If regional arbitration has a home, it is in Asia. More specifically, in Hong Kong. The growth of Hong Kong’s arbitration centre proved: if you give users a dependable local option, the some of them will come, especially if it saves long haul travel. The HKIAC’s success inspired any number of others (hence this book).
Indeed, Asia alone now boasts 40-plus similar organisations. These have their own club: the Asia Pacific Regional Arbitration Group (APRAG). Recent joiners include the Bangladesh International Arbitration Centre; the Delhi Arbitration Centre (which opened its door to international work in 2013); and two erstwhile branches of CIETAC that broke away and forged new independent names.
For users, such choice can create anxiety. Which is the right option? Am I missing out on something if I stick with what I’ve always done? That’s where this guide comes in. There isn’t so much a right option, when it comes to dispute resolution clauses, as an informed choice, or a healthier negotiating position. What may seem like giving ground on arbitral centre may be no such thing.
So below and throughout this book, you will find two lists: “white listed” organisations – dependable in all scenarios; and “worth a closer look” – options that inside their comfort zones are also good. The key is knowing where that comfort zone is. The second group should be matched to disputes that fit.
- Hong Kong International Arbitration Centre (HKIAC)
- Singapore International Arbitration Centre (SIAC)
Worth a closer look
- Australian Centre for International Commercial Arbitration (ACICA)
- Beijing Arbitration Commission (BAC)
- Chinese International Economic and Trade Arbitration Commission (CIETAC)
- Japan Commercial Arbitration Association (JCAA)
- Korean Commercial Arbitration Board (KCAB)
- Kuala Lumpur Regional Centre for Arbitration (KLRCA)
Hong Kong International Arbitration Centre (HKIAC)
Why is the HKIAC on a white list of regional arbitration providers?
Regional arbitration pretty much began with the HKIAC. No regional institution has been running for so long, or with such success.
How successful is it?
In case terms, very. In 2016, the centre handled 262 cases, and the year before 271 (of which four in five were “international”). Although the total value in dispute fluctuates – in 2015 it was US$6.2 billion and a year later US$2.5 billion – it’s always in the billions.
Doesn’t it count cases a little differently from others?
Yes. For historical reasons, the centre counts both total cases and cases administered under its own administered or UNCITRAL arbitration rules.
How’s the second figure been changing?
It also fluctuates year on year but is generally seen as travelling in a healthy direction. In 2015 it was 116 cases (42 per cent of the total) and in 2016, 94 cases (35.8 per cent).
Are the cases mostly construction and maritime arbitration?
They used to be but not anymore. Though both categories continue to feature in the makeup of its work, the biggest category is now commercial.
How did the HKIAC establish itself?
A combination of luck and good judgement. The HKIAC was arguably in the right place at the right time – but it’s also enjoyed a succession of excellent leaders. Two of its founding fathers are Neil Kaplan QC and Michael Moser – now, towering figures but less well known then. They helped it grasp how to grow beyond domestic work in Hong Kong. And the government has helped too.
What has the government done?
Though standoffish at first, it’s grown into a keen supporter. It ensured the HKIAC got a whole floor in downtown Hong Kong to turn into a hearing centre (no easy task in that real estate market). The chief executive of Hong Kong (head of the government) and the justice minister have attended various HKIAC events.
Did being on China’s doorstep help?
Undoubtedly. Hong Kong benefited from appearing neutral and yet China-friendly. How long it will have that appeal is unclear. The deal providing it with a separate identity expires in 2047. Opinion is divided on whether China’s rulers will see merit in preserving the old identity. Expat locals say, already, the character of the place is changing.
What are the HKIAC’s strengths?
Its proven track record (it has been handling cases for two decades); a fine set of rules; and a light-touch style of case administration. It is also affordable, even in a city as expensive as Hong Kong. The HKIAC was the first institution to give parties a choice in how they pay arbitrators (by value of case, or an hourly rate). It’s gone even further recently on arbitrator costs.
How does the HKIAC differ from SIAC?
The two have different structures – the HKIAC’s rules are more UNCITRAL-inspired, while SIAC is closer to the ICC approach. They also had quite different beginnings. The HKIAC grew organically. It can be viewed as an offshoot of the local bar; in fact, it started life as a very successful branch of the CIArb. SIAC, in contrast, was a government idea.
