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Recent developments in Singapore arbitration law

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Margaret Joan Ling
Allen & Gledhill, Singapore
margaret.ling@allenandgledhill.com

Serene Chee
Allen & Gledhill, Singapore
serene.chee@allenandgledhill.com

Recent developments in Singapore arbitration law

The Covid-19 pandemic has undoubtedly changed the way in which arbitration has operated in Singapore. Nevertheless, in spite of restrictions to physical attendance at hearings due to the pandemic, there have been considerable recent updates to arbitration-related case law in Singapore.

The latest arbitration-related decision rendered by the Singapore Court of Appeal on 29 October 2020 is BRS v BRQ and another and another appeal [2020] SGCA 108 (BRS v BRQ). In this case, the Court clarified the circumstances in which a request for correction of an arbitral award made under Article 33 of the UNCITRAL Model Law on International Commercial Arbitration (as adopted by the United Nations Commission on International Trade Law on 21 June 1985) (the Model Law) would trigger an extension of the three-month time limit for bringing an application to set aside the award under Article 34(3) of the Model Law. The Court of Appeal considered that the phrase ‘if a request had been made under Article 33’ under Article 34(3) of the Model Law required the substance of a request under Article 33 of the Model Law to come within the scope of the relevant Article 33 provision, in order for the request to have the effect of extending the time limit under Article 34(3). On this basis, the respondent’s application to set aside the award was held to be time-barred as its request purportedly to correct the award was not, in substance, a request under the scope of Article 33. This was the first time that the apex court in Singapore considered such an issue.

While the Court of Appeal recognised that there would be less certainty if only requests that were in substance requests under Article 33 would qualify to extend the time under Article 34(3) of the Model Law, the Court also emphasised that Article 33 is an exception to the initial time limit in Article 34(3) of the Model Law. It would also be ‘incongruous and an abuse’ of Articles 33 and 34 if a party could claim that its request for correction comes within Article 33 provided its terms state that it is made under the relevant provision in Article 33, even though in substance it is clearly nothing of the sort.[1] This would render the specification of the types of requests under Article 33 ineffectual.[2]

Another notable decision is ST Group Co Ltd and others v Sanum Investments Ltd and another appeal [2020] 1 SLR 1, in which the Court of Appeal held that once an arbitration was wrongly seated, in the absence of waiver of the wrong seat, any award that ensued should not be recognised and enforced by other jurisdictions because such an award had not been obtained in accordance with the parties’ arbitration agreement. This decision illustrates the courts’ commitment to uphold unequivocally the principle of party autonomy that is fundamental to arbitration agreements, thereby promoting certainty in arbitration. Given this ruling, it is all the more important that the seat of arbitration is clearly set out in any arbitration agreement.

In the cases of BNA v BNB and others [2020] 1 SLR 456 and BNA v BNB and another [2019] SGHC 142, the Singapore courts deliberated on the proper interpretation of the phrase ‘for arbitration in Shanghai’ in an arbitration agreement. The issue before the courts was whether the arbitral tribunal appointed by the Singapore International Arbitration Centre (SIAC) lacked jurisdiction to hear the dispute on the ground that Shanghai was to be the seat of the arbitration instead. The High Court observed that the law of the arbitration agreement would generally be the same as the law of the underlying agreement if the former were unspecified. However, while the underlying agreement on the facts was governed by the law of the People’s Republic of China, the High Court held that the arbitration agreement was governed by Singapore law, taking into account, inter alia, Rule 18.1 of the Arbitration Rules of the SIAC (5th ed 2013) (the SIAC Rules 2013) which expressly provides that in the absence of a contrary agreement by the parties or a contrary determination by the tribunal, the seat of any arbitration under the SIAC Rules 2013 is to be Singapore.[3] The High Court regarded the phrase ‘arbitration in Shanghai’ as merely being a selection of the venue for hearings, not the seat of the arbitration.[4] In making its decision, the High Court further considered that the arbitration agreement may be rendered invalid if it were governed by the law of the People’s Republic of China.[5]

