Singapore 2008

Articles in this Report: Liberalisation of the legal services market; Beyond the loss-gain binary; Singapore law as the ‘law of choice’; The battle for Singapore lawyers

Singapore law as the ‘law of choice’

Five years ago, as part of a broader 20- year effort to establish Singapore as a regional and international hub for commercial arbitration, the Economic Development Board of Singapore (EDB) instituted the Arbitration Capability Program (ACP), a policy specifically designed to enhance the ability of the legal market to handle high-end cross-border arbitration. Through a series of incremental investments in infrastructure, facilities, lawyer training and tax-offsets for international law firms, the government has been successful in achieving its aim, with Singapore now considered a regional and international leader in the field.

Apart from having its own smoothly functioning arbitration body, the Singapore International Arbitration Centre (SIAC), Singapore has also been able to attract international arbitration bodies such as the Permanent Court of Arbitration (PCA) and International Centre for Dispute Resolution (ICDR) to establish regional headquarters. It is against this backdrop that the amount of international arbitration work is expected to exponentially increase in the years ahead. “Singapore is really an ideal place for international commercial arbitration,” says Manoj Sandrasegara, director at Drew & Napier, adding that arbitration has become a competitive advantage of Singapore’s legal market.

As much as its well-developed arbitration infrastructure is important for attracting future work, the city-state’s geographical location is doubtless key to growth in the area. “Singapore’s proximity to the booming economies of China, India and other Asian countries and their increasing involvement in complex commercial transactions should benefit Singapore’s international arbitration market,” says Alban Kang, managing partner of ATMD. Singapore law is already widely favoured as the governing law and the city is a preferred venue for dispute resolution in transactions involving parties from different jurisdictions, as evidenced by the decisions of the Indian Merchants’ Chamber and Agri Trade India Services to support the use of Singapore law to govern their transactions when an alternative to Indian law is required.

But the bulk of international arbitration in Singapore need not come from India. “Singapore’s well-developed arbitration credentials and its position as a neutral, third-party arbitration venue mean that we are well placed to capture work arising from other places in the region,” says Susan de Silva, partner, ATMD.

“Singapore has a number of obvious and compelling advantages that have made it ‘The Hub’ for international arbitration in the Southeast Asia region. Clearly, businesses recognise these advantages and, as a consequence, we have seen two things; one is an increased use of Singaporean law as the law governing parties’ contracts and the other is disputes work emanating not only from Indonesia and Vietnam but also from other, smaller countries in the region,” says Nick Watts of Freehills.

Professor Steve Ngo, managing director of the Adler Centre for Dispute Resolution and secretary-general of the Trisakti Institute of Arbitration at Trisakti University, Jakarta, says that while Singapore can rely on the comparatively advanced nature of its international arbitration capabilities for a steady stream of work in the coming years, the actual amount of work and its complexity will be mediated by a number factors, not least how active Singapore firms are in selling arbitration as the preferred form of dispute resolution in the region.

“Singapore lawyers know arbitration to be the most efficient and cost-effective method of resolving commercial disputes,” he says. “But Singapore’s neighbours are not familiar with the intricacies of arbitration; they are more willing to use traditional methods like litigation. Selling arbitration to regional clients and lawyers as a cheap and quick way to solve disputes is very important.”

The Singapore government and domestic and international arbitrators alike are already heavily involved in rainmaking of this type throughout the region. Singapore’s neutrality in international arbitration is similarly believed to be another crucial factor dictating the destination of work in this field in the short to mid term. “Singapore’s dispute resolution mechanisms are incorruptible,” notes Thio Shen Yi, joint managing director, TSMP.

In Thio’s opinion, the sophistication of Singapore’s arbitration mechanisms may even serve to attract more international business into the region.

“Fair and reliable dispute resolution offers businesses both added transactional security and a ‘get out’ or ‘exit clause’ should things turn sour.”

In fact, a source has told ALB that in their experience a lack of efficient and enforcement mechanisms in the region has seen a lot of proposed transactions “held over or shelved indefinitely. But the tide is now definitely turning.”

International arbitration work also has a much broader significance for the Singapore market, in that it may present an opportunity for Singapore to penetrate markets that were hitherto closed off, such as China. “Dispute resolution is an area where we could possibly capture part of the Chinese market,” says Baker & McKenzie.Wong & Leow managing principal Wong Kien Keong.

Phillipe Taverne, a partner at Cotty Vivant Marchisio & Lauzeral, concurs. “We can attract a lot of Chinese-related international arbitration away from Hong Kong through our neutrality, low costs and relatively speedy processes,” he says.

However, Taverne, Wong and others concede that Hong Kong’s international arbitration systems are still a step ahead of Singapore’s in terms of the number of cases handled and complexity, and that any gains that Singapore made on this front would be minimal in the short term. The more immediate contenders for the market it seems are emerging Middle East players such as Dubai and Doha.

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