Connectivity, an efficient legal system and a plethora of choice are making Singapore increasingly popular for resolving international disputes
A sia has grown in prominence as a choice destination for international trade and investment, with Singapore well positioned as a trusted neutral venue for resolving cross-border disputes in the region. Its legal ecosystem enjoys strong political and judicial support, with policies geared to liberalising legal services and strengthening legislative frameworks being rolled out.
Singapore has built a fair, respected and efficient legal system grounded by the rule of law, ranking 12th of 128 countries in the World Justice Project Rule of Law Index for 2020, and topping the region for absence of corruption, order and security, regulatory enforcement, civil justice and criminal justice. All of these foster a robust environment for the protection and enforcement of commercial rights. This has been recognised in the World Bank’s 2020 Doing Business report, where Singapore topped the rankings of 190 economies for the ease of enforcing contracts. Singapore law has been increasingly accepted, and in a survey in 2019 commissioned by the Singapore Academy of Law, Singapore law was found to be the second most adopted governing law in cross-border transactions in Asia, after English law. The Lion City also tied with London as most popular seat of arbitration worldwide in White & Case’s 2021 International Arbitration Survey.
Singapore’s legal ecosystem enjoys strong political and judicial support, with policies geared to liberalising legal services and strengthening legislative frameworks being rolled out. Singapore’s world-class judiciary has also been augmented by eminent international jurists from both civil law and common law traditions onto the Singapore International Commercial Court’s (SICC) bench. As a result, Singapore has attracted legal talent, including commercially experienced counsel and a growing number of distinguished arbitration and mediation practitioners.
Singapore’s suite of international dispute resolution platforms – namely, the SICC, Singapore International Arbitration Centre (SIAC) and Singapore International Mediation Centre (SIMC) – have been increasingly busy. These options are complementary, each with unique features and advantages providing an excellent range of options to meet the needs of commercial parties.
Enforceability is often a critical consideration in the choice of a dispute resolution mechanism, and Singapore is a signatory to multilateral and bilateral treaties facilitating effective enforcement of arbitral awards, court judgments and mediated settlements. Arbitral awards enjoy widespread enforceability through the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which boasts 169 contracting states. Enforcement of international mediated settlement agreements is enhanced by the Singapore Convention on Mediation, with 55 signatories. Judgments of the SICC, as a superior court of law, can be enforced in almost all major commercial jurisdictions and many other regional ones, including by way of the 2005 Hague Convention on Choice of Court Agreements.
The three most commonly used dispute resolution mechanisms are litigation (in the domestic or international court), arbitration and mediation. Arbitration and mediation are entirely based on consent. Parties may agree either pre-dispute (for example, by way of arbitration or a mediation clause in contract), or post-dispute, referring to arbitration or mediation. Without such agreement, the arbitral tribunal has no jurisdiction and there is no basis for a mediator to facilitate any negotiation between parties. This means that to bring a third party into the arbitration or mediation – such as when there are related contracts or claims – all parties, including the third party, would generally have to agree.
In contrast, court jurisdiction is under relevant legislation. While in certain cases the legislation requires a jurisdiction agreement between parties, once the court is seized of jurisdiction it can exercise compulsory jurisdiction, and is empowered to join a third party to the proceedings without requiring the parties’ consent. The nature of the dispute resolution also differs in these mechanisms. Court and arbitral proceedings are adjudicative, culminating in a final decision on the dispute that is binding on parties. Mediation, on the other hand, is facilitative, to enable parties to arrive at a mutually acceptable resolution. Parties are therefore directly involved in the decision-making process, with better control over the outcome. Another difference is that arbitration and mediation proceedings are confidential by default, while the principle of open justice generally applies to court proceedings, subject to certain exceptions.
Finally, there is generally a right of appeal from a first instance court decision on the substantive merits of a case, unless parties have agreed to limit, or waive such a right. But there is presently no avenue for appeal against an award made in an international arbitration seated in Singapore. Recourse is confined to applying to court to set aside the award, but only on limited grounds such as fraud, breach of natural justice, excess of jurisdiction, procedural irregularity and breach of public policy. As for mediation, any settlement reached is consensual and contractual in nature, and there is no appeal.
There are also differences between litigation in the domestic court and litigation in the international court. For example, in the Singapore domestic courts, questions of foreign law which arise to be determined are regarded as questions of fact, that are proved by way of expert evidence. Foreign law experts are called as witnesses at trial, and subject to cross-examination. Substantial time and costs may be incurred as a result. In contrast, questions of foreign law which arise in SICC proceedings may, if the SICC grants permission, be determined on the basis of submissions instead of proof. Where permission is granted, counsel can make submissions on foreign law directly to the SICC, saving the time and costs of calling expert witnesses.
The increasing inter-connectedness of the modern world also means that there are more foreign parties involved in commercial disputes that are brought before the Singapore courts. These foreign parties may be unfamiliar with the court processes and procedures in Singapore. This is particularly so for parties who come from civil law jurisdictions. Foreign parties may also wish to be represented in proceedings by counsel in their jurisdiction with whom they may have an existing relationship. But foreign counsel generally do not have rights of audience before the domestic courts in Singapore.
The SICC’s procedural rules afford sufficient flexibility to tailor its procedures in a manner that suits the needs of the parties and the dispute at hand. In the appropriate case, the SICC can adopt procedures that parties from a civil law background may be more familiar with. Foreign lawyers may register with the SICC and once registered, they are allowed to act for parties in SICC cases which have no substantial connection to Singapore.
Singapore’s domestic courts and the SICC recently implemented new procedural rules, namely the Rules of Court 2021 and SICC Rules 2021 respectively, which took effect on 1 April. The Rules of Court 2021 simplify and modernise the language of the rules and streamline procedures. Under the Rules of Court 2021, the court is given closer control over how a case progresses, by procedural reforms such as a single application pending trial to prevent parties litigating in a piecemeal manner, and a requirement for the court’s permission to use expert evidence.
Similarly, the SICC Rules 2021 introduce reforms in the SICC’s procedures. The SICC Rules 2021 are specially designed to facilitate international commercial litigation, and incorporate international best practices from a variety of dispute resolution mechanisms and legal traditions. Although many key features of existing court procedures are retained, the rules introduce certain new initiatives. For example, the process of bringing a case is now simplified, with a single mode of commencement of proceedings. Contested claims are decided by one of three adjudication tracks, each involving different modes of presentation of legal arguments and evidence, depending on the needs of parties and disputes at hand. A specialised technology, infrastructure and construction list is also implemented, with technically complex cases dealt with by specialist judges.
Most recently, a new Order 23A was introduced, providing rules for multi-party international restructuring and insolvency proceedings, with effect from 1 October. This is a significant step in the development of Singapore’s restructuring and insolvency landscape.
On the international arbitration front, the International Arbitration Act, 1994, was amended, from December 2020, providing a default appointment mode of arbitrators in multi-party arbitrations where the parties’ agreement does not specify such procedure, and explicitly recognising powers of the arbitral tribunal and court to enforce confidentiality obligations.
Other proposals to amend the act remain under consideration. These include the option for parties to incorporate a right of appeal to the high court on a question of law arising out of an award, where parties have agreed to the mechanism, and an option for parties to agree to waive or limit grounds for annulling an arbitral award. In addition, Singapore recently embarked on various reforms relating to litigation funding. Third-party funding is now possible for international and domestic arbitration proceedings, certain SICC proceedings, and related court and mediation proceedings. Since last May, lawyers can also enter into conditional fee agreements with clients in these proceedings. All of this further enhances Singapore as a dispute resolution hub.
21A Duxton Hill
Tel: +65 6816 6660