DEVELOPMENTS IN ARBITRATION LAWS
| Author | CHAN LENG SUN |
| Date | 01 December 2002 |
| Published date | 01 December 2002 |
Parliament has introduced extensive changes to the arbitration of Singapore. This article discusses some salient features of the new legislation.
1 Singapore’s arbitration laws may be conveniently divided into two regimes: domestic and international. There is actually a third regime governing investment disputes between States and nationals of other States. This can be found in the Arbitration (International Investment Disputes) Act (Cap. 11), but may be disregarded for the purpose of our discussion on commercial arbitration in the private sector.
2 Domestic arbitrations have hitherto been governed by the Arbitration Act (Cap. 10) which was enacted in 1953 based on the English Arbitration Act 1950. The 1953 Act was amended from time to time, until its latest edition in 1985. It is now entirely replaced by the Arbitration Act 2001 (No. 37 of 2001).
3 International arbitrations are regulated by the International Arbitration Act (Cap. 143A).1
4 Parliament has introduced important changes to both the domestic and international regimes, while maintaining the dichotomy between the two.
5 The new Arbitration Act 2001 came into force on 1 March 2002.
6 The Act reflects current thinking, borrowing from the 1996 UK Arbitration Act as well as the Model Law. The Model Law has already been given the force of law in international arbitrations governed by the International Arbitration Act (“IAA”). The Review of Arbitration Laws Committee (“Review Committee”) has recommended that the legislative regimes applicable to domestic arbitration and international arbitration be harmonised, but kept separate. The primary purpose of the separation is to allow the courts a greater degree of curial supervision over domestic arbitrations.2
7 The Arbitration Act 2001 is logically laid out, starting with the arbitration agreement, through to jurisdiction, the proceedings and finally to the award and the role of the court. The parties’ right to decide for themselves how the arbitration is to be conducted is preserved to a large extent. This article will not attempt to discuss every provision of the legislation.3 Instead, it contains the author’s rather arbitrary (no pun intended) sampling of some salient features of the Act. The focus is on “external” rather than “internal” rules.4 As the Act was passed to harmonise domestic and international arbitration laws, many ideas incorporated into the Act are relevant to international arbitrations as well.
8 Every arbitration in Singapore must be governed by either the Arbitration Act 2001, or the IAA. Section 3 provides that “This Act shall apply to any arbitration where the place of arbitration is Singapore and where Part II of the International Arbitration Act (Cap. 143A) does not apply to that arbitration.”5 At its second reading in Parliament on 5 October 2001, the Minister of State for Law commented that Singapore law does not recognise the concept of a “delocalised” arbitration unconnected with any system of municipal laws.
9 The explanation of the Minister leaves open the question whether it is permissible to have an arbitration in Singapore governed by a foreign, e.g. English curial law.6 An arbitration governed by English law would not
be “unconnected with any system of municipal laws.” There is an important distinction between the curial law of a foreign State (i.e. the municipal law of a country which is not the seat of the arbitration), and a “law” unconnected with any system of municipal laws. The former is still connected with a system of municipal laws. The latter is not.
10 The Minister’s words echoed those of the Review Committee, and the traditionalist view espoused in cases such as Bank Mellat v Helliniki Techniki SA[1983] 3 All ER 428 where Kerr LJ held, at p. 431, that:
“Despite suggestions to the contrary by some learned writers under other systems, our jurisprudence does not recognise the concept of arbitral procedures floating in the transnational firmament, unconnected with any municipal system of law.”
11 The court, however, did not rule out the idea that the curial law need not be the law of the seat of arbitration, as long as it is the municipal law of another country. In Dallal v Bank Mellat[1986] 1 All ER 239, at p. 252, Hobhouse J held that:
“Whilst English law, like most foreign legal systems, may seek to exercise some measure of control over arbitration proceedings taking place in this country whatever their curial law, English law does not deny the possibility of a different curial law … There may be problems involved in the municipal law recognition as between private parties of proceedings which exist solely at a supra national level and have no relationship at all to any system of municipal law (see Bank Mellat v Helliniki Techniki SA[1983] 3 All ER 428 at 431; [1984] QB 291 at 301, per Kerr LJ). In the present case there are two systems of municipal law … which give validity to the arbitration proceedings. There is no reason in principle why that validity should not be recognised by the English courts.”
