by Tom Pritchard

In November 2016, the English High Court was asked to rule on an arbitral tribunal’s jurisdiction after it made an award in favour of a claimant that had undergone a corporate restructuring halfway through the arbitration (A v B [2016] EWHC 3003 (Comm)).  The restructuring occurred under Indian law, but the decision may affect any litigant that goes through a restructuring process outside of England and Wales during an arbitration.


The claimant, E, had a long-term contract for the supply of iron ore with P, an Indian company.  When a dispute regarding the performance of the contract arose, the dispute was referred to arbitration in England.  After the commencement of the arbitration, P merged with F, another Indian company, under Indian company law using an Indian court-sanctioned Scheme of Amalgamation.  The Scheme of Amalgamation provided that all the rights and liabilities of P passed to F while simultaneously causing the dissolution of P.  At the conclusion of the arbitration, F (now substituted for P) was awarded over US$ 39 million plus interest.

E then applied to the English court to have the arbitral award set aside under section 67 of the Arbitration Act 1996, arguing that the tribunal lacked jurisdiction as the arbitration should have lapsed upon the dissolution of P by the Indian courts.

Claimant’s arguments

In order to advance its claim that the arbitration should have lapsed, E relied on the fact that the Scheme of Amalgamation (the mechanism by which P’s rights and liabilities passed to F) was a “universal succession” under Indian law.  E argued that English law does not recognise that concept of universal succession and that the transfer should therefore be viewed as an equitable assignment.

For F to rely on the equitable assignment in order to bring a claim against E, E maintained that notice needed to be given to E by P after the assignment completed.  As a matter of fact, P could not provide notice to E prior to its dissolution as P ceased to exist as soon as the “assignment” occurred.  Therefore, E argued that no effective assignment had occurred under English law and that the arbitration must have lapsed when P was dissolved (as the arbitration could not proceed with only one party).

In support of its position, E relied on the case of Baytur SA v Finagro Holdings SA [1992] 1 Lloyd’s Rep 134, in which the transfer of rights to a pending dispute was characterised as an equitable assignment.

Defendant’s arguments

In response, F argued that the Scheme of Amalgamation dictated that P had ceased to exist at the moment it transferred its rights and liabilities to F.  This was a legal and natural result of the Indian company law system.  Therefore, P could not give notice to E.

Furthermore, all the requirements under Indian company law had been met in order to transfer P’s claim to F.  Consequently, F advanced the argument that it was not right to consider the transfer as an equitable assignment.  Instead, comity compelled the English courts to recognise the effect of Indian company law.

Lastly, F asserted that Baytur could be distinguished on the basis that it involved only the transfer of benefits, whereas the merger of P and F involved both rights and liabilities being transferred from one entity to another.  Additionally, in Baytur the dispute had not commenced, whereas in the present case the arbitration was already underway.


Sir Jeremy Cooke found in favour of F.  He upheld the tribunal’s jurisdiction and refused to set aside the award.

The judge appeared to be largely persuaded by the equity of the situation, stating that a ruling in favour of E would have resulted in a “black hole” in which original claimants, who had followed their governing law, could never transfer claims before ceasing to exist.  Further, he found it to be “self-evident that a notice of assignment cannot be served before the assignment has occurred“.

Consequently, the case is authority for the concept that rights to a claim in arbitration can be transferred to another while an arbitration is on-going.  It is another example of an English court taking a pragmatic “pro-arbitration” stance.  However, the result may be more accurately said to have been determined by the nature of the Indian company law regime, which prevented the ability to serve proper notice.  Perhaps the case should then be understood as a caveat to the rule that notice must always be served when transferring rights from one party to another, where equity demands.

However, this caveat appears to be particularly narrow.  It would certainly appear more advisable to avoid corporate restructuring in the middle of an arbitration (or at least fully to consider the effect of the restructuring on the arbitration process while the restructuring is happening, rather than after the event).

*This article was authored by Tom Pritchard, a trainee solicitor at Olswang LLP, and originally published on Olswang LLP’s Legal and Regulatory News.

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The SPC Opinion

On 30 December 2016, the Chinese Supreme People’s Court (“SPC“) issued its Opinions on the Provision of Judicial Safeguards for the Construction of Pilot Free Trade Zones (“SPC Opinion“).

Article 9 of the SPC Opinion provides, among other things, that:

  • if two (2) wholly foreign owned enterprises (“WFOEs“) that are registered within a pilot free trade zone enter into an agreement to submit disputes to arbitration seated outside mainland China, the courts will not hold such an arbitration agreement as invalid merely on the ground that the dispute concerned is not foreign-related.
  • the courts will not uphold an objection to the recognition and/or enforcement of a foreign-seated arbitration award merely on the ground that there is no foreign-related element if the following three (3) conditions are met:
    1. at least one of the parties to the dispute is a foreign-invested company registered within a pilot free trade zone;
    2. the parties had entered into an arbitration agreement submitting their disputes to arbitrations seated outside mainland China;
    3. (a) the opposing party is the claimant who initiated the foreign-seated arbitration in the first place; or (b) the opposing party is the respondent who participated in the arbitration without challenging the validity of the arbitration clause in the course of the arbitration.

