Second Reading Speech by Minister for Law, K Shanmugam, on the International Arbitration (Amendment) Bill

09 APR 2012

Introduction

Mr Speaker, Sir, I beg to move, “That the Bill now be read a Second time.”
The Government began developing Singapore as a hub for international arbitration in the mid-2000s. We have come a long way. SIAC’s total caseload is now at 188 in 2011. I have asked for the distribution as an Annex (0.2MB) which sets out how our arbitration sector has developed and some data on the caseload. The Annex will be treated as part of my speech.
By most international reckonings, our position as the leading centre for arbitration in Asia is now cemented. An Asian Legal Business article in December 2011 called Singapore’s rise in the world of arbitration as “meteoric”. Singapore has now become the leading Asian seat for international arbitrators.
Today’s Bill seeks to make further refinements to laws governing arbitration. We have consulted many people, both in Singapore and overseas, with whom we work closely.
I thank all who have contributed.

There are four main amendments:
1. broadening the definition of what an arbitration agreement is;
2. providing recourse against negative jurisdictional rulings by an arbitral tribunal;
3. clarifying the tribunal’s power to award interest; and
4. recognising emergency arbitrators and interim orders.

Broadening the definition of an arbitration agreement

Clause 2(b) deletes the existing definition of an arbitration agreement in section 2.

Clause 3 inserts a new section 2A, containing a broader definition of an arbitration agreement.

The new section 2A incorporates Option I of Article 7 of the 2006 Amendments to the 1985 UNCITRAL 1 Model Law on International Commercial Arbitration.

Under the new definition, an arbitration agreement which is concluded orally, by conduct or through any other means, if its content is recorded in any form, it will be recognised as an arbitration agreement within the context of the International Arbitration Act (IAA).

In our consultation last year, a majority of arbitrators and practitioners were of the view that the broadened definition should be adopted.

Recourse against negative jurisdictional rulings by an arbitral tribunal

Clause 4 repeals and re-enacts section 10 to provide recourse against negative jurisdictional rulings by an arbitral tribunal. Such a ruling is one where the tribunal holds that it does not have the jurisdiction to hear a dispute.

The Act currently follows the Model Law in not providing any recourse against negative jurisdictional rulings. The absence of recourse against such rulings may defeat the parties’ intention to arbitrate.

Academics and practitioners have called for reform in this area. In particular, t he Singapore Academy of Law’s Law Reform Committee had recommended that the review of negative jurisdictional rulings be allowed. That was in its January 2011 Report on the Right to Judicial Review of Negative Jurisdictional Rulings.

Such a ruling made at any stage of the arbitral proceedings can now be appealed to the High Court and appealed further to the Court of Appeal, if the High Court grants leave to appeal.

The Bill will also allow the tribunal and the court to award costs against any party for the arbitral and/or court proceedings, when it rules that the tribunal has no jurisdiction.

Tribunal’s power to award interest

Clause 9 amends section 20 to clarify the power of arbitral tribunals to award interest.

Subject to the arbitral agreement, the tribunal will be able to:
- award simple or compound interest;
- on sums claimed or costs awarded in the arbitration;
- from such date, at such rate and with such rest as it sees fit.

In other words, full discretion will be given to the arbitral tribunals to award interest.

Emergency arbitrators and interim measures ordered by the tribunal

Clause 2(a) amends the definition of an arbitral tribunal in section 2(1) to include emergency arbitrators.

Emergency arbitrators provide urgent interim relief to parties before the arbitral tribunal is constituted.

They are a fairly recent innovation in international arbitration. The Singapore International Arbitration Centre was one of the first in the world to introduce them. Other arbitral institutions have now followed suit.

With the amendments, there will be clear legislative support for emergency arbitrators. They will be able to exercise the full range of powers available to the tribunal under the Act. Their awards will be enforceable in our courts in the same way as awards by any other arbitral tribunal.

In addition, clause 10 amends the definition of foreign arbitration awards in section 27(1).

The amended definition will then encompass interim measures made by an arbitral tribunal, such as orders for the preservation of property. Such interim measures will now be enforceable in our courts.

Conclusion

The remaining clauses make miscellaneous, consequential, and other minor amendments.

In conclusion, Sir, may I mention that the Bill comes before this House at a significant moment in the context of arbitration. In June this year, Singapore will host the 21st Congress of the International Council for Commercial Arbitration (ICCA). This is a significant global arbitration meeting. It is the first time since 2004 that the ICCA is meeting in Asia, and it emphasises Singapore’s growing status as a hub for international arbitration.

The passage of this Bill will signal to the international arbitration community our continued commitment to providing the fullest legislative support for international arbitration.

^[1] United Nations Commission on International Trade Law.

Last updated on 25 Nov 2012