Welcome Address by Minister for Culture, Community and Youth, and Second Minister for Law Edwin Tong SC, at the 25th Annual IBA Arbitration Day

23 FEB 2024

Good morning, everyone.

Conference Co-Chairs – Ms Chiann Bao, Dr Xavier Favre-Bulle, and Ms Valeria Galíndez

Organising Committee Chair – my friend and former adversary at the Bar, Ms Koh Swee Yen SC

Friends, colleagues, distinguished guests, ladies and gentlemen

Introduction

  1. Good morning to everyone.
  1. It was such a nice video that was put together on the history of IBA Arbitration Day. As we reminisced and saw the various Conference Chairs of the IBA Arbitration Day in different years and different cities, some of which I was present at, it brought back a lot of memories. It is really a reflection and a statement of how far arbitration has come.
  1. As Mr David Rivkin said in the video, how you started wanting to make arbitration more international, and I think you have succeeded tremendously. You just have to look around the room today to see that arbitration is very much top of mind and also very international.
  1. We are very honoured that IBA has chosen to hold its 25th Annual IBA Arbitration Day in Singapore. It is a milestone occasion, a silver anniversary, and one that we are very privileged to host.
  1. We also would also like to extend our appreciation to the IBA Arbitration Committee for your continuous support, and Swee Yen and the team, for the not-slight task of putting this together.

Prevalence of Arbitration Today

  1. The strong turn-out today demonstrates the continued importance of arbitration as a means of resolving international disputes.
  1. Arbitration remains very much the preferred mechanism. Earlier, Swee Yen cited the Queen Mary study. The Survey mentioned that an overwhelming 90% of the respondents continue to indicate a preference for resolving their disputes through arbitration either on a standalone basis, which about a third of the respondents preferred, or in combination with other ADR mechanisms, which close to two-thirds of the respondents preferred.
  1. If you look at the number of new cases filed with leading arbitral institutions – ICC, SIAC and LCIA – they show a generally stable, if not an upward, trend. In particular, in Asia, a number of new institutions have opened up – in Saudi Arabia about 10 years ago, Brunei and Mumbai in 2016, Uzbekistan and Kazakhstan in 2018, New Delhi in 2019, and Abu Dhabi in 2024. I think you begin to see how arbitration still remains very much top of mind.

IBA Arbitration Day 2024

  1. With so many countries looking at developing arbitration, it is useful to have a platform like this today, with practitioners, business leaders, government officials and many thought leaders coming together.
  1. I took a look at the programme to see what will be discussed.

(a) There are very many pertinent topics – many new ones, including mediation, and perhaps some not-so-new ones, like investor-treaty arbitrations.

(b) But there are also very perennial, old chestnuts, some time-honoured ones, which I remember studying in school. Consent in arbitration – one of the most basic, fundamental ingredients of an arbitration. Parties’ consent still remains very much top of mind. Also costs and time – these are all very much time-honoured issues in arbitration.

  1. With the evolution of time, with new issues coming to the fold, with different perspectives that we take, with technology infused into the way we do business, as we transact across borders, this shows how complicated and complex arbitration can be.
  1. So let me look at the topic that I have been asked to speak about. Xavier said earlier: “Where we are, and where we are going”. I thought it would be useful for me to briefly sketch out Singapore’s experience in developing arbitration and dispute resolution as a whole, to understand the challenges we face in arbitration today, looking a little bit forward to see what are the issues that appear on the horizon, and as we scan the horizon, what are some of the opportunities we might see.

Singapore’s Development as an International Dispute Resolution Hub

  1. Singapore’s journey to develop itself into an international arbitration hub began more than three decades ago. It was very much driven by the Government, coming together, understanding that Singapore, because of our unique position geographically, our use of English as a commercial language, our rule of law and our use of English law as the legal system, our legal system is one that sought to support businesses.
  1. You can either operate in Singapore, from Singapore, or through Singapore – it does not matter. We wanted a system that would allow you to fairly, in a very transparent, neutral way, resolve your disputes.
  1. To us it also made sense, because amongst some of Singapore’s most important business propositions would be:

(a) Our laws and our policies, to encourage businesses to operate in this environment, a very pro-business environment.

