Note: There is a common misconception that once a party has obtained an arbitral award or court judgment in the later stages of judicial proceedings, the case has come to an end. In fact, enforcement of the arbitral award or court judgment is the final stage of the entire judicial process. It determines whether the parties to the arbitration or litigation can recover their assets. Without effective enforcement, even a decision that is entirely favourable to the winning party may ultimately become no more than a piece of paper.
As economic exchanges between countries continue to increase, whether an award or judgment issued in one country or jurisdiction can be recognized and enforced in another has become an important issue. At the same time, new trends in overseas migration among high-net-worth individuals and the transfer of assets abroad have led to a growing number of cases involving recovery against a judgment debtor's assets outside the original jurisdiction. Cross-border recognition and enforcement of judgments is a new issue before us. Recognition and enforcement of foreign awards and judgments also have far-reaching implications for advancing cross-border judicial cooperation, saving litigation resources and reducing transaction costs, and will inevitably become an important trend in future international judicial cooperation.
This public account previously published a Belt and Road report on the recognition and enforcement in China of effective Singapore awards and judgments. In the next articles in this series, we will share how to seek recognition and enforcement in Singapore of arbitral awards, court judgments, civil mediation statements and interim measures from mainland China, as well as how third-party litigation funding may be used.
Recently, our litigation lawyers represented a large Chinese private enterprise before the Singapore High Court in an application for recognition and enforcement of an effective arbitral award issued by the Shanghai International Economic and Trade Arbitration Commission. We have also received several similar matters involving Chinese companies and Singapore counterparties that refused to comply with the awards. This article again outlines the basic process and key considerations for seeking recognition and enforcement in Singapore of an arbitral award issued in mainland China.
01 Key Developments in China–Singapore Judicial Cooperation
1. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention)
In international judicial cooperation, the most important and widely applied international treaty concerning the recognition and enforcement of foreign arbitral awards is the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, adopted in New York in 1958 at the 24th meeting of the United Nations Conference on International Commercial Arbitration. It is commonly referred to as the New York Convention. To date, more than 150 countries and regions are parties to the New York Convention.
China acceded to the Convention on 21 August 1986, and it entered into force for China on 22 April 1987. Singapore acceded to it on 21 July 1986 and incorporated it into domestic law through the Arbitration (Foreign Awards) Act, which was enacted and came into operation on 19 November 1986.
2. Treaty between the People's Republic of China and the Republic of Singapore on Judicial Assistance in Civil and Commercial Matters
On 28 April 1997, China and Singapore signed the Treaty between the People's Republic of China and the Republic of Singapore on Judicial Assistance in Civil and Commercial Matters. The scope of assistance includes:
- Service of judicial documents;
- Investigation and evidence-taking;
- Recognition and enforcement of arbitral awards; and
- Mutual provision of materials concerning the civil and commercial laws of the two contracting parties and judicial practice relating to civil and commercial litigation.
The treaty on judicial assistance does not cover the recognition and enforcement of commercial judgments.
3. Memorandum of Guidance between the Supreme People's Court of the People's Republic of China and the Supreme Court of the Republic of Singapore on Recognition and Enforcement of Money Judgments in Commercial Cases
On 31 August 2018, at the Second China–Singapore Legal and Judicial Roundtable, the President of the Supreme People's Court of China and the Chief Justice of the Supreme Court of Singapore formally signed the Memorandum of Guidance between the Supreme People's Court of the People's Republic of China and the Supreme Court of the Republic of Singapore on Recognition and Enforcement of Money Judgments in Commercial Cases (the “Memorandum”).
02 Chinese Arbitral Awards Can Be Recognized and Enforced in Singapore
China and Singapore are both parties to the New York Convention. For an arbitral award issued in China, enforcement in Singapore is generally not difficult as long as none of the circumstances for refusing enforcement under Singapore law applies.
In Singapore, a foreign arbitral award may be enforced by action, or by applying to the court for leave in the same manner as enforcement of a Singapore arbitral award under section 19 of the International Arbitration Act (IAA), pursuant to section 29(1) of the IAA.
