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singapore international arbitration centre (siac) releases new arbitration rules and fee schedule
introduction
on 1 july 2007, the 3rd edition of the siac rules (the "new rules") will come into effect, together with a new schedule of fees and supplementary practice notes for ad hoc and administered cases.[1] the new rules will replace the current edition of the siac rules (the "old rules"), which were issued in 1997 and were modelled largely upon the uncitral arbitration rules. the new rules introduce some significant changes, including some features that are modelled on the icc arbitration rules. the introduction of the new rules is the latest initiative to promote singapore as asia's principal centre for dispute resolution. it follows closely on the heels of a number of tax incentives introduced to attract foreign arbitrators and arbitral counsel, with the intention of widening the pool of available expense and encouraging parties to settle disputes in singapore. the main changes of the new rules are set out below:
appointment of arbitrators
the new rules clarify the role of the siac as the appointing authority. under the new rules, even if the parties have agreed that an arbitrator is to be "appointed" by any party or a third person, such agreement shall be treated as an agreement to nominate an arbitrator (rule 5.2). in all cases, candidates nominated by the parties or by any third person, including arbitrators already "appointed", shall be the subject to the confirmation of the chairman of siac (rule 5.3).
the new rules also give the registrar the power to decide that a dispute warrants the appointment of three arbitrators, taking into account the complexity of the case, the quantum involved or other relevant circumstances (rule 5.1). the old rules provide for the appointment of a sole arbitrator, unless the parties have agreed otherwise.
memorandum of issues
the new rules introduce the concept of a memorandum of issues (rule 17). under the new rules, the tribunal and the parties are required to draw up a document defining the issues to be determined in the arbitration. the requirement, at first sight, appears to be similar to the terms of reference required under icc arbitration. unlike the terms of reference, however, the memorandum of issues is to be completed after the parties' written statements. the deadline for the production of the memorandum of issues may only be extended by the registrar. if any party refuses to participate in drawing up the memorandum of issues or to sign the same, the tribunal may submit the same to the registrar for approval. the concept of a memorandum of issues adds a further procedural step to the arbitration, that did not exist under the old rules. the siac has justified the change on the basis that a clear scope of reference agreed before the substantive hearing is likely to assist the parties and the tribunal in the efficient resolution of the dispute.
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scrutiny of awards
similar to the icc, the siac has introduced a rule that allows it to exercise control over the quality of awards issued under the new rules. the new rules require the tribunal to submit the draft award to the registrar, who may suggest modifications as to the form of the award. the registrar may also draw the tribunal's attention to points of substance, without affecting the tribunal's liberty of decision (rule 27.1). rule 27.1 also provides that no award shall be issued unless it has been approved by the registrar as to its form.
challenge of arbitrators
in case of a challenge to an arbitrator, the old rules provide for the automatic suspension of the arbitration until the challenge is resolved or decided upon. this could be exploited by parties to delay the arbitration, especially during critical stages of the proceedings. under the new rules, the automatic suspension is abandoned and the registrar now has discretion to order a suspension of the arbitral proceedings.
use of practice notes
the new rules formalise the use of practice notes. rule 35.4 now provides that the registrar may issue practice notes to supplement, regulate and implement the siac rules. the practice notes are intended to promote transparency and certainty between the parties and arbitrators and to facilitate the administration of arbitrations.
quantum based fee structure
in tandem with the new rules, the siac introduces a new fee schedule, which does away with the previous practice of remunerating arbitrators on an hourly basis. instead, similar to the fee system of the icc, the siac introduces a fee schedule based on the sum in dispute. rule 30 of the new rules provides that the fees of the tribunal will be determined in accordance with the published schedule of arbitrator's fees. when the arbitration is terminated, withdrawn or settled, the fees will be fixed in accordance with the stage of proceedings at which the arbitration was terminated. the siac has justified the change on the basis that the new rules offer greater transparency and certainty of fees. while the siac's new fees for arbitrators are comparable to the icc rates, the administrative fees are still significantly lower than those of the icc.
conclusion
there is an increased confidence of asian parties to settle their dispute in asia rather than in the established european arbitration centres, which has led to an increase of arbitration cases being handled in asia. together with the initiatives by the singapore government to promote the settling of disputes in singapore, the new rules support the siac's status as one of the leading arbitration institutions in asia. the new rules aim to improve the efficiency of proceedings brought under the siac rules. the new fee structure will offer greater certainty of costs, although it remains to be seen whether the new system will have an impact on the overall cost of arbitrating under the siac rules. the introduction of the memorandum of issues and the new requirement to scrutinise the draft award are a deliberate steps to bring siac arbitration into line with the practice of the icc. its is expected that the new rules will further encourage parties to select siac arbitration as the means of resolving their disputes.
[1] the 2007 rules and the schedule of fees are available on the siac website at www.siac.org.sg | |
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