INTERNATIONAL ARBITRATION (AMENDMENT) BILL

INTERNATIONAL ARBITRATION (AMENDMENT) BILL: Order for Second Reading read.

The Minister for Law (Mr K Shanmugam): Mr Speaker, Sir, I beg to

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move, "That the Bill be now read a Second time."

Sir, this Bill amends the International Arbitration Act.

These amendments are the result of a consultation process involving key industry experts, both local and foreign. The current Act incorporates the 1985 United Nations Commission on International Trade Law or UNICITRAL Model Law. We have now taken into consideration amendments made to the Model Law by UNCITRAL in 2006.

This Bill introduces three key amendments.

Court-ordered interim measures in support of foreign arbitrations

The first is to allow court-ordered interim measures in support of arbitrations conducted outside Singapore. In the case of Swift-Fortune v Magnifica Marine SA[2007] 1 SLR 629 , our Court of Appeal held that our present Act only empowered the Singapore court to grant interim orders to support arbitrations held in Singapore. Similar orders cannot be granted in respect of foreign arbitrations. The new amendment gives the Court the power to do so in respect of foreign arbitrations as well.

While this amendment augments the powers of the Court in relation to arbitration, it also places appropriate restrictions on the exercise of these new powers.

It is in line with our policy of minimal curial intervention in arbitration proceedings.

The scope of the new powers is limited to interim measures in support of arbitration, for example, interim injunctions to preserve assets. They do not extend to procedural or evidential matters

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dealing with the actual conduct of the arbitration itself – like discovery, interrogatories, or security for costs. These procedural matters fall within the province of the arbitral tribunal and must be decided by the tribunal itself. This is similar to the position taken in the UK Arbitration Act.

Consistent with the policy of limited court intervention, the Court can exercise these new powers only when the arbitral tribunal or arbitral institution has no power to act, or is unable to act for the time being effectively.

It is envisaged that one such scenario could be where the foreign arbitral tribunal has power to make an interim order but that order cannot otherwise be enforced in Singapore apart from an application under this new section.

Other examples include: (a) a party applying to Court for relief before the arbitral tribunal has been fully or properly constituted; (b) a party applying to Court for relief against a non-party to the arbitration, which an arbitral tribunal has no power over; and (c) where the arbitral tribunal is unable to hear an urgent application for interim relief sufficiently quickly.

The amendment is also sensitive to the fact that some arbitration cases may genuinely require urgent assistance from the Court. If the case is one of urgency, the Court may make such orders to preserve evidence or assets for the arbitration. The term "assets", in line with current case law, should be read widely in this context, to include intangible assets or "choses in action", which include bank accounts, shares and financial instruments.

If the case is not one of urgency, the Court will make an order only if notice of the application has been given to the other parties and the arbitral tribunal, and

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the application has been made with the permission of the arbitral tribunal or the agreement in writing of the other parties.

Ultimately, the Court retains its discretion in deciding whether to make an order or not. If the Court considers that the fact that the place of arbitration is outside Singapore (or likely to be so) makes it inappropriate to make such an order, the Court can refuse to do so. For example, the English High Court has held that if an applicant to a foreign arbitration was unable to show that the other party has substantial assets in England or was unable to show any link between the foreign arbitration and England, the Court could refuse to make an order.

Once the tribunal is able to act, it should be accorded primacy. Accordingly, the amendment makes clear that any order granted by the court may cease to have effect, should an arbitral tribunal subsequently make an order which expressly relates to the previous court order. This is in line with our policy of facilitating arbitration and minimising judicial intervention in the process.

Sir, this amendment will be welcomed by industry and parties to arbitrations. It ensures that our arbitration laws are progressive and will boost our efforts to promote Singapore as a leading venue for arbitration.

I should add that this is the only 2006 amendment to the 1985 Model Law which the Bill will incorporate into our International Arbitration Act. At present, the majority of industry experts consulted were against the full adoption of the 2006 Model Law. We will keep this issue under review, and may make further amendments as necessary.

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Definition of an arbitration agreement

Sir, the second key amendment is to modernise the current definition of an "arbitration agreement" in Part II of the Act by expanding it to cover "electronic communications". The present Act defines an arbitration agreement by reference to physical written forms of communications, like letters, telexes, telegrams, and so on. This amendment would make it very clear that Singapore recognises that an arbitration agreement can be contained in "electronic communications" like electronic mail or electronic data interchange.

Consequential amendments are also made by the Bill to the Arbitration Act to ensure that the definition of an arbitration agreement is similarly updated.

There is, however, no corresponding amendment to the definition of "arbitration agreement" under Part III of the International Arbitration Act. Part III deals with the enforcement in Singapore of foreign awards, via an international treaty, the New York Convention on the Recognition and Enforcement of Arbitral Awards 1958. The definition of "arbitration agreement" in the New York Convention has not changed. In dealing with the New York Convention, Singapore will continue to follow the existing definition.

