INTERNATIONAL ARBITRATION BILL

Order for Second Reading read. 1.37 pm

The Parliamentary Secretary to the Minister for Law (Assoc. Prof. Ho Peng Kee): Sir, I beg to move, "That the Bill be now read a Second time."

Sir, the Ministry of Law, in its Addendum to the President's Address at the opening of Parliament earlier this year, stated that the Ministry and the Attorney-General's Chambers would review our legislation to ensure adequate legal support for Singapore's regionalisation drive. In this regard, we stated that the adoption of international conventions and model laws which harmonise and facilitate international trade and dispute settlements would be considered.

This Bill will provide a legal framework to resolve international commercial disputes by arbitration and is part of this review.

The Bill will mainly implement the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration on an "opt-out" basis. This Model Law establishes a framework for the conduct of international commercial arbitrations, regulating such matters as:

(1) the composition and jurisdiction of the arbitral tribunal;

(2) conduct of the arbitral proceedings; and

(3) the making and setting aside of the award.

It is crafted in such a way as to be acceptable to lawyers from both of the world's major legal systems, ie, the common law and civil law systems.

Sir, the Model Law accords full liberty to parties in non-domestic arbitrations to choose laws and arbitrators to resolve their disputes with minimal intervention from domestic courts. Domestic arbitrations will continue to be governed by the existing Arbitration Act (Cap. 10) where a greater degree of judicial supervision is imposed.

Since the Model Law's adoption by the UN General Assembly in 1985, it has gained widespread acceptance. Many countries including Australia, Bermuda, Canada, Cyprus, Egypt, Hong Kong, Mexico and the USA have adopted it.

The 1985 Economic Committee recommended that to develop into a centre for legal services, we should speed up the settlement of commercial disputes and set up an international commercial arbitration centre.

The Singapore International Arbitration Centre (SIAC) commenced operations in 1991. This Bill will facilitate the settlement of commercial disputes in Singapore. As Singapore businessmen expand overseas, there will be greater contacts with foreign parties. Currently, foreign businessmen are uncomfortable with unfamiliar arbitration laws and excessive intervention from local courts if they select Singapore as the venue for arbitration. They will therefore welcome the application of the Model Law in Singapore.

Sir, international arbitration is a highly competitive business. Businessmen are able to choose from a variety of attractive international centres including Hong Kong, Hawaii, Kuala Lumpur, Melbourne and Vancouver. Currently, a glaring disadvantage of the SIAC is the non-applicability of the Model Law in Singapore.

The Law Reform Commissions and Legislatures of Commonwealth countries which have adopted the Model Law have stated that the Law would assist the development of their respective international arbitration centres.

The Hong Kong experience suggests that the adoption of the Model Law will sharpen the competitive edge of the SIAC. Since 1990, when the Model Law was introduced in Hong Kong, a significantly higher number of cases have been referred to the Hong Kong International Arbitration Centre. From the initial nine cases in 1985, this number increased incrementally from 20 in 1986 to 45 in 1989. Thereafter, the number of cases increased significantly from 54 in 1990, ie, when the Model Law was introduced, to 185 in 1992.

Sir, the provisions of the Model Law are explained in detail in the Explanatory Statement. Let me briefly take the House through the main parts of the Bill. Part II will give the Model Law, except for Chapter VIII, the force of law in Singapore. The Model Law is reproduced in the First Schedule. Part II also contains the modifications and clarifications we have made to clarify and improve the Model Law. This was done after studying the experiences of other countries and consulting the UNCITRAL Secretariat.

The reason for this approach is to let foreign businessmen and lawyers know at the outset the changes that have been made to the Model Law. This will facilitate their choice of Singapore as a venue for their cases.

Apart from implementing the Model Law, Part II will introduce additional provisions which will facilitate arbitrations. These provide for the confidentiality of court proceedings arising from arbitrations, conciliation proceedings prior to arbitration, immunity of arbitrators for negligence and mistakes, invoking the assistance of the courts in enforcing interim orders or directions, allowing the arbitrators to adopt "inquisitorial processes" in the Civil Law tradition, awarding of interest and taxation of arbitration costs by the Registrar of the SIAC.

The Bill will also consolidate all provisions on international arbitrations in a single Act by re-enacting substantially unchanged the Arbitration (Foreign Awards) Act (Cap. 10A) in Part III. The Arbitration (Foreign Awards) Act presently gives effect to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958. This Convention which is set out in the Second Schedule allows arbitral awards made in one Convention country to be recognised and enforced in any of the other Convention countries.

There was wide consultation in drafting this Bill. It was first prepared by a sub-committee of the Singapore Academy of Law Law Reform Committee comprising lawyers, some of whom are practising arbitrators from the private practice, the Law Faculty, the SIAC, foreign international law firms and the AG's Chambers. The Bill was then considered and adopted with amendments by the Academy's main Law Reform Committee. Both the SIAC and the Singapore Institute of Arbitrators support the implementation of the Model Law.

In summary, the reasons why Singapore should adopt the Model Law are as follows:

Firstly, the Model Law provides a sound and internationally accepted framework for international commercial arbitrations.

Secondly, the general approach of the Model Law will appeal to international businessmen and lawyers, especially those from Continental Europe, China, Indonesia, Japan and Vietnam who may be unfamiliar with English concepts of arbitration. This will work to Singapore's advantage as our businessmen expand overseas.

Thirdly, it will promote Singapore's role as a growing centre for international legal services and international arbitrations.

Sir, I beg to move.

Question proposed.

Dr Arthur Beng Kian Lam (Bedok GRC): Mr Speaker, Sir, I rise to support the Bill.

Sir, I agree with the Parliamentary Secretary that the Bill is a welcomed boost to the development of Singapore as an international centre for legal services.

The Model Law has proven to be a practical and useful tool in jurisdictions which have adopted it. I share the view that its enactment will enhance the role of the Singapore International Arbitration Centre (SIAC). Sir, we have been told that the Model Law is already operative in countries which compete with Singapore for international arbitration work. It is therefore timely that we give the SIAC this additional boost.

Sir, with this Bill, business people overseas will not worry about encountering an unfamiliar element if they select Singapore as the place of arbitration. Foreign counterparts of Singapore investors, who are unfamiliar with the English law, on which the existing Arbitration Act is based, will find the Model Law more accessible. As I understand it, the Model Law is drafted in the six official UN languages, namely, Arabic, Chinese, English, French, Russian and Spanish. It is also consistent with our drive towards regionalisation, as it will be easier to convince these foreign counterparts to agree to the SIAC as a venue to settle disputes that may arise. In this way, this essential term of a contract can be more easily settled.

Sir, the provision of an effective and mutually acceptable mechanism for settling disputes that may arise is an important element in any business transaction. As we strive to enhance Singapore's attractiveness as a total business centre, the Model Law will fill a gap. The Parliamentary Secretary has alluded to the success of the Hong Kong International Arbitration Centre since the Model Law was introduced in 1990. We aim to match that success.

Finally, Sir, I welcome the Parliamentary Secretary's assurance that the Bill is the product of widespread consultation and has received good support from the legal fraternity. In this way, I am sure it will meet the needs of the business and legal community.

Assoc. Prof. Ho Peng Kee: Sir, I thank the GPC Chairman for Law and Home Affairs for his support of the 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. - [Assoc. Prof. Ho Peng Kee].

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