(b) Our trusted legal system, with a strong reputation for good governance, low corruption, efficiency, and rule of law.

(c) And of course, as I mentioned earlier, our prime geographical location, something that we are blessed with. A little red dot, as Swee Yen puts it, but at the crossroads of ASEAN, and also a connection between the East and the West.

  1. For these same reasons, we subsequently expanded our ambition, to include other forms of dispute resolution, e.g. mediation. We were behind the Convention on Mediation some years ago, pre-COVID if you recall in 2019. We looked at developing intellectual property (IP) as well, and also, restructuring.
  1. Through these approaches, we have SIAC, which you know. We have SIMC, which focuses on international mediation, and SICC, which focuses on litigation, but in the international commercial courts.
  1. We had a few guiding principles.
  1. First, we were keen, very much married to the idea that this has to be a very open regime. Right from the start, we knew that for this to be a successful international hub, we had to have the best people in the world wanting to come here, wanting to operate out of the system here, and wanting to use the system here. The best people talent in Singapore, giving people choices of who to use.
  1. So, we liberalised our regime.

(a) We allowed foreign lawyers to participate in Singapore-seated arbitrations, even if they might be governed by Singapore law. We made it easier for practitioners to practise arbitration in Singapore. We did not require a licensing regime – and we still do not – if they wanted to practise arbitration in Singapore. We also made it easier for non-resident arbitrators to conduct their arbitration hearings right here in Singapore, by exempting them from having to apply for what we typically call ‘work passes’ for foreign workers.

(b) We also sought to make our institutions truly international. We have top arbitration practitioners sitting on the Boards of our institutions. For example, we have been privileged to have luminaries like Lucy Reed as President of the SIAC Court of Arbitration, who succeeded Gary Born. We invite foreign arbitrators, mediators and judges to come onto SIAC’s, SIMC’s and SICC’s panels. The majority of their panel members are our colleagues from overseas. Each of these institutions might bear the Singapore name, but we want the best of the world’s talent to be part of these institutions.

(c) We also invite leading international arbitral institutions, which might sometimes be seen as SIAC’s direct competitors – ICC, PCA, AAA-ICDR, and WIPO AMC, for example, to be located right here in Singapore. They all have spaces in Maxwell.

(d) We designed Maxwell as a first-class hearing facility, and also a place where thought leadership can gather. So all of these institutions have a space at Maxwell. We found – at least while I was in practise, I found, just wandering around the hallways of Maxwell Chambers to be useful. You would bump into someone, you would share a coffee, and find that you get to collaborate. ICC would work with SIAC, who would in turn work with AAA, WIPO. INSOL is here as well. So the different thought leaders in different institutions located in one physical space.

  1. Second, we regularly update our legislation to meet our primary goal, which is that this system has to work for the business community. It has to be fit for purpose, it has got to evolve, and it has got to align very much with the current modalities of doing business.

(a) We introduced International Arbitration Act (IAA) in 1994, and it commenced in 1995. Over the last 28, 29 years or so, we made 11 amendments to the legislation, of which 5 were very major amendments.

(b) The most recent amendment was in 2023, to introduce a conditional fee agreement (CFA) framework for both the international as well as domestic arbitration proceedings.

(c) We are now looking at the next round of revisions to the IAA, to take into account current practices from around the world, changes in systems from around the world, learnings from different jurisprudence emerging from leading jurisdictions.

  1. Third, we are also looking at strongly developing and advancing our thought leadership. Earlier on, Swee Yen spoke about some leading cases. Anupam is one of the other examples. The jurisprudence of Singapore courts is widely discussed by arbitration practitioners, and has influenced the development of arbitration jurisprudence.
  1. As a consequence, we do see more and more parties using Singapore. Not just using Singapore as the arbitration seat, using Singapore as the curial law, but increasingly using Singapore law as the governing law for contracts as well.
  1. We have seen positive experiences in SIAC. We have seen disputes of up to about US$2.5 billion in value. SIMC famously resolved a US$1 billion dispute in 3.5 days.
  1. We want to continue to attract these cases, such quality cases, into Singapore. So all of these steps that we had taken, plus a few more, plus what was a secret ingredient for us also was a very stable socio-political climate, a very pro-business outlook environment. All that helped us in the last 30, 35 years or so.

