03 Sep 2014
Channel News Asia
Rising intra-Asia trade and a conducive legal regulatory environment are factors that contributed to Singapore’s rise as a major arbitration centre. Two upcoming centres are expected to extend the Republic’s role in arbitration.
SINGAPORE: Trade within Asia is growing faster than anywhere else in the world. According to Citi, intra-Asia trade makes up a quarter of Asia’s annual exports of US$6 trillion. With an increasing amount of goods being traded and deals being cut, commercial disputes have also increased and Singapore is emerging as a key arbitration centre for handling such disputes.
At present, the top three jurisdictions which refer disputes to the Singapore International Arbitration Centre (SIAC) are China, India and Indonesia. The centre handled 259 cases in 2013 – more than double the number of cases it was handling five years ago.
Law firm Pinsent Masons – which specialises in international arbitration disputes arising in the energy, infrastructure and technology sectors – says Singapore is also taking a bigger chunk of the global arbitration pie. Mr Mohan Pillay, the firm’s partner and Joint Head of Office said major arbitration centres like Hong Kong, Paris, London, Stockholm have seen an increase in international arbitration over the last six years, but “the real star has been Singapore, which has seen a 60 per cent increase over the last six years up to 2013. That’s in stark contrast to a 30 per cent drop over the same period for Hong Kong”.
The SIAC says the legal regulatory environment here is also a key factor. For example, legislation has been updated regularly to keep in step with global best practices. “There are no restrictions in Singapore on foreign counsel, or foreign arbitrators coming in and out to do arbitrations. And no work permit sort of restrictions or requirements,” added SIAC CEO Lim Seok Hui.
The centre also said that in some cases, companies may prefer arbitration over commercial litigation for various reasons, including confidentiality, enforceability of the judgement, and the limited rights of appeal.
Autonomy is also a factor. Said Ms Lim: “For commercial litigation, there will be judges. In arbitration, obviously, you get to choose your arbitrator.” In sectors such as oil and gas, mining, shipping, construction, banking and financial services, where disputes require a certain type of expertise, parties involved in the arbitration process retain some autonomy by choosing and select their arbitrators, “whereas in court, you don’t get that choice,” he noted.
Maxwell Chambers is the centre of arbitration activity in Singapore, with more than 10 arbitration institutions and over 20 hearing rooms and preparation rooms. Planning for the building started in 2005 and it opened for business four years ago.
Two new centres are expected to be set up soon: the Singapore International Mediation Centre and an International Commercial Court. They will extend Singapore’s role in arbitration to commercial mediation and court-based commercial litigation.