Enforcing Arbitral Awards in Singapore a QA with Michael Weatherley and Cathryn Neo

Compared to foreign court judgments, the ease and simplicity of having an international arbitral award recognised and enforced is a prominent feather in arbitration’s cap, and one of its greatest advantages. In addition, the reluctance of parties to trust foreign courts makes international arbitration a compelling choice for resolving cross-border commercial disputes.

Our dispute resolution partner, Michael Weatherley, and Cathryn Neo, dispute resolution senior associate (Ashurst ADTLaw) discussed with Financier Worldwide the current trends in enforcing arbitral awards in Singapore. 

You may download the PDF version at the end of this article.

Could you provide an overview of recent arbitration activity in your country of focus? Are there any common themes among the types of cases you are seeing?

Consistent with Singapore’s recent ranking as the equal most preferred seat of arbitration in the world, arbitration activity in Singapore is at an all-time high. The Singapore International Arbitration Centre (SIAC), for example, has posted two consecutive record years in terms of new case filings, with 2020 seeing the SIAC surpass 1000 new filings for the year for the first time, albeit two sets of associated cases accounted for 261 and 145 related cases respectively. We are also seeing a significant uptick in M&A disputes, including post M&A reps and warranties, tax indemnity and shareholder exit disputes, as well as disputes in the renewable energy sector, particularly relating to the construction and operation of large-scale renewable energy infrastructure. Liquefied natural gas (LNG) price review negotiations and arbitrations also remain a significant feature of the disputes landscape in Singapore.

What strategies might be used by a losing party to challenge an arbitral award and frustrate the enforcement process? To what extent are ‘tactical’ challenges becoming more common?

There are two ways in which a losing party may attempt to avoid the consequences of an award, either by actively seeking to set aside an award in the seat of arbitration or passively waiting for the winning party to seek enforcement in the jurisdiction in which they have assets and resisting such proceedings. As the grounds for these kinds of challenges are limited largely to procedural irregularities, we commonly see parties trying to precipitate procedural issues in the arbitration as a tactic to preserve rights of challenge in the event they are on the losing side of an award. This can range from complete non-participation in the arbitration, to late requests for extensions of time or vacations of hearings, to mock outrage at and requests to exclude allegedly ‘new’ arguments or evidence, and, certainly more commonly in the era of COVID-19, objections to the holding of hearings virtually.

Have there been any recent legal or judicial developments in your country of focus, which impact the process of enforcing arbitral awards?

Enforcement of awards in Singapore remains a largely mechanistic process and has not been subject to any recent legislative changes of significance. In terms of judicial developments, the High Court in Bloomberry Resorts confirmed that it has the discretion to grant time extensions for setting aside an order granting leave to enforce, in contrast to the Singapore Courts’ strict enforcement of the three-month time limit for setting-aside applications. The court considers the length of delay, reasons for delay, chances of the defaulting party succeeding and the degree of prejudice the would-be respondent would suffer if time was extended. No objection to the extension was taken in the subsequent appeal.

How are courts in your country of focus dealing with challenges to arbitral awards? What insights can we draw from recent cases?

Recent cases show that Singapore courts will strictly enforce the three-month time limit in Article 34(3) of the Model Law for bringing a setting aside application. The Court of Appeal in Bloombery Resorts confirmed that this time limit also applied to section 24 of the International Arbitration Act, under which awards can be set aside if, among other things, the making of the award was induced by fraud or corruption. In the recent case of China Machine, the Singapore Court of Appeal made clear that a party cannot challenge an award in respect of a failure in the arbitral process if it did not give ‘fair intimation’ of its objection to the tribunal itself. The court emphasised that it would not countenance ‘hedging’ tactics where parties simply reserve their position before the tribunal and decide based on the outcome of the award if they wish to pursue the point.

When it comes to enforcing arbitration awards, what strategies can companies deploy to enhance their chances of success?

It is crucial to start planning for enforcement before commencing the arbitration and certainly before receiving the award. The starting point is to identify if and where your counterparty has assets for enforcement. Companies can work with investigation firms to trace and identify assets across various jurisdictions. Once the relevant jurisdictions are identified, companies should consider getting local counsel advice on the local enforcement regime, including its reliability, limitation periods, practical restrictions and processes. This may influence how the arbitration is conducted and even what relief is sought from the tribunal. Companies may also consider seeking interim injunctions prior to the commencement of, or during, arbitration to prevent the dissipation of assets. Depending on the precise rules in play, these may be sought from emergency arbitrators, courts or the main tribunal.

When negotiating and drafting business agreements, what steps can parties take to ensure that contractual arbitration clauses are clear and valid? How important is this to facilitating award enforcement down the line?

The invalidity of an arbitration agreement is grounds for refusing enforcement of an award under most legal systems, including Singapore’s. Therefore, getting the arbitration clause right is essential. Often the best strategy for ensuring a clear and valid arbitration clause is to adopt the model clauses recommended by the various arbitral institutions. They are generally fit for purpose and, in most cases, will not provoke time-consuming and costly challenges to their validity or effect. Aside from the usual key elements, you may also wish to specify the law governing your arbitration clause to avoid long and costly disputes on the subject in the event questions arise as to the formation, validity or effect of the clause, as occurred in the recent Singapore Court of Appeal case of BNA v. BNB.

Going forward, what trends do you expect to see around arbitral award enforcement? What predictions would you make for the months ahead?

With the increasing use and popularity of emergency arbitration, we expect to see greater efforts by legislators around the world to expressly provide in arbitral legislation for the enforceability of emergency arbitrator awards and orders. Singapore led the charge in this regard, amending its arbitration legislation in 2012. If not by legislation, we expect courts to increasingly favour enforcement of these emergency awards and orders. A recent prominent example of this approach was the Indian Supreme Court’s decision in Amazon v. Future where the court held that an award by an emergency arbitrator in the context of an Indian-seated SIAC arbitration was enforceable in India.