This decision was however overturned by the Court of Appeal. In finding that the phrase ‘for arbitration in Shanghai’ held on its face the natural meaning that Shanghai was the seat of the arbitration, the Court of Appeal emphasised that Singapore’s pro-arbitration policy is subject to limits. The Court of Appeal highlighted that ‘arbitration agreements, despite the best of intentions of the parties, can at times be invalid for any one of a variety of reasons’, and that ‘it does not follow that the parties’ manifest intention to arbitration must always be given effect to come what may’.[6] Furthermore, Rule 18.1 of the SIAC Rules 2013 did not apply because the phrase ‘arbitration in Shanghai’ constituted the parties’ agreement that Shanghai was to be the seat of arbitration.[7] Shanghai was therefore the seat of the arbitration, regardless of whether such a finding would mean that the tribunal had no jurisdiction to determine the dispute between the parties.

On 28 May 2020, the Singapore Court of Appeal also rendered its decision in BBA and others v BAZ and another appeal [2020] 2 SLR 453. One of the issues that the Court considered was whether it was entitled to undertake a de novo review of the tribunal’s decision on whether a claim was time-barred under the Indian Limitation Act. The Court drew a distinction between decisions on jurisdiction (being the power of the tribunal to hear a case) and decisions on admissibility (being the appropriateness of a tribunal to hear a case). The significance of this distinction is that decisions of the tribunal on jurisdiction can be reviewed de novo by the supervisory courts at the seat of the arbitration, whereas a decision of the tribunal, having jurisdiction, on admissibility cannot. The Court then laid out a ‘tribunal versus claim’ test for the purpose of making this distinction. In essence, the test questions whether the objection is targeted at the tribunal or at the claim.[8] Ultimately, the Court held that issues of statutory limitation go towards admissibility and therefore cannot be reviewed de novo by the court.

This distinction was also applied by the Court of Appeal in the subsequent case of BTN and another v BTP and another [2020] SGCA 105. In this case, the appellants applied to set aside an arbitration award on the grounds that it was contrary to the pro-arbitration public policy of Singapore. The appellants’ reasoning was that it could not litigate on a vital component of their defence because of the tribunal’s decision that it was res judicata. The Court of Appeal considered that the tribunal’s decision on issues of res judicata went towards admissibility and not jurisdiction because an argument on res judicata is not about having the dispute be resolved in a different forum, but about not having the claim resolved in any forum. On this basis, the courts cannot review such a decision on its merits, and the setting aside application was dismissed.

Finally, in China Machine New Energy Corporation v Jaguar Energy Guatemala LLC and another [2020] 1 SLR 695, the Court of Appeal clarified that a party’s right under Article 18 of the Model Law to a ‘full opportunity’ of presenting its case is not unlimited. Despite the use of the unqualified modifier ‘full’ under Article 18, a tribunal is only required to give each party a reasonable opportunity to present its case.

Apart from the above developments to arbitration-related case law in Singapore, in 2020 amendments were been introduced to the Singapore International Arbitration Act (Cap 143A) (the IAA). The amendments introduce two out of four proposals put forward for public consultation in 2019. These amendments are: first, to introduce a default mode of appointment of arbitrators in multi-party situations where the parties’ agreement does not specify the applicable procedure; and second, to provide explicit recognition of the powers of the arbitral tribunal and the High Court to enforce obligations of confidentiality, by making orders or giving of directions, where such obligations exist. The amendments, which aim to strengthen Singapore’s arbitration legislative framework for international arbitrations, came into force on 1 December 2020.

 


Notes

[1] BRS v BRQ, at 68-70.

[2] BRS v BRQ,at 70.

[3] BNA v BNB and another [2019] SGHC 142, at 104-110.

[4] BNA v BNB and another [2019] SGHC 142, at 109.

[5] BNA v BNB and another [2019] SGHC 142, at 116-117.

[6] BNA v BNB and others [2020] 1 SLR 456, at 2.

[7] BNA v BNB and others [2020] 1 SLR 456, at 64-65.

[8] BBA and others v BAZ and another appeal [2020] 2 SLR 453, at 76-77.