The Singapore International Arbitration Centre ("SIAC") recently published a new set of Investment Arbitration Rules ("the Rules" or "the SIAC IA Rules"), which entered into force on 1 January 2017. The Rules – the first of their kind by a private arbitral institution – are a specialized set of arbitration rules catered to investment disputes involving States, State-controlled entities or intergovernmental organizations, whether arising out of a contract, treaty or statute. They incorporate a number of significant innovations that address several issues unique to investment arbitration, including concerns regarding inefficient procedures and a lack of transparency. The Rules also contain market-leading provisions that deal with emergency interim relief and third-party funding.
The Rules reflect SIAC's growing prominence as an arbitral institution and thought leader in the field. Like their commercial counterpart, the 2016 SIAC Rules for commercial arbitration, which are discussed further here, the Rules are the product of an extensive public consultation process in February 2016, with numerous comments received from law firms and in-house counsel based i Europe, the Middle East, Africa and North America.
Gary Born, President of the SIAC Court, chaired the SIAC Rules Revision Executive Committee, and was a member of the SIAC Court of Arbitration Subcommittee on Investment Arbitration. Senior Associate Jonathan Lim and Associate Dharshini Prasad, members of Wilmer Cutler Pickering Hale and Dorr's International Arbitration Practice Group, worked closely with the SIAC Secretariat and Subcommittee on Investment Arbitration in all aspects of the Rules' drafting process.
Key elements of the Rules are summarized below.
I. SCOPE OF APPLICATION
References to the Rules
The Rules apply by agreement of the parties. Rule 1.1 provides that where parties "have agreed to refer a dispute to arbitration in accordance with the SIAC Investment Arbitration Rules," such parties shall be deemed to have agreed that the arbitration shall be conducted pursuant to and administered by SIAC in accordance with the Rules.1 Parties should note that the Rules will need to be specifically referenced in order to apply; a mere reference to "SIAC" or "SIAC Rules" is unlikely to be sufficient and will trigger the application of the 2016 SIAC Rules for commercial arbitration instead. In accordance with Rule 1.2, an agreement to refer a dispute to arbitration under the Rules may be expressed in a contract, treaty, statute or other instrument, or through an offer by a party in a contract, treaty, statute or other instrument, which is subsequently accepted by the other party by any means, including the commencement of arbitration.2 The Rules further provide that it is open to the parties to agree to the application of the Rules at any time before or after a dispute has arisen, notwithstanding that parties may have previously consented, or that a party may have previously offered to consent, to arbitration in accordance with other arbitration rules.3
No Jurisdictional Criteria
The Rules provide that they may be agreed to and applied in any type of arbitration, and that such application will not be subject to additional jurisdictional criteria such as the requirement of the existence of qualifying "investor" or "investment."4 However, the Rules also clarify that parties may nonetheless be bound by any jurisdictional criteria that may be contained in the underlying contract, treaty, statute or other instrument.5
This may be contrasted with Article 25(1) of the ICSID Convention, which limits ICSID's jurisdiction to disputes "arising directly out of an investment" and involving a "national of another Contracting State."6 These jurisdictional criteria have been the subject of significant dispute, and have contributed to the increased cost and complexity of ICSID arbitration claims. The absence of such jurisdictional criteria in the Rules will be attractive to parties seeking an efficient mechanism for the resolution of investment disputes.
Immunity from Execution
Rule 1.3 provides that an agreement to refer a dispute to arbitration under the Rules constitutes a waiver by the State, State-owned entity or intergovernmental organization of any right to immunity from jurisdiction.7 However, consistent with the position under international law, Rule 1.3 also recognizes that waiver of immunity from jurisdiction is distinct from immunity from execution, and that an agreement to refer a dispute to arbitration under the Rules therefore does not automatically impact immunity from execution.