Authentication of " Made in Singapore " awards

Sir, the third key amendment introduced by this Bill is to allow the Minister to appoint an entity to authenticate "Made in Singapore" awards.

Currently, a party seeking to enforce an arbitral award outside Singapore under the New York Convention is required to tender before the foreign court: (i) A duly authenticated original award or a duly

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certified copy; and (ii) The original arbitration agreement or duly certified copy.

The Ministry has received feedback that some parties face difficulties in enforcing their Singapore arbitration awards overseas. These difficulties have arisen because certain foreign courts require that the awards be duly authenticated before allowing the awards to be enforced.

There is currently no public body authenticating awards made in Singapore. The Bill will amend the International Arbitration Act to allow the Minister to prescribe, in rules, designated entities to authenticate, "Made in Singapore" arbitration awards for the purposes of overseas enforcement.

The authentication process is non-mandatory. It does not prevent any person from authenticating any award or arbitration agreement by any other manner.

The Bill also makes consequential amendments to our domestic Arbitration Act in order to introduce a similar system for the arbitrations governed by the Arbitration Act.

Housekeeping and consequential amendments

Finally, besides the three key amendments, the Bill includes some minor housekeeping amendments. This includes the deletion of section 32 of the International Arbitration Act. This deletion will obviate the need for the Minister to gazette States that are party to the New York Convention, or to certify that a State is a Convention country. This is no longer required since the list of Convention countries is published on the official UNCITRAL Internet website.

Sir, the amendments contained in the Bill are intended to keep our International Arbitration Act modern, effective and

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arbitration-friendly. This will in turn help to keep Singapore at the forefront as a top international arbitration centre.

Sir, I beg to move.

Question proposed.

4.19 pm

Mr Christopher de Souza: Mr Speaker, Sir, thank you for allowing me to join in this debate. First, Sir, I declare my interest as a lawyer who acts as counsel in SIAC arbitration cases.

I rise in support of the Bill as I believe the amendments are part of a package of measures which will continue to ensure Singapore's continued choice as a top tier international arbitration city. Singapore is currently the top city in Asia for International Chamber of Commerce-International Court of Arbitration (ICC) arbitrations and one of the top six ICC arbitration venues in the world, which venues include New York, Paris, London, Geneva and Zurich.

With the rapid rise of big Asian economies like China and India, there is great growth in commercial activity in this part of the world. It is inevitable that the number of international arbitration cases in our region will increase dramatically as the globalisation of commercial entities continues. We are set to capture much work in this area as we are currently a top arbitration venue in Asia if not, the top. We are a highly attractive and conducive venue, thanks to our accessibility to East and West, the integrity of our public institutions, transparency, geographical proximity, availability of international legal and related expertise, infrastructure and connectivity, tight security, cost-effectiveness and a strong sense of the rule of law.

Top international arbitral institutions such as the American Arbitration Association's International Centre for

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Dispute Resolution (ICDR) and the Permanent Court of Arbitration (PCA) are already based here. Just two months ago, the World Intellectual Property Organisation (WIPO) signed an agreement to set up an arbitration centre here in 2010 to hear intellectual property-related (IP) disputes, as its Director-General, Francis Gurry, observes Asia "becoming the centre of gravity for creativity and technology".

Thus, clause 2 of the Bill is timely. It amends section 2(1) to recognise the enormous changes in the way the world communicates today. Electronic communication has permeated and dominated communication in every business organisation. Re-defining "arbitration agreement" to include electronic communications such as electronic emails and data exchange is necessary and inevitable. This is also in line with Option I of Article 7 of the Model Law on International Commercial Arbitration, as amended by the United Nations Commission on International Trade Law (UNCITRAL) in 2006.

The second amendment to empower Singapore courts to grant interim orders to assist foreign arbitrations is consistent with the 2006 amendments to the 1985 Model Law and in line with the legislation of other countries such as the United Kingdom and New Zealand. Currently, a Singapore court can only grant interim orders to assist Singapore arbitrations.

Concerns have been expressed by members of the public about how the proposed new section 12A may be a disincentive for parties to park their funds here. I, on the contrary, think that as we develop into an international investment and wealth management hub for organisations and individuals, it is even more critical to have legislation that maintains transparency, cooperation and adherence

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to international laws. Such provisions are important as they provide assurance and confidence to all parties and establish our reputation as a legitimate world-class financial centre, with International Arbitration services to match. I note that the Monetary Authority of Singapore, which was consulted, has no objections to these amendments which underline our commitment to attracting legitimate sources of funds. Nonetheless, the proposed new section 12A(3) provides a safeguard in giving our courts the flexibility and discretion to refuse to grant such interim orders if they consider it appropriate. I think this is a wise and cautious provision.

