The New Act and the Endeavor to Elevate Singapore’s Status as an International Arbitration Hub

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Singapore has been one of the top countries regarding international arbitration. Not only in Asia, but also in world-class ranking. To maintain this status, Singapore’s Ministry of Law plays a vital role in developing international and commercial law, adapting and designing an innovative legal framework to enhance international arbitration.

On 5 October 2020, the Parliament of Singapore passed the International Arbitration (Amendment) Bill to amend Singapore’s International Arbitration Act (“IAA”) Cap. 143A (the “Act”). These amendments strengthen Singapore’s legal framework for international arbitration and enhance its status as an international disputes hub.

Background

In 2019, the Singapore parliament conducted a Public Consultation to seek views on four proposals[1] to amend the IAA. Ministry of Law received information from businesses, arbitrators, professional organizations, academics, and practitioners. Two of the proposed amendments were the effort to appoint arbitrators in multi-party disputes and strengthen powers to enforce confidentiality obligations. These amendments became the first proposed amendments to the IAA since 2012 to be in force officially. The discussed amendment proposals include:

A default mode of appointment of arbitrators in multi-party arbitrations;
Allowing parties, by mutual agreement, to request that the tribunal decides on jurisdiction issues at the preliminary award stage;
Powers for the court and the tribunal to support enforcement of confidentiality obligations in arbitrations; and
Explicitly allowing parties to appeal questions of law arising out of an arbitral award to the Singapore High Court if parties have agreed to opt-in to this mechanism.

Key features

A provision regarding the default mode of appointment of arbitrators in multi-party arbitrations

Before the new amendments, the IAA did not provide any default mechanism for the appointment of arbitrators for disputes that involve more than two parties. Therefore, when there was no mutual agreement beforehand to appoint the arbitrators, this allowed respondents to hinder or stop the multi-party arbitrations. Since Singapore has been a popular location for arbitrators, it is necessary to fill in this legal loophole.

Section 9B to the IAA sets out the default mechanism for arbitrator appointments involving disputes with more than two parties. This amendment greatly benefits the parties who do not have a prior procedure set out to implement the same mechanism. This amendment also ensures that no party will exploit the lack of this procedure to hinder or pause the arbitration. The provision also covers the clear and appropriate prescribed procedures and timeframe for both parties to appoint all three arbitrators. Importantly, all claimants and all respondents must agree to appoint an arbitrator within a fixed timeframe, respectively. The arbitrators appointed by both claimants and respondents will then appoint a presiding arbitrator. If they cannot agree on an agreement, the “appointing authority” (i.e., the President of the Court of Arbitration of the Singapore International Arbitration Center (SIAC) or such person appointed by the Chief Justice to exercise these powers) will appoint a presiding arbitrator instead, per request of one of the claimants or respondents.

Powers to Enforce Confidentiality-related Obligations in Arbitration

Under Singapore law, the parties and the arbitral tribunal have an implicit duty not to disclose confidential information obtained during the arbitral proceedings or to use such information for any purpose other than the dispute unless the parties agree otherwise. Both parties may have a clear obligation to keep confidentiality according to their arbitration agreements or the rules legally set out by their chosen institutional arbitration.

Although this amendment did not codify into a new law, this will increase parties’ ability to enforce such confidentiality obligation by instituting that arbitral tribunals and the Singapore judiciary can “make orders or give directions” to guarantee that this obligation will be enforced rigorously. This amendment would be comparable to the ICC rules, which grant arbitral tribunals the enforcement powers. The arbitration would also realize the importance of confidentiality. Now, both Singapore-seated and foreign tribunals can enforce interim orders similar to court orders, with the condition that leave of the High Court is obtained. Moreover, High Court can also issue an order to enforce this obligation directly.

There are only two amendments in the new Bill passed, namely a default mode of appointment of arbitrators in multi-party arbitrations and power for courts and tribunals to encourage the enforcement of the confidentiality obligation in the course of arbitral proceedings. Meanwhile, the other two proposals remain under review.

Reference

[1] https://www.mlaw.gov.sg/news/press-releases/public-consultation-on-proposed-amendments-to-the-international-arbitration-act#:~:text=PRESS%20RELEASES-,Public%20Consultation%20on%20Proposed%20Amendments%20to,Arbitration%20Act%20(%E2%80%9CIAA%E2%80%9D)&text=The%20Ministry%20of%20Law%20(MinLaw,June%20to%2021%20August%202019.

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The New Act and the Endeavor to Elevate Singapore’s Status as an International Arbitration Hub