INTERNATIONAL ARBITRATION (AMENDMENT) BILL

Order for Second Reading read.

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 is related to the Bill which was just passed. This Bill makes consequential and related amendments to the International Arbitration Act to ensure its consistency with the Arbitration Bill which we have just moved earlier. Another objective is to clarify certain provisions in the International Arbitration Act. This Bill is another product of the work of the Attorney-General's Chambers' Law Reform and Revision Division. Indeed, consultation on this Bill was done jointly with those that took place on the Arbitration Bill.

[Mr Deputy Speaker in the Chair]

4.49 pm

The Minister of State for Law (Assoc. Prof. Ho Peng Kee): Sir, this Bill effects the following changes in order to harmonise it with the proposed Arbitration Act:

First, the stay of proceedings provisions will be streamlined. I think I have mentioned this already just now. Because under the existing International Arbitration Act, all stay of proceeding applications must be filed in the High Court, regardless of whether the action was originally commenced in the Subordinate Courts or the High Court. This Bill will remove this inconvenience because now the parties need not submit the matter for determination by the High Court.

Second, the Bill amends the International Arbitration Act to allow the Court on its own motion to discontinue certain stayed actions if at least two years have elapsed since the order of stay has been made. As I have explained just now, this amendment follows from that in the first Bill, because two years is a long enough time for the action to proceed if the parties have so intended and, in any case, even if discontinued, they can take up an action to restart it.

Thirdly, the Bill provides limited immunity to the default appointing authority and arbitral institutions. This states that arbitral institutions are not liable for anything done or omitted in respect of the discharge of their functions in appointing or nominating arbitrators unless there is shown to have been bad faith involved in the act or omission. The provision also clarifies that the appointing authority or arbitral institution is not liable for the acts of the arbitrator appointed or nominated by it.

Sir, apart from the foregoing, two main amendments are made to provide clarifications, so that there will be greater certainty as to the operation of the International Arbitration Act. Firstly, clause 14 provides clarification on the finality of an interim award. Under UK arbitration law and our domestic Arbitration Act, an interim award, once given, is binding and cannot be reviewed by the arbitrator. The Model Law says nothing about the finality of an interim award but practitioners have long assumed that the position is the same as well. The Attorney-General, the Chairman of the SIAC and leading arbitrators, including members of the Singapore Institute of Arbitrators, have recommended that legislation be passed to clarify this position to avoid uncertainty in the law. Thus, clause 14 of the Bill amends the Act to state clearly that the position in Singapore for international arbitrations is that interim awards are final and binding.

Second, clause 12 of the Bill amends section 15 of the International Arbitration Act to clarify its scope. Section 15 was intended to allow parties who desire a greater degree of judicial intervention to opt out of the Model Law regime into the domestic Arbitration Act as the applicable law of arbitration. In its existing form it has created some uncertainty in the industry and requires clarification. The first question to be resolved is whether parties to an arbitration agreement should be regarded as having opted out of the Model Law if the arbitration agreement contains a reference to the use of institutional arbitration rules, eg, ICC rules, without more. A new section 15(2) is therefore added to clarify that a reference in an arbitration agreement to any institutional arbitration rules would not, by itself, be regarded as an agreement to opt out of the Model Law.

The second question to resolve is which legal regime will apply in the event that parties to an international arbitration conducted in Singapore opt out of the Model Law. For the avoidance of doubt, section 15 is amended to state that Singapore's domestic arbitration law under the Arbitration Act would apply to the arbitration if parties expressly choose to opt out of the International Arbitration Act or the Model Law.

Sir, this Bill will help ensure that our International Arbitration regime continues to keep pace with the best practices among international standards and more firmly establish Singapore as an attractive place to conduct international commercial arbitrations.

Sir, I beg to move.

Question proposed.

Assoc. Prof. Chin Tet Yung: Mr Deputy Speaker, Sir, I rise to speak in support of the Bill which together with the Arbitration Bill that was just considered will form the substantive basis for Singapore to develop as an important arbitration centre. But as rules are just part of the process and the practice of how to encourage international arbitration has to be taken into account, I should like to ask the Minister of State to clarify a couple of points.

In the case of international arbitration, I would like to ask him how we can ensure that Singapore would be looked upon, regarded as a good forum for international arbitration. For example, how do we make sure that our arbitrators would have a high standard of objectivity and independence, even when they are considering disputes between Singapore parties and parties from abroad?

Second, I would like to know whether we have taken steps to facilitate entry into Singapore of well-known foreign arbitrators. I understand, for example, that when foreign arbitrators come to Singapore, they are uncertain about the tax position and some of them have expressed unhappiness over the red tape encountered, especially with reference to withholding tax. Could the Minister of State assure the House that steps will be taken to smoothen the process of admitting foreign arbitrators to Singapore so that with the new regime of rules and practices, Singapore can continue to be a good base for international arbitration as well?

With that, I support the Bill, Sir.

Assoc. Prof. Ho Peng Kee: Sir, once again, I thank Prof. Chin for his comments and support of the Bill.

Sir, his first point is the attractiveness of the centre, in particular when parties are in dispute, and one of the parties is a non-Singaporean party. I think that has to do with two areas. The first will be the quality and integrity of the panel of arbitrators. This is because SIAC that forms these two lists of arbitrators stands by the reputation of these arbitrators. If Prof. Chin looks at the list of arbitrators, he will see that they comprise men of good professional standing, proven expertise not just in the legal field but also in other fields, and that also goes to say for the other list of international arbitrators. So I think the track record is important. People who have done arbitration in Singapore must feel good about what they have experienced and then word can get around. And I think the numbers that have increased over the years do show that the SIAC has built up a track record.

The other point is, of course, on how the centre is run. As I have said, I think it must be well run. So here we have got a former High Court Judge who heads the centre, working with a team of very committed people. Also, it is not linked, for example, to the Government, because that is also an issue, especially if one of the contracting parties is the Singapore Government. We also want parties to such contracts to consider Singapore as a venue for arbitration. This, of course, has been helped by what we did in August 1999 when previously the SIAC was organised and came under the auspices of the Trade Development Board, which is a statutory board under MTI. This is not to say that at that time, there was any wrongdoing, but more in terms of perception and holding out. At that time, we switched it and now it comes under the Singapore Academy of Law, which all of us know is an institution of high standing and of repute overseas. So that is the first point.

The other point, of course, is again part of this process I have talked about earlier on, how to always consider requests and ways in which we can make Singapore more attractive. On the point of tax that Prof. Chin has asked, what MinLaw has done is that we have asked Ministry of Finance to consider whether if there is any situation where foreign arbitrators who come to Singapore as arbitrators may be in a disadvantaged position, vis-a-vis their tax liability. We should look at it and see whether there are grounds and, if so, how we can ameliorate it.

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.