Circular No. DT/AM 69 of 2005
SGX — Derivatives Circular For All Members
30 June 2005
Circular No. DT/ AM 69 of 2005
ADMINISTRATION OF ARBITRATION BY SIAC
Following a review of the SGX-DT arbitration framework and procedure, the Exchange is pleased to inform Members that it has appointed the Singapore International Arbitration Centre (SIAC) to administer arbitrations among Members and market participants resulting from SGX-DT transactions with immediate effect.
The SIAC will have an SIAC SGX-DT Panel of Arbitrators comprising industry experts and legal professionals, some who have or are currently serving on SGX-DT Business Conduct and Disciplinary Committees. The attached Appendix 1 provides a guide to Members who may wish to arbitrate their disputes.
Should you need any clarification on this circular, please contact Mr Wong Sow Wei of our Legal Department at telephone number 6236-8330. For clarification on the arbitration procedure and/or the use of SIAC's services, please contact Ms Sabiha Shiraz or Mr Ganesh Chandru of SIAC at telephone number 6334-1277.
JOYCE FONG
SENIOR VICE PRESIDENT & HEAD
LEGAL & COMPANY SECRETARY
Appendix 1 Guide to Administration of Arbitration by SIAC
Administration of Arbitration by SIAC
SGX-DT has appointed SIAC to administer arbitrations among Members and market participants arising from transactions on SGX-DT. Under this expedited arrangement, SIAC will:
The benefits of the appointment are as follows:
SIAC is an established arbitral institution operating since 1991 and has accumulated a wealth of experience and expertise in administering arbitrations. Users will benefit from having their dispute arbitrated in a professional manner at a competitive fee.
SIAC has put together a scale of arbitration fees for SGX-DT users. This comprises SIAC's management fee and the Tribunal's fee and is pegged to the amount of the claim and counterclaim (if any) based on the appointment of a sole arbitrator. Where additional arbitrators are appointed, the arbitrator's fees will be increased accordingly. Each scale peg sets a minimum and maximum fee limit which gives parties a clear indication of arbitration fees before proceedings are commenced. This will enable parties to evaluate their requirement for arbitration and settlement options once proceedings have commenced. The arbitration fee structure is enclosed at Annex A.
Refer to Annex A — Schedule of Fees
Taking into account the nature of disputes likely to arise from transactions on SGX-DT, SIAC has formulated an expedited arbitration procedure allowing for a more speedy resolution of disputes. To facilitate this, SIAC has drafted a separate set of arbitration rules (known as the SIAC SGX-DT Arbitration Rules) to govern arbitrations arising from transactions on SGX-DT. The SIAC SGX-DT Arbitration Rules are enclosed as Annex B.
Refer to Annex B — SIAC SGX-DC Arbitration Rules.
Certain provisions of the SGX-DT Rules have been amended to effect the appointment of SIAC. Some of the major differences between an arbitration administered by the SGX-DT under the procedures in Chapter 6 and one conducted by the SIAC are detailed in the FAQs enclosed as Annex C. These include the fact that arbitrations by the SIAC will be heard by a sole arbitrator instead of a panel of 3 (unless the parties agree to a bigger panel or the Chairman of SIAC decides that one is necessary), the inclusion of a right to challenge the appointment of an arbitrator on the grounds of his impartiality or independence and the removal of the right of appeal to the Appeals Committee.
Refer to Annex C — FAQs.
Annex B SIAC SGX-DT Arbitration Rules — effective 1 July 2005
(1st Edition, 1 July 2005)
"Act" refers to the International Arbitration Act (Cap 143A) and any statutory re-enactments thereof.
"Centre" refers to the Singapore International Arbitration Centre.
"Chairman" refers to the Chairman of the Singapore International Arbitration Centre and includes the Deputy Chairman.
"Exchange" refers to the Singapore Exchange Derivatives Trading Limited by whatever name from time to time called.
"Participating Exchange" refers to an exchange which is a party to the Mutual Offset System and has assumed the rights and obligations thereunder.
"Member" refers to a Clearing Member, a Corporate Non-Clearing Member, an Individual Non-Clearing Member or a Commercial Associate Member.
"Non-Member Customer" means a person who is a customer of a Member and is not himself a Member.
"Registrar" refers to the Registrar of the Singapore International Arbitration Centre and includes an Assistant Registrar.
"SIAC SGX-DT Panel" refers to the list of persons admitted to serve as arbitrators under these Rules.
"Tribunal" refers to the arbitrator or arbitrators appointed in accordance with these Rules.
The language of the arbitration shall be in English.
A party which is aware of non-compliance with these Rules and yet proceeds with the arbitration without promptly stating its objection to such non-compliance, shall be deemed to have waived its right to object.
In all matters not expressly provided for in these Rules, the Tribunal and the Registrar shall act in the spirit of these Rules and shall make every reasonable effort to ensure that the disputes are resolved expeditiously and fairly and the awards are legally enforceable.
These Rules may from time to time be amended by the Centre in consultation with the Exchange whenever necessary.
1 See prescribed Form A Submission to Arbitration.
2 The Claimant may use Form B to submit a Notice of Arbitration.
3 The Respondent may use Form C to submit a Response.
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-DT Rules, SGX-DT Members, CME Clearing Members and Non-Member Customers may refer unresolved disputes among Members and market participants arising from transactions on SGX-DT to the SIAC for arbitration.
In order to proceed with arbitration under the SIAC SGX-DT 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 2.1 of the SIAC SGX-DT 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 Management Fee and the Tribunal's Fee. The Management 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 and is based on the appointment of a sole arbitrator (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. Where the parties agree to a bigger panel of arbitrators or the Chairman of SIAC decides that one is necessary, the fees will increase according to the number of arbitrators appointed.
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-DT?
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-DT Panel of Arbitrators comprises industry experts and legal professionals, some who have or are serving on the Business Conduct Committee (the SGX-DT committee that previously heard disputes arising from transactions on SGX-DT) and the SGX-DT Disciplinary Committee.
8. What are some of the major differences between arbitration under the former procedures in Chapter 6 administered by SGX-DT compared to an arbitration administered by SIAC?
An arbitration conducted by the SGX-DT is heard by a panel of 3 arbitrators whereas arbitrations by the SIAC will be conducted by a sole arbitrator unless the parties agree to a bigger panel of arbitrators or where the Chairman of the SIAC decides that one 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-DT 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-DT Rules as parties would be 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 the International Arbitration Act (Cap. 143A) and the UNCITRAL Model Law, inter alia, where:
This is similar to the existing procedures and standards for review by the Appeals Committee under Rule 607 of the SGX-DT Rules.
Please refer to the SIAC SGX-DT 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.