Key Issues Facing Arbitration

  1. As we evolve and as we look at newer challenges, the operating environment has changed. Not just because of COVID, but I think COVID accelerated it.
  1. In the recent few years, COVID-19 (one of the major black swan events), the current geopolitical tensions, trade wars, protectionism, people looking inward, being less multilateral in outlook and being more friend-shoring or reshoring in their business approach; all that has significantly impacted economic activities. These, in turn, have impacted international arbitration, with new challenges and trends emerging.
  1. So what I thought I would do for the next couple of minutes is to share observations on three such trends that I expect to see in international arbitration, and I will walk you through each of them.

I. ESG-related claims

  1. First, on ESG-related claims. ESG was first mentioned in the mainstream context in a 2004 United Nations report titled ‘Who Cares Wins’, a play on a movie. The report encouraged businesses to integrate ESG factors into capital allocation, as well as portfolio management.
  1. Since then, ESG has become quite common vernacular in business, particularly on regulatory issues. ESG obligations are now increasingly enshrined in contracts, corporate policies, and even in pieces of legislation.
  1. The European Union’s Corporate Sustainability Reporting Directive (“CSRD”) will see EU companies having to publicly disclose information on how their business activities affect the planet and people, and how their ESG measures and risks conversely affect their business. Compliance will be mandated on an increasing scale from FY2024 in several gradated steps, right through to FY2028, with the first reports due to be released in 2025 – very much on the horizon.
  1. One outcome of this that we can likely expect will be a rise in the potential liability risks of greenwashing, as the CSRD lifts the veil on disclosure. So for the first time, we now look behind and lift the veil on disclosure in the ways that I have mentioned.
  1. We have already seen greenwashing form the basis of quite a number of lawsuits in Germany, but with this new development, we might expect to see actions commenced against EU companies (including EU subsidiaries of non-EU companies as well) across the world, particularly in the retail and consumer sectors.
  1. We might also expect to see a rise in energy arbitrations in the years to come. Many countries, including Singapore, have committed to achieving net zero emissions by 2050. At COP28 last year, more than 100 countries pledged to triple renewable energy capacity by 2030. That’s just a mere 6 years away.
  1. Pledging is one thing, but implementation will come at a cost, not without bumps on the road. As we look to renewable energy to replace the age of fossil fuel power for instance, we will almost certainly see disputes arising out of licensing issues, supply chains, and early teething issues as corporations make the transition.
  1. Europe is expected to see the highest volume of energy disputes followed by Asia, the Middle East and Africa in the future. Asia-Pacific, in particular, has historically been heavily dependent on coal. There has been a rise in investments in alternative renewable energy sources in the region. The Asian Development Bank estimates that renewable energy manufacturing in Southeast Asia alone has the ability to generate US$90 billion to US$100 billion in sustainable revenue by 2030.
  1. The Queen Mary University of London, in partnership with Pinsent Masons, conducted an empirical study on energy arbitration in 2022.

(a) Respondents expect the volume of disputes as a result of cost volatility of raw materials, supply chain issues, energy transitions to cleaner source of energy and changes to regulatory frameworks, to contribute as main drivers to the rise in energy arbitrations.

(b) These, amongst others, are delicate issues that can take a complete turn overnight. The survey was released in 2022, which means it was the middle of the COVID-19 pandemic, probably done in 2020 or 2021, before the onset of the Russia-Ukraine troubles. And you can see how dramatically a conflict like that, erupting overnight, can have an impact on supply-chain issues, global trade issues, and as I said earlier, protectionist measures being implemented in trade. So we expect to see a rise in this area of cases as we scan the horizon.

