Supreme Court of Judicature (Amendment) Bill

Order for Second Reading read.

Mr Deputy Speaker: Senior Minister of State Indranee Rajah.

3.01 pm

The Senior Minister of State for Law (Ms Indranee Rajah): Mr Deputy Speaker, on behalf of the Minister for Law, I beg to move, "That the Bill be now read a Second time".

The Supreme Court of Judicature (Amendment) Bill introduces amendments in relation to the Singapore International Commercial Court (SICC). First, the Bill makes clear that the SICC has jurisdiction to hear any proceedings relating to international commercial arbitration that the High Court may hear under the International Arbitration Act (IAA). Second, the Bill streamlines the SICC's procedure by removing the option of pre-action certification.

The SICC was established in 2015 as a division of the High Court to hear international commercial disputes, including those governed by foreign law. The underlying objective of the SICC is to be a neutral venue for international commercial litigation for parties with little or no connection to Singapore but who need and value a neutral jurisdiction with strong rule of law, experienced and highly respected judges and access to high quality legal and professional services for their dispute resolution. It is also to broaden the suite of international dispute resolution options available to regional and international parties and to complement our already well-established international arbitration services.

Key features of the SICC include:

(a) flexibility on certain procedures, for example, on rules of evidence and discovery;

(b) its bench which combines highly qualified and experienced local judges with high quality international judges, comprising eminent foreign jurists who can hear disputes governed by foreign law;

(c) the option for parties to engage foreign counsel to represent them before the SICC where the case is an "offshore case", that is to say, matters with no substantial connection to Singapore.

Since its establishment, the SICC has heard 17 cases with diverse subject matters, including construction, investment, banking and finance and shipbuilding, and involving parties from jurisdictions including Japan, Israel, the United Arab Emirates (UAE), Hong Kong, India, Indonesia and Australia. These are all high-value cases. Two of the 17 cases included parties who availed themselves of the option to engage foreign lawyers. In the others, parties were fully represented by Singapore counsel.

The SICC has received positive reviews for the quality and speed of its judgments. For example, the first case heard in the SICC concerned a large-scale industrial project involving business interests in Australia, Indonesia and Singapore. The SICC issued two judgments for the case, which included a claim of about US$750 million and a counterclaim of about US$59 million. The first of the two judgments was described in the Global Arbitration Review as a "masterclass" in how to deal with the rules of interpretation, public policy and the implication of terms. Commentators have noted that the SICC is, and I quote, "…an innovative commercial court designed for international commercial cases… and the option of having their disputes adjudicated by experienced commercial judges from Singapore and international judges from common law and civil law jurisdictions".

It has also been noted, and here I quote again, "despite being in its infancy, the SICC is proving to be a key contributor to international construction law jurisprudence…" Yet another commentator has noted that most judgments were delivered within three months of the date of the last hearing, and some were even handed down less than a month after being argued.

To ensure that the SICC continues to fulfil its objectives, the main amendment in the Bill seeks to make it clear that the SICC also has the jurisdiction to hear the same kind of proceedings relating to international commercial arbitration that the High Court can hear, and which satisfies such conditions as the Rules of Court may prescribe.

Under the IAA, the High Court has jurisdiction over certain matters in relation to international commercial arbitration. For example, parties can apply to the High Court to seek the setting aside of an arbitral award given in Singapore.

Since the SICC was set up as a division of the High Court, it has always been the intention that parties should be able to appear before the SICC for IAA-related matters. Clause 2 of the Bill makes this position clear. Accordingly, parties may choose to commence an action in the SICC for an IAA-related matter, where the conditions in the Rules of Court are satisfied. A case may also be transferred to the SICC from the High Court and vice versa, in accordance with transfer requirements as set out in the Rules of Court.

Parties in these arbitration cases will benefit from the added option of having their applications heard by the SICC judges whose expertise covers a range of civil and common law jurisdictions. These are jurists of the highest calibre, hailing from diverse geographical backgrounds such as Australia, continental Europe, Hong Kong, Japan, the United Kingdom (UK), the United States (US) and Canada. Many of them are also very experienced in arbitration law.

