SIAC Investment Arbitration Rules

Maxwell Chambers, Singapore by Nicolas Lannuzel (CC BY-SA 2.0) via Wikimedia Commons

The Singapore International Arbitration Centre (SIAC) announced last month that its draft set of rules for investment arbitration (the draft SIAC Investment Rules), initially due to come into force on 27 May 2016, would not be published until later in the year due to the substantial feedback received from arbitration practitioners. When the new SIAC Investment Rules come into force, they will apply to disputes between commercial parties or ‘investors’, on the one hand, and states and state-owned entities, on the other, which arise under commercial agreements or investment treaties.

Key features of the draft SIAC Investment Rules

The draft SIAC Investment Rules are in large part based on the standard SIAC Arbitration Rules, of which a new version is expected to come into force later this month (a draft version has already been published). Thus, subject to some changes in time limits, the standard SIAC Rules regarding, among other things, submissions, applications for the early dismissal of  fundamentally flawed claims (itself a new addition to the standard SIAC Rules in 2016), challenges to arbitrators, the conduct of the proceedings, the conduct of hearings and the writing of awards shall apply to investment cases. To these have been added a number of innovations and modifications designed specifically for investment arbitration, which are summarised below.

Submissions by third parties
In accordance with a trend to allow for greater public participation in investment arbitration, the draft SIAC Investment Rules grant a tribunal the discretion to allow a non-disputing party the right to make submissions even without the consent of the parties to the dispute. In exercising its discretion whether to allow the third party to make submissions, the draft SIAC Investment Rules provide that the tribunal must consider whether the non-disputing party has a ‘sufficient interest’ in the proceedings. This is arguably a lower threshold than that of the ICSID and UNCITRAL Transparency Rules which instead require a ‘significant interest’ in order for a third party to be granted permission to make submissions.  

Third-party funding
The draft SIAC Investment Rules are the first rules of any major arbitral institution to grant tribunals the express authority to require the disclosure of any third party funding arrangements. (Although some ICSID tribunals have ordered such disclosure in the past (e.g. Muhammet Cap and Sehil Insaat v Turkmenistan and Eurogas v Slovakia), they did so by relying on their inherent powers as arbitrators.) The draft SIAC Investment Rules also allow a tribunal to take into account third party funding arrangements when apportioning the costs of the arbitration.

Emergency Arbitrators
Relief can be sought from an emergency arbitrator under the draft SIAC Investment Rules. Unlike the standard SIAC Rules, however, parties may only apply for such relief if both parties expressly agree. This appears to strike a balance between the desire of SIAC to include the emergency arbitrator mechanism that has proven popular with commercial users since its introduction in the 2010 SIAC Rules and a sensitivity to the concern of some states that they should not have their sovereign powers fettered on an interim emergency basis.

Confidentiality
The confidentiality provisions of the draft SIAC Investment Rules seek to strike a balance between party autonomy and the increasing trend toward transparency in investment arbitration. The default position is that SIAC will publish limited information regarding the existence of an investment dispute with all other matters relating to the proceedings (including the nature of any orders or awards) remaining confidential. The parties, however, may agree to keep the existence of the dispute confidential or to publish all matters relating to the proceedings.

Constitution of the tribunal
The default position under the draft SIAC Investment Rules is that, in the absence of an agreement of the parties, a tribunal will consist of three arbitrators (compared to the default of a sole arbitrator under the standard SIAC Rules). The parties may, however, agree to a tribunal of any odd number of arbitrators, including panels of five or more persons. When required to select a sole or presiding arbitrator, the SIAC Court will use a list procedure.[1]  When doing so, it will probably select a candidate of a nationality other than that of the parties, which is already the informal practice under the standard SIAC Rules.[2]

Time limits
The draft SIAC Investment Rules extend certain time limits as compared to the standard SIAC Rules in recognition of the potential complexity of investment disputes and the delays that states may experience in instructing counsel. For example, the period of time for a respondent state to file its Response to the Notice of Arbitration and for the parties to agree on the constitution of the tribunal is extended from 14 to 28 days. Nonetheless, the time limits for the constitution of the tribunal remain shorter than those under the ICSID Rules, which allow the parties 90 days to appoint the arbitrators.

Multiple contracts, joinder, consolidation or expedited procedure
The new standard SIAC Rules contain provisions for multiple contracts, joinder, consolidation and expedited procedures. These have been omitted from the draft SIAC Investment Rules on the basis that states, which SIAC wants to encourage to agree to the new rules, may not be comfortable with these innovations or because they may not be appropriate for cases brought under investment treaties. In practice, however, parties to a dispute governed by the SIAC Investment Rules could agree to the application of similar principles.

Conclusion

While the draft SIAC Investment Rules contain some interesting innovations, SIAC evidently needs more time to ensure that the final version of the Rules will reflect best practice and be attractive to commercial parties, investors, states and state-owned entities. If SIAC can achieve this, it can be expected to administer many more cases involving states and state-owned entities beyond the five in which it has already been involved. Indeed, once the Investment Rules come into force later this year, users will for the first time have the option of submitting a dispute to a commercial arbitration centre to be administered under a set of rules customised for investment arbitration.[3] 

Authors:
Mark Mangan, Partner and Henry Defriez, Associate; Dechert LLP