THE AUTHOR:
Sunita Advani, Arbitral Assistant to Mr Michael Lee
2022 marked a year of key developments in the Singapore arbitration scene. This report provides a round-up of some of the major developments, such as the introduction of conditional fee arrangements in Singapore as well as leading judgments issued by the Singapore courts relating to arbitration.
Conditional Fee Arrangements
On 4 May 2022, Singapore’s framework for conditional fee arrangements (“CFAs”) came into operation. This allows lawyers in Singapore to enter into CFAs with clients in selected proceedings under the new CFA framework. The CFA framework is set out in the Legal Profession Act and the Legal Profession (Conditional Fee) Arrangement Regulations 2022 (the “CFA Regulations”).
While CFAs were previously illegal under Singapore law, this new development enhances Singapore’s competitiveness as an arbitral hub and develops its litigation funding landscape, whilst also supporting the dispute resolution needs of businesses and individuals in Singapore. Damages-based agreements or contingency fee agreements continue to be illegal in Singapore.
Pursuant to Section 3 of the CFA Regulations, CFAs are only permitted in specific types of contentious proceedings, namely a) international and domestic arbitration proceedings, as well as related court proceedings (such as stay of proceedings applications, enforcement of awards and mediation proceedings), and b) proceedings in the Singapore International Commercial Court as well as related proceedings (such as mediation proceedings and appeal proceedings).
Pursuant to Section 4 of the CFA Regulations, prior to entering into a CFA, lawyers are required to provide certain information on the CFA to the client, including:
- the nature and operation of the CFA and its terms;
- the client’s right to seek independent legal advice before entering into the CFA;
- that the uplift fees (if any) are not recoverable; and
- that the client continues to be liable for any costs orders that may be made against the
client by a court of justice or an arbitral tribunal.
Pursuant to Section 5 of the CFA Regulations, every CFA must include terms relating to all of the following:
- the particulars of the specified circumstances in which remuneration and costs or any part
of them are payable to the lawyer under the CFA; - the particulars of any uplift fee, if applicable;
- that lawyers and clients must comply with the cooling-off period of five days after a CFA is entered into, during which either party may terminate the agreement via a written notice;
- any variation of the agreement must be in writing and expressly agreed to by all parties to the CFA;
- that for variation related to costs issues, there is also a cooling-off period of three days after the CFA is varied, during which either party may terminate the variation agreement via a written notice; and
- that on the termination of the CFA during the cooling-off period in c) or e) above, the client is not liable for any remuneration or costs incurred during the cooling-off period except those incurred for any service performed during the cooling-off period that was expressly instructed by or agreed to by the client.
Validity of Arbitration Agreement Which Misnames Arbitral Institution
In Re Shanghai Xinan Screenwall Building & Decoration Co, Ltd [2022] SGHC 58, the Singapore High Court was faced with determining whether an arbitration clause was defective because it referred disputes to a non-existent institution, namely the “China International Arbitration Center”, and consequently whether the arbitral award was enforceable in Singapore against a Singapore-incorporated company.
Justice Philip Jeyaretnam held that his task was to construe the arbitration agreements in the contracts to determine whether China International Economic and Trade Committee (“CIETAC”) was right to conclude that it was indeed the selected arbitral institution. He found that the parties intended to resolve their disputes in China, and that they would not have deliberately chosen a non-existent institution, but intended to choose an existing arbitral institution which they misnamed.
Justice Jeyaretnam compared the name of the non-existent arbitral institution in the English primary text of the arbitration agreements to the full names of five of the major arbitral institutions in China, including CIETAC, to check for similarities in wording. He then concluded that in agreeing on “China International Arbitration Center”, the parties had in fact agreed on CIETAC, and that inaccuracy in the name of the arbitral institution in the arbitration agreements does not nullify the parties’ consent to arbitration or their choice of CIETAC. He therefore upheld the CIETAC award.
Enforceability of Interim Awards Made By An Emergency Arbitrator in a Non-Singapore-Seated Arbitration
In CVG v CVH [2022] SGHC 249, the Singapore High Court held that that an interim award made by an emergency arbitrator in a foreign seated arbitration was, in principle, enforceable in Singapore. In this case, the emergency interim award of the emergency arbitrator was made in Pennsylvania, United States, in International Centre for Dispute Resolution (“ICDR”) arbitration proceedings. The defendant had been the claimant’s franchisee in Singapore, Malaysia, Taiwan, and the Philippines. The dispute arose out of the termination of various agreements which governed the Singapore franchise business.