II. EFFICIENT RESOLUTION OF INVESTMENT DISPUTES
The Rules include a number of provisions that streamline the investment arbitration process, drawing on SIAC's experience with resolving commercial arbitration disputes efficiently. These are intended to address perceptions by users that investment arbitrations take too long and cost too much. The Rules adopt many features of the 2016 SIAC Rules for commercial arbitration, including provisions that impose strict time limits and allow the early disposal of frivolous claims and defenses, with a number of adjustments to accommodate the interests of States, State-owned entities and intergovernmental organizations.
Early Jurisdictional Objections
The Rules provide a mechanism for the determination of early jurisdictional objections. Under Rule 25.1, before an arbitral tribunal is constituted, parties may raise before the Registrar any objections regarding the existence or validity of the arbitration agreement, the applicability of the Rules, or the competence of the SIAC to administer the arbitration.8 The Registrar shall determine whether such objection should be referred to the SIAC Court.9 Rule 25.1 also provides that the SIAC Court shall make a prima facie ruling on the objections, without prejudice to the tribunal's power to rule on its own jurisdiction.
The Registrar's initial vetting of such objections, followed by the SIAC Court's prima facie determination on such objections, mirrors Rule 28.1 of the 2016 SIAC Rules for commercial arbitrations. It is also similar in function to the ICSID Secretary-General's power under Article 36(3) of the ICSID Convention to refuse to register a Request for Arbitration if it is "manifestly outside the jurisdiction of the Centre," except that under Rule 25.1, the Registrar shall decide whether to refer objections to the SIAC Court in response to a party's objection, rather than on its own volition. It is likely that only obvious objections will be upheld at this stage.
The Rules also impose time limits for parties to make jurisdictional objections. Rule 25.3(a) provides that any objection that the arbitral tribunal does not have jurisdiction shall be raised no later than in a Counter-Memorial or in a Rejoinder, or at any equivalent stage of the proceedings as determined by the arbitral tribunal.10 Rule 25.3(b) provides that a party shall raise any objection that the tribunal is exceeding the scope of its jurisdiction within 28 days after the matter alleged to be beyond the scope of the tribunal's jurisdiction arises during the arbitration.
Early Dismissal of Claims and Defenses
The Rules also incorporate an early dismissal procedure that will empower tribunals to filter out manifestly unmeritorious claims or defenses under a number of different grounds, thus enhancing the efficient resolution of investment disputes under the Rules. At present, only ICSID, SIAC and the Arbitration Institute of the Stockholm Chamber of Commerce ("SCC") offer such a claim-filtering procedure.
Rule 26 provides for the early dismissal of a claim or defense on grounds that it is: (i) manifestly without legal merit; (ii) manifestly outside the jurisdiction of the arbitral tribunal; or (iii) manifestly inadmissible.11 This provision is modelled after Rule 41(5) of the ICSID Arbitration Rules which allows the early dismissal of a claim if it is "manifestly without legal merit." However, Rule 26 provides more clarity by setting out additional grounds relating to the manifest lack of admissibility or jurisdiction, which are consistent with ICSID jurisprudence on the interpretation of Rule 41(5) of the ICSID Arbitration Rules, but which have yet to be expressly codified in those rules. Furthermore, the SIAC IA Rules permit early dismissal of both claims and defenses, whereas ICSID Rule 41(5) only permits the former. Nonetheless, an arbitral tribunal constituted under the SIAC IA Rules will likely be able to take into consideration existing ICSID jurisprudence on ICSID Rule 41(5).
An application under Rule 26 can be made at any time after the constitution of the arbitral tribunal. An initial proposal for requiring early dismissal applications to be made within a 30-day timeframe, which was included in the draft version of the Rules that was released for public consultation on 1 February 2016, was not eventually adopted in the rules. The absence of a time limit for early dismissal applications expands the potential application of Rule 26, and makes it a flexible and powerful tool for arbitral tribunals to filter out frivolous or obviously unmeritorious claims and defenses.
