Arbitration In Asia

International arbitration has firmly established its roots in Asia, with Hong Kong and Singapore featuring prominently at the vanguard of its continued development in the region. While other leading economies in Asia have stepped up development of their infrastructure to attract international arbitration, Hong Kong and Singapore have maintained an aggressive course to promote their respective jurisdictions as pro-arbitration and business-friendly communities. This article is based on the Arbitration in Asia chapter in this book’s 2013 edition,1 and introduces the major changes and significant developments in international arbitration undergone by both these jurisdictions since 2011.

Among the key developments in Singapore are the following. First, as of 31 December 2012, the Singapore International Arbitration Centre (SIAC) administered 235 new arbitration cases compared to 188 over the same period in 2011, demonstrating a significant increase. For the first time, Chinese parties, not Indian, accounted for the highest number of case fillings. Along with recent amendments to its arbitral rules and the opening of an overseas office in India, SIAC continues to strengthen its image as a major arbitral institution in the region. Second, key legislative changes have been introduced and two landmark decisions handed down (Kempinksi and Astro) that affirm Singapore’s continued policy of ‘minimal curial intervention’. Third, the appeal of Singapore as an arbitration hub has sparked the debate on how local and foreign talent can grow together by way of possibly establishing a new court.

In Hong Kong, the popularity of the Hong Kong International Arbitration Centre (HKIAC) continues to grow. According to statistics available on the HKIAC website, the HKIAC heard 293 arbitration matters in 2012. This was a slight increase on 2011, when they heard 275 arbitration matters.2 The HKIAC opened its first overseas office in Seoul, Korea, to attract the growing arbitration cases in the country. In addition, having recently been added to India’s official list of ‘gazetted’ states, Hong Kong will be competing with Singapore as a hub for India-related arbitration work.

Singapore and Hong Kong are at the forefront of Asia’s growth. In 2008, the International Court of Arbitration of the International Chamber of Commerce (ICC) decided to locate their Asian offices in both Hong Kong and Singapore. In deciding to do so, Jason Fry, the secretary general of the ICC Court, stated:

We are grateful for the encouragement we have received from the governments of Singapore and Hong Kong to come to the region. Both Singapore and Hong Kong are recognized hubs for international dispute resolution.3

Yet both Singapore and Hong Kong have their limitations, in spite of their best efforts. Singapore is a smaller jurisdiction, and it entered the international arbitration game later than Hong Kong, at a time when Hong Kong hosted a larger pool of arbitral expertise. Singapore does not have the economic locomotive power of China at its disposal, fuelling its efforts to be Asia’s arbitration hub of choice. Singapore also had to refute unsubstantiated claims that its judiciary is too closely identified with the country’s long-governing political party.4 In fact, Singapore has to work doubly hard to encourage foreign corporates and entities to arbitrate in Singapore for the same reasons that these entities may consider Hong Kong as an equally attractive alternative: a pro-arbitration attitude, general judicial reluctance to interference in arbitral decisions, good communication and transport links, and strong government support for arbitration.

The China factor – although largely a boon for arbitration in Hong Kong – comes with its own baggage. For a number of years, the repeated concern in some quarters has, paradoxically, been Hong Kong’s proximity to China, with doubts expressed over the prospects of a fair trial, including perceptions of bias in favour of China-related entities. That such views resonate was somewhat evidenced on the back of a two-year HKIAC project that ended in 2008. Aimed at promoting Hong Kong as a centre for international arbitration in the United States, 30 per cent of those surveyed opined that Hong Kong was ‘too close to China’ and that they could ‘not get a fair trial’ there.5 The reality of these perceptions led a HKIAC spokesperson to say that part of the HKIAC’s remit was to stress the transparency of Hong Kong, its adherence to the rule of law and its ‘separate status and independent legal system’.6

Singapore’s reputation as a world-class venue for international arbitration has attracted business entities from India and, to a lesser extent, Indonesia. In 2012, Chinese parties generated the highest number of case filings at SIAC, overtaking India for the first time. The rise in popularity of SIAC arbitration with Chinese parties and the continued popularity with Indian parties are both significant achievements. SIAC also received a significant number of new case filings from Hong Kong.7 Section 44 of the Indian Arbitration and Conciliation Act 1996 requires that a country which has signed up to the New York Convention8 must be reflected in India’s Official Gazette if an award from that country is to be enforced. Singapore appears in India’s Official Gazette. Previously Hong Kong did not appear; however, on 19 March 2012 the Indian Ministry of Law and Justice added China (including Hong Kong and Macao) to India’s official list of ‘gazetted’ states.9 As a result, arbitration awards made in China, Hong Kong and Macao on or after 19 March 2012 will be recognised as New York Convention awards in India. This is hardly surprising, given that there is already a voluminous level of trade between China and India (projected to reach US$100 billion in 2015). The recognition of Chinese awards would undoubtedly enhance Hong Kong’s appeal as an arbitration centre for India-related disputes.

Over the last 10 years in particular, Singapore has moved in leaps and bounds, building world-class infrastructure to support arbitration, opening up the legal sector to foreign competition and building up international arbitration expertise that is today arguably on a par with that of Hong Kong.

As both Singapore and Hong Kong continue looking to scale up and make themselves attractive venues for international arbitration work, this chapter takes a look at their respective journeys by tracing how both jurisdictions worked assiduously to turn themselves into the arbitration powerhouses that they have become, with a focus on legislative evolution and infrastructure development.

Singapore – a relatively late entrant

The active promotion of international arbitration in Singapore is a fairly recent phenomenon, dating back about 25 years. Situated at the crossroads of South East Asia, and in between the sea lanes of communication that sit astride China and India, Singapore’s geography and trade links put it in a unique position to market itself as the premier arbitration hub for Asia. Its enviable geographic location is buttressed by a legal regime and legislative framework that is arbitration-friendly and fiercely observant of the rule of law. Underpinning this is a government that is dedicated to promoting Singapore as an arbitration hub for Asia.

Significantly, business community perceives Singapore as a neutral venue for arbitration, and the repeatedly strong ranking of the country in corruption indices underpin the legislative environment. In turn, Singapore’s legal regime is supported by a world-class arbitration infrastructure in the shape of Maxwell Chambers, a purpose-built facility that houses a number of world-class arbitral institutions. The Singapore judiciary’s philosophy towards arbitration was most succinctly captured in the Court of Appeal judgment in Tjong Very Sumito v Antig Investments Pte Ltd.10

An unequivocal judicial policy of facilitating and promoting arbitration has firmly taken root in Singapore...The role of the court is now to support, and not to displace, the arbitral process.

Tracing the evolution and establishment of international arbitration in Singapore necessitates a short trip down memory lane.

The UNCITRAL Model Law’s journey to Singapore

In 1890, an Arbitration Ordinance was enacted for the Straits Settlements, which included the Crown colony of Singapore. This was replaced in 1953 by a new Arbitration Ordinance, renamed the Arbitration Act after Singapore’s independence in 1965. The Act did not differentiate between local and foreign arbitrations; more specifically, it countenanced a relatively high level of judicial intervention.11 A distinction was first made with the enactment of the Arbitration (International Investment Disputes) Act of 1985 and the Arbitration (Foreign Awards) Act of 1986. This was a response to Singapore’s accession to the New York Convention. However, the Arbitration (Foreign Awards) Act did not establish a legislative framework for the conduct of arbitration in Singapore involving foreign parties. Instead, it was enacted to deal with enforcement issues affecting arbitral awards made in countries that had already acceded to the New York Convention. The long-standing Arbitration Act was also amended in 1985, designed to specifically deal with domestic arbitrations.

The UNCITRAL Model Law was adopted by the United Nations Commission on International Trade Law on 21 June 1985. Having only recently reorganised and bifurcated its arbitration regimes to address local and foreign arbitrations, the Ministry of Law was tasked to look into the reform of local laws on commercial arbitration in 1991. It appointed a sub-committee to review arbitration legislation in Singapore which submitted its findings in 1993. The committee looked closely at reports made by other national law review committees, especially the United Kingdom’s Mustill Report, which had previously concluded that the Model Law did not offer a regime superior to that which already existed in England.12

In recommending the adoption of the Model Law, the sub-committee presciently recommended that Singapore had to adopt ‘a world view of international arbitration’ if it aimed to become an international arbitration centre, and could not take the UK position. At the second reading of the Bill, the parliamentary secretary of the Ministry of Law observed that the Model Law would appeal to international business people and lawyers, particularly those who would be unfamiliar with the common law and English concepts of arbitration, and that this would promote Singapore’s role as a growing centre for international arbitration.13 In January 1995, the International Arbitration Act (IAA) was duly passed, replacing the Arbitration (Foreign Awards) Act 1986, with some modifications.

