19 May 2014
Michelle Quah, BT Supplements
Concerted efforts to bring in foreign competition and internationalise legal services have yielded benefits
SINGAPORE’S legal industry these days is marked more by change and progression than constancy. In recent years, it has seen itself being opened up to foreign competition, the introduction of new bills and laws, a change in the way that criminal proceedings are conducted and the promotion of the Republic as an international dispute resolution centre, among other things.
Growing the legal services industry – through inviting more foreign competition and promoting the city-state as a global dispute resolution centre – goes far in supporting Singapore’s drive to be the preferred international business and commercial centre in Asia and the world.
Having an internationally competitive legal services hub supports the needs of local and multinational firms and drives work in other sectors of the economy.
Law Minister K Shanmugam says that there are four aspects to this: “One, you need a first-class court system. Two, you need a first-class international arbitration system. Then, something which is completely new and can be a game-changer is the international commercial court. And I want to put in a lot of resources into commercial mediation for international cases.”
The opening up of the domestic legal industry to foreign competition, while not immediately popular with local law firms, has yielded benefits for the broader sector.
Six foreign law firms were awarded Qualifying Foreign Law Practice (QFLP) licences when the scheme was first introduced in 2008, and they were big multinational firms – Allen & Overy, Clifford Chance, Latham & Watkins, Norton Rose Fulbright, White & Case and Herbert Smith Freehills.
In the first five-year licence period, these firms generated $1.2 billion in total revenue, of which about 80 per cent came from offshore work. They have also provided more employment opportunities for Singapore-qualified lawyers, having hired more than 100 such lawyers since getting their QFLP status.
Of the six, Allen & Overy, Clifford Chance, Latham & Watkins and Norton Rose Fulbright have just had their licences renewed for another five years; White & Case has been given a one-year conditional licence; and Herbert Smith Freehills has decided not to renew its QFLP licence, having other strategic initiatives in mind.
A second round of QFLP licences was awarded in February 2013 to four heavyweight global legal firms: US firms Gibson, Dunn & Crutcher, Jones Day and Sidley Austin as well as Linklaters, a Magic Circle practice from the United Kingdom.
Concerted efforts have also been made in recent years to boost Singapore’s standing as an international dispute resolution hub.
The rise in cross-border investment and trade into and between Asian economies has fuelled demand for dispute resolution services. This, in turn, has created demand for a neutral venue that can provide the suite of dispute resolution services spanning arbitration, litigation and mediation.
The Ministry of Law recognised that a strong dispute resolution framework would benefit Singapore by adding to the growing volume of legal work coming into the country, while creating opportunities for Singapore lawyers and Singapore law firms.
It has spared no effort in bringing this to bear. Mr Shanmugam said recently: “The creation of the Singapore International Arbitration Centre (SIAC) is a good case study of our approach. We saw an opportunity for the legal services sector, given the rise of India, China and the rest of Asia. We brought in the best expertise from around the world for the SIAC board. We then set a number of clear goals in terms of where we wanted to end up. We changed the legal framework to make sure we would be most attractive: full party autonomy, no interference from the courts, tax breaks, etc. Then we conducted a concerted marketing campaign in which we spread the word of the attractiveness of Singapore as an arbitration hub. My senior officials and I visited several countries for this.”
Cavinder Bull, deputy chairman of the SIAC and a partner with Drew & Napier, said that the various arbitration practices based in Singapore – in both local and international firms – have benefited immensely from these efforts.
“Those who in tandem with the government’s efforts have invested in securing and developing talent in this field have seen their arbitration caseload increase. As the complexity of the work has increased, arbitration practitioners in Singapore have risen to the challenge and this experience is shaping a generation of lawyers with well-honed skills in international arbitration,” Mr Bull added.
A committee established by the Ministry of Law has also recommended to the ministry that it establish a Singapore International Commercial Court (SICC) as a division of the High Court, to hear international commercial disputes. It also suggested that there be an SICC panel of judges, which could include international jurists and that foreign counsel be allowed to take part in proceedings in certain circumstances. The ministry is studying public feedback received recently on these recommendations.
An important complement to international arbitration and international commercial litigation would be commercial mediation for international cases. The Ministry of Law is now working with industry stakeholders to establish the Singapore International Mediation Centre, to be launched later this year.
As Asian economies continue to grow – their combined gross domestic product (GDP) is expected to more than treble between 2010 and 2020, growing from US$10 trillion to US$34 trillion – the volume and complexity of cross-border disputes are also expected to grow.