International Arbitration (Amendment) Bill

Order for Second Reading read.

2.45 pm

The Second Minister for Law (Mr Edwin Tong Chun Fai): Mr Speaker, I beg to move, "That the Bill be now read a Second time".

Sir, over the years, the Government has made significant efforts to strengthen Singapore's position as a premier international legal services and dispute resolution hub. We have capitalised on our geographical position and our strong adherence to the rule of law, to grow these services.

In international arbitration, we have a comprehensive legal infrastructure that supports and at the same time intensively promotes arbitration alongside a robust and effective legal system. We have enhanced our laws, to constantly improve our system and to best meet the needs of the end user. We have a first class judiciary that is supportive of arbitration as a dispute resolution mechanism and these are amongst the main reasons why Singapore is the most preferred seat of arbitration in the world today.

We have come far, in the last 25 years, since the Singapore International Arbitration Centre, the SIAC, was set up. Today, Singapore is a popular seat for arbitration and also recognised as the third most preferred in international arbitration in the world. It is also the third most preferred arbitral institution, the SIAC, globally. In 2019, the SIAC saw a new high of 479 case filings. This is the third consecutive year that the SIAC's caseload has exceeded 400 and we will aim to do even better in the coming years.

This growth has only been possible with the close partnership between the Government and the legal fraternity. We share a common understanding about the value of alternative dispute resolution to Singapore's position as a legal services hub. At the same time, the arbitration landscape is constantly evolvingand we must be ever alert to changing needs and continue to improve Singapore's value propositions as a hub for international commercial arbitration.

With the uncertainties facing the global economy, it is now even more important that we regularly review and enhance our legislation, so as to continue to build on our reputation for being a trusted and neutral jurisdiction, under-girded by a strong rule of law and a legal framework that is responsive and remains relevant to the users' evolving needs.

This Bill, Mr Speaker, is moved in that spirit.

In 2019, MinLaw conducted a broad public consultation on a number of proposals to improve and enhance and to consider for amendment of the International Arbitration Act or IAA. These proposals were aimed at enhancing our offerings, in the international arbitration arena and they included: the introduction of a default mode of appointment of arbitrators in multi-party situations; recognising that an arbitral tribunal and the High Court ought to have powers to enforce obligations of confidentiality; allowing a party to the arbitral proceedings to appeal to the High Court on a question of law arising out of an award, provided that parties have agreed to opt into this mechanism; and allowing parties to waive or limit the annulment grounds under the Model Law or the IAA. These are amongst the several proposals that were considered in the consultation in 2019.

We consulted widely. And received feedback from arbitral institutions, from professional bodies, from practitioners, from academics, from multi-national companies who are themselves users of the arbitration in the international arena, key industry experts, both local and foreign. We have studied the feedback and the views very carefully. We received a broad range of views, because this really represents the end-users and the market. We received views on whether to implement them and if so, how then these changes ought to be implemented.

After extensive consultation with stakeholders, we have decided to proceed with the first of the two of the proposals first. This Bill therefore introduces two amendments.

First, it sets out a default mechanism for the appointment of arbitrators in multiparty situations.

Second, it recognises that the tribunal and the High Court have the power to enforce confidentiality obligations in an arbitration.

The rest of the proposals which were considered in the public consultation are still being studied and evaluated by my Ministry. I wish to thank and place on record our gratitide to all those who have contributed their views, their time and suggestions. They have been very welcomed and most helpful in shaping our views. I would like to emphasise that the Government remains committed to working with our stakeholders to strengthen the international arbitration regime so as to ensure that this regime remains attractive and continues to serve the needs of international businesses.

Sir, let me now take Members briefly through each of the amendments.

At present, the IAA provides a procedure for default appointment of arbitrators only where there are only two parties to a dispute; and where these parties have adopted an ad hoc arbitration instead of institutional arbitration or have chosen not to apply institutional arbitration rules. There is currently no similar procedure in the IAA or the UNCITRAL Model Law on International Commercial Arbitration, for arbitrations where the dispute involves more than two parties.

As Members know, today as transactions become more complex, disputes become more complex, multi-party arbitrations have been a growing trend. It is no longer often that we see a case where there is a single claimant with a single respondent. The increasingly complex and diverse nature of contracts means that more often than not, these disputes will be multi-party in nature.

Where there are multiple parties, they may not be able to collectively agree on an arbitrator. Indeed, it is sometimes not in their interest to do so. A group of claimants will probably find it easier to be aligned, but in some multi-party cases, the interests of the disputing parties are not necessarily aligned neatly into two opposing sides and very often, they are not. As a result, it is not easy for these two groups of parties to agree on who they wish to nominate as their respective arbitrator. Such situations could also occur in disputes arising from multi-shareholder or multi-joint venture party disputes.

