July 1, 2014
Booming cross-border trade and investment across Asia over the past decade has spurred rapid growth in international arbitration. Businesses have naturally looked to site arbitrations within Asia, closer to projects and potential witnesses than the traditional centres of London and Paris. Singapore led the way with a multi-dimensional effort to create an arbitration-friendly legal framework, purpose-built facilities and a pool of legal talent to handle cases whether as counsel or arbitrator. Others have followed. Recently, Seoul opened its International Dispute Resolution Centre. Its progenitor and Chairman, former Korean Bar Association President, Young-Moo Shin, describes how Korea has changed from hermit kingdom to the place to which the world comes. With only two hearing rooms, the Seoul IDRC may seem small by comparison with the twelve hearing rooms of Singapore's Maxwell Chambers, but nonetheless it represents a significant statement of intent. Seoul's investment in hardware is matched by its quick development of arbitration software. From being focused on domestic legal concerns a decade ago, its lawyers have become at home in the world, typically with a master's degree from an American university and a command of English sufficiently strong to conduct hearings with confidence and aplomb.
Having reduced the supply of home-grown lawyers in the 1990s, restricting the intake of the NUS law faculty to 150 at its lowest point, Singapore was initially wrong-footed by the explosion in demand for legal services. The drivers of demand were twofold: cross-border dispute resolution and increasingly complex financial structures and products. International law firms took advantage of the vacuum to grow in Singapore and the region, staffing their offices with a combination of British and American lawyers on the one hand and Filipino, Malaysian, Indian and Chinese lawyers on the other. The Third Committee on the Supply of Lawyers reported in 2006 and began the process of releasing the bottlenecks in the supply of Singapore lawyers. It recommended a sharp increase in the intake of the NUS law faculty as well as the establishment of a second law faculty at SMU. Today, the Singapore legal profession benefits from the high quality of both faculties, which together produce sufficient graduates to help Singapore law firms meet the legal needs of businesses in the region.
It is this burgeoning demand that has spurred investment in arbitration infrastructure across Asia, not just in Seoul but in Kuala Lumpur and Hong Kong, with even cities at the periphery such as Sydney and Melbourne building new facilities for international arbitration. This same demand has attracted a second wave of international supply. In April, more than twenty London Queen's Counsel were in Singapore on the same day, a phenomenon unheard of in past years but which has become almost commonplace today.
However, so long as sufficient opportunities exist for Singaporeans to receive a legal education and participate in what has been termed by Chief Justice Sundaresh Menon as 'the golden age of arbitration', Singapore's open doors to foreign legal talent is a major draw and helps maintain its current lead in terms of the numbers of cases seated and heard in Singapore.
Why does it matter that parties are given freedom to choose counsel and arbitrators from anywhere in the world unfettered by visa or other legal or bureaucratic restrictions? Open doors gives parties confidence to arbitrate in Singapore, because they can then put conduct of the case in the hands of their favourite counsel, regardless of nationality or jurisdiction of qualification. Lawyers and arbitrators from around the world have flocked to Singapore, setting up offices, including in Maxwell Chambers. It demonstrates the quality of Singapore lawyers, that we have a strong market share of the growing pie of international arbitration, with a number of our counsel and arbitrators also making a mark elsewhere, appearing or presiding in many other arbitration seats.
This particular strength of open doors can be replicated, as can facilities. Over time, the sophistication of other legal professions in the region will increase. Even Singapore's vaunted connectivity is an advantage that can, if not matched, at least be lessened, as other cities build new airports and receive more flights.
But there is one thing that Singapore has developed that it is very difficult for other cities to replicate, and that is the practical, commonsensical and robust brand of common law that is Singapore law in the commercial sphere. It has been described as English law without the European law overlay, and perhaps of all the streams of common law in the world hews closest to the Victorian vision of freedom of trade and contract. This was the insight of incoming Attorney-General VK Rajah, when after being elevated to the High Court Bench he began the long-haul effort of promoting Singapore law as the choice for governing law in contracts between nationals of different countries unrelated to Singapore. There were many nay-sayers, who felt Singapore was too small for our law to become a popular choice, and make headway against the momentum of English law. But it was precisely Singapore's small size, combined with our commercial, business-driven mind-set, that has made Singapore law an ideal neutral choice.
The choice of governing law and the choice of seat are logically distinct. A contract governed by French law may provide for London as the seat of arbitration. But a respected governing law and a popular seat are mutually reinforcing, and that is Singapore's critical advantage.
South Korea will build more and better hearing rooms, its lawyers will become more and more internationally adept and commercially minded, but it is hard to see, in the foreseeable future, that Korean law will be much chosen as the law to govern contracts by parties who are not themselves from Korea. Singapore law is Singapore lawyers' not-so-secret weapon.
The article was first published as 'S'pore's role in int'l arbitration in Asia' in The Business Times on 20 May 2014.