E-briefing: Is Your Arbitration too costly and lengthy? You can now consider the Arbitral Summary Award Procedure.

E-briefing: Is Your Arbitration too costly and lengthy? You can now consider the Arbitral Summary Award Procedure.
28 Nov 2018

Why is this important? With the summary award procedure, parties can skip the hassle of a typical arbitration process and full trial hearing. A binding arbitral award may be obtained in as short as 2 months. This means significant time and costs savings for parties. The Singapore International Arbitration Centre (SIAC) Rules make an express provision for such a summary award process.

Key things you should know

Mounting an application for early dismissal:

  • This must be made early: The application must be made early, although the SIAC Rules do not prescribe when exactly should the application be filed.
  • This can be made against a claim or a defence: This is an important difference between arbitration and court litigation. In arbitration, a summary award can be made against a claim or a defence. In litigation, a summary judgment can only be made against a defence.
  • This can be made on two grounds: That your opponent’s claim or defence is (1) manifestly without legal merit, or (2) outside the jurisdiction of the Tribunal.
  • The application should state in detail the facts and legal basis supporting the application.

After an application for early dismissal has been made:

  • The Tribunal has a discretion to allow or disallow the application.
  • If the application is allowed to proceed, the Tribunal must hear parties on the application. The Rules are silent on (i) whether this should be a paper or oral hearing, and (ii) whether documentary support or witness statements can be submitted.
  • A Summary Award or order must be made within 60 days of the application. The Tribunal must give reasons for the Award.

A quick overview of the process across arbitral institutions:

Key Aspects of the Process

SIAC Rules 2016

HKIAC Rules 2018

ICC Rules 2017 read with 30 Oct 2017 Practice Note

SCC Rules 2017

Summary disposition made of

Claims and Defences

Not stated (Likely to be Claims and Defences)

Claims and Defences

Claims and Defences

Time limit for application

No time limit (save that the SIAC Rules refer to the process as “early” dismissal)

As early as possible after the relevant points of law or fact are submitted

As promptly as possible after filing of claims or defences

No time limit

Application may pertain to

Legal merits and jurisdiction

Legal and factual merits and jurisdiction

Merits and Jurisdiction

Merits, Jurisdiction and Admissibility

Time Limit to issue Summary Award

Within 60 days of application

Within 90 days of application

As promptly as possible

No prescribed time limit

 

Potential Pitfalls to Avoid:

The summary award process is a relatively recent innovation by arbitral institutions. It is thus fertile ground for parties to exploit tactically. Parties will do well to be advised on the potential pitfalls involved in the process.

Difference in standards applied by Arbitral Tribunals: Different arbitral institutions adopt different standards in hearing a summary award application. Parties should understand the key procedural differences across the institutions so as to adopt nuanced tactics to launch or defend a claim.

For example, an application to the SIAC must made on the “legal merits” (or on jurisdictional grounds). However, the SIAC Rules require the application to state in detail “the facts and legal basis” supporting the application. This creates an opportunity to argue that the Tribunal should consider the surrounding factual matrix in making its decision.

Gaps in procedure: The summary award procedures of all the commercial arbitral centres allow for jurisdictional challenges. Separately, there is the relationship between the powers of the supervisory court of the seat and the arbitral tribunal to determine a tribunal’s jurisdiction. How does the summary award process fit into this relationship?

In Singapore, a party can apply to the Singapore High Court under Section 10 of the International Arbitration Act (“IAA”) to determine jurisdiction after the tribunal has decided on its jurisdiction. The SIAC Rules adopt a “manifest” threshold for an early dismissal application on jurisdictional grounds. This is a very high threshold. It appears that a tribunal may only allow the application if it is satisfied that it has no jurisdiction on a plain and obvious basis. Several questions arise, on which the express lex arbitri and rules are silent:

  • If an applicant fails on a summary award application before an SIAC tribunal, can the applicant proceed to apply to the High Court to determine the same question?
  • If the High Court then determines that the tribunal has jurisdiction on a manifest threshold, can the applicant place a second jurisdictional objection before the tribunal - this time on the full merits of the jurisdictional question? Or would a party be estopped from so doing?
  • The complexity increases if we consider the applicant’s right to apply for permission to appeal to the Court of Appeal against the High Court’s decision under the IAA.

Enforceability: There is a concern that a summary award disrespects parties’ right to natural justice. A party disgruntled by a summary award against it may seek to rely on this ground to challenge the enforcement of the award.

However, the award creditor may convincingly argue that parties have consented to the expeditious and cost-effective conduct of the arbitration by the tribunal. This consent is arguably extended to the tribunal’s power to issue a summary award where appropriate. Parties should also note that the right to be heard in a summary award application is an express requirement of the SIAC Rules.

Conclusion

The summary award procedure can result in significant time and costs savings. There has been a ready uptake of the procedure by major commercial arbitral centres around the globe. Given so, we can expect the frequency of summary award applications to increase in the coming years.

Parties are recommended to obtain specialist advice to strategically navigate the potentially tricky landscape surrounding the procedure. The procedure allows many opportunities for tactical advantages and manoeuvring. A party who finds itself the defendant to such an application should adopt nuanced tactics depending on the applicable rules of the arbitration. There are innovative solutions around the procedural gaps. There are also steps that parties may take to enhance the international enforceability of a summary award.

Eversheds Harry Elias regularly provides advice on different types of dispute resolution strategies to suit the client’s needs. We have extensive experience advising and successfully representing commercial enterprises with respect to international dispute resolution and the conduct of commercial and investment arbitration. We also have full rights of audience before all tiers of Singapore courts, and are thus uniquely placed to assist with Singapore law issues in cross-border disputes. 

Authors:

Francis Goh

Head, International Arbitration

Partner, Eversheds Harry Elias

Shaun Leong

Of Counsel, Eversheds Harry Elias

Janice Lee

Foreign Legal Associate, Eversheds Harry Elias

For more information, please contact our Business Development Manager, Ricky Soetikno at rickysoetikno@eversheds-harryelias.com

 

Contact: 

Francis Goh

Partner
Head, International Arbitration
Head, Private Client Advisory
T: 
+65 6361 9835
F: 
+65 6438 0550
E: 
FrancisGoh@eversheds-harryelias.com

Shaun Leong

Of Counsel
International Arbitration
T: 
+65 6361 9369
F: 
+65 6438 0550
E: 
ShaunLeong@eversheds-harryelias.com

Janice Lee

Foreign Legal Associate
T: 
+65 6361 9821
F: 
+65 6438 0550
E: 
JaniceLee@eversheds-harryelias.com
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