Does organic growth make a difference?
It says something about Hong Kong’s legal environment and its support for arbitration. But it also certainly helps an institution to have the backing of a vibrant arbitration bar. It’s arguable that the HKIAC would have been less able to respond to Singapore’s marketing push without the support of its local bar. Those voices helped it to make the case for upgrading Hong Kong’s arbitration infrastructure.
Has the HKIAC been hurt by the rise of Singapore?
There’s no doubt the two are serious rivals, but in the past, each has had a protected area. For the HKIAC it was China, while Singapore enjoyed a monopoly on India (Hong Kong awards weren’t enforceable there, owing to a technicality of Indian law). Singapore has lost that advantage because India has “gazetted” Hong Kong, while Hong Kong must deal with a perception in some quarters that, now it is part of China, it is not as suitable for China disputes as it once was.
So what’s going to happen?
Who knows? Hong Kong’s share of Chinese work is standing up well. Competition in any walk of life is usually a good thing and it’s hard to see why arbitration should be an exception. As it happens, the HKIAC doesn’t only face competition from SIAC. It has to contend with both the ICC (which administers cases in Hong Kong) and now CIETAC Hong Kong on its doorstep.
What are the HKIAC’s rules like?
They contain some useful regional elements. One is broader powers on joinder. Asian investments are often spread over several contracts; the rules give the HKIAC and arbitrators greater powers to organise and centralise disparate cases. Such powers have since become the norm, but the HKIAC was one of the trailblazers.
The rules also contain some interesting elements aimed at controlling arbitrator costs.
How do they do that?
As well as giving parties a choice of how to pay the arbitrators, they contain a cap on the arbitrator’s hourly rate unless the parties agree otherwise.
Is that useful?
Well, arbitrators will tell you that the percentage of total costs they account for is very low. But every little helps, and rules like this go down particularly well with Asian parties. The cap is HK$6,500 an hour.
Are there any pitfalls?
With the HKIAC itself? No. With Hong Kong as a seat, Korean lawyers and sometimes civil trained lawyers find the local style of arbitration “a little litigation influenced”, to quote one. Also, there’s always a slight concern that in 15 years’ time, Hong Kong may not be the place it is today.
What’s the mood of the centre like?
The centre appears confident. Hong Kong’s legal infrastructure is in better shape thanks to arbitration ordinance (and some very favourable court decisions) and it’s made an important transition.
What transition is that?
It said goodbye to long-serving secretary general Chian Bao in late 2015. Bao was popular. At a retirement dinner, she received so many standing ovations one attendee compared it to watching President Obama leave. The new secretary general is Sarah Grimmer – formerly of the Permanent Court of Arbitration. It’s early days but so far, so good with her tenure. She has preserved the core of Bao’s team in the secretariat – and added to it (two hires in 2017 at managing counsel level including Wesley Pang, formerly of Shearman & Sterling). And they’ve had welcome news.
It’s about their hearing rooms and headquarters.
Are they moving?
No, quite the reverse. There was some concern that they were about to lose their current space at Exchange Square. This state of the art hearing centre was opened with much razzmatazz (including a dancing dragon) a few years ago. Since then, however, the government mooted the idea of moving them into a new justice hub – still under construction, in a less convenient part of town. Now Hong Kong’s Secretary for Justice of the Hong Kong Rimsky Yuen SC has changed his mind (in part citing GAR’s favourable review of the centre in this guide). So the HKIAC can stay where it is.
The HKIAC has since announced that developing nations can use its hearing space for free, earning it a shortlisting for ‘innovation’ in the most recent GAR awards.
What’s it like arbitrating at the HKIAC?
According to statistics released by the centre – it’s a bit faster and cheaper. In 2017, the centre released figures showing that its cases conclude faster, on average, than those at the LCIA, SCC and SIA, and that its administrative fees are lower than the LCIA (the SIAC was also lower than the LCIA). The full comparison is available on the HKIAC’s website.
Does it have anything to worry about?
Longer term, there’s the existential question looming over Hong Kong. Will the former colony retain its democratic traditions? There’s some evidence that US parties are already shifting to Singapore because they view Hong Kong as losing its independent character. What effect that will have on the HKIAC is unclear.
