Opening Address by Minister for Law, K Shanmugam, at SIAC Congress 2016

27 MAY 2016

27 May 2016 Posted in Speeches

Mr Lucien Wong, Chairman of SIAC,

Mr Gary Born, President of the SIAC Court,

Mr Thio Shen Yi, President of the Law Society of Singapore,

Toby

Friends,

  1. Good morning and thank you for inviting me here for your second Congress.

    INTRODUCTION – SIAC’S ACHIEVEMENTS

  2. At your first Congress in 2014, we spoke about SIAC’s new record then of international arbitration cases, filed in 2013, reported in 2014 – 259 cases.

  3. In this second congress, I think we can congratulate SIAC again for a new record. Despite the uncertain economic situation in the last couple of years, in 2015, it has had 271 cases. So congratulations, SIAC.

  4. Lucien talked about how SIAC started with 2 cases in the 1990s. But in the past ten years SIAC’s caseload has effectively tripled.

  5. In the past three years, more than 80% of SIAC’s cases were international in nature. And of that, more than 40% of the cases had no connection whatsoever with Singapore.

  6. India, China and other Asian countries were amongst those with the highest number of cases at SIAC.

  7. But at the same time, there was a good share of cases from non-Asian countries – US, Australian parties were all amongst the top ten international parties using SIAC.

  8. In a short period, SIAC has made significant progress. It has built a brand-name and reputation based on trust, neutrality and efficiency.

    FACTORS FOR SUCCESS

  9. A number of factors have contributed to SIAC’s success so far. Success is never taken for granted, it doesn’t stand still. But we can identify what has led us here and what is the way forward.

  10. The story started in this way. In 2008 I assessed the situation and said, look, Asia has everything going for it in terms of trade, economics – there were ups and downs but the secular trend was clearly upwards.
    • China, India, Japan, which was at that time still the second largest economy in the world.
    • And if you looked at the Pacific coast of the US getting more and more integrated with Asia, and of course Korea.
    • And ASEAN. People sometimes forget – China today is the second largest economy in the world, Japan is the third, India is among the top ten economies. ASEAN is right in the middle with over 600 million people and a $2.4 trillion economy that within 4 years will hit $4 trillion. It is actually the seventh largest economy in the world.
    • And you add Australia, with whom we have just signed a strategic partnership, another $1.6 trillion economy.

  11. Looking at the legal system, at the courts, each country has its own way of doing things. Local customs and culture are such that people will find that litigation in the courts somewhat of a challenge, somewhat difficult to understand. Arbitration was a natural solution in that context.

  12. And yet despite the great economic potential and the great need, my sense was that the number of cases in Singapore could be much more than what would then have been. Given our rule of law, my description of Singapore, as really the New York of ASEAN, where you can fly in and fly out, put your money in, safe and easy to walk around, with a great legal system, something that many of you, when you walk into our courts, will find easy to understand – no peculiarities or local customs.

  13. In that context, I said, okay, how do we make it much more international? How do we make sure that this place becomes a great international arbitration centre?

  14. We started with the Board of SIAC. It was very local at that time, we made it more international. I approached Michael Pryles, asked him if he was prepared to come onboard. He helped us, and the SIAC Board became international, with stars from UK, South Korea, China, India coming onboard, together with European arbitrators. So first, we made SIAC international.

  15. Second, we made sure our legal system and framework was arbitration-friendly. A clear philosophy was articulated as to where we stand in the arbitration scene. And our courts became arbitration-friendly, not in the sense that it was completely hands-off – they intervened where necessary – but on the whole they made clear their philosophy that they will support arbitration rather than supplant it. Our legislative philosophy was accepted by the courts.

  16. If I can give you one instance, there was a decision in March 2002 on the interaction between UNCITRAL rules and model law. We felt that it didn’t quite capture the essence of what we wanted and it wasn’t in line with international decisions. So the High Court decided in March, we had the first reading of a bill to reverse the High Court decision in August, and it was passed in October. I think this can only happen in Singapore. And this was after consultation with industry as well.

  17. Likewise, we had conflicting decisions from the High Court as to whether the court can grant an interim order in support of arbitration outside of Singapore. After consultations, within the same year, we changed our legislation to make it clear that the courts had that power. So that can be done – legislative framework and support.

  18. And we amended the provisions of the International Arbitration Act to make sure that it kept pace. As a result, together with Singapore’s well-known strengths, all of that helped in the fairly exciting journey that SIAC has undertaken. And while the government did its part, SIAC did its part, and as a result of the partnership, SIAC today ranks among the top 5 arbitral institutions in the world.