Other developments

Siemens International Trade Co., Ltd. v Shanghai Golden Landmark Co., Ltd.

The SPC Opinion follows hot on the heels of the 2015 landmark case of Siemens International Trade Co., Ltd. v Shanghai Golden Landmark Co., Ltd. (“Golden Landmark“), in which the Shanghai No. 1 Intermediate People’s Court (the “Court“) upheld and enforced an SIAC award between two PRC-incorporated entities which were also WFOEs.

In Golden Landmark, the Court found the legal relationship between Siemens and Golden Landmark to be foreign-related because:

  • The source of capital, ultimate ownership interest and business decisions of both companies were funded by and/or closely connected with foreign investors; and
  • The performance of the contract bore foreign-related features and was akin to an international sale of goods.

While welcoming the approach taken by the Court in Golden Landmark, commentators have been quick to caution against overstating the importance of the case as the SPC is not bound to follow the decision.

Ennead Architects International LLP v Fuli Nanjing Dichan Kaifa Youxian Gongsi

In a separate development, the Nanjing Intermediate People’s Court of Jiangsu Province recently issued a decision to enforce, for the first time, a CIETAC Hong Kong arbitration award between an American architectural firm and a Chinese property developer in Ennead Architects International LLP v Fuli Nanjing Dichan Kaifa Youxian Gongsi. This again demonstrates in general a greater willingness on the part of the Chinese courts to recognise and enforce foreign awards, albeit closer to home to mainland China in this particular instance.


  • Short of being a direct endorsement, the SPC Opinion does appear to be the SPC’s general nod of approval on the more open and inclusive approach taken by the Court in the Golden Landmark case towards foreign-seated arbitrations.
  • Like the Golden Landmark case, the SPC Opinion will be warmly welcomed by foreign investors who will see these developments as a sign of the PRC’s increasing openness towards enforcing foreign-seated arbitration awards between entities that may be incorporated in the PRC but otherwise driven by foreign investors.
  • This will serve to assuage the concerns foreign investors may previously have had about having limited legal recourse outside mainland China in the event of a dispute.
  • The safeguards mooted by Article 9 of the SPC Opinion is a clear indicator that the SPC is moving towards an increasingly more inclusive / less interventionist approach, which has previously deterred many foreign enterprises from readily doing business in the PRC.
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Joint Seminar on The Arb-Med-Arb Protocol: The Future of Alternative Dispute Resolution? (10 January 2017, Jakarta, Indonesia)


We are delighted to host a panel discussion on The Arb-Med-Arb Protocol: The Future of Alternative Dispute Resolution? alongside the Singapore International Mediation Centre (SIMC) and Pusat Mediasi Nasional (the Indonesian Mediation Center) (PMN) on 10 January 2017, 5 pm – 6.30 pm at the Shangri-La Hotel, Jakarta.

This interactive discussion will explore the benefits, challenges and tactical strategies relating to mediation in the context of dispute resolution. More details can be found here: http://www.olswang.com/invites/170110_Arb-Med-Arb.html.

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by Mark Davison and Katherine McKenna

On 20 October 2016, the ICC Executive Board approved changes to their Rules which will be effective as of 1 March 2017.[1]

Within the amended rules, the ICC has followed other arbitration centres such as SIAC in implementing an expedited process for lower value disputes.  However, the ICC has gone a step further and has provided that all disputes which are less than US $2 million will automatically need to be administered under the new expedited process unless the parties have expressly agreed to opt-out of this process in their arbitration agreements.  Parties with claims greater than US $2 million will have the option to opt-in to the new expedited process.

Under the expedited procedure:

  • the ICC has the discretion to appoint a sole arbitrator even if the parties have agreed otherwise in their arbitration agreement;
  • there is no requirement to prepare terms of reference;
  • the tribunal shall have discretion after consulting with the parties as to procedural measures it adopts – i.e. the tribunal may decide to dispense or limit document production, limit the length and scope of written submissions and witness evidence and even determine whether or not it should dispense with a formal hearing where witnesses are cross examined;
  • tribunals are required to issue awards within six months of the date of the case management conference being held; only in limited and justified circumstances will the ICC grant tribunals extensions.  The ICC Court and its Secretariat will maintain their roles in the quality control of awards made.

In return for using the expedited procedures, the ICC arbitration fees will be significantly reduced for the expedited procedure although it will still be calculated on a scale of the amounts in dispute.

It is likely that the amendments will be welcomed in the market.  With other arbitration centres and even courts invoking expedited procedures[2], it is clear that market users want to create environments where they can resolve their disputes quickly and cheaply.  Forcing users with small disputes to use the expedited process may convince those users that expedited processes may be suitable in certain circumstances to larger disputes.