With the Model Law incorporated into the new IAA, the Ministry of Law set up the Review of Arbitration Act Committee in 1997, to assess the regime covering local arbitrations. Unlike the United Kingdom which legislated a single comprehensive arbitration framework in the form of the 1996 Arbitration Act, the Review of the Arbitration Act Committee consciously decided to maintain two separate regimes for arbitration in Singapore – one for local arbitrations and the other for international arbitration. The reason for maintaining this distinction was to allow for the prospect of a higher degree of curial intervention on domestic matters.

More significantly, it offered an option to parties to decide whether they wished to opt in or opt out of either regimes by making specific reference to either the IAA or the Arbitration Act, depending on each parties’ desire concerning the extent of curial supervision. The new Arbitration Act came into force in 2002 with a view to align the Act with the Model Law, but applying in circumstances where the Model Law did not.14 In 2004, amendments were made to the Legal Profession Act allowing individuals previously not authorised to practise law in Singapore to represent parties in arbitration proceedings, including offering advice, documentary preparation and other assistance in relation to or arising out of arbitration proceedings.15 Separately, foreign lawyers had already been allowed to represent parties in arbitration proceedings in cases where the governing law was not Singapore law since 1992.16 Finally, in 2007, the government appointed a committee led by Justice V K Rajah to undertake a comprehensive review of the legal services sector to allow foreign law firms to vet and draft Singapore law agreements incorporating arbitration clauses and advising parties on their rights and liabilities in such agreements, both before and after a dispute is arbitrated.16

Without doubt, the legal changes introduced between 1991 and 2007 fundamentally altered the arbitration landscape in Singapore. But what of Singapore’s arbitration hardware?

Building Singapore as an international arbitration hub

Singapore’s road to becoming a world-class arbitration hub was by no means straightforward. In fact, the first step towards establishing a concrete presence only occurred in 1991 with the decision to set up the not-for-profit SIAC: the premier arbitration institution in Singapore. It primarily administers cases under that subscribe to its own rules, the latest version having been updated in 2013. It is also able to preside over arbitrations in accordance with the rules agreed to by disputants. The significance of the formation of SIAC was that it gave Singapore an institutional arbitration capability with a case administration arm and a trained panel of international arbitrators.

Local media reports are generally unclear about when Singapore first decided to pursue its aim of making Singapore an arbitration hub in Asia. However, one article published on 30 April 1987 in the main local daily, The Straits Times, titled ‘Singapore may be arbitration centre’, does shed some light on when the first seeds were sown.17

The article reported that Warren Khoo, then a council member of the Law Society of Singapore and the Singapore Institute of Arbitrators (later to serve on the High Court bench), disclosed the imminent establishment of a working committee to study the possibility of setting up an arbitration centre to settle international commercial disputes. This was on the back of a visit by Michael Gaudet, the then-chairman of the ICC International Court of Arbitration in Paris who was quoted as saying, ‘We are very rewarded to see that the public authorities realise that this might well be the proper time to set up a centre here.’

Mr Khoo noted that the Singapore Economic Development Board had ‘taken a lot of initiative in the idea’ while the attorney general’s chambers was ‘very actively interested’ and very supportive. Mr Khoo, who was also frank in his assessments of the arbitration landscape in Singapore, was quoted as saying:

I think it is correct to say that Singapore is alone, among the major trading nations in Asia, not to have an established arbitral institution, an institution that people can readily refer to when drafting a contract or when a dispute has arisen and there is a need to consider arbitration... The closest thing we have is the Singapore Institute of Arbitrators, which was established a few years ago... But the institute assists arbitrations only of an ad hoc variety and in an ad hoc manner by providing, when requested to do so, a list of arbitrators on its panel.18

By the early 1990s, with a new chief justice at the helm, the local judiciary, in its drive to reduce the backlog of cases pursued the encouragement of dispute resolution through alternative dispute resolution (ADR). These efforts included mediation and arbitration, and institutionalising the concept of the ‘pretrial conference’, with a view to explore other means of dispute resolution instead of litigation.

This drive in the direction of ADR was helpful, as local and international businesses operating in Singapore became increasingly aware of alternative dispute resolution mechanisms like arbitration. As the government worked to make Singapore arbitration friendly by investing in institutions and updating legislation, early results were beginning to show. According to Professor Lawrence Boo, by the first half of the first decade of the new century, ICC data revealed Singapore to be the most popular arbitral seat for ICC arbitration in Asia.19 The ICC International Court of Arbitration also reported that Singapore was one of the top five arbitration jurisdictions in the world.20

On 21 January 2010, Singapore officially opened Maxwell Chambers, the permanent home of SIAC as well as offices for a host of other world-class arbitral institutions. The idea for Maxwell Chambers originated from the legal services working group of the Economic Review Committee in 2002, chaired by the then- deputy prime minister, Lee Hsien Loong, who stressed the need for ‘good infrastructure and facilities’ to make Singapore a regional alternative dispute resolution service centre.21

By November 2005, the Ministry of Law started planning for an integrated dispute resolution complex, settled on a site and commenced design work in January 2007. Maxwell Chambers was completed in July 2009 and the first hearings took place shortly thereafter. The completion of Maxwell Chambers also coincided with the appointment of a new blue-ribboned SIAC board, comprising leading arbitrators and arbitration counsel and chaired by the current SIAC chairman, Professor Michael Pryles. The appointments were made to bring new depth to the international expertise of SIAC, with a view to boosting its international reputation.22

Even as work was being carried out to get the infrastructure in place, the American Arbitration Association signed an agreement with SIAC in 2006 to start a joint venture, known as the International Centre for Dispute Resolution (ICDR), giving Singapore’s arbitration industry a noteworthy shot in the arm. In 2007, another world-renowned arbitral institution, the Permanent Court of Arbitration (PCA), based in The Hague, signed an agreement with the Singapore government to establish a virtual hearing centre in Singapore for PCA cases. According to Tjaco van den Hout, the secretary general of the PCA:

The decision to set up a facility [in Singapore was] a response to a more general request from the membership of our organisation to conduct an outreach to the region, and the choice of Singapore we considered a natural one because it is arbitration-friendly and in itself has a flourishing arbitration industry.23

To date, Maxwell Chambers houses many international arbitration institutions from Singapore and around the world. Apart from SIAC, these include the ICC Court of Arbitration, the ICDR, the International Centre for the Settlement of Disputes (ICSID), the PCA, the London Court of Commercial Arbitration, the World Intellectual Property Organization Arbitration and Mediation Center, the Singapore Chamber of Maritime Arbitration, the Chartered Institute of Arbitrators, the Franchising and Licensing Association, and the Singapore Institute of Arbitrators.

The expansion of the arbitration space in Singapore is also a major reason for the presence of eight of the top 10 law firms (in terms of revenue) in Singapore.24 In 2010, it was estimated that the number of new international arbitration cases in Singapore was expected to rise up to 20 per cent over the next few years,25 an expectation confirmed by the recent SIAC annual report. As of 31 December 2012, SIAC was administering 235 new cases (compared to 198, as of 31 December 2009). For the 235 new cases filed in 2012, the total sum in dispute amounted to S$3.61 billion. This is a substantial increase from last year which involved claims totalling S$1.32 billion.

Separately, at the 2011 Singapore Academy of Law Conference, the Honourable Judge of Appeal Justice V K Rajah noted that 40 per cent of all international arbitrations that took place at SIAC designated Singapore law as their governing law, marking a 10 per cent increase from previous years. A similar trend was also observed in ad hoc arbitrations; both developments highlighting the growing employment of Singapore law in regional transactions. Justice Rajah also stressed that the development of arbitration in Singapore required the legal community to strive continually so as to maintain the defining features of arbitration – speed, cost and flexibility.26

The SIAC issued new rules that came into force on 1 April 2013. The new SIAC 2013 Rules (fifth edition) were amended to reflect the functions of the Court of Arbitration by providing, inter alia, for the president of the Court to perform the roles previously assigned to the SIAC chairman.27 The most relevant changes include the following:

  • A new SIAC Court of Arbitration was created to oversee case administration and arbitral appointment functions of SIAC, and perform quasi-judicial functions such as deciding challenges to arbitrators and objections to the prima facie jurisdiction of SIAC, and determine matters of arbitration policy. The board of directors is made up of prominent local and international lawyers and corporate leaders, and will henceforth be solely responsible for the corporate and business development functions of SIAC.
  • The SIAC registrar is now able to determine when an arbitration has commenced. The registrar is required to ensure that the notice of arbitration complies with the rule requirements.
  • The registrar is now able to adjust the time limits stipulated under the rules.
  • In the event that an arbitrator is removed, it is now possible under the rules to have a substitute. Previously, substitutes were appointed only in the event of an arbitrator’s resignation or death.
  • Party autonomy has been bolstered with respect to party representation. Party representatives, be it legal counsel or otherwise, no longer require ‘proof of authority as the Registrar or the Tribunal may require’.
  • There is no longer a mandatory law exception to conduct witness interviews prior to any hearing. Previously, interviewing witnesses before any hearing may not have been permitted if it fell under the mandatory provision of any applicable law.
  • Jurisdictional objections now follow a two-step procedure. An objection will first go to the registrar, who will determine if it should be referred to the Court of Arbitration. If the Court then determines that there is a valid arbitration agreement, then the case goes forward without prejudice to the tribunal’s decision on its own competence. Previously, the objection would not go through to the registrar, but straight to the committee of the board (now the Court).

