Keynote by Mr Han Kok Juan, Deputy Secretary, Ministry of Law, at the Asian Legal Business Cross-Border Dispute Resolution and Arbitration Forum

02 NOV 2017

2 Nov 2017 Posted in Speeches

I am very happy to see so many of you here today at the Asian Legal Business Cross-Border Dispute Resolution and Arbitration Forum.
As in-house counsel, you play a critical role advancing and safeguarding your companies’ legal interest, which includes planning for how disputes, if they were to arise, are to be resolved. Dispute resolution is an important, but often neglected, aspect of commercial transactions and contract negotiations. When the business focus is to seal a partnership, it takes special effort and a determined in-house counsel to anticipate problems that may arise should the relationship go sour later, and to actively plan for dispute resolution to protect the company’s interest under those circumstances.
I understand that you will later have in-depth discussions on practical issues like how to choose a good seat for international arbitration, how to negotiate the arbitration clause in your dispute resolution agreement, and the challenges you can expect in enforcement. Many of you, while based in Singapore, may also cover your companies’ regional transactions. I would thus like to take this opportunity to share my personal views on some of the key regional developments which can help set the context for your discussions later.

Asia
As we all know, the economic centre of gravity of the world is shifting to Asia. As this happens, the centre of gravity for legal activities will follow also. There will be a lag in this shift, because of habits and established practices. Nonetheless, Asia’s magnetic pull on trade and commerce will most certainly have a knock-on effect for legal activities. Asia will be a land of opportunity, not just for companies, but also for law firms, lawyers and in-house counsels.
Take infrastructure as an example. Asia’s rapid urbanisation, development and population growth create an urgent need: US$20 trillion of additional infrastructure investments from now till 2030. These infrastructure projects need financing and project structuring. They will also need legal services to bring the projects into being. The nature of infrastructure projects is such that delays and variations are common. Demand for infrastructure in Asia will translate to demand for dispute resolution services.
The numbers already show this. Between 2014 and 2019, legal services is projected to grow at 3.3 per cent a year globally. Over the same period, legal services in the Asia-Pacific region is expected to grow at 5.5 per cent annually. There is a 2.2 percentage point difference in growth rate. What this means is that while we can continue to do good legal work around the globe, there are simply more opportunities in the Asia-Pacific. And because the 2.2 percentage point difference in growth rate is compounded each year, this “legal opportunity gap” between Asia and the rest of the world is widening with each passing year.