Allowing the SICC to hear matters relating to international commercial arbitration will also increase Singapore's attractiveness as a seat of arbitration, primarily because the widely acknowledged high quality of the bench hearing arbitration-related matters will now be further enhanced by the inclusion of the international judges who sit on the SICC.

Currently, only Singapore-qualified lawyers in Singapore law practices may appear before the High Court for IAA and IAA-related matters. There will be no change to this status quo. The IAA is part of Singapore law, with features that are tailored for the Singapore arbitration landscape, and there is a developed body of local jurisprudence based on our Courts' interpretation and application of the IAA provisions, which Singapore lawyers are well versed in. Hence, parties which have arbitration-related matters heard in the SICC must be represented by Singapore-qualified lawyers.

Foreign lawyers, who may be registered to represent parties in an "offshore case" as defined in the Rules of Court, will not be able to appear before the SICC in respect of IAA matters. This will be so notwithstanding that the foreign lawyers had represented the parties in the original arbitration. The Rules of Court will be amended accordingly to clarify that an "offshore case" does not include matters under the IAA.

Finally, clause 3 of the Bill removes the option of applying for a pre-action certificate. When the SICC was established, it was envisioned that potential parties should have the option of applying for a pre-action certificate to certify that the intended action is international and commercial in nature, and can therefore be heard by the SICC. However, feedback received by the Supreme Court has been that the procedure has been of limited utility. It will therefore be removed.

The SICC's early successes place Singapore in a good position to continue to serve as a leading centre for the resolution of international commercial disputes. We will continuously refine and develop this offering to meet the needs of parties to such disputes. The amendments in the Bill are part of this on-going endeavour. Mr Deputy Speaker, Sir, I beg to move.

Question proposed.

Mr Deputy Speaker: Mr Murali Pillai.

3.09 pm

Mr Murali Pillai (Bukit Batok): Mr Deputy Speaker, I declare my interest as a lawyer practising in international commercial disputes, and occasionally dealing with cases heard in the SICC. I support the primary aim behind this Bill.

The launch of the SICC in 2015 was a major move to position Singapore as a neutral dispute resolution centre in Asia in the litigation sphere, in tandem with the arbitration sphere. Leveraging on our existing well-developed legal infrastructure and respected judiciary, which includes not just local judges but eminent jurists drawn from outside Singapore, the establishment of the SICC heralded an exciting change in our legal landscape.

This Bill seeks to amend the Act to clarify that the SICC has the jurisdiction to hear any proceedings relating to international commercial arbitration that the High Court may hear. Given that the SICC's jurisdiction involves hearing commercial actions that are international in nature, there is no reason why the SICC should not also have the jurisdiction to hear proceedings relating to international commercial arbitrations involving foreign parties. This amendment is a timely one that brings clarity to this area.

I do note, as the hon Senior Minister of State mentioned, that SICC's jurisdiction to hear any proceedings relating to international commercial arbitration is proposed to be subject to conditions that will be prescribed in the Rules of Court. One condition that will be prescribed, as stated in the Explanatory Statement, is what constitutes an "international commercial arbitration". Could the Minister please elaborate on other conditions, if any, that are expected to be prescribed in the Rules of Court?

Next, on the issue of the abolishment of the pre-action certificate procedure, during the Second Reading of the Amendment Bill to establish the SICC in late-2014, the hon Law Minister explained that this was an optional step that a party could take in advance of commencing actual proceedings in order to mitigate any uncertainty in whether the dispute falls within the jurisdiction of the SICC. Now that that the SICC has had a few years of experience in administering international commercial disputes heard in that Court, may I ask what has changed that has led to a determination that the pre-action certificate procedure is no longer needed?

In particular, I wish to highlight that the pre-action certification procedure, besides promoting certainty in whether or not an action falls within the jurisdiction of the SICC in terms of whether it is an international commercial case, also assists in promoting certainty as to whether the case may be classified as an offshore case. This is because the pre-action certificate also allows for a determination by the Court at the outset as to whether the case should also be classified as an offshore one, such that foreign representation would be allowed. By doing away with this pre-action certification procedure, the remaining two modes by which the case may be classified as an offshore case only take effect after legal proceedings are commenced, namely, by either party making a unilateral declaration that the case is an offshore case or by either party applying to the SICC after the case has commenced for a determination as to whether it is an offshore case.