[1] http://www.iccwbo.org/News/Articles/2016/ICC-Court-amends-its-Rules-to-enhance-transparency-and-efficiency/

[2] For example, the English Commercial Court has recently handed down its first decision under the High Court’s Shorter Trials Scheme, where a judgment was made totalling US $68 million. This had been determined within seven months of the claim being issued and with total costs on both sides of £350,000 (National Bank of Abu Dhabi PJSC v BP Oil International Limited [2016] EWHC 2892 (Comm): the judgment is here).

*This article was authored by Mark Davison (Senior Associate) and Katherine McKenna (Trainee Solicitor) of Olswang LLP, and was  originally published on Olswang LLP’s Legal and Regulatory News. 

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The Queen Mary University of London (“QMUL“) recently released its International Dispute Resolution Survey relating to Technology, Media and Telecoms (“TMT“) disputes.

The comprehensive survey was conducted over 2 phases and involved a variety of respondents, including private practitioners, in-house lawyers to respondent companies from more than 13 TMT-related sectors.

We have summarised the survey’s key findings, distilled the TMT sector’s general perceptions of international arbitration, and drawn some broad conclusions on the way forward below.

What are the most common types of TMT disputes and where / in which sectors do they take place?

The respondents cited intellectual property (“IP“) disputes as the most common (50%), with joint venture / partnership collaboration disputes (39%) and licensing disputes following closely behind (37%).

  • The rise in IP-related disputes could be attributed to IT implementation programmes, data related issues, reputation management issues and outsourcing programmes.
  • The rise in joint venture / collaboration disputes reflects the general increase in start-ups, digital disruption and the general need within the TMT industry to work with other businesses.

The Telecoms sector was the most contentious, with 71% of respondents experiencing more than 20 disputes and 83% indicating that their largest disputes were at the highest end of the scale (i.e. more than US$100m).

Asia reported the highest incidence of disputes, with 37% experiencing more than 20 disputes and 25% experiencing a dispute at the highest end of the scale.

Predicted future areas for disputes are: IP, collaborations and data / security issues.

What are the in-house Dispute Resolution (“DR“) policies and preferences?

75% of the organisations surveyed had a DR policy and within such policies, mediation is the most preferred mechanism (50%), followed by arbitration (47%).

However, within specific sectors, the responses were varied:

  • The Telecoms sector showed a preference for expert determination / adjudication, whilst no respondent actually encouraged litigation.
  • The IT sector saw litigation as the most encouraged mechanism (50%) with arbitration falling some distance behind (27%).
  • The Energy, Construction and Manufacturing industries all rated arbitration as the most encouraged DR mechanism.

When all respondents (including private practitioners and other dispute resolution practitioners) were assessed on their personally preferred DR mechanism, most stated a strong preference for arbitration (43%) over litigation (15%).

What are the top considerations affecting an organisation’s DR policy to international arbitration?

While various factors were cited as important to an organisation’s DR policy on international arbitration, the top two factors are (1) choice of institution and (2) seat of the arbitration.

Unsurprisingly, these are important elements for a well-drafted arbitration clause, and are usually provided for in the model clauses of most major arbitral institutions, such as the Singapore International Arbitration Centre (“SIAC“), London Court of International Arbitration (“LCIA“) and the International Court of Arbitration (“ICC“).

Whilst 40% of respondents expressed a preference towards mediation, there is “no common view” as to what form mediation should take. Overall, there is a lack of familiarity with mediation, particularly in civil law jurisdictions. Whilst respondents from the civil law jurisdictions tend to view mediation as an evaluative process, those from the common law jurisdictions essentially saw mediation as “facilitated negotiation“.

DR mechanisms in practice: preference vs reality

Not all disputes progress to a binding decision with 41% being settled.

Whilst most respondents indicated a strong personal preference for arbitration, the most commonly used DR mechanism over the past 5 years was in fact litigation (litigation : arbitration / 44% : 35%). This could be attributed to the following:

  • Many disputes emerge more than 5 years after the contract is drafted. These disputes may involve contracts written before the surge in popularity in arbitration over the last decade.
  • Customers and suppliers tend to have differing views about arbitration, and this could explain a lack of agreement to arbitration in the DR provisions at the contract drafting stage.
  • Litigation may be the default position, particularly for disputes that do not involve contracting parties, i.e. IP, competition, data protection / security disputes.
  • At the procurement stage, parties may have given little attention to the DR provisions, either to time constraints or because neither anticipates a major dispute arising.

The key to greater inclusion of international arbitration into DR clauses appears to lie in educating the Board of Directors, Senior Executive or CEO of the organisation (57%), as they tend to be the main decision-makers on whether to introduce formal legal proceedings.

While General Counsel or Head of Legal are the second most common decision-makers (36%), the survey appears to indicate that most are well-acquainted with and/or generally aware of the advantages of arbitration.

The future of international arbitration and TMT disputes – advantages, weaknesses and ways to improve

A “striking majority” of respondents (92%) indicated that international arbitration is well-suited for TMT disputes, and 82% anticipate that there will be a general increase in its use to resolve TMT disputes.

