International Commercial Litigation in Focus
Reactions to SIDRA’s International Dispute Resolution Survey
This the third instalment of a three-part series of articles focuses on the SIDRA Survey findings in international commercial litigation (ICL), particularly the respondents’ satisfaction with the cost and speed of ICL and how the Singapore International Commercial Court has streamlined its rules and processes to ensure effective and efficient proceedings.
The Singapore International Dispute Resolution Academy (SIDRA) launched its SIDRA International Dispute Resolution Survey in 2019. In 2021, SIDRA conducted the second iteration of the Survey and released its findings in August 2022. The 2022 Final Report sets out the findings of the second run of the SIDRA Survey, which was conducted to better understand user experience and satisfaction with different international dispute resolution mechanisms, including international commercial arbitration, mediation, and litigation.
All respondents to the SIDRA Survey are identified as Client Users (corporate executives and in-house counsel) or External Counsels (dispute resolution lawyers and corporate lawyers) who engage in cross-border commercial dispute resolution. All respondents are actual users of international dispute resolution mechanisms; views of neutrals, academics, institutional providers, and other non-user stakeholders are not represented.
User and Institutional Perspectives on the Costs and Speed in International Commercial Litigation
In relation to international litigation, we turned to the Singapore International Commercial Court (SICC) to get their reactions to the Survey findings. We interviewed Mr Laurence Wong, Senior Director of the SICC.
The SICC is a division of the General Division of the Singapore High Court and part of the Supreme Court of Singapore.1Overview of the SICC, available at https://www.sicc.gov.sg/about-the-sicc/overview-of-the-sicc.
It has jurisdiction over cross-border commercial disputes. As it is a court of law, an appeal against a judgment or order of the SICC is available and shall be filed with the Singapore Court of Appeal.2Singapore International Commercial Court Practice Directions, para. 139(2). Respondents to the SIDRA Survey were asked what were their most commonly used international commercial courts. The SICC was the most commonly used international commercial court (80%), followed by the London Commercial Court (LCC) (47%) and the Dubai International Financial Centre Courts (20%). The SICC and LCC were also the top two most commonly used international commercial courts in the first SIDRA Survey Report.32020 SIDRA Survey Final Report, Exhibit 8.2.3, available at https://sidra.smu.edu.sg/sites/sidra.smu.edu.sg/files/survey/index.html.
It should be clarified from the outset that the SIDRA Survey does not differentiate between international or domestic courts for the purposes of ICL as long as they are used to decide cross-border commercial disputes. Furthermore, the Survey does not define what is an “International Commercial Court”, which could be debatable with respect to various courts listed in the relevant questions in the SIDRA Survey based on their place in national court systems as well as such features as language of litigation, legal representation, nationality, and legal background of judges. The SIDRA Survey results also depend on the experience of respondents with respect to a particular court or litigation and is, thus, case specific. Therefore, aggregated responses of the SIDRA Survey respondents are not directly applicable to any particular court, but they are important in that they reflect user expectations with respect to litigation of cross-border disputes, internationally.
The 2022 SIDRA Survey findings reveal that 74% and 69% of respondents consider speed and cost, respectively, as some of the most important factors influencing their decision to use ICL. There is, however, a significant disparity between the figures when it comes to the satisfaction of respondents with the same factors, with only 40% of respondents satisfied with speed and 37% with costs associated with ICL.
The rather low level of user satisfaction with speed and cost in ICL was surprising from an SICC perspective, although Senior Director Wong recognised this as an issue of general concern in international dispute resolution. He explained how the SICC was established in 2015 to complement Singapore’s international dispute resolution ecosystem by forming one strong pillar – a court dedicated to international commercial litigation, where international judges hear matters together with Singapore judges and foreign lawyers may represent parties in matters where there are no substantial Singapore connection. In view of heightened criticism of increased time and costs in international arbitration and for greater call for efficiency in international commercial dispute resolution, the SICC adopted measures, such as those set out below, to address this global issue from its inception. The time and cost effectiveness of SICC proceedings is attributed to specially designed features and procedures of the SICC as discussed below.