A related problem is the nature of the local bar. Hong Kong grows less of its own legal talent than Singapore, which has an indigenous legal community. While that’s so, the HKIAC must live with the possibility that a substantial part of Hong Kong’s bar, so pivotal in its success hitherto, could move somewhere else (family life allowing) if events takes a turn they don’t like, robbing it of much needed patronage and support.
Singapore International Arbitration Centre (SIAC)
Why is SIAC white-listed?
At a poetic level, SIAC stands for the proposition that dreams can come true, and that persistence pays off. Thirteen years ago, it was a small (if well-funded) player. Today it’s probably the fastest-growing arbitral provider in this report. Waxing less lyrical, it’s a safe pair of hands (and seat) in Asia that isn’t part of China.
How was its transformation achieved?
Slowly. SIAC was launched in 1991, but didn’t see casework take off until fairly recently. So success didn’t come overnight.
What finally swung it?
The glib answer is, building the world’s biggest international arbitration hearing centre. The 2010 opening of Maxwell Chambers – a mega-sized hearing complex dedicated entirely to international arbitration – put Singapore firmly on the arbitration map.
How’s that connected to SIAC?
SIAC proposed the idea, after canvassing sources around the world on how to kick-start its profile. In some ways, Maxwell Chambers is a distillation of Singapore’s wider approach to international arbitration: trawl the world for good ideas and take advantage of government backing to copy them.
So has the government been an important part of SIAC’s success?
Absolutely. Barely a year goes by without some change to Singapore’s arbitration regime – or “ecosystem” (in local parlance). Often those require legislative time.
Ways the government has helped SIAC include introducing tax perks for foreign arbitrators and arbitration firms that work in Singapore, plus almost countless adjustments to the law to fill lacunae or ensure SIAC’s rules work as intended.
Do the rules not work as intended?
It’s more that, in their enthusiasm to be cutting edge, they’re continually changing. When the SIAC released its latest set 2016, it was the fourth change since 2007. Most providers amend their rules every nine or 10 years. The 2016 rules added powers on joinder and consolidation to keep up with rivals such as the HKIAC and ICC.
More recently, the SIAC has released investment arbitration rules.
So it’s a simplification to say Maxwell Chambers put Singapore on the map?
Yes. Although Maxwell Chambers helped, it takes more than a new hearing centre to get to the top – even a really good one.
It so happens that SIAC hit the road hard between 2001 and 2007, promoting itself to law firms, corporations and its own government. More recently it’s brought in big international names to assist it administrate cases, including Gary Born as president.
The government also gave the SIAC a big boost when it opened Singapore’s legal market to foreign firms. Once foreign firms were in place, they had an incentive to promote Singapore as an international arbitration centre – since it was a service in which they had a competitive advantage over local players.
Are these efforts paying off?
There’s evidence that they are. Statistics show that centre enjoyed its latest “best year ever” in 2015, with a new all-time high total of 271 new cases. It posted a very respectable total of 222 cases in 2014, and has around 600 cases total on foot at the time of writing.
On top of that, the clauses producing these were mostly written in the past four years. So SIAC seems firmly implanted in deal lawyers’ minds. Anecdotally, many say SIAC has gained a solid reputation and is easy to agree on, particularly if you have a party that doesn’t want to arbitrate in Europe or the US.
More importantly, the value of those cases is much bigger than it used to be.
What’s arbitrating at SIAC like?
It’s a lot like being at the ICC. In 2013, changes to the rules completed the homage (it was already fairly similar). Above all, they added a Court of Arbitration to the process, to resolve issues arising mid-case. This court comprises 16 illustrious names from the international arbitration firmament.
The rules also offer the various bells and whistles that have become standard – since 2010, for example, SIAC has offered an expedited procedure for use when certain criteria are met, and the option of an emergency arbitrator.
Of course, the rules are one thing, but how the arbitrators apply them is another one. If SIAC has a flaw, it’s that local arbitrators set things up too much like Singaporean court litigation.
What are the new investment rules like?
