Choice of Court Agreements Bill – Speech by Dennis Tan

(Delivered in Parliament on 14 April 2016)

I declare my interest as a lawyer with a practice involving international commercial work.

I rise in support of the Choice of Court Agreements Bill.

On 25 March 2015, Singapore signed the Hague Convention on Choice of Court Agreements of 2005. For the rest of my speech I shall refer this as the ‘Hague Convention’ or ‘the Convention’. Singapore joined the European Union, the United States and Mexico as the current states who have signed up to the Convention. The present bill is being passed to ratify the Convention and bring it into law in Singapore.

Choice of court agreements are clauses in commercial contracts where parties to a contract nominate the courts of a particular country to decide on any legal disputes that may arise from the contract. They are often known as jurisdiction clauses.

The Convention also seeks to provide uniformity in the way the courts of contracting states should decide on choice of court agreements in contracts. In particular, it provide specific rules in the way the courts of contracting states can decide on how they should rule on exclusive choice of courts agreements.

The other feature of the Convention is that it seeks to provide uniformity in the way the courts of contracting states will decide on the recognition and enforcement of foreign civil judgments of fellow contracting states.

Presently, under our present laws, there are only 11 countries whose civil judgments may be recognized and enforceable in Singapore.  Likewise, by way of reciprocity, our civil judgments may be recognized and enforceable in the same 11 countries.

With the Convention and the passing of this Bill, the 11 countries will be joined by another 28 states. That includes Mexico and all countries in EU (except Denmark). Our civil judgments may be recognized and enforceable in those additional countries and likewise we may recognize and enforce their court judgments. Hopefully, the US will ratify the Convention soon. More than that, I hope that it will be a matter of time before other parties signed up to the Convention. When more countries sign up and ratify the Convention, more countries will be added to the 39 states.

The mutual recognition and enforcement of judgments among contracting states will certainly help to promote international trade.

The co-operation of contracting states in the recognition and enforcement of judgments will hopefully help to enhance our courts as one of the leading judiciaries in the area of commercial law.

It has been said that the Hague Convention seeks to create a regime for recognition and enforcement of court judgments comparable to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly referred to as the “New York Convention”). The New York Convention applies to the recognition and enforcement of international arbitration awards and currently has about 156 signatories. Hopefully in time to come, the Hague Convention will be as successful as the New York Convention.

Over the years, Singapore has grown to be a leading forum for international arbitration in the world. The Singapore International Arbitration Centre (SIAC) has become one of the leading international arbitration centres. In more recent years, the Singapore Chamber of Maritime Arbitration (SCMA) has become a leading maritime arbitration body.

The government has been trying to develop Singapore as an international centre for dispute resolution.  International arbitration is one pillar of this thrust. The other pillar is our courts, particularly where it involves adjudication of disputes arising from international contracts.

Our High Court and our Admiralty courts have their share of landmark decisions in international jurisprudence.  It is not by chance that the signing of the Convention and now this Bill coincide with the recent setting up of the Singapore International Commercial Court (SICC) in January this year. And indeed, rightly so.

By enhancing the enforceability of our court judgments abroad, I hope that it can enhance the attraction of the SICC and indeed Singapore courts generally and persuade more international commercial parties to have their disputes be decided in our courts. To this end, I am in support of the ratification of the Hague Convention and this Bill.

I hope the SICC will develop to be a premier international commercial court. The court has already appointed distinguished and reputable judges from different countries to sit on its bench. We also need to think about the mechanics of getting our courts to be chosen as the exclusive choice of court in the jurisdiction clause of the many commercial agreements that international parties enter into.

We have to persuade people to put Singapore courts or SICC into their contracts as the court of choice to adjudicate any dispute that may arise. We need to approach MNCs and other international companies.

We can start by persuading our own Singapore companies to use our SICC or Singapore jurisdiction clauses. We need to persuade them to fight for such clauses to be used, even in face of their international business counterparts disagreeing.

Jurisdiction clause is frequently not an item of priority to consider when parties are negotiating a contract. They may be more excited about the clauses relating to the price of the contract or the operational details. Most people think jurisdiction clauses are not something that should break a deal. This may make the task of persuading a change of mindset a little more difficult.

We need to persuade lawyers who draft contracts for their clients. Sometimes we may also need to persuade lawyers to persuade their clients. From my experience, some clients are creatures of habits and may take time to be persuaded.

We should also try persuade the many international lawyers based in Singapore or in Asia to promote Singapore, whether for SICC or for arbitration.

We should also take a leaf from the experience of SIAC and in recent years, SCMA in their marketing efforts to persuade companies to use their respective house arbitration clauses. Over time, SIAC has grown in its reputation and stature. On the other hand, SCMA has come a long way in the last few years. SCMA has become much better known in the international maritime circle. The SCMA arbitration clause is becoming more and more widely used.

In 2013, SCMA has even managed to persuade BIMCO to have SCMA BIMCO arbitration clause options in its many standard contract templates. BIMCO is the world largest shipping association in the world with 2200 members worldwide. Its contract forms are recognized and used by shipping companies worldwide as industry standard templates. Persuading BIMCO to have a SCMA arbitration clause was no mean feat for a relatively young maritime body like SCMA. Before that, there was only London and New York. Efforts like this should inspire all stakeholders in their promotion drives for not just arbitration in Singapore, but also in the use of SICC or Singapore courts as a chosen choice of court for dispute resolution.

One of the strengths of Singapore as a legal hub is that it can and often does provide a neutral forum for non-Singapore parties. For example, for international arbitration, Singapore is often a preferred neutral forum of choice for a dispute involving say two Asian parties e.g. Chinese and Indian parties or between, say, a European party and a Chinese party. We can and should tap on this for SICC too. Certainly with the 27 states in the European Union being contracting states under the Hague Convention, European parties must certainly be a key object of our persuasion.

Finally, with the establishment of the Asean Economic Community in 2015, it will make sense to have reciprocal recognition and enforcement of civil judgments between all ASEAN countries. Currently, such reciprocity only extends to Brunei and Malaysia. For example, our court judgments is not recognized in Indonesia. I know that many Indonesians prefer to have their commercial disputes determined by arbitration in Singapore and frequently SIAC, and sometimes even when their business counterparts are also Indonesians. We should indeed persuade our ASEAN neighbours to follow our footsteps in signing up to the Hague Convention.

With that, I support the bill.