The EU-Singapore FTA and the IPA which were signed on 19 October, 2018, are the first bilateral trade and investment agreements between the EU and an ASEAN member state. This is a large step forward in the promotion of trade and investments in Singapore by the EU. The IPA incorporates all aspects of the EU’s new approach to investment protection and will replace BITs between Singapore and EU member states including Belgium-Luxembourg, Bulgaria, the Czech Republic, France, Germany, Hungary, Latvia, the Netherlands, Poland, Slovakia, Slovenia and the United Kingdom. The EU-Singapore FTA and the IPA will be sent to the European Parliament. The EU is aiming for the FTA to come into force in 2019. The IPA will then come into force upon ratification by each EU member state.
The substantive provisions of the IPA include protection from expropriation, FET, MFN and NT. A party breaches FET obligations if its measures constitute:
- a denial of justice;
- a fundamental breach of due process;
- manifestly arbitrary conduct; or
- harassment, coercion, abuse of power or similar bad-faith conduct (article 2.4(2)).
Various footnotes in the IPA clarify the scope of the provisions for greater certainty (eg, footnote 9 of Chapter Two (Investment Protection) clarifies that the sole fact that the covered investor’s claim was rejected, dismissed or unsuccessful does not constitute a denial of justice).
Article 2.6 of the IPA provides that neither party shall directly or indirectly nationalise, expropriate or subject to measures having the effect of nationalisation or expropriation, the covered investments of covered investors except for:
- a public purpose;
- in accordance with due process of law;
- on a non-discriminatory basis; and
- against payment of prompt, adequate and effective compensation, which is the fair-market value immediately before expropriation or impending expropriation becoming public knowledge.
Valuation criteria used to determine fair market value may include going-concern value, asset value - including declared tax value of tangible property - and other criteria, as appropriate. Annex 1 further clarifies that expropriation includes both direct and indirect expropriation and Annex 2 clarifies that when Singapore is the expropriating party, any expropriation of land, shall be upon the payment of compensation at market value in accordance with the Land Acquisition Act (Chapter 152), and should be for a public purpose or incidental to a public purpose.
The IPA’s unique feature is that it provides for a permanent investment court - a two-tier tribunal consisting of the Tribunal of First Instance and an appeals tribunal. The Tribunal of First Instance consists of six members (two each nominated by the EU and Singapore, and two members who are neither nationals of a European Union member state nor Singapore, to be jointly nominated by the European Union and Singapore) appointed for an eight-year term (article 3.9). The IPA also provides for a permanent appeal tribunal with six members appointed for an eight-year term (article 3.10). A provisional award shall be issued by the Tribunal of First Instance within 18 months of the date of submission of the claim and if no party appeals within 90 days of the issue of the provisional award, the award shall become final (article 3.18). The grounds for appeal are:
- error in the interpretation or application of the applicable law
- manifest error in the appreciation of facts, including the appreciation of relevant domestic law and
- grounds provided in article 52 of the ICSID Convention in so far as they are not covered by the other two grounds in the IPA.
Grounds in article 52 of the ICSID Convention are:
- that the tribunal was not properly constituted;
- the tribunal manifestly exceeded its powers;
- corruption of a member of the tribunal;
- serious departure from a fundamental rule of procedure; and
- failure to state the reasons of the award.
The IPA also provides for a mediation mechanism (article 3.4 and annex 6). The IPA provides for transparency of proceedings (article 3.16) and an entire Annex 8 deals with the Rules on Public Access to Documents, Hearings and the possibility of third persons making submissions. All documents and hearings before the Investment Court will be publicly accessible and the Secretary-General of the United Nations, through the UNCITRAL Secretariat, is designated as the repository (article 5 of Annex 8).
In case of third-party funding, the IPA requires the disclosure of the name and address of the funder to the Tribunal and to the other disputing party, and the notification has to be made at the time of claim submission, or as soon as third-party funding is agreed upon, given or granted (as applicable) (article 3.8).
Another noteworthy development in Singapore is the legalising of third-party funding (TPF) for international arbitrations seated in Singapore, and related court and mediation proceedings. The common law torts of maintenance and champerty are abolished vide the Civil Law (Amendment) Act 2017 (passed on 10 January 2017). The Civil Law (Third-party Funding) Regulations came into force on 1 March 2017 and lay down certain qualifications for funders. Amendments carried out to the Legal Profession Act and Legal Profession (Professional Conduct) Rules permit legal practitioners to introduce funders to their clients and advise their clients in relation to the TPF contract (provided they receive no direct financial benefit from the referral). Legal practitioners are also under a duty to disclose to the court or tribunal, as the case may be, the existence of TPF and the identity of the third-party funder. These developments in relation to TPF have further enhanced the popularity of Singapore as a preferred seat for international arbitrations, including investor-state arbitrations.
Singapore courts have recently heard two cases arising out of two Singapore-seated investor-state arbitrations. In Sanum Investments Ltd v Government of the Lao People’s Democratic Republic  5 SLR 536, which concerned a challenge to the applicability of the China-Laos BIT to Macau, the Court of Appeal had to examine state succession principles, and interpret fork-in-the-road clauses. As to the case of Kingdom of Lesotho v Swissbourgh Diamond Mines (Pty) Ltd and others  SGHC 195, this was the first case before the Singapore High Court that pertained to the setting aside of an award on the merits rendered in an investor-state arbitration seated in Singapore. This case has been heard before the Court of Appeal, and judgment has been reserved.
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