They’re an adaptation of the regular rules to accommodate the esoteric aspects of investors state and state–state disputes. Useful features include: an early dismissal mechanism; time limits on arbitrator challenges; and the option for the case to continue in parallel to such a challenges (if the arbitrators deem it appropriate). They also require disclosure of any third party funding.
How busy is the centre?
2016 was the SIAC’s busiest year: it registered 343 new cases – a significant increase (27 per cent) on the year before. The “value at stake” rose even more: from US$4.41 billion to US$11.72 billion in 2016. Much of the current work emanates from India (153 of the new matters have one Indian side) but more is coming from China (76 matters).
Are there any pitfalls to beware of?
No pitfalls per se, but a few little things to monitor. One is that the rule on confidentiality is particularly broad. Another is that the model clause makes a few choices for you that other clauses leave blank (such as Singapore as a seat). Other than that, no real traps exist for the unwary – although, with the rules changing often, there can be scope for arguments about which set should apply.
Worth a Closer Look
Asia’s also home to a number of “local” institutions that – for the right sort of disputes – are more than suitable. What’s more, appearing to give ground and accept a less-known entity can be parlayed into other concessions during a negotiation.
So here is our selection of other institutions that shouldn’t be dismissed out of hand. They may give you an extra bargaining chip.
Australian Centre for International Commercial Arbitration (ACICA)
Why’s ACICA an institution to watch?
It’s backed by some very driven individuals who think they’ve got an excellent case to make for Sydney as an arbitral centre.
Do they have a point?
Certainly. Australia has an excellent UNCITRAL-inspired law, as well as high-quality lawyers and arbitrators – and all available at a more affordable price than its nearest arbitral neighbours. Of course, there is a “but”.
What’s the “but”?
Sydney is nearly as far from Beijing as Paris is. And depending where you come from, you’re in a pretty rubbish time zone. “I’ve loved my four Australian cases,” comments one US lawyer, “but being somewhere where day is night and night is day is frankly a pain.”
What do the Australians say in response?
They know it’s a long journey. But they say it’s worth it when you get there. And it’s only a medium-long trip if you’re starting from Asia – then you’re only shifting from your normal day by a couple of time zones. Sydney can also make the case that it’s less subject to China’s influence than either Singapore or Hong Kong.
Australia, and New Zealand too, will soon have a chance to showcase their merits to the wider arbitration world as the joint hosts of the 2018 ICCA congress.
So how’s it doing?
It’s very active and has a well-established brand – it held its 30-year anniversary in 2015. ACICA’s recent past president, Doug Jones, set a strong pace here and others have kept it up, promoting it and securing memoranda of understanding with other organisations around the world. Jones himself believes that momentum is building, although at the time of going to press, no case figures were available on ACICA’s website (www.acica.org.au) to confirm this.
Beijing Arbitration Commission (BAC)
Why’s it worth a closer look?
The BAC has many admirers, including the Economist Intelligence Unit. It described the BAC as “the only local arbitration commission which meets global standards”. Anecdotal evidence in Hong Kong’s arbitration community supports this.
What sets it apart?
“Professionalism, competence and transparency,” according to one respected source, speaking at GAR Live Hong Kong a few years ago. He called it the standout option among China’s 250-odd local arbitration commissions (CIETAC’s local competition). That view was confirmed this June by a respected Chinese arbitration source. The source who spoke described the BAC as “the rising star in China, they work really hard.”
What’s so good about it?
The BAC’s rules are the most flexible on offer for the mainland China when it comes to party autonomy, where they approach the international norm. It’s possible to run a case pretty much any way you want, even when it comes to the vexed topic of which laws should apply. They also contain helpful elements on joinder, and what to do if a med-arb has gone wrong (they allow for the arbitrators to be changed, which will be welcome to international parties).
The BAC also gets points for the quality of its secretariat, where staff turnover is lower than at other arbitration commissions (including CIETAC). BAC staff are reputed to take pride in their work: “BAC secretariat has a team spirit,” comments our respected Chinese source. “They feel like it’s their enterprise. It’s very rare.”
Another popular feature is that the BAC is self-funded (and has been since 1998); it’s not an arm of government.
Who succeeded in doing all that?
The credit is usually given to credit Madame Wang Hongsong, the BAC’s charismatic vice-chairperson.