Additionally, the decisions of the president, Court and registrar concerning all matters will be conclusive and binding upon the parties and tribunal and they are not required to provide reasons. In this respect, the parties would be taken as to have waived their right for appeal.

India – the friendly neighbour

In 2005, Singapore and India signed the Comprehensive Economic Cooperation Agreement (CECA). Even so, in 2006, only four India-related arbitrations were heard at SIAC. In stark contrast, five years later in 2011, most foreign arbitrations heard in Singapore were from India.

However, the large number of Indian disputes heard at SIAC has not gone unnoticed. The London Court of International Arbitration set up its first independent subsidiary in New Delhi in 2009 and updated its arbitral rules in 2010, portending stiff competition with Singapore in the years to come.28 Even Malaysia’s Kuala Lumpur Regional Centre for Arbitration (KLRCA) has gone on road shows in Mumbai and Delhi with a view to attracting Indian parties to Malaysia for arbitration.29

Singapore is not resting on its laurels. Top legal representatives continue to visit India to aggressively present Singapore’s arbitration capabilities. Law Minister K Shanmugam was in Mumbai in 2010 to participate in a conference organised by SIAC, and spoke again at a SIAC conference in Singapore later that year, discussing India as a global business destination. In early 2012, at another conference titled ‘Arbitration India’, organised by SIAC and the Confederation of Indian Industry (CII), Justice Rajah informed delegates that all arbitral awards made by Singapore courts in 2011 had been upheld by the Indian courts, effectively restating the reliability of Singapore as a neutral venue for arbitration.30

In May 2013, SIAC opened its first overseas office in India. The Honorable Senior Minister for State Indranee Rajah was also present for the new opening of SIAC’s Mumbai office, proving once again that Singapore has both the potential and the power to propel its arbitration skills to the rest of the world. The senior minister remarked that since Singapore and India share close economic, trade and investment ties, it would only be natural that SIAC was established there. Apparently, ‘Indian companies now form the largest foreign corporate contingent in Singapore with more than 5,000 registered Indian companies in Singapore’.31 India has proven itself as one of Singapore’s closest economic Asian partners.

Recent changes to the IAA

Speaking at the inaugural Arbitration Dialogue organised by the Law Ministry in 2011, Minister K Shanmugam stated that Singapore intends to be at the ‘leading edge of thinking in international arbitration’.32 The minister then went on to unambiguously outline the government’s approach to arbitration.

As I tell the arbitration practitioners we meet, our approach in Singapore is: we see a problem, and where it can be solved legislatively, we are in a position to do that within three to six months. For example, in almost every jurisdiction, you might get cases which sometimes are not consistent with how we want arbitration to be supported. We came across such a case from the High Court and the situation was sorted out legislatively within four months. That is the approach we take when we have a court system and judicial philosophy now which is extremely supportive of arbitration as well. They intervene in appropriate cases; they do not take a completely hands-off approach, but totally supportive and in line with international thinking.33

The 2009 amendments to the IAA

In line with Singapore’s reputation as an arbitration-friendly jurisdiction, the IAA was amended in 2009. Interestingly, the purpose of the 2009 International Arbitration Act (Amendment) Bill was tellingly enunciated by the minister at the end of the second reading of the Bill, making it clear what the end-goal of the government was: keep our International Arbitration Act modern, effective and arbitration-friendly. This will in turn help to keep Singapore at the forefront as a top international arbitration centre.

Even though the 1985 Model Law underwent a revision in 2006, Singapore, after consultation with industry experts, decided against its full adoption.35 In fact, the only 2006 amendment to the Model Law that was incorporated into the International Arbitration (Amendment) Bill 2009 was the enactment of the Section 12A which expressly enables a Singapore court to grant interim orders in certain circumstances, in furtherance of arbitration hearings held outside Singapore. This lacuna in the law was hitherto most tellingly exposed in the case of Swift-Fortune v Magnifica Marine SA,36 where the Singapore Court of Appeal held that it did not have the power to grant interim orders to support such arbitrations.

In concert with the Singapore courts’ approach to minimising curial intervention involving international arbitration hearings held in Singapore, the scope of section 12A is limited only to interim measures in support of arbitration, such as interim injunctions to preserve assets. These interim injunctions do not extend to procedural or evidential matters which determine the conduct of the arbitration such as discovery, interrogatories or security for costs.34 However, a reluctance towards curial intervention does not preclude the Singapore courts from assisting in the arbitral tribunal, particularly when the latter has no power to act.

The 2009 amendments to the IAA also saw the modernisation of the definition of an ‘arbitration agreement’ which now covers ‘electronic communication’. While the Act refers to physical written forms of communication like letters, telexes, telegrams, etc, it also covers ‘electronic communications’ such as electronic mail and electronic data exchange.

The third key amendment to the IAA in 2009 covered the authentication of ‘made in Singapore’ awards. This was in response to industry feedback that some parties were not able to enforce Singapore awards overseas as foreign courts required the awards to be authenticated before enforcement. The amendment allows the Minister of Law to prescribe designated bodies and institutions to authenticate awards made in Singapore.

The 2011 amendments to and the passing of the IAA 2012

Even though the International Arbitration (Amendment) Act 2009 came into force in 2010, by late 2011 the Ministry of Law launched another public consultation exercise on additional amendments to the IAA and proposed the enactment of a Foreign Limitation Periods Act (FLPA) that would apply to arbitration. The language employed by the Ministry in the public consultation paper was noteworthy. Acknowledging Singapore as a global venue for arbitration, the public consultation paper quoted a 2010 study by Queen Mary, University of London, and sponsored by White & Case, which found that Singapore was Asia’s top arbitration destination. The survey assessed a number of criteria, especially factors which influence the choice of law, choice of seat, choice of arbitrators and arbitral institutions. Insofar as the seat of arbitration was concerned, it was noteworthy that the survey respondents rated national arbitration laws, a jurisdiction’s record of enforcing arbitration agreements and awards, and the perceived neutrality and impartiality of the jurisdiction as the most important factors. Singapore scored highly in each category.35

30 per cent of the survey respondents listed London as their preferred seat of international arbitration, followed by Geneva with 9 per cent. Singapore was ranked alongside Tokyo and Paris with 7 per cent listing it as their preferred seat, ahead of New York. The fact that Singapore was not even on the previous Queen Mary survey, conducted in 2006, is indicative of the progress made by the country in promoting itself as an international arbitration hub.

Four changes to the IAA were proposed in the International Arbitration Act (2011) Amendment Bill.36 The Bill passed on in April 2012 resulting in the new IAA 2012.

Firstly, the definition of ‘arbitration agreement’ was expanded to include agreements concluded orally, by conduct or through other means (new Section 2A(4) of the IAA). Previously, the IAA only recognised arbitration agreements made in writing, a point that does not accord with commercial reality in cases where arbitration agreements are often concluded orally, and put into writing later. The amendments are in line with the 2006 Model Law, or the ‘hybrid approach’, which extends the IAA’s application by any means, including by conduct and orally, as long as their content is recorded in any form.

Secondly, parties are now able to appeal against an arbitral tribunal decision where the tribunal ruled that it has no jurisdiction (negative jurisdictional rulings) (Section 10 of the IAA was repealed and a new section 10 was substituted). This appeal can be made at any stage of the arbitral proceedings. Prior to the amendment, Singapore courts could only review positive jurisdictional rulings, where arbitral tribunals ruled that a Singapore court could hear the dispute in question. The Law Ministry eventually formed the view that an inequity is just as likely to arise from a negative jurisdictional ruling as it is from a positive jurisdictional ruling. The amendment seeks to allow parties to have recourse to Singapore courts in respect of both positive and negative jurisdictional rulings. Amending the IAA to allow for negative jurisdictional rulings would differ from the Model Law position taken by the Court of Appeal in PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA40 which interpreted article 16(3) to allow appeals only with respect to positive rulings on jurisdiction.37

Thirdly, the arbitral tribunal’s powers to award costs are enhanced. A tribunal may award simple or compound interest on the whole or any part of any sum awarded. This also applies to any sum already paid before the date of the award and costs awarded (the Bill repealed the old Section 20 of the IAA and inserted a new Section 20). It is noteworthy that the Ministry’s public consultation paper at paragraph 13 revealed that the draft provision was based on section 79 of the Hong Kong Arbitration Ordinance 2010.

Finally, emergency arbitrators are now recognised under the definition of an arbitral tribunal of the IAA (the Bill amended Section 2(a) of the IAA). This means that an emergency arbitrator will be given the same powers as an arbitral tribunal (such as the power to grant urgent relief). This development makes Singapore ‘the first jurisdiction to expressly include an emergency arbitrator under the definition of an arbitral tribunal in its IAA.’42 The appointment of the ‘emergency arbitrator’ was introduced by the SIAC Rules 2010. This amendment seeks to ensure that an order to appoint an emergency arbitrator is enforceable under the IAA since previously the legal status of emergency arbitrators and the enforceability of their interim orders was unclear.

