New Bill on Choice of Court Agreements to Enhance Enforceability of Singapore Judgments
1. The Choice of Court Agreements Bill 2016 was introduced in Parliament today for First Reading by the Minister for Law, Mr K Shanmugam. If passed, the Bill will implement the Hague Convention of 30 June 2005 on Choice of Court Agreements (the Convention), paving the way for Singapore to ratify it.
2. Once ratified, if a Singapore court is the chosen court of an exclusive choice of court agreement covered by the Convention,
a) The dispute must be heard only in Singapore; and
b) The courts of other Contracting States will be obliged to recognise and enforce the Singapore court judgment on that dispute.
If the court of another Contracting State is the chosen court, similar obligations apply.
3. The ratification of the Convention will enhance the international enforceability of Singapore court judgments, including those of the Singapore International Commercial Court (SICC). This will make the SICC a more attractive dispute settlement option as a neutral litigation venue.
4. The Convention applies to international cases where there is an exclusive choice of court agreement concluded in a civil or commercial matter designating the courts of a Contracting State to the Convention (the chosen courts).
5. Choice of court agreements are contractual clauses used by parties to international commercial transactions to agree in advance on which court they would like to resolve any legal dispute that may arise between them. Businesses engaging in cross-border activities commonly use such clauses to have greater certainty on where disputes will be litigated and where judgments can be enforced. This in turn promotes a more conducive legal environment for international trade and investment. Exclusive choice of court agreements are clauses designating a court or specific courts in a country as chosen courts to the exclusion of all other courts.
6. The Convention has two basic aims – first, to ensure that exclusive choice of court agreements in favour of courts of Contracting States are effectively enforced, and second, that judgments rendered by the chosen courts are recognised and enforced in Contracting States.
7. Singapore signed the Convention on 25 March 2015. The Convention came into force on 1 October 2015. Currently 28 States are party to the Convention, which is in force in the European Union and all its member states (except Denmark) and Mexico. Apart from Singapore, it has also been signed by the United States and Ukraine, but has yet to be ratified in those two countries.
8. Legal sector stakeholders including the judiciary, Law Society, industry practitioners and academia were actively consulted prior to the signing of the Convention and in the drafting of the Bill.
9. The rules in the Convention are subject to only limited and specific exceptions. They supersede the existing laws determining where international disputes are heard, and how foreign judgments are enforced in Singapore, in cases where the Convention applies.
MINISTRY OF LAW
4 APRIL 2016