INTERNATIONAL ARBITRATION 1/3LY
DESPITE ITS POPULARITY IN THE REGION, FROM WHAT I’VE SEEN, THE SPACE IS STILL DOMINATED BY INTERNATIONAL OR U.S. FIRMS.
DILUTING THE ATTRACTION OF ARBITRATION
The caseload of SIAC has increased significantly since I joined: then, there were less than 100 new cases per year; whereas last year, we received 259. We’ve seen phenomenal growth. And, if you look at the ICC statistics, the number one seat for ICC arbitration in Asia is Singapore – another indication of Singapore’s increasing popularity as an arbitration hub. EUGENE Despite its popularity in the region, from what I’ve seen, the space is still dominated by international or U.S. firms. Have you come across many local Asian law firms – from countries such as Korea, China or Indonesia – on the international arbitration scene? MICHAEL Yes, I’ve come across counsel from many countries in Asia, which serves to reinforce how diverse the region is; Asia as a unitary concept – the Asian way of doing business, the Asian way of dispute resolution – is a real misnomer. Asia is extraordinarily diverse: there are common law, civil law and socialist legal systems. Economically, commercially and ethically there is great diversity. Allowances have to be made for these variations. Of course, there are also linguistic and cultural differences. A lack of cultural synergy shouldn’t impede a fair hearing. So, as I mentioned before, cultural sensitivity is terribly important. EUGENE There’s also an interesting dynamic around arbitration being a concept that was developed in western countries; it’s been practiced there for far longer, and it’s not unheard of for practitioners to visit Asia and assume they can dictate how it should be done. But with growth comes diversity, and the globalisation of arbitration will continue to blend differing legal systems and cultural attitudes.
These days, we encounter really complex issues – construction, joint venture, technology and energy disputes – and counsel feel an obligation to address all the relevant matters; which, of course, becomes expensive. Nevertheless, there are a few ways of managing costs: one is to have a multi-tiered dispute resolution agreement, requiring negotiation and / or meditation before arbitration; and another way is to have expedited arbitration. Expedited procedures work really well for small disputes. In the SIAC rules, we have a provision for expedited arbitration for disputes of up to SGD 5 million, for situations where the matter is urgent, or when all parties have agreed to the process. We appoint one sole arbitrator; even if the arbitration clause says three; and the tribunal is obligated to finish within six months. This year, I believe we’ve had more applications for expedited procedures than any other organization. We may also have appointed more emergency arbitrators than any other centre. At the SIAC, we’re really trying to develop facilities that produce the outcomes parties want – by responding to the needs of the profession and users – first and foremost. EUGENE Certain institutions have already begun assigning fees to a specific amount per dispute. Do you think it would be practicable to introduce a tiered approach to the recovery of costs; introducing something similar by attributing recovery to the quantum of a dispute? MICHAEL That’s a good point. Arbitrators have very broad discretion in terms of awarding costs, and they could – and some do – take into consideration the numbers of points raised, and the relative success on each issue. Where counsel appears to have prolonged the arbitration, by virtue of their attitude or matters raised, arbitrators can certainly take this into account; and many good arbitrators already do. Costs are a perennial challenge, and likely to remain so...
EUGENE Another topical and somewhat controversial subject in arbitration circles is the growing cost of arbitration. Clients are commenting that arbitration is expensive, compounded by the length of the process. When arbitration was conceived, some of the original advantages were that it was shorter and more efficient than litigation; and it was also supposed to be less formal. Many of these advantages have been diluted as arbitration’s evolved, and these changes are shaping modern practice. It’s not unusual nowadays for arbitration proceedings to go on for longer than court proceedings; and, accordingly, the costs incurred can be quite significant. Addressing this is important because users are interested in easy and cost efficient methods for resolving disputes – that was the initial attraction of arbitration. What do you think we can do to manage costs, and simplify the process for users? MICHAEL There’s no denying that big arbitrations are expensive, and occasionally (but let me say rarely), the administering bodies are to blame. But, fundamentally, it really is up to counsel to manage the process efficiently: if counsel raises an inordinate number of points, the tribunal has to deal with all of them – it can’t pick and choose – so counsel’s presentation of the case is decisive when it comes to costs. Arbitration should always be a last resort. Parties should try to negotiate, or perhaps mediate, a settlement first, and commercial parties mostly follow that approach. In years gone by, arbitration was more straightforward because the cases were less complex and more akin to expert determinations.
Made with FlippingBook Annual report