The Ministry of Law Consults on the Proposed Amendments to the International Arbitration Act

Jul 19 2019 | by OrionW

Arbitration is a popular method of resolving commercial disputes.  Singapore has recently been ranked the third most preferred arbitration seat in the world, and the most preferred in Asia.  To continue to meet the evolving needs of parties involved in commercial disputes, Singapore’s Ministry of Law (MinLaw) issued a consultation paper on 26 June 2019 with proposed changes to the International Arbitration Act (IAA), as discussed below.

Default Mode of Appointment in Multi-Party Situations

The IAA and the UNCITRAL Model Law on International Commerce (1985) (Model Law), which has the force of law in Singapore, provide a mode of appointment for disputes when there are two parties involved.  However, it is now increasingly common to have three or more parties involved in a dispute.

MinLaw proposes that multiple claimants will jointly nominate an arbitrator, and multiple respondents will do the same.  If the co-claimants or co-respondents disagree on who to nominate, the appointing authority (for example, President of the Singapore International Arbitration Centre (SIAC)) will appoint the arbitrator.

Parties May Request the Tribunal to Decide on Jurisdiction at the Preliminary Stage

The IAA provides that a tribunal can decide on jurisdiction either during the preliminary or final award stage. The parties have no formal voice in the timing of the tribunal’s decision.

MinLaw proposes to allow the parties, by mutual agreement, to request the tribunal to decide the issue of jurisdiction at the preliminary award stage.

Power of an Arbitral Tribunal and the High Court to Enforce Obligations of Confidentiality

Present common law imposes on the parties and the arbitral tribunal the duty of confidentiality, i.e. not to disclose or use confidential information obtained during the arbitration proceeding, except if the parties otherwise agree.  The rules of arbitral institutions may also provide for confidentiality, including the confidentiality of the existence of the arbitration itself.

MinLaw’s proposed amendments strengthen those duties by providing explicit recognition of the powers of the High Court and the Arbitral Tribunal to enforce obligations of confidentiality.

Allow Appeal to the High Court on a Question of Law Arising Out of an Award

Presently, parties may apply to the High Court to set aside an arbitral award on grounds of fraud, corruption, or breach of natural justice in the making of the award only.

MinLaw proposes to give parties, if they agree, the right to appeal to the High Court on a question of law arising out of an award. However, the proposed amendments also provide that leave of court is required before the appeal proceeds and that the parties must file the leave application within a specific period.

Other Proposals from Third Parties

In addition to MinLaw’s proposals, third parties have submitted two proposals on which MinLaw also seeks the views of the public:

To allow parties to agree to waive or limit the annulment grounds under the Model Law and IAA

Under present rules, parties may apply to the Court to set aside an arbitral award on grounds of fraud or corruption, breach of natural justice, incapacity, invalidity of agreement, improper notice, inability to present the case, lack or excess of jurisdiction, improper composition of the tribunal or conduct of procedure.

The proposal allows parties to limit or waive by agreement the above grounds, except fraud or corruption. The parties may also not limit or waive by agreement annulment on the grounds that the dispute is incapable of settlement by arbitration or that the award is against public policy.

Court shall have the power to order costs in certain arbitral proceedings

The second proposal would empower courts to make an order providing for costs of the arbitral proceedings when a party successfully sets aside a tribunal’s awards under the annulment grounds in the IAA and the Model Law.

Consultation Period

The consultation period for these amendments will end on 21 August 2019.