Lastly, the new section 19C will empower the Minister for Law to designate entities to authenticate, on a non-mandatory basis, 'made in Singapore' arbitration awards to facilitate the enforcement of such awards in countries that are party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (ie, the New York Convention). I support this amendment as this will certainly make it more attractive for arbitration parties to settle their disputes here as they will be able to enforce their Singapore arbitration award overseas.

Sir, to echo the Minister for Law's sentiments, the amendments in this Bill signal to the legal world that the Government is serious about ensuring that Singapore continues to be an attractive and effective hub for international arbitration.

I support the Bill.

4.24 pm

Mr Chiam See Tong (Potong Pasir): The Bill updates the definition of "arbitration agreement" in Part II by expressly including arbitration agreements made by electronic communications.

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Clause 2 amends section 2(1) by redefining "arbitration agreement" to clarify an arbitration agreement can be made by electronic communications as defined in Option I of Article 7 of the Model Law on International Commercial Arbitration, as amended by the United Nations Commission on International Trade Law (UNCITRAL) in 2006.

International arbitration is becoming more widespread. Singapore aspires to be an international arbitation hub of this region. We have the expertise but more importantly, Singapore must build up a reputation as a fair and honest place where impartiality is an accepted norm. We must also put in place our arbitration laws which recognise the irrevocability of arbitration agreements and the enforceability of awards prevails. The method of selecting arbitrators is an important aspect of the arbitration process, for arbitrators' ability and fairness are the decisive elements in arbitrations.

Mr Shanmugam: Mr Speaker, Sir, I would like to thank Mr de Souza and Mr Chiam for their support on the Bill.

Sir, I can pick up Mr Chiam's points first. I think there are a couple of points that Mr Chiam made. We need to build up our reputation as a fair and honest place, and that arbitrators' fairness and ability are key in any arbitration. I entirely agree, and that is what we have been working on for a very long time. And international rankings which rank both Singapore's judiciary as a top-class centre and emphasing rule of law, and specific to arbitration, that we are one of the top six destinations in the world, speak volumes for that. We are now recognised as a top centre for arbitration where rule of law is paramount, and where people can come and get a good arbitration service as a whole suite, with an excellent panel of arbitrators. And if they are not happy with them, they can choose whom they want and also they can appoint as counsel

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anyone from the world, and we provide the framework for that. And so it is an extremely arbitration-friendly jurisdiction which is recognised throughout the world now.

As Mr de Souza has pointed out, these amendments are part of our larger initiative to ensure that Singapore continues to be a leading destination for international arbitration work. The power of the courts to grant relief in support of foreign arbitration may be considered as an essential element of a complete and well-ordered international arbitration regime. Such a power is also seen as consistent with the spirit of the New York Convention. It also recognises party autonomy and gives full support to the party's intention to have their dispute resolved by the forum of their choice.

Sir, ensuring that our legislative framework remains up to date is just one of the facets in our effort to develop a world-class ecosystem for arbitration.

As Mr de Souza highlighted, we are privileged to have been able to attract the American Arbitration Association's International Centre for Dispute Resolution (ICDR) and the Permanent Court of Arbitration (PCA) as well as the UN World Intellectual Property Organisation to our shores.

We are also very pleased to note that our Singapore International Arbitration Centre (SIAC) is gaining wide acceptance internationally. This March, an international blue-ribbon Board of nine members from seven different countries was appointed to helm the SIAC, adding even greater lustre to an already vibrant arbitration scene. In 2008, SIAC administered 85 new cases. As at the end of August this year, there were 72 new cases for 2009. In terms of value, the claims handled or held at the SIAC soared to almost S$1.6 billion for the year 2008 – slightly over three times that of the

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S$500 million in 2007. For 2009 (as of end of August), the SIAC had already handled claims totalling close to S$700 million. These figures do not include arbitrations administered by other arbitral institutions, such as the ICC-ICA, and other ad hoc arbitrations where Singapore is the neutral and popular venue of choice.

With Maxwell Chambers, the world's first fully integrated arbitration facility, now set up, Singapore has become an even more desirable venue for arbitration. A number of well-known industry players have relocated to Singapore. Law firms have expanded their arbitration practices, and two sets of premier barrister chambers will locate at Maxwell Chambers, along with other international arbitral institutes.

Sir, Singapore is well poised to be a leading arbitration centre and the

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proposed amendments will ensure that our regime will continue to be on par with that of other leading international arbitral jurisdictions.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Shanmugam].

Bill considered in Committee; reported without amendment; read a Third time and passed.