She, legend has it, insisted that, as the capital’s commission, the BAC ought to hold itself to a higher standard, and it was she who personally visited a vast number of state-owned companies to inform them so. With some success. There’s has been extensive uptake of the BAC in Chinese domestic contracts, as the figures show. “It’s like the story of the tortoise and the hare,” says our source. “While CIETAC slept, the BAC moved ahead.”
How busy is the BAC?
It’s very busy, especially when compared with CIETAC. In 2016, the BAC handled 3,012 cases; in 2015, 2,944. The caseload is almost double what it was in 2007.
And how small or large are the cases?
The average has been about US$1.5 million per case since 2012. But much larger cases are known. It handled one matter worth US$1.7 billion in 2015.
Is any of the work international?
International is the one thing that the centre isn’t so at home. It’s now seeking to change that by building its international profile. Even so, it handled 69 cases with one foreign party in 2016 – and 52 the year before – which is more international work than some better known organisations.
What is it doing to improve its international profile?
It has become more and more active outside China. It has adopted an international name - the Beijing International Arbitration Commission (BIAC) – and now organises more foreign conferences per year than CIETAC; it is also taking part in the UNCITRAL working group as an observer. There’s talk too of an international advisory board.
Are there any eccentricities to keep an eye on?
As with any Chinese mainland arbitration, the process tends towards the shallower version of arbitration rather than a deep quest for absolute truth. The BAC aims to complete all matters within six months.
Med-arb is also a regular feature; the BAC uses an “evaluative”, rather than “adjudicative” style.
Is there an enforcement penalty to pay, if selecting the BAC? How easy is it to enforce a BAC award in other parts of China?
The BAC is unusual among the city commission’s in that 60 per cent of its work comes from outside its home (in 60 per cent of the cases one side is not from Beijing). Thus courts in other parts of China are now well aware of its name. Enforcement in provincial areas is not, therefore, seen as a problem.
Anything else to know?
The staff are regarded as particularly helpful and are often fluent in English. They can, however, be slow to respond. All cases are run using a state of the art case-management system. And the BAC’s hearing rooms have a lovely view of Beijing.
China International Economic and trade Arbitration Commission (CIETAC)
Why is it worth a closer look, rather than being on the white list?
CIETAC is China’s home-grown international arbitration institution, and government rules have gifted it a huge caseload and created decades of experience (it handled 1,531 cases in 2015, the most recent year for which there are statistics). It’s also the best-known Chinese arbitration provider among China’s judiciary, giving it an enforcement advantage against many of the 200-plus other Chinese providers.
On the other hand, for a number of reasons – some of which it has no power over – it remains an acquired taste.
What are the complaints?
It’s in a poor seat – which is hardly CIETAC’s fault.
Why isn’t China a good seat?
The usual answer is that courts interfere too much. But there are some other related difficulties. A lot of the Chinese law firms of the sort encountered on cases at CIETAC use tactics that aren’t pleasant to deal with (but standards of behaviour are improving). “Even if you lower your expectations, it’s still not enough,” one source told GAR a few years back. But it makes sense, if possible, to get such an opponent away from their home turf. If that’s not an option, then CIETAC is often a perfectly serviceable option. The only advice is to go in with your eyes open.
What should a newcomer to CIETAC know in advance?
The process can be “frighteningly fast”, as GAR has reported in the past – and not always very surgical. A speaker at a GAR Live Hong Kong once gave it “five out of 10 for efficiency”, saying that speed without accuracy isn’t much help. CIETAC is fast because takes an inquisitorial approach, and very little time is devoted to testing evidence.
At other times – usually if it’s asked to handle a complex multiparty case, or because it is attempting to administer a matter under another institution’s rules (which happens from time to time) or if an opponent is politically connected and doesn’t want an award any time soon – CIETAC can be frustratingly slow.
The secretariat also has far more of a case-management role than is perhaps the norm. It likes to take charge of all procedural matters, things that would usually be the domain of the tribunal. CIETAC is also not the most multilingual of organisations, and suffers at times from high staff turnover and the occasional unmotivated bad apple among the staff. Finally, it has a tendency to impose med-arb.
Isn’t med-arb viewed with distrust?
