The necessity of resolving commercial disputes through an effective method of dispute resolution has become increasingly pronounced in light of the rapid growth in crossborder commercial transactions.
The use of arbitration as a dispute resolution mechanism has become an increasingly attractive means to resolving commercial disputes as it offers parties a confidential and, at times, a less confrontational process which may be rarely found in the adversarial system of litigation in the courts. The arbitral process offers flexibility and party autonomy, and the confidentiality of proceedings is attractive to commercial entities who value long term commercial relationships with each other beyond the dispute at hand.
The purpose of this article is to consider the key differences between the SIAC (Singapore International Arbitration Centre) Rules 2010 ("the SIAC Rules") and the KLRCA (Kuala Lumpur Regional Centre for Arbitration) Arbitration Rules 2012 ("the KLRCA Rules"), and how these differences influence the arbitral process.
Structure and introduction
The KLRCA Rules are predominantly based on the UNCITRAL Arbitration Rules. Part I of the KLRCA Arbitration Rules contains a rather short list of modifications to the UNCITRAL Arbitration Rules which are embodied in Part II . Rule 1(3) confirms that any conflict between Part I and II shall be resolved in favour of the former.
In contrast to the KLRCA Rules, the SIAC Rules contain a substantially higher number of modifications to the UNCITRAL Arbitration Rules. Due to this, the SIAC Rules are presented as an independent set of rules although they are also largely based on the UNCITRAL Arbitration Rules.
Generally, the SIAC Rules seek to expedite the process of arbitration through the setting of tighter timelines and reducing the number of opportunities for parties to interfere with the arbitral process. The KLRCA Rules, on the other hand, takes a slightly different approach as they are more inclined towards the concept of party autonomy.
Commencement of Arbitral Proceedings
The emphasis that the SIAC places on expediency can be seen from the start of arbitral proceedings. Rule 4 of the SIAC Rules provides the respondent with only 14 days to provide a response to a notice of arbitration.
Under Article 4 of Part II of the KLRCA Rules, the respondent is given 30 days to provide a response after being served with a notice of arbitration.
Constitution of the Arbitral Tribunal
Time for appointment of arbitrators
If it is determined (by agreement or otherwise) that one arbitrator is to be appointed, SIAC Rule 7.2 provides a maximum of just twenty-one (21) days from the commencement of the arbitral proceedings for parties to agree on the appointment of that arbitrator. If parties are unable to agree, the Chairman of the SIAC shall proceed to make an appointment "as soon as practicable". In addition, should any one party so request, the Chairman has the power to proceed to make an appointment even before the twenty one days are up.
If a panel of three arbitrators is to be appointed, SIAC Rule 8 gives parties a period of fourteen days to nominate their respective arbitrators, after which the third arbitrator will be appointed in accordance with the arbitration clause or by the Chairman.
In contrast, under the KLRCA Rules, Parties are given thirty days to agree on the number of arbitrators before the default number of three arbitrators is imposed on them by the KLRCA Rules. Parties are then provided with a further period of thirty days to nominate the appointment of arbitrators . If there are to be three arbitrators, the final formation of the arbitral tribunal could take more than 75 days.1
Number of arbitrators
In arbitral proceedings, the tribunal commonly consists of one arbitrator or a panel of three arbitrators. The number of arbitrators would have been either specified in the arbitration clause in the contract, or agreed between the parties.
Rule 6.1 of the SIAC Rules states that if there is no agreement between the parties as to the number of arbitrators, there shall only be one arbitrator2. In contrast, Article 7(1) of Part II of the KLRCA Rules gives parties thirty (30) days from the commencement of the arbitral proceedings to come to an agreement, if there had been no prior agreement relating to the number of arbitrators. If the parties are unable to come to an agreement as to the number of arbitrators after thirty days, the number of arbitrators would be a panel of three (3) by default.
Process of appointment of arbitrators
Part of the reason the KLRCA takes a longer time to constitute an arbitral tribunal is that, even in the absence of express agreement, it allows parties to give a fair amount of input into the appointment of arbitrators, even if only one arbitrator was to be appointed. Article 8 of Part II of the KLRCA Rules sets out the procedure where parties are given 15 days to give their input on which arbitrators they would prefer to be appointed.
The SIAC, in the interests of expediency, takes away much of that party autonomy by implementing a more top-down approach in the appointment of arbitrators when there is no agreed mechanism for such appointment between the parties.
Repetition of hearings when an arbitrator is replaced3
Under Article 15 of Part II of the KLRCA Rules, if any arbitrator is replaced, proceedings shall resume at the point where the replaced arbitrator ceased to perform his functions. The Tribunal has the discretion to decide otherwise.
A similar position is taken under SIAC Rule 15, with two key differences.
First, if the arbitrator who is replaced is the sole or presiding arbitrator, and if such replacement is due to a successful challenge by one of the parties, "any hearings held previously shall be repeated unless otherwise agreed by the parties"4.
This puts the decision regarding repetition of hearings firmly in the hands of the parties rather than in the hands of the tribunal, which is the case under the KLRCA Rules.
Secondly, if an interim or partial award has already been given, hearings solely in respect of that award shall not be repeated, and the award shall remain in effect.
The effect of this is that, under the SIAC Rules, an interim or partial award will not be set aside even if an entirely new tribunal is constituted. Under the KLRCA Rules, however, the replacement of any one arbitrator may constitute grounds for rehearing in respect of interim or partial awards that have already be made.
It is clear that the SIAC Rules adopt a more top down approach in favour of expediency whilst the KLRCA Rules focus on greater party autonomy. Which system of rules would be attractive to parties to an arbitration will very much depend on their commercial objectives, the urgency of the matter, the need for interim or urgent relief and the need for greater party autonomy in the arbitral process.
1 Article 9 of the KLRCA Rules, which governs
the appointment of 3 arbitrators, provides that after each party is
first given 30 days to nominate their arbitrator of choice, the 2
appointed arbitrators are given a further 30 days to agree on the
third arbitrator. If no agreement is reached, then a "list
procedure" under Article 8 will be activated, which will take
another 15 days.
2 This is subject to considerations regarding the complexity of the case.
3 Both the KLRCA and the SIAC Rules have similar processes for the challenge and replacement of arbitrators.
4 Note that if the replaced arbitrator is neither the sole nor the presiding arbitrator, the position in the SIAC is the same as in the KLRCA – previous hearings may be repeated at the tribunal's discretion.
This update is provided to you for general information and should not be relied upon as legal advice.