China
One major engine of growth in Asia, alongside Southeast Asia and India, is China. Just as China is today already an economic powerhouse, China will become a powerhouse for international dispute resolution. In 2016, China’s arbitral caseload involving a foreign party was over 1,500. This far exceeded the caseload of any other international arbitral institution. This important statistic is under-reported in international arbitral publications, and China’s current ability is under-appreciated by legal practitioners and companies.
Notwithstanding this, China is far from reaching its full potential. Chinese arbitral institutions are still largely domestic in focus. This is because China’s international caseload, high by global standards, is but a mere 0.7 per cent of the over 200,000 arbitral cases it handles a year.
However, this will change as China’s Belt and Road Initiative (BRI) pushes Chinese arbitral institutions overseas. As more Chinese companies internationalise and worry about disputes that may arise, they will compel Chinese arbitral institutions to beef up their international expertise to handle cases involving foreign parties as well as to go overseas, either by setting up overseas offices or by partnering international institutions. If they can, these Chinese companies will prefer to have their disputes administered by a Chinese arbitral institution and appoint Chinese arbitrators whom they are familiar with. This is no different from any other multi-national corporations who also have their own preferred institutions and arbitrators and whose motivation is to safeguard their own commercial interest. Today, there are over 200 arbitral institutions in China. I am confident that amongst them, at least a few will succeed and emerge major international dispute resolution institutions handling high volumes of cases involving Chinese and foreign parties.
The BRI is a major game-changer. It has the potential to create exciting opportunities for businesses, and to improve the lives of billions. The BRI is bridging civilisations and bringing together governments, businesses and people to realise the vision of a BRI built on mutual trust and benefit.
The BRI covers over 60 countries – 65 to be exact – and many civilisations. As BRI projects involve cross-border, high value and long-term investments, there will inevitably be some political and financing risks, operational challenges and differences in systems and practices. While businesses seek cooperation, they need to also plan for disputes. Agreeing in advance on how disputes will be resolved should they arise can strengthen trust and further cooperation.
The growth of the BRI will thus need to be supported by the parallel development of a dispute resolution mechanism. This mechanism can take different shapes and forms. It is quite natural for countries and companies to desire a framework that maximises their own respective benefits and interests. However, for such a mechanism to truly support the BRI’s growth and advance investment, trade and commerce, it needs to foster trust and further cooperation. In my view, the BRI dispute resolution mechanism should have a few key characteristics.
1. First, the dispute resolution mechanism should have rule of law as its foundation. Disputes should be resolved based on well- established, fair and transparent rules and procedures.
2. Second, the administration of the mechanism should be independent and neutral. It should instil in parties trust that the administration of the agreed rules will be fair and consistent, regardless of who the parties are.
3. Third, the system should be stable. It should give parties the confidence that if and when disputes arise 10, 20 years down the road, the system earlier agreed upon will still apply and remain robust and sustainable.
4. Fourth, it should cover all dispute resolution instruments, including litigation, arbitration or mediation, to cater to the varying needs of business.
Singapore
Singapore supports the BRI and is happy to play our part to contribute to the development of such a mechanism. We also welcome Chinese arbitral institutions to set up offices in Singapore and/or to partner Singapore dispute resolution institutions to offer joint services. This will offer more options for businesses so that they can choose the services that best suit their purposes.
Singapore is today an international business hub. Many multinational corporations use Singapore as a base to serve the Asia-Pacific region, including over 7,000 Indian companies as well as another over 7,000 Chinese companies.
At the same time, Singapore is also a hub for international dispute resolution, as part of a full spectrum of professional services Singapore offers. Going forward, Singapore is committed to further strengthening this, so that we can better serve the legal needs of businesses. We are doing so in four ways.
1. First, Singapore has a trusted legal system that delivers high quality jurisprudence and is neutral and stable. Today, Singapore is one of the top five seats of arbitration in the world, alongside London, Paris, Geneva and Hong Kong. Businesses who plan long- term choose Singapore as the seat of arbitration in their contracts, even those that have no connection whatsoever with Singapore. They know that if and when disputes arise many years later, Singapore will be Singapore: trusted, consistent and reliable in its approach, delivering the same high-quality jurisprudence as it does now, if not better. And more businesses will come to appreciate the trust, neutrality and stability that Singapore offers, as these command an even higher premium in an increasingly uncertain world. What we offer is intrinsically linked to our system of governance. It cannot be created overnight and is not easily replicated.
2. Second, Singapore proactively reviews legislation to make sure that they stay up-to-date and support businesses. For example, we recently amended legislation to allow third party funding in relation to international commercial arbitration. This offers businesses an additional financing and risk management tool, where businesses can finance valid claims, which they might not have otherwise pursued due to financial constraints. This adds to our arbitration regime that is completely open and our pro-arbitration judiciary that reliably upholds parties’ agreement to arbitrate. We have also introduced a new legislative framework to strengthen the enforceability of mediated settlements.
3. Third, Singapore offers a complete suite of dispute resolution services, including international commercial arbitration, mediation and litigation, to meet businesses’ needs. The Singapore International Arbitration Centre (SIAC), Singapore’s flagship arbitral institution, is today the fourth most preferred arbitration institution globally; its caseload last year exceeded that of the London Centre of International Arbitration (LCIA). In particular, SIAC is a popular independent third party institution for businesses whose counter-party cannot agree to a dispute resolution institution from their home country. The Singapore International Mediation Centre (SIMC) offers parties a non-adversarial mode of resolving disputes. Its Arb-Med-Arb Protocol, jointly administered with SIAC, builds on the advantages of mediation while providing it with cross-border enforceability through the New York Convention. The Singapore International Commercial Court (SICC) provides a neutral and high-quality forum for international commercial litigation, even for disputes which have no connection with Singapore and are not governed by Singapore Law. Parties who bring disputes before the SICC enjoy the advantages of a court-based dispute resolution mechanism, as well as SICC’s innovative features, including the joinder of third parties, which may be important in multi-party transnational disputes, the right of appeal and a panel of eminent international jurists.
Fourth, Singapore adopts an open and inclusive approach. We understand that businesses want choice of institution, arbitrator and counsel they are familiar with. We set up Maxwell Chambers, the world’s first integrated dispute resolution complex. We are expanding Maxwell Chambers to meet growing demand for space from international dispute resolution institutions, chambers and law firms. The International Court of Arbitration of the International Chamber of Commerce (ICC) and the Permanent Court of Arbitration (PCA) are setting up their physical offices here. We have also built ourselves as a hub for legal services so that parties can capitalise on the openness and flexibility of our dispute resolution regime to tap on the expertise of the top international and regional law firms based in Singapore.
To conclude, Singapore is pro-trade, pro-commerce and pro-rule of law. These are not just our policy choices or values that we adhere to. They are part of the Singapore DNA, and are core to Singapore’s very existence and survival as a nation. You can thus count on this when you set up your businesses here, or choose Singapore as your seat for dispute resolution. With this as our foundation and a strong base of legal talents and high-quality dispute resolution service providers, Singapore will continue to improve ourselves and develop offerings that provide the best solutions for you and your corporations.
This forum provides a valuable platform for the exchange of ideas and insights and fostering stronger relationships among our legal professionals. I thank the organisers for putting this together and for inviting me to share my views. I wish all of you a meaningful and fruitful conference.
Thank you.

Last updated on 02 Nov 2017