China: New Rules For Singapore Arbitration

Last Updated: 27 June 2007
Article by Michael Evan Jaffe and Meg Utterback

Companies throughout Asia Pacific grapple with choice of law and choice of forum issues in every contract. The prevailing view in China is that a foreign company is best served to move arbitration off-shore in hopes of a more level playing ground than might be found under the traditional Chinese arbitration body, the China International Economic and Trade Arbitration Commission (CIETAC), or some of the newer PRC local arbitration commissions. The preferred venues for arbitration currently are Singapore and Hong Kong. Thus, it is important for companies to be aware of changes to the Singapore International Arbitration Commission (SIAC) Rules and how those changes might influence the decision on venue in drafting the next contractual dispute resolution provision.

The SIAC has published its new, third edition Arbitration Rules (New Rules), effective July 1, 2007. The New Rules replace the second edition Arbitration Rules issued in 1997 (Old Rules). The New Rules revise the procedures for the appointment and challenge of arbitrators, add written submissions during the pre-hearing phase, and initiate a new fee structure. The New Rules also shift powers previously held by the Arbitral Tribunal and the Appointing Authority to the SIAC Registrar, giving the Registrar greater control over the administration of arbitration proceedings. In most instances, the changes tend to bring the SIAC Rules in closer accord with the widely recognized ICC Rules of Arbitration (ICC Rules). The New Rules aim to improve efficiency by employing the best practices available for resolving international commercial disputes.

Revised Procedure for Appointing and Selecting the Number of Arbitrators

The New Rules change the procedure for determining the number of arbitrators in an arbitration proceeding. Under the Old Rules, a sole arbitrator presided over the arbitration unless the parties agreed otherwise (Old Rule 6). The New Rules also provide for a default sole arbitrator, but afford the Registrar discretion to increase the size of the Tribunal to three arbitrators when warranted, based on quantum in dispute, complexity of subject matter, proposals by the parties and other circumstances (New Rule 5.1). This New Rule is very similar to Article Eight of the ICC Rules governing the number of arbitrators, which creates a default sole arbitrator, but provides that the ICC Court may increase the size of the Tribunal based on the circumstances of the case (see ICC Rules, Art. 8, sec. 2).

The New Rules also change the manner in which arbitrators are appointed. Under the Old Rules, in a sole arbitrator proceeding, both parties were encouraged to agree on an arbitrator, and if the parties failed to agree, the arbitrator would be appointed by an "Appointing Authority" selected by the parties (Old Rule 7). In three-arbitrator panel proceedings, each party appointed their own arbitrator, who, in turn, selected the Presiding Arbitrator (Old Rule 8.1). If either of the parties failed to appoint an arbitrator, or the first two appointed arbitrators failed to agree upon a Presiding Arbitrator, the Appointing Authority would appoint the Chair. (Old Rule 8.3).

The New Rules eliminate the role of the Appointing Authority. Under the New Rules, parties do not appoint, but rather "nominate" arbitrators; the nominations are subject to confirmation by the Chairman of the SIAC (New Rule 5.3, 6.1, and 7.1). An arbitrator is not empanelled until the SIAC Chairman confirms the party’s nomination (New Rule 5.5). This "nominate and confirm" procedure tracks the "nominate and confirm" procedure provided in Article Nine of the ICC Rules. The New Rule reduces the number of participants in the appointment process and formally recognizes the Chairman as the final authority on the Tribunal’s composition, resulting in a more streamlined and definitive system.

One way in which the New Rules depart from both the Old Rules and the ICC Rules is with respect to the nationality of the arbitrators. The Old Rules provide that the SIAC Chairman shall consider the nationality of the arbitrators in relation to the nationality of the parties (Old Rule 11.1). Similarly, Article Nine of the ICC Rules contains several provisions that instruct the General Secretary to consider the nationality of arbitrators in making appointment decisions. The New SIAC Rules have deleted the nationality provision entirely. Generally, parties still believe that nationality of the arbitrators may have some influence over the process and the outcome. Certainly arbitrators trained in a civil versus common law jurisdictions have differing views on the presentation of evidence. Further, an Asian arbitrator may have a differing view on a contractual dispute than might his equally learned colleague from Europe. This New Rule may be ahead of its time in assuming that disputes are sufficiently globalized that nationality has become irrelevant.

Revised Procedure for Challenging Arbitrators

The Old Rules required that upon a party’s challenge of an arbitrator, the Registrar automatically suspend the arbitration while the Chairman decided the merits of the challenge (Old Rule 13.2). Under the New Rules governing challenges, the Registrar has discretion to suspend the proceedings. Absent an exercise of that discretion, the arbitration may proceed while the SIAC Chairman decides the merits of the challenge. Similarly, the ICC challenge provisions do not require suspension of the arbitration upon challenge of an arbitrator. The deletion of an automatic suspension provision ensures that parties cannot unilaterally invoke the challenge procedure and thereby halt the progress of the arbitration proceeding.

Under the New Rules, if the SIAC Chairman upholds the challenge (or if the arbitrator is otherwise dismissed), the parties must proceed to the "nominate and confirm" procedure under the revised selection procedures (See New Rules 10-12). The New Rules also give the SIAC Chairman exclusive authority to fix costs associated with challenges (New Rule 12).

