SIAC Investment Arbitration Rules

The Singapore International Arbitration Centre (SIAC) has announced the release of its Investment Arbitration Rules (the Rules), which came into force on 1 January 2017.  This release follows the earlier public consultation in February 2016, when practitioners were invited by SIAC to review and comment on the draft of the Rules.

The Rules are the first of a kind. While private arbitral institutions often administer both commercial and investment arbitration, such as the ICC or the Stockholm Chamber of Commerce, SIAC is the first private institution to introduce a specific set of arbitration rules for investment arbitrations.  In creating a dedicated set of rules, SIAC has adopted innovative approaches to address some of the key procedural issues commonly encountered in investment arbitration.  

Carefully tailored to the reality of treaty arbitration

Recent studies suggest that ICSID arbitrations can take approximately 3 to 4 years to complete, from commencement of arbitration until a final award is rendered,[1] compared to 12 to 18 months for a SIAC commercial arbitration.[2] 

The SIAC investment arbitration rules have clearly been devised to address some of the most common procedural issues which arise during ICSID arbitrations. For example:

• The rules expressly permit the presiding arbitrator to make procedural rulings alone unless otherwise agreed (Rule 16.5).
• The tribunal is expressly allowed to appoint its own experts unless otherwise agreed (Rule 23).
• Rule 17 specifies that submissions will be prepared in a "memorial-style" (i.e. pleadings, expert reports and witness statements filed at the same time) rather than "pleadings style" (where expert reports, evidence and witness statements are exchanged at a later date).

Addressing these sorts of issues directly in the rules may help to limit some of the traditional procedural wrangles that take place between the parties before the production of the first procedural order in ICSID and UNCITRAL proceedings.

From an investor's perspective, the inclusion of an express sovereign immunity waiver clause at Rule 1.3 will also be considered helpful, although it does not extend to immunity from execution.

To help improve efficiency in SIAC investment arbitrations, the Rules also include the following provisions:

• Appointments of arbitrators (Rules 6 and 7) – Strict time limits are imposed by the rules on the appointment of arbitrators to prevent a party using delay tactics during the constitution of the tribunal.
• List Procedure for the Appointment of Arbitrators (Rule 8) – The SIAC Court will be more actively involved in the appointment of arbitrators by compiling a list of candidates for the tribunal based on the parties' views on the qualifications of the arbitrators.
• Challenges to arbitrators (Rules 11 to 13) – Similar to the appointment of arbitrators, strict timelines on challenges to arbitrators are built-in to the Rules, which mirror the SIAC commercial arbitration rules.
• Early dismissal (Rule 26) – Parties can avail themselves of a procedure for early dismissal of claims and defences if any claim or defence is: (a) manifestly without legal merit; (b) manifestly outside the jurisdiction of the Tribunal; or (c) manifestly inadmissible.  This provision mirrors the SIAC arbitration rules and is similar to ICSID Rule 41(5) (introduced in 2006) which permits dismissal of claims on similar grounds.

Involvement of non-disputing Parties

Investment arbitrations may involve consideration of public interest issues, in particular the extent to which the State can legitimately exercise its right to regulate in the public interest, which may be inconsistent with private rights. Accordingly, non-disputing party submissions are potentially a factor in investment arbitration, albeit the basis for intervention by non-disputing parties is not settled in investment arbitration law. Rule 29 therefore set out explicit provisions regarding written submissions, and potentially oral argument, from non-disputing state parties to the investment treaty, or unconnected third parties.

Third-party funding

Third-party funding is becoming more common in international arbitration, including in investment arbitrations.  Indeed, Singapore recently introduced legislative changes to permit third party funding for arbitration (see our previous blog post here). 

An important consideration in third-party funded cases is whether details of a party's funding arrangements should be disclosed to the other party and the Tribunal.  In the past, ICSID tribunals have ordered disclosure of the existence and details of a party's third-party funding arrangements, relying on their inherent powers, rather than any rules expressly dealing with this issue, in cases said to involve potential conflicts of interest.  In contrast, SIAC has chosen to include an express power for the Tribunal to order the disclosure of third-party funding arrangements and to take such arrangements into account when apportioning costs (Rule 24). Rule 31 also allows the Tribunal to take into account a third-party funding arrangement in apportioning costs. Interestingly, a "Third-party funding arrangement" is not a defined term in the rules, and it remains to be seen how this provision is interpreted; i.e. whether this will extend only to arrangements with formal third-party funding providers, or whether it will capture arrangements with insurance companies, banks and others which achieve similar funding objectives.

Interim and Emergency Relief

The Rules provide for the availability of emergency arbitrators and for interim relief to be granted before the constitution of the Tribunal.  These provisions mirror those in the SIAC commercial arbitration rules and provide additional avenues of recourse to parties in the circumstances where relief may not otherwise be available prior to the appointment of the Tribunal.

Confidentiality

The rules contain a reference to the parties' "right to confidentiality" in Rule 29.3(c) and confidentiality is expressly addressed in Article 37. 

Comment

SIAC's introduction of an independent set of rules specifically targeted at investment arbitration reflects Singapore's growing status as a hub for dispute resolution. 

The Rules have very clearly benefited from being drafted by those with experience of the practical reality of acting as both counsel and arbitrator in investment arbitrations, resulting in some provisions which mirror the procedure adopted by many (but not all) tribunals in their first procedural orders for investment arbitrations (such as memorial-style pleadings and the ability for the presiding arbitrator to make procedural rulings alone) and which can cause much debate between the parties at an early stage. The powers given to the Tribunal and the clarity given to issues like interim relief are to be welcomed. 

It may take some time for a body of practical experience to build up over how these Rules will operatre in practice. From the introduction and definitions used, it appears these Rules will only apply to claims where the parties have expressly agreed to apply them. Going forward, we may see new investment treaties providing for the SIAC Investment Arbitration Rules, but in the meantime, only express agreement by the parties will allow their application. The caseload will therefore be limited in the short to medium term.

The Rules provide an efficient and contemporary framework for the conduct of investment arbitration and strengthen SIAC's current standing as a leading international arbitration centre.  As investment arbitration continues to grow, the Rules may act as a catalyst for more diversity in the institutions administering investment arbitrations.

For further information, please contact Alastair Henderson, Partner, Laurence Shore, Partner, Dominic Roughton, Partner, Christian Leathley, Partner, Andrew Cannon, Partner, Iain Maxwell, Of Counsel, Daniel Waldek, Senior Associate, Louise Barber, Associate, Philip Kim, Associate or your usual Herbert Smith Freehills contact.