Many people don’t pay attention to the arbitration clauses of a contract, but it is wise to do so, says Paul Aston, Partner at Holman Fenwick Willan in Singapore. Aston is a strong proponent for nominating Singapore as the seat of arbitration under international law for cross-border shipping, offshore construction and trade contracts.
Singapore’s International Arbitration Centre (SIAC) has become a leader in international dispute resolution, and Aston contrasts its user-friendliness with many other possible choices. SIAC, subject to English or Singapore law (preferably the former), is his choice. The Singapore Chamber of Maritime Arbitration is akin to the London Maritime Arbitration Association (LMAA) with many arbitrators on the panel of both, so parties can choose LMAA Rules and its excellent arbitration clause but with Singapore as the seat of arbitration.
As doing business with companies in countries such as India and China increases, he believes it is timely to contrast the arbitration system in these countries with that of Singapore. While all give lip service to the UNCITRAL Law Model or Rules, the willingness of courts in India and China to interfere with the arbitration process and thus ignore the chosen arbitration dispute resolution venue undermines the arbitral process. Court judgments made in other countries are not recognized in China. However, arbitration rulings from a recognized arbitral body are. This is an important consideration when trying to enforce an award there, says Aston.
The Importance of Certainty
“In Singapore, the courts are basically hands off. There is no right of appeal and very restrictive grounds for setting aside an award. People want certainty. They choose their arbitrator, pay their money and accept the outcome,” he says. Singapore thus prevents bogus allegations of fraud or illegality (easy to make but difficult to prove) from being used to create lengthy delays and increase the cost of disputes.
“Such issues in Singapore and England are arbitral issues, which means the arbitrator can decide them if they are raised. Indeed, the arbitrator can determine his own jurisdiction, so an allegation that there was no contract and thus no arbitration clause can be determined by the arbitrator and is not a reason to ignore the contractual arbitration clause and go rushing off to court,” Aston explains.
SIAC has a President who selects a sole arbitrator or a third arbitrator when the parties cannot agree. In addition, SIAC will endorse and acknowledge an award made in Singapore, which is useful when seeking to then have such an award recognized in a foreign jurisdiction.
SIAC rules allow the appointment of an interim Emergency Arbitrator where there is a time criticality and the applicant cannot wait until a full tribunal is appointed in the ordinary way. An emergency arbitrator can be appointed within 24 hours and the parties called together within another 48. After that, a ruling can be made within a week or other appropriate time frame.
If one party refuses to choose an arbitrator, there is no need to take the matter to court in Singapore. The President of SIAC will nominate one rather than the claimant’s having to issue a writ and serve it in another country. “This can take forever and a day in places like China and India,” says Aston.
Aston is not singling India and China out particularly. Rather he believes Singapore to be the jurisdiction of choice over many others, including Vancouver, Seattle, New York, Sydney and Dubai. Singapore is a very cosmopolitan place with top-class local lawyers and lawyers from around the world resident there. “Singapore is a very neutral place,” says Aston, “a place that bridges perceptions of Western or Eastern bias, whether they are founded or not.”
A Vibrant Industry
International arbitration has become a vibrant industry. Major law firms in many countries, including the U.S., are increasingly establishing permanent teams in Singapore. “A lot of them have U.S. clients doing business with India and Asia, and they are setting up offices here to undertake international arbitration.”
Aston himself is a qualified mediator and is about to become a qualified arbitrator. He specializes in all aspects of international trade and shipping, including shipbuilding and repair disputes, and he advises shipyards and buyers on contracts for the construction of various offshore structures and their utilization offshore. He has particular expertise in relation to long- and short-term contracts for the supply, transportation, sale and purchase, and storage of petroleum products and LNG. – MarEx
Wendy Laursen writes from New South Wales, Australia.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.