The Singapore International Commercial Court: A challenge to arbitration?

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:

• Carolyn Berger, former judge of the Delaware Supreme Court and vice chancellor of the Delaware Court of Chancery (United States).
• Patricia Bergin, chief judge of the Supreme Court of New South Wales (Australia).
• Roger Giles QC, former judge of the Court of Appeal of the Supreme Court of New South Wales and judge of the Dubai International Financial Centre Courts (Australia).
• Irmgard Griss, former president of the Austrian Supreme Court (Austria).
• Dominique Hascher, judge of the French Supreme Court (France).
• Dyson Heydon AC QC, former judge of the High Court of Australia and the New South Wales Court of Appeal (Australia).
• Sir Vivian Ramsey, former judge of the High Court and judge in charge of the Technology and Construction Court (England and Wales).
• Anselmo Reyes, former judge of the Court of First Instance in Hong Kong in charge of the construction and arbitration list and the commercial and admiralty list.
• Sir Bernard Rix, former judge in charge of the Commercial Court and Lord Justice of Appeal in the Court of Appeal (England and Wales).
• Yasuhei Taniguchi, former chairman of the Appellate Body of the World Trade Organization Dispute Settlement Body and professor emeritus at Tokyo University (Japan).
• Simon Thorley QC, IP law specialist and former deputy High Court judge and deputy chairman of the Copyright Tribunal (England and Wales).

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:

• Joinder of third parties – Unlike arbitration, the SICC has the power to join third parties to an action, even if the third parties are not parties to a written jurisdiction agreement and do not consent to being joined as a party. Arguably the SICC will not exercise this power if the third party will be in breach of an arbitration agreement. In any event, a State or the sovereign of a State may not be made a party to an action in the SICC (whether by joinder or otherwise) unless it has submitted to the jurisdiction of the SICC under a written jurisdiction agreement.
• Foreign legal representation - Parties may be represented by foreign lawyers in cases which have no substantial connection to Singapore (known as “offshore cases”), as well as in cases where the subject matter or issues in dispute give rise to questions of foreign law.
• Laws of Evidence and Foreign Law - Parties may apply to exclude the application of Singapore’s laws of evidence. As with arbitration, the SICC may allow parties to choose to apply alternative rules of evidence, with which they may be more familiar. The SICC may, upon the application of a party, order that any question of foreign law be determined on the basis of submissions, without requiring formal proof by experts.
• Confidentiality of Proceedings - Proceedings will generally take place in open court, but parties will have the option to apply for the proceedings to be confidential. In deciding to make a confidentiality order, the SICC will take into account whether: (i) the case is an offshore case; and (ii) there is an agreement between the parties on the making of such an order.
• Right of Appeal - Decisions of the SICC may be appealed to the Singapore Court of Appeal, although parties will be allowed to contractually exclude or limit this right of appeal. If the parties agree in writing to waive, limit or vary the right to appeal against any judgment or order of the SICC, then an appeal may be brought only to the extent as agreed between the parties.

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.