Publication
Australian Arbitration Week 2024
Australian Arbitration Week took place between 13 – 18 October 2024 in Brisbane.
Banking and finance disputes review
Global | Publication | November 2015
The new Singapore International Commercial Court (SICC) was officially launched on 5 January 2015. The SICC is intended to be the Asian centre for resolving international commercial disputes, in particular, international banking and financial disputes.
Whilst Singapore has for some time enjoyed success as the leading regional centre for international arbitration, financial institutions have traditionally been resistant to arbitration, preferring litigation as their chosen method of dispute resolution. Accordingly, the SICC may be attractive to financial institutions as a new forum for international banking and financial disputes. Even though the SICC typically enjoys jurisdiction via a contractual jurisdiction clause, the Singapore High Court may on its own motion order a transfer of a case to the SICC where “it is more appropriate for the case to be heard in the Court”.
The Singapore High Court has seen several high profile international banking and financial disputes in recent years. These include suits brought by Filipino, Taiwanese and Chinese investors against different international banks and a suit brought by a Singapore public-listed infrastructure company against a Middle Eastern-based bank arising out of credit facilities for a construction project in Libya.
The number of cross-border disputes involving financial institutions is only set to increase as the Singapore government continues to actively promote Singapore as a major Asian financial centre. Singapore is home to over 700 financial institutions offering a myriad of products and services across various asset classes. This includes over 200 banks, a growing number of which have also chosen to base their operational headquarters in Singapore to service their regional group activities. Singapore is the third largest foreign exchange centre globally and the largest foreign exchange centre in Asia Pacific. Singapore is also ranked the largest over the counter (OTC) interest rate derivatives centre in Asia Pacific excluding Japan by turnover. Assets under management in Singapore rose by 30% from S$1.8 trillion in 2013 to over S$2.3 trillion in 2014.
Given this trend, the Singapore High Court may face increasingly technical and complex international banking and financial disputes. Should such disputes be filed before the Singapore High Court in the future, it is plausible that the High Court may transfer the dispute to the SICC.
The SICC has several advantages for international users over the domestic courts. For example, key distinguishing features of the SICC include a panel of international judges, the possibility of having foreign legal representation, the determination of foreign law on the basis of submissions rather than expert evidence, the exclusion of Singapore’s laws of evidence and the ability to limit or vary the right of appeal. These features are discussed in more detail below.
The judges of the SICC comprise both the local judiciary and a panel of international judges. The inaugural panel of eleven international judges contains both civilian and common law jurists from around the globe. They are:
Rules and practice directions have been specifically formulated for the SICC and will provide it with the framework to hear cross-border commercial disputes. Some of the salient features are:
The Supreme Court of Judicature (Amendment) Act 2014 stipulates that parties who have agreed to submit to the jurisdiction of the SICC shall, unless expressly stated otherwise, also be considered to have agreed to submit to the exclusive jurisdiction of the SICC, to carry out any SICC judgment without undue delay and to waive any recourse to any court or tribunal outside Singapore against any SICC judgment and the enforcement of such a judgment.
In contrast to international arbitral awards that are enforceable by way of the New York Convention on the Enforcement of Foreign Arbitral Awards, SICC judgments have the status of a Singapore High Court judgment. Their enforceability in a foreign jurisdiction would be dependent on the principles governing the recognition of foreign judgments in that jurisdiction. This is a possible disadvantage of an SICC judgment compared to an arbitral award. The current disparity between the enforceability of SICC judgments and arbitration awards may restrict the circumstances in which parties will prefer the SICC to situations where enforcement will take place in Singapore itself, or in a country where parties are relatively confident a Singapore judgment will be enforced.
The SICC’s combination of international expertise and commercially focussed rules should make it an attractive forum for resolving international banking and finance disputes. For multi-party disputes involving jurisdictions that allow enforcement of Singapore judgments, the SICC may be preferred to arbitration. And for complex financial disputes centred in Asia, the SICC may be more practical than litigation in London or New York.
Publication
Australian Arbitration Week took place between 13 – 18 October 2024 in Brisbane.
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