In one example that was cited to us, the dispute comprised a state, a ministry and joint venture vehicle as the respondent. On the side of the claimants was a consortium of oil companies. The claimants were more easily able to co-ordinate and appoint an arbitrator, but when it came to the respondents, it was a lot more difficult as the different parties comprising the respondent group, comprised different entities with divergent interests. This would result in one side not having the benefit of a party appointed member on the tribunal, through no fault of his except that its interests were not coincident with the rest of the respondent group.

Other examples include claims by a developer against two contractors, in a situation where each of the contractors might have had a distinct role and each of the contractors might well have a reason for suggesting that the other contractor is at fault. In those situations, you would not expect the respondent parties to be coincident or aligned in terms of their choice of arbitrators.

It is also not uncommon for respondents to try to delay or frustrate an arbitration by either failing to appoint an arbitrator or dragging their feet or just not taking part in the proceedings for nomination at all.

These examples are just some, but they demonstrate the importance of having clear rules or procedures, upfront, to help parties to quickly resolve their differences, at the procedural stage. This is not a problem where parties have decided on a set of institutional rules, but it does become critical in the context of multi-party ad hoc arbitration situations where there is no agreed mechanism for the constitution of the arbitral tribunal, and where the parties' inability to agree on the appointment of their arbitrators would invariably lead to disagreement and delays in commencing the proceedings. This invariably adds to costs and unnecessary time spent on process and procedure, when the parties really ought to get into the heart of the substance of the dispute and resolve those disputes. We also want to ensure that, as far as possible, all parties receive equal treatment in the formation of the tribunal.

Sir, to address these concerns, 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.

Let me now take Members briefly through the steps involved in this procedure. The claimant must first appoint an arbitrator on or before the date of its request for arbitration. If there is more than one claimant, then all the claimants should make the appointment by agreement. The claimant or claimants must then inform the respondents of the appointment and state the appointed arbitrator together with the notice of arbitration.

The respondent must then appoint an arbitrator after the receipt of the request for arbitration. Again, if there is more than one respondent, all the respondents need to make or agree to the appointment. The respondent must inform the claimant or claimants of the appointment. And finally, the two appointed arbitrators on both sides, will then get together and appoint the third arbitrator, who will be the presiding arbitrator.

However, where parties are unable to come to an agreement on their choice of arbitrator, then the new section 9B(2) provides that the appointing authority must then, in that situation and upon the request of any party, appoint all three arbitrators. In doing so, the appointing authority is required to have regard to and I quote, "all relevant circumstances". So, a broad discretion, to consider all the facts, all the matters which arise in the context of that appointment exercise is to be considered. 9B(2) also allows for the appointing authority to consider the choices already made by the parties at that stage, if any, and at what stage the proceedings might be at.

Let me elaborate a little on this. Under the IAA, where the parties have not agreed on who should be the appointing authority, then the default appointing authority will be the President of the Court of Arbitration of the SIAC and any other person nominated by the Chief Justice to exercise the powers of that appointing authority.

In doing so, the appointing authority may have regard to all relevant circumstances as I have mentioned and that authority may reappoint or may revoke any appointment that has already been made. The appointing authority may also designate any one of the three arbitrators as the presiding arbitrator. This process seeks to strike a balance between party autonomy and equality in the arbitration process. And this process is itself aligned with the rules of leading arbitral institutions on the multi-party appointment of arbitrators. So, the process that we have designed in this, is in terms of philosophy, aligned with that of leading institutions around the world.

In similar fashion, the appointing authority will appoint the third arbitrator upon the request of any party, and if the two arbitrators appointed by the parties fail to agree on the appointment of the third arbitrator within the timeframe specified. Again, the appointing authority is granted discretion to consider all relevant circumstances, in coming to its decision. And these may also include the reasons why the two appointed arbitrators are not able to agree on the third arbitrator or their reasons for failing to come to an agreement within a specified time.

Introducing this default mode of appointment in multi-party arbitrations will reduce potential delay in the conduct of arbitration proceedings. And this might arise where parties are unable to agree or refuse to agree as I mentioned earlier. Or, if the party-appointed arbitrators are themselves, unable to agree on a third appointment.

With the amendment, the parties' failure to agree on joint nominations, or indeed, a refusal to agree, will not prevent the arbitral tribunal from being constituted expeditiously. As any party in this default mode of appointment would have the right to make a request to the appointing authority, to cite reasons and to request the authority to make the appointment. This would also, as I mentioned, avoid the problem of parties seeking to delay or frustrate the arbitration by not taking part in the process at all.

And we believe that ultimately, this default mechanism, that is set up upfront, will save time for parties, will increase the overall efficiency of the process and will be a further step in continuing to make Singapore an attractive seat for complex international arbitration disputes including those with include multi-parties.

Sir, I now move on to broadly outline the second amendment.

