Annex C Frequently Asked Questions About Arbitration and the Singapore International Arbitration Centre

1. What is the difference between arbitration and mediation?

In an arbitration, the arbitrator looks into the legal rights and wrongs of a dispute and makes a decision. Once the arbitrator has arrived at a decision, it is binding on parties whether they agree with it or not. It is very much like the way a court case is decided by a judge, except that the process does not take place in a court room, and it is not open to the public. As in a court case, there is usually a winning and a losing party in an arbitration.

In a mediation, the mediator, essentially, helps parties to settle their disputes by a process of discussion and narrowing differences. The mediator helps the parties to arrive at an agreed solution. He does not decide the dispute. A successful mediation results in an agreement signed by the parties, whereas a contested arbitration results in a decision by the arbitrator himself without the agreement of the parties. In a mediation, there is no such thing as a winning or losing party, because there is no binding decision without both parties agreeing to one.

The Singapore International Arbitration Centre handles arbitration cases in Singapore. Mediation is managed by the Singapore Mediation Centre.

2. What are the advantages of resolving disputes by arbitration?

Arbitration is a less formal procedure than court litigation, and it is conducted in private, away from the glare of the media and the public. Parties are free to appoint their own arbitrators and can chose more practical procedures and rules for the conduct of an arbitration. Arbitration awards are final and binding, and have extra-territorial enforceability in over 130 countries under the New York Convention. Generally, arbitration can also be more cost-efficient and speedier than court litigation.

3. Is there a difference between Singapore International Arbitration Centre (SIAC) and Singapore Institute of Arbitrators (SIArb)?

Yes, they are separate and distinct organisations. SIAC is an arbitral institution that offers a neutral and independent venue in which parties can resolve their disputes. It provides institutional support for the conduct of arbitration. Among other things, this includes the appointment of arbitrators, the financial management of arbitration and arranging for facilities and other support services for the conduct of an arbitration.

SIArb is an institution that caters to the training needs of arbitrators. SIAC works closely with SIArb by lending resources to conduct some of its training modules.

4. How do I commence arbitration proceedings?

Under the SGX-DC Clearing Rules, SGX-DC Members and third parties to whom SGX-DC Members provide carrying and/or clearing services may refer disputes arising from transactions to be cleared by a SGX-DC Member and/or SGX-DC, another Participating Market or a Mutual Offset System in relation to reciprocal clearing arrangement arranged or agreed to as between SGX-DC and the Participating Market or under a Mutual Offset System to the SIAC for arbitration.

In order to proceed with arbitration under the SIAC SGX-DC Arbitration Rules, both parties must sign a Submission to Arbitration on the prescribed Form A.

The party initiating the arbitration (the "Claimant") should then file with the SIAC Registrar a written Notice of Arbitration setting out the requirements in Rule 1.3 of the SIAC SGX-DC Arbitration Rules governing the conduct of arbitrations. A copy of the Notice of Arbitration should concurrently be served on the other party to the dispute (the "Respondent"). For the convenience of parties, there are prescribed forms that can be used when filing a Notice of Arbitration (Form B) and Response (Form C).

5. How is the Arbitration Fee structure in Annex A derived?

There are two components of the Arbitration Fee — the Administration Fee and the Tribunal's Fee. The Administration Fee is pegged to the quantum of the claim, or the counterclaim if any and covers SIAC's cost of administering the arbitration.

The Tribunal's Fee is set at the rate of $500.00 per hour but is capped based on the estimated total time in which the Arbitrator is expected to take to decide a case (i.e. including the time taken in preparing for the hearing, the hearing itself and issuing the Award). The cap is based on the aggregate of the quantum of the claim and the counterclaim.

6. What if it is determined midway through the arbitration proceedings that the quantum of claim or counterclaim is more/less than the original estimation in the Notice of Arbitration and/or the Response by Respondent?

If the quantum of the claim or counterclaim is more than the initial estimation, the Registrar will direct the Claimant or the Respondent as the case may be, to pay the additional fees before the case may proceed.

If the quantum of the claim or counterclaim is less than the initial estimation, the additional Arbitration Fees paid will not be refunded to the parties until and unless the Registrar so directs.

7. Does SIAC have the experience and expertise to administer arbitrations to a specialized sector of the community such as SGX-DC?

Yes. SIAC has experience in administering arbitrations in specialized industries. In November 2004, SIAC launched a new division, the Singapore Chamber of Maritime Arbitration, to deal specifically with disputes arising from the maritime industry. Its rules of arbitration were tailored to govern maritime disputes, taking the nature of the industry into account.

SIAC had previously tailored the Bunker Claims Procedure for the oil bunkering trade and also assisted the timber and rubber trading community in tailoring industry-specific arbitration procedures.

On a related note, the SIAC SGX-DC Panel of Arbitrators comprises industry experts and legal professionals, some who have served on the SGX-DT Business Conduct Committee (the SGX-DT committee that previously heard disputes arising from transactions on SGX-DT), the SGX-DT and SGX-DC Disciplinary Committees. The SIAC SGX-DC Panel of Arbitrators is also identical to the SIAC SGX-DT Panel of Arbitrators appointed in July 2005 to arbitrate disputes arising from transactions on SGX-DT.

8. What are some of the major differences between arbitration under the former procedures in Chapter 5 administered by SGX-DC compared to an arbitration administered by SIAC?

An arbitration conducted by the SGX-DC is heard by a panel of 1 or more odd number of arbitrators whereas arbitrations by the SIAC will be conducted by a sole arbitrator unless the Chairman of the SIAC is of the view that more than 1 arbitrator is necessary. This will help keep the cost of the arbitration low and expedite the arbitration process whilst at the same time ensuring that justice is done between the parties.

The SIAC SGX-DC Arbitration Rules, however, provide for a party to challenge the appointment of an arbitrator where there are circumstances that give rise to justifiable doubts as to his impartiality or independence within 7 days of his appointment. A party nominating or agreeing to the appointment of the arbitrator may also challenge the appointment of an arbitrator within 7 days after becoming aware of circumstances that give rise to doubts about his impartiality or independence after the appointment has been made.

There will also no longer be an avenue for applications to the Appeals Committee refusing to arbitrate or appeals to the Appeals Committee against the decision of the arbitration. Decisions of the arbitrator will be final and binding on the parties. This is to simplify the dispute resolution process and provide finality to the decision of the arbitrator. This, however, is not unlike the procedure used for an arbitration under the SGX-DC Rules as parties are usually required to sign an agreement excluding appeals against decisions of the tribunal.

Notwithstanding this, the parties may still apply to the High Court to set aside an award of the arbitrator under section 24 of the International Arbitration Act (Cap. 143A), inter alia, where:

(a) the making of the award was induced or affected by fraud or corruption; or
(b) a breach of the rules of natural justice occurred in connection with the making of the award by which the rights of any party have been prejudiced.

Please refer to the SIAC SGX-DC Arbitration Rules for the complete list of the rights and obligations of a party to an arbitration.

9. Who may I contact if I require clarification on arbitration procedure and/or the arbitration services provided by SIAC?

You may contact Ms Sabiha Shiraz or Mr Ganesh Chandru at +65 6334 1277 regarding any queries you may have on the arbitration procedure and/or the arbitration services provided by SIAC.