Singapore well placed for 'belt and road' dispute resolution

Singapore is an obvious choice for dispute resolution, particularly in the Asia-Pacific region. It is well-known for its steadfast rule of law, innovative infrastructure and all-round international approach to matters – qualities not consistently found elsewhere in the region. It is also recognised as a truly neutral venue.

In the context of arbitration specifically, Singapore's pro-arbitration stance, combined with its status as a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), offers additional support for the dispute resolution process and avenues for the enforcement of arbitral awards.

Singapore will be particularly advantageous for the resolution of belt and road-related disputes. Belt and road, formally known as the Silk Road Economic Belt and 21st Century Maritime Silk Road initiatives, is China's strategy to finance and deliver projects along land routes to Europe, across Asia and the Middle East, and across trade routes over the South China Sea, South Pacific Ocean and Indian Ocean. It incorporates over 1,700 projects with a combined value of over US$1 trillion, and will potentially impact at least 70 different countries.

The sheer scale and geographic spread of the belt and road raises the prospect of complex cross-border commercial disputes, which will often involve multi-national parties and jurisdictions lacking many of the features that set Singapore apart. It is therefore no wonder that, with a number of new initiatives, Singapore continues to defend its title as one of the world's foremost international dispute resolution centres.

Consideration of conditional fee arrangements

One development that will be of particular interest to parties looking to engage legal representation in Singapore relates to conditional fee arrangements (CFAs). CFAs, where lawyers are paid only if a claim is successful, are generally prohibited in Singapore, where the long-standing English law principles of maintenance and champerty continue to apply - although a limited exception applies in permitted cases involving third party funding.

On 28 August, Singapore's Law Ministry announced that it is seeking public feedback on the use of CFAs, which are being considered for international and domestic arbitration cases, "specified proceedings in the Singapore International Commercial Court" and connected mediation cases. Broadening the exception for CFAs will benefit parties by enabling them to enter into more creative risk-sharing fee arrangements that fit with their own commercial approach and interests and to select their team from a wider range of counsel, as has been the experience in other common law jurisdictions such as the UK and US which already allow the use of these arrangements.

Allowing the parties more flexibility in fee arrangements and choice of counsel will be especially relevant to many belt and road-related disputes where the projects are high-value, the issues are technically and legally complex and cash flow can be complicated.

Other recent developments

On 7 August 2019, the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention) was signed in Singapore by 46 countries. Signatories include the world's two largest economies, the United States and China, as well as some of Asia's largest economies, India and South Korea. The Singapore Convention will come into effect once at least three countries have ratified it, which is expected to happen by early 2020.

The signing of the Singapore Convention is unprecedented. While individual jurisdictions have recognised the advantages of mediation as a collaborative dispute resolution mechanism, its use in cross-border disputes remains rare – in no small part due to concerns over enforcement. By creating a presumption in favour of enforceability, the Singapore Convention is an important step in the development of mediation as a global tool.

During the Singapore Convention signing ceremony, the United Nations and the Singapore government also signed a memorandum of understanding "for collaborating in promoting international mediation and other dispute settlement methods as well as in supporting the harmonised use of the Singapore Convention and other UNCITRAL instruments". This will include building a UNCITRAL Academy in Singapore which would organise, among other things, future Singapore Convention Conference events.

On 8 August 2019, the American Arbitration Association-International Centre for Dispute Resolution (AAA-ICDR) announced that its regional headquarters will be located in Singapore, confirming that its newly-expanded Singapore office will serve as its Asia case management centre. On the same date, the Beihai Asia International Arbitration Centre (BAIAC) opened in Singapore, under the auspices of the Beihai Arbitration Commission of China's Guanxi province. The centre aims to provide low-cost and efficient international arbitration services for small to medium-value cross-border commercial disputes.

Also this month, the Law Ministry tabled the Reciprocal Enforcement of Foreign Judgments (Refja) (Amendment) Bill and the Reciprocal Enforcement of Commonwealth Judgments (Recja) (Repeal) Bill in the Singapore parliament. Only judgments from the superior courts of 11 jurisdictions can be registered in Singapore under the current legislation. The proposed amendments to the Refja, and the repeal of the Recja, would enable the enforcement of a wider range of foreign judgments including non-money judgments, certain interlocutory orders and civil judgments from lower courts, with enforcement in foreign courts on a reciprocal basis.

Disputes arising out of belt and road-related projects, as well as cross-border disputes more generally, will certainly benefit from these welcome developments in Singapore, especially the Singapore Convention, BAIAC and the Refja reforms.

Andrea Clark is a dispute resolution expert at Pinsent Masons, the law firm behind Out-Law.