In concert with these latest amendments, the introduction of the FLPA seeks to clarify which country’s limitation laws apply to disputes that are litigated in Singapore (either through court or arbitration), but which are governed by another country’s laws. The Ministry of Law has recommended that the law which governs the dispute should apply. The FLPA was passed in April 2012 as well.

A fascinating canard to the latest public consultation exercise is the Ministry of Law’s readiness to float trial balloons for commentary and criticism. While not proposing the specific amendments, the Ministry is considering amending the IAA to allow parties, by agreement, to waive their right to set aside arbitration awards, effectively excluding the prospect of appeal to the courts. It is noteworthy that the Ministry referred to the new French Arbitration Act which contains that very provision in article 1522, so as to bring finality to disputes between parties. Another trial balloon floated in the recent exercise involved a move away from the doctrine of champerty to allow the qualified use of third-party funding to fund litigation and arbitration.

The Ministry’s desire to keep pace with international developments reiterates the pro-arbitration framework that Singapore seeks to build upon, so as to keep pace with other world-class arbitration jurisdictions around the world. That it will do so is hardly in doubt.

‘Minimal curial intervention’ – Singapore judiciary stands strong

The recent Court of Appeal decision in PT Prima International Development v Kempinski Hotels SA and other appeals38 paves the way for the structure of future pleadings and affects the arbitral awards that follow. It avoids the formalistic approach to pleadings in arbitration and instead focuses on whether the wronged party has been truly prejudiced by acts of the other party. Pleadings are not put under the spotlight as they are in litigation, but, as the Court of Appeal states, parties must still have the opportunity to understand and respond to the case against them in accordance with the principles of natural justice. This approach is in line with the continued support for ‘minimal curial intervention’ and enforcement of awards in Singapore, presumably to strengthen its attractiveness as an arbitration destination. With the current judgment, it will attract more arbitration proceedings since the requirement for pleadings will not be seen in par with litigation. Gerald Chien-Yi believes that this departure from a fact-based pleading system so often seen in litigation should be welcomed with open arms, because a key difference of international arbitration is to cater to the parties of a different legal system which may have different concepts of rules in pleadings.39

Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others45 was a key decision by the High Court interpreting the UNCITRAL Model Law. A dispute arose out of a failed joint venture between two group companies, Astro and Lippo, to provide multimedia services in Indonesia. Lippo attempted to raise lack of jurisdiction during the recognition and enforcement stage as per article 36 of the Model Law. However, this was rejected by the High Court as article 36 did not have force of law in Singapore. Defences could have only been raised at the setting-aside stage (article 34) which had to be made within three months following the issuance of the award.

The decision once again highlights the Singapore courts’ continued approach for ‘minimal curial intervention’. The High Court noted:

Mr Landau’s [ie, the counsel for Lippo] approach draws strongly from the English position of increasing judicial intervention despite his admission that it is the UK which has broken rank with other Model Law countries in so doing. Singapore has chosen the path of less curial intervention, in line with the objectives of the Model Law.40

As a result, a party contesting the jurisdiction of the arbitral tribunal should promptly seek recourse under article 34 or article 16 of the Model Law. The party must adopt an ‘active’ approach with respect to challenging the tribunal’s jurisdiction.

Enter foreign lawyers

Subject to the approval of the Singapore courts, QCs may be permitted to argue certain cases of specialty. The Astro case saw two prominent QCs argue before the Singapore High Court. In Re Joseph David QC,41 the Singapore High Court allowed Astro’s application to admit Mr David Joseph QC as its counsel because it considered that Mr Joseph QC ‘appears particularly suited to address the issues arising in this case… because he is the author of Jurisdiction and Arbitration Agreements and their Enforcement [Sweet & Maxwell, 2005; second edition 2010], which is now widely considered to be a leading reference text in the complex field of arbitration law. This book has also been referred to by the Singapore courts as an authority for various legal propositions or views.’ Similarly, Mr Toby Landau QC, who acted for the successful party in the UK Supreme Court case of Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan,42 was admitted as Lippo’s counsel because the case was identified by the Singapore High Court as ‘being a decision of the UK Supreme Court [which therefore] merits careful consideration… The application of Dallah in the resolution of this legal conundrum could have important implications for the arbitral and commercial communities here and perhaps elsewhere.’43

This was the first time British QCs had been allowed to appear before a Singaporean Court since the Legal Profession (Amendment) Bill in February 2012. The admission of both QCs reflect Singapore’s current statutory scheme to admit QCs on an ad hoc basis if a matter contains issues of fact or law of ‘sufficient difficulty and complexity’ and if the circumstances of the case warrant it. VK Rajah JA noted that:

Taking into consideration advancements in legal education, the ever greater exposure of Singapore advocates to increasingly complex areas of law at the frontiers of legal evolution as well as the commendable elevation of standards within the Bar, it has become increasingly difficult to satisfy the Court that the legal issues and/or facts are of sufficient difficulty and complexity to require elucidation and/or argument by a Queen’s Counsel…Indeed, with the effluxion of time, it appears that local Senior Counsel or experienced lawyers with particular expertise in the respective areas of law will be able to handle competently most legal issues that arise before Singapore courts.44

The granting of foreign attorneys to argue highly complex areas of law before Singapore courts sets the spotlight on the country’s growing prominence in the development of international arbitration law. Singapore has the potential to become the testing ground for addressing the most complex issues in international arbitration law. This can only be beneficial as the judgments, such as the Astro case, may be instructive for other jurisdictions to follow.

A new court?

The development of Singapore as a global international arbitration hub has been supported by initiatives that leverage on Singapore’s attraction as a flexible and responsive jurisdiction. In the Opening of the Legal Year 2013 and Welcome Reference for the new Chief Justice Sundaresh Menon, he announced that one of his major priorities would be to develop a framework for the establishment of the Singapore International Commercial Court (SICC). He noted that:

We’ve seen the great success of the efforts to promote Singapore as a hub for international arbitration. Much of this work emanates from abroad, but parties have chosen to arbitrate here. There are many factors that account for this and it’s time to take fuller advantage of them… From my preliminary consultations, it appears there will be strong interest in this from the community of legal corporations operating throughout Asia. This promises to be an exciting and important step in our efforts to grow the legal services sector and to expand the scope for us to internationalise and export Singapore law.45

From the information that is currently available, the SICC would seek to service the wider Asia region and ‘export’ Singapore law and its legal sector. The initiative is currently being investigated by way of a working group set up by Justice V K Rajah and Indranee Rajah.

The sudden increase of foreign firms and foreign lawyers has made it ripe to review the future of the Singapore legal sector. The Chief Justice emphasised the need to foster collaboration between the foreign and local attorneys. The new court would seek to ‘enhance the standing of the subordinate courts, and encourage larger commercial law firms and senior counsel to devote more time and financial support to pro bono efforts’.46

The exact implication of this initiative for arbitration in Singapore is unclear. However, it is without a doubt that the success of arbitration in Singapore has prompted the query on what else Singapore can offer to the international community. If the SICC proves to be a successful initiative, it would truly internationalise Singapore as a friendly jurisdiction and enhance its competitive edge against Hong Kong.

Hong Kong: Asia’s most established arbitration venue?

Hong Kong has been repeatedly ranked as the world’s freest economy. Its long and deep history of commerce parallels its status as one of Asia’s most mature legal jurisdictions. In its 2012 Economic Freedom of the World annual report, the Frasier Institute ranked Hong Kong in first place for economic freedom, a position it has retained for more than 30 years.53 Hong Kong was also ranked as the world’s most competitive economy by The World Competitiveness Yearbook 2012 published by the International Institute for Management Development.47

Hong Kong’s judiciary, in particular its Court of Final Appeal, is served by pre-eminent lawyers from Hong Kong, including serving Supreme Court judges from the United Kingdom and retired Chief Justices from Australia. It is home to more than 8,000 lawyers with nearly 1,300 registered foreign lawyers from 28 jurisdictions.48 Infrastructure remains second to none, and its communication and transport links are world class.

In spite of misgivings about China and the role Beijing plays in determining economic policy in Hong Kong, business confidence has remained high even after 1997, when Hong Kong was returned to China. Hong Kong remains a global financial centre and has stuck to the common law system. It is also a separate customs territory from the rest of China. Its existence as a special administrative region of China has not stopped the employment of common law precedents and various international treaties. Covenants on the protection of fundamental rights have been incorporated into Hong Kong law. Arbitral awards in Hong Kong are enforceable in China because of a mutual legal assistance arrangement signed in 1999.