In many parts of the world, that’s true. In Asia, where the desire to negotiate a problem away can be great, but also accompanied by a reluctance to make the first move, med-arb can be a big help. It allows talks to start without anyone losing face. In CIETAC’s 50 years, a substantial percentage of cases have been resolved in med-arb.
As a process, it’s also less scary than it was. CIETAC and others have steps in place in case the “med” part of the med-arb fails.
Why is CIETAC so busy?
Governmental rules prevent foreign arbitral providers from administering mainland-seated arbitrations. They also require all arbitrations in China to be administered – by some sort of arbitration organisation. Therefore, Chinese providers have a monopoly, with CIETAC at the apex of the pyramid.
Because it is one of the best-known options, if you are likely to need court support during a case then CIETAC makes practical sense. Ditto if the award needs to be enforced inside China.
What does CIETAC say in response to critics?
To its credit, it has listened to complaints and worked hard to improve both its offering and China as a seat. It will probably always be hampered by being a government organisation.
How international is it?
It’s a mixed picture. The numbers are quite good – with around one-third of the work classed as international; in 2015, that was 437 cases. But when it comes to the make-up of the organisation, CIETAC panels are usually still all Chinese, or two Chinese and one Chinese-speaking foreigner. It is theoretically possible to achieve a non-Chinese tribunal. In practice, it’s difficult, because of the poor rates of pay.
How independent are the arbitrators appointed?
Opinions vary. There are stories of mainland arbitrators “who would be given one out of 10” for independence or “who are clearly partisan or communicating with one of the parties” (quotes from a past edition of GAR Live Hong Kong); while others “deserve 10 out of 10”. Non-career arbitrators – those who sit as a sideline rather than as their main professional activity – are viewed as safer on this score.
How up to date are the rules?
They were revised in 2014, to add emergency arbitrator provisions and new options for consolidation and joinder, and to make it easier to dispose of more valuable cases with a summary arbitration procedure. The rules now include the ability to have a case administered by CIETAC’s Hong Kong sub-commission.
Hasn’t CIETAC had some ups and downs of late?
There have been some “incidents”. In 2006, its secretary general was arrested (later released without charge), while more recently, CIETAC branches – in Shenzhen and Shanghai – have broken away and set up competition. As surprising as those instances were, neither seems to have left a permanent mark. More concerning is probably CIETAC’s failure to match the energy of other local Chinese providers (notably the BAC).
On the upside, it has a new secretary general, Wang Chengjie, previously of CIETAC’s sister mediation institution.
Where does CIETAC Hong Kong fit in?
CIETAC Hong Kong is a branch of CIETAC, in Hong Kong, which opened in 2012. Without case numbers (not available) it’s hard to say if it is proving a success. But the logic certainly works: all the upsides of using CIETAC, but in a better seat.
Japan Commercial Arbitration Association (JCAA)
Why is it worth a closer look?
The JCAA is Japan’s only international arbitration provider, founded in the 1950s.
So why isn’t it better known?
It’s never had that much work. On average, the JCAA gets only 15 to 20 new cases a year and some of those include an element of double counting.
The majority are, however, international.
Why doesn’t it get more cases?
There are various theories. Some point to Japanese culture, which is averse to disputes and at ease with courts. But statistics on domestic arbitration appear to give the lie to that (they show extensive use of arbitration). So it seems to be down to “soft factors”.
What soft factors?
Neither Tokyo nor Osaka is home to many potential arbitrators (in contrast to, say, Hong Kong or Seoul, which is where Japanese cases tend to go). One well-placed source reports that “only two or three names come to mind immediately” as suitable for a big international case. So companies don’t feel a particular pull to stay local.
Then there’s the general expense. The JCAA isn’t cheap: “For the size of the filing fee, you might as well go to the ICC.” On top of that you have expensive hotel rooms or conference space to rent (there’s no hearing facility). The upshot is, waging international arbitration in Japan isn’t cheap!
Is there anything in the JCAA’s favour?
There is one area in which the JCAA can potentially save you money. A JCAA case comes with its own tribunal secretary, paid for by the JCAA.
Why are you listing it in this section?
Despite the obstacles, the JCAA is seen as on the up, and improving. One foreign counsel who sat there as arbitrator recently said his experience was very good and “very different” from previous occasions: “They provide a very good service now. I would absolutely recommend them in the right case.” Japanese business is also pushing the JCAA in negotiations with business partners.
