The Movie Business

 MARKET VIEW – ARBITRATION 

Freshfields’ head of international arbitration, Lucy Reed, talks to Singapore International Arbitration Centre chief executive, Lim Seok Hui, about the institution’s recent rise to prominence

Lucy Reed, Freshfields Bruckhaus Deringer: Singapore International Arbitration Centre (SIAC)’s reputation in the market has skyrocketed in the last five years. What are some of the factors which have led to that growth?

Lim Seok Hui, SIAC: It was certainly no coincidence that the spike in new case numbers we have seen since 2008 corresponded with the entry onto the world stage of the Chinese, Indian, Indonesian, Japanese and Korean economies. That is of course a key factor in the growth of the institution. Underpinning and assisting that development is the fact that the government of Singapore was very quick to lay the infrastructure needed for the advancement of international commercial arbitration in our jurisdiction, and to adopt the necessary legislation to allow us to keep up to speed with global best practices. We also have a very supportive judiciary which built upon Singapore’s reputation for neutrality, integrity and quality more generally as regards our legal sector.

Lucy Reed: I cannot emphasise enough how important it has been to Singapore that the government decided to make dispute resolution an industry in and of itself. People don’t perhaps realise how big – and unprecedented – that goal was. The government was very brave to do it, especially when other countries in the region were jealously protecting their Bars and operating ‘fly in, fly out’ rules. It is also important to remember that Maxwell Chambers was the first world-class international arbitration complex, and set a new benchmark.

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‘I cannot emphasise enough how important it has been to Singapore that the government decided to make dispute resolution an industry in and of itself.’
Lucy Reed, Freshfields

Located in Singapore’s central business district, Maxwell Chambers is indeed seen by practitioners both within and outside the region as best in class. The facility, described by one arbitration lawyer Legal Business spoke to as a ‘one-stop shop for dispute resolution’, houses 12 hearing rooms – the largest of which can accommodate up to 140 people – and 12 break-out rooms, in addition to arbitrator-only lounges and a host of case management facilities.

Taking its lead from the International Dispute Resolution Centre in London, which houses within one building the likes of JAMS International, ResoLex, the Centre for Effective Dispute Resolution (CEDR) and the London Court of International Arbitration (LCIA), Maxwell Chambers is home to the regional offices of arbitral institutions including the ICC, the American Arbitration Association (AAA) and WIPO, the United Nation’s intellectual property arm. Leading British barristers’ chambers including One Essex Court, Stone Chambers and Essex Court Chambers have also set up shop in the complex, evidence of the lucrative work on offer as Singapore and its rival for Asia’s arbitral crown, Hong Kong, further impose themselves on the world stage. Crucially, that work extends beyond the arbitral process itself. In 2012, two of London’s best-known silks – Toby Landau QC and David Joseph QC, both of Essex Court Chambers – faced off in the Singaporean courts over the enforcement of arbitration awards worth US$300m, the first time in nearly a decade that an English Queen’s Counsel had conducted advocacy before the city-state’s judiciary.

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Lim Seok Hui: In addition to providing an attractive infrastructure for international arbitration, we offer a number of ancillary benefits such as income tax exemptions for foreign arbitrators and tax incentives for law firms setting up arbitration practices in Singapore. Similarly, the government imposes no restrictions whatsoever on foreign counsel appearing in international arbitration; work permits are not required for those lawyers, either. Finally, we are fortunate that Singapore is very well-placed, geographically-speaking. So it is a mixture of each of those factors which has contributed to the rapid growth of the centre.

Lucy Reed: How do you promote SIAC in ways that might be different from other institutions?

Lim Seok Hui: We are very excited about the most recent thing the institution is doing to engage new users and continue to engage our current users, which was borne largely out of my experience of doing the conference circuit in the region. I thought a movie focused on what happens in an international arbitration would help to demystify the process for people who haven’t been through one, as well as showing in-house counsel how the SIAC rules, our secretariat and court operate, and the benefits of Singapore as a seat and venue for arbitration.

Lucy Reed: It’s certainly a different viewing experience from earlier arbitration films. I previously served as president of the Institute for Transnational Arbitration, the organisation that pioneered the mock arbitration as a way of teaching the subject. During my time, we made a series of our mock workshops shot on a single camera from the back of the room, and yet remain much in demand. By contrast, the SIAC movie was put together by a professional film company. Scripts were written by counsel at the secretariat and vetted by the likes of Toby Landau QC. We went through numerous retakes and green screens; it was great fun, actually, and more importantly an extremely useful educational tool.

Lim Seok Hui: The movie lasts around three hours – slightly longer than most Hollywood blockbusters – but is divided into sections: how to commence an arbitration; the emergency arbitrator hearing; arbitrator appointments and challenge; SIAC court’s decision; jurisdictional and merits hearings; deliberations of the tribunal; and discussions on enforcement of the award. The movie is subtitled into Chinese, Korean, Japanese and Bahasa Indonesian, although we’ll look to add to those languages in the future. The response has been very good so far. Indeed, the SIAC road trip across Asia has so far been very well received and very well attended.

