Bookended by the formation of the SICC in the beginning, and the arrival of the ASEAN Economic Community at the end, 2015 is shaping up to be a promising year for arbitration in Singapore, finds Ed Lane

Arbitration in Singapore in 2015 will benefit from increased multi-lateral legal agreements to recognize the wealth city-state's enforcement of judgments, possibly through avenues such as the Association of Southeast Asian Nations (ASEAN) or a formal treaty, according to lawyers interviewed by ALB.

Singapore’s regional and trading partners might elect to consider a formal treaty, according to Jonathan Choo, a partner at Olswang, though such a process would take time. But he notes that for many commercial agreements there is a strong base of support among clients to have Singapore's judiciary as touchstone.

“About 50 percent or more of the cases at the Singapore International Arbitration Centre (SIAC) involve firms from outside of Asia,” Choo says. “They highly trust the judiciary here as a key factor as well as cost and, of course, the infrastructure available.” For example, many Indian companies now look to use SAIC as a preferred venue over London because local firms are on par in expertise with senior counsel from abroad, though he notes that that took time.

"Local firms have developed the expertise once squarely with foreign legal counsel so that has made Singapore even more attractive," he adds. He also says the speed of the government in passing the International Arbitration Act (IAA) shows that change can happen here quickly.

For Edmund J. Kronenburg, managing partner of Braddell Brothers, the factors behind an increase in the number of offshore disputes determined in Singapore can be put down to a short checklist.

"Singapore has the following main attributes conducive to being a dispute resolution hub," Kronenburg says. "It is perceived as a neutral venue. It is trusted by both East and West while not being so much a part of the East or West that it appears pre-disposed to the former or latter. Its courts are efficient and fair; and its Bar offers quality legal representation at reasonable cost, compared with Hong Kong, London or Paris which are all global arbitration hubs."

Chou Sean Yu, a partner with WongPartnership, said international firms have voted with their feet in the case of noting Singapore in contracts as the place for arbitration, if needed.

"The increase in such disputes resolved through international arbitration has mainly come about because of the increased use of Singapore-seat arbitration clauses as the agreed mode of dispute resolution in international contracts," Chou says. "Singapore has become a popular seat for arbitrations because of its strong reputation for facilitating international arbitration, principally through the fact that the Singapore courts (being the supervisory court over any arbitration seated in Singapore) are independent and very well-versed in arbitration matters."

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A CHANGING MIX

Choo notes the mix of clients has also changed as the nature of business around the globe becomes increasingly focused on intellectual property and Internet connectivity. Singapore has a base in maritime, insurance and oil and gas work in arbitration, counsel said. As a trend going forward however, an area broadly defined as tech and media has come to the fore.

One reason is that the room for disputes in agreements involving software and content as well as equipment favors a jurisdiction in Asia with regional acceptance, Choo says.

"I think that a sizeable number of offshore disputes that are determined in Singapore will continue to originate from the construction, insurance and maritime sectors," Choo says "Moving forward, I expect that in line with the growing trend for international technology and media businesses to target the immense market potential within the ASEAN region and in India, we will soon also start to see more disputes from the technology and media sectors being determined through arbitration in Singapore."

At the end of 2015, the ASEAN region enters into an ASEAN Economic Community (AEC) pact that has laid the ground work for harmonized regulations across banking, drug and medical device regulations and the ability to clear services as well as goods trade in the 10-nation - Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar, and Vietnam - bloc of more than 600 million people with a combined GDP over $2.3 trillion, equivalent to the world's seventh largest economy.

Indeed, India, China and the U.S. are often invited to attend ASEAN meetings as observers and eagerly use the chance to push broader agreements on market access for companies, which Chou says will only become more evident.

"We have started to see many more disputes where the subject matter concerns investments in India and China and I believe there will be a continued upward trend in such disputes," he says. "We have also started to have investment treaty disputes being heard in Singapore (which have no other connection with Singapore) and this is also expected to increase."

But Singapore won’t be the only arbitration centre benefiting from the advent of the AEC. “Implementation of the AEC will liberalize goods and services across the ASEAN region and see a marked increase in regional and international investment,” says Datuk Professor Sundra Rajoo, director of the Kuala Lumpur Regional Centre for Arbitration (KLRCA). “The arrival of the AEC will therefore bring attention to and raise awareness of existing arbitration provisions in the ASEAN Comprehensive Investment Agreement (ACIA). KLRCA is the key regional arbitration centre named in the ACIA, and with its combined ASEAN community presence and state of the art facilities is poised to provide specialist dispute resolution services throughout this new era of ASEAN growth.”

