International Arbitration Legal and Case Developments: Asia-Pacific

February 20, 2024

In February 2024, the Asian International Arbitration Centre ("AIAC") announced it will undergo institutional reform as a result of the formalization of the Supplementary Agreement to the Host Country Agreement between the Government of Malaysia and the Asian-African Legal Consultative Organization ("AALCO"). The AALCO is an inter-governmental organisation comprising forty-seven governments of the Asian and African region. The AIAC was inaugurated in 1978 as part of a host country agreement between Malaysia and AALCO.

The restructuring initiative will be carried out in phases and will involve the introduction of the AIAC Court of Arbitration in accordance with relevant amendments to the prevailing legislation. The AIAC also intends to appoint a Chief Executive Officer, who will be in charge of managing day-to-day operations and administration of the AIAC.

February 21, 2024

The Singapore International Arbitration Centre ("SIAC") has signed a Memorandum of Understanding ("MOU") with the Bahrain Chamber for Dispute Resolution ("BCDR") to encourage the resolution of international disputes via arbitration. This partnership will see the SIAC and the BCDR jointly host in-person, hybrid, or virtual conferences, seminars, and workshops focused on international arbitration in both Singapore and Bahrain.

The SIAC and the BCDR will also invite key figures from their local arbitration communities to participate in events held by the SIAC in Bahrain or by the BCDR in Singapore.

The MOU outlines that the BCDR will offer its current hearing facilities in Bahrain at preferential rates for SIAC arbitration hearings, and reciprocally, the SIAC will facilitate the use of hearing facilities in Maxwell Chambers in Singapore at preferential rates for BCDR arbitration hearings.

(This entry was produced with the help of generative AI.)

March 6, 2024

The Hong Kong International Arbitration Centre ("HKIAC") has released its 2023 statistics, which reaffirms Hong Kong's position as one of the prime international arbitration hubs.

While the total number of matters submitted to the HKIAC (500) is similar to that in 2022, 281 filings were made, which is the third highest figure since 2017. A total of 771 parties and 382 contracts were involved, and a record-breaking HK$92.8 billion (approximately US$12.5 billion) were involved in the disputes handled by the HKIAC. The average amount of each dispute was HKD 467.6 million (approximately USD 60.1 million), another new record.

The HKIAC continues to be one of the most widely used forums for international dispute, with around three quarters of arbitrations handled and almost 90% of arbitration administered involving at least one non-Hong Kong party from countries such as Singapore, South Korea, Japan, the British Virgin Islands, Cayman Islands, and the United States, and involving 14 different jurisdictions.

The statistics also reveal progress in HKIAC's attempt to improve the diversity of arbitration in Hong Kong. More than one-third of the arbitrators appointed were female, a figure higher than that in 2021 and 2022. More than one-third of the arbitrators were also previously not appointed by the HKIAC in the last three years.

The statistics also reflect the effectiveness of the Hong Kong – Mainland China arrangement on interim measures, whereby the parties to arbitral proceedings in Hong Kong may apply for interim measures under the laws of the Mainland China to preserve assets pending the outcome of the arbitration. In 2023, the HKIAC has processed 19 applications to 13 different Mainland Chinese courts, and the Mainland Chinese courts had issued orders to preserve RMB$544 million (approximately USD 76.1 million) worth of assets.

March 14, 2024

Singapore's Minister for Culture, Community and Youth and India's Minister for Law and Justice signed a Memorandum of Understanding ("MOU") to deepen cooperation on legal and dispute resolution services between the two countries.

Under the MOU, Singapore's Ministry of Law and India's Ministry of Law and Justice will work together to promote the exchange of people, expertise and information, as well as to organize events and courses on international commercial dispute resolution, the promotion of alternative dispute resolution mechanisms, and other areas of mutual interests.

A Joint Consultative Committee, co-chaired at the Ministerial or Secretary level, will also be set up, and will meet regularly to make and implement specific proposals under the MOU.

March 20, 2024

The Government of Singapore and the Government of the Kingdom of Bahrain signed a bilateral Treaty to establish a new Bahrain International Commercial Court ("BICC") in Bahrain and a designated body in Singapore to hear appeals from the BICC. The BICC will be set up through joint collaborative efforts between the Singapore International Commercial Court and the Supreme Judicial Council of the Kingdom of Bahrain.

This collaboration follows the signing of the Memorandum of Understanding on Cooperation and Memorandum of Guidance as to the Enforcement of Money Judgments by the Singapore and Bahrain judiciaries in May 2023. The establishment of the BICC is a component of Bahrain's plans to build an international commercial dispute resolution hub and build on its dispute resolution mechanisms.

