Justice S Mohan: Speech to the Indonesian Judiciary on the Singapore Courts' Role in the Transnational System for Commercial Justice

SPEECH TO THE INDONESIAN JUDICIARY
“The Singapore Courts' Role in the Transnational System for Commercial Justice”

Tuesday, 7 November 2023

Justice S Mohan
Supreme Court of Singapore

Leadership of the Supreme Court of the Republic of Indonesia
Head of the Judicial Research, Development and Training Agency, Judge Bambang Hery Mulyono
Ladies and gentlemen

1.            A very good afternoon and may I begin by also expressing my deep gratitude to the organisers for the opportunity to address you on this very important and relevant topic of international cross-border dispute resolution¹.

2.            Cross-border dispute resolution has never been more relevant than it is today, and indeed is poised to grow in importance, given the increasingly globalised world that we live in. As business and commerce continue to transcend national borders, so will the disputes that inevitably arise out of such commercial activities. This has called for and resulted in the development of a transnational system for commercial justice (which I will refer to in my address as a “TSCJ”). I am delighted that this seminar will allow an exchange of ideas on how such a TSCJ is best organised, best implemented and best supported.  I am privileged to be able to share my views on the role of the Singapore courts in the TSCJ.

3.            Let me start by defining what I mean when I refer to a “transnational system”. By this, I mean a multi-jurisdictional interactive network comprising commercial dispute resolution mechanisms, such as litigation, arbitration, and mediation; and institutions, such as national courts, commercial courts, arbitration centres and institutions.

4.            Chief Justice Sundaresh Menon and Justice Aedit Abdullah who spoke before me, gave you insight into two key facets of the TSCJ: cross-border institutional collaboration and cross-border insolvency and restructuring respectively.

5.            It cannot be gainsaid that a core mechanism in the resolution of international commercial disputes, and by extension a central pillar of the TSCJ, is international commercial arbitration. Therefore, a large part of what I wish to share today focuses on the Singapore court’s role in the context of international commercial arbitration and, more broadly, its role in promoting a TSCJ that best accords with the reasonable expectations and interests of commercial parties. I will divide my speech into two parts, broadly corresponding with two important characteristics of an effective institution within a TSCJ: first, I will provide an overview of the institutional structures and processes in the Singapore courts that support the robust and efficient resolution of international commercial disputes; and second, I will provide a snapshot of Singapore’s judicial approach towards the enforcement of arbitration agreements and awards.

I.             Institutional structures and processes

6.            I turn to the first point. The Supreme Court of Singapore comprises the Court of Appeal, which is our apex court, and the High Court. In turn, the High Court consists of two divisions – the Appellate Division and the General Division. Under the General Division, there are specialised lists or clusters comprising Judges who are well-acquainted with and specialise in the subject matter within their respective clusters. With regard to the resolution of applications relating to international commercial arbitration disputes, the High Court has a dedicated “Arbitration” cluster.

7.            Additionally, the Singapore International Commercial Court (the “SICC”) was established in 2015 as a division of the High Court. It provides an alternative forum for the litigation of “international and commercial”² disputes, including any “proceedings relating to international commercial arbitration”³ or “proceedings relating to corporate insolvency, restructuring or dissolution that are international and commercial in nature”⁴. The SICC bench comprises a diverse panel of eminent international and local judges, all of whom are experienced specialist commercial judges.

8.            Having such clusters with specialist Judges, as well as the SICC, to hear arbitration-related applications helps promote the efficient and robust resolution of such international commercial disputes in Singapore.

9.            In addition, the processes we adopt also enable the efficient and expeditious disposal of arbitration-related applications. A fundamental component of this process is the convening of an early Registrar Case Conference (“RCC”), usually within 4 weeks after the arbitration application is filed⁵. In an RCC, a registrar will manage the arbitration application, including setting deadlines for the parties to file affidavits and written submissions and fixing hearing dates. Further, limits are also imposed on the volume of documents tendered in evidence. For instance, the Rules of Court provide that except with the permission of the court, no further affidavits may be filed in the application after the defendant files its affidavit on the merits⁶,  and that written submissions for an arbitration application are not to exceed 35 pages⁷. Exceptions are made by the court only in special cases.

10.         These processes are important to meet the expectations of commercial parties when they interact with the Singapore court in the resolution of arbitration-related matters. As the common refrain goes, “justice delayed is justice denied”. The efficient and expeditious disposal of arbitration-related applications is thus essential to promote a TSCJ that best accords with the expectations and interests of commercial parties. It is therefore imperative that the processes of our courts do not impede or cause unnecessary delays to the justice administered by an arbitral tribunal by way of its arbitral award.