  19. And our lawyers – international as well as local lawyers – have become extremely busy. For a start, one of the rules that we changed was to make clear that our law allow foreign lawyers to practice arbitration here without having to use local counsel if the arbitration has nothing to do with Singapore laws. There was a bit of resistance from our local profession, but they saw, after we talked to them, and the rule was changed. Since then, if you ask any of the local firms that has been involved in arbitration, the work has exploded, has mushroomed.

  20. Crucial to SIAC’s success has been its leadership. Professor Pryles flew the flag for us, led SIAC in the first few years from 2008. And he gave a strong foundation. For his sterling work, recognised by the President of Singapore with a National Award.

  21. In April 2013, SIAC adopted a new management structure with a Board and separately a Court with different functions and focus. Mr Lucien Wong took over as Chair in April 2013, and he and his Board have provided exceptionally good, sound and visionary leadership.

  22. Under Lucien, SIAC continues to develop, improve. It opened first overseas office in Mumbai in 2013 and a second overseas office in Shanghai last year. It is exploring more tie-ups with a number of different countries.

  23. It also formed a Users Council last year which serves as a platform for feedback on SIAC Rules on the whole arbitral process, how it handles cases, and helps SIAC keep up with international trends and opinions.

  24. Meanwhile Professor Pryles was appointed the first Court President and he has laid the foundations for a strong Court. It will continue process of renewal and development of the way SIAC provides its services.

  25. Mr Gary Born took over leadership of the Court from March 2015. We have been very fortunate to have Gary, one of the superstars of international arbitration, to come on board and help us in this journey. And as you can see he has been busy preparing for the new rules and a number of other initiatives.

  26. In the past ten years or so, they have updated the Rules – Emergency Arbitrator and Expedited Procedure, etc. – and today will be the fourth time in ten years that a revised set of rules are being put forward.

  27. The experience, the needs of users are paramount. And their needs are growing more complex.

  28. In a recent survey of American and European corporate counsel and compliance officers (looking at companies with annual revenues of over $250 million):
    • One-third (32%) reported a rise in legal disputes.
    • Slightly over half (57%) reported that volume stayed the same.
    • 11% said that their companies were involved in “bet the farm” litigation in 2015, compared to 8% in 2014.

  29. In a 2014 survey, half the respondents expected the number of international disputes to rise over the next two years.

  30. Companies operate in a fast-paced, complex environment. They need to address issues in several jurisdictions. SIAC will have to meet those needs. The needs are ever evolving and changing, and it has to innovate so that it remains relevant.

    SINGAPORE’S DISPUTE RESOLUTION ECOSYSTEM

  31. From the Government’s perspective, the objective has always been clear. We have done everything we can, we will do everything we can to support Singapore as an international arbitration centre.

  32. People know the steps we have taken:
    • Physical infrastructure
    • Legal framework
    • The support we give in a number of ways

  33. Everyone knows about Maxwell Chambers. To meet increasing demand, we will expand Maxwell Chambers, and triple its current size. That is the kind of demand that it faces. We will also upgrade what it offers to users and tenants.

  34. My Ministry is directly involved – my Permanent Secretary is hands-on on the project. The other agencies are supporting it. And you know that when we say we will get it done, people know that we will get it done – on time and under cost.

  35. We will also continue to ensure the legal framework is supportive. In this context, something that has been raised with us a number of times is whether Singapore is going to do anything about Third Party Funding. What I can say is that we are looking at it, and have been looking at it. We have been getting feedback. I’m not in a position to answer anything today, but we hope to be able to say something later in the year. We will announce our views – there are pros, there are cons – when we are ready.

    CONCLUSION

  36. So if you take a step back, I would say this in conclusion. The medium- and long-term view of Asia and the Pacific, with 40% of the world’s GDP, is as I said earlier – the secular trend is upwards. The various developments, free trade agreements of whatever quality, but which are coming through, will make sure that growth remains.

  37. China’s consumer story has started and will continue. The rest of ASEAN, India, will continue upwards, with greater and greater integration. China alone, in terms of infrastructure, in ASEAN, criss-crossing all the way from Kunming, north-south, through mainland Southeast Asia, west-east, across Vietnam, Cambodia, Thailand – the infrastructure spending alone will be several trillion dollars.

  38. So the growth in infrastructure, the growth in commerce, and growth in travel thanks to low-cost airlines. It costs $200 to travel from Singapore to Bangkok – you can spend two days and come back, so it’s like driving somewhere for a weekend. That’s how travel is transforming. And all of this will be powering a new wave of explosive growth.

  39. Singapore and SIAC are well-positioned to take part in that, provided we are not complacent. Provided we don’t believe that this is a given. We have to compete, we have to work hard, but we can be part of the story.

  40. I wish all of you a fruitful rest of the day. Thank you.

Last updated on 31 May 2016