12 In Naviera Amazonica Peruana SA v Compania International de Seguros del Peru[1988] 1 Lloyd’s Rep 116, although the English Court of Appeal found that it would be unlikely for parties to provide for a curial law which was different from that of the seat of arbitration, they recognised that it was permissible in theory. Kerr LJ held at p. 120:
“There is equally no reason in theory which precludes parties to agree that an arbitration shall be held at a place or in country X but subject to the procedural laws of Y. The limits and implications of any such agreement have been much discussed in the literature, but apart from the decision in the instant case there appears to be no reported case where this has happened. This is not surprising when one considers the complexities and inconveniences which such an agreement would involve. Thus, at any rate under the principles of English law, which rest upon the territorially limited jurisdiction of
our Courts, an agreement to arbitrate in X subject to English procedural law would not empower our Courts to exercise similar jurisdiction over the arbitration in X …”
13 Channel Tunnel Group v Balfour Beatty Construction [1992] 2 All ER 609 demonstrated at once both the possibility and the limitations of having a curial law which is not the lex loci arbitri. In that case, the seat of the arbitration was Brussels but the curial law was English law. The English Court declined jurisdiction to grant an injunction over the defendants. At p. 623, the Court held that:
“Like Kerr LJ [in Naviera Amazonica Peruana SA v Compania Internacional de Seguros del Peru], I do not believe that an English Court has jurisdiction to exercise all the powers in the Arbitration Act 1950 in the case of an arbitration held abroad, even if the parties have agreed to English curial law. It may exercise some of them, for example, by staying court proceedings here, or by enforcing the award, as I have already mentioned. And in the converse case, where parties arbitrate here but agree on the procedural law of a foreign country, it seems to me that at least some of the powers conferred by the English Act could still be exercised …”
14 The judgment of the Singapore Court of Appeal in PT Garuda Indonesia v Birgen Air[2002] 1 SLR 393 gives some indication as to how difficult it would be to overcome the presumption that the curial law follows the seat of the arbitration. In that case, the Court held that the curial law must follow the place of arbitration, i.e. Indonesia. Nonetheless, the facts of that case did not require the Court to grapple with an express choice of a curial law which was not the law of the seat of arbitration. Naviera Amazonica Peruana SA, supra and Union of India v McDonnell Douglas Corpn[1993] 2 Lloyd’s Rep 48 were cited to the Court, but these cases involved rather more ambiguous provisions regarding jurisdiction and curial law and were distinguished on their facts.
15 Given the intention of the Arbitration Act 2001 to make either the Arbitration Act 2001 or the IAA compulsorily applicable in Singapore, it is doubtful that a choice of a foreign curial law would be permitted to oust the application of either Act. Parties may opt out of the IAA, but where this happens, the Arbitration Act 2001 steps in. It is of course permissible for parties to override specific procedures where the statutory provisions are expressly subject to their agreement to the contrary. However, it would be interesting to see how far, if at all, a court would uphold, say, a choice of English curial law, for an arbitration in Singapore.
16 The court has three choices. First, reject outright a choice of curial law which is not Singapore law. Secondly, the court may consider
Hobhouse J’s view in Dallal v Bank Mellat that the curial law of a tribunal may comprise of the laws of more than one municipal system. Saville J considered such a state of affairs “highly unsatisfactory” in Union of India v McDonnell Douglas Corpn[1993] 2 Lloyd’s Rep 48. Saville J’s solution is the third option that a Singapore court may look at. In that case, the parties had agreed that “The arbitration shall be conducted in accordance with the procedure provided in the Indian Arbitration Act 1940” but the seat was England. Saville J emphasised the importance of the seat. He held, at p. 51, that:
“… the parties have chosen English law as the law to govern their arbitration proceedings, while contractually importing from the Indian Act those provisions of that Act which are concerned with the internal conduct of their arbitration and which are not inconsistent with the choice of English arbitral procedural law.
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