Eastern star—new courts to ensure Singapore’s place at the top

Two new dispute resolution centres are to be created in a bid to cement Singapore’s position as an international dispute resolution hub. Andre Yeap SC, senior partner at Rajah Tann and a member of the working committee formed to develop the Singapore International Commercial Court (SICC), explores how the new SICC and Singapore International Mediation Centre (SIMC) will enhance Singapore’s global reputation.

What is the background to the new SICC and SIMC and why were they considered necessary?

Singapore has been consciously promoting itself as a financial and legal services hub. Apart from encouraging international offshore firms to establish a Singapore presence focusing on cutting edge financial products and legal services work, there has also been an active promotion of Singapore as an international dispute resolution hub. This is reflected in the gradual but distinct push to develop Singapore as a first choice arbitration destination. The establishment of Maxwell Chambers as a dedicated arbitration facility, together with the developing roles of SIAC and the other arbitration centres, have gone a long way towards establishing Singapore as possibly the top, or one of the top, Asian arbitration destinations.

However, arbitration has always carried certain perceived inherent weaknesses which could broadly be summarised as follows:

Adding third parties to proceedings

Generally, unless a third party is already a party to the arbitration agreement or agrees to participate in the arbitration with the consent of the existing parties to that arbitration, it would not be possible to compel the addition of a third party. This is particularly of concern in infrastructure or construction-related projects where there may be separate arbitration disputes arising between:•

  1. the owner and the main contractor arising from the main contract

  2. the main contractor and the sub-contractor arising from the sub-contract

  3. one sub-contractor and another sub-sub-contractor pursuant to a separate contract

all of which may have their own separate arbitration agreements.

If such proceedings were commenced in the Singapore court instead of arbitration, there would have been every possibility and likelihood that the court could have ordered that all of these parties be joined in the proceedings so the dispute between these various parties could be resolved in one hearing before the same judge given the dispute would have arisen in relation to the same project and the same facts, with the work done by one or two of the sub-contractors—often being the ultimate cause of the dispute

Appointing arbitrators

It has also been observed that some parties, including state-owned entities, even some in Asia, still have lingering concerns and some reticence about arbitration—perhaps over issues involving the appointment of the arbitrators and their complete impartiality, particularly in the absence of any appeal procedures (as arbitration awards are generally considered final and can only be set aside on limited grounds, such as a breach of natural justice or misconduct of the arbitrators). Under most arbitration agreements, each party would nominate their respective arbitrators with the third arbitrator, usually the chair, being agreed upon by the two arbitrators. This is a procedure which some parties may feel involve too much risk for their appetite, and they might prefer a system where a tribunal is effectively picked by a court of a competent and corruption-free legal system

Cost and efficiency

Although one of the initial attractions to arbitration was a more efficient and cost effective dispute resolution process, this attraction has lessened over time as the court systems in many jurisdictions have become faster and more efficient. The end result today is arbitration costs, particularly for matters involving a panel of three arbitrators, is likely to be significantly higher than court proceedings as parties, in addition to counsel fees, would also have to pay for:

  1. the cost of the arbitrators

  2. the administration cost of the relevant arbitration centres

  3. the costs for hearing facilities

Furthermore, unlike most court processes where there would be some form of a taxation process scale by which the cost payable by parties can be fixed (with some degree of predictability), the cost payable by parties in an arbitration is usually decided by the arbitrators. There have been reported cases where the costs awarded by arbitrators were considered to be excessively high and totally disproportionate to either the complexity or quantum involved in the dispute. With some of these perceived deficiencies or weaknesses of the arbitration process in mind, it was considered that it might be a worthwhile investment to create the SICC—the brainchild of the current Chief Justice of the Supreme Court of the Republic of Singapore, the Honourable the Chief Justice Sundaresh Menon. A working committee (of which I was a member) was formed to look into the feasibility of the SICC and the working committee recommended it be proceeded with. As I understand, the relevant legislative processes required for the formation of the SICC is currently finding its way through Parliament and should be completed by the third or fourth quarter of 2014, barring any unexpected delays.

What are the key procedures in the SICC/SIMC?

The procedures for the SICC would follow international best practices for commercial dispute resolution. In addition, there will likely be some flexibility in relation to:

  1. confidentiality—for which hearings in camera may be permitted if sought by the parties in relation to matters with no substantial Singapore interest or connection, although SICC proceedings would generally be in open court

  2. matters connected with foreign law—which need not be pleaded and proved as facts as the judges would be able to take judicial notice of foreign law from the written and oral submissions of counsel, with the relevant authorities

What criteria will a case need to meet to be heard in the SICC/SIMC?

The SICC is intended to hear international cases which may have little or no connection with Singapore (as in the case of some international arbitrations) where parties may consent to the dispute being heard by the SICC either before or after the dispute has arisen. In addition, there may be cases which have already been filed in the Singapore Supreme Court which may be considered suitable for transfer to the SICC, and the court could make an order for such transfer.

How can foreign lawyers be involved with the new courts?

To make the SICC a court of a truly international nature, with an ability to deal effectively with foreign law and specialist areas, it is also intended for there to be a panel of judges, each with an honorary title of Associate Judge whom may be appointed to hear these disputes. This panel of Associate Judges may be drawn from eminent practitioners or legal scholars, whether local or foreign, including retired Supreme Court judges and senior officials in other legal jurisdictions, as well as retired Singapore Supreme Court judges. Of course, a sitting Singapore Supreme Court judge may also be appointed to hear a SICC case.

Unlike the arbitration process, it is also intended for there to be the normal appellate procedures. This means that after a first instance hearing, the parties would be at liberty to lodge a full appeal to the SICC Court of Appeal. It is also intended for the coram hearing the SICC Court of Appeal (which would typically comprise three judges) to comprise of one or perhaps even two Associate Judges with the relevant expertise for the case.

Unlike under the arbitration process, the SICC would be also able to:

  1. order the joinder of third parties

  2. appoint the relevant hearing tribunal

  3. fix the cost in a manner which parties may consider to be more predictive, open and controlled

For matters which have no substantial Singapore connection and are not governed by Singapore law, the intention is to also allow foreign lawyers to be involved as counsel for SICC matters. Such foreign lawyers, however, would be required to register themselves with a registry that would be set up by or for the SICC and would have to undertake to abide by a code of ethics.

Are there any other important forms of dispute resolution in Singapore?

Mediation of course has been an integral part of the dispute resolution process. The SIMC was set up many years ago to promote mediation as a means towards settlement. Encouraging mediation of cases in the SICC is a natural extension. In line with the international nature of the disputes expected in the SICC and to also encourage mediation in respect of international arbitrations in Singapore, it was considered sensible and appropriate to form the SIMC. Much like the SICC and the SIAC, the idea is for the SIMC to have a pool of recognised talented and eminent personalities on their panel, albeit to serve as mediators.

It is hoped together, the SICC, the SIMC and the SIAC, will be able to keep Singapore at the highest pinnacle of international dispute resolution in Asia.

Interviewed by Jane Crinnion. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

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