Chief Justice Sundaresh Menon: Speech to the Indonesian Judiciary on International Collaboration in the Transnational System of Commercial Justice

SPEECH TO THE INDONESIAN JUDICIARY
“International Collaboration in the Transnational System of Commercial Justice”

Tuesday, 7 November 2023

The Honourable the Chief Justice Sundaresh Menon
Supreme Court of Singapore

Chief Justice Professor Dr Muhammad Syarifuddin
Vice Chief Justice for Judicial Matters, Dr Sunarto
Leadership of the Supreme Court of the Republic of Indonesia
Head of the Judicial Research, Development and Training Agency, Judge Bambang Hery Mulyono
Ambassador Mr Kwok Fook Seng
My fellow judges and colleagues from the Singapore Judiciary
Ladies and gentlemen

1.           A very good afternoon, and greetings of peace and goodwill. Let me first express my deep gratitude to the organisers for inviting my colleagues, Justice Aedit Abdullah and Justice S Mohan, and me, to address you today. The rise in cross-border business over the last several decades has brought with it a considerable increase in the number of international commercial disputes, and these raise many complex and novel issues. This seminar is an excellent opportunity for us to exchange ideas and views on some of these issues, and my colleagues and I are honoured to be able to share our perspectives with you.

2.           I want to begin by introducing the idea of the existence of a transnational system of commercial justice. We are all familiar with the idea of a domestic legal system, but I have argued elsewhere¹ that even though there is no supranational governing body, legislature or courts, international commercial disputes are nonetheless governed by a transnational system of commercial justice, which in some respects is quite well established and understood, and in others, is still developing. I refer to this in this address as the “TSCJ” or the “Transnational System”. It consists of legal institutions – including dispute resolution forums such as commercial courts, arbitral centres, and mediation institutes, along with other international bodies such as UNCITRAL – and a growing body of laws and principles that these institutions develop and apply². In my address today, I would like to shine a light on one important facet of the Transnational System: that is, international collaboration between the institutions of the TSCJ. I will expand on two aspects of this: collaboration in the resolution of individual disputes, and collaboration that strives to reform and refine the TSCJ. I suggest that such collaboration will be vital to promoting the just and efficient resolution of international commercial disputes, and is also crucial to the continuing development of the Transnational System.   

I.             Collaboration in the resolution of individual disputes

3.            Let me first touch on how the dispute resolution bodies of the TSCJ collaborate in the resolution of individual disputes. Such collaboration takes place on at least two levels. At the first level, commercial courts enable and support other dispute resolution bodies to settle disputes that are properly placed before those bodies. They do this by allocating disputes to agreed forums, and by enforcing and upholding the outcomes of dispute resolution in other forums.

4.            Thus, commercial courts will typically channel disputes to arbitral tribunals or to courts in other jurisdictions by readily granting stays of court proceedings in favour of agreed arbitral or litigation forums. For instance, in the context of arbitration, the Singapore Court of Appeal held in the case of Tomolugen³ that a litigant only had to establish a prima facie case that there was a valid and operative arbitration clause and that the dispute fell within the scope of the clause to obtain a stay of the court proceedings in favour of arbitration⁴. And beyond the enforcement of arbitration agreements, commercial courts also foster the holistic determination of disputes in arbitration by imposing case management stays and related orders in respect of disputes that are not subject to arbitration but are nonetheless related to disputes that are going to be arbitrated. For example, in Tomolugen, the court made orders for a case management stay of the court actions against those defendants who were not party to the arbitration agreement, and directed the plaintiff to consider whether to offer to remit its disputes with those defendants to arbitration⁵. These directions offered the parties the option of resolving all their disputes before a single forum.

5.            Commercial courts also support other dispute resolution bodies in their settlement of individual disputes by enforcing the outcomes of dispute resolution in those forums. A prime example is the prompt and regular enforcement of arbitral awards, which has been foundational to the flourishing of international commercial arbitration. In this regard, the Singapore courts have sought to facilitate the efficient resolution of challenges against arbitral awards, and have also developed a body of case law on the enforcement of arbitral awards that seeks to safeguard and secure the legitimacy of the arbitral process while discouraging cynical challenges. Justice Mohan will elaborate on the work of our courts in this field in his address. Apart from arbitration, commercial courts also regularly enforce foreign judgments and, as I noted in a speech that I delivered this morning,⁶ we will soon enforce international commercial mediated settlement agreements under the Singapore Convention on Mediation. Such enforcement gives teeth to the outcomes of dispute resolution in other forums, and it undergirds the final settlement of disputes by those forums. 