The oft-cited advantages of arbitration include:

  • The procedural flexibility available to arbitration as compared to court procedures;
  • Confidentiality;
  • Enforceability in multiple jurisdictions.
  • The uncertain political climate (i.e. Brexit) is another reason why respondents chose international arbitration over court proceedings.

Some perceived weaknesses / disadvantages of arbitration are:

  • The difficulty in obtaining injunctive relief;
  • Prohibitive costs of arbitration; and
  • The lack of arbitrators with TMT expertise.

Whilst lower costs are the most obvious way to improving arbitration (58%), a need for specialist knowledge of the TMT sector was also highlighted:

  • A main reason cited for the reluctance to use arbitration is the lack of specialist arbitrators with TMT expertise.
  • Technical knowledge and sector expertise are ranked highly when it comes to choosing external counsel and arbitrators.
  • Key ways of improving arbitration for TMT disputes include: (1) the creation of a neutral system for the accreditation of specialist arbitrators; (2) having a specialised roster of arbitrators for TMT disputes; and (3) the appointment of more industry experts.

TMT disputes and arbitral institutions

The ICC, World Intellectual Property Organisation (“WIPO“), LCIA, International Centre for Dispute Resolution (“ICDR“) and SIAC were ranked amongst the top five most preferred arbitral institutions for TMT disputes.

  • In the United States, the ICDR was the most preferred choice at 55%.
  • In the EU, the ICC came in highest at 74%.
  • In Asia, the SIAC was most popular at 67%, followed closely by the ICC at 61%.
  • WIPO is more favoured for IP disputes.


TMT disputes tend to be high risk and high-value, with many involving sums in excess of US$100m.

Asia was the most contentious region surveyed, although Europe and North America had the most claims at the highest end of the scale.

The future of international arbitration in the TMT sector is bright, with most within the industry predicting its use to increase.

Key ways of exploiting this advantage include:

  • gaining greater buy-in from the Boards of TMT organisations;
  • advising on its inclusion in DR clauses for TMT contracts;
  • gaining industry confidence by building up more specialist TMT arbitrators and counsel.

With thanks to Lakshanthi Fernando.



Posted in Arbitration, TMT | 1 Comment


Over the past few years, companies have begin to view Singapore as an attractive regional business hub as evident by the increase in the number of global companies who have decided to set up and/or relocate their Asia headquarters to Singapore in a bid to expand their regional presence and capabilities. Indeed, this position is consistent with the findings of Consultancy firm, PwC in a recent survey (“Cities of Opportunities 7, 2016“) which saw Singapore being placed 2nd (out of 30 global cities and after London) as the world’s best business hub.

This, coupled with the increase of economic activity within Asia (particularly Singapore) and the need to ensure that Singapore maintains its competitive edge as (rightly described by the Singapore Ministry of Law) the “key seat of arbitration in Asia“, has propelled the Singapore Ministry of Law to propose changes under the Civil Law (Amendment) Bill 2016 (“Funding Bill“).

The Funding Bill which was submitted for First Reading before the Singapore Parliament on 7 November 2016 essentially seeks to enact a framework and legalise third party funding for international arbitration and related litigation proceedings in Singapore.  The Funding Bill is expected to proceed for a second reading and if approved, to be enacted in early 2017.

Given the recent developments, here is an overview of what you need to know of the impending change:

Question Answer Did you know?


What is third party funding?


Third party funding is an alternative mode of financing a party’s legal proceedings.

It is where a third party entity, that is entirely not involved in and/or connected to a dispute, provides funds to one party (usually the Claimant) for a return of financial gains (e.g. a share of damages awarded) in the event a claim is successful.

Also commonly referred to as “litigation funding“, “specialist funding” and “legal financing“.
What is the current position in Singapore?


Third party funding is not allowed in Singapore under the common law tort of champerty and maintenance.

Similarly, third party funding agreements are not enforceable in Singapore.


Both Singapore and Hong Kong have yet to legalise third party funding in arbitration. However,

  • The Law Reform Commission (Hong Kong) has recently proposed for the legalisation of third party funding under the Arbitration Ordinance; and
  • Unlike Hong Kong, there are currently no professional third party funders based in Singapore.
What are the proposed changes?


Four (4) key changes:

(i)        Abolish the common law tort of chamberty and maintenance in Singapore;

(ii)       Third Party Funding contracts can be valid and enforceable in “certain prescribed categories of proceedings” such as international arbitration and related legal proceedings in Singapore;

(iii)     Third Party funders will be subject to certain prescribed qualification or requirements; and

(iv)     Through a related amendment under the Legal Professions Act (Cap. 161), lawyers can introduce / refer funders to clients as long as there is no direct financial benefit derived. They can also advise clients on third party funding contracts and any disputes arising out thereof.

The proposed amendments were open for public consultation between 30 June 2016 to 29 July 2016 and received feedback from the Law Society, lawyers, in-house counsel, professional funders and other agencies.

