INTERNATIONAL ARBITRATION 1/3LY
IN CONVERSATION WITH MICHAEL HWANG 33
S APNA This illustrates how important it is to have the support of the government of a state when seeking to establish new centres for dispute resolution.
S APNA Howdo you see arbitration developing in the next ten to fifteen years? Do you think we are seeing a change in trends nowwith regard to practice and procedure? MI CHAEL I would like to seemore civil law firms becoming active in international arbitration, asmany of them already have experience in arbitration. When involved in international arbitration, civil law firms accept that they have to play the game by common law rules; they tend to argue in away that matches their common law opponents and the arbitration is often conducted in English. I believe that some civil law firms could develop a significant presence in the international arbitration space. For example, I think theremay be greater involvement of civil law firms in international arbitration in the Koreanmarket. The Korean Commercial Arbitration Bar is very strong in knowledge and ability and they are generally quite strong in English. Dr. Jöerg Risse recently outlined ten drastic proposals which address ways inwhich to reduce the time and cost of arbitral proceedings; many of these ideas are verymuch in line with civil lawpractices. For example, having no witness statements at all, and instead interrogation of witnesses by the tribunal. S APNA In Dubai local court proceedings there are actually no witnesses at all, they just rely onwritten submissions and documents. Under exceptional circumstances you can request witness evidence. However, I amnot too sure how the court would in fact deal withwitnesses. MI CHAEL I have worked on arbitration cases in China with CIETACwhere there were no witnesses. A claim is submittedwith some supporting documents and the lawyers turn up and argue the case without witnesses. The case is decided on counsel’s arguments and the discussionwill essentially be based on the papers. CIETAC are fixated on delivering their awards within sixmonths, so there is always pressure to prepare the draft awardwithin the prescribed period because extensions of time are difficult to obtain. However, CIETAC is becomingmuchmore flexible. The challenge in the past was that the CIETAC Rules required the presiding arbitrator to be Chinese. In turn, presiding arbitrators tended to be trained in a traditional Chinese way andwere not, therefore, very interested in oral witness testimony. They have now pledged to bemore flexible in international cases. S APNA One last question on regional developments, do you have any views onwhether there will bemore investment arbitrations in Asia in the next ten to twenty years?
MI CHAEL Are you askingme to predict howmany Asian governments are going to be considered to be ignoring investors’ rights? Froman outsider’s perspective, and from speaking to some of the players in themarket, there are a few investor-state cases going around at themoment which, interestingly, many of the local Singaporean firms are pitching for. Themarket can only grow, since at themoment there are a relatively lownumber of investment arbitrations against Asian governments. REMEDY ING T HE C OS T I S SUE : F I X ING F EE - S C A L E S A ND L IMI T ING D I S C O V ERY S APNA I am increasingly hearing complaints by users that arbitration procedures have become too protracted and, subsequently, too expensive. LordMustill once said that it is surmised that the dinosaur became extinct because it got too large – it would be a shame if arbitrationwent the same way! What are your views on these shifts in the way arbitrations are being carried out and their relative cost? MI CHAEL On the issue of costs, I always feel that people are not asking the correct questions. The ICC carried out a survey a fewyears ago which showed that 18% of the costs incurred by their users were spent on the ICC’s administrative fees and the arbitrators. The remaining 82%was spent on legal fees and expert costs. For me, the issue clearly lies in the negotiation of fees between the clients and their lawyers. Clients need to be asking themselves: if my firmwere to fight my case in a national court, would it be cheaper? Theremay be some room for the international arbitration community to influence client-lawyer costs, by setting a scale for fees based on the total value of the claims in the arbitration. I have started to float this idea amongst colleagues: in the same way that institutions like the ICC and SIAC fix a scale for arbitrators’ fees, why not fix a scale for recoverable (i.e. party and party) counsel’s fees in terms of what is deemed to be a reasonable amount? If we are able to estimate a fee scale for arbitrators based on the number of hours that we think would be reasonable for them to work on a case given its value, then theoreticallywe should be able to estimate a similar scale of fees for counsel. I imagine that counsel’s fees would be higher than arbitrators’ fees; however, it would not be beyond the
PRED I C T I ONS F OR A RB I T R AT I ON IN A S I A : T HE C OMP E T I T I V E A DVA N TA GE OF S ING A P ORE S APNA Looking forward, what are your predictions for how the Singapore legal market will develop? MI CHAEL Based onwhat I have seen, the Singapore legal profession, which includes both domestic and foreign lawyers, ismaking significant inroads into the handling of arbitration cases in Asia. When I first started hearing SIAC and ICC cases in Singapore, typically counsel would be fromoverseas, with hardly any involvement of Singaporean firms. Evenwhen there was a change in lawwhichmade it compulsory for there to be the involvement of a Singaporean firm in Singapore law cases, the involvement of Singaporean firms remained low. I have seen a case governed by Singapore lawwhichwas argued entirely by foreign lawyers on both sides, with the Singaporean lawyers only appearing on day one of the proceedings. There has been a turnaround in the last two or three years. I have observed this personally, and SIAC has put together statistics (which have not yet been published) validating this trend. Inmy experience, in the vast majority of SIAC cases, at least one of the parties will be represented by a Singaporean law firm. This happens in approximately 50% to 75% of SIAC cases. Conversely, the Hong Kong arbitrationmarket is dominated by offshore firms and local Chinese firms are not very visible in the arbitration space. In that respect, I think Singapore is way ahead. When comparing Singaporean lawyers and local Hong Kong lawyers, I think our lawyers have the edge. If Singaporean Chinese-speaking lawyers were able to exploit their Mandarin Chinese capabilities (something that not all Hong Kong lawyers can do), as well as their experiences of international arbitration, it may open up the arbitrationmarket in China for Singaporean law firms. What I hope to see in the next ten years, is for Singaporean firms to gain greater representation, at least in the Asian region.
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