March 1, 2016
Late last year the Singapore Chamber of Maritime Arbitration (“SCMA”) published the third edition of its arbitration rules (“Rules”). The latest changes continue to build upon the earlier amendments made in May 2009. The previous amendments in May 2009 removed institutional oversight and involvement in administering arbitrations, furthered its aim of propagating greater party control, while at the same time, provided a framework for maritime arbitration.
The latest changes in October 2015 are aimed at further improving the Rules so that they remain as user friendly as possible and bolstering the existing framework. In addition, the latest changes bring with them greater clarity and certainty.
Some of the notable changes broadly deal with:
- suggested model clauses;
- small claims procedure for claims not exceeding US$150,000; and
- default positions with respect to applicable laws, the juridicial seat of arbitration, the physical place of the arbitration, and the application of the International Arbitration Act of Singapore (Cap 143 A) in the absence of agreement between the parties.
There have also been certain default positions with respect to the cost of appointment of arbitrators, which afford parties greater certainty in budgeting for the arbitration.
The Rules commence with a section on suggested model clauses. While this section strictly does not form part of the Rules themselves, it serves to assist contracting parties when drafting their dispute resolution clauses.
The suggested clauses include:
- SCMA BIMCO Arbitration Clause (2013) which was introduced in November 2012 for use with BIMCO documents, agreements and forms;
- SCMA Arbitration Clause;
- SCMA Bunker Arbitration Clause; and
- SCMA Arb-Med-Arb Clause.
Small claims procedure
Previously the SCMA rules provided for a small claims procedure for claims not exceeding US$75,000 whereby the time limit for service of case statements were reduced to 14 days instead of 30 days, there were no discovery applications provided for and no oral hearing unless required by the Tribunal. The award, without a need for reasoning, would be issued within 21 days from the date of receipt of all parties’ statements or if there was an oral hearing, from the close of the same.
This has now been increased from US$75,000 to US$150,000.
The latest amendments have also introduced a cap on the arbitrator’s fees (US$5,000, or if there is a counterclaim, US$8,000) and recoverable legal costs (US$7,000, or if there is a counterclaim, US$10,000). This further aids in making the small claims procedure as cost efficient as possible. Indeed, the small claims procedure had from the outset, been designed to offer a streamlined framework to resolve disputes.
Law of dispute, juridical seat of arbitration, place of arbitration
There is now even greater clarity that if the juridical seat is Singapore and the SCMA Rules apply, the law of arbitration under the Rules shall be Singapore law and the International Arbitration Act of Singapore (Cap 143 A) applies irrespective of the nationality of the parties. However, as before, the parties remain free to agree to a different juridical seat or agree that the arbitration shall be subject to the Arbitration Act of Singapore (Cap 10). This is so that parties have the option of appealing on an error of law (with leave).
Under the new Rules, regardless of the seat of arbitration, the physical place of arbitration will be in Singapore unless parties agree to another place. However, under the new Rules, the tribunal also has the power to direct a different physical place of arbitration.
Arbitrators and cost of hearings
The Rules deal with the situation where a party fails to appoint an arbitrator within 14 days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the appointment of the third arbitrator within 14 days of their appointment. In such scenarios, the amendments make clear that the appointment of the arbitrator concerned, shall be made upon the request of a party, by the chairman.
However, an appointment service fee of S$750 per party is payable to SCMA before the release of the letter of appointment. If full response is not received at the time of release of the appointment letter, the party applying for the appointment shall make the full payment of S$1,500 for release and seek recovery of S$750 through their claims from the other party.
In addition, a non-refundable appointment fee of S$500 payable to the arbitrator upon appointment and a booking fee for the tribunal for the hearing, which is S$1,500 per day. Parties may request from the arbitrator a partial refund if the matter gets settled beforehand but that is subject to the arbitrator’s discretion.
Furthermore a new rule has been introduced with respect to the booking fees for the tribunal for hearings.
Under the new rule, the booking fees are as follows:
For hearings where the duration is less than 10 days, the booking fee will be S$1,500 per day.
For hearings over 10 days, the booking fee for each additional day until the 15th day shall be increased by 30%.
For hearings over 15 days, the booking fee for each additional day until the 20th day shall be increased by 60%.
In the case of a hearing in excess of 20 days, the booking fee shall be at the rate for a hearing of 20 days plus an additional sum as may be agreed with the parties in the light of the length of the proposed hearing.
This rule is no doubt introduced to encourage parties to narrow their disputes and settle certain heads of claims if possible.
In line with the general push towards mediation as a preferred means of dispute resolution, the tribunal may take into account any unreasonable refusal by a party to participate in mediation.
This is no doubt a welcomed addition to the Rules. The Rules may even better facilitate the push towards mediation if parties are able to obtain larger refunds of the booking fees, should hearing dates be vacated prior to or on or after the start date by reason of settlement of the dispute. As it stands, it may not be commercially viable for parties to settle the matter less than three months before the hearing as the booking fees may not be returned at all.
Publication of an award
Finally, the Rules now place the onus on the party to inform the SCMA that it objects to the publication of the award (albeit one that has been redacted to preserve party anonymity) by writing to the SCMA within 60 days of the publication of an Award. This is a departure from the previous position where the SCMA would give notice to the parties that it intends to publish the Award and invite parties to object to the same within 30 days.
This is likely to encourage the publication of more awards and contribute to the overall development of the jurisprudence in maritime arbitrations.
The latest amendments to the Rules are timely and a progressive step in the right direction. They also illustrate the SCMA’s continuous desire to improve its framework to the benefit of parties in dispute. It is also a testament of the hard work that has been done by the outgoing Executive Director Lee Wai Pong and his team.