April 12, 2024

The Department of Justice of Hong Kong has released the Action Plan on the Construction of Rule of Law in the Guangdong-Hong Kong-Macao Greater Bay Area (the "Action Plan"). With a view to facilitating resolutions of cross-boundary disputes and to leveraging Hong Kong's competitive advantage as a leading international dispute resolution center, the Action Plan has promoted measures, namely "allowing Hong Kong-invested enterprises to adopt Hong Kong law" and "allowing Hong Kong-invested enterprises to choose for arbitration to be seated in Hong Kong" (collectively, the "Measures"). The Measures allow Hong Kong-invested companies in the Pilot Free Trade Zones to choose Hong Kong as the governing jurisdictions of their contracts and the seat of arbitration.

Under the Action Plan, the Department of Justice will also actively promote Hong Kong legal services to companies within the Greater Bay Area and encourage Mainland companies to choose Hong Kong as the forum to resolve any disputes.

With the benefit of the Action Plan and the Measures, the Greater Bay Area, with over RMB$13 trillion of GPD in 2022, will serve as a gigantic opportunity for the legal industry in Hong Kong. The Action Plan and the Measures may also bolster the confidence of investors planning to invest in the Greater Bay Area companies, as companies could leverage Hong Kong, which is experienced for handling cross-border disputes under arbitration, mediation and other dispute resolutions mechanisms, to handle commercial disputes within the Greater Bay Area. It is expected that more companies in the Greater Bay Area will adopt Hong Kong as the governing law in their contracts and include arbitration clauses with Hong Kong chosen as the seat of arbitration.

May 3, 2024

For the first time since 2018, the Hong Kong International Arbitration Centre ("HKIAC") has released an update to its Administered Arbitration Rules ("2024 Administered Arbitration Rules"), which took effect on June 1, 2024.

A key purpose of the 2024 Administered Arbitration Rules is to align the HKIAC with its international counterpart. In line with the London Court of International Arbitration, the 2024 Administered Arbitration Rules introduce the concept of gender diversity by requiring parties and HKIAC to consider gender diversity when appointing arbitrators. It also requires parties and tribunals to consider issues of (i) information security; and (ii) environmental impact when contemplating the procedure for an arbitration. Tribunals are empowered to make directions and order sanctions for any non-compliance with information security, and to make costs orders when a party's conduct has an adverse environmental impact.

Another emphasis of the 2024 Administered Arbitration Rules is to improve the overall efficiency of the arbitration process in Hong Kong. The tribunal is given more power in conducting the arbitration, including the power to revoke the appointment of an arbitrator when he/she could not fulfil their function. On the other hand, tribunals are required to follow a stringent time limit in their closing proceedings and determination of awards. Notably, there is a general provision for the HKIAC to adopt any measures that are necessary for the preservation of the efficiency or integrity of the arbitration, which gives the tribunal freedom and discretion in conducting arbitration.

The changes imposed by the HKIAC showcase its intention to bring the Hong Kong arbitration community closer to the international standard and fortify Hong Kong as one of the leading arbitration forums in the world.

December 1, 2023

In CVV and others v. CWB [2024] 1 SLR 32, the Singapore Court of Appeal declined to set aside an arbitral award on the basis that the tribunal had allegedly breached the fair hearing rule by failing to apply its mind and/or to give reasons for its decision.

The Court of Appeal observed that while an arbitral tribunal was under a general duty to give reasons, it was not settled in the case law whether a tribunal's failure to give adequate reasons was itself a reason to set aside an award, or what the content of a tribunal's duty to give reasons was. Further, it was not appropriate to apply standards of reasoning applicable to judges in the context of arbitration proceedings, given that different considerations were at play in court cases as opposed to arbitrations.

In any event, the court found that it was not necessary to finally determine these issues as the claimants' case for setting aside was premised on a breach of the rules of natural justice. On the facts of the case, the court found that there was nothing to indicate that the tribunal had breached the rules of natural justice and that there were therefore no grounds for setting aside.

This case highlights that arbitrators are not expected to meet the same standards of reasoning as judges in the drafting of awards. Nevertheless, the scope of a tribunal's duty to give reasons for its decision, and the resulting remedies if the tribunal breaches that duty, remains unsettled.

December 15, 2023

In The Republic of India v. Deutsche Telekom AG [2024] 1 SLR 56, the Singapore Court of Appeal issued a landmark judgment holding that the doctrine of transnational issue estoppel prevented a party from raising the same grounds of challenge to resist enforcement of an arbitral award, after those grounds had already been litigated in setting-aside proceedings.

The appellant, the Republic of India ("India"), applied to set aside an order permitting enforcement of an arbitral award against it, on the principal basis that the arbitral tribunal lacked jurisdiction to make the award. This was the same ground that India had relied on to set aside the award before the seat court in Switzerland, and which the Swiss court had rejected.

