INTERNATIONAL ARBITRATION 1/3LY
DESP I TE I T S POPUL ARI T Y IN THE REGION, FROM WHAT I ’ VE SEEN, THE SPACE I S S T ILL DOMINAT ED BY INTERNAT IONAL OR U. S . F IRMS .
D I L U T ING T HE AT T R A C T I ON OF A RB I T R AT I ON
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, fromwhat I’ve seen, the space is still dominated by international or U.S. firms. Have you come acrossmany local Asian law firms – fromcountries such as Korea, China or Indonesia – on the international arbitration scene? MI CHAEL Yes, I’ve come across counsel frommany countries in Asia, which serves to reinforce howdiverse the region is; Asia as a unitary concept – the Asianway of doing business, the Asianway 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 bemade 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 inwestern 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 arbitrationwill 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 fewways of managing costs: one is to have amulti-tiered dispute resolution agreement, requiring negotiation and / or meditation before arbitration; and another way is to have expedited arbitration. Expedited procedures work reallywell for small disputes. In the SIAC rules, we have a provision for expedited arbitration for disputes of up to SGD 5million, for situations where thematter 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 finishwithin sixmonths. This year, I believe we’ve hadmore applications for expedited procedures than any other organization. Wemay also have appointedmore 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 quantumof a dispute? MI CHAEL 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; andmany 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 andmore 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 shapingmodern 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 tomanage costs, and simplify the process for users? MI CHAEL 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 tomanage 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 perhapsmediate, a settlement first, and commercial partiesmostly follow that approach. In years gone by, arbitrationwasmore straightforward because the cases were less complex andmore akin to expert determinations.
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