03 Basic Process for Seeking Recognition and Enforcement of a Foreign Arbitral Award in Singapore
- The applicant (the successful party) applies to the Singapore High Court for recognition and enforcement of a foreign arbitral award that complies with the New York Convention (Order 34, rule 14 of the Rules of Court 2021). The court issues an order granting leave to enforce the arbitral award.
- The applicant serves the order granting leave to enforce on the respondent (the unsuccessful party). The service is carried out by the applicant, not by the court.
- Within 14 days after receiving the order, the respondent may apply to set it aside. If service is made at an address outside Singapore, the court may determine another appropriate period. If the respondent has a legally valid ground under Singapore's International Arbitration Act or the New York Convention, it may commence proceedings to challenge and seek to set aside the arbitral award.
- If the respondent does not challenge the arbitral award by applying to set aside the order, the award will be enforced. Enforcement against the respondent may proceed by way of a seizure and sale order in respect of tangible assets or a garnishee order in respect of bank accounts.
In addition, the procedure for recognizing and enforcing interim measures issued by a member state of the New York Convention in Singapore is the same as the procedure for recognizing and enforcing a foreign arbitral award.
04 Key Considerations When Seeking Recognition and Enforcement
1. Court with Jurisdiction
The court with jurisdiction over an application in Singapore for recognition and enforcement of a foreign arbitral award is the Singapore High Court.
2. Limitation Period
Under section 6 of Singapore's Limitation Act (Chapter 163), an application to enforce a foreign arbitral award must be filed within six years after the foreign arbitral award was made.
3. Documents to Be Submitted with the Application for Recognition and Enforcement
- The original foreign arbitral award or a certified copy;
- The original arbitration agreement or a certified copy;
- An English translation; and
- Information about the parties, together with an explanation of the extent to which the respondent has failed to comply with the arbitral award.
4. Asset Preservation
As with asset-preservation measures in China, an applicant in Singapore may apply to the court for interim relief to secure the enforceability of an arbitral award if there is strong evidence that the award debtor is disposing of its assets to evade enforcement of the award. Such interim relief may include an injunction restraining the award debtor from dealing with its assets.
5. Third-Party Funding
Singapore recognizes third-party funding in the field of international arbitration, and it may also be used in practice in recognition and enforcement proceedings. If an applicant needs financial support when seeking recognition and enforcement in Singapore of a foreign arbitral award, a third-party funder may enter into a contract with the applicant without the need for court approval.
6. Grounds for Refusing Recognition and Enforcement
In addition to setting out the obligation of contracting states to recognize and enforce foreign arbitral awards, the New York Convention also lists the circumstances in which the judicial authority of the country where enforcement is sought may refuse to enforce a foreign award. Article V(2) provides that if recognition or enforcement of an arbitral award would be contrary to the public policy of the country where enforcement is sought, that country's judicial authority may refuse to recognize and enforce the award. The New York Convention does not define “public policy” expressly, mainly because different countries have different national conditions and therefore different public policies.
In Singapore legal practice, the application of public policy is subject to strict limitations. In other words, the threshold for invoking public policy to resist enforcement of an arbitral award is very high. It is generally described as conduct that “shocks the conscience” or violates the most basic notions of morality and justice. To refuse enforcement on public-policy grounds, the award must involve serious injustice, and enforcing it must seriously offend the court's conscience or conflict with the most basic principles of justice and morality. One example would be an award obtained through unlawful means such as fraud or corruption.
05 Lawyer's Note
Singapore is internationally known as an arbitration-friendly jurisdiction. Its courts strongly support arbitration as a dispute-resolution mechanism and respect the autonomy of arbitration participants. They also give considerable deference to the professional judgment of arbitral tribunals and take a supportive approach to the recognition and enforcement of awards, rather than readily refusing to enforce a foreign arbitral award. Accordingly, if a party to a transaction has assets in Singapore, it should be aware of this tendency of the Singapore courts, make every effort during the arbitration proceedings, and avoid facing an unfavourable award and its enforcement in Singapore.
- For further advice on the recognition and enforcement in Singapore of arbitral awards, please contact a professional adviser at Zhongxin Legal Information.
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.