Singapore High Court stands up for fast-track arbitration procedure

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Summary: The Singapore High Court has recently rejected an application to set aside an award issued under the Singapore International Arbitration Centre’s (SIAC) expedited procedure. This is the first time the High Court has had to consider such an application and the decision should increase users’ confidence in the procedure and also provide certainty for future expedited arbitrations under the SIAC Rules.

The Singapore High Court has recently rejected an application to set aside an award issued under the Singapore International Arbitration Centre’s (SIAC) expedited procedure. This is the first time the High Court has had to consider such an application and the decision should increase users’ confidence in the procedure and also provide certainty for future expedited arbitrations under the SIAC Rules.

Speed is a benefit often associated with arbitration and it has become commonplace for many arbitral bodies to offer “fast-track” procedures to prevent certain arbitrations from becoming disproportionately long and expensive.

SIAC’s expedited procedure was introduced in 2010 and aims to offer parties their arbitral award within six months of the appointment of the tribunal. The case is referred to one arbitrator, unless the President of SIAC determines otherwise. Parties may apply to use the expedited procedure if: the amount in dispute does not exceed the equivalent of S$ 5,000,000; or the parties agree; or in cases of exceptional urgency.

However, although there are obvious time and cost benefits to using the expedited procedure, the actual effectiveness of the mechanism is ultimately dependent on enforcement and set-aside proceedings before the national courts. The decision in AQZ v ARA [2015] SGHC 49 will therefore be an important source of guidance for future challenges.

What has happened?

In AQZ v ARA [2015] SGHC 49, the dispute in question arose out of a contract formed in 2009 for the delivery of two shipments of Indonesian coal. The purchaser commenced SIAC proceedings in 2013 on the basis that the seller had failed to deliver the second of these two shipments claiming US$ 852,000. The SIAC President directed that the proceedings should be conducted in accordance with the expedited procedure, and appointed a sole arbitrator. However, the parties’ agreement had not specified the expedited procedure, and provided for an arbitration by a panel of three arbitrators.

In the award, the seller was found liable for breach of contract and subsequently made an application to the Singapore High Court to set aside the award on several grounds, and in particular on the following bases:

  • First, the conduct of the arbitration was not in accordance with the parties’ agreement because at the time of contract, the 2007 SIAC rules applied and these made no provision for an expedited procedure.
  • Second, even if the expedited procedure did apply, the composition of the arbitral tribunal was not in accordance with the parties’ agreement, which had expressly provided for a panel of three arbitrators instead of one.

What are the key points?

The High Court rejected both of the seller’s arguments and held that:

  • The expedited procedure was in accordance with the parties’ agreement.  There was a rebuttable presumption that the applicable SIAC rules were those at the  date of the arbitration, not the date of contract.  The parties had not made specific reference to the 2007 rules and therefore the 2010 rules in force at the date of commencement of arbitration applied.
  • The appointment of a sole arbitrator was also in accordance with the parties’ agreement.  The 2010 rules applying under the agreement allowed the SIAC president to appoint a sole arbitrator.
  • Even if the arbitration should not have been conducted before a sole arbitrator, the seller had failed to prove that the breach of the arbitration agreement was serious or that it had suffered any prejudice from the expedited procedure.

How will this affect me?

This decision reinforces the importance of giving proper thought to the mechanics of the arbitration process at the stage when parties are negotiating and drafting their agreements. In particular, parties should consider whether they want a particular version of the SIAC rules to apply, and if so they should reference it by name. If not, there is a risk that any future procedural amendments to the rules (including those related to expedited procedures and emergency arbitrators) will apply.

BLP Perspective

It is clear from this decision that the courts are willing to take a robust approach in respect of challenges to expedited arbitration awards and highlights that, without evidence of prejudice or other defects, usage of the expedited procedure in itself is unlikely to form a sufficient basis of challenge. This should increase confidence in the expedited procedure and the judgement sets a high bar for those looking to resist enforcement or seeking set-aside. As such, if parties have entered into an eligible dispute, they should be encouraged to give serious consideration to using the expedited procedure in order to reach a decision which is not only fast, but will also stand up to challenge.

Roger Milburn is a senior associate and Emily Smith is a trainee in the Singapore office Berwin Leighton Paisner LLP.

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