Currently, unless parties otherwise agree, the parties and the arbitral tribunal have a duty of confidentiality. This can arise in a number of ways. First, as a result of an agreement between the parties. Second, under any written law or rule of law and this includes the common law. Third, under the rules of arbitration including the rules of arbitration of an institution or organisation, which the parties have agreed to, or have been adopted by the parties.

Confidential information obtained in anarbitration proceeding is protected from disclosure or use for any other collateral purpose, not the purposes for which the information was obtained, which is the arbitration.

The scope and content of such a duty might differ. In other words, what does this duty cover, what kind of information, what type of documents? They might differ from case to case.

And depending on the circumstances of each case, this duty could cover documents used or disclosed in the proceedings.

Our Courts over several decided cases have recognised that, in the absence of an express agreement between the parties regarding the existence and the scope of a duty of confidentiality, even in that parties to the arbitration have an implied duty of confidentiality.

At the same time, our courts have also commented that there ought not be any generalisations as to what the duty of confidentiality would encompass. In other words, do not set out upfront for every case and in each and every case for each type of categories of documents, what that scope of confidentiality covers because each case ought to be evaluated and contextualised in its own circumstances and the implied duty reflects the needs and expectations of the parties as well.

A distinction has to be drawn between different types of confidentiality attaching to different types of documents or 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 also not absolute and the extent to which the duty is preserved will depend on the individual circumstances.

Given the centrality of confidentiality in arbitration, parties expect that their various obligations of confidentiality can be protected. However, the International Arbitration Act, as it currently stands, does not expressly recognise that. The arbitral tribunal does not recognise that the arbitral tribunal or the Courts have the power to enforce existing confidentiality obligations in the event of any such breach.

The Bill, therefore, seeks to insert a new section 12(1)(j) in the IAA to expressly recognise the powers of the arbitral tribunal and the High Court in terms of enforcing such a duty and to give effect to such obligations by making orders or giving directions as may be appropriate. These powers will apply, regardless of whether the obligations arise under any of the limbs which I mentioned earlier, whether the obligation arises by written law, by rule of law, under common law, rules of arbitration or by agreement between parties.

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. The Bill, therefore, does not codify obligations of confidentiality but seeks to strengthen parties’ ability to enforce existing obligations. It does not impose any new or additional obligations of parties beyond what has been set out in those three broad categories that I have mentioned.

For instance, the new provision will not require a plaintiff in arbitration-related court proceedings, to have to apply for the sealing of the court file and redaction of the papers, when commencing such proceedings and that is the position currently.

Sir, in summary, this Bill will strengthen our international arbitration framework. It keeps us up to date and will ensure that Singapore remains an attractive venue for international arbitrations. It will also show the international arbitration community that we have a continued commitment to providing strong legislative support for international arbitration. Mr Speaker, Sir, I beg to move.

Question proposed.

Mr Speaker: Mr Patrick Tay.

3.04 pm

Mr Patrick Tay Teck Guan (Pioneer): Mr Speaker, Sir, I declare my interest as a Fellow of the Singapore Institute of Arbitrators.

I rise in support of this Bill, which amends the International Arbitration Act or IAA and seeks to enhance Singapore’s status as an international commercial arbitration hub.

Over the years, Singapore’s position as an international dispute resolution hub in the globe has been cemented, largely due to its strong recognition of the rule of law. Alternative dispute resolution mechanisms – in particular, mediation and arbitration, are increasingly popular in recent times, with the privacy afforded to parties at such forums. Additionally, the Singapore Courts have also recognised arbitration agreements and stayed Court proceedings commenced in breach of such agreements. This lends weight and legitimacy to the arbitration landscape in Singapore and parties can be confident that their earlier agreements to arbitrate their disputes will be upheld in Singapore.

I understand that the Bill makes the following two key amendments:

First, the introduction of a default mode of appointment of arbitrators in multi-party arbitrations where parties’ agreement does not specify the procedure for such appointments; and

Second, the Bill will explicitly provide for the arbitral tribunal and the High Court to enforce obligations of confidentiality, by making the relevant and/or necessary orders and directions, where such obligations exist.

I welcome the amendments, for the following reasons.

In an era where contractual obligations are being restructured, varied, suspended and/or terminated, as a result of the unprecedented impact of COVID-19 on global economies, the potential for disputes over substantive matters is rife. The complexity of such matters may be exacerbated where there are more than two parties involved in the dispute. The amendments plug the lacuna in the law. With the stipulated procedure on appointment of arbitrators in multi-party arbitrations, this should minimise procedural disputes on the same time, resulting in saved time and costs for parties. We note that there is a growing trend in arbitrations from joint ventures, oil and gas matters, and merger and acquisition disputes – these disputes often involve substantial sums of monies, and there is all the more reason why we want these matters to be arbitrated in Singapore.

Additionally, privacy and confidentiality remain the cornerstone of arbitration. The enactment of statutory powers of the arbitral tribunal and High Court to enforce existing confidentiality obligations, whether under agreements or at law, gives bite and effect to such obligations, which will certainly bring Singapore’s arbitration landscape to greater heights.

