Article: Exclusive interview with the SCMA as it turns 10

The Singapore Chamber of Maritime Arbitration (SCMA) celebrates 10 years of its establishment as an independent institution of arbitration in 2019. Senior Judge Chao Hick Tin, Chairman of the SCMA shares exclusive insights on the development and direction of the SCMA with Jason Wee, Claims Director at The Standard Club Asia Ltd.  (Standard Asia) in Singapore.

Q. Our heartiest congratulations, Judge, to the SCMA on its 10th anniversary.  How did the journey begin?

From conception, in shaping the form and direction of the SCMA, proponents of the SCMA, namely; the Singapore Maritime Foundation (SMF) had consistently engaged with the maritime community in Singapore and regionally.   

Pursuant to the community’s demand for the establishment of a regional maritime arbitration centre, the SCMA in fact, came into being 15 years ago in 2004.  However, at the time it was a part of and operated under the management and rules of the Singapore International Arbitration Centre (SIAC) and offered an administered model of arbitration for maritime disputes, which differs from its current model.

Over the next five years, it became apparent that the maritime community preferred instead a ‘light’ touch model of arbitration.  With the support of the community and the SMF, in 2009, the SCMA was re-constituted as an independent institution with its own set of rules and offering a non- administered model of maritime arbitration, which remains its current form.

Q: What are the hallmarks of the SCMA model and how does it differ from other established arbitration models such as the Singapore International Arbitration Centre (SIAC) or the London Maritime Arbitration Association (LMAA)?

First, is our unique model of arbitration. The SCMA Arbitration Rules (Rules) were created by and for the marine and international trade communities. The SCMA model of arbitration is a non-administered one. In short, it allows for arbitration to be commenced, conducted, and completed without the need for administration by an arbitration institution.  In this regard, the SCMA differs from other models such as Singapore International Arbitration Centre (SIAC) or the International Chamber of Commerce (ICC) which are administered models of arbitration in which proceedings are institutionally driven.

The SCMA model is minimalist in institutional intervention, preserves party-autonomy and strives for cost-efficiency. To that end, our Rules are kept simple and current with feedback from the industry. We found that this is the type of arbitration overwhelmingly preferred by the maritime and international trade community.

However, at the same time, we recognise that parties may sometimes find themselves in a situation where third-party assistance is needed to facilitate and move the arbitral proceedings along. It is for this reason that the Rules also offer optional ‘opt-in’ features. For a nominal fee, a party may invoke the assistance of the SCMA to (1) act as appointing authority, (2) determine challenges to the tribunal, (3) provide the tribunal with fundholding services, and (4) authenticate awards pursuant to the Singapore International Arbitration Act. This unique approach ensures that end-users may continue to resolve maritime disputes in the traditional non-administered way, with the option for add-on services, if necessary. Incidentally, the SCMA does not charge any other filing fee, ad-valorem or tiered case management or institutional fees.

The SCMA’s second hallmark is its transparency and impartiality in the exercise of its function as an appointing authority selected by the parties. Pursuant to the Rules, parties are clothed with full autonomy to appoint arbitrators from the SCMA’s panel of arbitrators or indeed any other arbitrator(s) of their own choice to resolve their dispute^[1].

From time to time, parties may invoke the assistance of the SCMA Chairman to appoint an arbitrator where the parties or the wing arbitrators are unable to do so.

We are guided by four broad principles when appointing an arbitrator. First, we will only appoint an arbitrator who has demonstrated familiarity with and experience in the subject-matter of the dispute. Second, this list is further narrowed by considering the attributes preferred by the parties. For example, some parties prefer that the arbitrator is a senior member of the bar (QC or SC) or an ex-judge, while other parties prefer that a commercial person be appointed, for example, in relation to commodities disputes. Yet other parties may prefer that a more junior arbitrator be appointed given that the quantum in dispute is relatively modest. We will take reference from the parties’ express preferences and from their list of proposed nominees.

Third, we will consider the ordinary residence of the parties, their counsel and where applicable, any wing arbitrators. Subject to the constraints and limitations of our panel, we will as far as practicable appoint an arbitrator that will incur the least overall travel and accommodation costs. For example, if the parties, witnesses and counsel are all based in Japan, we tend not to appoint an arbitrator ordinarily resident in London. Fourth and finally, having applied the earlier principles, the shortlisted arbitrators are ranked in order of their last appointment or nomination, in that way ensuring that every arbitrator on the SCMA panel is given a fair and equal opportunity to be appointed to a SCMA reference.