If approved, these changes will take the form of amendments to the Civil Law Act (Cap 43 of the 1999 Revised Edition).





What preparatory steps can your company take?


In anticipation of the prospects of legalised third party funding in Singapore:

(i)         Know your third party funders – are they reputable and experienced?

(ii)        Know the qualifying criteria you need to meet to be eligible for third party funding.

In the UK, there is a self regulatory body called the Association of Litigation Funders which also sets standards (in the form of a Code of Conduct) for which its funder members must abide by.

 What does this mean for Singapore?

Adopting a more “light touch” approach means it remains uncertain if Singapore will extend the legalisation of third party funding to cover domestic arbitration and court litigation in Singapore.

For the moment, the current changes (if allowed) will still be a significant development in Singapore’s positioning as the dispute resolution hub of choice for cross-border disputes in Asia. It brings Singapore more in line with other major arbitration centres, such as London, and provides commercial parties with yet another reason to choose arbitration to resolve their disputes.


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The SIAC Study

On 10 October 2016, the Singapore International Arbitration Centre (“SIAC“) released its inaugural Costs and Duration Study (the “SIAC Study“) based on actual cases filed with the SIAC under the 5th edition of the SIAC Rules (“SIAC Rules 2013“, which came into effect on 1 April 2013). The data set was taken from 98 cases administered under the SIAC Rules 2013 from the period 1 April 2013 to 31 July 2016 where a final award had been issued.

Some noteworthy statistics from the SIAC Study:

  • The mean duration of an SIAC arbitration is 8 months, whereas the median duration is 11.7 months.
  • The mean total costs of an SIAC arbitration is USD 80,337, as compared to the median total costs, which is USD 29,567.

The above figures are fairly impressive given that, according to Gary Born, President of the Court of Arbitration of the SIAC, the “average sum in dispute in the past three years is more than USD 16 million“.

The LCIA Study

In a similar costs and duration study released in November 2015 (“LCIA Study“), the London Court of International Arbitration (“LCIA“) published data on LCIA arbitrations completed between 1 January 2013 to 15 June 2015.

The LCIA Study shows, among other things, that:

  • The mean duration of an LCIA arbitration is 20 months, whereas the median duration is 16 months.
  • The mean costs of an LCIA arbitration is USD 192,000, whereas the median costs is USD 99,000.

The LCIA Study also compared the LCIA’s statistics with the mean and median costs of arbitrations commenced under three (3) other established arbitral institutions, namely, the International Chamber of Commerce (“ICC“), the SIAC and the Hong Kong International Arbitration Centre (“HKIAC“).

Interestingly, based on the LCIA Study, the estimated mean costs of an SIAC arbitration amounted to USD 250,000, while the median costs was approximately USD 140,000.

The main takeaway from the LCIA Study was that LCIA arbitrations were generally more affordable than ICC and SIAC arbitrations; HKIAC arbitrations have the distinction of being the cheapest. However, according to the LCIA Study, the costs of LCIA arbitrations are comparable to that of HKIAC arbitrations for high-value disputes worth more than USD 1 million.

The LCIA uses the hourly rate system to compute the costs of its arbitrations, as opposed to the ad valorem system used by the ICC and the SIAC. (The HKIAC uses both systems, giving parties a choice between the two.) The ad valorem system fixes the costs of an arbitration based on the value of a claim and within limits provided by each institution’s costs scales.

Disparities in data collection

A comparison of the data taken from both studies reveals a significant disparity between the LCIA’s estimated cost of an SIAC arbitration and the SIAC’s own numbers. For example, the median costs of an SIAC arbitration under the LCIA Study was USD 140,000, as compared to USD 29,567 under the SIAC Study. Given that the two studies were conducted only a year apart, the disparity cannot be easily explained away by just the passage of time.

However, the figures obtained by the SIAC Study – which appear to be based on actual costs incurred in real cases – may arguably be more accurate than the numbers published by the LCIA Study, which were derived from estimates using the SIAC’s costs calculator.

Efficiency of SIAC arbitrations

While a close comparison of the two studies would cast some doubt as to the actual mean / median costs of an SIAC arbitration, the efficiency of an SIAC arbitration looks set to continue to improve with the introduction of the 6th edition of the SIAC’s Arbitration Rules, which came into effect on 1 August 2016 (“SIAC Rules 2016“).

In particular, with the introduction of the early dismissal rules as well as enhancements to the Emergency Arbitrator and Expedited Procedure provisions, the median duration of an SIAC arbitration is expected to continue to shorten. At 11.7 months, the median duration of an SIAC arbitration is already shorter than that of an LCIA arbitration, which comes in at 16 months.

The enhanced speed of SIAC arbitrations is likely to be an attractive feature for commercial parties on the lookout for the most expeditious (and inexpensive) method of resolving their commercial disputes.