While the amendments do not seek to impose fresh and/or new confidentiality obligations in arbitration proceedings, my query relates to the scope of such existing obligations. The authorities suggest that the general principle in Singapore’s arbitration law is that arbitrations are not only private but also confidential.

The High Court in Myanma Yaung Chi Oo Co Ltd v Win Win Nu and another in 2003 held that “there was an implied obligation on the parties obtaining documents not to disclose them or use them for any purpose other than the dispute in which they were obtained.”

Disclosure, however, may be permissible in certain circumstances, such as the consent of the other party; by order or leave of Court; where it is reasonably necessary; and/or where it was in the interests of justice or where legally required.

Would the Minister be able to provide certain specific instances in which confidentiality obligations are waived? For instance, where documents and/or evidence are raised in arbitration proceedings for which a finding has been made, are subsequently raised in court proceedings for a separate matter between the same parties who wish to deviate from their original position?

Sir, clarifications notwithstanding, I stand in support of this Bill.

3.09 pm

Mr Vikram Nair (Sembawang): Mr Speaker, I support this Motion. I declare my interest as a dispute resolution lawyer who practises international arbitration.

Between June and August last year, MinLaw proposed several amendments to the International Arbitration Act for public consultations. Six areas were put out for public consultation and this Bill implements two of them.

The first amendment is to provide for a default mode of appointment for arbitrators in multi-party arbitrations.

Generally, when an agreement is entered into parties would usually include standard arbitration clauses in those agreements. These clauses would typically provide for tribunals consisting of a sole arbitrator, or sometimes three arbitrators. Where there are three arbitrators to be appointed, the usual method is for the Claimant to appoint one, the Respondent to appoint one and for the two appointed arbitrators to agree on a third. These are general practices, of course, specific clauses may vary. There is typically also a deadlock mechanism. If the two party appointed arbitrators cannot agree on the third, namely that it will be appointed by some third party, usually institution appointed under the arbitration agreement. This could be ICC, for example.

Where problems arise is if there are more than two adverse parties in an arbitration and all are separately represented. I think the Minister highlighted several examples in his speech. And this is increasingly common in the context of multi-party agreements or in a situation where different agreements are consolidated because we now have rules permitting consolidation of arbitrations. So, in this scenario where you have three parties or more, there is a greater likelihood that parties will not be able to agree upon "party appointed" arbitrators. For example, if there are multiple Respondents, each separately represented and with different views on the same issue, there may be deadlock.

What these rules provide for is the default appointment of arbitrators in such situations, which is eminently sensible. It requires parties to name arbitrators at specific points in the process as well. So, this also reduces the chance that the appointment of arbitrators will be used as a way to delay proceedings.

Now, the core of arbitration is always party autonomy and party autonomy is still protected here because if parties have agreed on their own default mechanism where agreement cannot be reached, that should still prevail. What this amendment deals with such a situation where parties did not really provide the mechanism but would not have wanted deadlock either. So, what this provides is really a process by which this deadlock can be broken and the arbitration process can be moved smoothly along, even where parties or whether there are three or more parties who cannot agree on the arbitrator.

The second amendment also deals with another vexed issue and this is confidentiality

Confidentiality obligations are common in arbitration proceedings. This is also one of the main attractions of arbitration for many parties as they would prefer to settle disputes out of the public eye. However, the protection of confidentiality is sometimes more difficult because the most common remedy for breach of confidentiality is to get an injunction to prevent dissemination of the information. This would only be available if the information is not already in the public domain. Thus, speed is of the essence if one wishes to get injunctive relief to protect confidentiality of matters subject to arbitration.

For most practitioners, we would agree that the Tribunal always have powers to make such orders but this was never expressly set out in the legislation. There was some debate on whether tribunals may have the power and to what extent that powers would extend to making confidentiality a part of the arbitration. So, by making this amendment to section 12 of the International Arbitration Act – which is really a section that spells out the Tribunal's powers – what it now provides specifically is that the Tribunal has such powers to make orders to protect confidentiality in an arbitration. Of course, the scope of this obligation is not defined precisely but this is necessary because exactly what documents are covered by it, which are already out in the public domain, which are not – these are all matters for that Tribunal to decide. But at least the one debate that will be off the table is whether or not the Tribunal has these powers.

The other benefit of putting it in this section of the International Arbitration Act is that the Court will also now have the power to make an order where a Tribunal is not able to so this is also, I think, necessary as a catch all provision because given the speed with which one has to move if you want to protect confidentiality. If the Tribunal is not in place, for example, it may be necessary to go to the Courts to get such an order.

I support and welcome both of these amendments. I think they both solve practical problems that practitioners encounter and it is a tidy solution. I would also add, in my concluding remarks, that I also agree with the other four proposals the Ministry had put forward in the consultation and hope that these too can be implemented in due course. Each of these are good solutions to practical problems.

