30 September 2016

A Guide to the SIAC Rules 2016

On 1 August 2016, the 6th Edition of the Arbitration Rules of the SIAC (2016 Rules) took effect. Among other things, the 2016 Rules introduce joinder and consolidation provisions. They also include a novel early dismissal procedure and refine the Expedited Procedure and the Emergency Arbitrator provisions.

On 1 August 2016, the 6th Edition of the Arbitration Rules of the Singapore International Arbitration Centre (SIAC) (the 2016 Rules) took effect. The 2016 Rules will apply to any arbitration commenced with the SIAC on or after that date, unless otherwise agreed by the parties.

The amendments in the 2016 Rules improve on and codify some of the SIAC’s existing practices and aim to keep the SIAC’s arbitration rules up to date with other institutional rules. The key amendments in the 2016 Rules are discussed below.

Consolidation

Before the 2016 Rules, the SIAC did not have express rules on the consolidation of arbitrations. Any formal consolidation would usually occur only with the consent of the parties and after the constitution of the tribunal. The absence of consolidation provisions meant that parties relying on multiple arbitration agreements may have to commence separate arbitrations, possibly proceeding before different tribunals, with the risk of ending-up with conflicting awards.

The 2016 Rules introduce provisions on consolidation and allow disputes to be consolidated if any of the following criteria (the Consolidation Criteria) is satisfied:

  • all parties have agreed to the consolidation;
  • all the claims in the arbitrations are made under the same arbitration agreement; or
  • the arbitration agreements are compatible, and:
    • the disputes arise out of the same legal relationship(s);
    • the disputes arise out of contracts consisting of a principal contract and its ancillary contract(s); or
    • the disputes arise out of the same transaction or series of transactions.

Parties seeking to commence proceedings arising out of multiple contracts may now file a single Notice of Arbitration, describe how the Consolidation Criteria is satisfied and pay a single filing fee. This eases the financial burden on parties who would otherwise have to pay multiple filing fees at the outset in order to commence multiple proceedings. It is only when the application for consolidation is rejected in whole or in part by the SIAC Court of Arbitration (the Court) that additional filing fees would be required in respect of the arbitrations that have not been consolidated.

Prior to the constitution of any tribunal in the arbitrations sought to be consolidated, a party may file a consolidation application, which is then decided by the Court. If the application is granted, the arbitrations are consolidated and one tribunal is appointed in respect of the consolidated proceedings. This saves the parties time and costs and obviates the risk of ending-up with conflicting awards in separate arbitrations. If the application is rejected by the Court, the denial is without prejudice to a party’s right to request a tribunal to deal with a consolidation application later on.

Once a tribunal has been constituted in any of the arbitrations sought to be consolidated, a consolidation application may still be granted by the tribunal, provided that the same tribunal has been constituted in each of the arbitrations sought to be consolidated or no tribunal has been constituted in the other arbitrations.

Joinder of additional parties

The 2016 Rules expand the SIAC’s current joinder rule, which only applies post-constitution and which does not cover intervention (where a non-party seeks to be joined in an existing arbitration).

Under the 2016 Rules, the application for joinder may be made by a party or a non-party, prior to or after the constitution of a tribunal, provided that any of the following criteria is satisfied:

  • the additional party to be joined is prima facie bound by the arbitration agreement; or

  • all parties, including the additional party to be joined, have consented to the joinder of the additional party.

Note that unless there is consent by all parties, joinder is limited to parties prima facie bound by the same arbitration agreement. If a party is seeking to rely on a different arbitration agreement in its joinder application, that party may have to commence a separate arbitration which it could then ask to be consolidated in accordance with the consolidation provisions of the 2016 Rules.

Prior to the constitution of the tribunal, the application for joinder is decided by the Court, without prejudice to the applicant’s right to apply to the tribunal for joinder post-constitution if the application is rejected. After the tribunal has been constituted, the application for joinder is filed with and decided by the tribunal.

