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Second Reading Speech by Law Minister K Shanmugam on the International Arbitration (Amendment) Bill

Posted in Parliamentary speeches and responses


 
           Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."


Introduction

2          Sir, this Bill amends the International Arbitration Act. 

3          These amendments are the result of a consultation process involving key industry experts, both local and foreign. The current Act incorporates the 1985 United Nations Commission on International Trade Law or UNCITRAL Model Law. W e have now taken into consideration amendments made to the Model Law by UNCITRAL in 2006. 

4          This Bill introduces three key amendments. 

Court-ordered interim measures in support of foreign arbitrations

5          The first is to allow court-ordered interim measures in support of arbitrations conducted outside Singapore . In the case of Swift-Fortune v Magnifica Marine SA [2007] 1 SLR 629, our Court of Appeal held that our present Act only empowered the Singapore court to grant interim orders to support arbitrations held in Singapore.  Similar orders cannot be granted in respect of foreign arbitrations. The new amendment gives the Court the power to do so in respect of foreign arbitrations as well.

6          While this amendment augments the powers of the Court in relation to arbitration, it also places appropriate restrictions on the exercise of these new powers. It is in line with our policy of minimal curial intervention in arbitration proceedings. 

7          The scope of the new powers is limited to interim measures in support of arbitration, for example interim injunctions to preserve assets. They do not extend to procedural or evidential matters dealing with the actual conduct of the arbitration itself – like discovery, interrogatories, or security for costs. These procedural matters fall within the province of the arbitral tribunal and must be decided by the tribunal itself. This is similar to the position taken in the UK Arbitration Act.

8          Consistent with the policy of limited court intervention, the Court can exercise these new powers only when the arbitral tribunal or arbitral institution has no power to act, or is unable to actfor the time being effectively. It is envisaged that one such scenario could be where the foreign arbitral tribunal has power to make an interim order, but that order cannot otherwise be enforced in Singapore apart from an application under this new section

9          Other examples include:

(a) a party applying to Court for relief before the arbitral tribunal has been fully or properly constituted;

(b) a party applying to Court for relief against a non-party to the arbitration, which an arbitral tribunal has no power over; and

(c) where the arbitral tribunal is unable to hear an urgent application for interim relief sufficiently quickly. 

10         The amendment is also sensitive to the fact that some arbitration cases may genuinely require urgent assistance from the Court. If the case is one of urgency, the Court may make such orders to preserve evidence or assets for the arbitration. The term “assets”, in line with current case law, should be read widely in this context, to include intangible assets or choses in action, which include bank accounts, shares and financial instruments. 

11         If the case is not one of urgency, the Court will make an order only if notice of the application has been given to the other parties and the arbitral tribunal, and the application has been made with the permission of the arbitral tribunal or the agreement in writing of the other parties. 

12         Ultimately, the Court retains its discretion in deciding whether to make an order or not. If the Court considers that the fact that the place of arbitration is outside Singapore (or likely to be so) makes it inappropriate to make such an order, the Court can refuse to do so. For example, the English High Court has held that if an applicant to a foreign arbitration was unable to show that the other party has substantial assets in England or was unable to show any link between the foreign arbitration and England , the Court could refuse to make an order. 

13         Once the tribunal is able to act, it should be accorded primacy. Accordingly, the amendment makes clear that any order granted by the court may cease to have effect, should an arbitral tribunal subsequently make an order which expressly relates to the previous court order. This is in line with our policy of facilitating arbitration and minimising judicial intervention in the process.    

14         Sir, this amendment will be welcomed by industry and parties to arbitration. It ensures that our arbitration laws are progressive and will boost our efforts to promote Singapore as a leading venue for arbitration.

15         I should add that this is the only 2006 amendment to the 1985 Model Law which the Bill will incorporate into our International Arbitration Act. At present, the majority of industry experts consulted was against the full adoption of the 2006 Model Law. We will keep this issue under review, and may make further amendments as necessary.

Definition of an arbitration agreement

16         Sir, the second key amendment is to modernise the current definition of an “arbitration agreement” in Part II of the Act by expanding it to cover “electronic communications”. The present Act defines an arbitration agreement by reference to physical written forms of communication, like letters, telexes, telegrams and so on. This amendment would make it very clear that Singapore recognises that an arbitration agreement can be contained in “electronic communications” like electronic mail or electronic data interchange. 

17         Consequential amendments are also made by the Bill to the Arbitration Act to ensure that the definition of an arbitration agreement is similarly updated.

18         There is, however, no corresponding amendment to the definition of “arbitration agreement” under Part III of the International Arbitration Act. Part III deals with the enforcement in Singapore of foreign awards, via an international treaty, the New York Convention on the Recognition and Enforcement of Arbitral Awards 1958. The definition of “arbitration agreement” in the New York Convention has not changed. In dealing with the New York Convention, Singapore will continue to follow the existing definition.  

Authentication of “made in Singapore ” awards

19         Sir, the third key amendment introduced by this Bill is to allow the Minister to appoint an entity to authenticate “made in Singapore ” awards. Currently, a party seeking to enforce an arbitral award outside Singapore under the New York Convention is required to tender before the foreign court:

(a)                 A duly authenticated original award or a duly certified copy; and
(b)                 The original arbitration agreement or duly certified copy.

20         The Ministry has received feedback that some parties face difficulties in enforcing their Singapore arbitration awards overseas. These difficulties have arisen because certain foreign courts require that the awards be duly authenticated before allowing the awards to be enforced.

21         There is currently no public body authenticating awards made in Singapore . The Bill will amend the International Arbitration Act to allow the Minister to prescribe, in rules, designated entities to authenticate, “made in Singapore ” arbitration awards for the purposes of overseas enforcement.

22         The authentication process is non-mandatory. It does not prevent any person from authenticating any award or arbitration agreement by any other manner.

23         The Bill also makes consequential amendments to our domestic Arbitration Act in order to introduce a similar system for the arbitrations governed by the Arbitration Act.

Housekeeping and consequential amendments

24         Finally, besides the three key amendments, the Bill includes some minor housekeeping amendments. This includes the deletion of section 32 of the International Arbitration Act. This deletion will obviate the need for the Minister to gazette States that are party to the New York Convention, or to certify that a State is a Convention country. This is no longer required since the list of Convention countries is published on the official UNCITRAL Internet website.
   
Conclusion

25         Sir, the amendments contained in the Bill are intended to keep our International Arbitration Act modern, effective and arbitration-friendly. This will in turn help to keep Singapore at the forefront as a top international arbitration centre.

26         Sir, I beg to move.

Attachments

Last updated on 28 Jan 2013