3.15 pm

Mr Zhulkarnain Abdul Rahim (Chua Chu Kang): Mr Speaker, Sir, I rise in support of this amendment Bill. I thank the Second Minister for Law for the explanations to the amendment Bill. I declare my interest as a legal practitioner in international arbitration disputes.

The two broad areas of amendments that the Bill proposes in relation to multi-party arbitration and powers of arbitral tribunals and the High Court are important are important and very much welcome.

These amendments are also timely since the last amendments came in 2012. I have no doubt that with these amendments, more parties will benefit by bringing their disputes seated in Singapore or before the Singapore International Arbitration Centre or SIAC. I thank MinLaw which had proactively consulted various stakeholders in the international arbitration eco-system in Singapore. There were various proposals stated in the public consultation paper.

It has to be noted, though, that since the conclusion of the public consultation in 2019, admittedly we are now facing a much-changed global legal landscape ravaged by the current COVID-19 pandemic.

Since the pandemic, there has been an uptick in terms of brewing cross-border disputes arising out of force majeure, impossibility of performance and other contractual breaches. However, even with our Singapore law firms’ increasing global presence, connections and international expertise, we continually face stiff competition to attract these disputes to our shores.

This is because clients and litigants are not only more sophisticated, but they are more sensitive to disputes, especially during this time. They are craving for certainty both in terms of costs and outcome of arbitration proceedings especially in the midst of this economic outlook. They require more flexibility; some may prefer greater court supervision on matters of law in arbitral proceedings. Others, as so, and prefer to waive appeals to the High Court on arbitral awards in the interests of having finality in the arbitral process. Corporations are also rethinking their agreements to prepare for a post-COVID world and considering the best dispute resolution mechanism that would offer them the best flexibility or option.

Hence, while I applaud the efforts made to further ensure that Singapore’s arbitration regime remains responsive and relevant to evolving needs, I would urge MinLaw to consider expediting the tabling of the other proposals in the consultation paper as this will be key to cementing Singapore’s status as the preferred seat for arbitration disputes and leapfrog us over other competitive jurisdictions.

My focus is on two separate proposals raised in the consultation paper which are not tabled here in this Bill.

The first of which would allow parties which seek greater curial intervention, to appeal to the High Court on a question of law in an award based on an opt-in mechanism. The second would allow parties who on the other hand prefer minimal curial intervention, to agree to waive or limit the annulment grounds under the relevant sections of the IAA and the Model Law.

I believe that these proposals would be beneficial to Singapore.

Firstly, they would sharpen our edge as a preferred seat of arbitration as they would cement parties’ autonomy, front and centre, in our arbitration legislative framework. Parties would have more options and flexibility to tailor an international agreement to suit their unique purposes, especially in preparation for a post-COVID world. This would hopefully then attract more cross-border transactions and international disputes to be heard before the Singapore Courts and SIAC.

Consequently, it would only mean more exposure and training for our local lawyers from a professional development standpoint. As an international disputes lawyer, I have handled disputes in various jurisdictions and arbitration centres, SIAC here, London Court of International Arbitration and International Court of Arbitration in London and Paris. However, looking at the current climate, local younger lawyers, may not get much exposure and opportunity to experience handling international arbitration disputes. As such, we need to consider tabling these other proposals soon for the benefit of our future generations of talent.

Mr Speaker, Sir, I am not a glass-half-empty kind of guy – looking at what is not there instead of what is. But I fear that if we do not fill the glass up now, we may be too late to do so in the future.

Necessity is the mother of all inventions. There is an opportunity for us to reinvent and leapfrog the competition now.

I therefore seek an indication from the Minister on whether the other proposals in the consultation paper, particularly the two I mentioned, are being tabled and if so, when. Clarifications notwithstanding, Mr Speaker, I support the amendments to the Bill.

3.21 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, Singapore has emerged as one of the leading hubs for international arbitration in recent years. In 2019, the Singapore International Arbitration Centre or SIAC set a new record with 479 new case filings and parties from over 59 jurisdictions chose Singapore as their destination for arbitration.

The amendments in this Bill will further strengthen our international arbitration regime and raise Singapore’s profile as a global centre for international arbitration. Parties who require arbitration services will also have access to a wider range of options best tailored to their needs.

That said, I have a few clarifications on the Bill, many of which, Minister Edwin has already clarified on.

My first clarification is on the default mode of appointment of arbitrators in multi-party arbitration. It is good that we recognise that we need to provide for the appointment of arbitrators in multi-party disputes which are on the rise. They occur, for instance, in disputes involving joint ventures, mergers and oil and gas acquisition.

The new section 9B details the default mode of appointment for multi-party situations. There is some concern about point 4 of this section, which states: if either the claimants or the respondents fail to appoint an arbitrator, the appointing authority must appoint all three arbitrators. The authority can also reappoint or revoke any appointments made.