On the facts of the case, the Court of Appeal applied the doctrine of transnational issue estoppel to give effect to the prior decision of the seat court. The court observed that the New York Convention did not operate in isolation because the domestic law of the enforcement court also came into play, which in Singapore included principles of transnational issue estoppel. Further, the court held that applying the doctrine of transnational issue estoppel also respected the parties' choice of a seat in a principled manner.

As the requirements for the operation of transnational issue estoppel were made out on the facts of the case, the Court of Appeal found that India was estopped from relying on the same grounds it raised before the Swiss court, and dismissed India's appeal. The decision highlights the importance of choosing a seat, as the decision of the seat on issues such as jurisdiction may, in some instances such as the present case, be given preclusive effect in the enforcement courts.

February 16, 2024

In AAA v. DDD, the dispute originated from a transaction that was documented through multiple instruments, namely: (i) a loan agreement amongst the borrower, the lender and two guarantors; (ii) a promissory note issued to the lender by way of security and signed by the borrower and the guarantors; and (iii) various other security documents concluded by the borrower and the guarantors in favour of the lender.

In the Notice of Arbitration, the lender explicitly invoked the arbitration agreement contained within the loan agreement while a copy of the promissory note was exhibited. The Tribunal determined that by exhibiting a copy of the promissory note, including its dispute resolution clause, the lender's invocation of the dispute resolution clause in the promissory notes can be reasonably inferred. Consequently, the defendants challenged the jurisdiction of the tribunal to adjudicate the lender's claims against the guarantors under the promissory note.

The Hong Kong court expressed reservation about the notion that a mere reference to a document, accompanied by its exhibition, would suffice to invoke the arbitration agreement in that document. Instead, the court emphasized that clear and explicit language is required to indicate that a dispute is being brought to arbitration under a specific provision in a particular contract.

The court also clarified that when dealing with conflicting dispute resolution clauses in multiple related contracts, the "centre of gravity" approach applies. In such cases, there is no presumption that parties intended to resolve their disputes in a single forum, even if the contracts constitute a package. To determine the appropriate forum, one must identify the "centre of gravity" of the issue or dispute and assess which dispute resolution provisions are closer to the issue or dispute. Therefore, in situations involving multiple contracts, it is advisable to attempt to consolidate the proceedings or stay one of the proceedings pending the outcome of the other.

February 27, 2024

In CNG v. G & Anor, the Hong Kong court rejected an application to set aside an arbitral award on the basis that: (i) the tribunal had failed to consider certain crucial issues that were pertinent to the case, and (ii) the imposition of an unreasonable arbitration timetable had prevented the applicant from presenting its case. The arbitration centered around the rights and obligations of the parties as stipulated in a Shareholders Agreement.

In her Reasons for Decision, the Honourable Madam Justice Mimmie Chan emphasized that the court would refrain from interfering with the tribunal's role in finding the facts. It will not review the evidence again to make its own findings. The court also urged legal practitioners to carry out their duties to the court and to act responsibly when advising their clients on whether an award can be properly challenged. This is particularly important because the allocation of public resources comes into play when judicial time is taken up by lengthy (yet ultimately unmeritorious) applications.

March 7, 2024

In X & Y Co v. Z Co, the Hong Kong court rejected an application to set aside an arbitral award on the basis that the tribunal had failed to deal with certain issues. The court remarked that this was another case of a losing party in an arbitration challenging an award by "repackaging" arguments which had not been made the focus of submissions to the tribunal and presenting them to the court as key issues which had not been dealt with by the tribunal.

The arbitration considered whether the claimant was entitled to exercise its exit rights under a Share Subscription and Purchase Agreement against the respondents, and if so, whether the claimant was entitled to specific performance and/or damages in lieu. The tribunal issued an award in favour of the claimant. The respondents applied to set aside the arbitral award.

The court consolidated the respondents' grounds for setting aside the arbitral award into two defences, namely the Condition Precedent Defence and the Tax Defence. However, the court noted that these defences were not included in the list of issues, nor questions presented to the tribunal for consideration.

The court emphasized that the tribunal does not have a duty to meticulously search through all materials to ascertain and understand the issues presented by a party, whether explicitly or indirectly, for determination. Consequently, the court ruled that a party cannot challenge an arbitral award by "repackaging" arguments that were not advanced or maintained before the tribunal and presenting them as critical issues that the tribunal failed to deal with. As a result, the court dismissed the respondents' application.

Therefore, when preparing for a tribunal case, it is crucial to ensure every argument is included in the list of issues and explicitly maintained throughout the arbitration. The burden lies with lawyers to identify and direct the tribunal to the key disputed issues. Tribunals cannot be expected to discover potential issues on their own.

