An EU (Spanish) company enters into a transaction with an ASEAN (Indonesian) company. If there is a dispute and the matter is before either the Spanish or the Indonesian courts, the winning party might find that they have to re-litigate the entire matter in the other party’s domestic courts in order to enforce the judgment. This is because there is no treaty that provides for the mutual recognition and enforcement of each state’s court judgments.
One popular option to avoid the problem is to have such disputes arbitrated in Singapore. Under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, a Singapore arbitration award can be enforced in more than 150 states, including every ASEAN and EU member-state.
Industry watchers will be aware of the Singapore government’s aim to promote and entrench the city state’s position as Asia’s hub for international dispute resolution by offering a complete suite of services in relation to international litigation, international arbitration and international mediation. Until recently, the most visible of those efforts centred on promoting international arbitration in Singapore.
But commercial parties that would rather litigate their disputes now have grounds to cheer. There have been significant developments that allow the Singapore courts to be a viable alternative to international arbitration for international commercial disputes. These provide a significant impetus for ASEAN and European parties to consider having their disputes settled in Singapore.
LAUNCH OF SICC
On 5 January 2015, the Singapore International Commercial Court was launched to deal specifically with transnational commercial disputes of “an international and commercial nature”.
The SICC has special provisions in recognition of the fact that the parties and the dispute in question may have little connection to Singapore. Unlike normal civil proceedings, a party before the SICC may be represented by a foreign lawyer registered under the applicable Singapore regulations. As of 19 May 2016, 69 foreign lawyers had registered. Where foreign law applies, the SICC permits foreign lawyers to make direct submissions on the law.
International Judges from common law and civil law jurisdictions have been appointed to the SICC and may hear disputes. International judges comprised the majority of the panel in the first reported judgment issued by the SICC on 12 May 2016.
On 14 April 2016, the Choice of Court Agreements Bill was passed in the Singapore Parliament. The new act will come into force and give effect to the Hague Convention, once it is published in the Singapore Government Gazette.
The Hague Convention is a significant judgment-recognition convention that strengthens the enforceability of Singapore court judgments (including SICC judgments) abroad (in particular the EU), and facilitates a more conducive legal environment for cross-border business.
The EU and Mexico have already ratified the Hague Convention and so commercial parties operating in, or trading between, the EU (excluding Denmark), Singapore and Mexico will be its major beneficiaries. The act more than triples the number of countries in which a Singapore judgment may be enforced. The Hague Convention is the litigation equivalent of the New York Convention. Under article 8 of the Hague Convention, a judgment given by a court of a contracting state designated in an exclusive choice of court agreement must be recognized and enforced in another contracting state, unless one of the limited grounds set out under the Hague Convention applies.
This promotes finality because a contracting state’s court is not supposed to review the merits of the case when recognizing and enforcing a foreign court’s judgment under the Hague Convention. This is very similar to courts enforcing a foreign arbitration award pursuant to the New York Convention.
When the New York Convention was first signed in 1958, there were only 24 state signatories. The Hague Convention may well grow to rival the New York Convention in time. Trade between the EU and ASEAN has almost doubled since 2005, and the two regional blocs are each other’s third-largest trading partner. Commercial parties in every ASEAN member state, to the extent that they have EU (or Mexican) counterparties, should actively consider choosing Singapore as a forum for the resolution of their disputes. If parties do not wish to arbitrate, they now have a perfectly viable alternative forum in the SICC.
MOHAMMED REZA is a director of JWS Asia Law Corporation in Singapore. Shaun Lee, supervising associate, and Justin Kwek, associate, also contributed to the article