How Does the SICC Manage Efficiency and Effectiveness of Their Proceedings?
a) Court Fees and Duration of Proceedings
In accordance with the SICC Rules 2021, “Court fees” include the following categories of litigation fees: milestone fees, hearing fees and miscellaneous fees.4SICC Rules 2021, Supreme Court of Judicature Act (Chapter 322), O.26, r.2. The Court fees are totally transparent. The specific fees under each category are clearly set out in the SICC Rules 2021. Cases at the SICC may be heard by a single judge or by three judges. Accordingly, all milestone fees are fixed for main actions heard by a single judge. Milestone fees for main actions heard by three judges are likewise set. Hearing fees for matters heard by a single judge or three judges varies depending on the total number of hearing days. Most importantly, the SICC does not administer ad-valorem fees. Court fees are not dependent on the amount in dispute. Thus, whether it is SGD 500,000 claim or SGD 5 billion claim, the Court fees would be the same.
In order to ensure the efficient and effective conduct of proceedings, one of the High Court of Singapore’s Key Performance Indicator (KPI), is to dispose 85% of matters within 18 months. As the SICC Senior Director indicated, in fact, over 90% of matters are disposed of by the High Court within 18 months for the last several years. The proceedings in the Court of Appeal are generally much faster. The small portion of cases that take longer than the target set by the Court KPI concerns complex matters, such as multiparty cases, matters involving multiple foreign law to be addressed, as well as multiple sets of counsel and which, therefore, results in lengthier timelines, case management conferences (CMC) and hearings.
b) Effective Case Management and Absence of Due Process Paranoia
The SICC adopts a robust judge-led case management conference system where the judges work with counsel to help shape issues to be determined at trial, with a view towards amicable dispute resolution where possible. The Court Registry will make sure that there are no undue delays in a case progressing and that matters proceed efficiently in compliance with the KPI, and standards established by the Court.
In arbitration, there is no appeal on the merits, giving parties only one chance to present their case. Therefore, the counsel of parties in an arbitration will often try to leave no stone unturned and present lengthy submissions and records of evidence, including lengthy witness statements and expensive expert reports. Arbitral tribunals tend to allow leave to present more submissions and evidence, extensions of timelines, and other procedural motions of the parties. Arbitral tribunals will have to consider everything that has been presented to it with the fear of a possible challenge of the award on the basis of due process. The situation is drastically different in the SICC. According to the SICC Rules 2021, the Court, in order to ensure “just, expeditious and economical disposal of any proceedings”, may make appropriate orders.5Id, O.1, r.11. Thus, according to Senior Director Wong, the judges might deny leave to file certain submission or evidence if they are immaterial to the case and refuse to consider the same should they be presented by the parties anyways. In case parties fail to comply with the SICC Rules 2021 and Court orders or directions, the Court is empowered to take action, including to issue a relevant cost order. Thus, SICC judges are not affected by the so-called “due process paranoia” in the same way as arbitrators, which leads to more efficient and effective proceedings. If we compare the practice in arbitration, the “due process paranoia” and the parties’ increased litigious tactics are considered to be some of the reasons driving costs and delays in commercial arbitration. The 2022 Survey findings demonstrate that arbitration is no longer perceived as a cost and time effective option by users of international commercial arbitration. Only 30% of the Survey respondents are satisfied with the costs in arbitration and only 41% are happy with the speed of arbitration proceedings.
c) Effective Handling of Third-party Joinders
The way the SICC deals with third-party joinders is yet another important avenue to ensure time and cost-effective proceedings. According to Senior Director Wong, the ease of joinder is offered so that parties can save time and costs in having all their claims arising out of multiple contracts and between multiple parties considered in one proceeding. Unlike commercial arbitration, where in most of the cases joinder of third parties would be possible if arbitration clauses in various contract are compatible and the consent of all parties to the proceedings is given, joinder of third parties in SICC litigation is within the sole discretion of the judges. The Court may order a person to be joined as a new party if it deems appropriate for the purposes of resolution of all matters in dispute or connected thereto.6Id, O.10, r.5. The only requirement under the SICC Rules 2021 is that if the third party is to be joined as a claimant, such third party must consent in writing and such consent must be filed with the Court. In case a third-party is joined as a defendant, no such consent is required. If the third party to be joined as a defendant fails to submit a statement of defence, they are deemed to have admitted the claims provided in the third-party notice and are bound by any Court judgement or decision in relation to such claims. The opposing party may object to the request for joinder and their objection will be heard. The final decision, of course, lies with the judges.