  • Based on data collected from both studies, SIAC arbitrations are generally resolved more quickly than LCIA arbitrations.
  • The duration of SIAC arbitrations is likely to continue to shorten with the new provisions found in the SIAC Rules 2016.
  • The actual median costs of an SIAC arbitration appears to be subject to dispute, with the LCIA Study yielding very different estimates from the SIAC Study’s published figures.
  • Ultimately, neither study is comprehensive enough to accurately determine whether the ad valorem system or hourly rate system is more cost-efficient.
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In the recent decision of JVL Agro Industries Ltd v Agritrade International Pte Ltd [2016] SGHC 126, the Singapore High Court set aside an arbitration award in favour of the defendant, Agritrade International Pte Ltd (“Agritrade”), on the basis that there had been a breach of the rules of natural justice.

In brief, the Court found (amongst other grounds) that:

  • The arbitral tribunal had reached its determination on the basis of an issue which Agritrade had not advanced in the proceedings; and
  • In doing so, the tribunal had failed to grant the plaintiff, JVL Agro Industries Ltd (“JVL“), a fair hearing.

This is a significant decision in Singapore, an arbitration-friendly jurisdiction where the local courts rarely intervene in the decisions of arbitrators.

The background

  • JVL entered into a series of 29 contracts to buy palm oil from Agritrade between July and November 2008.
  • In the second half of 2008, the market price of palm oil fell significantly below the parties’ contractually agreed prices.
  • JVL approached Agritrade to have a price-averaging arrangement (“PAA”) to allow JVL more time to discharge its contractual obligations and to average down the unit price of the palm oil. Meanwhile, JVL continued entering into new contracts with Agritrade to buy palm oil at the prevailing market price.
  • Eventually, JVL discharged almost all its purchase obligations, save for five (5) undischarged market price contracts (the “disputed contracts“).
  • By June 2010, the market price of palm oil had risen significantly. The parties were unable to agree on the prices to be reflected in the disputed contracts. As a result, JVL served a notice of default on Agritrade that it would purchase the remaining palm oil from the market and claim the difference against Agritrade.

The arbitration proceedings

  • In April 2011, JVL commenced arbitration against Agritrade at the Singapore International Arbitration Centre (“SIAC“).
  • JVL’s pleaded position was that Agritrade had failed to perform any of the disputed contracts despite promises to do so.
  • Agritrade’s main defences were that:
    • the PAA resulted in the disputed contracts being void for uncertainty (“Uncertainty Defence“); or
    • Even if the disputed contracts were not void, they had been mutually terminated (“Mutual Termination Defence”).
  • Agritrade abandoned its Mutual Termination Defence on the first day of the arbitration proceedings, resulting in its sole defence at the arbitration being the Uncertainty Defence.
  • Agritrade did not address the parol evidence rule at all in its defence. It was the tribunal that directed parties to address this issue.
    • The parol evidence rule provides that a party to a contract which has been reduced to writing cannot (unless one of a limited number of exceptions applies) rely on extrinsic evidence to vary, contradict, add or subtract from the contract.
  • The tribunal issued its award in October 2013, dismissing JVL’s claim with all three arbitrators agreeing that their decision turned on the issue of whether the PAA amounted to a collateral contract:
    • The majority found that the PAA amounted to a collateral contract that was capable of varying the parties’ obligations under the disputed contracts.
    • In a nutshell, the tribunal’s determination of Agritrade’s liability depended primarily on its determination of whether the PAA was a collateral contract falling within the exception of the parol evidence rule.

JVL’s application to set aside the award

Dissatisfied with the outcome, in January 2014, JVL applied to the Singapore High Court to set aside the arbitral award. JVL’s primary grounds were:

  • There was a breach of the rules of natural justice in the tribunal’s making of the award;
  • The arbitral tribunal’s decision on certain issues went beyond the scope of the arbitration; and
  • There was apparent bias on the part of the tribunal towards JVL.

Having heard the parties, the High Court suspended JVL’s application to set aside the award (i.e. exercising the Court’s power under Art 34(4) of the UNCITRAL Model Law), remitting the award back to the tribunal for it to consider whether it was necessary or desirable to receive further evidence or submissions on (amongst other things) whether the PAA amounted to a collateral contract. The tribunal declined to receive further submissions or evidence and rendered an addendum reaffirming its decision. JVL’s application to set aside the award resumed before the High Court after six (6) months.

The High Court’s decision

  • The Honourable Justice Vinodh Coomaraswamy observed that:
    • JVL and Agritrade failed to raise or address the parol evidence rule in their respective cases.
    • Although the parol evidence rule was addressed in the parties’ first exchange of written submissions (at the direction of the tribunal):
      • Agritrade chose not rely on the collateral contract defence as an exception to the parol evidence rule (“collateral contract exception”) despite having at least five (5) opportunities to do so; and
      • Neither party was directed to specifically address the collateral contract exception.
  • The Court allowed JVL’s application, holding that:
    • there was an insufficient nexus between the tribunal’s chain of reasoning and the cases advanced by the parties.
    • Significantly, the Court found that Agritrade’s defence was not merely silent on the collateral contract exception, but had implicitly rejected it.
    • As such, the majority of the tribunal had breached the rules of natural justice by depriving JVL of a fair hearing.
    • In particular, the Court found that the majority had exercised “unreasonable initiative” by impermissibly relieving Agritrade of the burden of establishing its defence.