II. AI, cybersecurity and data privacy threats

  1. Another area is in AI, cybersecurity and data privacy threats. These are all increasingly burgeoning areas, growing areas. Each economy, each jurisdiction, many governments have had to grapple with them.
  1. The impact I feel in arbitration will be felt in two aspects – in areas where we will see disputes, and the direct impact and challenge to the practice.
  1. AI itself is generating curiosity about its potential. I understand this was a topic of discussion at the APAG event yesterday evening.
  1. It goes without saying that as we see the advent of AI. AI was not really even talked about in the context of technology some 3 or 4 years ago. But today, you have seen different large language models, reinventing itself, evolving very quickly.
  1. It does go without saying that in the context of arbitration, in the legal industry, the Ministry is thinking about how we can, if we should – and if so, how – to regulate the use of AI in the legal industry.
  1. We have all heard about the two lawyers in New York who used ChatGPT, and delivered a number of fictious, non-existent cases as authorities to the court to support their positions. To prevent similar cases of AI ‘hallucination’, what we need to do is study the landscape in greater detail. We have got to evolve with the times, and my Ministry will be looking at this carefully.
  1. We launched a national AI strategy some months ago. A 2.0 for us in Singapore, but to look at the different aspects of AI – from the production side, meaning the development of AI, the evolution of large language models, to their enforcement and regulatory framework for the use of AI.
  1. But in the meantime, even as we look at dealing with all these issues on the horizon, I think we can, even now, immediately deploy AI as a tool where practicable to use, for example to save time and costs on backend work, for example, in e-discovery.
  1. When I first started practise some 30 years ago, we were literally on our knees on the floor sorting documents, understanding them, looking through them, categorising them, making a list of documents, all of that. I think most of us as junior lawyers spent a majority of our time on this. AI can play a big role in saving time, saving costs, being a bit more accurate, and also helping legal firms in practice management as well.
  1. In fact, some arbitral tribunals are either already using or are considering using AI for case management purposes. Not yet quite the same scale as using it to decide cases, but to help them manage cases. For future uses, conversations are being had about AI tools playing a role in arbitrator selection, and even in the drafting of awards.
  1. The challenges of these applications, as I said earlier, can arise from ‘hallucination’. But they also include the risks that are emerging, as we use more and more AI infused into our work. There is the a question of bias, if incomplete information is fed to the AI tools – if the learning modules are not complete, not fair, not objective, what happens to the decision? What are some of the due process issues, if arbitrators entrust their decision-making to AI? How do we look at compromising the integrity of the proceedings or evidence? How do you catch convincing AI-fabricated evidence? That is a new challenge for arbitral tribunals and courts alike, if that is not already the case.
  1. So the second issue that we see very much on the horizon for us in Singapore and also I think in Asia, is the growth and advent of AI and cybersecurity.

III. The Iron Triangle – Time, Cost, Quality

  1. I have talked about ESG, and talked about AI. My third issue is something that I called ‘time-honoured’ earlier, i.e. the time-cost-quality Iron Triangle.
  1. I have borrowed this phrase from the construction industry. When I was in practice, we called it “cheap, good and fast”. You can only ever have two out of the three. If it is cheap and good, it cannot be fast. If it is good and fast, it cannot be cheap. So that is the conundrum.
  1. This Iron Triangle is a concept in project management. In an ideal world, we want arbitrators who are all three – cheap, good, fast, and maybe even friendly and nice.
  1. But when you look at this triangle, international arbitration was originally developed as a quicker and more cost-efficient alternative to the courts. It started off in this way in Singapore too. When we started in the late ‘80s and early ‘90s, we were facing a judiciary system which was very much backlogged. It was not automated, cases were still slower, it took a couple of years to get to a trial.
  1. So when arbitration first stated, the immediate benefits of having a case that could be resolved in a matter of months or a year was a huge advantage. Cost was also significantly cheaper, because it was much faster.
  1. But this proposition is increasingly challenged. The Singapore International Dispute Resolution Academy (SIDRA) conducted a survey in 2022. One of the insights gained from the survey was on the difference between factor importance and satisfaction. You can clearly see from the chart on the screen, where speed and cost sit on the satisfaction scale. If I were to hazard a guess, part of the reason can be attributed to the landscape of arbitrators and arbitration counsel, and how it plays into the Iron Triangle.
  1. When arbitration first started to gain traction, it was a relatively new space for arbitrators and counsel alike. If we think back to the days when IBA Arbitration Day first started, 25 editions ago, the early days of arbitration ‘levelled’ the playing field in a way, and individuals were able to move along, progress their cases, and build up the entire arbitration ecosystem.
  1. Now, many years down the road – more than 60 years since the New York Convention, arbitration has become much more sophisticated. Both arbitrators and counsel alike have become highly sought-after specialists in their own right, with some having a long waiting list of clients or parties wanting to appoint them. If we look at the Iron Triangle, it does then mean that one of the legs of this triangle will have to be compromised. More often than not, that is speed.
  1. That has been common feedback that I hear, as we go around today, when we take soundings from the industry, and we often do, both from local as well as from foreign lawyers in Singapore.
  1. Since I joined the government in 2018, I have also made a number of visits in my Law Ministry capacity to China, India, Japan, Uzbekistan, Kazakhstan, Myanmar, France, the UK, to understand the different ecosystems and see practice there. I ask often about the evolution, development, and feedback on arbitration. By and large, the common consensus was that they were quite dismayed by how lengthy and costly international arbitration has become. That might perhaps be truer for some countries more than others. So I do think that this is an issue that we do need to grapple with.
  1. I do see that some of the topics today deal with costs in arbitration, with speed and selection of arbitrators, and also the process of arbitration, and I do think that is something we have to face. In Singapore, for us, one of the issues we constantly look at is how we can improve the process.

