Amendments to Singapore's arbitration laws

The Government of Singapore has recently passed an International Arbitration (Amendment) Bill and a Foreign Limitation Periods Bill.  These measures reflect Singapore's continuing efforts to fine tune its arbitration laws and maintain its position as one of the world's leading international arbitration forums.  In this post, we provide an overview of the changes and consider their practical impact.

Background to the changes

The Ministry of Law began a one month public consultation on 21 October 2011, seeking feedback on proposed amendments to the International Arbitration Act ("IAA") and the enactment of a new Foreign Limitation Periods Act.  The consultation period closed on 21 November 2011 and the Ministry commented that the feedback received was "mostly in favour of the amendments put forwards in both Bills".  The Bills were introduced in Parliament on 8 March 2012 and were passed on 9 April 2012.

A summary of the legislative changes is set out below.

The International Arbitration (Amendment) Bill 2012 ("IA(A) Bill")

The amendments to the IAA made by the IA(A) Bill focus on four areas of reform:

1. Relaxation of the current requirement that arbitration agreements be in writing

The definition of "arbitration agreement" in the IAA has been broadened to include arbitration agreements concluded by any means, as long as they are recorded then or subsequently in any form.  The amended definition would encompass, for example, arbitration agreements concluded orally or by conduct and later recorded in writing, or by email or by audio recording. The change is intended to bring the legislative regime into line with commercial reality.

2. Review of negative jurisdictional rulings

Under the previous framework, the Singapore courts were only entitled to review an arbitral tribunal's ruling on jurisdiction where that ruling is positive (i.e. where the tribunal decides that it has jurisdiction). The courts have now been given a similar power to review a tribunal's decision to refuse jurisdiction, no matter whether the tribunal has refused jurisdiction at the outset of the proceedings or at any stage thereafter.

The amendments also confirm that tribunals and courts have power to make costs orders against any party when ruling that the tribunal does not have jurisdiction.  This negates concerns that a negative ruling on jurisdiction implies a consequent lack of power to make a related costs award.

3. Arbitral tribunals' powers to award interest

Previously, the scope of the tribunals' powers to award interest was not clearly defined under the IAA, but it has now been clarified that tribunals have the power to award simple or compound interest on the principal amounts claimed and on amounts awarded in respect of costs.

The amendments also make clear that sums payable under awards will carry interest from the date of the award at the rate prescribed for judgment debts, unless the award otherwise directs.

4. Emergency arbitrator procedure

In certain circumstances, parties may require urgent relief prior to the formal constitution of an arbitral tribunal. The amendments to the IAA follow the Singapore International Arbitration Centre's recent lead in providing for the appointment of an interim emergency arbitrator pending the appointment of the permanent tribunal.  To ensure that the emergency arbitrator procedure is effective, the definition of "arbitral tribunal" has been amended to include emergency arbitrators, thus giving the latter the same legal status and powers as arbitral tribunals appointed under standard procedures, and ensuring that their orders are enforceable through an appropriate amendment to the definition of "arbitral award".

Finally, consequential amendments have also been made to the domestic arbitration law, the Arbitration Act (Cap. 10), to reflect the substance of the changes described above.

The Foreign Limitation Periods Act ("FLP Act")

The FLP Act clarifies which country's limitation laws will apply to disputes which are heard in Singapore (whether in litigation or arbitration) but which are governed by the laws of another jurisdiction.  It provides that in such cases, limitation will be determined by the laws that govern the substantive dispute.  Where, for example, a contractual dispute is initiated in Singapore in relation to a contract governed by the laws of England, the FLP Act provides that the applicable limitation period will be determined by English law as the law that governs the dispute, rather than by the laws of Singapore.

This rule is subject to two exceptions. The first is where its application would conflict with public policy. The Act explains that a conflict with public policy would arise where the application of the rule "would cause undue hardship to a person who is, or might be, a party to the action or proceedings".  The second exception stipulates that where the law of the relevant foreign jurisdiction provides for extension or interruption to a limitation period during the absence of a party to the proceedings from any specified jurisdiction, that part of that law shall be disregarded for the purposes of the proceedings in Singapore. The FLP Act disapplies this exception where it would conflict with public policy or cause undue hardship to a party to the action.

Whilst the Ministry of Law acknowledged that the amendments to the IAA are not without controversy, it believes the changes will make Singapore's arbitration legislative framework "even more arbitration friendly" and, coupled with the clarifications to limitation legislation, "will ensure that Singapore remains an attractive venue for international arbitrations".