Because the JCAA has been asking them to, ever since it upgraded its rules.
When did it upgrade the rules?
It has had improved rules since February 2014.
These revised rules introduced the option to request an emergency arbitrator; improved things on interim measures (bringing the JCAA more in line with the UNCITRAL Model Law); and changed when expedited arbitration could be used. They also introduced the possibility of mediation within the same process.
Are there any pitfalls to be aware of?
With the JCAA, not really. With Japan, an issue may lurk regarding foreign counsel. In theory, all should be fine. Local bar rules permit foreigners to act on Japanese soil in “international disputes”. But a flag has been raised where the foreign lawyer’s client has dual identity – the Japanese subsidiary of an international name, say. If such an entity were in dispute with a Japanese firm (eg, a supplier), the foreign lawyer could face a challenge.
Are there any recent positives?
There’s a rumour that Tokyo will be getting a hearing centre. The exact timing isn’t yet known.
Korean Commercial Arbitration Board (KCAB)
Why is the KCAB worth knowing more about?
The KCAB – and lawyers in Korea – have serious plans to become an international arbitration destination. It’s already busy with domestic work – and for various reasons the next logical step is seen as servicing cases that have no connection with Korea.
How busy is “busy”?
It received 381 arbitration cases in 2016; of which, 62 were international. That’s a dip on the previous year, but not by much, and over time the numbers are steady.
The organisation and the government are on a drive to promote as an arbitral destination Seoul internationally.
What kind of a drive?
The government recently enacted the “Arbitration Industry Promotion Act” under which it commits to providing “very significant measures of institutional and material support to the promotion of international arbitration in Korea” according to an article in the most recent Korean Arbitration Review.
Around the same time as enacting the promotion act, the government amended Korea’s arbitration act to be more in line with the latest version of the UNCITRAL Model Law.
What are its rules like?
The KCAB has a separate set of international rules that apply automatically in all international cases. The rules were first adopted in 2011 and updated in 2016, and embody all the key LCIA/ICC inspired norms.
What’s the KCAB doing to increase its international business?
It’s been tweaking various things. One was its rate of pay. In domestic matters, sitting as an arbitrator is regarded as an honour rather than a job, and the rate of pay is lower accordingly. But for international arbitrators, this pro bono approach has made Seoul unattractive. So the KCAB has been increasing its international case rates of pay. It has also introduced an International Arbitration Committee to its structure, to play the same role as the courts of other leading bodies. Current members include Jan Paulsson, Gary Born, Lucy Reed and Doug Jones to name but a few. According to Kevin Kim, these changes signal “KCAB International Arbitration Version 2.0”.
Is there a dedicated international arbitration hearing centre?
The Seoul International Dispute Resolution Centre – an arbitration hearing facility – opened a few years ago in downtown Seoul. It’s smaller than some equivalents, but very high tech.
Does Asia need another seat?
Some civil-trained lawyers think so. The current major providers – chiefly Hong Kong and Singapore – are all common law, giving Seoul something unique. Geographically, Seoul is well located. Plus it’s near to several major economies – Russia, China, Japan and Mongolia – that could all come to view it as a useful neutral space. Koreans like to think they may emerge as a Switzerland for North Asia. On top of that, Seoul has a sizeable pool of arbitration talent, much of it home-grown.
South Korea’s currency crisis in the late 1990s created a wave of arbitration – as ICC figures testify (for a while South Korea was one of the bigger sources of ICC work). Local law firms noticed what was happening to their clients and astutely skilled up.
Very clever of them. How did they manage it?
They shared know-how as they gained it. If one Korean partner had a case (as co-counsel – in the beginning Korean firms were always co-counsel), he or she shared the knowledge gained with whoever was interested back in Seoul – colleagues and rivals alike. Today Korean lawyers are more likely to be the first chair as counsel and occupy leadership roles with all the international arbitration organisations such as ICCA, the ICC and the LCIA.
What’s the process like if you do go to Seoul?
