SINGAPORE: An Introduction
Singapore continues to thrive as a leading international commercial dispute resolution hub. The Singapore courts remain for many commercial parties - and are increasingly becoming for other new users - the go-to dispute resolution forums due in no small part to the strong legal system, strict adherence to the rule of law, first-class judiciary and first-rate legal infrastructure.
This overview highlights several recent developments that reinforce Singapore’s commitment to strengthening its status as a trusted, conducive and efficient international commercial dispute resolution hub.
Litigation-Mediation-Litigation Protocol (LML Protocol)
On 12 January 2023, the Singapore International Commercial Court (SICC), in collaboration with the Singapore International Mediation Centre (SIMC), launched the LML Protocol - a framework aimed at promoting the amicable resolution of international commercial disputes.
The LML Protocol sets out the procedure under which disputes commenced in the SICC are to be referred to the SIMC for mediation as well as the procedure to continue or terminate proceedings in the SICC on the conclusion of the mediation.
Under the LML Protocol, where proceedings are commenced in the SICC and the parties have agreed to refer their dispute for mediation in accordance with the LML Protocol, the court may grant a case management stay of proceedings for up to eight weeks after the commencement of mediation to allow the parties to attempt amicable resolution by mediation. The court may grant an extension of the stay where there are good reasons, and may also grant interim relief or make supplementary orders to preserve a party’s rights during the period of the stay.
Where mediation is successful, the parties may record the terms of the mediated settlement agreement as an order of court.
The LML Protocol represents Singapore’s latest addition to its arsenal of existing hybrid commercial dispute resolution mechanisms including the arbitration-mediation-arbitration protocol that was launched by the Singapore International Arbitration Centre and the SIMC in 2014.
SICC Model Jurisdiction Clause for International Arbitration Matters
On the same day it launched the LML Protocol (ie, 12 January 2023), the SICC also introduced the SICC Model Jurisdiction Clause. That clause provides as follows:
“In respect of any court proceedings in Singapore commenced under the International Arbitration Act 1994 in relation to the arbitration, the parties agree: (a) to commence such proceedings before the Singapore International Commercial Court ('the SICC'); and (b) in any event, that such proceedings shall be heard and adjudicated by the SICC.”
The Model Jurisdiction Clause allows parties to, by agreement, designate the SICC as the supervisory court for arbitration-related court proceedings in respect of Singapore-seated arbitrations.
Where the parties do not so designate the SICC as the supervisory court in their agreements, the default position is that the Singapore High Court (SGHC) will have jurisdiction to hear applications under the International Arbitration Act 1994 in relation to the Singapore-seated arbitration.
The Model Jurisdiction Clause is a welcome development for at least two reasons.
First, the quantum of costs that can potentially be recovered in SICC proceedings is usually higher than that in SGHC proceedings. This is one factor that commercial parties may consider attractive.
The costs recovery regime in the SGHC is governed by Order 21 of the Rules of Court 2021 (ROC 2021). Costs are assessed “at such a level as would enable a litigant with reasonable merits to pursue justice”: Senda International Capital Ltd v Kiri Industries Ltd [2023] 1 SLR 96 (“Kiri Industries”) at [47], citing Then Khek Koon v Arjun Permanand Samtani [2014] 1 SLR 245 at [156]-[157].
In this connection, the SGHC will apply an objective standard to determine the level of recoverable costs in each case, informed by the normative question of what ought to be the amount of costs a successful party can recover for the particular work done in the context of the dispute in question, irrespective of the level of costs the successful party may have actually incurred in the legal proceedings: Kiri Industries at [47].
On the other hand, the costs recovery regime in the SICC is governed by Order 22 of the SICC Rules 2021. The Singapore Court of Appeal (SGCA) has clarified in Kiri Industries that an award of costs under the costs recovery regime in the SICC is generally intended to restore or compensate the other party for the expense it had incurred in the legal proceedings as long as this had been incurred in sensibly mounting its claim or defence: Kiri Industries at [52].
In this regard, the SICC will as a starting point make a subjective inquiry into what costs were in fact incurred by the successful party in the particular case: Kiri Industries at [52]. The SICC will then apply the test of reasonableness to the actual costs incurred to ascertain if the successful party had pursued the proceedings in a reasonable and sensible manner. This entails the SICC looking both at whether costs were reasonably incurred and whether the overall quantum of costs is reasonable, which in turn requires the SICC to consider various factors including the complexity of the issues, the amount at stake and the total time and effort expended in the proceedings: Kiri Industries at [52], [54].
The upshot of this is that, as the SGCA observed in Kiri Industries, in practice costs awarded by the SICC are likely to be significantly higher than those awarded by the SGHC: Kiri Industries at [59]. As an aside, prospective third-party funders of SICC proceedings who need to factor into their funding decision the likely quantum of costs that may be recovered at the conclusion of proceedings will benefit from the SGCA’s decision and clarifications in Kiri Industries.
Second, the SICC is a specialised court that was established to handle international commercial disputes including arbitration-related court proceedings. It has a deep bench of international judges from common and civil law jurisdictions, including many arbitration specialists, and is well placed to adjudicate disputes where the parties have designated foreign law as the governing law of the arbitration clause or the substantive agreement.
International commercial parties who find themselves involved in business disputes will no doubt benefit from the SICC panel’s deep understanding and extensive knowledge of multiple jurisdictions, while being assured that the SICC remains a neutral jurisdiction that pays faithful adherence to the rule of law.
Memorandum of Understanding (MOU) Between the Supreme Court of Singapore and the Supreme People's Court of the People’s Republic of China
On 1 April 2023, the Supreme Court of Singapore signed an MOU with the Supreme People's Court of the People’s Republic of China on Cooperation on the Management of International Commercial Disputes in the context of the Belt and Road Initiative (BRI).
Under the MOU, the SICC and the China International Commercial Court (CICC) will:
(a) each develop and implement the LML Protocol, facilitated by a domestic or foreign mediation expert, and a domestic, foreign, or international mediation institution, for the management of international commercial disputes arising from the BRI project; and
(b) mutually exchange and share information on their respective LML Protocol and other dispute resolution practices, including information on procedural rules, case management protocols and practices as well as enforcement processes relating to the SICC and the CICC.
The MOU signifies both courts’ acknowledgement of mediation as a desirable dispute resolution mechanism that not only saves the parties’ time and costs but also preserves their commercial relationship and provides them with greater autonomy and control over the outcome of the dispute resolution process.