Faster, now

In addition to the introduction of costs sanctions for a party’s failure to keep its award confidential and the removal of the obligation upon parties to draft jointly a memorandum of issues, the SIAC rules of 2010 addressed what were at the time, and indeed remain, two of the industry’s hot issues: provisions on fast-track arbitration and emergency arbitrators. Both went to longstanding concerns over the inability of arbitration to remain the speedy and nimble form of dispute resolution that once distinguished it from cumbersome court litigation, a topic still discussed at what seems like every conference and cocktail party on the circuit.

Historically suited to dispensing quick and dirty justice for domestic disputes that did not require full-blown arbitration, fast-track procedures are now being seen as an antidote to the lengthy, cost-sapping approach to international dispute resolution. Unsurprisingly, general counsel required to manage large caseloads – Richard Hill of Shell, which has around 9,000 disputes on its books, is a case in point – have become increasingly vocal about the benefits of expedited procedures.

As of 15 August 2014, SIAC had received 153 requests to administer fast-track proceedings, 98 of which were accepted. Only cases with a value of less than US$4.6m will be considered for expedited arbitration, and awards are rendered on average five months and 16 days after the tribunal is constituted, thereby satisfying the six-month deadline stipulated by the rules. Its emergency arbitrator provisions have, comparatively speaking, proven more popular, with 37 applications made as of mid-August 2014. ‘I’m told that number is quite close to that of the AAA, whose provisions were introduced several years before ours,’ says Lim, adding that around one in every two applications is granted by SIAC.

 

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Lucy Reed: Tell me about your teams – the secretariat, the court and the board of directors.

Lim Seok Hui: We see requests for the typical types of urgent interim relief – to prevent the cashing of a bank or performance guarantee, for example, or a freezing order over assets. In Singapore, the international arbitration legislation has been amended such than an order issued by an emergency arbitrator, whether in a Singapore-seated or foreign-seated arbitration, is enforceable as if it was a final award by a tribunal. In practice, however, even though other countries may not have adopted similar legislative changes, there has generally been a high rate of voluntary compliance in our emergency arbitrator cases. We normally get advance notice a couple of days before the notice of arbitration is filed; whoever is working on the case needs to be living and breathing it for the next two weeks. Although the rules state that the emergency arbitrator must be appointed within one business day, we usually do so the same day. That means checking on neutrality of nationality and conflicts within an incredibly short space of time; because we also scrutinise awards, that challenge is made all the more difficult. There’s a lot of pressure on our legal teams. Our secretariat, which is led by our registrar, Tan Ai Leen, comprises ten lawyers from all over the world, including our key Asian jurisdictions of India, China and Korea. That in itself ensures a very driven culture within the team, which is dedicated to facilitating the overall efficiency of cases in order to reduce timelines for our users. Generally, people come to us after a few years in private practice, and stay for three or four years again before returning. These days we receive extremely impressive CVs from all over the world.

Lucy Reed: Would it be fair to say that when an institution does award scrutiny, the work of the counsel is made more interesting and therefore is likely to attract really bright and practically-minded candidates?

Lim Seok Hui: That is absolutely correct. A further draw is the fact that some of the most eminent international arbitrators from across the world sit on our court – Michael Pryles, Gary Born, Jan Paulsson, Bernard Hanotiau and Emmanuel Gaillard, as well as leading Asian practitioners such as Cavinder Bull SC, Eun Young Park, Sungwoo (Sean) Lim and Harish Salve. The role of the court is much like at the LCIA, in that it undertakes the technical side of case management and makes decisions on arbitrator and jurisdictional challenges. Michael Pryles, in his role as president, determines whether or not to grant applications for the expedited procedure and emergency arbitrator procedure. By contrast, the board of directors looks at strategy, new markets, the growth of the institution and any related corporate governance matters. We find that the split in this way works very well.

Gender on the agenda

In common with many institutions, SIAC, which has more than 360 arbitrators on its panel, does not formally blacklist poor performers. Rather, it will take into account user feedback both when renewing its panel list, a process undertaken every two years, and when appointing arbitrators for individual disputes. The failure to render awards in a timely fashion – within 12 months for sole arbitrator cases and less than 18 months for a three-member tribunal – is the quickest way to find oneself out of favour, says Lim. ‘We only look to appoint to our panel arbitrators with a strong track record and reputation in this regard,’ she explains. SIAC made 143 arbitrator appointments last year, more than half of whom – 51% – were Singaporean nationals.

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Lucy Reed: Can you tell us about the criteria you use when selecting arbitrators?

Lim Seok Hui: The first thing we look at is neutrality as regards nationality, before turning to a consideration of the expertise required for each particular dispute. We also look at the seniority of the potential candidates. Because we are very cost-conscious, as are our users, we try to match the seniority of the appointment to the level of complexity of the dispute. To further control costs we try to use Singapore-based arbitrators whenever we can, regardless of nationality. We also look at the time since a person’s last appointment by SIAC, and generally stick to a six-month rotation to ensure as far as we can that everyone on the panel gets a fair chance.

Lucy Reed: How important is it to SIAC to appoint female arbitrators?

Lim Seok Hui: It is difficult because there are so few women in arbitration, especially in Singapore and the wider Asia region. That said, we would like to appoint more women to our tribunals and are actively trying to do so. Both the registrar and I are women, as are the majority of our legal counsel. We are also looking to promote more women throughout the organisation, so watch this space.