Should you end up under the domestic rules, Korean arbitrators are pleasingly unfettered in their approach. So you won’t just get a version of local litigation. These days you’ll probably end up under the international rules, where, especially with the recent organisational changes, things will resemble what parties are used to. The main difference is: it’s likely to be faster. Korean society reveres speed (tourists quickly become familiar with the phrase “pali-pali” (“hurry hurry”) and this extends to arbitration. The KCAB is proud having a 200-day average case duration, and will try to hit that even in complex international arbitration.
Does everyone speak English?
Pretty much. Younger Korean lawyers are usually educated abroad these days, and most speak excellent English. Many are dual-qualified.
Korea is opening up its legal market. Do you expect that to have an effect on KCAB figures?
In time, it would be logical to see a rise as a result. International firms opening offices in new markets view arbitration as one of their competitive advantages over local firms. So new arrivals in Seoul will have an incentive to promote the KCAB to provide a flow of such work. One of the common features of all the successful arbitration centres is a population of international cross-border law firm.
Are there any pitfalls?
Make clear you want all disputes to be under the international rules, for avoidance of doubt. Otherwise there is a small chance that, for example, a dispute between a locally incorporated subsidiary and a Korean firm, could be classified as domestic. Be aware too that there have been one or two hiccups in the local courts.
There have been two decisions that look bad for Korea as a seat. Local lawyers are keen to portray these matters as a blip – saying they’ll be reversed on appeal. Until then, keep a watching brief.
Have there been any recent developments?
In 2016, the KCAB celebrated its 50th anniversary, and made the changes to its structure referred to above. It also introduced a Code of Ethics for Arbitrators.
So what do non-Koreans who’ve used it say?
On the whole, the feedback has been good. The rules are viewed as serviceable and the staff is energetic and well grooved from all the domestic arbitration. A number of international arbitrators have accepted appointments there since the rule changes in 2011 and 2016.
Kuala Lumpur Regional Centre for Arbitration (KLRCA)
Why’s it worth knowing more about?
After several years in the wilderness, the KLRCA embarked on a modernisation and revitalisation programme six years ago and is now a credible option, for the right case.
Why was it in the wilderness?
Malaysia’s courts started being unsupportive of arbitration. That led users to avoid it as a seat.
So what changed?
The courts have improved in their support and understanding and the centre has had a makeover. In 2014 it moved to new premises inspired by the impressive facilities at Singapore’s Maxwell Chambers. But its biggest shot in the arm came back in 2010, when it appointed new director general, Sundra Rajoo. He has taken things by the scruff of the neck.
What has he done?
Since his arrival it has revised its rules, developed several sets of bespoke ones, upgraded its premises, added international names as advisers, and revamped its secretariat. Rajoo himself has hit the road in a big way, to promote it.
Is there space for it, squeezed between Singapore and Hong Kong?
Winning market share in international arbitration is never easy. The KLRCA has the advantage of a supportive government, which helps a great deal when setbacks occur.
Have setbacks occurred?
For a while it seemed that Sundra Rajoo might leave. That was averted after word reached the right people. Malaysia’s courts, meanwhile, have refrained from slipping into bad habits. If anything, things are on the up.
How busy is it?
2016 is the first year that the KLRCA has released figures. They show 522 new cases registered in 2016. Most, however, were requests for adjudication. Within that, 62 were arbitrations; seven of them international. You can find the full report on the KLRCA’s site.
Will those figures grow?
There’s every possibility. Kuala Lumpur has some natural advantages its arbitration centre can exploit. Chief among them, the city has become a hub for Islamic finance. If the KLRCA can persuade corporate lawyers that Kuala Lumpur is a better seat than, say, Dubai, for arbitration with an Islamic angle, the KLCRCA will be well provided for.
Is that likely?
Neither Dubai nor Kuala Lumpur has a great reputation for court interference (though Malaysia’s courts are improved on yesteryear). But as one Asian source put it, “At least with Malaysia, you have the prospect the government will step in and sort it all out. You’ll never have that in Dubai.”
In readiness, the KLRCA in 2012 released an innovative set of Islam-friendly arbitration rules (inspired by the Model Law) – for which it received a GAR Award for Innovation.
What are the rules like?
The KLRCA released new rules in mid-2017. They’re “light touch” in approach, and include provisions on joinder, consolidation and the review of awards. They give Rajoo a new power to consolidate disputes.