In fact, Hong Kong’s gravitas as an international arbitration centre under the ‘one country, two systems’ principle has increased, as it offers an ideal place for international arbitration bodies interested in the China-related work. In 2010, Hong Kong signed a cooperation agreement with the China Council for the Promotion of International Trade – one of the aims of which was to strengthen cooperation between Hong Kong’s arbitral institutions and their China-based equivalents like the China International Economic and Trade Arbitration Commission (CIETAC).49 For its part, Beijing continues to render ‘unwavering support to Hong Kong as a matter of national policy and interests’.50 The Mainland and Hong Kong Closer Economic Partnership Agreement (CEPA), a free-trade agreement privileges Hong Kong products with zero import tariffs into China, is one of the economic umbilical cords that make Hong Kong a gateway to the burgeoning growth in China. Tellingly, in the words of Secretary for Justice Wong Yan Lung, ‘China is making full use of Hong Kong’s strength in the legal field to enhance its own economic interests in the global arena.’51

As with Singapore, a peek into the past tells a fascinating story of Hong Kong’s evolution into a premier arbitration centre in Asia.

Tracing Hong Kong’s arbitral evolution

The colony of Hong Kong introduced its first Arbitration Ordinance in 1844, which gave the presiding governor wide powers to refer any civil dispute to arbitration. Curiously, the Ordinance was not passed as an alternative to litigation but as the main means of dispute resolution since no civil litigation system existed in Hong Kong in 1844. In fact, it was enacted as an interim measure until a legal system took root in the colony and powers granted to the Governor would cease after the appointment of a Supreme Court judge in Hong Kong. Unfortunately as the Ordinance was not sanctioned by London, the Colonial Office rendered it otiose about five months after its enactment.52

It was only with the enactment of the Civil Administration of Justice (Amendment) Ordinance in 1855 that arbitration as an alternative means of dispute resolution was recognised in Hong Kong. The 1855 Ordinance remained on the Hong Kong statute books until 1901. It was finally repealed in 1901 by the Code of Civil Procedure which incorporated many provisions found in the English Arbitration Act of 1889. The former was in turn repealed in 1950 by the Supreme Court (Amendment) Ordinance.

The Hong Kong Arbitration Ordinance of 1963 was the first comprehensive arbitration legislation for the colony containing provisions that applied to domestic and international arbitrations. Based on the English Arbitration Act of 1950, it would remain in force until 2011. In the case of a domestic arbitration, the Ordinance gave the courts a discretion to stay court proceedings. In an international arbitration, however, a stay was mandatory. While remaining the backbone of Hong Kong’s arbitration regime for almost 50 years, it was amended a number of times to support truly international arbitration in Hong Kong, rather than remaining distinctly English-based. In 1975, the New York Convention was also incorporated into the Ordinance.

In 1979, the attorney general John Griffiths QC appointed a Law Reform Commission to assess what new provisions ought to be included into the Hong Kong Arbitration Ordinance. The findings of the 1981 Report on Commercial Arbitration led to the Arbitration (Amendment) Ordinance becoming law in 1982, and it marked the first time Hong Kong’s arbitration laws transitioned from the arbitration laws of England.

Shortly thereafter, the attorney general channelled his efforts to see how Hong Kong could develop into an international arbitration centre. A steering committee was set up under the late Justice David Hunter comprising two sub-committees; one to study the financial viability of a Hong-Kong based international arbitration centre and the other to look at what rules it should adopt.

Born in the private sector: HKIAC

The committee proposed arbitration facilities to be provided by private institutions in addition to courses provided by tertiary institutions to teach arbitration law and practice. On the financial front, about HK$1.5 million was raised from the private sector, with the government matching the contribution dollar for dollar.The government also set aside a floor of the old Central Magistracy Building for the HKIAC, a company limited by guarantee subsequently granted charitable status, which heard its first arbitration hearing in September 1985. The lack of experienced arbitrators was addressed by legislative changes that enabled judges and civil servants to accept appointments as arbitrators in Hong Kong.53

In the late 1980s, the financial capital that led to the establishment of the HKIAC was running out. As a result, in March 1990, the Finance Committee of the Legislative Council extended a one-time grant of HK$19.1 million from which the institution draws an investment income. With financial hurdles out of the way, The HKIAC made representations to the government for larger premises as the HKIAC’s growth had rendered the Arbuthnot Road premises inadequate. After introducing the Model Law in 1990, 54 cases were heard at the HKIAC. In 1992, the number of administered cases grew rapidly to 185 cases.54

In response, the Hong Kong government duly offered the HKIAC half of the 38th floor at Exchange Square. Today, the HKIAC has expanded by taking the entire 38th floor, with a total floor space of over 1,200 square metres, effectively doubling its previous size.55

With the adoption of the UNCITRAL Model Law in 1985, the Law Reform Commission set up a specialist sub-committee to consider whether Hong Kong should adopt the Model Law. In September 1987, the Commission recommended the adoption of the Model with minor amendments. The Model Law was formerly enacted as the Arbitration (Amendment No. 1) Ordinance 1989, and it was incorporated as the Fifth Schedule to the Arbitration Ordinance. The Commission gave a number of reasons for doing so.63 Among others, adoption of the Model Law provided a sound framework for international arbitration and Hong Kong would benefit as a growing centre of international arbitration. In its proposals, the Commission also recommended that permanent funding be set aside for the HKIAC and that it be formally recognised as a part of Hong Kong’s arbitration laws with a view to promote it as a Hong Kong institution nominated in arbitration clauses.

In 1992, the attorney general put together a committee of the HKIAC under the chairmanship of Justice Neil Kaplan to look into the prospects of amendments to the Arbitration Ordinance in concert with the May 1991 release of a new draft Arbitration Act in the United Kingdom. It was on this committee’s recommendations that the Arbitration Ordinance underwent another significant update in 1997 with the enactment of the Arbitration (Amendment) Ordinance 1996, a few months before Hong Kong reverted to the People’s Republic of China (PRC).

A number of new provisions were introduced to extend party autonomy and to limit the extent of curial intervention in arbitrations. A new section 2AA was also introduced stating the objects and principles of the Arbitration Ordinance – to facilitate the fair and speedy resolution of disputes by arbitration without unnecessary expenses. Section 2AA(2) which outline the principles of the Ordinance stated that parties should be free to agree how a dispute was settled bearing in mind the public interest and that the court’s curial powers are as detailed by the Ordinance. The committee also recommended a fundamental reform of the Arbitration Ordinance for the long term. However, as this proposal was significantly more complex than the surgical amendments to the Ordinance, it was held in abeyance, ultimately only seeing the light of day in 2011.

The 1997 handover did present one important problem. The return of Hong Kong to Chinese sovereignty meant that in the eyes of the New York Convention, Hong Kong was no longer a separate jurisdiction. This made it impossible to enforce a mainland China award in Hong Kong and a Hong Kong award in mainland China after 30 June 1997. The matter was resolved nine days before the handover, when both jurisdictions signed a memorandum of understanding (MOU) known as the Arrangement concerning Mutual Enforcement of Arbitration Awards between Mainland and the Hong Kong SAR. The MOU iterated that courts of Hong Kong would agree to enforce awards made with reference to the arbitral laws of the PRC. Likewise, PRC courts would agree to enforce awards made in Hong Kong in accordance with the Arbitration Ordinance. The provisions of the MOU were duly incorporated in the Arbitration (Amendment) Ordinance 2000.

Towards a unified arbitration ordinance

In 1998, the Hong Kong Institute of Arbitrators sought to look into the prospects of a unitary regime that would apply the Model Law to domestic and international arbitration agreements as recommended by the 1992 HKIAC committee on arbitration law. They established a committee on Hong Kong Arbitration Law, supported by the HKIAC and the secretary for justice. Their terms of reference were to operationalise the recommendation of the 1992 Committee which proposed that:

The Arbitration Ordinance, Cap. 341, as amended by the [Arbitration (Amendment) Ordinance (No. 75 of 1996)], should be completely redrawn in order to apply the Model Law equally to both domestic and international arbitrations, and arbitration agreements, together with such additional provisions as are deemed, in the light of experience in Hong Kong and other Model Law jurisdictions, both necessary and desirable. In the process, the legislation would keep pace with the needs of the modern arbitration community; domestically and globally, and would free Hong Kong from the outdated and illogically arranged English Arbitration Acts [1950-1979, now repealed], and the large body of case law on which their interpretation depends.56

On the need for a unitary regime, the committee cited a number of advantages. First, the question of whether the local or international regime applies is avoided. Second, a unitary regime was in line with the international trend of reducing curial intervention in all forms of arbitral proceedings. Third, the international character of business in Hong Kong and the existence of a unitary regime would enable both the business community and the legal profession to operate an arbitration regime that is in line with international arbitration development and practices. Finally, the Model Law would also attract lawyers from civil law, not just common law, jurisdictions.57

After five years of work and consultation, the committee submitted its final report in April 2003 to the secretary for justice. The report also extended the scope of application beyond ‘commercial arbitration’ by referring specifically to ‘an arbitration under an arbitration agreement’, unlike the Model Law which refers specifically to ‘international commercial arbitration’ as per Article 1(1).58