It is unclear why the failure of just one side to appoint an arbitrator means that the appointing authority must now step in to appoint all three arbitrators even if the other side managed to agree on their arbitrator.

Essentially, this means that failure to agree by one side, makes the agreement reached by the other side ineffective.

I do understand that it is common for arbitration institutions to require the appointing authority to appoint all three arbitrators if either the claimants or the respondents are unable to come to an agreement on an arbitrator.

However, there is a permutation on this model under article 8(1) of the 2020 London Court of International Arbitration Rules. It says: where all parties have agreed in writing for each side to nominate a single arbitrator, but one side is not able to come to an agreement on a nomination, the other side is free to make its nomination.

Party autonomy is a significant feature of arbitration.

To ensure that parties’ agreements are given consideration, can the Minister confirm that the appointing authority should take into account the agreement reached by parties on one side on their arbitrator when appointing the three arbitrators?

My second clarification is on the amendment to expressly recognise the powers of the arbitral tribunal and the High Court to enforce obligations of confidentiality.

This amendment is welcome and will assist in tightening the process and preserving confidentiality of the proceedings.

That said, despite the express recognition, the Bill does not codify confidentiality obligations that the Minister mentioned.

Given that one of the main draws of arbitration is the confidentiality of proceedings, and codifying confidentiality obligations will assist in reducing uncertainty and potential disputes over these obligations, can the Minister clarify the reasoning behind deciding against codifying confidentiality obligations?

For a good example, we can take a look at the arbitration scene in Hong Kong. The Hong Kong Arbitration Ordinance expressly provides for a statutory duty of confidentiality in arbitration.

Under section 18(1) of the Arbitration Ordinance, unless agreed by the parties, no party may publish, disclose or communicate information relating to the arbitral proceedings and awards.

Notably, this confidentiality extends to the existence of arbitration proceedings. This position is also mirrored in article 45.1 of the 2018 Hong Kong International Arbitration Centre Rules.

Hong Kong was ranked among the top five seats of arbitration worldwide in 2018 and still continues to have a lead over our own SIAC in 2019.

We note that codifying confidentiality obligations may lead to some challenges. For instance, there may be difficulties in defining the scope of the duty of confidentiality and its exceptions.

However, such difficulties are already present in our current approach of implying the duty of confidentiality in arbitration.

In fact, it is not uncommon for arbitration proceedings to be delayed because of parties disputing over their scope of implied duty of confidentiality. The delay reduces one of the main draws of arbitration – its efficiency.

I hope the Minister will consider codifying confidentiality obligations, whether in the Act itself or in subsidiary legislation, as this would encourage parties to arbitrate in Singapore.

My final clarification is on the exclusion of the proposed opt-in mechanism for parties to incorporate a right to appeal to the High Court, on a question of law arising out of an arbitral award.

Can the Minister clarify the reasoning behind deciding against including this right to appeal on a question of law?

As things stand, parties may only apply to the High Court to set aside an arbitral award on relatively limited grounds. These grounds include fraud, corruption, breach of the rules of natural justice or contravention of Singapore’s public policy.

One of the key components of arbitration proceedings is finality. However, this should not be at the expense of leaving questions of law unresolved. This may potentially have significant impact on the substantive rights of parties.

Furthermore, the opt-in mechanism allows parties to choose to exercise this right or to rely on the default position. This adds to Singapore’s commitment in giving parties the flexibility to determine certain issues and procedures in their arbitral proceedings, as compared to court proceedings.

In fact, the right to appeal on a question of law has already been expressly recognised in our domestic arbitration. Section 49 of our Arbitration Act provides that a party to arbitral proceedings may, with the agreement of all parties and with the leave of the Court, appeal to the Court on a question of law arising out of an arbitral award.

Giving parties this option to have a right to appeal on a question of law may not only encourage more parties to arbitrate in Singapore, but also assist in determining case law in Singapore.

Sir, in conclusion, I look forward to Singapore increasing its global standing as a centre for international arbitration.

Notwithstanding my clarifications, I stand in support of the Bill. If I may add, Sir, I slowed down my speech and spaced it out significantly so that I did not deliver my speech in a quick-fire fashion as Minister Edwin mentioned at the last Sitting about my speeches. I took into account the Minister’s previous feedback and I hope that he will now agree to all my proposals in this speech.

Mr Speaker: Minister Edwin Tong.

3.28 pm

Mr Edwin Tong Chun Fai: Mr Speaker, Sir, I thank all the Members, particularly Mr Ng for slowing his speech, but I will have a response for him, perhaps in a less quick-fire fashion.

Sir, I am very grateful that the Members have highlighted that the principle of party autonomy, which really has been one of the key considerations in the way in which we have organised arbitration rules or laws. And obviously, our whole eco-system in encouraging parties to come into Singapore and choose Singapore as a neutral, trusted venue.