These two modes cause some uncertainty, as it appears that there is a lack of clarity as to whether a party who wishes to be represented by foreign counsel should do so from the outset after making a unilateral declaration, given the risk that this may be later set aside by the court.

From another point of view, the other party to the action may be taken by surprise, since it would not be aware as to whether the other party had applied to register foreign counsel because this is an ex-parte application. This means that the other party would not have advance notice of the other party's intention to have foreign representation until it is served with a unilateral offshore declaration. Even if that party were to apply to have the unilateral offshore declaration set aside, the other party's foreign counsel would nonetheless be allowed to act pending the determination of the application. This gives rise to the risk that even if the unilateral offshore declaration is, indeed, later set aside, the Court may nonetheless exercise its discretion to allow foreign representation to continue, as is allowed under the Rules of Court. From the counterparty's perspective, this may be seen as a fait accompli.

To promote greater certainty, it is preferable for any contentions as to whether the case is an offshore case to be raised and disposed of at the outset, either before the action is commenced or before the action is materially progressed. Subject to the points I have raised in my speech, I agree with the proposed amendments and I support the Bill.

Mr Deputy Speaker: Asst Prof Mahdev Mohan.

3.15 pm

Asst Prof Mahdev Mohan (Nominated Member): Mr Deputy Speaker, the SICC was, as we have heard, officially launched on 5 January 2015. And since then, this specialist division of the Singapore High Court has grown from strength to strength. The Court benefits from the best features of our established judicial system in Singapore as well as some novel features, such as having eminent international judges with common law and civil law training and experience who may be designated by the Chief Justice to hear cases in the SICC from time to time.

London may still dominate cross-border commercial litigation but it is no longer the default venue. The SICC has proven that it is able to quickly resolve complex disputes of substantial value and, together with the Singapore International Arbitration Centre (SIAC), and the Singapore International Mediation Centre, is an important component of Singapore's standing as a leading dispute resolution hub of choice in Asia.

It is thus only fitting, Mr Deputy Speaker, that on the third year anniversary since its launch, amendments have been proposed to the Supreme Court of Judicature (Amendment) Bill to clarify that the SICC has jurisdiction over all international commercial arbitration matters. This Court that had prompted the SICC's creation, the London Commercial Court, is perhaps one inspiration on this particular amendment or this particular clarification. As just like the London Commercial Court has a relationship with the London Mercantile Court, the SICC perhaps can be a specialist international court for international arbitration matters as well. The amendments to also abolish pre-action certificates signify that the SICC has come of age.

I welcome these amendments, Sir, but permit me to ask and pose certain questions to the Senior Minister of State.

First, notwithstanding the current avenues for enforcement at common law and under statue, does enforcement remain a challenge for the SICC as far as these judgments are concerned? More specifically, has Singapore's ratification of the Hague Convention on Choice of Court Agreements in 2016, and the passage of enabling legislation by this House just last year, had a positive impact on the enforcement of the Singapore High Court Judgments in general and SICC's judgments in particular? If so, could the Senior Minister of State please elaborate?

In addition to typical commercial arbitration cases which are between two commercial parties, do the amendments also clarify that the SICC can sit, if certain conditions are met, as the supervisory Court in investor-state arbitration cases as well under the International Arbitration Act, particularly section 10 of the International Arbitration Act? It would stand to reason, Sir, that it can do so since the High Court and the Court of Appeal have exercised such jurisdiction in the case of Solomon Investments and Lau, but I ask for this clarification from the Minister as the jurisdictional challenge was recently raised in the 2017 case of the Kingdom of Lesotho and Swissborough Diamond Mines. Further, some scholars believe that the Singapore Court may not have jurisdiction under the IAA to serve as the curial Court in investment arbitration cases.

Four, given the SICC has, strictly speaking, had the jurisdiction to hear cases arising from international commercial arbitration, both when the party so agreed by written agreement as well as when there has been a transfer from the High Court in its original jurisdiction, what may have dissuaded commercial parties from agreeing in their dispute resolution clauses thus far from having all court actions arising from any Singapore-related arbitration to come before the SICC? Are there statistics to show the number of companies perhaps that utilise the existing SICC model dispute resolution clause in their agreements?

