Keynote Address by DPM Prof S Jayakumar at the the Opening Ceremony of the Conference on “Institutional Arbitration In Asia”
3 Oct 2006 Posted in Speeches
Mr Richard Naimark, Vice President, American Arbitration Association
Ms Kathy Gonzalez, Senior Counsel, ICC Dispute Resolution Services
Mr Goh Joon Seng, Chairman, Singapore International Arbitration Centre
Ladies and Gentlemen,
Let me first welcome all participants to this conference, and to our friends from abroad who have made a special effort to be here today. I hope you will enjoy your stay here. In addition, I warmly welcome the representatives from the three institutions behind the organisation of this event - AAA, ICC and SIAC. It is commendable that these international arbitration institutions have joined hands to conduct this conference.
Your theme is “Institutional Arbitration in Asia”.
In Asia, with the maturing of markets and the increasing sophistication of businesses, there is better understanding and increased acceptance of arbitration as a form of dispute resolution. Institutional arbitration too, is on the rise, as can be seen by the many different regional arbitral institutions that have been established throughout Asia. In China, CIETAC and the Beijing Arbitration Commission are well known bodies, as is the Hong Kong International Arbitration Centre. The Korean Commercial Arbitration Board has a long history in dispute resolution, and Malaysia has the Kuala Lumpur Regional Centre for Arbitration. These are just a few of the regional centres in Asia.
The traditional big institutions like ICC and AAA have also started to develop a higher profile in this region. I hope that your discussions will lead to better insights that will contribute to the further growth and development of arbitration in Asia.
The arbitration scene in Asia
- Asia as a whole is booming. In 2005 alone, foreign direct investment into the region exceeded 140 billion US dollars. China’s GDP grew by about 10% and India’s by 8%. With so much increased business activity in the region, it is natural that the demand for dispute resolution services has also increased correspondingly.
- This leads to both challenges and opportunities for all the arbitration players in this part of the world. There are challenges to our ability to meet the demands and needs of a rapidly growing market. But there are also rewards to be reaped if we can take advantage of the opportunities. We will each have to find our own responses to these challenges and opportunities, whether as lawyers, law firms, arbitrators, arbitral institutions, regulators or promoters of arbitration activities.
The arbitration scene in Singapore
- Here in Singapore, we also have to find our way forward in response to the same challenges and opportunities. The level of international arbitration activities in Singapore has risen significantly in recent years. Law firms have reported  that over the past three years, their international arbitration caseloads had been increasing by about 20% every year. This is true for both local law firms as well as foreign law firms based here. Responding to the growing demand in arbitration work, firms are beefing up their arbitration practices, with the number of lawyers handling arbitration work rising by about 16% each year. Many law firms reported that their arbitration departments are growing at a much faster rate than their other departments.
- It is not only the caseload figures that are rising. Law firms also reported that the average quantum of dispute in the cases had also been increasing steadily. This suggests that they are handling larger and more complex disputes. A recent survey of the larger law firms here puts the total quantum of dispute in international arbitration cases in 2005 to be in excess of $10 billion U.S. dollars. If the many ad-hoc cases arbitrated in Singapore by law firms that are not based here are included, the total will be much higher.
Factors for growth
- There are several reasons for this growth of international arbitration activities in Singapore. Our geographical location, at the crossroads of the major economies of China, India, Indonesia and Australia, is one factor. We are fortunate to be located in this dynamic and fast growing part of the world with immense potential and business opportunities, and key cities in this region like Shanghai, Tokyo, Seoul, Jakarta, New Delhi and Sydney are all within only seven hours’ flying time of Singapore.
- The other important factor is Singapore’s legal infrastructure. We have acted to ensure that our laws and rules are arbitration-friendly and in line with new developments in the international arbitration scene. For example, our arbitration regime is based on the UNCITRAL Model law, and Singapore is a signatory to the New York Convention. Our judiciary, which enjoys high international standing, understands arbitration, and effectively supports the cases being heard here.
- We also recognise the importance to have a large pool of good legal talent available here if we are to develop Singapore as an international arbitration centre. Over the years, we have built up a strong local bar, experienced and well-trained to handle complex legal matters. Three years ago, we exempted foreign arbitrators from tax on any income derived from arbitration work done in Singapore. We also gave foreign lawyers complete freedom to practice arbitration work in Singapore, regardless of the governing law of the contract in dispute.
- I believe that these factors and measures that we had put in have had some impact  on the growth of the arbitration industry in Singapore. I am heartened to note that for ICC arbitrations in 2005, Singapore came out tops in Asia in terms of the venue of arbitration, choice of applicable law of contracts, and nationality of arbitrators. I am also pleased that AAA had chosen Singapore as the location of its first ever Asian office, entering into a joint venture with the SIAC in February this year. We welcome such partnerships and would be happy to facilitate and support all arbitral bodies that may wish to undertake arbitration work in Singapore.
