In 2021, the Singapore International Arbitration Centre was ranked as the most preferred arbitral institution in the Asia-Pacific and second worldwide.
This is no mean feat given that there has been stiff competition among the major arbitration hubs in the region since the early 2000s, with frequent comparisons being drawn between the SIAC and other institutions such as the Asian International Arbitration Centre, the Hong Kong International Arbitration Centre and the Korean Commercial Arbitration Board.
How does the SIAC distinguish itself from its sibling institutions in the region?
Like many of major arbitration hubs in Asia, Singapore has long been known for pro-arbitration laws and a judicial policy of minimal curial intervention, and the Singapore courts have constantly reiterated the high threshold for setting aside arbitration awards.
However, the SIAC also benefits from Singapore’s reputation as a ‘stable’ or ‘neutral’ place to conduct cross-border business in politically fraught times, particularly for transactions between Asian and Western entities. Given increasingly fraught US-China relations, the SIAC is often seen as a preferable alternative to competitors such as the HKIAC which are (sometimes unjustifiably) associated with the political turmoil of their geographical location. This perceived neutrality also makes Singapore and the SIAC a natural forum choice for investor-state disputes.
This effect can also be observed in the proliferation of technology companies relocating headquarters to Singapore and using Singapore law as the governing law of their contracts. Such corporate relocations naturally redirect more cross-border disputes to the SIAC, and contribute to the SIAC’s image as a reliably unobjectionable venue for dispute resolution. The growing number of Web 3.0 companies in Singapore contributes also towards raising the profile of Singapore legal practitioners as experts in such fields, increasing the attractiveness of Singapore as a forum in which related disputes can be heard.
Currently, an additional advantage of arbitrating in Singapore is its thus-far fairly consistent approach to dealing with the ongoing effects of the COVID-19 pandemic: whereas other jurisdictions in Asia have experienced returning lockdowns, Singapore has recently re-opened its borders and removed most restrictions.
Multi-Nationalism and Expertise
However, the SIAC has not been content to rely solely on the advantages of its geographical position. The SIAC panel of arbitrators has over 100 different arbitrators from more than 25 different jurisdictions, and the SIAC is capable of administering arbitrations in a broad variety of languages including Bahasa Indonesia, Chinese, French, Hindi, Korean, Russian and Tagalog.
In 2021, the SIAC’s foreign users originated from 64 different jurisdictions, chief among them being India, China and the USA closely followed by Vietnam, South Korea and the Ukraine. In an effort to broaden its reach, the SIAC maintains representative offices in New York, Seoul, Mumbai and Shanghai in order to promote the SIAC’s services and ensure real-time access to users in these time-zones.
Modernisation of Arbitration Rules
The SIAC keeps abreast with arbitration trends. The 2016 edition of its rules has been updated to include cost-saving and globally-recognised ‘best practices’ such as procedures for early dismissal, consolidation and joinder, as well as expedited and emergency protocols.
An innovation unique to the SIAC is the “Arb-Med-Arb” Protocol, an alternative to traditional tiered dispute resolution clauses. Under the Protocol, disputes initiated in the SIAC are referred to the Singapore International Mediation Centre (SIMC) for a round of mediation before an independent mediator. If the mediation does not result in a settlement agreement within 8 weeks, the arbitral tribunal resumes conduct of the arbitration proceedings. If a settlement agreement does eventuate, it can be recorded as a consent award enforceable under the New York Convention.
This offers a structured alternative to traditional tiered dispute resolution protocols or other Med-Arb clauses, which are often used in joint-venture agreements in which parties want to commit upfront to a confidential and amicable mode of dispute resolution.
The problem with self-designed tiered dispute resolution clauses is that the logistics of progressing through the tiers are left to the parties to figure out after the dispute has occurred and co-operation is difficult. It is not uncommon for combative litigants to seek to derail proceedings by alleging that a tiered dispute resolution clause has not been duly observed. An additional challenge is that generic Med-Arb clauses sometimes envisage the same individual acting as both mediator and arbitrator in respect of the same dispute – while cost-efficient, the conflation of the two roles could lead to a perceived compromise of the Without Prejudice nature of mediation that parties typically enjoy, which could in turn prejudice the integrity of the resulting arbitral award.
The AMA Protocol helps to avoid these problems by getting the SIAC and SIMC are involved in the administration of the dispute from Day One, ushering the parties through the various stages of the protocol. While the mediation is initiated almost immediately after the arbitral tribunal is constituted, there is a clear delineating between the mediation (which is administered by the SIMC) and the arbitration proceedings (administered by the SIAC), preserving the integrity of both processes.
Conditional Fee Arrangements and Litigation Funding
In 2017, Singapore introduced a framework for third-party funding in international arbitration and related proceedings (this has since been extended to domestic arbitration proceedings). From 4 May 2022, lawyers and law practices in Singapore are also now able to enter into conditional fee arrangements in relation to international and domestic arbitration proceedings, among others.
It is still too early to tell how far the liberalisation of the costs regime will entice commercial parties to elect to arbitrate their disputes in the SIAC. However, the availability of alternative fee structures and financing is certainly an added point in Singapore’s favour as a forum for arbitration; parties have more options for how they manage their fee budgets and litigation risks.
With a CFA, the costs of pursuing a claim would no longer seem to be as prohibitive, while the possibility of litigation funding enables parties to proceed with meritorious claims with lower costs exposure. Savvy legal counsel would be slow to discount these options when drafting dispute resolution clauses.
Competing jurisdictions are certainly not far behind; Hong Kong is considering a broader reform allowing for a wider range of outcome-related fee structures in arbitration and related proceedings. The proposed reform, once adopted, would allow Hong Kong practitioners to offer not only conditional fee arrangements, but also damages-based agreements and other hybrids.
Conclusion
In sum, the SIAC’s prolonged success as an arbitration venue is attributable to many co-existing factors, including the SIAC’s constant evolving to keep up with arbitration trends and the specific needs of its users. In line with this theme, one hopes that the SIAC will be able to capitalise on its prominence and continue introducing further innovations to the arbitration process, as opposed to merely adopting trends.
