ARBITRATION BILL

Order for Second Reading read. 4.30 pm

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

Sir, this Bill repeals the Arbitration Act. In its place, the Bill enacts a new Arbitration Act which is more in line with our International Arbitration Act (IAA) and international practices, as reflected in the UNCITRAL Model Law on International Commercial Arbitration.

Sir, arbitration is a useful and efficient alternative dispute resolution (ADR) process to settle commercial disputes. Hence, it is important that our arbitration laws and practices effectively support the business infrastructure in Singapore and at the same time encourage and facilitate its greater use.

The existing Arbitration Act was enacted in 1953. It is largely based on UK arbitration law. In 1995, this House passed the International Arbitration Act to adopt the Model Law as our governing law on international commercial arbitrations. At that time, it was decided that the migration to the UNCITRAL Model Law be conducted in phases, with the first phase involving only international arbitration. As the Model Law has been well received by Singapore arbitrators and practitioners, the next step is to align our domestic laws with the Model Law. This will narrow the differences between the two regimes. In 1996, the UK revamped their arbitration laws and incorporated many provisions from the Model Law. In the light of these developments, the Attorney-General initiated a review of our Arbitration laws, spearheaded by the Chambers' newly formed Law Reform and Revision Division. The Division consulted many bodies in this review. They include the Singapore Institute of Arbitrators, the Singapore International Arbitration Centre, the Law Society of Singapore, the Singapore Institute of Architects, the National University of Singapore, the Economic Development Board and the Trade Development Board. The Bill is therefore the product of all these consultations. In fact, it is the first law reform proposal from the Law Reform and Revision Division to be introduced as a Bill in this House.

Sir, this Bill is largely based on the UNCITRAL Model Law, which already forms the basis of Singapore's International Arbitration Act. The Bill also incorporates useful provisions from the 1996 UK Arbitration Act. This approach allows the creation of an arbitration regime that is in line with international standards and yet preserves key features of those existing arbitration practices that are deemed to be desirable for domestic arbitrations.

Sir, let me now highlight the main features of the Bill. Firstly, the Bill adopts the territorial criterion recommended in the Model Law and affirms the position that every arbitration held in Singapore must be governed by an applicable law of arbitration either under the International Arbitration Act or under this Bill. The concept of a `delocalised' arbitration unconnected with any system of municipal laws would not be recognised under Singapore law.

Secondly, the Bill adopts the position that some supervision by the Courts over the conduct of arbitration in domestic arbitration is desirable. For example, the power to grant Mareva injunctions and Anton Piller injunctions is vested in the Court, and not in the arbitral tribunal. The Bill also provides for the Court to be able to determine a preliminary point of law, to set aside the arbitral award on certain grounds and for appeals to be made against the award on a point of law.

Thirdly, the Bill allows a party to apply for stay of court proceedings in favour of arbitration in the court in which the proceedings were first commenced. Under the current position, if an action is commenced in the Subordinate Courts and a stay of the proceedings is sought in favour of arbitration, the person seeking the stay needs to apply to the High Court to stay the proceedings in the Subordinate Courts. The new arrangements under the Bill would therefore remove this inconvenience in having to submit the matter for determination by the High Court.

The Bill also allows the Court, on its own motion, to discontinue certain stayed actions if at least two years have elapsed since the order of stay was made. This is in recognition of the fact that most disputes under arbitration would take less than two years to resolve, and that if a court proceeding is stayed for more than two years on account of an ongoing arbitration, the subject matter of the court proceeding would most probably have been resolved, and a further continuation of the stay would be unnecessary. Either party may still apply for the discontinued action to be reinstated.

Fourth, the Model Law concept of separability is adopted. What this means is that an arbitration clause in a commercial contract is treated as a separate and distinct agreement from the underlying contract itself, and as such would survive the termination of the underlying contract. An arbitration clause in a contract thus constitutes a self-contained contract that is ancillary to the underlying contract and is capable of independent existence.

Fifth, the Chairman of the Singapore International Arbitration Centre (SIAC) will now be the default appointing authority where the parties are unable to agree on the appointment of arbitrators. Currently, the appointing authority is the High Court. This change recognises the position of the SIAC as the premier arbitration centre in Singapore and the region. The SIAC has been the default appointing authority for international arbitration since 1995. The steady increase in the number of international arbitrations confirms the confidence of parties in the SIAC. With the expertise of the SIAC and its panel of eminent arbitrators, the SIAC is well-positioned to fulfill this function. This change will also conserve the valuable resources of the High Court.

Sixth, the existing provisions on the institution of umpires have been removed from the Bill. Having umpires is a unique English concept to break deadlocks arising out of the decisions of two-man arbitral tribunals. Umpire provisions have been found to be cumbersome and expensive to employ, and the concept of umpires does not exist at all under the Model Law. The Bill thus makes no mention of umpires and there are only provisions for appointing one-man or three-man arbitral tribunals. This is consistent with the Model Law and international commercial practice. The Bill contains a transitional provision to cater for existing arbitration agreements that contain references to umpires. Out of respect for party autonomy, the Bill allows for the continued operation of the existing legislative provisions on umpires for existing arbitration agreements that make mention of umpires.

In a related change, there are no longer provisions governing the appointment of two-man tribunals as the umpire provisions for breaking deadlocks have been removed from the proposed Arbitration Act.