- The Singapore Government is committed to doing more to support the growth of the international arbitration industry. Taking a multi-pronged approach, we will tackle the issue from different angles. For example, besides the earlier initiatives mentioned, we are also in discussions with other international arbitral institutions to bring them to Singapore as well. This will not only enable them to have a foothold in this important Asian market, but will also underscore Singapore’s reputation as a dispute resolution hub. Separately, we have noted feedback from foreign arbitrators and counsel who regularly fly in to Singapore that they would want some sort of process to facilitate easier entry for arbitration work. We have discussed with the relevant authorities and have obtained their broad agreement on this. We are now working out the details of implementation.
- We have also recently announced major changes to our legal services regime, aimed at augmenting and strengthening the legal talent pool in Singapore. Key developments include the setting up of a new law school, and allowing foreign lawyers to practice Singapore law in local law firms in areas such as arbitration, banking and corporate work. These measures are aimed at enlarging the pool of available legal expertise, making it easier for both local and foreign firms here to grow to meet the demands of the market. They will also help to attract quality foreign talent to be based here to provide legal services, including arbitration, to the entire region.
- Another significant move is our plan to develop an integrated arbitration complex  that will house both state-of-the-art hearing room facilities and international arbitration institutions under one roof. It is clear that there is a demand for specialised facilities to cater to the specific needs of high-end arbitration work. We aim to have this new complex up and running by late 2008. We are confident that this dedicated centre will enable us to provide a full suite of services and meet the needs of all international arbitration users who come here.
- We hope that all these various initiatives will not only signal strongly to the arbitration community that the Government is serious and committed to the growth of international arbitration in Singapore, but will in and of themselves strengthen the attractiveness of Singapore as an international arbitration venue.
The broader scene
- But it is not just in Singapore that international arbitration is growing in importance. Asia, as a whole, is also increasingly moving towards arbitration as a dispute resolution mechanism.
- Just yesterday, an arbitration workshop was conducted here, attended by over fifty delegates from nine countries in the Association of South-East Asian Nations. A mix of private sector individuals, as well as government officials, had a fruitful time discussing the arbitration scene in this region, and to share experiences and ideas for developing the industry further. It is heartening to see so many Asian countries coming together for a workshop of this nature, and I believe the increased emphasis on arbitration by Asian governments will have positive benefits all around.
- To conclude, I would like to return to the point I started with. The future of international arbitration in Asia is bright, but we must accept the challenges together with the opportunities. It is my hope that all of us will continue to learn from each other’s experiences and work together to further develop the arbitration industry in this part of the world. On this note, may I wish you all a fruitful and rewarding discussion at the conference.
The arbitration scene in Singapore
(Refer to Paragraph 7)
In a survey of ten of the largest local and offshore law firms in Singapore about international arbitration work in the past three years, it was revealed that:
- International arbitration caseloads have grown by an average of 20% annually
- Total billings of the firms have almost doubled
- Total quantum in dispute of arbitration cases heard has tripled, to more than US $10 billion
- Arbitration departments of law firms have been steadily growing in size, by about 15% annually
 Factors for growth- ICC statistics about arbitration in Asia 2005
(Refer to Paragraph 12)
- Among all Asian countries, Singapore law was most often used as the governing law of contracts in ICC arbitrations
- More Singaporeans sat as arbitrators in ICC arbitrations than any other Asian nationality
- Singapore was the Asian city chosen most often by parties to an ICC arbitration
- When parties did not choose any arbitration venue, Singapore was the Asian city fixed most often as the venue by the ICC Court of Arbitration
 Singapore’s initiatives
(Refer to Paragraph 15)
Minlaw and EDB are setting up an integrated dispute resolution complex for arbitration and other dispute resolution work. The complex is intended not only to provide world-class hearing room facilities, but will also house major international arbitration institutions. The aim is to develop the complex into the premiere international arbitration venue in the region, for both ad-hoc and institutional arbitration cases.
The key features of the complex will include:
- Custom-designed hearing room layouts suited for arbitration work
- Provision of caucus rooms for short breakout sessions and working rooms for legal teams to prepare their cases
- World-class telecommunications and teleconferencing equipment
- Secure document storage facilities
- 24-hour operating hours for users that need to work overnight
- Rest and refreshment areas
- Concierge services for foreign users of hearing rooms
- Co-located international arbitral institutions to provide one-stop arbitration services
Last updated on 25 Nov 2012