In-house lawyers and business leaders from across region cast their votes for the best arbitration & dispute resolution practices in Asia.
It’s called alternative dispute resolution, but international arbitration is well and truly in the mainstream. A vital insulation against the vagaries of unfamiliar legal systems, arbitration is big business, not least for the lawyers who are advising on it. And while one needs to be wary of the ‘warm and fuzzy’ tag sometimes associated with arbitration, this mode of dispute resolution has much to commend it.
But just what constitutes a good arbitration and dispute resolution practice and what makes a good practice a leading one? ALB speaks to leading lawyers and in-house counsel to find out.
The market and the GFC
While it’s easy to draw a link between macro-economic conditions and certain legal practice areas – capital markets, to take an obvious example – the link with arbitration work is more enigmatic. All lawyers interviewed by ALB warn against oversimplifying the link between the current economic climate and a rise in arbitration work. “When economic difficulties arise you see a rise in commercial litigation,” says John Bishop, head of Pinsent Masons’ China practice. “That is the nature of the legal market but these are generally more recovery related and it is not these disputes that go to arbitration.”
The trend at the moment, he says, is not a meteoric rise in international arbitrations but rather a steady increase owing largely to the long lead time required for arbitrations and the fact that many arise as a result of lengthy periods of non-performance. “It’s not a flood at the moment, but we are witnessing an increase”, he says. “The disputes we are working on do take some time to be prepared, to develop into technical disputes.” But, according to Bishop, there are plenty of disputes in the making around the region. “What we are noticing is that there a lot of disputes bubbling under the surface, but these have not reached the dispute resolution stage at the moment,” he says. “We predict that this will happen over the next six to eight months.”
Paul Starr, a partner with Mallesons Stephen Jaques in Hong Kong, highlights a number of areas where this trend is already in full swing, saying that it is work in the Gulf region that is keeping him busiest at the moment. “Dubai’s a classic example of where the GFC argument is true,” he says. “This trend has been happening for some time and a number of government and non-government contracts are starting to fall into dispute.” Outside of the Middle East, they are not necessarily going straight to arbitration. Mirroring a trend that is occurring throughout the region, many would-be Asian disputes are being routed to mediation. “Mediation is playing a large part in the disputes happening in Asia particularly in the building, construction and infrastructure sectors.” Similarly in Hong Kong, the recent Civil Justice Reform is bringing mediation more into the picture, with further reforms in the new year expected to make it the first port of call for contentious employment matters.
But while economic fortunes may not be playing a direct role in influencing the levels of international arbitration and mediation it is clear they are nonetheless exerting their influence and this is something that is evidenced in the sometimes vastly different roles being played by lawyers and their clients. Andrew Aglionby, head of Baker & McKenzie’s international commercial arbitration practice in the Asia-pacific, says the inclement economic environment is causing more clients to look to risk management, to ways they can avoid disputes rather than becoming embroiled in them. “It is true that the economic situation has given rise to business risks and there are of course more to manage,” Aglionby says. “We are receiving a lot of instructions to assess clients’ risks at the moment with a view to reaching negotiated settlements on disputes at an early stage.”
According to David Bateson, a Hong Kong-based partner with Mallesons Stephen Jaques, there is more of a focus on agreements at the front end. Bateson says that this involves structuring investments and contracts so clients can avail themselves of appropriate dispute resolution mechanisms should things take a turn for the worse. “There is an awareness among clients that this is perhaps more important than it used to be and a recognition that now is not the time to be engaging in lengthy disputes due to the costs involved.”
In-house lawyers ALB spoke to agree, in fact insist, that an awareness of the need to avoid disputes is now one of the most important criteria in the selection of external counsel in the area. “Most disputes can be avoided,” said the general counsel of one of Asia’s largest real estate companies. “What we want from external counsel here is someone with foresight who can look after us at the front end of transactions to avoid a situation down the track where we are caught up in lengthy disputes.”
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