Singapore: SIAC Proposal For Cross-Institutional Consolidation Of International Arbitration Proceedings

Last Updated: 19 February 2018
Article by Rupesh Gupta

Introduction

Recent times have seen rapid developments in the field of arbitration not just in India but world-over. An overall pro-arbitration view has been adopted with passage of time and almost every institution and legislature has been deliberating on making the arbitration process more effective, efficient and authoritative. An apt example of this is the passing of Arbitration and Conciliation (Amendment) Act, 2015 in India with salient features and changes to achieve the preamble of the arbitration statute in India. Recognizing certain shortfall in the present system relating to international arbitration proceedings, the Singapore International Arbitration Centre ("SIAC") has recently proposed cross-institutional consolidation of international arbitration proceedings. This Article seeks to analyze the need for such consolidation of cases and the challenges that may be faced if such a proposal is accepted and sought to be implemented.

Need of the hour

At present, the general rule is that related disputes can be consolidated and adjudicated together. This ensures that there is a single decision that covers all matters of issue between the parties and there are no contrary decisions arising out of the same factual matrix. A problem arises when there are multiple agreements between the same parties or related parties and each of these agreements are subject to a different set of institutional arbitration rules. Now, under the present regime, arbitrations conducted by the same institution can be consolidated however, no such consolidation can take place when parties have subjected themselves to different institutional arbitrations under their agreements.17 This means that there will be concurrent proceedings on similar matters between the same parties giving rise to multiple decisions that may be

contrary to each other and hence pose a problem at the time of enforcement of award. The proposal by SIAC aims to eliminate multiplicity of decisions in connected matters thereby also reducing inconsistency in decisions. It seeks to provide a one-stop solution for inter-related matters and provides cost-effective solution as now, a single arbitration will effectively deal with all issues arising between the parties thus also allowing a comprehensive solution to the matter.

The road ahead

SIAC has addressed various issues that will come up once such a proposal is accepted. The major issues involved in implementing this proposal are:

1. Governing rules- The first issue will be the decision as to whether matters should be consolidated and if yes, which institutional rules will govern the arbitration. SIAC proposes two alternatives for this problem. The fist alternative is setting up of a joint committee which will decide applications for consolidation and the institutional rules that will govern the proceedings. The other alternative suggested is to appoint one institution that will decide these applications and the criteria for consolidation.

2. Uniformity of rules among institutions- The effective implementation of this proposal requires that all institutions have a uniform set of rules with respect to criteria for deciding consolidation applications as well as the procedure to be followed once an application is approved. The criteria for consolidation should be clearly set out and the reasons for allowing an application for consolidation should also be given in each decision in order to ensure transparency. Setting out reasons will also ensure that a judicial review is readily possible when required.

3. Party Autonomy- The proposal envisages that once the parties have expressly selected the institutional rules, they are deemed to have accepted the provisions for consolidation. Now, there might be situations where parties do not wish to consolidate matters and such automatic approval to consolidation undermines party autonomy. The rules should provide for a mechanism whereby parties may opt-out of such consolidation and are free to take up their disputes before different institutions.

4. Partial Consolidation- There will be situations wherein consolidation of all related disputes will not be possible. The final set of rules need to address the issue of partial consolidation of cases in such a situation.

5. Enforcement- Another issue that may arise is the enforcement and validity of an award passed pursuant to the consolidation. On a challenge to such an award, the concerned court of a country may come to a finding that the award is not enforceable as the consolidation was improper or unwarranted. In such situations, the very purpose of this provision will be lost as instead of increasing efficiency and ease it will result in creating additional hurdles for the winning party.

Conclusion

The idea of consolidating proceedings across institutions sounds very convenient in theory. However, its implementation poses many challenges, some of which will only come to the fore when this proposal is finally implemented. The adoption of this practice would undoubtedly require streamlined and uniform rules across institutions. The cross-institution consolidation proposal is designed to facilitate the efficient and enforceable resolution of international commercial disputes, which is expected to provide significant gains for parties. The proposal is indeed a welcome step as it will save substantial costs, time and will enable the matters to be decided via one institution. However, a question arises as to how consolidation of cases pending before different institutions is beneficial for the institutions as well. The stance of other leading institutions on this matter is yet to be seen. We look forward to further updates and deliberation on this subject as arbitration is the prevalent alternate dispute resolution mechanism in present and for the future.

Footnote

17 SIAC, "Memorandum Regarding Proposal on Crossinstitution Consolidation Protocol". Available at: http:// www.siac.org.sg/images/stories/press_release/2017/Memorandum%20on%20Cross-Insti tutional%20 Consolidation%20(with%20%20annexes).pdf

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