II.            Judicial approach towards the enforcement of arbitration agreements and awards

11.         I turn to my second point: Singapore’s judicial approach towards the enforcement of arbitration agreements and awards. Singapore is often described as a “pro-arbitration” jurisdiction. This means that the Singapore courts do not view arbitral tribunals as wild horses that need to be controlled or tamed – far from it. Instead, we strive to support the arbitration ecosystem by giving effect to the parties’ intention to arbitrate, thereby strengthening the TSCJ as a whole⁸. This judicial approach manifests in several ways, as illustrated by a number of decisions of our apex court.

12.         First, in the case of Insigma⁹,  decided almost 15 years ago in 2009, the Court of Appeal recognised that as long as the parties have demonstrated a clear intention to settle any dispute by arbitration, the court should give effect to such intention, even if certain aspects of the agreement may be ambiguous, inconsistent, incomplete or lacking in certain particulars¹⁰.  Insigma illustrates Singapore’s judicial approach which places a premium on the parties’ intention to arbitrate and pays due regard to the expectations and interests of commercial parties.

13.         Second, in the case of Tomolugen¹¹ referred to by Chief Justice Menon in his address, the Court of Appeal, in agreeing with the English House of Lords decision in Fiona Trust¹², held that an arbitration agreement should be construed widely, based on the presumed intentions of the parties as rational commercial parties, and eschewed adopting a technical approach to the construction of arbitration agreements¹³. This demonstrates the Singapore courts’ hesitance to allow technical arguments to trump the parties’ intentions on how they wish to use the mechanisms available to them in the TSCJ for the resolution of their disputes.

14.         Third, Singapore’s judicial approach towards the enforcement of arbitration agreements manifests in two types of orders commonly granted by the court – the first is an order granting a stay of proceedings that are brought before the Singapore court; and the second an order granting an anti-suit injunction to restrain proceedings commenced or prosecuted in courts elsewhere.

15.         On a stay of proceedings, in Tomolugen, the Court of Appeal was confronted with the question of whether to grant a stay of court proceedings in favour of arbitration under section 6 of the International Arbitration Act 1994. The Court of Appeal held that the court should adopt a prima facie standard of review when hearing a stay application under section 6. It further held that a stay order ought to be made if the applicant is able to establish a prima facie case that: (a) there is a valid arbitration agreement; (b) the dispute in court falls within the scope of the arbitration agreement; and (c) the arbitration agreement is not null and void, inoperative or incapable of being performed¹⁴. In laying down this 3-step test and applying a prima facie standard of review, Tomolugen gave teeth to the principle of kompetenz-kompetenz, which clothes an arbitral tribunal with the power to determine any challenge to its own jurisdiction. Tomolugen also evinces Singapore’s judicial stance of being pro-arbitration by refraining from short-circuiting the arbitration process, thereby strengthening arbitration as a dispute resolution mechanism within the TSCJ.

16.         As for the grant of an anti-suit injunction, in Sun Travels¹⁵,  the Court of Appeal held that it would suffice for an applicant to show that there was a breach of an arbitration agreement by its counterparty through the commencement or prosecution by that party of foreign court proceedings. Once such a breach had been established, an anti-suit injunction restraining the commencement or prosecution of those court proceedings would ordinarily be granted unless there are strong reasons not to¹⁶. The Court of Appeal explained that in granting such an injunction, the court is not arrogating to itself jurisdiction exercised by the court of a foreign friendly state, but is merely seeking to uphold and enforce the parties’ contractual bargain¹⁷, namely, their agreement to arbitrate.

17.         Fourth, the Singapore courts adopt a philosophy of minimal curial intervention when parties seek to challenge an arbitration award. In the case of AKN¹⁸, the Court of Appeal was emphatic that our courts must not interfere in the merits or correctness of an arbitral award and, in the process, offer parties a second chance to re-argue the underlying merits of the case¹⁹. In China Machine,²⁰ the Court of Appeal decided that in determining whether a party had been denied its right to a fair hearing by the tribunal’s conduct of the proceedings, the question to be asked is whether what the tribunal did (or did not do) falls within the range of what a reasonable and fair-minded tribunal in those circumstances might have done with reference to what was known to the tribunal at the material time²¹. The court should also accord a margin of deference to the tribunal’s exercise of its procedural discretion²². 