6.            Beyond promoting the resolution of individual disputes by other forums, dispute resolution bodies of the TSCJ also collaborate to resolve disputes together. Let me offer two illustrations of this, which relate to composite or multi-tier dispute resolution mechanisms and cross-border insolvency respectively.

7.            First, composite or multi-tier dispute resolution avenues involve different experts or institutions working together to resolve a dispute. Take construction disputes, for example, which often involve multiple parties and a range of knotty and technical issues. Where disputes arise, these may first be referred to dispute boards. These mechanisms can significantly downsize and contain disputes, and thereby significantly reduce what remains in contention at the end of the project, and that can then be referred to arbitration or litigation⁷. Once proceedings are filed, the dispute may be remitted to mediation under arbitration-mediation-arbitration or litigation-mediation-litigation protocols, which generally provide for the proceedings to be stayed pending mediation and for any settlement to be recorded as a consent award or judgment to facilitate its enforcement. And if further disputes remain to be resolved through adjudication, adjudicators can call on expert referees and assessors to help them understand and weigh complex technical evidence⁸. In these ways, different dispute resolution bodies of the TSCJ can collaborate to jointly deliver the appropriate and efficient resolution of international commercial disputes.

8.            This form of collaboration can also be seen in the very important field of cross-border insolvency disputes. Judicial cooperation in this domain is vital for the holistic and synchronised resolution of complex transnational insolvency cases. Perhaps the most striking example of this arose in the insolvency proceedings relating to the Nortel Group, which comprised more than 130 companies in over 100 countries⁹. There, the Delaware and Ontario courts were confronted with the issue of how to allocate the proceeds of the sale of the Group’s assets, which amounted to some US$7.3 billion¹⁰. The two courts made a groundbreaking decision to hold a joint trial to decide this issue, under an agreed cross-border protocol, which involved the same evidence being placed before each court with joint video hearings¹¹. Ultimately, the courts independently reached consistent rulings on the allocation of the funds, and issued separate judgments on the same day. This is a profoundly significant example of the coordinated and coherent resolution of a hyper-complex insolvency dispute¹².

9.            Such collaboration can now take place under the framework in the Judicial Insolvency Network (or “JIN”) Guidelines. The JIN Guidelines have been adopted by 17 jurisdictions including major insolvency courts like the United States Bankruptcy Courts for Delaware and the Southern District of New York (or “SDNY”), and the Chancery Division of England and Wales. In essence, the JIN Guidelines provide for insolvency courts to cooperate in areas like the sharing of documents and the holding of joint hearings¹³. They have formed the basis of protocols developed by the Singapore courts and the United States Bankruptcy Court for the SDNY in three cases, including a recent case involving Garuda Indonesia¹⁴. Justice Aedit will take up the subject of cross-border insolvency proceedings and the value of collaboration in this context, in his address.    

II.            Collaboration to reform and refine the TSCJ

10.         Let me turn to the second main form of collaboration between the institutions of the TSCJ. This relates to collaboration that seeks to enhance the operation of the Transnational System. Let me touch on two aspects of this.

11.         First, the institutions of the TSCJ can collaborate to develop legal instruments that advance the legal framework for international commercial disputes.

(a)          One example of this is collaboration in the development of soft law codes or reports that enhance convergence in international commercial law. For instance, the Asian Business Law Institute, a collaboration involving jurists from the Asia-Pacific region, has partnered with the International Insolvency Institute, a leading global insolvency body, to jointly publish several reports and guides on insolvency and restructuring in Asia, with a view to promoting the harmonisation and convergent application of Asian insolvency laws¹⁵.

(b)          And commercial courts have also worked together to develop non-binding legal instruments that foster legal convergence and facilitate court-to-court collaboration. For example, the Standing International Forum of Commercial Courts (or “SIFoCC”) has issued a Multilateral Memorandum on Enforcement of Commercial Judgments for Money. This contains contributions from over 30 judiciaries, which set out the law on the enforcement of commercial money judgments in their respective jurisdictions. Such works can greatly improve our understanding of foreign laws, which is an important first step towards legal harmonisation¹⁶. And the Supreme Court of Singapore has entered into several memoranda with foreign courts relating to the referral of issues of foreign law¹⁷. These instruments provide for issues concerning the law of the counterpart foreign court to be referred to that court for determination or for the rendering of a non-binding opinion. Such mechanisms can greatly simplify the process of deciding complex issues of foreign law, and reduce the risk of inconsistent findings by courts of different jurisdictions¹⁸.