Finally, are future innovations in the pipeline, Sir, to enhance the recognition and enforcement of SICC judgments? At the Dubai International Financial Centre (DIFC) Court, I note that money judgments can, at times, be "converted" under their Practice Directions into arbitral awards for the purposes of having recourse to the widely accepted New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. At the DIFC, if the judgment debtor does not have assets in Dubai, a common law country, a Gulf Cooperation Council (GCC) country and/or a country with which the UAE has a bilateral or multilateral treaty on recognition and enforcement, the judgment creditor can nonetheless still commence arbitration under the Arbitration Rules of the DIFC-LCIA Arbitration Centre. It is a combined centre between the London Court of International Arbitration (LCIA) and the DIFC.

While the nature and scope of the DIFC are certainly different from the SICC, is the Ministry of Law (MinLaw) perhaps studying the prospect of anything similar in collaboration with our own SIAC, which itself is recognised as one of the top five arbitral institutions in the world?

Just as an experimental Practice Direction that I mentioned above has opened the door to wider enforcement of DIFC judgements across the UAE, is the Ministry currently looking into the possibility of enhancing the recognition and enforcement of SICC judgments in ASEAN and Asian countries beyond the current avenues of enforcement available at common law and under statute?

Let me end, Sir, by saying perhaps the Senior Minister of State would be the person best poised and in the best position to answer my questions as she herself was a member of the creating committee of the SICC in 2013.

Mr Deputy Speaker: Mr Louis Ng.

3.22 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, I stand in support of this Bill. This Bill relates to proposed amendments to the Supreme Court of Judicature Act. It deals with matters relating to the operation and jurisdiction of the SICC.

The SICC was officially launched in 2015. The idea behind it was to grow the legal service sector, and to internationalise and export Singapore law. Since its launch, we have seen several cases go through the SICC, and it is important that legislation be updated to promote its efficiency. Similar to the point that Mr Murali Pillai had made, I would like to ask if the Senior Minister of State can confirm the rationale for removing the pre-action certificate and also whether there will be alternative procedures in place available to parties to now obtain early determination of these jurisdictional issues.

Next, the other primary amendment that the Bill seeks to pass relates to section 18D of the Act, which deals with the jurisdiction of the SICC. It is in this context that I seek certain clarification. As currently formulated under section 18 of the Act, the SICC has jurisdiction to hear and try actions that satisfy all of the following conditions: (a) the action is international and commercial in nature; (b) the action is one that the High Court may hear and try in its original civil jurisdiction; and (c) the action satisfies such other conditions as the Rules of Court may prescribe.

Clause 2 of the Bill seeks, among other things, to introduce the following sub-section to section 18D: "Without limiting subsection (1), the Singapore International Commercial Court (being a division of the High Court) has jurisdiction to hear any proceedings relating to international commercial arbitration that the High Court may hear and that satisfy such conditions as the Rules of Court may prescribe."

Within the context of International Commercial Arbitrations, recourse to the High Court is available under the International Arbitration Act. Given that such recourse to the High Court is already provided for in the International Arbitration Act and section 18 of the Act already provides that the SICC has jurisdiction where the High Court has jurisdiction, why is there a need for this amendment?

I note from the Explanatory Statement of the Bill that the amendments sought are to, among other things, "provide for clarity that SICC has jurisdiction to hear any proceedings relating to international commercial arbitration that the High Court may hear", but is this necessary given the current language of section 18D of the Act?

My concern is that the proposed amendments may be interpreted as conferring additional jurisdiction to the SICC when this is not the intention. Can it be clarified that this amendment does not seek to confer additional jurisdiction but simply to clarify the jurisdiction that the SICC already has? If so, to avoid misinterpretation of intent, can I suggest that the following language be adopted instead: "For the avoidance of doubt, the Singapore International Commercial Court (being a division of the High Court) has jurisdiction under subsection (1) to hear any proceedings relating to international commercial arbitration that the High Court may hear and that satisfy such conditions as the Rules of Court may prescribe."

