Proposed amendments to the International Arbitration Act and the new Foreign Limitation Periods Act

8 Mar 2012 Posted in Press releases

1. Introduction

1. As part of continuing efforts to maintain a world-class legislative framework for arbitration, the Ministry of Law (MinLaw) conducted a public consultation on a draft International Arbitration (Amendment) Bill (IA(A) Bill) in October 2011.

2. The draft Bill proposed amendments to the International Arbitration Act (IAA) ¹ that were aimed at enhancing Singapore’s status as an arbitration hub by expanding the scope of arbitral tribunals’ jurisdiction and powers.

3. In conjunction with this, MinLaw also conducted a public consultation on a draft Foreign Limitation Periods Bill (FLP Bill), for the enactment of a Foreign Limitation Periods Act (FLPA) to clarify the applicable rules of limitation for both arbitral and court proceedings

4. MinLaw received feedback on various aspects of the amendments from industry stakeholders, including arbitrators, practitioners in both local and offshore law firms, academics and the Singapore International Arbitration Centre (SIAC) . The feedback received was mostly in favour of the amendments put forward in both Bills.

5. The provisions in the final versions of the Bills have been fine-tuned, taking into consideration the views and comments received. More details of the feedback received and incorporated in the Bill can be found at Annex A.

2. International Arbitration (Amendment) Bill 2012

6. The IA(A) Bill makes amendments to the IAA to:
   1. Relax the current requirement that arbitration agreements be in writing (the writing requirement);
   2. Allow Singapore courts to review rulings by arbitral tribunals that these tribunals do not have jurisdiction to hear the dispute (negative jurisdictional rulings);
   3. Clarify the scope of arbitral tribunals’ powers to award interest in arbitral proceedings; and
   4. Provide legislative support for the appointment of “emergency arbitrators” before the arbitral tribunal hearing the dispute is properly constituted.

7. Following feedback during the public consultation, the IA(A) Bill has also been refined to make consequential and related amendments to the Arbitration Act (AA) (which applies to domestic arbitrations) to mirror the amendments to the IAA, where applicable.

1. Relaxation of the Writing Requirement

8. The IAA currently only recognises arbitration agreements that are made in writing. MinLaw received feedback that this requirement does not accord squarely with commercial reality, as arbitration agreements are often concluded orally, and put into writing later.

9. Clauses 2(b) and 3 of the IA(A) Bill amend the definition of an “arbitration agreement” in the IAA, and will extend the IAA’s application to arbitration agreements concluded by any means (orally, by conduct or otherwise), as long as their content is recorded in any form. For instance, an arbitration agreement made orally, but subsequently documented through an audio recording, will now fall within the scope of the IAA. This amendment adopts one of the two options proposed by UNCITRAL in the revisions to its Model Law in 2006.

2. Review of Negative Jurisdictional Rulings

10. The IAA currently does not permit a Singapore court to review negative jurisdictional rulings made by arbitral tribunals (that is, rulings by the tribunals that it has no jurisdiction to hear the dispute). In contrast, however, our courts are able to review positive jurisdictional rulings made by arbitral tribunals (that is, rulings by tribunals that they have jurisdiction to hear the dispute).

11. This inconsistent treatment of negative and positive jurisdictional rulings has been criticised by practitioners and academics, who argue that inequity is just as likely to arise from a negative jurisdictional ruling that is erroneously made, as from an erroneous positive jurisdictional ruling.

12. Clause 4 of the IA(A) Bill seeks to rectify this inconsistency by amending the IAA to allow parties to have recourse to Singapore courts in respect of both positive and negative jurisdictional rulings, at any stage of the arbitral proceedings. Further refinements to Clause 4 have also been made following the public consultation, to clarify that the court can make costs orders against any party when ruling that an arbitral tribunal has no jurisdiction.

3. Arbitral Tribunals’ Powers to Award Interest

13. Singapore’s IAA currently does not clearly define the scope of arbitral tribunals’ powers to award interest.

14. Clauses 5 and 9 of the IA(A) Bill amend sections 12(5) and 20 of the IAA, to clarify the scope of these powers. In particular, the amendments will expressly prescribe that an arbitral tribunal has the power to grant simple or compound interest on: (a) monies claimed in arbitrations, and (b) orders for one party to pay the other party’s legal costs.

4. Legislative Support for the “Emergency Arbitrator” Procedure

15. At times, parties to a dispute may require urgent relief, even before the arbitral tribunal over the dispute is constituted. To address this issue, the SIAC recently introduced an “emergency arbitrator” procedure that provides for the appointment of an interim arbitrator pending the constitution of the actual tribunal.

16. Clauses 2(a) and 10 of the IA(A) Bill amend the definitions of an “arbitral tribunal” and an “arbitral award” to clarify the status of orders made by such “emergency arbitrators”. The amendments accord emergency arbitrators with the same legal status and powers as that of any other arbitral tribunal and ensure that orders made by such emergency arbitrators (whether appointed under the SIAC rules or the rules of any other arbitral institution, in both foreign and local arbitrations) are enforceable under our IAA regime.

5. Consequential and Related Amendments to the AA

17. Clause 11 of the IA(A) Bill makes consequential and related amendments to the AA to mirror the amendments to the IAA, where applicable. The AA (which applies to domestic arbitrations) has traditionally followed the amendments in the IAA, and feedback was received in the consultation that most of the proposed amendments to the IAA would also benefit domestic arbitrations under the AA.

3. Foreign Limitation Periods Bill 2012

18. The FLP Bill enacts a new FLPA, to clarify the issue of which country’s limitation laws apply to disputes that are litigated in Singapore (either in court or through arbitration), but which are governed by the law of another jurisdiction.

19. This may occur, for instance, in a contractual dispute where parties decide to litigate in Singapore, but have chosen to have their contract governed by the law of another jurisdiction. In such cases, the question arises whether the applicable limitation law should be that of: (a) the foreign law governing the dispute, or (b) the law of the forum (that is, Singapore).

20. The provisions of the new FLPA make it clear that the applicable limitation period will be the rules of the law that govern the dispute. This will not only apply to arbitrations, but also to disputes litigated in court.

4. Conclusion

21. The amendments to the IAA in the IA(A) Bill will make our arbitration legislative framework even more arbitration-friendly. Coupled with the new FLPA, which will clarify the application of limitation laws in the context of Private International Law for all proceedings, including arbitration proceedings, the amendments in both Bills will ensure that Singapore remains an attractive venue for international arbitrations.

22. MinLaw would like to thank all respondents who have provided invaluable feedback during the public consultation.

Annex A: Responses to feedback received from public consultation (0.16MB)
International Arbitration (Amendment) Bill (0.7MB)
Foreign Limitation Periods Bill (0.3MB)

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^[1] The IAA provides the framework of rules that governs the conduct of international arbitrations in Singapore. A 2010 Queen Mary University study concluded that Singapore was Asia’s top arbitration destination.

Last updated on 25 Nov 2012