In June 2005, the Department of Justice sought the input of the members of the Legislative Council Panel on Administration of Justice and Legal Services (AJLS) on the committee’s report. With the AJLS’ support, a Department of Justice departmental working group was established to implement the report recommendations. A consultation paper was published in December 2007 and feedback was sought on the proposals made in the paper as well as the Department of Justice’s consultation draft Arbitration Bill (Arbitration Bill 2007). The latter was unambiguous about the principal rationale of the Bill – one of which was to reinforce and promote Hong Kong as a leading regional centre for legal services and dispute resolution.59

The paper was circulated to 60 entities including arbitration institutions, government departments, legal representatives and a variety of private bodies. More than 40 submissions were received and the working group duly considered all submissions, which were in turn taken into account by the Department of Justice. After some revisions in light of feedback, the Arbitration Bill 2007 was then tabled before the Legislative Council in June 2009 as the Arbitration Bill 2009. The Bill’s committee held 13 meetings between July 2009 and May 2010 to deliberate the Arbitration Bill 2009, and some committee stage amendments to the 2009 Bill were introduced.60 Some of the key amendments were as follows:61

  • Clause 18(2)(a)of the Arbitration Bill 2009 was amended to permit publication, disclosure or communication of information involving arbitral proceedings or an award if it was to establish a legal right or interest of a party or enforcing or challenging an award in court either within or outside Hong Kong.
  • The reference to a ‘written agreement’ in clause 32 was replaced by ‘arbitration agreement’ to clarify that the provision applied to the appointment of a mediator as provided by the arbitration agreement.

While the legal industry had been proposing a unitary arbitration regime since the mid-1990s, the new Arbitration Ordinance also included a set of optional provisions in Schedule 2. These allow parties to opt in to some or all of the provisions which cover domestic arbitrations under the previous Arbitration Ordinance. The existence of schedule 2 was essentially a result of lobbying by the local construction industry. As a result, the provisions under schedule 2 will apply for six years until 2017, if an arbitration agreement provides that it is a ‘domestic arbitration’.62 Schedule 2 buttresses the view of some legal minds that the new Arbitration Ordinance is better conceived as evolutionary rather than revolutionary aimed at balancing the needs of all parties.63

The new Arbitration Ordinance also contains provisions that explicitly deal with confidentiality in arbitral proceedings and awards. This makes Hong Kong the first Asian jurisdiction to include such provisions in its arbitration regime. The only other jurisdictions worldwide that have express confidentiality are New Zealand, Australia, Scotland and Spain.64 Insofar as the publication of awards are concerned, the new Arbitration Ordinance allows for this after parties give their consent to do so.

While the impending introduction of a unitary regime was debated, discussed and refined, the ICC Court decided to open two new Asia offices in 2008, one in Singapore and the other in Hong Kong. The ICC has opened a Secretariat of the Court in Hong Kong complete with a case management team to oversee and administer Asian cases under the ICC Rules of Arbitration.65

The success of the HKIAC in promoting its services among the arbitration community has raised its profile internationally. In May 2013, HKIAC launched its first overseas office in Seoul (the Seoul International Dispute Resolution Centre), in an effort to harness the growing arbitration sector in Korea.66 Additionally, the PCA held its first hearing at the HKIAC in July 2013 demonstrating the growing appeal that the HKIAC, and Hong Kong in general, has internationally.67

The most recent amendments to the HKIAC Administered Arbitration Rules were made in 2013. First, a revised provision is incorporated for the tribunal to join additional parties to an arbitration. Second, new provisions were introduced to allow the HKIAC to consolidate two or more arbitrations or to allow claims arising out of or in relation to multiple contracts to be raised in a single proceeding. Third, new provisions on emergency arbitrators were introduced. Finally, a fee cap was introduced for an arbitrator’s agreed hourly rate at HK$6,500 per hour unless agreed otherwise by the parties.

The Arbitration (Amendment) Bill 2013 to the Arbitration Ordinance

The Arbitration Ordinance was recently amended by the Arbitration (Amendment) Bill 2013 (the 2013 Amendments). The 2013 Amendments introduced new provisions to address two important key features: the enforcement of arbitration awards made in the Macao Special Administrative Region of China (Macao) and, like Singapore’s recent amendments to the IAA, the enforcement of emergency relief granted by an emergency arbitrator.68

The enforceability of foreign awards is undoubtedly a primary consideration in selecting the seat of arbitration. The New York Convention facilitates the mutual enforcement of arbitration awards among its member states. However, the New York Convention only applies as between states. Since Hong Kong and Macao were both returned to the PRC in 1997 and 1999 respectively, this presented the problem of mutual recognition and enforcement of arbitral awards between Hong Kong and Macao.69

This lacuna in the law was plugged when Hong Kong and Macao signed the Arrangement Concerning Reciprocal Recognition and Enforcement of Arbitral Awards Between the Hong Kong Special Administrative Region and the Macao Special Administrative Region78 on 7 January 2013 (the HK-Macao Arrangement). Article 1 of the HK-Macao Agreement provides that:

The courts of the HKSAR shall recognise and enforce arbitral awards made in the Macao SAR pursuant to the arbitration laws and regulations of the Macao SAR and the courts of the Macao SAR shall recognise and enforce arbitral awards made in the HKSAR pursuant to the Arbitration Ordinance of the HKSAR.

The 2013 Amendments were thus made to enshrine the HK-Macao Arrangement in the Arbitration Ordinance.

Part 3A of the 2013 Amendments was enacted to keep up with both international and regional legislative developments in the enforcement of emergency arbitration awards. In particular, the new section 22B allows for an arbitrator to be appointed at short notice and commence the hearing and for the recognition of ‘emergency relief’ orders made pursuant to the emergency arbitrator’s appointment. The provision of ‘fast-track’ arbitration services will certainly increase Hong Kong’s attractiveness as an arbitration hub to commercial parties.

Recent cases in Hong Kong

In Pacific China Holdings v Grand Pacific Holdings,70 the applicant argued that it had been prejudiced by the arbitral tribunal’s violation of certain procedural rules on interlocutory matters. However, the Court of Appeal found that the violation had to be ‘sufficiently serious or egregious so that one could say a party has been denied due process’.71 This was affirmed on appeal to the Court of Final Appeal. The case demonstrates the limited intervention by the Hong Kong judiciary in arbitrations.

In Lin Ming v Chen Shu Quan,72 the court dealt with anti-arbitration injunctions and demonstrated the restrictive approach taken by the Hong Kong courts in refusing to grant such injunctions:

Further, granting the injunction sought by the first plaintiff would tend to undermine the object of the Arbitration Ordinance viz. to facilitate the fair and speedy resolution of disputes by arbitration without unnecessary expense, and the principles upon which the Ordinance is based.73

These cases demonstrate the continued support of the Hong Kong courts to facilitate arbitration in the jurisdiction. However, the more pertinent cases relate to those arbitral proceedings involving Chinese parties and the perception problem that it creates for the Hong Kong arbitration community.

China and beyond: boon or bane?

Going forward, the economic opportunities afforded by many Chinese cities will keep Hong Kong’s arbitral community buzzing. In December 2011, during an address in Seoul, Hong Kong’s secretary for justice Wong Yan Lung put on record the intention to develop Hong Kong into the international arbitration hub of the Asia-Pacific. To this end, the secretary for justice cited the significant support Hong Kong has received from the Chinese government and China’s vice premier Li Keqiang, referring to initiatives implemented in the Chinese city of Qinghai to encourage arbitral institutions in Hong Kong to provide their services to Chinese corporates with a view to popularise the use of Hong Kong law to settle commercial disputes.74

The comments of the secretary for justice in Seoul also reveal the desire for a deeper engagement in the arbitration realm with South Korea. His remarks were unambiguously direct:

I understand Korean businessmen have been resorting to arbitration to resolve disputes for a long time. For international arbitrations, many of you are users of the ICC’s facilities. The Korean legal community is active on the arbitration scene. This is certainly an area where closer co-operation between Hong Kong and Korea can be mutually beneficial and further explored.75

Hong Kong faces a perception problem when it comes to Chinese awards. In 2011, this was tangentially raised in the case of Democratic Republic of the Congo v FG Hemisphere Associates85 which clarified the law covering sovereign immunity in Hong Kong. On the one hand, the court stated that while immunity applied to the enforcement of court judgments and arbitral awards, it would not apply to arbitral proceedings, meaning sovereign immunity cannot be pleaded as a bar to the jurisdiction of an arbitral tribunal. On the other, the question remains whether the courts in Hong Kong could be prevented from exercising supervisory jurisdiction over a Hong Kong arbitration on the grounds of sovereign immunity. Even though the latter issue was not addressed by the court, some have argued that a claim of sovereign immunity would not stop the courts in Hong Kong from exercising supervisory jurisdiction.76 Equally, some argue that it is unlikely that state-owned Chinese corporations would be allowed to present a sovereign immunity claim before a Hong Kong court.77

