proceedings), accusing the respondent of colluding with others to wrest control of the management and day-to-day operations of the company from him. In reply, the respondent applied for and obtained an anti-suit injunction in Singapore from the Singapore High Court restraining the NCLT proceedings in India. In granting the injunction, the High Court judge had to determine which law governed the question of the arbitrability of the subject matter in dispute at the pre-award stage. This was relevant because the appellant had raised disputes concerning the oppression and mismanagement of an Indian company before the NCLT, and such disputes were non-arbitrable under the law of India and had to be referred to the NCLT. However, the same kind of disputes were arbitrable under the law of Singapore. Thus, the arbitrability of the dispute depended in turn on whether or not Singapore law (the law of the seat) or Indian law (the law appearing to govern the arbitration agreement) governed the question of the arbitrability of disputes concerning the oppression and mismanagement of companies. The High Court judge found that the law of the seat (i.e., Singapore law) should govern this question, and since disputes relating to oppression and mismanagement of a company were arbitrable in Singapore, the respondent was entitled to obtain the anti-suit injunction.

The Court of Appeal disagreed with this finding of the High Court judge. In so doing, the Court of Appeal had to consider Section 11 IAA, which states that any dispute that parties have agreed to submit to arbitration under an arbitration agreement may be determined by arbitration ‘unless it is contrary to public policy to do so’. In construing this phrase, the Court of Appeal held that it meant the public policy of both Singapore and a foreign state. The Court of Appeal held that this was consistent with the whole purpose of the IAA, which was to facilitate international commercial arbitrations that may have no connection with Singapore other than Singapore having been chosen as the seat of the arbitration. What this means is that at the pre-award stage, any party that seeks an anti-suit injunction from the Singapore court or other measure in aid of arbitration will be able to pursue this measure only if the subject matter is arbitrable under both Singapore law and the law governing the arbitration agreement.

Nonetheless, the Court of Appeal proceeded to hold that the High Court judge was right to grant the anti-suit injunction because it found that the law governing the arbitration agreement was not Indian law. In so doing, the Court of Appeal noted that there was no express choice of law in the arbitration agreement. The Court of Appeal also held that it was not appropriate to imply Indian law for the arbitration agreement, as this would effectively negate the parties’ agreement to submit company management disputes to arbitration, since such disputes could not be arbitrated under Indian law. The Court of Appeal then went on to look at which law had the closest connection with the arbitration agreement and, given that the arbitration was to take place in Singapore, determined that this was Singapore law. As Singapore law governed the question of arbitrability, and company management disputes were arbitrable under Singapore law, the Court of Appeal upheld the injunction restraining the appellant from continuing with the NCLT proceedings in India.

The Court of Appeal’s decision reiterates the Singapore courts’ approach to facilitating international commercial arbitrations while at the same time upholding Singapore’s own public policy concerns. In future, parties are advised to draft their arbitration agreements carefully with these considerations in mind. In particular, it would be advisable to expressly make clear which law is intended to govern the arbitration agreement as compared with the law that governs the general contract in which the arbitration is found. The Court of Appeal noted that any concerns about predictability and certainty could be addressed by suitable drafting in this direction.

The Singapore courts will set aside arbitral awards where there has been a breach of natural justice

In Phoenixfin Pte Ltd and others v. Convexity Ltd [2022] 2 SLR 23, the Singapore courts demonstrated their readiness to set aside awards where there had been a breach of the rules of natural justice. The respondent had entered into an agreement with the first appellant to provide IT security consulting services. The agreement was governed by English law. A dispute arose after the appellant sought to terminate the agreement. The respondent commenced arbitration in accordance with the SIAC Rules, under the expedited procedure. The respondent in particular claimed that the first appellant was liable to pay the respondent a ‘make-whole amount’ in the event of termination under a ‘make-whole clause’. This amount, after accounting for interest, came to US$2.8 million.