We understand and agree with this principle which really undergirds the amendments that we have proposed in this Bill.

Members have sought various clarifications and I will address these in turn.

Mr Ng’s first question relates to the question of whether the appointing authority should also take into account the agreement that had already been reached by the parties at the stage where the appointing party’s role is triggered, and whether it should take that into account when deciding on the appointment all three arbitrators.

Sir, that was a very good question and let me just give a little bit of background before I answer Mr Ng’s question. In the feedback we that we received from the various consultations, the principle of equal treatment of the parties in the context especially of the appointment of the tribunal was something which was emphasised to us. It is part of the adjudicative system.

Arbitral institutional rules and also the national laws unanimously impose a requirement, whether express or implied, that the parties be treated equally throughout the process.

Although the solutions adopted differ in some particulars, most major institutional rules, including the LCIA Arbitration Rules that Mr Louis Ng referred to, now either permit or, in fact, require the institutions to designate the entire tribunal in multi-party proceedings. In other words, the moment there is a disagreement on one party's nomination, then the rules either permit or, in fact, they require the appointing authority to designate the entire tribunal. That is the position in LCIA and also some other major institutions. The reason behind this is to preclude imbalance or, at least, the perception of imbalance in the way in which the tribunal is subsequently appointed and avoid a situation where just one party has a say on his or her nominee for the arbitration.

In scoping section 9B, we can see that there are many reasons why a party may not be able to agree or has chosen not to agree to the arbitrator. It could be because parties do not identify with the same “side” as the party nominating it even though we may be co-respondents to the arbitration, or it may be because one party is intentionally delaying the proceedings, not nominating, or dragging its feet, as I have mentioned earlier, so as to trigger the default mechanism to appoint all three and, in that process, hope to sideline the choice put up by the other party. And we are very much alive to that possibility.

So, to allow the appointing authority some flexibility and the discretion to take into account what I have just articulated and, indeed, what Mr Louis Ng had put forward in his speech, the appointing authority is now clothed with the ability to look at all relevant circumstances and we do not define upfront what that might be precisely because it may differ from case to case and the antecedent conduct of the parties in terms of the choice of the arbitrator would be something that the appointing authority would look at.

So, to that extent, the authority can look at factors, such as whether the parties on one side may have reached an agreement or not in the way that Mr Louis Ng has put it, or the reasons why one side was not able to come to an agreement. That is also relevant. It may not be because of trying to frustrate the process or trying to delay the proceedings. That is also relevant. And the appointing authority will have the ability to look at and study all these factors.

In the context of appointing the three arbitrators, we have given broad remit to the authority to do so. So, it may reappoint. We have expressly said it may reappoint, meaning if one party has already chosen, it may reappoint, or it may decide to revoke the appointment altogether and decide afresh.

We believe that this strikes the right balance between the principles of equality and also party autonomy, something that Mr Louis Ng and Mr Vikram Nair also spoke about.

On the question of confidentiality, the amendment is to recognise that the tribunal and the High Court will have power to enforce these obligations. The amendments do not seek to change the law or add new obligations, but seeks to ensure that it is clear beyond the pale that the tribunal and the High Court will have the power to enforce these obligations.

Mr Patrick Tay asked for clarifications on instances where the obligations might be waived. Sir, the duty has its roots in common law. As Mr Patrick Tay mentioned, Justice Kan mentioned this in a 2003 decision that it is implied that parties who choose arbitration are more likely to take into account the fact that these are private hearings and have the cloak of confidentiality.

The Courts, however, have also noted – and I think Mr Patrick Tay also briefly alluded to that – that we should take care not to generalise what that duty would encompass upfront, that is, not to spell it out upfront. Mr Vikram Nair also noted that this gives a degree of flexibility because, as a case proceeds, the quality and nature of confidentiality over a specific piece of information or document might change. Likewise, whether or when a confidentiality obligation is to be waived must also be assessed in the context of the facts in which the issue arises.

I would add that, in any given case, regard must also be given to the chosen institutional rules that the parties have agreed will apply to their own arbitration and whether or not there are any specific rules in that setting relevant to the way in which they look at confidentiality.

To a reference that Mr Louis Ng brought up about institutional rules, I should add that the Singapore International Arbitration Centre (SIAC) Rules do stipulate the scope of confidentiality and that it is stated to cover the existence of the proceedings itself, like the Hong Kong position that Mr Louis Ng mentioned – the pleadings, evidence and what other materials might arise in the context of the proceedings and, of course, all documents produced in discovery in those proceedings, and, finally, the award that was issued at the culmination of the proceedings.

I will come back to this point in a moment as I address Mr Louis Ng's other point in a less quick-fire way.