Q. Over the last decade, the SCMA has accomplished much. Which of its achievements, in your view, has made the biggest impact on the maritime industry?

The inclusion of the SCMA Arbitration Rules in the BIMCO Standard Dispute Resolution Clause as one of the three default arbitration rules (the other two being the LMAA and the Society of Maritime Arbitrators (SMA)). Whilst I do not have the figures as to the exact number of contracts which have since chosen SCMA as their forum, it remains significant that the international maritime community regards Singapore as one of the three epicentres of maritime arbitration alongside London and New York.

Q. Earlier this year, David Roberts, Managing Director of Charles Taylor Mutual Management (Asia) Pte Limited, managers of Standard Asia observed at an international event in Shanghai that although London remains the leading maritime arbitration centre, Singapore is growing quickly. What do you see as the key challenges for SCMA to ensure it remains relevant for the next 10 years?

The rapidly changing marine industry certainly presents many opportunities and challenges for the SCMA. Technological advancements and legislative changes have led to the decline of traditional “bread and butter” arbitration work such as charterparty, bunkers and cargo disputes. The SCMA’s reported case statistics also underscore the fact that these disputes no longer dominate the maritime arbitration scene. Instead, shipping counsel and arbitrators must position themselves to handle more complex disputes arising from the non-traditional maritime sectors such as disputes arising from oil and gas exploration, ship and rig building, commodities, and international trade. As a result, the SCMA has expanded the definitional criteria as to what constitutes a “maritime dispute” to allow arbitrators who are not from a traditional shipping background but with proven experience in, for example, oil and gas, shipbuilding, or commodities disputes, to gain admission to the SCMA Panel of Arbitrators.

Aside from the challenges posed by the said technological and legislative changes, many opportunities and challenges are likely to result from the shift in international trade and other business activities to Asia and China. As trade and business activity flows into our region, so too will disputes and its concordant providers of dispute resolution services. Many of the jurisdictions within Asia are civil law jurisdictions. One challenge is for our common-law trained counsel and arbitrators to be able to gain relevant knowledge and experience in handling arbitration proceedings under civil law and vice versa. Since 2017, the SCMA has stepped up its outreach efforts to civil law jurisdictions such as China, Indonesia, Japan and South Korea.

Q. Looking ahead, what plans and policies are in store for the SCMA over the next three to five years?

The SCMA Procedures Committee has begun work on the fourth edition of the Rules. Our previous edition was published in 2015 and is due for a refresh. Additional details will become available as the Committee reaches out to the Singapore and regional maritime communities for feedback and consultation.

Currently, the SCMA also does not prescribe an ad-valorem fee for arbitrators, since the fee should reflect the complexity of the arbitration rather than the quantum of the claim (or counterclaim).  Following consultation with industry, the SCMA will publish its Guidelines on Arbitrators’ Fees by way of a Practice Note. It will serve as a good basis for parties to discuss the fee payable to arbitrators. The Guidelines are consistent with the SCMA’s aim to remain cost-efficient and relevant.

The club congratulates the SCMA on its 10th anniversary and extends its appreciation to the Chairman and the Secretariat for this special interview.

To commemorate its 10th anniversary as an independent reconstitution from the SIAC, the SCMA has organized various events throughout 2019. The highlight of these events is the special edition 10th Anniversary SCMA Conference which is due to take place on 4 October 2019. The Honourable Chief Justice of Singapore, Sundaresh Menon, and the Senior Minister of State for Law and Health, Edwin Tong, SC are the Guest of Honour and Distinguished Speaker, respectively. The event will trace the development of Singapore maritime arbitration and expound on present and future challenges to remain relevant in a competitive dispute resolution market.  The Standard Club is a proud co-sponsor of this event.

Refer to www.scma.org.sg for further details.

[1] The SCMA currently boasts over 170 members and 110 qualified panel arbitrators from 14 countries, all of whom are experts in one or more maritime disciplines.  We understand that arbitral proceedings may be conducted, and awards rendered under common or civil law systems and in languages other than English. Admission to the SCMA Panel of Arbitrators is not dependent on nationality, jurisdiction or affiliation. Successful candidates must have at least 10 years of experience in a responsible commercial, technical or legal position in the maritime industry, and demonstrated knowledge of the law relating to maritime matters and arbitration and proven the ability to draft reasoned awards of a maritime nature.

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