Next, clause 4(b) of the Bill seeks to delete section 80(2A)(c) of the Act and substituting it with the following: "to prescribe, for the purpose of section 18D(2), what constitutes an international commercial arbitration, and any conditions that any proceedings must satisfy before that Court may hear those proceedings." Essentially, within the context of section 80(2A) of the Act, if the amendment is passed, Rules of Court may be made to define what an International Commercial Arbitration is for the purpose of the proposed section 18D(2).

The IAA already has several references to the term "international commercial arbitration". I think it is fairly clear what an arbitration is. Section 5(2) of the IAA sets out when an arbitration is international. Finally, when it comes to defining the term "commercial", the footnote of Article 1(1) of the First Schedule of the IAA mandates a wide interpretation and provides guidance as to what amounts to relationships of a commercial nature.

Given the approach that has been adopted in primary legislation, is there a need for the current amendment whereby Rules of Court may be made to set out what may constitute an International Commercial Arbitration? Is there a possibility that such Rules of Court may adopt a separate definition and create difficulty with the approach taken in the IAA?

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

Mr Deputy Speaker: Senior Minister of State Indranee Rajah.

3.26 pm

Ms Indranee Rajah: Mr Deputy Speaker, I thank the Members for their comments and support of this Bill. Let me now address their comments and queries.

I will first address Mr Louis Ng's question regarding why we are amending section 18D of the Supreme Court of Judicature Act and in relation to this, Mr Louis Ng and Prof Mahdev Mohan's questions on the jurisdiction of the SICC.

Mr Louis Ng correctly pointed out that the IAA provides that the High Court is the competent Court to hear matters relating to international commercial arbitration, and that the Supreme Court of Judicature (Amendment) Bill provides that the SICC has the High Court's original civil jurisdiction.

With respect to the wording of section 18D of the Supreme Court of Judicature (Amendment) Bill, although we have felt that it was clear, from time to time, we do get some questions as to the wording and its extent, and really, we felt that rather than have any lingering doubt about this, it would be better to clarify it and make it clear from the outset to avoid unnecessary litigation on this going forward.

And so, to reassure Mr Louis Ng, we are not extending or conferring additional jurisdiction on the SICC. What we are doing is clarifying its existing jurisdiction. This is clear from the explanatory statement of the Bill, which says that the Bill seeks to amend the Supreme Court of Judicature Act, to provide for clarity that the SICC has jurisdiction to hear any proceedings relating to international commercial arbitration that the High Court may hear.

Asst Prof Mahdev Mohan asked if the SICC will now be able to sit as the curial Court in investment arbitration award-related cases under the IAA. The intent of these amendments is for the SICC to hear IAA-related cases that the High Court can hear, subject to the proceedings fulfilling the relevant jurisdictional requirements and conditions. The conditions will be set out in the Rules of Court, which help to define the SICC's jurisdiction, as necessary. The Rules of Court are still in the process of being drafted, and Asst Prof Mahdev Mohan's suggestion will be carefully considered.

This brings me to Mr Louis Ng and Mr Murali Pillai's questions on the conditions and definitions which will be prescribed in the Rules of Court.

Clause 4(b) allows the Rules of Court to prescribe what constitutes an international commercial arbitration and such other conditions that any proceedings must satisfy. The specific Rules of Court are still being drafted. Once they are completed, they will have to go to the Rules Committee which is chaired by the Chief Justice. Whatever the eventual shape and form of the definitions and conditions, the Rules of Court, being subsidiary legislation, cannot enlarge the jurisdiction of the SICC as provided for in the SCJA, they can only serve to define or refine it.

I come now to pre-action certification. Clause 3 of the Bill deals with the removal of the pre-action certification procedure. Mr Louis Ng and Mr Murali Pillai have raised questions about the rationale for removing the procedure.

The pre-action certification was envisaged as an option that parties could use to certify, among other things, that the intended action is international and commercial in nature, and can therefore be heard by the SICC. However, the feedback received from the Supreme Court has been that the procedure has been of limited utility. And it is certainly not the case that the Supreme Court has required that the pre-action certificate be applied for in every SICC case.

