Knowledge Highlights 22 October 2020
On 5 October 2020, the International Arbitration (Amendment) Bill (“Bill”) was passed in Parliament. The Bill proposes amendments to the International Arbitration Act (“IAA”) aimed at enhancing Singapore’s status as an international commercial arbitration hub and strengthening the legal framework for international arbitration. The IAA was last amended in 2012.
Rationale for amendments to IAA
In his second reading speech, Second Minister for Law Edwin Tong noted that over the years, the Government has made significant efforts to strengthen Singapore’s position as a premier international legal services and dispute resolution hub, capitalising on Singapore’s geographical position and strong adherence to the rule of law to grow these services. He went on to state that, in international arbitration, Singapore has:
- a comprehensive legal infrastructure that supports and intensively promotes arbitration alongside a robust and effective legal system;
- enhance its laws to constantly improve the system and meet the needs of the end user; and
- a first class judiciary that is supportive of arbitration as a dispute resolution mechanism.
Mr Tong also stated that the arbitration landscape is constantly evolving and that Singapore must be ever-alert to changing needs, and continue to improve Singapore’s value propositions as a hub for international commercial arbitration.
In 2019, the Ministry of Law (“MinLaw”) conducted a broad public consultation on a number of proposals to improve and to enhance the IAA. The Bill introduces two of four amendments that were considered:
- A default mechanism for the appointment of arbitrators in multiparty situations; and
- Recognition that the arbitral tribunal and the High Court have the power to enforce confidentiality obligations in an arbitration.
The remaining proposals which were considered in the public consultation are still being studied and evaluated by MinLaw.
1. Default mode of appointment of arbitrators in multi-party situations
The IAA currently provides for default appointment of a three-member arbitration tribunal in situations where there are two parties to a dispute (i.e., one claimant and one respondent). It does not address situations where there are more than two parties involved in the dispute (“multi-party arbitrations”).
The Bill therefore seeks to introduce a default mode of appointment of arbitrators in multi-party arbitrations where the parties’ agreement does not specify the procedure for such appointments. It sets out the processes and timeframes that should be adopted by claimant(s) and respondent(s) in appointing a three-member arbitration tribunal.
Mr Tong noted in his speech that this amendment was necessary because of the increasingly complex and diverse nature of contracts means that more often than not, disputes are multi-party in nature. Where there are multiple parties, they may not be able to collectively agree on an arbitrator. Clause 3 of the Bill introduces a new section 9B to the Act, to provide for the default procedure for the appointment of arbitrators in multi-party arbitrations. It will apply where there are three or more parties and three arbitrators. The default procedure will only apply where parties have not agreed on a procedure for the appointment of the arbitrators.
Introducing a default mode of appointment in multi-party arbitrations will reduce potential delay in the conduct of arbitration proceedings. With the amendment, the parties’ failure to agree on joint nominations or indeed their refusals to agree will not prevent the arbitral tribunal from being constituted expeditiously.
2. Recognising that an arbitral tribunal and the High Court have the power to enforce obligations of confidentiality in an arbitration
The IAA provides that, unless parties otherwise agree, the parties and the arbitral tribunal have a duty of confidentiality under the common law not to disclose confidential information obtained in the course of the proceedings or use them for any purpose other than the dispute.
In recognition of the importance of confidentiality to arbitration, the Bill provides explicit recognition of the powers of the arbitral tribunal and the High Court to enforce obligations of confidentiality, by making orders or giving of directions, where such obligations exist. The Bill does not codify obligations of confidentiality but seeks to strengthen parties’ ability to enforce existing obligations.
The amendment recognises that confidentiality is an important attribute of arbitration, and that the common law is still developing as to the precise extent of the obligation - in other words, whom it should bind, and the exceptions, if any, to the rules.
Mr Tong noted that confidential information obtained in arbitration proceedings is protected from disclosure or use for any other collateral purpose, that is not the purposes for which the information was obtained, which is the arbitration. The scope and content of such a duty might differ. The courts, over several decided cases, have recognised that, in the absence of an express agreement between the parties regarding the existence and scope of a duty of confidentiality, parties to the arbitration have an implied duty of confidentiality.
At the same time, the courts have also commented that there ought not be any generalisations of what the duty of confidentiality would encompass. A distinction has to be drawn between different types of confidentiality attaching to different types of documents, or the evidence that has been obtained in these proceedings. So, for example, arbitration awards may be treated differently from the underlying materials used, or disclosed in the course of arbitration proceedings. This duty is not absolute, and the extent to which the duty is preserved will depend on the individual circumstances.
More information on these amendments can be found in our earlier Alert on the Bill titled “Proposed amendments to International Arbitration Act to strengthen arbitration framework in Singapore”.