Early dismissal of claims and defences

The 2016 Rules introduce a novel procedure for the early dismissal of claims and defences that are manifestly without legal merit or manifestly outside the jurisdiction of the tribunal.

The application for early dismissal is filed before the tribunal, who decides whether or not the application should be allowed to proceed.

If the application is allowed to proceed, the tribunal shall give the parties an opportunity to be heard before deciding whether the application should be granted. The tribunal shall make an order or award on the application within 60 days from the date of its filing, although the Registrar of the SIAC (Registrar) may extend the time in exceptional circumstances. The order or award shall be reasoned, but the tribunal may set forth its reasons in summary form.

Expedited procedure

With the objective of broadening the base of cases that could fall under the Expedited Procedure, the 2016 Rules raise the ceiling for Expedited Procedure applications from SGD 5 million to SGD 6 million.

In cases proceeding under the Expedited Procedure, the tribunal is given the power to decide whether the arbitration could be conducted on a documents-only basis. Previously, hearings are dispensed with only by agreement of the parties.

The 2016 Rules clarify that in the event of any conflict between the arbitration agreement and the Expedited Procedure, the latter prevails. This validates the power of the President of the SIAC Court of Arbitration (President) to appoint a sole arbitrator even if the arbitration clause provides for a different number, a power previously upheld by the Singapore High Court in AQZ v ARA [2015] SGHC 49.

During the course of the proceedings, it may turn out that a dispute is more complex than it seemed to be, or developments might ensue that might make it more appropriate for the proceedings to be taken out of the Expedited Procedure. The 2016 Rules introduce a provision allowing the tribunal to order, in appropriate cases, that the proceedings shall no longer be conducted in accordance with the Expedited Procedure, although the proceedings shall continue under the same tribunal constituted under the Expedited Procedure.

Challenge of arbitrators

The 2016 Rules introduce a challenge fee, which is currently fixed at SGD 8,000, to be paid by the party filing the notice of challenge against an arbitrator. If the challenge fee is not paid within the time limit fixed by the Registrar, the challenge shall be considered as withdrawn. This rule may deter frivolous challenges to arbitrators and provides certainty as to the costs of a challenge, which were previously variable and fixed by the Court.

The 2016 Rules also reflect the SIAC’s current practice to issue reasoned decisions on challenges to arbitrators.

Emergency arbitrator provisions

Under the 2013 Schedule of Fees, the fees of an emergency arbitrator (EA) are variable and range from SGD 20,000 to 20% of a sole arbitrator’s maximum fee calculated in accordance with the SIAC’s ad valorem Schedule of Fees. The SIAC’s new Schedule of Fees fixes the EA’s fees at SGD 25,000 and the deposits at SGD 30,000 unless otherwise determined by the Registrar. Pegging the fees and deposits at a fixed amount gives the parties certainty and ensures that EA proceedings are cost-effective even for high value disputes.

The 2016 Rules refine the EA provisions further by stating that the President shall seek to appoint the EA within one day from receipt of the EA Application (as opposed to one business day under the 2013 Rules), and that the interim order or award shall be made within 14 days from the date of the EA’s appointment unless the Registrar extends the time in exceptional circumstances. Additionally, the EA is expressly empowered to make preliminary orders pending any hearing, telephone or video conference or written submissions by the parties.

Conclusion

The introduction of joinder and consolidation provisions is a long-awaited development and brings the SIAC up to date with the rules of other arbitration institutions. The inclusion of a novel early dismissal procedure and the refinement of the provisions on Expedited Procedure and EA provide parties with additional options and try to address calls for speedier and more cost-effective arbitration proceedings.

Judith Gill
City judith.gill@allenovery.com
Andrew Battisson +65 6671 6089
Partner, Singapore andrew.battisson@allenovery.com
Andrew Pullen
City andrew.pullen@allenovery.com
Maricef Valderrama +65 6671 6093
Associate, Singapore maricef.valderrama@allenovery.com

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