Speech by Law Minister K Shanmugam at the “Arbitration for Indian Industry” Conference jointly organised by the Singapore International Arbitration Centre and Confederation of Indian Industry

20 Feb 2010 Posted in Speeches

The Honourable Judge of the Bombay High Court, Dr Justice D Y Chandrachud,

The Honourable Judge of the Delhi High Court, Justice A K Sikri,

The Honourable Justice of Appeal for the Supreme Court of Singapore, Justice V K Rajah,
Chairman, Singapore International Arbitration Centre (SIAC), Professor Michael Pryles

Mr Nishith Desai, representing the Confederation of Indian Industry (CII),

Distinguished guests,

Ladies and gentlemen,

1. Good morning and thank you for inviting me to this conference. I hope to sketch out a few key points on our relationship with India and also some factors that I think are relevant in looking at Singapore as a centre for arbitration.

The Importance of International Arbitration

2. International arbitration has experienced remarkable growth in recent years. There is an increased acceptance of arbitration and many of the major international arbitral institutions have reported significant increases in the number of cases handled by them. Much of this growth has taken place in Asia, and that has prompted international arbitral institutions to plan for increased levels of activity in this region.

Singapore – A Key Global Commercial Hub

3. Where does Singapore fit into this picture? We see ourselves as the commercial focal point of South-east Asia, a region with a population of more than 500 million. It lies between two emerging giants, China and India, each with more than a billion people and booming, large, economies. Asia is set to realise its immense economic potential and propel the world economy forward, with India and China leading the pack. In Singapore, we seek to be a key global legal centre and hub for businesses, providing services which would participate in this growth.

Recognising Opportunities in India

4. Let me now focus specifically on our relationship with India. Singapore has welcomed the opportunity to partner in India’s rapidly growing economy and in fact was one of the first countries to recognise the growth trajectory that India was on. Almost 20 years ago, the partnership started with the then Prime Minister, Mr Goh Chok Tong, making a series of visits. And the interactions between our two leaderships, as well as business communities, have had a significant and deep history over the last 20 years; with Singapore establishing businesses, business parks and joint ventures with various Indian companies.

5. We were also the primary movers in ASEAN to engage India at a regional level to promote greater economic co-operation. These efforts have benefited both ASEAN and India and resulted in various initiatives, such as the recently concluded ASEAN-India FTA which was signed in August last year. There are various other projects currently in the pipeline designed to bring about a wide set of economic benefits to both ASEAN and India by stimulating tourism, investment and trade flows, and at the same time deepen India’s strategic linkage to ASEAN.

6. India and Singapore have also signed the Comprehensive Economic Co-operation Agreement (CECA) in 2005. Since then, we have seen bilateral trade and investment volumes reach record levels. Bilateral trade grew at a rate of 20 per cent annually and more than doubled from about S$11.75 billion in 2004 to almost S$30 billion in 2008, and in 2009 there was a slight dip. Singapore is India’s biggest trading partner in ASEAN and its second largest cumulative investor contributing over US$8.1 billion of foreign direct investment from 2000 to 2008. India has been steadily moving up our trade rankings in recent years and is now our 11th largest trading partner.

7. Singapore has emerged as the top destination for overseas investment by Indian companies in FY 08/09, with more than US$5.5 billion invested. Indian companies now account for the second largest overseas group in Singapore with over 3,800 companies registered as at the end of 2008. Indian companies have carried out the ‘Look East’ strategy, which is centred on regional co-operation and encouraging companies to regionalise, with great vision. And Singapore is seen by many Indian companies as a key gateway to East Asia.

Singapore – A Venue of Choice for International Arbitration

8. In this context of Singapore being a key global commercial hub and centre for businesses, we have aimed to position Singapore as the venue of choice for international arbitration. Let me highlight some of the key factors featured in that strategy.

1. Neutrality

9. First and foremost, is the aspect of Singapore’s neutrality. Singapore sees itself as a place with a strong adherence to the Rule of Law; where you can go in and out easily, you can go about your businesses without any interference and both investors from the West as well as businesses from the East will feel completely comfortable. We have an English, common law based system, though much of our law is also derived from Indian law, for example, the Penal Code and the Criminal Procedure Code are copied straight from Indian law. But it is a system where any Indian, English, American or European lawyer would feel completely comfortable with and would know that this is a system that is completely neutral and culturally compatible for everyone. And in the context of the Rule of Law, international organisations have ranked our judiciary very highly. For example, the Global Competitiveness Report 2009 – 2010 issued by the World Economic Forum rated Singapore 19^th out of 133 countries on the subject of judicial independence from political influence, ahead of Japan, France and the United States. The IMD World Competitiveness Yearbook 2009 ranked Singapore second among 57 countries for having a legal and regulatory framework that encourages the competitiveness of enterprises.

2. Legislative Framework

10. Secondly, the legislative framework is also supportive of arbitration. We adopt international best practices. We adopted the UNCITRAL Model Law into our International Arbitration Act several years ago. Singapore is a signatory to the New York Convention and arbitration awards from Singapore are enforceable in over 140 countries all over the world.