Hong Kong’s secretary for justice Wong Yan Lung also weighed in on the subject in a speech made on the occasion of the Opening of the Legal Year in January 2012:

Following the judgment, questions have been raised on the enforceability of arbitral awards in Hong Kong. Views such as those suggesting that Mainland state-owned enterprises stand to enjoy absolute immunity in Hong Kong by virtue of this decision are misconceived, as a Mainland state-owned enterprise is simply not an entity of a foreign state. Further, the fact is arbitration cases affecting foreign states are few in Hong Kong, and legislation has been introduced or enacted in jurisdictions such as the UK and the US to curb activities of buying and enforcing sovereign debts incurred by developing countries. In any event, parties are now better placed to organise their affairs when the law has been put beyond doubt.78

Equally noteworthy, in light of doubts about Hong Kong as a neutral arbitral venue in mainland China-related cases, the Court of Appeal decision in Shandong Hongri Acron Chemical Joint Stock Company Limited v PetroChina International (Hong Kong) Corporation Limited79 sought to address concerns of Chinese bias.80 In that case, the Court of Appeal enforced an arbitration award rendered against a mainland China state-owned company, squarely addressing the point about judicial independence and alleged judicial bias towards China.81

The perception of Hong Kong’s nexus with China is likely to be watched very closely by the arbitral community in the years to come, but if Hong Kong maintains its pro-arbitration norms, these perceptions are unlikely to lead to any decrease in its popularity as an arbitral seat of choice. As the legal community comes to terms with the new Arbitration Ordinance and the new HKIAC Rules, it should ensure that Hong Kong’s arbitration regime remains up to date and attractive to business for years to come.

That said, the real test for Hong Kong will rest on how successful Hong Kong is in attracting parties from countries like Korea, which are significantly closer to Hong Kong than Singapore, to settle arbitration disputes. The HKIAC’s recent launch in Seoul will be useful in that objective. If Hong Kong manages to assuage perceptions among the international business community of its China bias, it would stand out as the arbitration capital of Asia. The well-publicised split in 2012 between CIETAC Beijing and CIETAC Shanghai due to disagreements over the 2012 CIETAC Rules82 could work in Hong Kong’s favour in attracting more PRC-related disputes. Until then, with the introduction of the new Arbitration Ordinance coupled with the increasing caseload of both the HKIAC and the Hong Kong branch of the ICC secretariat, Hong Kong is likely to be seen as the venue of choice involving disputes between Chinese and Western companies.83


The eyes have truly turned on Asia, where it is determinedly becoming a popular arbitration destination, for both international and domestic proceedings. UK-based arbitrator Julian Lew commented that emerging economies are currently leading international arbitration due to many factors, including its low world debt – Asia has only 19 per cent of the world’s debt.84 It can thus focus on its continuous effort to build its reputation as an arbitration haven with the ongoing EU crisis, while avoiding high bureaucratic and administrative cost when the fees could be less than half in Asia. Additionally, the influx of international firms in the aforementioned countries contributes to more expertise for expert arbitration advice in the whole region.

Lew also noted that, historically, Asian countries played a limited role in the negotiation of key international legal instruments on arbitration. For instance, the negotiation of the New York Convention consisted of former colonial powers and no independent Asian countries, with the exception of Pakistan, India, the Philippines, Sri Lanka and Vietnam.85 However, the turning point came in the mid- to late 1980s when, unlike the Western arbitration hubs, most Asian jurisdictions based their arbitration legislation on the 1985 UNCITRAL Model Law. ‘Asia has the highest concentration of Model Law countries in the World.’86 This advantage will, as Lew predicts, result in the development of international arbitration law being spearheaded by the Asian countries and lead to conformity on the Model Law’s application.87 The Astro decision is a case in point.

The theme of competition has defined Singapore and Hong Kong’s arbitration efforts, in particular, over the last few years. This is unlikely to go away anytime soon. A putatively arbitration-unfriendly judgment in Hong Kong or Singapore in the future will inevitably generate commentaries that devote a line or two for the reader to consider the other as a better arbitration destination. Likewise, a pro-arbitration judgment in either jurisdiction may well be amplified and employed as an agent of one-upmanship.

The Asian arbitration pie is only likely to get bigger. In 2011, Singapore law minister K Shanmugam even offered to support the KLRCA which ironically, was the first regional arbitration centre in Asia, having been set up in 1978.88 Such synergistic thinking is likely to benefit both Singapore and Malaysia. His counterpart, Malaysian law minister Nazri Aziz, was also quoted as saying that disputes in niche areas like Islamic financial matters are likely to be arbitrated in Kuala Lumpur. He stated, ‘Singapore and Kuala Lumpur are too near. We might as well have a good understanding and cooperation. It’s better to work together rather than start competing.’89 While it remains to be seen if Hong Kong or Singapore will go down this road, healthy competition between two of the world’s freest economies, at the centre of the most economically dynamic region in the world today, should not be unexpected.