12.         The institutions of the TSCJ also engage in dialogue and discussions that are geared towards enhancing the Transnational System.

(a)          First, there is ongoing judicial dialogue through the cross-citation of decisions across different jurisdictions. This enables courts to draw on the experience and wisdom of their counterparts in other jurisdictions that have dealt with the same issues, and to develop their laws with these decisions in mind and, if possible, consistently with how other jurisdictions have developed their law. This promotes coherence in the TSCJ¹⁹. For example, in Tomolugen, we examined cases from Canada, England and Hong Kong, before determining the appropriate approach to applications for a stay of proceedings to enforce an arbitration agreement²⁰. And just a few weeks ago, our decision in Tomolugenwas cited at length by the United Kingdom Supreme Court in the Mozambique²¹ case, in the course of a survey of case law from several jurisdictions on the test for whether a dispute involves a “matter” which the parties had agreed to refer to arbitration. The court noted that many leading arbitration jurisdictions had adopted a similar approach, and developed English law in line with that consensus. 

(b)          More broadly, the institutions of the TSCJ engage in dialogue and discussions at various conferences and meetings, to discuss common issues and interests like the complexification of disputes and how to promote the integration of the Transnational System For example, the SIFoCC invited judges, arbitrators, and mediators to its Full Meeting last year, to exchange ideas on fostering collaboration between our institutions and improving the coherent operation of the TSCJ²².

III.           Conclusion

13.         It is evident that international collaboration between the institutions of the TSCJ is a crucial element of the Transnational System. It enables and enhances the just and efficient resolution of disputes, and is central to our joint endeavour to refine and reform the TSCJ. It is therefore imperative that we encourage and enhance all efforts to promote such cross-border collaboration. In that spirit, we are delighted to make some contribution to this event in Indonesia.

14.         Thank you very much and I wish you all a very fruitful seminar.

^{(1) Sundaresh Menon CJ, “The Law of Commerce in the 21st Century: Transnational commercial justice amidst the wax and wane of globalisation”, Lecture hosted by the University of Western Australia Law School and the Supreme Court of Western Australia (27 July 2022); Sundaresh Menon CJ, “SIFoCC playing its part as a cornerstone of a transnational system of commercial justice”, Address at the 4th Full Meeting of the Standing International Forum of Commercial Courts (20 October 2022) (“SIFoCC playing its part”); Sundaresh Menon CJ, “The Transnational System of Commercial Justice and the Place of International Commercial Courts”, Lecture in Bahrain (9 May 2023) (“The TSCJ and the Place of ICCs”).}

^{(2) The TSCJ and the Place of ICCs at para 4.}

^{(3) Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals [2016] 1 SLR 373 (“Tomolugen”).}

^{(4) Tomolugen at [63].}

^{(5) Tomolugen at [186]–[190].}

^{(6) Sundaresh Menon CJ, “International Mediation and the Role of the Courts”, Speech to the Indonesian Judiciary (7 November 2023) at paras 31 and 34.}

^{(7) SIFoCC playing its part at para 18.}

^{(8) Sundaresh Menon CJ, “Constructing Collaboration: Remoulding the Resolution of Construction Disputes”, Keynote Address at the 9th Annual Conference of the International Academy of Construction Lawyers (14 April 2023) at para 42(a).}

^{(9) Re Nortel Networks Corp [2015] OJ No 2440 (“Re Nortel”) at [1].}

^{(10) Re Nortel at [3].}

^{(11) Re Nortel at [8].}

^{(12) The TSCJ and the Place of ICCs at paras 39–40.}

^{(13) JIN Guidelines: https://jin-global.org/jin-guidelines.html.}

^{(14) The other two matters involved Ezra Holdings Ltd and Three Arrows Capital Ltd respectively.}

^{(15) ABLI, “Asian Principles of Business Restructuring”: https://www.abli.asia/abli-projects/asian-principles-of-business-restructuring/.}

^{(16) SIFoCC playing its part at para 16(a).}

^{(17) SG Courts, “References of questions of law between Singapore and foreign courts”: https://judiciary.gov.sg/who-we-are/references-questions-of-law-singapore-foreign-courts.}

^{(18) The TSCJ and the Place of ICCs at para 45(b).}

^{(19) The TSCJ and the Place of ICCs at para 45(a).}

^{(20) Tomolugen at [46]–[56].}

^{(21) Republic of Mozambique (acting through its Attorney General) v Privinvest Shipbuilding SAL (Holding) and others [2023] UKSC 32 at [57]–[64].}

^{(22) SIFoCC, “Report of the fourth full meeting” at pp 30–36.}