The Singapore Chamber of Maritime Arbitration (SCMA) is one of two Singaporean arbitration institutions. First launched in 2004 and independently reconstituted in 2009 from the Singapore International Arbitration Centre (SIAC), the SCMA was established to serve the needs of maritime disputants and to further Singapore’s aim of serving as Asia’s centre of maritime legal expertise and dispute resolution. -1
Although similar in many ways to international commercial arbitration of the general variety, the existence of specialised maritime arbitration bodies is testament to the distinctive differences in the way the maritime and shipping industry conducts its business and resolves its disputes. Two differences will be highlighted for the purposes of this guide.
First, the nature of the maritime and shipping business is intrinsically an interconnected one. Industry participants from all over the world are susceptible to sensitivities and fluctuations in the regional and domestic markets. Resources, risks and reward often necessarily reside in common pools across national and geopolitical boundaries. A significant majority of industry participants are therefore a part of one or more private international maritime organisations such as the Baltic and International Maritime Council (BIMCO), the International Chamber of Shipping (ICS), and the International Group of P&I Clubs (IGP&I). Business is usually conducted in accordance with the guidelines or the standard forms produced and maintained by these and other organisations. Accordingly, the industry takes a very commercial attitude with regard to the resolution of its disputes.
Second, the nature of maritime disputes is unique. Many of the legal issues have no parallel in general international commercial disputes. For example, and this list is by no means exhaustive, the concepts of the maritime adventure, charter parties, bills of lading and the transfer of title, maritime liens, marine insurance, bunker disputes (such as ship fuel), ship and sister ship arrests, collisions, salvage, in rem actions against the ship or the law of general average (and not forgetting stowaways, of course) are unique to shipping. Many of these disputes involve complex factual or technical questions that require not only the application of legal principles, but also deep knowledge of the customs and workings of the international maritime and shipping business. Perhaps more so than any other area of international commercial arbitration, arbitrators in maritime and shipping disputes are not made up solely by those who are qualified in the law, but also those with significant commercial experience.
Accordingly, the rules by which maritime disputes are resolved take these factors into account and ensure that such disputes are resolved in an appropriate, but also commercial, fair and economical, fashion.
Specialised Arbitration Rules for Maritime Disputes
SCMA arbitration is not meant to replicate administered forms of arbitration as exemplified by rules issued by arbitration institutions such as the International Chamber of Commerce International Court of Arbitration (ICC Arbitration) or the London Court of International Arbitration (LCIA).
To cater to the unique needs of the maritime industry, the SCMA maintains three sets of arbitration rules each designed for a specialised area of the maritime and shipping business. We discuss the key features of each of our arbitration rules in the following sections.
SCMA Arbitration Rules (2015, 3rd ed) -1
The SCMA Arbitration Rules are designed as a ‘light touch’ framework to ensure minimal institutional intervention. Party autonomy and flexibility are the key underlying principles that underpin the SCMA arbitration framework. The SCMA does not charge any filing, management or administration fee.
The SCMA Arbitration Rules are intended to be used by parties to resolve disputes including charter parties, cargo loss and damage, bills of lading, international trade and cargo (container or commodities such as liquid, dry or break bulk, among others), shipbuilding and repair, ship sale and purchase, and oil and gas, in a manner that preserves their long-term commercial relationships. The SCMA Arbitration Rules are one of the three default maritime arbitration rules provided for under the BIMCO Standard Dispute Resolution Clauses. Where an arbitration brought under the SCMA Arbitration Rules involves amounts in dispute under US$150,000, an expedited procedure, the SCMA Small Claims Procedure (SCMA SCP), will apply by default. A detailed explanation of the SCMA SCP is set out in a subsequent section.
Commencing an SCMA arbitration
An SCMA arbitration is commenced by the claimant providing a notice of arbitration to the respondent, containing only brief details such as a request to refer a dispute to arbitration, details of parties and a reference to the arbitration agreement and the substantive contract from or out of which the dispute arose. -1 It is not compulsory to state details such as the nature and circumstances of the dispute, or the relief or remedy sought, which can be included at a later stage of the arbitration. Parties often take advantage of these provisions to attempt settlement without incurring unnecessary or wasted costs to protect their legal cause of action. There is no filing fee.