The possibility of multiple and parallel proceedings is yet another concern in international commercial dispute resolution, especially in commercial arbitration. In today’s world of complex corporate structures and inter-related transactions, the risk of multi-contract or multi-party disputes is very high. The seriousness of this concern in terms of overall efficiency of proceedings is evident in the 2022 SIDRA Survey. Thus, in choosing arbitral institutions, 91% of respondents consider institutional rules as “important” or “absolutely crucial” characteristics with particular emphasis on important procedural mechanisms such as consolidation and joinder. A strict and straightforward approach to third-party joinders in SICC practice can significantly reduce the risk of multiple proceedings and, consequently, reduce the costs and time incurred by the parties. Even in cases where joinder is not possible in SICC litigation, the parties can still use the evidence and arguments adduced in one proceeding by just referring to them in other proceedings, whereas in arbitration this possibility is limited due to the confidentiality of matters.
d) Introduction of Expert Evidence
The preparation and presentation of expert evidence is one of the most expensive parts of commercial dispute resolution, especially in arbitration. SICC Senior Director Wong explained that SICC’s approach to legal and industry expert evidence is designed in a way that can save parties significant time and costs. On the issues of foreign law, instead of presenting expensive foreign law expert reports and wasting time and cost on their cross-examination, foreign lawyers can register with the Court as “registered foreign lawyers” and file submissions on the issues of foreign law directly on behalf of the parties.7Id, O.3, r.1(1)(d).
When it comes to industry expert evidence, parties will need to apply to the Court and obtain leave to submit such expert evidence. Pursuant to the SICC Rules 2021, no expert evidence may be adduced unless the Court grants permission, which would be the case only if the expert evidence will contribute materially to the determination of any issue in the case and provided that such issue cannot be resolved by the facts and materials agreed mutually by the parties.8Id, O.14, r.2. Furthermore, the Court might direct parties to present a common expert and even determine the remuneration of such expert, instead of individually filing costly expert reports and incur more costs on lengthy cross-examinations.
According to Senior Director Wong, the SICC is a very “uncommon common law court”. The SICC was created based on two main ideas: (1) to facilitate the further development and enrichment of lex mercatoria and (2) to create a court that emulates existing best practices. In fact, when setting up the SICC, the Committee tasked with developing the framework for the Court collected the views of practitioners, academics, jurists, and business leaders as to what they thought were the effective and efficient practices in international dispute resolution that they would like to see in their future international commercial court. The SICC gives commercial parties another tool, alongside arbitration and mediation, to resolve their disputes, helping them find an appropriate dispute resolution process. The SICC aspires to be one of the leaders among international dispute resolution institutions and strives to meet these goals through high standards to which the Court subjects all participants of the proceedings, including its panel of renowned international judges from all over the world.
Empirical research such as the SIDRA Survey aims to screen how effective dispute settlement procedures are in meeting parties’ expectations in cross-border commercial dispute settlement. We anticipate that this type of evidence will encourage dispute resolution institutions to revisit their procedures and practices on a regular basis to ensure more effective and efficient dispute resolution.
SIDRA is currently running the third iteration of its International Dispute Resolution Survey. The 2023 SIDRA Survey is currently open for participation. It is you – users of international dispute settlement systems (mediation, arbitration, litigation, mixed mode (hybrid) mechanisms), who determine the outcome of the Survey; it is you whose voice is decisive in devising the most efficient and effective dispute resolution processes. Your contributions are highly valuable to us. You are invited to contribute to the ongoing SIDRA Survey, which you will find here.
|Overview of the SICC, available at https://www.sicc.gov.sg/about-the-sicc/overview-of-the-sicc.
|Singapore International Commercial Court Practice Directions, para. 139(2).
|2020 SIDRA Survey Final Report, Exhibit 8.2.3, available at https://sidra.smu.edu.sg/sites/sidra.smu.edu.sg/files/survey/index.html.
|SICC Rules 2021, Supreme Court of Judicature Act (Chapter 322), O.26, r.2.
|Id, O.1, r.11.
|Id, O.10, r.5.
|Id, O.3, r.1(1)(d).
|Id, O.14, r.2.