18.         It is of course not the position that our courts will never allow a challenge to an arbitral award – our approach is a more nuanced one. On occasion (albeit rare), the Singapore courts have set aside awards, primarily on the basis of breaches of natural justice that had occurred in the course of the arbitration and which prejudiced the rights of the aggrieved party. This segues neatly to my fifth point, which is that the judgments handed down by our courts where arbitral awards have been set aside were decided on a principled basis and thus do not undermine international commercial arbitration or the efficacy of the TSCJ.

19.         For instance, in the case of CAJ²³,  the Court of Appeal upheld the decision of the Judge of the High Court (who happened to be me), noting that it was a “classic case of a breach of natural justice” as the respondent was not given a fair and reasonable opportunity to respond to a new contractual defence raised by the appellant for the first time in the arbitration only in its written closing submissions²⁴. The Court of Appeal observed that over the past 20 years, approximately only 20% of applications to set aside arbitral awards had been allowed and the courts had only done so in exceptional cases²⁵.

20.         The key point illustrated by the various cases I have discussed is this - when commercial parties agree to arbitrate a dispute, it is their reasonable expectation that the arbitration agreement in their contract will be upheld. It is also their reasonable expectation that, in the absence of any prejudicial breaches of due process or any other limited ground on which an award may be set aside or enforcement in Singapore refused, an arbitration award will be final and binding on them. By recognising and giving real effect to these expectations, the Singapore courts are in effect appreciating their role in the TSCJ, by protecting party autonomy in both word and deed, and supporting the legitimacy and effectiveness of international commercial arbitration as a dispute resolution mechanism in the TSCJ.

III.           Conclusion

21.         To conclude, I see the Singapore courts’ role in promoting a TSCJ in the sphere of international commercial arbitration as being threefold: first, to have in place institutional structures and processes that strongly support the robust and efficient resolution of international commercial arbitration disputes; second, to maintain a consistent and principled judicial approach towards the enforcement of arbitration agreements and awards; and lastly, as covered by Chief Justice Menon in his address, to engage in international collaboration with other institutions (both formally and informally), with the aim of harmonising judicial philosophies across jurisdictions to create a coherent and truly transnational system of commercial justice.

22.         Thank you very much for giving me the opportunity to address you this afternoon. I wish all of you a fruitful and stimulating exchange of ideas at this seminar.

23.         Terima kasih.

^{1     I am grateful to my Justice’s Law Clerk, Ms Bay Jia Wei, for her research and invaluable assistance rendered to me in the preparation of this opening address. Any errors are entirely mine.
2     Supreme Court of Judicature Act, s 18D(1); Singapore International Commercial Court Rules 2021, O 2 r 1(1).
3     Supreme Court of Judicature Act, s 18D(2)(a); Singapore International Commercial Court Rules 2021, O 2 r 1(2)(d).
4     Supreme Court of Judicature Act, s 18D(2)(c); Singapore International Commercial Court Rules 2021, O 2 r 1(2)(da).
5     Registrar’s Circular No. 1 of 2023, para 9.
6     Registrar’s Circular No. 1 of 2023, para 8; Rules of Court 2021, O 6 r 12(6).
7     Registrar’s Circular No. 1 of 2023, para 10; Rules of Court 2021, O 9 r 25(14); Supreme Court Practice Directions, para 105(2).
8     Lecture in Bahrain by The Honourable the Chief Justice Sundaresh Menon, Supreme Court of Singapore, “The Transnational System of Commercial Justice and the Place of International Commercial Courts”, para 36.
9     Insigma Technology Co Ltd v Alstom Technology Ltd [2009] 3 SLR(R) 936 (“Insigma”).
10     Insigma at [31].
11     Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals [2016] 1 SLR 373 (“Tomolugen”).
12     Fiona Trust & Holding Corporation v Privalov [2007] 2 Lloyd’s Rep 267.
13     Tomolugen at [124].
14     Tomolugen at [63].
15     Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd [2019] 1 SLR 732 (“Sun Travels”).
16     Sun Travels at [68].
17     Sun Travels at [74].
18     AKN and another v ALC and others and other appeals [2015] 3 SLR 488 (“AKN”).
19     AKN at [37].
20     China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another [2020] 1 SLR 695 (“China Machine”).
21     China Machine at [98]–[99].
22     China Machine at [103].
23     CAJ and another v CAI and another appeal [2022] 1 SLR 505 (“CAJ”).
24     CAJ at [32], [54].
25     CAJ at [2].}