Key takeaways

This decision is unlikely to open the floodgates. It affirms the trite legal principles that:

  • there should be a sufficient nexus between the reasoning which the tribunal adopts and the cases advanced by the parties. [In this case, neither party had advanced the collateral contract issue.]
  • each party should be given a fair and reasonable opportunity to present its case. [The court found that JVL had been deprived of a reasonable opportunity to present its case, particularly on an issue that turned out to be the determinative issue in the tribunal’s ultimate award, i.e. the collateral contract issue.]
  • an arbitral tribunal has the power to undertake inquisitorial processes under s. 12(3) of the International Arbitration Act (Cap. 143A). Once issues have been raised by the tribunal, the tribunal can incorporate those issues into its reasoning provided that the parties have been given the opportunity to address such issues. [In this case, the tribunal had raised the collateral contract exception on its own accord (possibly to avoid an “unattractive” outcome) and adopted a chain of reasoning that had no connection with the cases advanced by either party.]

Ultimately, this decision validates Singapore as a neutral, fair seat where the Courts – while known for their pro-arbitration stance – will adopt a robust approach when there has been a clear breach of the rules of natural justice. The courts at the seat of the arbitration proceedings have supervisory jurisdiction over the arbitration process and the parties should be secure and confident that such powers will be exercised when required.

With thanks to Lakshanthi Fernando.

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An overview: How do the key changes to the SIAC Rules compare with some of the other major arbitral institutions?


SIAC (2016 rules) ICC LCIA HKIAC
Consolidation of multi-contract disputes
Joinder of parties and non-parties

(Non-parties disallowed)

Early dismissal of claims/ defences

Delocalising the Seat of Arbitration

(Default seat is London if parties have not agreed; Parties can subsequently request another seat)

(Default seat is Hong Kong if parties have not agreed)

Remedy against non-paying party for unpaid deposits

Expedited procedure may be heard solely on documentary evidence

(Expedited procedure unavailable)

(Appears to be silent)

Emergency arbitration proceedings (appointment of arbitrator in 1 day)

(Appointment within 2 days)

(Appointment within 3 days)

(Appointment within 2 days)

Arbitrator’s appointment can be challenged; A reasoned decision to any challenge will be given and a fee is payable

(The former arbitrator’s fees are not fixed)

With thanks to Lakshanthi Fernando.

Posted in Arbitration, Asean, Dispute Resolution, Hong Kong, ICC, London, SIAC, Singapore | Leave a comment

SIAC 2016 Rules: The key changes

On 1 July 2016, the Singapore International Arbitration Centre (“SIAC“) published the latest revised set of SIAC Rules (“SIAC 2016 Rules“), which will come into effect on 1 August 2016. The SIAC 2016 Rules are available here.

The SIAC’s draft revised rules were released for public comment on 18 January 2016. In a previous blog post, we highlighted some of the key proposed changes relating to Multiple Contracts and Consolidation, Joinder of Additional Parties and the enhanced Emergency Arbitration Proceedings, which have since been finalised.

An Overview of the Key Changes

A. Consolidation of multi-contract disputes (Rules 6 and 8):

Rule 6 [Multiple Contracts]

  • At the time of arbitration proceedings, the claimant can choose to either:
    • File a Notice of Arbitration in respect of each arbitration agreement invoked and concurrently submit an application for consolidation of the arbitrations under Rule 8.1; or
    • File a single Notice of Arbitration in respect of all the arbitration agreements invoked, including:
      • A statement identifying each contract and arbitration invoked; and
      • A description of how the applicable criteria under Rule 8.1 are satisfied.

Note: By filing a single Notice of Arbitration, the claimant is deemed to have:

  • commenced multiple arbitrations (one for each arbitration agreement invoked); and
  • applied to consolidate all such arbitrations under Rule 8.1.

Rule 8 [Consolidation]

  • Complements Rule 6.
  • Prior to the constitution of the Tribunal, a party may apply for two or more pending arbitrations to be consolidated into a single arbitration, subject to any of the following criteria being satisfied:
    • The parties’ consent;
    • The claims are made under the same arbitration agreement; or
    • The compatibility of the arbitration agreements and the disputes arise out of:
      • the same legal relationship(s); or
      • contracts consisting of a principal contract and its ancillary contract(s); or
      • the disputes arise out of the same transaction or series of transactions.
  • After the constitution of the Tribunal, a party may apply to consolidate two or more pending arbitrations into a single arbitration. The same criteria as above applies with some additions:
    • The same Tribunal should have been constituted in each of the arbitrations; or
    • There is no Tribunal constituted in the other arbitration(s).

Who does a party apply to?

