ARBITRATION (INTERNATIONAL INVESTMENT DISPUTES) BILL

Order for Second Reading read.

3.58 p.m.

The Parliamentary Secretary to the Minister for Finance (Mr Tang See Chim) (for the Minister for Finance): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Mr Speaker, Sir, the Bill seeks to ratify the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which Singapore signed on 2nd February, 1968, so that the Instrument of Ratification of the Convention can be deposited with the World Bank.

The Convention is a code of international conduct which Singapore, trying to attract foreign investment, should adopt as it is an assurance to foreign investors that disputes about their investments here would be submitted to arbitration by the International Centre for Settlement of Investment Disputes, which has its seat in the World Bank.

The Centre has jurisdiction over any legal disputes arising directly out of an investment between a contracting state and a national of another contracting state, which the parties to the Convention consent in writing to submit to the Centre. However, any contracting state may at the time of ratification of the Convention or at any time thereafter notify the Centre of the class or classes of disputes which it would or would not consider submitting to the jurisdiction of the Centre.

It would, therefore, be necessary to enact legislation to enable Singapore to ratify the Convention. In order to implement the provisions of the Convention relating to the recognition and enforcement of an arbitral award rendered pursuant to the Convention, the Bill accordingly provides for the registration of such an award in the High Court under clause 4 of the Bill. As provided under clause 5 of the Bill, the award, on registration, shall have the same force and effect as if it had been a judgment of the High Court.

The expenditure of the Centre for the Settlement of Investment Disputes is met out of the charges for use of its facilities and any deficit is borne by the contracting states which are members of the World Bank in proportion to their subscriptions to the World Bank. The Bill therefore provides under clause 7 for any expenses which may be incurred by the Government under the Convention to be charged on and paid out of the Consolidated Fund.

Sir, I beg to move.

Question proposed.

4.02 p.m.

Mr L. P. Rodrigo (Serangoon Gardens): Mr Speaker, Sir, this Bill seeks to implement the International Convention on the Settlement of Investment Disputes between States and Nationals of Other States. By the Convention, the contracting parties may voluntarily submit to the jurisdiction of the tribunal.

Sir, my approach to this is simply that submitting to the jurisdiction of an international tribunal means a derogation of our sovereignty. This Convention goes further. It provides for the settlement of disputes between a contracting state party like Singapore and a national of a foreign state. This, one may even say, derogates still further from the sovereignty of Singapore.

4.03 p.m.

[Mr Deputy Speaker in the Chair]

Mr L. P. Rodrigo (Serangoon Gardens): The Convention also provides for agreement between the parties involved in the disputes as to the laws which may be applicable in the adjudication of this dispute. In the absence of any agreement as to what laws should apply to a dispute before the tribunal, the laws of the contracting state party would apply. As I understand it, the purpose of this Bill, it appears, is to accord confidence to foreign states which hope to invest in Singapore. That being so, whatever disputes arise with a foreign state would normally have to be adjudicated in Singapore and, therefore, the laws of Singapore would apply. That being so, why subscribe to this Convention at all, because our courts, I think, are certainly credible enough and capable enough of settling such disputes?

As the Parliamentary Secretary has stated, the procedure that is intended to be adopted with regard to the registration of awards would be the procedure that is at the moment being carried out in our High Court. There again the procedure of our courts is being adopted. That being the case, I do not see why we should subscribe to this Convention in the first place. Apart from the question that it derogates from our sovereignty, the Convention also provides for the utilisation of a substantial part of the procedure of our courts and, therefore, our courts. I think, would be sufficiently equipped to accommodate any dispute.

4.05 p.m.

Inche Abdul Aziz Karim (Kallang): Mr Deputy Speaker, Sir, the introduction of the Arbitration (International Investment Disputes) Bill is to be welcomed as it comes up at a time when the Republic is sparing no effort to create a favourable image abroad, that we are a society following the principles of law and order. I think the labour movement would associate itself with such a timely act to gain the confidence of prospective international financial investors. The Republic has already established for itself a reputation for respect for law and order, and the move to give legal protection to investors is a move in the right direction. The adoption of the Bill will definitely strengthen the image of the Republic and its people. We have all witnessed on not too few occasions when other governments have ruled without any respect for the agreements they have entered into.

The enactment of the Arbitration (International Investment Disputes) Bill into law and its enforcement will necessarily mean the implementation of the International Convention on the Settlement of Investment Disputes between States and Nationals of Other States and the registration by the Republic's High Court of the award of the International Centre for the Settlement of Investment Disputes. The direct effect of accepting the Convention will mean that the Republic does not live by arbitrary rules. The Arbitration (International Investment Disputes) Bill does not necessarily imply that the Government of Singapore expects to have disputes with foreign investors. It is, however, vital that there must be the international machinery available to settle the disputes. The Arbitration (International Investment Disputes) Bill will offer the machinery. Mr Deputy Speaker, Sir, I beg to support the Bill.

Mr Tang See Chim: Sir, may I allay the doubts raised by the Member for Serangoon Gardens? While I appreciate his concern about derogation of our sovereignty, may I assure him that this Bill does not in any way derogate from the sovereignty of our State?

[Mr Speaker in the Chair]

4.10 p.m.

Mr Tang See Chim: What it means is that by being a party to the Convention, we are merely transferring the jurisdiction of our local courts to the International Centre for Investment Disputes in cases where the disputes have not been satisfactorily resolved in our local courts. This is provided by Article 26 of the Convention. Incidentally, the Articles are attached to the Bill as a Schedule. Article 26 reads as follows:

'Consent of the parties to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy. A Contracting State may require the exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this Convention.'

Therefore, Sir, this is not a derogation of our sovereignty but only the delegation of some of our judicial functions to the international Centre for Investment Disputes.

It is true that when a dispute is referred to the Centre for arbitration, the law to be applied is the law agreed between the parties, and if the parties do not so agree, the arbitral tribunal would apply the law of the State party to the dispute; that is, it would apply municipal law as well as such rules of international law as may be applicable. While we ourselves have complete confidence in our judicial system in Singapore, foreign investors, however, may prefer an international tribunal. That is the whole point here. We want to assure foreign investors that we are all above-board that any investment disputes with us will be decided by an international tribunal who is unprejudiced and unbiased. This is an effort on our part to attract foreign investment.

It is heartening to hear from the Member for Kallang of his support and also the support of the labour movement for this Bill.

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 Tang See Chim]

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