March 8, 2024

In AAB v. BBA, the Hong Kong court rejected an application to set aside an arbitral award on the grounds of insufficient reasoning and lack of due process. However, the court remitted the award back to the tribunal due to its failure to deal with an issue.

The arbitration revolves around disputes amongst the shareholders of a joint venture. The tribunal ruled in favour of the claimants. Subsequently, the respondent applied to the court to set aside the award on procedural grounds, including the lack of reasoning and due process and the failure to address an issue.

In its decision, the court emphasized that the reasoning in an award does not need to be detailed if it allows the parties to understand the basis of the decision. The tribunal is not required to address every argument raised before it.

The court further said that due process requires a party to have a reasonable opportunity to present its case and respond to the opponent's case, but this is fact sensitive. Making general allegations about what could have been done if given a chance is insufficient. The party must demonstrate that a tribunal's significant error had unfairly prevented the presentation of important evidence or arguments. Further, failing to timely object or raise procedural irregularities may result in waiving the right to complain about a lack of due process.

On the third ground, the court found that the tribunal failed to answer one of the three issues it identified in the award. As a result, the court stayed the setting aside proceedings and remitted the matter back to the tribunal to rectify the failure to deal with the issue.

This case highlights that challenges based on procedural grounds will only be successful if there is a serious irregularity with the tribunal's conduct of the arbitration resulting in substantial injustice or unfairness, and the court prefers to remit an award to the tribunal for rectification rather than setting it aside.

March 15, 2024

In DFL v. DFM [2024] SGHC 71, the Singapore High Court enforced an arbitral award that was made under the Dubai International Arbitration Centre ("DIAC") Rules, notwithstanding that the arbitration agreement referred to a different set of arbitral rules that were no longer operative.

The arbitration agreement in question provided that disputes would be resolved by arbitration under the Dubai International Financial Centre–London Court of International Arbitration Rules (the "DIFC-LCIA Rules"). However, in 2021, the DIFC-LCIA was abolished and the DIFC-LCIA Rules ceased to be operative. The London Court of International Arbitration ("LCIA") and the DIAC agreed that all arbitrations referring to the DIFC-LCIA Rules would henceforth be registered by the DIAC.

The claimant subsequently commenced arbitration proceedings under the DIAC Rules and obtained permission to enforce an award against the respondent in Singapore.

The respondent applied to set aside the enforcement order on the basis that the parties had not agreed to arbitration under the DIAC Rules. The High Court Judge found that the arbitration agreement had been frustrated, and that the reference to the DIFC-LCIA Rules could not be severed and replaced with a reference to the DIAC Rules. However, the Judge found that the respondent had submitted to the tribunal's jurisdiction for purposes of the provisional award, by contesting the proceedings before the tribunal on the merits. The Judge therefore dismissed the respondent's application.

This case illustrates that parties should be careful to conduct themselves in a way that will not be taken as a submission to the tribunal's jurisdiction, if they intend to raise a jurisdictional objection. Otherwise, as illustrated by the facts of this case, parties may end up with arbitration proceedings under a set of rules that they did not initially agree to.

May 2, 2024

In Voltas Ltd v. York International Pte Ltd [2024] SGCA 12, the Singapore Court of Appeal ruled that an arbitrator was functus officio, notwithstanding that an earlier award made by the arbitrator contained a conditional order.

In an earlier award (the "2014 Award"), the arbitrator made a conditional order for the respondent ("York") to pay the appellant ("Voltas"), upon Voltas making payment to third parties. Disputes arose as to whether Voltas had made payment to the third parties, and the arbitrator ruled that he had jurisdiction to decide on the issue.

The Court of Appeal disagreed and found that the arbitrator did not have jurisdiction to make a further award. The court found that the 2014 Award was a final award, in the sense that it disposed of all remaining claims in the arbitration. Even if the 2014 Award contained conditional orders, it was nonetheless a final award as the conditions in the award did not make it necessary for the arbitrator to reconsider the matter, and an enforcement court would be able to assess whether the conditions in the award had been satisfied.

Given that the 2014 Award was a final award, the arbitrator was functus officio after its issuance unless there had been an express reservation of jurisdiction. There was no room to imply a reservation of jurisdiction and it was inconsistent with domestic legislative provisions to do so. As there was no express reservation in the 2014 Award, it followed that the arbitrator was functus officio.

This decision highlights the need to consider whether an award from the tribunal is intended to finally resolve all issues in an arbitration. Further, parties should ensure that where conditional orders are given, these orders are worded sufficiently clearly so that the parties will not need to go back before the tribunal for directions.