11. As the government, we keep a close eye on developments in the arbitration industry. When necessary, we move quickly and amend our legislation in a matter of months to keep up with global changes.

12. I was going to make this point. In a larger country like India, you have different stakeholders, so decision making takes a slightly longer time; say for example to pass into legislation. In a smaller place like Singapore, a city state, once we have taken a view that this is necessary, we can conceptualise, consult the industry, as we did last year. In a matter of three to four months, we can form a view and within another three to four months, that will be passed into an Act of Parliament. And so as a key government philosophy to support arbitration and to make sure that the legislative framework is supportive of arbitration, we have been doing that consistently. So with effect from the start of this year, the Act expressly empowers the Singapore Courts to grant interim orders in aid of international arbitration, irrespective of whether Singapore is the place of arbitration.

3. Judicial Context and Philosophy

13. The third aspect I would like to emphasise is that t he Singapore Courts are extremely supportive in bringing to bear the legislative intent, and have shown consistent emphasis on party autonomy and support of finality of the arbitral award. D esignated arbitration judges have been appointed to facilitate the process and to ensure that any curial judicial assistance is provided efficiently and consistently. So, you have specialist judges who deal with these issues.

14. Recent cases in Singapore’s Courts demonstrate that it would be extremely unlikely to find any exceptional circumstance that allows for arbitral awards to be set aside. In fact, based on reported cases from the Singapore Courts, all applications to enforce awards have been granted, and only one award in Singapore, and that is from a domestic arbitration, has been successfully appealed against.

15. Sometimes lawyers might say, “Oh dear, the Courts will therefore not intervene at all”. But really, if you make a philosophical choice for arbitration, you have decided that you are going to stick with that award, then whether you like it or not, we believe that you should have that choice and it is not for the Courts to intervene; not on the basis of public interest, not on the basis of questions of law, except in a very narrow situation of fraud.

16. And indemnity costs awards are also made against those who attempt to derail the arbitration process with unmeritorious court applications, signalling that our Courts will not tolerate such tactics.

17. Singapore’s Court of Appeal, our highest court, ruled last year and stated emphatically the philosophy last year and I quote: “An unequivocal judicial policy of facilitating and promoting arbitration has firmly taken root in Singapore.” And later in the same judgment, I quote again: “The role of the court is now to support, and not to displace, the arbitral process.” That is the philosophy. The legislative philosophy and the judicial philosophy are totally supportive of arbitration. And the judge who wrote that judgment and set out the principle very clearly is Justice V K Rajah who is here, whom I think will take part later on in the panel. You can hear from him what the judiciary’s views are. But that, I think he will accept, was not always the case. Like in some other jurisdictions, our courts tended to be more liberal about their role in arbitrations some years ago. And we looked at it, and through a series of legislative changes, we made clear what our government’s philosophy was. And, the Courts looked at the letter of the law and they applied it in a black and white manner. Thus, that is now the consistent philosophy across both the institutions of State.

18. And just to see how far Singapore has moved, in 1989, there was a decision (it was circulated all around the world to say why Singapore should not be a place to arbitrate) where our High Court ruled, correctly, on the law as it then stood, that foreign lawyers cannot take part in arbitrations in Singapore. And the person who got that injunction is now the Deputy Chairman of the SIAC sitting here, Mr Sundaresh Menon, considered one of the leading arbitrators in Asia now. Again, today we have moved our legislative system and changed the laws such that anyone from anywhere in the world can come and arbitrate in Singapore without having to use Singapore lawyers. So, you could and frequently have a situation where two sets of law firms from two different jurisdictions appointing arbitrators from all over the world; and the only connection to Singapore is that the seat of the arbitration is in Singapore. If they need the assistance of the Singapore Courts, then they need to get some Singapore lawyers who can appear at the Bar. But other than that, you can envisage a situation where two Indian law firms, for example, resolve a dispute through arbitration in Singapore employing a panel of three Indian arbitrators. Legislatively and philosophically, that is encouraged now.

4. Arbitral Institutions

19. The fourth point that I would make is that any party looking to arbitrate in Singapore can easily engage some of the top arbitral institutions in the world. The American Arbitration Association (AAA), the Permanent Court of Arbitration (PCA), the ICC’s International Court of Arbitration (ICA) and the Arbitration and Mediation Centre (AMC) of the World Intellectual Property Organization have all set up facilities in Singapore. Most recently the International Centre for the Settlement of Investment Dispute (ICSID) has also committed to do so.

20. The SIAC as well, has grown from strength to strength in the past decade. In 2000, it handled 58 cases. By 2009, the SIAC had almost tripled this number to handle 160 cases.

21. In the last one year alone, the growth has been 60 per cent, from 100 to 160, and that is a significant number because it has been in the last two or three years that significant changes were put in. Of the 24 new cases in the last year involved at least one Indian party, which was twice as many as in 2008. Indeed, India was the largest source of cases for SIAC in 2009, after coming in third behind China and Indonesia in 2008.

