Public Consultation on Proposed Amendments to the International Arbitration Act and Proposed Enactment of the Foreign Limitation Periods Act

20 Oct 2011 Posted in Press releases

1. Introduction

1. Singapore has become a global venue for arbitration. In 2010, a Queen Mary University study concluded that Singapore is Asia’s top arbitration destination.

2. As part of the Ministry of Law’s (MinLaw) continuing effort to maintain a world-class legislative framework for arbitration, the ministry is proposing another review to its International Arbitration Act. ¹ Closely related to the review is the proposal to enact a Foreign Limitation Periods Act.

3. International Arbitration Act (IAA) . The IAA provides the framework of rules that governs the conduct of international arbitrations in Singapore. The proposed amendments will enhance Singapore’s status as an arbitration hub by expanding the scope of arbitral tribunals’ jurisdiction and powers. They arise from recommendations received from various fronts, including the Law Reform Committee ² and our arbitration community.

4. Foreign Limitation Periods Act (FLPA). The proposal to enact the FLPA arises from recommendations made by the Law Reform Committee. The proposed FLPA will clarify the applicable rules of limitation for legal disputes. The new framework will apply to both arbitration and court proceedings.

2. Proposed Amendments to the IAA

5. The proposed amendments to the IAA are to:
   1. Relax the current requirement that arbitration agreements be in writing (the writing requirement);
   2. Allow Singapore courts to review rulings by arbitral tribunals that these tribunals do not have jurisdiction to hear the dispute (negative jurisdictional rulings);
   3. Clarify the scope of arbitral tribunals’ powers to award interest in arbitral proceedings; and
   4. Provide legislative support for the appointment of “emergency arbitrators” before the arbitral tribunal hearing the dispute is properly constituted.

1. Relaxation of the Writing Requirement

6. Singapore’s IAA currently only recognises arbitration agreements that are made in writing. MinLaw has received feedback that this requirement does not accord squarely with commercial reality, as arbitration agreements are often concluded orally, and put into writing later.

7. MinLaw’s proposed amendments will extend the IAA’s application to arbitration agreements concluded by any means (orally, by conduct or otherwise), as long as their content is recorded in any form. For instance, an arbitration agreement made orally, but subsequently documented through an audio recording, will now fall within the scope of the Act. This amendment adopts one of the two options proposed by UNCITRAL in the revisions to its Model Law in 2006.

2. Review of Negative Jurisdictional Rulings

8. Singapore’s IAA currently does not permit a Singapore court to review negative jurisdictional rulings made by arbitral tribunals (i.e. rulings by the tribunals that it has no jurisdiction to hear the dispute). In contrast, however, our courts are able to review positive jurisdictional rulings made by arbitral tribunals (i.e. rulings by tribunals that they have jurisdiction to hear the dispute).

9. This differential treatment of negative and positive jurisdictional rulings has been criticised by practitioners and academics. A recent Law Reform Committee report proposing reform of this area noted that “there is overwhelming support in the industry for the proposals [to permit review of negative jurisdictional rulings]”. 3 Inequity is just as likely to arise from a negative jurisdictional ruling that is erroneously made, as from an erroneous positive jurisdictional ruling.

10. MinLaw’s proposed amendments seek to rectify this inconsistency by allowing parties to have recourse to Singapore courts in respect of both positive and negative jurisdictional rulings.

3. Arbitral Tribunals’ Powers to Award Interest

11. Singapore’s IAA currently does not clearly define the scope of arbitral tribunals’ powers to award interest.

12. MinLaw’s proposed amendments will clarify the scope of these powers. In particular, the amendments will expressly prescribe that an arbitral tribunal has the power to grant simple or compound interest on: (a) monies claimed in arbitrations, and (b) orders for one party to pay the other party’s legal costs.

4. Legislative Support for the “Emergency Arbitrator” Procedure

13. At times, parties to a dispute require urgent relief, even before the arbitral tribunal over the dispute is constituted. In view of this, the Singapore International Arbitration Centre (SIAC) recently introduced an “emergency arbitrator” procedure that provides for the appointment of an interim arbitrator pending the constitution of the actual tribunal.

14. MinLaw’s proposed amendments seek to clarify the status of orders made by such “emergency arbitrators” (whether appointed under the SIAC rules or the rules of any other arbitral institution). The amendments will ensure that such orders are enforceable under our IAA regime.

3. Proposed Enactment of the FLPA

15. MinLaw is also proposing the enactment of the FLPA. The main aim of the Act is to clarify the issue of which country’s limitation laws apply to disputes that are litigated in Singapore (either in court or through arbitration), but which are governed by the law of another jurisdiction.

16. This may occur, for instance, in a contractual dispute where parties decide to litigate in Singapore, but have chosen to have their contact governed by the law of another jurisdiction. In such cases, the question arises whether the applicable limitation law should be that of: (a) the foreign law governing the dispute, or (b) the law of the forum (i.e. Singapore).

17. In Singapore, this issue is currently governed by common law. In the Law Reform Committee’s recent report, the committee has highlighted that there is, at times, uncertainty as to which of these two sets of laws should apply. The Committee recommended that the rules of the law governing the dispute should apply.

18. MinLaw agrees with the Law Reform Committee’s recommendation. The amendment will clarify that the applicable limitation period will be the rules of the law that govern the dispute. This will not only apply to arbitrations, but also to disputes litigated in court.

19. MinLaw invites interested parties to provide their feedback on the consultation papers for the International Arbitration Act and the Foreign Limitation Periods Bill. The consultation period is from 21 October to 21 November 2011. The public can view the consultation papers and draft Bills at www.mlaw.gov.sg and http://www.reach.gov.sg/YourSay/EConsultationPaper.aspx. The feedback may be sent in electronic or hard copy form to:

Legal Policy Division

Ministry of Law

100 High Street

#08-02, The Treasury

Singapore 179434

Fax: 6332 8842

E-mail: MLAW_Consultation@mlaw.gov.sg

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^[1] The International Arbitration Act was last amended in 2009 by way of the International Arbitration (Amendment) Act 2009. Amongst other things, these amendments: (a) updated the definition of “arbitration agreement” to clarify that an arbitration agreement can be made by electronic communications; and (b) made express provision for the Singapore High Court’s power to order interim measures in aid of an international arbitration, irrespective of whether the place of arbitration is Singapore or elsewhere.

^[2] The Law Reform Committee of the Singapore Academy of Law makes recommendations on the need for legislation in particular areas or subjects of the law. The committee also examines different existing branches of the law with a view to reform, and makes recommendations to the authorities for the conduct of such reform. The committee is currently chaired by the Honourable Justice Philip Pillai, and its members comprise of practitioners, academics and legal service officers.

^[3] See Report of the Law Reform Committee on Right to Judicial Review of Negative Jurisdictional Rulings (January 2011) at para 14.

Annex 1: Foreign Limitation Periods Bill (0.1MB)
Annex 2: Foreign Limitation Periods Bill Public Consultation Brief (0.1MB)
Annex 3: International Arbitration (Amendment) Bill (0.3MB)
Annex 4: International Arbitration (Amendment) Bill Public Consultation Brief (0.2MB)

Last updated on 05 Feb 2013