Arbitration of insolvency disputes initiated through a pioneering protocol by the Singapore International Arbitration Centre (SIAC)

The Singapore International Arbitration Centre (SIAC) has unveiled a new framework aimed at streamlining the resolution of disputes in the context of restructuring, debt adjustment, and insolvency. The new protocol, known as The Restructuring and Insolvency Arbitration Protocol, offers a flexible alternative for insolvency practitioners and creditors to resolve disputes in a neutral forum by subject matter experts.

The SIAC announced the release of this protocol, which is applicable in the Asia Pacific region, including countries like Australia and China, and covers disputes in sectors like construction and financial services. The protocol is accompanied by a guidance note and model clauses for parties to arbitration and tribunals.

One of the key features of the new protocol is its condensed timeline for arbitrator challenges, reducing the time from seven days to three. The protocol also requires the notice of arbitration to be submitted within seven days from the commencement of proceedings, shorter than the 14 days under the SIAC rules. The sole arbitrator must be nominated within 14 days from the commencement date, shorter than the 21 days under the SIAC rules. An award must be issued within six months from the constitution of the arbitral tribunal, in line with the deadline of expedited procedure under the SIAC rules.

Arvand Ghazizadeh of Pinsent Masons pointed out that under Australian law, the Corporations Act and Bankruptcy Act only permit a 'court', not an arbitral tribunal, to make consequential orders following a finding of a voidable transaction. This could potentially limit the relief insolvency practitioners can seek through arbitration. However, the new protocol offers a flexible alternative, ensuring better coordination with insolvency or restructuring proceedings.

The protocol includes provisions to discuss and consider jurisdictional objections, including where the dispute falls outside the scope of arbitration or is otherwise not arbitrable. By shortening the duration of dispute resolution processes, the new protocol may reduce the impact of insolvency and restructuring processes on stakeholders.

The protocol under the SIAC requires the consent of the parties involved. Consent can be included in the arbitration agreement before or after the dispute has arisen, as presented in the model clauses. Parties can opt for arbitration even in early-stage or informal restructuring if they have consented to the use of the protocol.

The expedited nature of arbitration proceedings may yield residual benefits for insolvency practitioners and creditors. Ensuring that arbitrability issues are dealt with during the procedure will limit the risks of setting aside.

While specific insolvency law experts from Australia and Singapore involved in developing the new SIAC Insolvency Arbitration Rules are not explicitly named, Christiane Kühn, who advises on international insolvency law and is based in Singapore, is active in related arbitration and insolvency law topics and may be involved in these developments. Concerns about implementation in home jurisdictions generally relate to differences between insolvency laws and arbitration frameworks, but detailed concerns from Australian or Singaporean experts are not provided.

In summary, the new Restructuring and Insolvency Arbitration Protocol by the SIAC offers a flexible and expedited alternative for resolving insolvency-linked disputes, potentially reducing the impact of insolvency and restructuring processes on stakeholders.

Arbitration of insolvency disputes initiated through a pioneering protocol by the Singapore International Arbitration Centre (SIAC)