Appointing the tribunal
Unless otherwise agreed, the tribunal will consist of three arbitrators (or one arbitrator where the SCMA SCP applies). Each party will appoint an arbitrator and the two arbitrators thus appointed will appoint the third arbitrator. If an arbitrator cannot be appointed within 14 days of service of the notice of arbitration, either party may apply to the chairman of the SCMA for such appointment. There is an appointment service fee of S$750 per party.
An appointment fee of S$500 is payable to the arbitrator upon his or her appointment. There is no scale of arbitrators’ fees, but arbitrators are expected to advise parties of its estimated fees and take a commercial view on their costs.
The appointment of an arbitrator can be challenged if there are justifiable doubts as to his or her impartiality or independence, or if the arbitrator does not possess the qualifications stipulated by the parties. If a party does not agree to the challenge or the arbitrator does not withdraw, the party making the challenge may refer the matter to the chairman of the SCMA for his or her decision. A party may also apply to a court of competent jurisdiction to remove an arbitrator if he or she is physically or mentally incapable of conducting the arbitration, if justifiable doubts exists as to his or her ability to do so, or if the arbitrator has refused or failed to use reasonable dispatch to conduct the arbitration or make the award.
Case procedure and institutional involvement
The SCMA is not involved in case management or procedure. These are left to parties and their counsel, who are often in a better position to agree on timelines among themselves in view of any ongoing attempts at settlement or mediation. Parties who are unable to agree among themselves may apply to the tribunal for directions.
Unless parties agree otherwise, the statement of claimant’s case must be served within 30 days after the appointment of the tribunal and the subsequent case statements – the statement of respondent’s defence and counterclaim (if any), the statement of claimant’s reply and defence to counterclaim (if any) – must be served within 30 days of service of each preceding statement.
Case statements must contain full particulars, a comprehensive statement of the facts and all contentions of law in support of a party’s position. All supporting documents relevant to the issues between the parties must also be submitted along with the case statements. No further case statements or written statements shall be served unless the tribunal has given leave for parties to do so.
Within 14 days of the time fixed for the statement of claimant’s reply, parties must serve the questionnaire set out under Schedule A of the arbitration rules. Parties are obliged to provide its responses on, among other questions, the main issues requiring determination and whether such issues are suitable for determination as a preliminary issue, whether an oral hearing is required, any expert evidence intended to be adduced, the estimated length of hearing, and whether the disputes is suitable for mediation. -1
The tribunal shall make its award in writing within three months from the close of proceedings. The award must state the reasons upon which the award is based and signed by at least a majority of the tribunal. The tribunal may take into account any unreasonable refusal by a party to participate in a mediation when deciding which party shall bear the costs of the arbitration and legal and other costs.
The SCMA Secretariat does not scrutinise an award made by the tribunal.
If no party objects within 60 days of publication of an award, the SCMA may publish a redacted version of the award. The redaction shall preserve anonymity as regards the identity of the parties, their legal and other representatives and of the tribunal. SCMA awards and an accompanying case commentary prepared by the SCMA Secretariat are published on the Lloyd’s Maritime Law Newsletter as a Singapore arbitration maritime award.
Optional institutional services
Although the SCMA is not involved in case management or procedure. There are instances where parties may wish to seek the assistance of the SCMA to progress the arbitration. SCMA provides four elective services, for a modest fee, to assist parties in their arbitration:
- appointment of arbitrator;
- determining a challenge to an arbitrator;
- fundholding service; and
- authenticating an SCMA award for enforcement in a New York Convention country.
SCMA Small Claims Procedure
The SCMA SCP is an expedited procedure designed to provide just and swift resolution to disputes where the sum of the claim and counterclaim is under US$150,000. The SCMA SCP forms part of the SCMA Arbitration Rules and applies by default where the sums in dispute are under the US$150,000 threshold.
Under this procedure, the dispute will be heard and determined by a sole arbitrator. The arbitration process is expedited and the 30-day intervals for the serving of case statements under the SCMA Arbitration Rules are reduced to 14-day intervals. There are no oral hearings unless the tribunal directs otherwise, and if so directed, the hearing shall be held for arguments only. The sole arbitrator shall issue his or her award within 21 days from the close of proceedings and is not obliged to give reasons for the award.
There is also a cap on the arbitrator’s fees and recoverable legal costs. The arbitrator’s fees are capped at US$5,000 or US$8,000 for disputes with a counterclaim. The amount of legal or other costs that may be ordered by the sole arbitrator shall not exceed US$7,000 or US$10,000 for disputes with a counterclaim.
