Speech by Mr. Louis Ng Kok Kwang, MP for Nee Soon GRC, at the Second Reading of the International Arbitration (Amendment) Bill(Bill No. 29/2020)
Sir, Singapore has emerged as one of the leading hubs for international arbitration in recent years. In 2019, the Singapore International Arbitration Centre set a new record with 479 new case filings and parties from over 59 jurisdictions chose Singapore as their destination for arbitration.
The amendments in this Bill will further strengthen our international arbitration regime and raise Singapore’s profile as a global centre for international arbitration.
Parties who require arbitration services will also have access to a wider range of options best tailored to their needs.
That said, I have a few clarifications on the Bill.
Default mode of arbitrator appointment in multi-party situations
My first clarification is on the default mode of appointment of arbitrators in multi-party arbitration.
It is good that we recognise that we need to provide for the appointment of arbitrators in multi-party disputes, which is on the rise. They occur, for instance, in disputes involving joint ventures, mergers, and oil and gas acquisition.
The new Section 9B details the default mode of appointment for multi-party situations. There is some concern about point 4 of this Section, which states: “if either the claimant(s) or the respondent(s) fail to appoint an arbitrator, the appointing authority must appoint all 3 arbitrators. The authority can also reappoint or revoke any appointment made.”
It is unclear why the failure of just one side to appoint an arbitrator means that the appointing authority must now step in to appoint all three arbitrators even if the other side managed to agree on their arbitrator.
Essentially, this means that failure to agree by one side, makes the agreement reached by the other side ineffective.
I do understand that it is common for arbitration institutions to require the appointing authority to appoint all 3 arbitrators if either the claimants or the respondents are unable to come to an agreement on an arbitrator.
However, there is a permutation on this model under Article 8.1 of the 2020 London Court of International Arbitration Rules. Where all parties have agreed in writing for each side to nominate a single arbitrator, but one side is not able to come to an agreement on a nomination, the other side is free to make its nomination.
Party autonomy is a significant feature of arbitration.
To ensure that parties’ agreement are given consideration, can Minister confirm that the appointing authority should take into account the agreement reached by parties on one side on their arbitrator when appointing the 3 arbitrators?
Codifying obligations of confidentiality
My second clarification is on the amendment to expressly recognise the powers of the arbitral tribunal and the High Court to enforce obligations of confidentiality.
This amendment is welcomed and will assist in tightening the process and preserving confidentiality of the proceedings.
That said, despite the express recognition, the Bill does not codify confidentiality obligations.
Given that one of the main draws of arbitration is the confidentiality of proceedings, and codifying confidentiality obligations will assist in reducing uncertainty and potential disputes over these obligations, can Minister clarify the reasoning behind deciding against codifying confidentiality obligations?
For a good example, we can take a look at the arbitration scene in Hong Kong.
The Hong Kong Arbitration Ordinance expressly provides for a statutory duty of confidentiality in arbitration.
Under Section 18(1) of the Arbitration Ordinance, unless agreed by the parties, no party may publish, disclose or communicate information relating to the arbitral proceedings and awards.
Notably, this confidentiality extends to the existence of arbitration proceedings. This position is also mirrored in Article 45.1 of the 2018 Hong Kong International Arbitration Centre Rules.
Hong Kong was ranked among the top five seats of arbitration worldwide in 2018, and still continues to have a lead over our own Singapore International Arbitration Centre in 2019.
We note that codifying confidentiality obligations may lead to some challenges. For instance, there may be difficulties in defining the scope of the duty of confidentiality and its exceptions.
However, such difficulties are already present in our current approach of implying the duty of confidentiality in arbitrations.
In fact, it is not uncommon for arbitration proceedings to be delayed because of parties disputing over their scope of implied duty of confidentiality. The delay reduces one of the main draws of arbitration – its efficiency.
I hope Minister will consider codifying confidentiality obligations, whether in the Act itself or in subsidiary legislation, this would encourage parties to arbitrate in Singapore.
Appeal on a question of law
My final clarification is on the exclusion of the proposed opt-in mechanism for parties to incorporate a right to appeal to the High Court, on a question of law arising out of an arbitral award.
Can Minister clarify the reasoning behind deciding against including the right to appeal on a question of law?
As things stand, parties may only apply to the High Court to set aside an arbitral award on relatively limited grounds. These grounds include fraud, corruption, breach of the rules of natural justice or contravention of Singapore’s public policy.
One of the key components of arbitration proceedings is finality. However, this should not be at the expense of leaving questions of law unresolved. This may potentially have significant impact on the substantive rights of parties.
Furthermore, the opt-in mechanism allows parties to choose to exercise this right or to rely on the default position. This adds to Singapore’s commitment in giving parties the flexibility to determine certain issues and procedures in their arbitral proceedings, as compared to court proceedings.
In fact, the right to appeal on a question of law has already been expressly recognised in our domestic arbitrations.
Section 49 of our Arbitration Act provides that a party to arbitral proceedings may, with the agreement of all parties and with the leave of the Court, appeal to the Court on a question of law arising out of an arbitral award.
Giving parties this option to have a right to appeal on a question of law may not only encourage more parties to arbitrate in Singapore, but also assist in determining case law in Singapore.
Sir, in conclusion, I look forward to Singapore increasing its global standing as a centre for international arbitration.
Notwithstanding my clarifications, I stand in support of the Bill.
If I may add Sir, I slowed down my speech significantly so that I didn’t deliver this speech in a quick fire fashion as Minister Edwin mentioned at last sitting about my speeches.
I took into account Minister Edwin previous feedback and so I hope that he will now agree to all my proposals in this speech. Thank you.
Watch the speech here
Watch the response here