  • The Court of Arbitration of SIAC (“SIAC Court“) [if application is made before the Tribunal is constituted]; or
  • The Tribunal [after the Tribunal has been constituted].

Why is this significant?

  • Previous SIAC Rules were silent on the administration of multi-contract disputes.
  • SIAC 2016 Rules provide a streamlined process for managing disputes arising out of or in connection with multiple contracts/arbitration agreement.

B. Joinder of Additional Parties (Rule 7):

  • Parties and non-parties may apply to be joined in a pending arbitration.
  • Joinder application may be made before or after the Tribunal is constituted.
  • Criteria to be considered:
    • The additional party to be joined is prima facie (i.e. on the face of it) bound by the arbitration agreement; or
    • All parties (including the additional party) consent to the joinder.

Why is this significant?

  • Previous rules (SIAC 2013 Rules) only allowed a third party to be joined to the arbitration if the third party:
    • was a party to the arbitration agreement; and
    • provided written consent to be joined.

C. Early dismissal of Claims and Defences (Rule 29):

  • A claim or a defence may be dismissed early if it is “manifestly”:
    • without legal merit; or
    • outside the jurisdiction of the Tribunal.
  • Application is to be made to the Tribunal.
  • The Tribunal has the discretion whether to allow it.
  • If the Tribunal allows an application for early dismissal to proceed, it must issue an order or Award:
    • with reasons (which may be in summary form); and
    • within 60 days of filing of the application [unless (in exceptional circumstances) the Registrar extends the time].

Why is this significant?

  • While early dismissal proceedings are common in court litigation, SIAC is the first major commercial arbitration centre to introduce such a procedure.

D. Seat of the Arbitration delocalised (Rule 21):

  • If the parties have not / are unable to agree on the seat of the arbitration, the Tribunal shall determine the seat having regard to all the circumstances of the case.

Why is this significant?

  • Previously, if the parties have not or were unable to agree on the seat, the seat was (by default) Singapore [unless the Tribunal determined otherwise].
  • Parties who do not expressly state the seat of arbitration in their arbitration clauses should take note of this change.

[As covered in a previous post, the seat of the arbitration is important for a number of reasons, for instance the seat determines the procedural law and the courts which have supervisory jurisdiction over the arbitral proceedings.]

E. Remedy against a Non-Paying Party (Rule 27):

  • The Tribunal has the power to issue an order or award for the reimbursement of unpaid deposits towards the costs of the arbitration.

Why is this significant?

  • The previous rules (SIAC 2013 Rules) merely allowed the Tribunal to issue an award for unpaid costs of the arbitration.
  • The new rule addresses a significant practical issue for parties (usually the Claimants) who need to pay the required deposits towards the costs of the arbitration when a counterparty fails or refuses to pay its share.

F. Expedited Procedure (Rule 5):

  • The amount in dispute (i.e. the aggregate of the claim, counterclaim and any defence of set-off) for the expedited procedure to be invoked has been increased from S$5,000,000 to S$6,000,000.
  • The Tribunal now has the discretion to determine whether an Expedited Procedure case can be decided on the basis of documentary evidence only as long as this is done in consultation with the parties.

Why is this significant?

  • Previously, the parties’ agreement was required for an Expedited Procedure case to be decided based only on documentary evidence (i.e. without a hearing).
  • The increase of the monetary threshold will enable more cases to benefit from the expedited procedure.
  • The Tribunal’s expanded discretion on dispensation of a hearing may increase the efficiency and speed at which a decision is made.

G. Emergency Arbitration Proceedings (Rule 30; Schedule 1; and Schedule of Fees):

  • New timeline for appointment of Emergency Arbitrator: Within 1 day (instead of 1 business day) of receipt of application for emergency interim relief and payment of administration fee and deposits.
  • New time limit for issuance of interim award / award: Within 14 days from the date of Emergency Arbitrator’s appointment [unless, in exceptional circumstances, the Registrar extends time].
  • Fixed fees: S$ 25,000 (unless the Registrar determines otherwise).

Why is this significant?

  • Faster relief.
  • Certainty on fees.

H. Challenge of Arbitrators (Rules 14 to 16; and Schedule of Fees):

  • A fixed “challenge fee” of S$8,000 (or S$8,560 for Singapore parties) is set; and
  • A reasoned decision of the SIAC Court will be issued.

Previously, there was:

  • no fee payable for submitting a notice of challenge; and
  • no requirement for the SIAC Court to provide reasons for its decision.

Why is this significant?

  • In our view, the requirement to pay a “challenge fee” may discourage frivolous or unmeritorious applications designed to delay the proceedings.
  • Greater clarity for the parties on the reasoning behind any decision by the SIAC Court on such challenges.


With the launch of the 6th edition of its rules (the last version being only 3 years ago), the SIAC has once again showcased its proactive and robust approach to refreshing, reviewing and streamlining its procedures to meet the commercial demands of its users.

With thanks to Lakshanthi Fernando.

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