APAC to Become the New Arbitration Hub?
The existence of the term 'arbitration' is unknown. In layman’s language, we can define arbitration as a dispute resolution mechanism. It can be traced back to the early civilization where mediation happened between parties through a third party.
As the world started shrinking, international arbitration between companies or individuals in different regions became inevitable.
The United Nations, enforced Arbitration agreements and arbitral awards in The New York convention 1958 under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This was further ratified by over 150 countries.
West to East
For a long time, the US and the west have been touted as the arbitration hub, attributing to the biggest economy and subsequently with a large number of transactions and disputes.
According to The Strait Times, Mr Cheng Tai-Heng, Singapore head of leading global law firm Sidley Austin, quoted “my view is that the deepest legal markets that command the highest rates will for some decades still be in the US, although the growth markets will be in Asia. The US is a stable legal market and not expanding that much compared with Asia.”
Further demonstrated in a survey conducted by Queen Mary University of London (QMUL) and White and Case, a global law firm, in which 1,218 respondents participated between 8 October 2020 and 21 December 2020, Singapore’s Singapore International Arbitration Centre (SIAC) performance as an arbitration hub stood at the second spot signifies the shift in a global perspective to see Asia pacific as the choice of International Arbitration.
The QMUL and White and Case survey also showed Singapore as the preferred arbitral institution in Asia-Pacific. In the same survey, Hong Kong stood at the third spot closing in on Singapore as the arbitration hub.
Barrister, Arbitrator, Founder and CEO of Immediation, Laura Keily added that, “Virtual hearings have become the new normal. It remains to be seen what the impact will be on the traditional relevance of the “seat’ of the arbitration, now that the seat is once and for all divorced from its geographic location. While New York and London remain powerhouses of arbitration, APAC is certainly a force to be reckoned with. My view is that Singapore will rise up to the challenge in this new paradigm.”
The Strait Times' article on the QMUL's survey quoted Ms Norah Gallagher of QMUL "The results reflect an interesting snapshot of change in arbitral practice during a time of global upheaval. The arbitration community had to adapt quickly, and some of these changes will remain after the pandemic recedes.”
"Virtual hearings and increased reliance on technology are clear examples of changes that will persist. It has been a challenging yet rewarding process, but we are pleased with the interesting results," she further added.
Ministry of Law, Singapore, said that an “arbitration-friendly” and regularly reviewed and updated legal framework has catapulted Singapore to the top standings and these results are efforts of over several years.
The Manila Times news on Regionals Arbitration Centers to Rise in Hong Kong states that Zhang Jun, China’s permanent representative to the United Nations, and Kennedy Godfrey Gastrorn, secretary-general of the Asian-African Legal Consultative Organisation (AALCO), recently signed an agreement in New York to establish a regional arbitration center in Hong Kong.
The aim of such an agreement is to boost commercial arbitration in the Asia Pacific region and establish a regional arbitration center in Hong Kong.
Why such a shift?
QMUL’s Survey on arbitration reveals striking insights:
- Administrative/logistical support for virtual hearing is the top choice for respondents followed by commitment to a more diverse pool of arbitrators.
- Arbitration users would be most willing to do without ‘unlimited length of written submissions’ and ‘oral hearings on procedural issues’ if this would make their arbitration cheaper or faster.
Asia Pacific arbitration hub not only exceeded the expectation to deliver on the technology front but also, on the diverse expertise in international dispute resolution based in the region. SIAC’s international panel comprises over 500 experienced arbitrators from over 40 jurisdictions as per The Strait Times, making it one of the top arbitration center in Asia Pacific.
Other Asia jurisdictions looking for a spot
Australia is following the footsteps of other APAC countries and is also set to become the Global Arbitration Hub. Australian Centre for International Commercial Arbitration (ACICA) released Australian Arbitration Report on 9 March 2021. The stats suggest the sprawling growth of the arbitration market.
India too is not far behind and is building the International Arbitration Center for dispute resolution at GIFT City in the state of Gujarat. Nirmala Sitharaman, Finance Minister of India, announced the same. According to the news on Business Standard, the move will ensure ease of doing business and will attract more investors, crediting to the fast disposal of cases.
APAC the future of arbitration?
While the study shows the shift in the International Arbitration Hub from West to East, it is still unwise to say the west is not the choice for dispute resolution.
Yes, the adoption of technology during the pandemic and inclusion of expertise from diverse jurisdictions play an important role in considering an arbitration center other than the legal framework and fast disposal of cases.
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