To prevent any potential abuse of the early dismissal procedure under Rule 26, Rule 26.3 provides that the arbitral tribunal has complete discretion in deciding whether to allow a Rule 26 application to proceed.12 This allows the tribunal to consider, among other things, the timing of the application and whether it is being improperly used to derail or disrupt proceedings. Should the arbitral tribunal decide to hear an early dismissal application, Rule 26.4 provides that it must render is decision within 90 days of the date of application, and that such decision may be in summary form.13 In any event, the arbitral tribunal may take into account any abuse of Rule 26 in allocating costs between the parties.14
Rule 26 is substantially similar to Rule 29 of the 2016 SIAC Rules for commercial arbitration, except that it provides for the early dismissal of claims or defenses on the additional ground that such claims or defenses are "manifestly inadmissible"; and requires arbitral tribunals to make a decision on the early dismissal, if the application is allowed to proceed, within 90 days rather than 60 days from the date of application.
Memorial-Style Written Submissions
Consistent with international best practices in investment arbitration, Rule 17 provides for a default system of memorial-style submissions whereby parties are required to submit comprehensive written submissions in support of their case, in the form of Memorials or Counter-Memorials.15 Parties may also seek leave under Rule 17.4 to make a further round of submissions, by way of either a Reply or Rejoinder, although this is not provided for as a matter of right.16 The Memorial or Counter-Memorial must include a statement of facts, legal arguments and authorities and supporting factual evidence, such as witness statements and expert reports.17 This is a departure from the 2016 SIAC Rules for commercial arbitration, which provide for a pleading-style of written submissions and does not require parties to submit witness statements and expert reports with their pleadings.18
A memorial-style approach to written submissions is consistent with the written procedure in ICSID arbitrations under ICSID Rule 31 and has several advantages, particularly in the investment arbitration context. It can clarify the issues in dispute and create incentives for settlement, and has the potential to significantly reduce the length and cost of arbitration proceedings.
Time Limits for Closure of Proceedings and Awards
Under Rule 30.1, an arbitral tribunal must declare the proceedings closed as promptly as possible, after consulting with the parties and upon being satisfied that there are no further evidence or submissions to be presented.19 This is similar to the 2016 SIAC Rules for commercial arbitration.20 After proceedings are closed, the arbitral tribunal must submit its draft award to SIAC for scrutiny within 90 days.21 his time limit, which can only be extended by the parties or the Registrar, is twice as long as the 45-day limit under the SIAC 2016 Rules for commercial arbitration and the draft Rules that were submitted for public consultation. Neither the PCA nor the ICSID Rules provide any time limits for the submissions of awards. The strict timeframe under the Rules for an important distinguishing feature, and will be crucial in helping to ensure the expeditious resolution of the dispute.
1 SIAC IA Rules, Rule 1.1.
2 SIAC IA Rules, Rule 1.2.
3 SIAC IA Rules, Introduction (iii).
4 SIAC IA Rules, Introduction (ii).
5 SIAC IA Rules, Introduction (ii).
6 ICSID Convention, Article 25(1).
7 SIAC IA Rules, Rule 1.3.
8 SIAC IA Rules, Rule 25.1.
9 SIAC IA Rules, Rule 25.1.
10 SIAC IA Rules, Rule 25.3.
11 SIAC IA Rules, Rule 26.1.
12 SIAC IA Rules, Rule 26.3.
13 SIAC IA Rules, Rule 26.4.
14 See SIAC IA Rules, Rule 35.
15 SIAC IA Rules, Rule 17.
16 SIAC IA Rules, Rule 17.4.
17 SIAC IA Rules, Rule 17.2 and Rule 17.3.
18 2016 SIAC Rules, Rule 20.
19 SIAC IA Rules, Rule 30.1.
20 2016 SIAC Rules, Rule 32.1.
21 SIAC 1A Rules, Rule 30.3.
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.