Singapore’s Path Forward

  1. Looking forward, let me give you a broad sense of what we are thinking of.
  1. First, on the issue of time and cost, SIAC has proposed a number of changes in the Draft 7th Edition of the SIAC Rules aimed at addressing these concerns. We took feedback, we discussed it with SIAC. We wanted to understand the practitioners’ views, and much of this is now coalesced into this draft 7th Edition.
  1. Some of these new rules that SIAC proposed include:

(a) A new preliminary determination provision, where parties may seek a preliminary determination, and the tribunal has to make a determination within 45 days.

(b) A new streamlined procedure as an even faster alternative to expedited procedure, to allow parties to have disputes below S$1 million in value resolved within a shorter period of 3 months.

(c) An expansion of expedited procedure to include disputes of up to S$10 million. This is up from S$6 million presently to allow more cases to benefit from the expedited procedure.

(d) Rules to cut short certain time limits in the conduct and process of emergency arbitrations.

  1. All of these is done with the desire and hope to raise the efficiency bar and to shorten the amount of time that will be needed, particularly for critical issues, such as preliminary determinations, sometimes on jurisdictional issues, and also on emergency cases where time is indeed a concern.
  1. We are also looking at leveraging technology, to enhance the user experience and efficiency.

(a) SIAC has announced that it has partnered with Opus 2 to launch its own in-house digital case management platform. This will be called the SIAC Gateway, and it will offer users a centralised platform for online filing, as well as to facilitate communication. It will be a powerful AI-driven technology platform for practice and case management.

(b) Maxwell Chambers, which I spoke about earlier, has also equipped its hearing rooms to accommodate virtual and hybrid hearings, which of course gained popularity and traction after COVID-19, and will also be renovating more rooms to make them hybrid hearing-ready.

(c) If you attended the Maxwell Chambers Open House yesterday, you will know that they have also introduced drone services. Not to deliver messages or food, which some people asked me about, but to allow parties to view relevant objects or locations, that would otherwise be challenging to produce or access in-person, when presenting evidence.

  1. In addition, to support the increasing number of disputes in new emerging areas and industries, such as those that I mentioned in ESG and technology or AI, our institutions have been proactively expanding its pool of arbitrators and mediators, who have that specific knowledge, background, experience and expertise in these areas. For instance, the Intellectual Property Office of Singapore (IPOS) has published a list of technical experts looking at IP in the context of registration and filing, but also increasingly in the space of intangible assets.
  1. As you know, a significant proportion of S&P companies have about 85% to 90% of their assets, no longer in brick and mortar, but in intangible assets. There will be increasingly more disputes on how you value intangible assets, how you trade intangible assets, and the value that might be ascribed as you do, say for example, a charge or mortgage on such assets. So all of that will need the use of technical experts.
  1. These are some examples of what Singapore has done and will be doing.

