Following a public consultation on the draft, the Singapore International Arbitration Centre (SIAC) released its Investment Arbitration Rules (IARs) at the end of December 2016. They became effective on 1st January 2017 and represent an innovative initiative to attract investment arbitration business to an institution that has gained a strong reputation as both a preferred arbitral institution and a proactive proponent of international arbitration as a means of dispute resolution.

 The IARs combine aspects of commercial arbitration with features familiar to those versed in ICSID arbitration and, in so doing, attempt to address the recurring difficulties of, inter alia, achieving a cost-effective and efficient process, implementing a summary mechanism for disposing of claims that are without merit, creating a transparent procedure (including third party intervention) and recognising and accommodating third party funding. At the same time, investment arbitration, as envisaged under the IARs, is not subject to the ICSID requirement of being a dispute arising directly out of an investment and will only be subject to such jurisdictional constraints as might be contained within the underlying contract or applicable instrument (i.e. an investment treaty).

It is perhaps apt to describe the IARs, as some have, as an investment/commercial arbitration hybrid and it is noticeable that one of the ‘selling points’ to parties is the use of SIAC commercial arbitration mechanisms to expedite the resolution of a dispute. It is, after all, typically the case that an ICSID arbitration will take in the order of 4 years to reach final award, whereas those going to commercial arbitration in Singapore might reasonably expect to reach that some stage in about 12 months.

The principal mechanisms aimed at timeliness and efficiency are:

  • The imposition of strict time limits on the appointment of arbitrators, thus removing an obvious delaying ploy. (See IARs 6.2, 7.2 & 9)
  • The compilation by the SIAC of a list of potential arbitrators, taking into account the parties’ views and the circumstances of the case. (See IAR 8)
  • The presiding arbitrator may make procedural rulings alone (subject to revision by the tribunal), unless the parties have agreed otherwise. (See IAR 16.5)
  • The requirement that the submission of written statements be by way of memorial/counter-memorial, rather than by pleadings, thus providing for the statement of facts, legal argument, witness statements and expert reports to be submitted at the same time (IAR 17.2)
  • The ability of the tribunal to appoint an expert, unless the parties have agreed otherwise. (See IAR 23.1)
  • The availability of a procedure for early (summary) dismissal of a claim/defence, on one of the following grounds: being manifestly without merit, being manifestly outside the jurisdiction of the tribunal, or being manifestly inadmissible. (See IAR 26)

In addition, and although not in itself an efficiency provision, it should be noted that an express sovereign immunity waiver clause will find favour with investors; unsurprisingly, however, the waiver does not extend to immunity from execution.

As for the IARs generally, many will probably conclude that they represent a concerted effort to create a practical and workable framework. In so doing, they have managed to address head-on many of those issues that remain current topics of debate. In particular, and complementing Singapore’s legislative amendment (passed in January 2017) to its Civil Law Act to allow for third party funding, the IARs specifically give the tribunal power to order disclosure of the existence of third party funding and/or the identity of such funder (IAR 24(l)) and to take account of third party funding when apportioning costs (IAR 33.1).

Additionally, and with lessons from commercial arbitration clearly in mind, the IARs provide for engagement of an emergency arbitrator and the granting of interim and emergency interim relief prior to the constitution of the tribunal (IAR 27); the application of the competence-competence principle (IAR 25); and confidentiality of both proceedings and award, subject to the parties agreeing otherwise (IAR 37).

Conversely, the IARs have also addressed a consideration that looms increasingly large in investment arbitration: the locus of a third party to make submissions. It is, after all, the case that wider issues of public international law over and above international investment law, such as international human rights or environmental law, may arise, or that matters of social or cultural impact have a direct bearing on one or more aspects of the dispute. With all this in mind, IAR 29 contains detailed provisions that allow for (i) a non-disputing contracting party to make written submissions as to treaty interpretation, and (ii) subject to leave being given, either a non-disputing contracting party or a non-disputing party to make written submissions as to any matter within the scope of the dispute (with the prospect of an elaboration/examination hearing thereafter). IAR 29 (at 29.8) also provides for a carefully delineated framework allowing access to material for such parties.

Time will tell whether SIAC becomes an investment arbitration hub. Given that it has shown itself to be both effective and efficient in international commercial arbitration and adept at addressing contemporary issues of public international law, it might well be the case that investment treaties and agreements specifically refer to the SIAC’s IARs. In the meantime, we wait to find out whether parties in state-investor disputes will agree between themselves that the practical advantages of the IARs hold more attraction than the self-contained ‘de-localised’ ICSID framework.

Martin Polaine, Barrister, ACIArb

The Author

Martin Polaine

Related Practice

Investor-State Arbitration

Image: https://commons.wikimedia.org/wiki/File:Singapore_Skyline.jpg