Mr Pillai suggested that the pre-action certification procedure helps to promote certainty compared to the other methods for classifying a matter as an "offshore case", as it allows for the classification to be made at an early stage. The need for the pre-action certification procedure was more compelling when the SICC was first established because there was concern that parties might have been uncertain about whether the SICC even had jurisdiction or whether a case was an "offshore case" with no substantial connection to Singapore. Since then, the SICC has generated case law to clarify the requirements of an "offshore case", and there is a greater familiarity with the SICC. Potential users of the SICC can continue to direct their questions, prior to the commencement of the case, to the SICC Registry for general guidance, including on issues relating to jurisdictional criteria, with the caveat that this does not constitute legal advice. They can also refer to the SICC Practice Directions.

Let me round off my response by addressing Asst Prof Mahdev Mohan's other questions and comments in relation to the SICC. The SICC has done well as a trailblazer for dispute resolution in Asia. Since its establishment three years ago, the SICC has broadened the suite of dispute resolution options available to regional and international parties, and established a track record of producing sound and expeditious judgments.

I thank Asst Prof Mahdev Mohan for raising the issue of enforcement, which we recognise is a key ingredient in the success of the SICC. The Ministry continually works with the Supreme Court on arrangements to provide for the recognition of Singapore Court judgments, including SICC judgments, in other jurisdictions. So, for example, Singapore is a party to The Hague Convention on Choice of Court Agreements. The Convention currently has 30 Contracting Parties, including Singapore, Mexico and the European Union and its member states, except for Denmark. Last year, China signed the Convention, joining the US, Ukraine and Montenegro as signatories to the Convention. As the number of Contracting Parties to the Hague Convention grows, the SICC's reach will expand as well. Outside of treaty arrangements, the enforcement of judgments is also possible in many countries, including Singapore, so long as applicable and necessary requirements, for example, jurisdictional requirements, are met.

But these are early days still for the SICC and for international commercial litigation in Asia. I do not have on hand statistics of contracts where SICC clauses have been inserted. But we have heard, anecdotally, of high-profile users inserting SICC clauses into their contracts and are heartened by this. It will take some time, obviously, because the clauses go into the contract at an early stage and you do not know when the dispute will arise. Sometimes, it can be a few years and sometimes even decades before a dispute surfaces. So, it will take some time before we see more reference to the SICC clauses.

Just to illustrate this point about it taking some time, if you look at our success in arbitration as a reference, the SIAC was established in 1991 but it only started to see success years later. Today, of course, it is one of the top arbitral institutions in the world, and this has come about due to the changes in the international landscape and the concerted efforts from the Singapore Government and key stakeholders.

The amendments proposed in this Bill follow our consistent approach in assiduously refining the services that we have to offer. One possibility why the SICC has yet to hear arbitration-related matters could be precisely the uncertainty over whether the SICC has jurisdiction to hear IAA matters. So, we have clarified that and we expect that with these amendments, the users will find Singapore an even more attractive seat for arbitration.

We will continue to support the SICC in its efforts to educate and raise awareness to users on what it has to offer. As awareness of what the SICC has to offer and the SICC's reputation grows, users will become more familiar with the SICC and will be attracted to adopt the SICC jurisdictional clauses.

The SICC will also continue to refine and improve its services to continue to meet the needs of users. And in that respect, I welcome Asst Prof Mahdev Mohan's various suggestions, including the one on the possible "conversion" of money judgments to arbitral awards. We will take into consideration his suggestions as the SICC continues to evolve and grow. It is our belief that we need to keep our ears close to the ground so that we can move quickly and respond to user feedback, as appropriate. And so, I do welcome Asst Prof Mahdev Mohan's feedback as well as that from the businesses, the profession and other stakeholders. Thank you very much. Mr Deputy Speaker, 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. – [Ms Indranee Rajah].

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

Mr Deputy Speaker: Order. I propose to take a break now. I suspend the Sitting and will take the Chair at 4.00 pm.

Sitting accordingly suspended

at 3.38 pm until 4.00 pm.

Sitting resumed at 4.00 pm

[Deputy Speaker (Mr Charles Chong) in the Chair]