Revised Procedures for Filing Written Documents

The New Rules add to the information that parties must include in the Notice of Arbitration. In addition to the parties’ names and addresses, the Notice must now include phone numbers, fax numbers, and electronic mail addresses (New Rule 3.1). The Notice of Arbitration must also include a quantification of the amount in dispute (if known), comments regarding the language of the arbitration, and confirmation that the other party has been served and the filing fee has been paid (New Rule 3.1). The new requirements for additional information – and particularly the requirement that the Notice state the amount in dispute – bring the SIAC’s Notice of Arbitration in close conformity to an ICC Request for Arbitration (ICC Rules Art. 3, sec. 4). The amount in dispute requirement will facilitate establishing arbitration fees and costs, as these amounts are in proportion to the amount at issue.

The New Rules require that the Respondent submit a Response to the Notice of Arbitration (New Rule 4.1). This response was permissive, but not mandatory, under Old Rule 4. The New Rules also provide alternative time limits for Respondent’s Statement of Defense. Respondent may submit the statement within 30 days of receipt of claimant’s statement or within 30 days of the notice that the Tribunal has been formed (New Rule 16.4).

The most significant change introduced by the New Rules is the addition of a "Memorandum of Issues" to the pre-hearing phase of the proceeding. Under Rule 17, within 45 days following the completion of the submission of written statements, the Tribunal must consult with the parties and prepare a memorandum of issues to be decided in the arbitration. If any party refuses to participate in drawing up the Memorandum of Issues, the Tribunal must still submit that document to the Registrar for approval (New Rule 17.3). The Memorandum of Issues closely resembles the "Terms of Reference" assembled jointly by the Tribunal and the parties during the pre-hearing phase of an ICC proceeding (see ICC Rules, Art. 18). Most practitioners will view this addition as a positive step, allowing the parties and the Tribunal to well-define the issues early on, with the goal of streamlining the issues and expediting the process.

SIAC Scrutiny of the Tribunal’s Award

Under the Old Rules, the Tribunal issued its award to the parties directly (Old Rule 28.1). Under the New Rules, the Tribunal must submit a draft award for the Registrar’s review (New Rule 27.1). The Registrar may suggest modifications as to the form of the award, and, without affecting the Tribunal’s liberty of decision, may also draw its attention to points of substance. The Rule states that no award shall be issued by the Tribunal until it has been approved as to form. The language of the New SIAC scrutiny provision replicates the language of the ICC provision for scrutiny of draft awards (see ICC Rules, Art. 27). This scrutiny provision promotes integrity in the Tribunal’s decision making and ensures uniformity as to all users regarding form.

Revised Fee Structure

Under the Old Rules, the Tribunal, in consultation with the Registrar, fixed the fees and costs of arbitration and included those amounts in the award (Old Rule 30.1). The Tribunal enjoyed considerable discretion in setting its fees, provided the fees were reasonable, considering such factors as the amount in dispute, time spent, diligence of the arbitrators, and complexity of the subject matter (Old Rule 31.1). The New Rules have removed this discretionary system and introduced a structure that sets fees based on a sliding scale in accordance with the amount in controversy (New Rule 30.1). In exceptional circumstances the Registrar may raise or lower the costs of arbitration (New Rule 30.1). This new fee structure is similar to the fee provisions in the ICC Rules (see ICC Rules, Art. 31). The new fee structure may result in somewhat higher fees in larger and more complex cases. In this regard, parties will monitor the way the Registrar exercises the fee setting discretion afforded under the New Rules.

Increased Role of SIAC Practice Notes in Administering Arbitration Proceedings

The Old Rules made no mention of the Centre’s "practice notes" rulings issued by the Registrar, which provide guidance on administration of arbitrations. The New Rules explicitly refer to practice notes: New Rule 5.4 states that the Registrar shall fix the Arbitrators’ fees in accordance with the practice notes, and New Rule 30.2 states the Tribunal’s out-of-pocket expenses shall be charged to the parties in accordance with the practice notes. Further, New Rule 35.4 vests in the Registrar the power to issue practice notes as needed. This is consistent with the ICC’s Internal Rules, which vest in the Secretariat the power to issue practice notes as necessary to the proper conduct of the proceedings (ICC Internal Rules, Art. 5, section 2).

Increased Control by the SIAC Registrar Over Arbitration Proceedings

The New Rules delegate to the Registrar many of the duties that were previously the province of the Tribunal or the Appointing Authority. Rule 5.1 vests in the Registrar the power to determine whether to use three arbitrators in certain cases. Rule 17.2 and 28.4 give the Registrar the power to extend time limits on the Memorandum of Issues and on the Tribunal’s corrected award. Rule 17.1 vests in the Registrar the power to scrutinize the draft awards of the Tribunal. Rule 18.1 gives the Registrar the power to change the seat of arbitration from Singapore in certain circumstances. Rule 35.4 vests in the Registrar the power to issue practice notes to assist in the administration of arbitral proceedings.

Changes to the Powers Afforded the Tribunal

The New Rules generally afford the same powers to the Tribunal that it had under the Old Rules. The Old Rules, however, made the powers of the Tribunal subject to modification by agreement between the parties (Old Rule 25), whereas the New Rules do not provide for any such modification (see New Rule 24). The New Rules also designate the Tribunal’s power to extend or abbreviate certain time limits (see, for example, New Rule 17.2; 27.1; 28.4). The Tribunal also enjoys less discretion in setting the fees and costs of arbitration due to the revised fee structure, described in section VI, above).

Conclusion

In adopting these rules, SIAC may be recognizing its natural move from a regional player to an international player. Thelen has tried ICC matters at the SIAC facility in Singapore. The staff is well organized and experienced in dealing with international parties. The adoption of the New Rules, while resulting in potentially higher fees, may also provide greater infrastructure and oversight of the proceedings, lending greater confidence in the institution and the outcome.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions