Speech by Permanent Secretary Mr Pang Kin Keong at the “Alternatives to Litigation in a Civil Society” conference in Dublin, Ireland

11 Oct 2011 Posted in Speeches

1. Let me make two quick points about arbitration in Asia, before I speak of developments in Singapore.

2. First, particularly with the rise of India and China, the centre of gravity of global economic activity is gradually shifting to Asia. This is nothing new but conventional thinking by now, but it bears repeating in the context of a discussion on arbitration in Asia. The IMF predicts that within 5 years, Asia’s economy will be 50% larger than it is today, and that by 2030, the region could become the world’s largest economic area. On the investment front, data from UNCTAD shows that foreign direct investments in Asia in 2010 were up 18% from 2009.

3. I mention this because with significant growth in cross border economic activity in Asia, there will clearly be attendant growth in the number of disputes. The increasing understanding in Asia of arbitration will lead to a good proportion of these disputes turning to arbitration.

4. A second trend I would point out is that the number of international arbitration cases handled by Asian arbitration institutions has generally been on the rise in the last few years. Several Asian countries have declared their intention to develop their arbitration capabilities and compete for a share of the global pie. A good number of Asian arbitral institutions have sprung up as a result. But I think more importantly, a few of these institutions are already of world class standards and have the confidence of businesses. From the perspective of business, it makes more sense to arbitrate closer to home when there are such world class institutions available, rather than travel halfway across the globe to the traditional venues.

5. Singapore is one of the countries which has benefited from the rising trend of arbitrating in Asia. In 2010, a Queen Mary/White & Case survey concluded that Singapore “clearly emerges as the most popular Asian seat”. In terms of popularity with corporations across the globe, Singapore tied for third place with Paris and Tokyo, behind London and Geneva.

6. Let me cite also the international cases handled by the Singapore International Arbitration Centre, or SIAC, as a proxy to view the development of Singapore as an arbitration venue. The number of international cases administered by SIAC saw a sharp rise starting in 2008. In the next two years, this number grew on average by about 40% annually, to reach 140 in 2010. I am given to understand that SIAC is on track to achieving another good year.

7. Relative to others, in the same 2010 White and Case survey, SIAC ranked fourth globally in terms of choice of arbitral institution (after ICC, LCIA and AAA-ICDR).

8. Taking another proxy: 120 arbitration cases were heard in Singapore’s Maxwell Chambers in 2010, one year after it opened its doors. Maxwell is an integrated centre in Singapore dedicated to providing one-stop facilities and services for the conduct of ADR activities. Just to mention, of the 120 cases heard in Maxwell last year, more than half were not SIAC cases. It goes to show that there are more arbitration cases being heard in Singapore, than the figures for SIAC and Maxwell show.

9. Feedback and reviews suggest that the most important reasons why parties to arbitration chose Singapore are neutrality; convenience; and confidence in Singapore’s legal and judicial system.

10. Neutrality for parties to arbitration includes political and cultural neutrality. Let me elaborate this. Politically, Singapore is not seen as aligned to either the West or the East, but as having maintained a neutral, balanced posture in its international relations. To some parties, this is an important consideration. Culturally, Singaporeans and Singapore society straddle the space between West and East. This, plus Singapore’s multi-racial, multi-lingual and cosmopolitan environment provide foreigners – whether Asians or non-Asians alike – an easy and comfortable familiarity when operating in Singapore. I think this is also an advantage when it comes to crossing language and cultural divides that often exist between Asian and non-Asian parties, whether in conflict resolution or business.

11. As for the factor of convenience, it encompasses all the usual considerations of physical proximity, flight connections, efficiency of infrastructure like transport, hotels, and tele-communications, safety and security, etc.

12. Last but certainly not least, the feedback we received from parties in arbitration also emphasised the importance of the overarching legal and judicial system under which arbitration takes place. In this regard, they are comfortable that the Singapore judiciary is supportive of arbitration. The judiciary has shown in several cases that its view of its own role is to support, and not displace, the arbitral process. As for Singapore’s legislative framework, the Government monitors closely international developments and solicits constant feedback from stakeholders, to ensure that our laws remain up-to-date and provide the best framework possible for arbitration. In fact, another review of our International Arbitration Act will take place very soon.

13. Singapore’s experience and circumstances are unique because every country is unique, but I think the criteria critical to establishing a good arbitration venue are applicable to many jurisdictions. To try to sum up in a nutshell, it is essentially about providing an overall environment in which parties can arbitrate efficiently, arbitrate in confidence, and with a high degree of predictability about how things will work.

14. One last point on Singapore’s policy approach to arbitration. We are not wedded to anchoring arbitration in Singapore through the Singapore International Arbitration Centre. It is our flagship, so we would naturally want it to do well, but we are above all interested in offering Singapore as a venue for arbitration, regardless of whether it is administered by SIAC or a non-Singapore institution. In fact, the Singapore Government has gone out to encourage international arbitral institutions to open physical and even virtual offices in Singapore. So, AAA, PCA, ICC- ICA, the World Intellectual Property Organization’s Arbitration and Mediation Centre, and ICSID have associated themselves one way or another with Singapore’s Maxwell Chambers.

15. We are also cognisant of the fact that to succeed as an arbitration venue, we have to offer a good breadth and depth of legal and arbitration capabilities. The Singapore Government has therefore adopted a completely open and easy regime for the practice of arbitration by foreign arbitrators and counsel, and we have attracted a significant number of arbitration practitioners and practices to base themselves and their offices in Singapore. More generally in the legal sector, we have been pursuing an approach of measured and deliberate liberalisation, to ensure that MNCs in Singapore have access to a wide range of quality legal services. We are making further moves in the coming year to further liberalise Singapore’s legal market.

16. Thank you.

Last updated on 25 Nov 2012