In accordance with SIAC’s expedited procedure, the arbitration was set to proceed to hearing in late May 2020. Witness lists and agreed lists of issues were exchanged by late April. However, in late April, the appellant sought to introduce two new expert witnesses to give evidence on whether the make-whole clause was an unenforceable penalty under English law. On 6 May 2020, the first appellant applied to amend its pleading to put into issue the question of where the make-whole clause was an unenforceable penalty under English law. The tribunal disallowed the application for the first appellant to amend its pleadings. Nonetheless, the tribunal took the position that she had allowed for the issue to be dealt with by way of legal submissions, and parties had notice of this fact. Ultimately, evidence was led at the evidentiary hearing without canvassing the issue of whether the make-whole clause was a penalty clause. Thereafter, the tribunal sought to raise the penalty issue at oral reply submissions post the evidentiary hearing. While the tribunal gave parties the opportunity to adduce evidence for the respondent’s witnesses at a further hearing, the respondent did not, taking the position that it was not their burden to do so. The tribunal then issued an award dismissing the respondent’s claim to US$2.8 million on the basis that the make-whole clause was an unenforceable penalty under English law. The respondent then applied to set aside this part of the tribunal’s award.

The Court of Appeal upheld the High Court judge’s finding that there had been a breach of natural justice and set aside this portion of the award. The Court of Appeal accepted that whether there had been a breach of natural justice did not depend on whether or not an issue had been pleaded in all cases in arbitration. However, the Court held that, ultimately, what mattered was whether a party had been given fair notice of an issue and fair opportunity to deal with it. In this case, the Court noted that the penalty issue was a question of mixed law and fact and no evidence had been adduced by the first appellant in support of its case that the make-whole clause was a penalty, as the amendment application was disallowed. Moreover, it was the appellant’s burden to show that the make-whole clause was an unenforceable penalty clause. By introducing this issue after the evidentiary hearing, the tribunal had denied the respondent the opportunity to put forward its case for why the make-whole clause was not a penalty. For example, the respondent was unable to show that the make-whole clause was in line with industry standards and hence not a penalty clause in law.

The Court of Appeal’s decision is particularly pertinent in the context of international arbitrations in Singapore because SIAC contains an expedited procedure. Disputes like the one in the present case that are conducted under the SIAC expedited procedure must be decided within six months. Parties should therefore be encouraged to raise issues of mixed law and fact early in order to avoid the possibility that there could be a breach of natural justice leading to the issuance of the tribunal’s award and a subsequent application to set aside the award.

The Singapore courts are able to recognise and enforce foreign interim arbitral awards made by emergency arbitrators

Interim arbitration awards may be made on a variety of issues, whether on an emergency basis or otherwise. Among other examples, such an interim award may decide a discrete issue of law or fact or make orders preserving property of one of the parties to secure the amount in dispute. In CVG v. CVH [2022] SGHC 249, the Singapore High Court held that foreign interim arbitral awards made by emergency arbitrators (EAs) are enforceable in principle in Singapore. Nonetheless, in this particular case, the High Court set aside the order granting the applicant leave to enforce a foreign EA award, on the basis that the award breached natural justice, in that the defendant had been unable to present its case in the foreign arbitration proceedings.

The defendant was the claimant’s franchisee in Singapore. The defendant also had permission to distribute the claimant’s products over the internet and to operate the claimant’s website. The defendant terminated the agreement. The claimant commenced emergency arbitration proceedings in Pennsylvania seeking reliefs, including the enforcement of post-termination clauses in its contract with the claimant. The arbitration was governed by Pennsylvania law and an EA was appointed. In the course of the arbitration, the EA sought clarification on whether or not the claimant was seeking to uphold the agreement and certain entitlements in the agreement pending the final decision. This was because several of the claimant’s actions, such as removing the defendant’s access to its worldwide ordering system, strongly suggested that the claimant had accepted the defendant’s termination of the agreement. However, the claimant in its post-hearing submissions clarified that it was also seeking to uphold the agreement pending final arbitration. On that basis, the EA made orders upholding the claimant’s right to certain entitlements on the footing that the agreement was still active and pending the decision of the full tribunal.