Some examples of situations where the Courts have found that confidentiality obligations have been waived or where disclosure of confidential information is accepted include the following:

(a) where the award is registered as a Singapore judgment and, obviously, it then enters into the realm of the public domain and privacy can no longer be attached to those proceedings and, therefore, the award itself;

(b) alternatively, where parties have, by their own conduct, indicated for an agreement for the confidentiality to be waived, for example, by not requesting that an open Court proceeding in which confidential information is to be discussed or would be brought up in those proceedings, not requesting that those proceedings be heard in-camera; and

(c) where there is reasonable suspicion of criminal conduct and there is a “public interest” behind why that information ought to be disclosed and an exception made for the confidential information arising out of the arbitration proceedings to be disclosed.

Moving to Mr Louis Ng's question as to why the obligation of confidentiality is not codified and whether we would consider doing so, let me again give a bit of background.

As I have mentioned earlier, it has its roots in common law, so it is implied in the proceedings. Mr Louis Ng mentioned that, in Hong Kong, it has been codified and it might then improve or, at least, enhance the proceedings. Let me just clarify that the fact that there is a duty of confidentiality is really quite unarguable. So, what Hong Kong has done is to say that there is a duty of confidentiality. But in our proceedings here in Singapore, especially in the context of what I have mentioned in the SIAC Rules, it is really quite unarguable. What the real issue is, when it comes to confidentiality, is often what are the quality and nature of that confidentiality. What does it do to the information and documents that are exchanged in those proceedings? That, as I have mentioned earlier, might take a different shape or be differently contoured, depending on the context.

So, what exactly is that scope? To whom does it apply? Does it apply only to the parties or the witnesses? You may have to look at what are the facts of that case, bring them up and the context, before you assess that question. When does it apply? Does it apply at the start? But it may not have the same quality as the start if, subsequently, information is disclosed or allowed to be disclosed or divulged by one party. So, the further context as to when you are looking at the issue will also be relevant.

Of course, finally, how is it best enforced? Is it by way of an injunction of some sort, a mandatory injunction, or would the parties be allowed to disclose it in a measured way under a ringfence or redacted.

So, these are all questions that I hope Mr Louis Ng will appreciate, but which arise maybe as a consequence of there being a confidentiality obligation in the first place which, as far as we are concerned, there is no argument over. Which is why we are proposing these amendments to allow the tribunal and the High Court to enforce these obligations.

But the question as to what you do with the confidential obligations, how you enforce, is something that ought to be looked at case to case and context to context. That is something that the High Court here in Singapore and also internationally have espoused. So, for that reason, we have decided against codifying and setting out the exact scope to what it applies and when it applies and let the Courts and the tribunal assess that question on a case-by-case basis.

In addition, we have also taken this view because it is also a recognition that this area of law is still evolving. There have been cases, both locally as well as internationally. Some, Mr Patrick Tay has cited earlier, and also International case law on this and it is a question that is best left to the common law at this stage to develop more fully.

I would add to Mr Louis Ng's point also that where parties to an agreement – if you come to an agreement and you have a specific concern, you have a specific confidentiality attached to, say, an IP patent or to a piece of information that is very sensitive – it is open to the parties to expressly incorporate provisions specific to their own needs in their arbitration agreement and that will be enforced. Members will remember that, at the outset, I mentioned that the confidentiality arises in a number of ways, one of which is through the parties' express agreement in the arbitration agreement itself.

Mr Louis Ng will know that the Courts have consistently looked at the scope of the arbitration agreement and to study that to assess the extent of the confidentiality obligations.

Next, let me move on to the amendments which have considered in the consultation but not brought in this Bill. Both Mr Louis Ng and Mr Zhulkarnain Abdul Rahim have enquired about these amendments and the proposals that were considered. I have briefly outlined these other considerations earlier and they broadly relate to the opt-in right of appeal and the proposal for the waiver or limitation of the annulment grounds.

These are still being studied and are not part of today's Bill, but I welcome Mr Vikram Nair's as well as Mr Zhulkarnain Abdul Rahim's views on them. I think Mr Louis Ng also said that these would add value to our landscape. We agree with the views that are set out. We will add them on to the very many REACH views that we have received so far on this and study them together with the various stakeholders that I have mentioned at the outset. When we are ready with that, we will come back and I am sure we will also consult with Mr Louis Ng and the others who have raised the points here.

In the final analysis, on these points, I want to assure Members and the arbitration community that my Ministry recognises the range of options and the diversity of views on these proposals. As I have said, some go towards whether or not they should be implemented; others have given us suggestions as to how they can be implemented. The operationalisation of these mechanisms also needs some study to ensure that they are consistent and that they lend themselves to fairness.

Sir, in conclusion, we believe that this Bill introduces amendments that best serve the needs of the arbitral community. As I have flagged, this is a process that is on-going and we are always taking into account what users want to see – developments in the law and, of course, international conventions and practices as well. We will continue to make Singapore an attractive seat for arbitration disputes.

With that, Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Edwin Tong Chun Fai].

Bill considered in Committee; reported without amendment; read a Third time and passed.