22. SIAC is strategically placed in the region to offer a neutral service for the dispute resolution of transactions. Unsurprisingly, 45 per cent of the new international case references in 2009 involved cases where parties have no connection with Singapore at all. And we anticipate this to be a rising trend.

23. It is difficult to compare with different centres in Asia because of how their caseloads are calculated. But I think it is fair to say that SIAC has in the last few years emerged as a leading centre, if not the leading centre in Asia in administrating international arbitrations

24. The SIAC constantly reviews its Rules and processes to reflect progressive commercial arbitral practices. It also regularly supplements its Rules with comprehensive Practice Notes, which clarify obscurities, promote transparency and strengthen the parties’ and their arbitrators’ confidence and certainty in the arbitration process. It amended its Code of Ethics in October last year to include an unequivocal undertaking from arbitrators on appointment that they have the capacity to devote sufficient time to the arbitration and that this will continue to be the case throughout the entire proceedings.

25. SIAC also has a scale of fees for arbitrators and administrative charges based on the sum in dispute. These allow parties to predict their maximum liability for the costs involved for the arbitration. Although what you pay for counsel is a different matter.

26. The result of these measures is a streamlined dispute resolution process that promises to resolve cases effectively and efficiently and with predictable and consistent results. On average, a case administered by the SIAC can be heard in Singapore and an award issued from the time of notice of arbitration to the issue of the award within 18 months. Simple cases have been completed in as little as nine months.

27. The SIAC’s track record also includes issuing awards which have subsequently been enforced in Australia, Hong Kong, Indonesia and China, amongst other New York Convention countries. In China, there are five instances in the last three years in which the courts have enforced SIAC awards, including the most recent court decision enforcing an SIAC award in June 2009. Singapore awards are also recognised in India, and this is a factor that makes SIAC competitive versus other arbitral providers in the region.

28. Last year, SIAC became a more international outfit and a new blue-ribboned SIAC Board was appointed, comprising nine leading arbitrators and arbitration counsel. The new Board is chaired by Professor Michael Pryles, who is ranked among the top 20 arbitration specialists in the world and who is a non-Singaporean. I think that one of the strengths that I would put forward for Singapore is that we, because of our size, are able to take the best from around the world and not be nationalistic about it and make sure that the service provider is able to provide the service and the clients or the people who get the service would get the best possible service. Mr Sundaresh Menon, whom I spoke about, and widely regarded as one of Singapore’s and Asia’s foremost lawyers in commercial litigation and arbitration, serves as Deputy Chairman. There are seven other members of whom six are non Singaporeans, including from India. These appointments to SIAC’s Board bring a new depth of international expertise to SIAC and further boost its reputation as a premier international institution.

5. Maxwell Chambers

29. The fifth point that I would like to share with you, is that in January this year, Maxwell Chambers, which is the world’s first integrated dispute resolution centre offering state-of-the-art facilities, was officially opened. It will serve to anchor Singapore’s position as the region’s leading centre for international arbitration. Since last August, Maxwell Chambers has hosted more than 60 hearings. Its tenants include the list of arbitral institutions I had earlier mentioned, including the AAA, PCA, ICC-ICA, AMC and ICSID.

30. Those of us who have conducted trials in court as well as arbitrations in hotel rooms would appreciate the convenience of having state of the art facilities, immediate translation services, transcription services and a courtroom-like atmosphere where there is confidentiality and break out rooms. Maxwell Chambers fulfils all of those objectives. I have suggested to both SIAC and Maxwell Chambers that they might want to do a seminar or a special event focused on Indian lawyers to showcase what Maxwell Chambers offers and some suggestions that they might want to take up. Maxwell Chamber’s primary objective is to create as convenient, as conducive and as attractive an environment as is possible to conduct international arbitration hearings in Singapore.

6. Open Regime for Legal Services

31. Last but not least, we have also adopted an open regime for the practice of arbitration law. Any party, Indian companies included, who arbitrate in Singapore are free to engage lawyers of any nationality and use any governing law. And we have in Singapore available many international law firms; some of whom that practice Singapore law and we also have barristers’ chambers that have set up in Singapore. So a wide array of international expertise is available. And, of course, given the convenience of getting in and out of Singapore, legal expertise can also be brought in from abroad.

Conclusion

32. Let me conclude by saying that a 2008 report by the International Chamber of Commerce – International Court of Arbitration ranked Singapore the top city in Asia for ICC arbitrations and one of the five most popular venues alongside Paris, London, Geneva and Zurich. Significantly, the number of new ICC-ICA cases heard in Singapore nearly doubled from 17 in 2007 to 31 in 2008. Similarly, in 2009, 114 out of 160 (or more than 70 per cent) of SIAC’s cases were international cases. Maxwell Chambers too has seen more than half of their cases involving foreign parties, making these truly international arbitration cases.

33. We hope to make Singapore the ideal neutral venue of choice for arbitration. Events such as these are crucial in bringing about an understanding of what we offer and building up the networks and strengthening the relationships.

34. I would like to commend SIAC and CII, and thank them for putting together today’s programme. I wish the Conference every success. Thank you.

Last updated on 26 Nov 2012