Justice Chua Lee Ming considered whether the term “foreign award” in section 29 of Singapore’s International Arbitration Act 1994 (2020 Rev Ed) (“IAA”) includes foreign interim awards made by an emergency arbitration. He concluded that it did, relying on a purposive interpretation of section 27(1) of the IAA and holding that the term “arbitral award” in s27(1) of the IAA “includes awards by emergency arbitrators.” He held that consequently, s29 of the IAA “applies to foreign awards by emergency arbitrators.”
Justice Chua also held that the award was binding within the meaning of s29(2) of the IAA and stated that this was “unarguably clear” from Article 7(4) of the ICDR’s International Arbitration Rules, which states:
“The emergency arbitrator shall have the power to order or award any interim or conservatory measures that the emergency arbitrator deems necessary, including injunctive relief and measures for the protection or conservation of property. Any such measures may take the form of an interim award or an order. The emergency arbitrator shall give reasons in either case. The emergency arbitrator may modify or vacate the interim award or order. Any interim award or order shall have the same effect as an interim measure made pursuant to Article 27 and shall be binding on the parties when rendered. The parties shall undertake to comply with such an interim award or order without delay.”
Allegations of Pre-Judgment in Related Arbitrations
In CNQ v CNR [2022] SGHC 267, the Singapore High Court dismissed a setting aside application for an ICC award in which the plaintiff had alleged that the arbitrator had prejudged the issues based on an earlier ICC award issued by the same arbitrator and involving the same parties.
Justice Maniam referred to the following test for establishing prejudgment in BOI v BOJ [2018] 2 SLR 1156:
“To establish prejudgment amounting to apparent bias, therefore, it must be established that the fair-minded, informed and reasonable observer would, after considering the facts and circumstances available before him, suspect or apprehend that the decision-maker had reached a final and conclusive decision before being made aware of all relevant evidence and arguments which the parties wish to put before him or her, such that he or she approaches the matter at hand with a closed mind.”
Justice Maniam then held that the arbitrator had not approached the issues in the second ICC arbitration with a closed mind, and that there was “nothing inherently wrong in him deciding [the same issues between the same parties] the same way.” He found that the arbitrator had considered the new evidence and contentions from the plaintiff in the second ICC award and had engaged with the plaintiff’s counsel and expert during the hearing in the second arbitral proceedings. He held that this demonstrates that the arbitrator had attempted to understand the plaintiff’s case in the second ICC arbitration, and consequently had not prejudged the issues in the second ICC arbitration.
Determining the Finality of an Arbitral Award
In York International Pte Ltd v Voltas Ltd [2022] SGHC 153, the Singapore High Court considered whether an arbitrator was functus officio once a conditional final award had been rendered by the arbitrator in the arbitral proceedings.
Justice S Mohan found that the conditional final award did deal with all the issues that formed the subject of the arbitration, such that the arbitrator was functus officio after its issuance. In coming to this decision, Justice Mohan found that the arbitrator chose to make a quantum award rather than adjourn the decision on quantum, the award did not contain an express reservation of jurisdiction to issue any further awards, and the award fully resolved the dispute between the parties. He added that although the award did not contain a specific sum to be paid by the plaintiff, it did detail a method of calculation of the specific sum. He therefore held that the award had fully set out the extent of the plaintiff’s liability and was “complete and final on its own terms”.
ABOUT THE AUTHOR:
Sunita Advani is an arbitral assistant to Mr Michael Lee, an English arbitrator member of Twenty Essex based in Singapore. In this role, she serves as tribunal secretary in Mr Lee’s high-value and complex international commercial arbitrations administered by the leading arbitral institutions globally. Sunita previously practiced international arbitration as a Junior Associate at a leading international law firm in Singapore, and is admitted to practice in England & Wales, New York and Singapore. She holds an LL.B. from the University of Nottingham, and an LL.M. from the University of California, Berkeley, School of Law. Sunita is the Founder and Chair of SG VYAP.
