A record number of new arbitration cases have been filed in Singapore in a sign that the city state’s efforts to become a leading dispute resolution hub are starting to pay off.
The jump in case filings comes as international corporations doing deals in Asia are considering excluding Hong Kong from legal contracts over concerns that China’s growing influence may undermine the rule of law in the territory.
While the caseload in Hong Kong has remained largely flat over the past five years, Singapore’s growing profile as an arbitration centre could increase competition between the rival business hubs.
The number of new cases handled by the Singapore International Arbitration Centre in 2020 more than doubled to 1,080 from the previous year. Parties from 60 jurisdictions including Hong Kong, Japan and Switzerland arbitrated $8.5bn in disputes. India, the US and China filed the most cases as foreign users.
“We reached new milestones in 2020 through careful planning and hard work,” Lim Seok Hui, SIAC chief executive, said in a statement.
The biggest leap came from US parties, with the total number of cases filed jumping 738 per cent from 65 in 2019, a trend experts said was partly due to Singapore’s neutrality amid increasing tensions between Washington and Beijing.
“Singapore walks a fine line between [the US and China],” said Jonathan Yuen, a lawyer for Rajah & Tann specialising in disputes. “By being friendly to both, it is seen as a relatively neutral ground for both sides. People may not want to go to New York or China, but both sides have no problem going to Singapore.”
A surge in parties activating dispute resolution clauses during the pandemic contributed to the high number of cases globally, said Lijun Chui, a partner for international law firm Bird & Bird. But Singapore positioning itself as a neutral hub for the region and global businesses had “paid off”, she added.
The city state has been a favoured arbitration hub for years, building institutions and passing legislation to facilitate dispute resolution.
But Singapore has more recently stepped up efforts to present itself as an alternative financial centre to Hong Kong. These include launching a corporate structure designed to lure funds from areas such as Hong Kong, the Cayman Islands and Luxembourg.
The Hong Kong International Arbitration Centre oversaw $8.8bn in disputes in 2020 with 483 new cases, fewer than the previous three years but above 2016 levels.
Hong Kong has launched an aggressive marketing campaign to protect the territory’s reputation as a global legal and financial hub in the wake of recent negative attention on its courts and judiciary.
Teresa Cheng, Hong Kong’s secretary for justice, held a conference for lawyers in February called “Why Hong Kong is irreplaceable”.
During it, Eddie Yue, chief executive of the Hong Kong Monetary Authority, said: “Some have seen challenges to Hong Kong’s future in the turmoil we face, but I think successfully weathering another storm has reinforced Hong Kong’s unique value . . . The legal profession has a very important role to play [in that].”
The head of a US law firm in the territory said: “There has been unfair criticism of the weakening of the rule of law and the independence of the judiciary in Hong Kong. The government is doing a big legal push to resist that.”