The claimant thereafter filed for permission to enforce the EA award in Singapore and obtained an enforcement order in Singapore. The defendant then applied to set aside the enforcement order. The Singapore High Court allowed the defendant’s application to set aside the enforcement order. In so doing, the Singapore High Court considered whether Section 29 IAA, which recognises and enforces ‘foreign awards’, also included arbitral awards made by EAs. The definition of foreign award in this part of the IAA means an ‘arbitral award made pursuant to an arbitration agreement’ in the territory of a country other than Singapore that is also a party to the New York Convention. The Court noted that the definition of arbitral award in this part of the IAA had been amended to include awards made by an arbitral tribunal that encompassed interim measures. The Court held that this amendment showed that the definition of foreign awards in Section 29 IAA was also intended to recognise EA awards made in a foreign jurisdiction. The Court also noted that this would be consistent with the parliamentary readings in Singapore that showed a legislative purpose to make the IAA applicable to all awards, including foreign interim awards by EAs.

Nonetheless, the Court set aside the enforcement order on the basis that the late clarification by the claimant that it sought to uphold its entitlements under the franchise agreement pending the final award deprived the defendant of the chance to contest this. In particular, it deprived the defendant of the chance to put forward evidence to show that the claimant had, by its conduct, repudiated the franchise agreement and hence should not be entitled to continuing benefits under the franchise agreement pending the issuance of the final award. This was a breach of natural justice.

The decision by the Singapore courts gives international parties clarification that foreign interim arbitral awards made by EAs, which are often required, can be enforced in Singapore under the IAA. This enhances Singapore’s status as a jurisdiction that is conducive to international commercial arbitration.

iii Investor–state disputes

In Lao Holdings NV and another v. Government of the Lao People’s Democratic Republic [2023] 1 SLR 5, the Singapore Court of Appeal chose not to set aside two arbitral awards made in investor–state arbitrations seated in Singapore. One of the arbitrations was conducted under the rules of the International Centre for Settlement of Investment Disputes and the other was an ad hoc arbitration conducted under the auspices of the PCA. The appellant had alleged violations by the respondent of two bilateral investment treaties pertaining to the development of hotels, casinos and clubs in Laos. The respondent raised the defence that the claims should not be entertained as there was evidence of bribery by the appellant. A settlement to the arbitrations was reached, which provided that the arbitrations could be revived in the event of material breach by the respondent. The settlement also provided that in the event of the arbitrations being revived, no new evidence could be admitted. Subsequently, the arbitrations were revived and the tribunal allowed the respondent to admit fresh evidence of bribery. In so determining, the tribunal undertook an exhaustive construction of the portion of the settlement agreement relating to the new evidence and also determined that it had a residual discretion to chart a different course if compelling circumstances were shown to exist.

The appellants applied to set aside the awards on the basis of a breach of an agreed arbitral procedure under Section 34(2)(a)(iv) of the UNCITRAL Model Law. In upholding the awards, the Singapore Court of Appeal held that it could not examine a particular interpretation of the settlement agreement that stipulated an arbitral procedure for errors of fact and law unless such interpretation was simply not open on any view of the text or procedure. As this was not the case here, there was no basis to revisit the arbitral tribunals’ interpretation of the arbitral procedure under the settlement agreement.

The developments above demonstrate Singapore’s continuing commitment to facilitating international commercial arbitrations. Court decisions show that Singapore continues to carefully limit curial intervention in arbitrations but that the Singapore courts will not hesitate to do so where this is justified (e.g., by a breach of natural justice). At the same time, the introduction of conditional fee arrangements is set to further position Singapore as a pioneering and welcoming destination for international commercial arbitration.