Singapore Bunker Claims Procedure
The Singapore Standard Code of Practice for Bunkering 5 and the Technical Reference Bunker Mass Flow Metering 6 provide for the SCMA to administer bunker dispute arbitrations in accordance with the Singapore Bunker Claims Procedure (the SBC Terms). Parties may bring their disputes for resolution under one of the avenues provided for under the bunker codes or refer the dispute to the SCMA for arbitration under the SBC Terms.
The SBC Terms provide a simplified, quick and inexpensive procedure to resolve disputes arising out of the sale and supply of bunkers where the claim or counterclaim does not exceed S$100,000 and where only a single issue is involved in the dispute. Where an arbitration proceeds under the SBC Terms, an arbitrator from the SCMA Panel of Arbitrators is appointed to be the sole arbitrator.
Parties must file their points of claim within 14 days of the registrar’s acceptance of the reference and subsequently, within 14-day intervals, file the points of defence and counterclaim (if any), and the points of reply and defence (if any). An award must be made by the sole arbitrator within 14 days of the close of submissions or hearing if one is called. The parties must endeavour to complete the hearings within two days.
Alternatively, parties may invoke the summary procedure under the SBC Terms within seven days of the service of the notice and request for a summary hearing within 14 days of such invocation. The registrar of the SCMA or a person appointed by the registrar will determine the dispute at the conclusion of the summary hearing.
The SBC Terms were drafted in consultation with the Singapore Shipping Association, the Maritime and Port Authority of Singapore and the SCMA. As with all other Singapore-seated awards, awards made under the SBC Terms are final, binding and enforceable in Singapore and any other New York Convention state.
SCMA Expedited Arbitral Determination of Collision
The SCMA Expedited Arbitral Determination of Collision Claims Terms (SEADOCC Terms) is an arbitration procedure designed to determine collision liability through a binding arbitration award issued within a relatively short amount of time (for collision claims). The SEADOCC Terms are invoked by parties’ agreement to appoint a sole arbitrator in accordance with the terms after a collision has occurred.
The sole arbitrator to be appointed is usually an expert in assessing collisions liability. Use of the SEADOCC Terms is particularly appropriate when parties (or their clubs) need to determine liability and resolve inter-ship claims in an efficient and cost-effective manner. One of the key features of the SEADOCC Terms is that it stipulates the submission of a predetermined list of documents necessary for the expeditious determination of collision liability within 14 days of the appointment of the sole arbitrator.7 The list of documents must fit within one lever arch file and the summary of background facts must be set out within no more than six pages of A4 paper.
The SEADOCC Terms were drafted with the support and input from protection and indemnity insurance clubs, marine insurers and senior maritime interests in Singapore.
Expert panel of maritime and shipping arbitrators
The SCMA maintains a panel of arbitrators, details of which are on the SCMA website www.scma.org.sg. Parties may appoint any arbitrator they wish, whether or not they are also on the SCMA panel of arbitrators. The criteria for membership of the SCMA panel is available on the SCMA website.
A successful applicant must:
- be engaged for at least 10 years in a responsible position or positions in one or more areas of the shipping industry, either commercial, technical or legal;
- have knowledge of law relating to shipping, arbitration practice and procedure; and
- demonstrate an ability to draft reasoned awards in maritime disputes whether by submitting at least two reasoned awards which the applicant has drafted or evidencing membership of a recognised arbitration institution.
There are also discretionary waiver provisions to allow deserving applicants who do not ostensibly meet the criteria to be admitted in appropriate cases. Applicants are approved by an admissions committee.
2 This section is based on the Commentary on the 3rd Edition of the Rules of SCMA (21 October 2015) authored by Mr Simon Davidson, former Head of Procedure Committee, SCMA.
3 Two other items are required: (1) a proposed on the number of arbitrators if there was no prior agreement; and (2) name(s) of the proposed arbitrator(s).
4 See Schedule A of the SCMA Arbitration Rules (2015, 3rd ed).
7 See paragraph 18 of the SEADOCC Terms.
32 Maxwell Road
#02-14 Maxwell Chambers
Tel: +6324 0552
Shi Yan Lee
The Singapore Chamber of Maritime Arbitration (SCMA) is a specialist arbitration institution for the resolution of maritime and international trade disputes. It is guided by its principal aim of providing a comprehensive set of non-administered arbitration rules with optional features. SCMA offers the maritime and international trade communities a neutral, cost-effective and flexible framework to resolve their disputes fairly and expeditiously. www.scma.org.sg