Seventh, the Bill provides for a modification of the UNCITRAL Model Law approach in the default appointment of three-man tribunals. Under the Model Law, where parties wish to appoint a three-man tribunal, each party appoints one arbitrator and the two so appointed would then appoint the third arbitrator. As arbitrators would appoint persons they know or are familiar with, the participation in international arbitrations may be limited to a few and home-grown arbitrators may not have an opportunity to participate in these arbitrations. After extensive discussions between the SIAC and the Law Reform and Revision Division of the Attorney-General's Chambers, it is proposed that the default appointment for three-man tribunals be modified to allow parties to appoint the third arbitrator by agreement. Failing the agreement, the SIAC, as default appointing authority, would appoint the third arbitrator. In this way, where the SIAC has an opportunity to make default appointments, it may do so to promote and develop home-grown arbitrators.

Sir, consequential amendments are also made to the Limitation Act and Bankruptcy Act. In particular, the provision in the existing Arbitration Act that deals with adoption of an arbitration agreement by the Official Assignee in the event of a party's bankruptcy has been enacted in the Bankruptcy Act. In the UK, this approach is also taken.

Sir, this Bill will help facilitate arbitration as a means of resolving commercial disputes in Singapore and will ensure that our domestic regime continues to stay on par with international standards. It will reinforce Singapore's position as a desirable venue for the conduct of arbitration.

Sir, I beg to move.

Question proposed.

Assoc. Prof. Chin Tet Yung: Mr Speaker, Sir, I rise to speak in support of the Bill.

Singapore is positioning itself as a centre for services, and one of the most important form of service is, of course, dispute settlement. Arbitration is increasingly becoming important as a means of settling disputes. It affords advantages beyond litigation, which is far more formal in its procedures. I therefore welcome the Bill in its entirety. I only wish to ask the Minister of State to clarify a couple of issues.

First, what steps are being taken to develop Singapore as an arbitration centre in the region? How is the Ministry and other relevant agencies going to train sufficient quality arbitrators to enhance Singapore's reputation as an arbitration centre?

Second, in clauses 62 and 63, reference is made to arbitrators acting as mediators. Mediation is, of course, a different dispute settlement mechanism than arbitration. And it seems that arbitrators in this Bill are expected to act as mediators. Are arbitrators now expected to be trained in mediation as well? And if so, what steps are taken to ensure that arbitrators know how to mediate properly?

Sir, with these comments, I support the Bill.

Assoc. Prof. Ho Peng Kee: Sir, first, let me thank Prof. Chin for supporting the Bill and for making useful comments.

Prof. Chin's first query is on how we can further ensure that Singapore becomes the centre for arbitration in the region. As I have mentioned, we are always looking at how our laws can be improved. Indeed, what we are doing today in passing these amendments to the Arbitration Act is a big step in that direction. After all, the Arbitration Act has not been amended very often since its enactment in 1953. In other words, we are providing two regimes for parties who want to arbitrate in Singapore to choose from, either the International Arbitration Act regime or the domestic Arbitration Act regime. My assurance to Prof. Chin is that the Attorney-General's Chambers will continue to monitor all trends and developments overseas and, if necessary, incorporate these, as we have done in these amendments this afternoon.

The other approach is to ensure that the Singapore International Arbitration Centre (SIAC) is well run. As I have mentioned in my speech, the SIAC, since its inception about 10 years ago, has made giant steps. Currently, it is chaired by a former High Court Judge. And not only him, but his predecessor, and others working with him have promoted the SIAC to parties, especially overseas and also in Singapore. The SIAC was launched in 1991. In 1992, it had two international arbitrations, one year after its launch. Last year, the number rose to about 60. So there is some increase. But the Chairman of the SIAC tells me that they will further promote the Centre, and that will include working with relevant agencies like the Trade Development Board.

The other point is the quality of the arbitrators. I think that is another selling point of any centre. The SIAC has on its panel over the years built up a group of local as well as foreign arbitrators. There are about 70 local arbitrators, not just eminent and distinguished lawyers but also people in the various fields where parties may want expertise in arbitration. So there are engineers, marine captains and architects. That is the local panel of arbitrators. That is complemented by a panel of about 70 foreign distinguished arbitrators. Here again, parties have a choice, which is important, because the key tenet of arbitration is party's autonomy. They can choose. They choose the venue, they choose the rules, they have a choice of arbitrators, and how it is conducted.

Then, of course, the training of arbitrators, a point which Prof. Chin mentioned is also important. Let me assure him that this is being done, not just by the SIAC but also by the Singapore Institute of Arbitrators, which has been around even longer than the SIAC. And together with the SIAC, they conduct continuing legal education. I understand that all these years, the Singapore Institute of Arbitrators has been training and accrediting arbitrators. They have a scheme where people join as members and, over time, when they prove themselves, they are upgraded to Fellows. There is also training done in conjunction with the UK Chartered Institute of Arbitrators. So, let me again make this point, which is a good point, that training is important, and I thank Prof. Chin for that reminder.

Prof. Chin also talks about clause 62. As I mentioned just now, one of the key tenets of arbitration is party's autonomy. In fact, clause 62, where an arbitrator may act as a mediator, is not a new provision because it is found currently in the International Arbitration Act. So in bringing the two Acts closer together, this has been co-opted into the Arbitration Act. But let me assure Prof. Chin that this provision only applies where the parties agree that the arbitrator shall have the powers to act; in other words, party's autonomy. Some parties may very well think that it is a good thing to do that, ie, before they submit the dispute to an arbitrator, they give the arbitrator an opportunity to mediate. Then, of course, we all know that it is a tenet that all arbitrators must remember that if they do mediate before that, they are wearing different hats and it is very important not to mix the two. So all parties, in other words, enter into this arrangement with eyes open - the parties in dispute as well as the arbitrator. Indeed, the provisions are there to guide the arbitrator, if he does so wear this other hat, what he should or should not do. So, again, let me assure Prof. Chin that this provision has been added after much thought.

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.