Opportunities

  1. Finally as I conclude, let me just share some reasons why I feel that with these challenges in the landscape, with the challenges that arbitration does face, which we will have to overcome, there are nonetheless significant opportunities in arbitration, in particular, in this part of the world, in Asia.
  1. Earlier on, Swee Yen spoke about ASEAN. ASEAN is a diverse region, probably the most diverse in the world. But it has a really young population. 65% of its approximately 650 million population are under the age of 35. It has got the fastest growing number of new affluents. It has got the most number of infrastructure projects per capita – in roads, in energy, in trains, in rail, in transport, in many parts of ASEAN. As you heard, it is also becoming soon, the 4th largest economy. So there is tremendous headroom for growth in ASEAN.
  1. Asia, in part, is also now the largest contributor to global foreign direct investments (“FDIs”) both for inflows as well as outflows. So incoming into Asia, as well as Asian investors’ outflow out of Asia. It has become one of the leading regions. Imports and exports have also been on the rise in Asia. This itself then means that the number of cross-border disputes and the number of international arbitrations involving Asian parties will be significant.
  1. In fact, there is an increasing proportion of Asian parties in cases administered by leading international arbitral institutions, such as ICC, SIAC, HKIAC, and LCIA. LCIA, for example, reported that the proportion of Asian parties jumped from 8% in 2021 to 24% in 2022. On that trajectory, it is looking likely that we will see more Asian parties involved, at least in LCIA cases.
  1. There are also opportunities for more disputes in the new, emerging areas. Beyond what I mentioned earlier, if you take Norton Rose Fulbright’s 2024 Annual Litigation Trends Survey published just last month, they noted that one in 10 respondents experienced ESG-related disputes last year, compared to just one in 50 in 2022. So it makes the point that I made earlier about the rise and growth of ESG, and when new regulations such as what is going to happen in the EU come downstream in the next 5 years or so, you can expect that number to grow significantly. The survey by Norton Rose also found that 40% of organisations saw their cybersecurity dispute exposure grow in 2023.
  1. These respondents, those that were part of the survey, were based in US and Canada, but we believe the trends to be similar in Asia. In fact, the numbers might even be higher, as many of these emerging industries have headquarters or significant operations in Asia. For instance, Asia accounts for the lion’s share of AI innovation and adoption, cryptocurrency ownership, e-commerce payment platforms, EV manufacturing and so on.

Conclusion

  1. So those were my observations in the limited time I have to look at where we were and where we are going.
  1. As I conclude, I want to say that I am very grateful for the many international parties and thought leaders who are present here – supportive of Singapore, practising in Singapore, using Singapore as a neutral, third-party venue.
  1. We constantly work with each of you. Some of you visit Singapore, but I know that many of you practise as foreign lawyers in Singapore along with our local Bar. We rely on you for feedback tremendously, because it is only when we get that sense from you on the ground – what are evolving business trends, what are your clients gearing towards, how do you see the industry, and consequently, how do we adjust and tailor our arbitration framework in Singapore – it is only with that interaction that we constantly engage in that we will be able to make Singapore a much better jurisdiction for parties.
  1. On that note, I end off with a bit of a plug. I want to extend a warm invitation to all of you to attend the Singapore Convention Week. If you enjoyed the food in Singapore, please come back again. Convention Week happens this year from 26 to 30 August. Of course it started off as a Convention on Mediation week, but each year, we look at the Convention Week as a way to gather thought leaders in the various dispute resolution forms in Singapore for exchange of information, and also to build networks and make friends.
  1. Post-pandemic, one of the things I realised that we missed a lot of was to do things in person. You can do it by Zoom, you can learn a lot by Zoom, but you cannot make a new friend across Zoom as easily as you might in person, over coffee or over a nice meal.
  1. So I welcome you warmly once again to Singapore. I hope you have a great time, not just in exchanging information and thought leadership, but also in building networks and friends. I hope to see you in Singapore again shortly.
  1. Thank you very much.

Last updated on 23 February 2024