One other area to watch is the Trans-Pacific Partnership trade pact pushed hard by the United States as a way to open services and trade across twelve countries throughout the Asia-Pacific region Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.

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THE SICC EMERGES

Still, in the world of business as in governments not everyone gets along and litigation remains very alive as an option, an area Singapore has setup a framework on as well through the Singapore International Commercial Court, a division of the Singapore High Court and part of the Supreme Court of Singapore designed to deal with transnational commercial disputes.

The SICC, in Singapore style, started as an idea by Chief Justice Sundaresh Menon in 2013 and by dint of committee work, government support and, of course, many lawyers, was officially launched on Jan. 5, 2015. Parties must submit to SICC jurisdiction under a written agreement and agree to other terms related to procedure.

A discussion of how it fits in with SIAC and the legal community shows wide acceptance because it deepens legal avenues and business.

"It is a positive development for both clients and legal professionals alike," Kronenburg of Braddell says. "What the creation of the SICC effectively allows is foreign legal and judicial talent to add value to the existing attributes of Singapore, in cases of an offshore nature.  If Singapore lawyers position themselves correctly, they will benefit from this value-add through collaborations with the foreign legal talent in such cases."

Choo of Olswang notes, however, it remains a work-in-progress.

"The SICC is still relatively new, so naturally, practitioners will have questions as to how it will function," he says. “However, it has received plenty of news coverage since its launch. This in turn has sparked much interest and discussion within the legal community here, which is always a good thing. I expect that it won’t be long before there is greater clarity on the topic, particularly once we start to hear about the first few cases heard at the SICC. I think that at least initially, the limited cross-border enforceability of SICC judgments will perhaps be the biggest impediment to the SICC’s popularity, particularly when considered alongside the use of arbitration as a dispute resolution forum. However, as far as Singapore is concerned, the important point here is that parties have the various dispute resolution options available to them in Singapore and can pick the most appropriate option for their dispute."

And Chou of WongPartnership says he sees it as complimentary. "The functions and objectives of the SICC are clear," he notes. "It is intended to be a specialist international commercial court with procedures which are intended to be effective in dealing with complex disputes involving foreign laws. Cross-border enforceability may admittedly appear to be a concern for parties who intend to use the SICC. Serious positive efforts are however currently being undertaken by Singapore to enhance the enforceability of a SICC judgment."

Going forward, Kronenburg says a key for continued growth is highly dependent on the strength of the judiciary."Singapore’s Judiciary should therefore continue to hold the trust of the arbitration community by releasing well-reasoned, pro-arbitration decisions, that other Model Law jurisdictions can refer-to as precedents," Kronenburg says. "In that regard, being ‘pro-arbitration’ is not the same as being ‘pro-enforcement’. Enforcement of an award might sometimes be ‘anti-arbitration’.  For instance, to blindly enforce an award that offends basic arbitration principles on jurisdiction cannot be ‘pro-arbitration’. The Singapore Court of Appeal has demonstrated that it understands that fine, sometimes overlooked, distinction in its Astro-Lippo decision in Oct 2013, in which it refused to enforce a substantial part of a SIAC arbitral award that tribunal actually lacked jurisdiction to make."

Indeed Chou says that the ability to set precedent and adapt at the same time is a balancing act that never ends.

"Singapore will need to remain abreast of all developments in the international arbitration sphere," he says. "Currently, it is looking into allowing for third party funding and potentially more sophisticated damages-based costs arrangements for international arbitrations seated in Singapore [both of which are currently prohibited under domestic restrictions]."

All three lawyers note that the depth of legal talent has to grow to keep up with new services and areas of practice - something that has apparently not escaped the attention of property developers in the Central Business District where a slew of gleaming office complexes house many of the top firms with office space set to grow.

Office rents in the city’s central business district jumped 14 percent last year, even as luxury home prices slumped 6 percent, according to Jones Lang LaSalle Inc.

The real estate firm said consolidation of several offices into Grade A space by consulting and law firms, more so than banks, is driving about 1.15 million square feet of new office space that will come on stream in 2015, rising to 1.6 million square feet in 2016 and 4.7 million in 2017.

Indeed, the demand for Grade A office space extends to Maxwell Chambers in Singapore, which houses top international alternative dispute resolution institutions under one roof.

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