  1. This article is an update of the Arbitration in Asia chapter in The Asia-Pacific Arbitration Review 2013, entitled ‘Singapore and Hong Kong’s international arbitration journey: A tale of two cities’, published by Global Arbitration Review.
  2. For 2012 statistics – ‘Case Statistics 2012’. Hong Kong International Arbitration Centre. For 2010 statistics – ‘Case Statistics 2010’. Hong Kong International Arbitration Centre. for 2010 statistics.
  3. ‘ICC International Court of Arbitration to open offices in Asia’, ICC Press Release, 12 March 2008. Available online at:
  4. ‘Does Hong Kong’s place in international arbitration remain secure?’, Commercial Dispute Resolution, 4 August 2011. Available online at:
  5. ‘Singapore challenges Hong Kong as international arbitration hub’, Asialaw, April 2008. Available online at:
  6. Ibid.
  7. ‘Singapore Comes to Age with Record Case Filings’, SIAC, February 2013. Available online at
  8. The New York Convention on the Recognition and Enforcement of Foreign Arbitral awards 1958 (more commonly known as the New York Convention).
  9. ‘Indian Government Declares Hong Kong as a Territory to Which the New York Convention Applies’. Hong Kong International Arbitration Centre. 11 Apr. 2012.
  10. [2008] SGHC 202.
  11. Mohan R Pillay, ‘The Singapore Arbitration Regime 2002 – Then, Now and Why’ [2003] ICLR 91.
  12. Bruce Harris, Rowan Planterose and Jonathan Tecks, The Arbitration Act 1996: A Commentary, third edition (Blackwell’s, 2003), p. 1.
  13. Singapore Parliamentary Reports, vol 63, col. 627, 31 October 1994.
  14. Singapore Parliamentary Reports, vol 73, col. 2214, 5 October 2001.
  15. The amendment was introduced via the Legal Professional (Amendment) Bill 2004, passed in Parliament on 14 September 2004.
  16. This amendment was passed in March 1992 following a High Court decision in Turner (East Asia) Pte Ltd v Builder’s Federal (Hong Kong) Ltd & Anor. [1988] 2 MLJ 280.
  17. ‘Government accepts key recommendations of Justice V K Rajah’s committee on the comprehensive review of legal services sector’, Singapore Government press release, 6 December 2007. Available online at:
  18. Ben Davidson, The Straits Times. ‘Singapore May Be Arbitration Centre’. National Library – Singapore, 30 April 1987.
  19. ‘Singapore may be arbitration centre’, The Straits Times, 30 April 1987. Available online:
  20. Lawrence Boo, ‘The Law and Practice of Arbitration in Singapore’. Adapted from a report published in The ICCA International Handbook on Commercial Arbitration, updated jointly with Michael Hwang and Amy Lai, published in ICCA Supplement No.38, April 2003 (Kluwer). Available online at:
  21. ‘The case for Singapore as a global arbitration hub’, The Straits Times, 6 March 2009.
  22. ‘Singapore looks to be international arbitration hub’, Government of Singapore press release, 24 January 2010 Available online at
  23. Speech by Mr K Shanmugam, Minister for Law and Second Minister for Home Affairs, at the inaugural Singapore International Arbitration Forum, 21 January 2010. Speech available online at:
  24. Satish Cheney, ‘Permanent Court of Arbitration to set up facility in Singapore’, Channel NewsAsia, 10 September 2007. Available online at:
  25. ‘Singapore aims to be at the forefront of international arbitration’,, 1 Nov 2011.
  26. ‘Number of new international arbitration cases in S’pore cases may rise’,, 20 January 2010. Available online at:
  27. Executive Summaries of SAL Conference 2011: Developments in Singapore Law 2006–2011: Trends and Perspectives. Print.
  28. ‘SIAC’s New Governance Structure and Revised Rules of Arbitration’, SIAC, April 2013. Available online at
  29. ‘Stepping up to Singapore: LCIA’s Indian arbitration mission’, Commercial Dispute Resolution, 29 April 2010. Available online at:
  30. ‘KL Arbitration Centre goes global, taps India’, New Straits Times, 29 Jan 2012. Available online at:
  31. ‘Singapore new hub for arbitration services’, Confederation of Indian Industry News Update, 21 January 2012. Available online at:
  32. S Lee, Singapore International Arbitration. Available online at:
  33. ‘Singapore aims to be at forefront of international arbitration’, 1 November 2011. Available online at:
  34. Opening speech by Mr K Shanmugam, Minister of Foreign Affairs and Law, at the Ministry of Law’s Arbitration Dialogue on 1 Nov 2011. Speech available online at:’s%20Speech%20at%20Arbitration%20Dialogue%202011.pdf.
  35. Second Reading Speech by Law Minister K Shanmugam on the International Arbitration (Amendment) Bill, Ministry of Law Press Release, 19 Oct 2009. Available online at:
  36. [2007] 1 SLR 629.
  37. Supra n. 35.
  38. ‘Singapore: Singapore as a preferred venue to resolve disputes in Asia?’, O’Melveny & Myers LLP publication, 1 December 2010. Available online at:
  39. ‘Public Consultation on Proposed Amendments to the International Arbitration Act and Proposed Enactment of the Foreign Limitation Periods Act’, Singapore Ministry of Law press release, 20 Oct 2011. Available online at:
  40. [2007] 1 SLR (R) 597.
  41. ‘Review of the International Arbitration Act: Proposals for Public Consultation’, Ministry of Law press release, 20 Oct 2011. Paper available online at:
  42. Pillai, Subramanian, and Kaushalya Rajathurai. ‘Singapore: Recent Amendments to the International Arbitration Act’. N.p., 3 June 2012. Courts Tribunals/Recent Amendments to the International Arbitration Act.
  43. [2012] SGCA 35.
  44. G Chien –Yi, The Role Of Pleadings In Determining An Arbitrator’s Mandate, (2013) 25 SAcLJ at p. 334.
  45. [2012] SGHC 212.
  46. [2012] SGHC 212 at 112.
  47. [2012] SGHC 262 .
  48. [2010] UKSC 46.
  49. ‘Astro vs Lippo – an Overview’, Shaun Lee, July 2012. Available online at
  50. [2012] SGHC 262 at [20].
  51. Response by Chief Justice Sundaresh Menon Opening of the Legal Year 2013 and Welcome Reference for the Chief Justice, Friday, 4 January 2013. Available online at:
  52. ‘Singapore considers international commercial court’, Big Law, 9 Jan 2013
  53. James Gwartney, Robert Lawson and Joshua Hall, Economic Freedom of the World: 2012 Annual Report, (Fraser Institute: 2012), p. 85. Available online at:
  54. 2012 World Competitiveness Yearbook results. See
  55. Ibid.
  56. Speech by Secretary for Justice Wong Yan Lung at a business luncheon co-organised by the Asian Strategy and Leadership Institute and the Hong Kong Economic and Trade Office in Singapore on 25 Nov 2010. Speech available online at:
  57. Speech by Secretary for Justice Wong Yan Lung at a business luncheon jointly organised by the Hong Kong Economic and Trade Office, Brussels and the Hong Kong Trade Development Council on 4 Oct 2011. Available online at:
  58. Ibid.
  59. Derek Roebuck, ‘Arbitration in Early Hong Kong:1835 – 1867’, 63 Arbitration (November 1997) 263, p. 265.
  60. Neil Kaplan, Arbitration in Hong Kong: A Practical Guide, (Sweet and Maxwell: 2003), p.86.
  61. Singapore Parliamentary Reports, vol 63, col. 626, 31 Oct 1994.
  62. Alison Ross. “Expanded premises for HKIAC”. Global Arbitration Review. 18 Oct. 2012. Available online at:
  63. The Law Reform Commission of Hong Kong Paper: Report on the Adoption of UNCITRAL Model Law, paragraph 1.9. Available online at:
  64. 1996 Report of the Hong Kong International Arbitration Centre Committee on Arbitration Law, para 1.1.9. As reproduced at Appendix 1 in John Choong and Romesh Weeramantry, The Hong Kong Arbitration Ordinance: Commentary and Annotations (Sweet and Maxwell, 2011).
  65. 2003 Report of the Committee on Hong Kong Arbitration Law, para 5.5 and 5.6. As reproduced at Appendix 2 in John Choong and Romesh Weeramantry, The Hong Kong Arbitration Ordinance: Commentary and Annotations (Sweet and Maxwell, 2011).
  66. Michael Moser and Teresa Cheng, Hong Kong Arbitration: A User’s Guide, (HKIAC, 2008), p. 211.
  67. 2007 Consultation Paper on the Reform of the Law of Arbitration in Hong Kong and Draft Arbitration Bill, p.4. Available online at:
  68. See Hong Kong Legislative Committee Paper No. CB(2)2546/08-09(05),’ Arbitration Practices adopted by Hong Kong’s major competitors’. Available online at:
  69. John Choong and Romesh Weeramantry, The Hong Kong Arbitration Ordinance: Commentary and Annotations (Sweet and Maxwell, 2011), p. 21.
  70. ‘Hong Kong’s New Arbitration Ordinance’, Client Update: Tanner De Witt Solicitors. Available online at:
  71. ‘Hong Kong’s New Arbitration Ordinance: An innovative approach in a highly competitive international arbitration market’, Practical Law Company, 1 March 2011. Available online at:
  72. ‘Hong Kong Strengthens Position as Leading Jurisdiction for International Arbitration with Major Overhaul of Legislative Framework’, Jones Day Publications, July 2011. Available online at:
  73. ‘ICC International Court of Arbitration to open offices in Asia’, ICC press release, 12 March 2008. Available online:
  74. ‘The HKIAC celebrates the opening of its first overseas office in Korea at the Inauguration of the Seoul International Dispute Resolution Centre (Seoul IDRC)’. Hong Kong International Arbitration Centre. 30 May 2013.
  75. ‘GAR reports on HKIAC’s hosting of PCA investment Arbitration Hearing’. Hong Kong International Arbitration Centre. 10 July 2013.
  76. Arbitration (Amendment) Bill 2013. Available online at:
  77. For a more detailed analysis of the difficulties in mutual recognition and enforcement between the different PRC regions, see Phillip Georgiou, Ashley M Howlett and Sonny Payne. ‘Proposed Amendments To Hong Kong’s Arbitration Ordinance – Macao: The Missing Piece’. 22 May 2013. Web. Dispute Resolution/Proposed Amendments to Hong Kongs Arbitration OrdinanceMacao The Missing Piece>.
  78. Hong Kong Department of Justice. ‘Arrangement Concerning Reciprocal Recognition and Enforcement of Arbitral Awards between the Hong Kong Special Administrative Region and the Macao Special Administrative Region, signed in Macao on 7 January 2013’ (translation). Available online at
  79. CACV 126/2011.
  80. CACV 126/2011 at 94.
  81. [2012] HKCFI 328; [2012] 2 HKLRD 547; HCA1900/2011 (8 March 2012)
  82. [2012] HKCFI 328; [2012] 2 HKLRD 547; HCA1900/2011 (8 March 2012) at 36.
  83. ‘Hong Kong grows as International Arbitration Centre’, Tax-News: Global Tax News, 12 December 2011. Available online at:
  84. Speech by Secretary for Justice Wong Yan Lung, ‘Role of Hong Kong as East Asia rises – A Legal Perspective’ in Seoul, South Korea on 8 December 2011. Available online at:
  85. FACV Nos 5, 6 & 7.
  86. Justin D’Agostino, ‘Hong Kong’s arbitration year in review: A Christmas Blog’, Practice Source: Kluwer Law International. Available online at:
  87. Justin D’Agostino, ‘Who wears the crown? Immunity and the identification of the sovereign in Hong Kong’, Kluwer Arbitration Blog, 17 August 2011. Available online at:
  88. Speech by Secretary for Justice Wong Yan Lung at the Ceremonial opening of the Legal Year 2012. Available online at:
  89. CACV31/2011.
  90. ‘Singapore gains as Hong Kong follows China rule on Immunity’, Bloomberg, 30 August 2011. Available online at:
  91. Ibid.
  92. ‘China International Economic and Trade Arbitration Commission Announcement On the Administration of Cases Agreed to Be Arbitrated by CIETAC Shanghai Sub-Commission and CIETAC South China Sub-Commission’. N.p. 1 August 2012.
  93. C Mark Baker and Matthew H Kirtland, ‘New Arbitration Law passed in Hong Kong’, Fullbright Briefing, 7 December 2010. Available online at:
  94. Alison Ross, ‘All Eyes on Asia’, Global Arbitration Review, 16 October 2013. Available online at:
  95. Ibid.
  96. Ibid.
  97. Ibid.
  98. ‘KL to tap Singapore’s arbitration experience’, The Straits Times, 16 September 2011.
  99. Ibid.

Unlock unlimited access to all Global Arbitration Review content