Singapore Proposes Amendments to Arbitration Law

In another sign that ADR continues to gain momentum worldwide, Singapore’s Ministry of Law has proposed changes to its International Arbitration Act (IAA).

The number of arbitration cases has risen steadily over the past few years and the changes are meant to address some holes in the law or create new powers for courts and arbitrators. The Ministry of Law said in its request for comments that the “proposed amendments will enhance Singapore’s status as an arbitration hub by expanding the scope of arbitral tribunals’ jurisdiction and powers.”  The amendments are a result of “recommendations received from various fronts, including the Law Reform Committee and our arbitration community,” it added.

The proposal includes a Foreign Limitation Periods Act. It would clarify which rule of limitations would apply in court and arbitral disputes where the site of the dispute is Singapore but the governing law is from another jurisdiction. “The amendment will clarify that the applicable limitation period will be the rules of the law that govern the dispute” and it would apply to arbitrations and cases litigated in court.

One proposed amendment would authorize arbitrators to award interest and another would make orders issued by emergency arbitrators enforceable. Currently, the law only recognizes written arbitration agreements as enforceable but a proposed amendment would make oral agreements enforceable as well as arbitrations based on the conduct of the parties.

Another proposed amendment would address the inability of courts to review decisions by arbitral tribunals that they do not have jurisdiction to consider a dispute. The proposal notes that courts may review positive rulings by arbitral tribunals, but not negative ones.

“Such differential treatment of negative and positive jurisdictional rulings has been criticized by practitioners and academics. Inequity is just as likely to arise from a negative jurisdictional ruling that is erroneously made, as from an erroneous positive jurisdictional ruling,” it read.

This proposed amendment is strongly supported in the industry and would “rectify this inconsistency by allowing parties to have recourse to Singapore courts in respect of both positive and negative jurisdictional rulings.”

It will be interesting to see how these changes will impact Singapore and even Asia. However these developments demonstrate a significant and positive step in the legal culture and are very much welcomed.