By Hazel Tang
You are about to close a business deal, and the negotiations are now down to the question of where to go if things go south. Where will you go?
Singapore, it seems, is the answer of an increasing number of companies in Southeast Asia, particularly those in Indonesia.
In fact, Singapore is consistently among the top five most frequently selected jurisdictions as the place of arbitration across the world, and the top choice in Asia, for arbitrations conducted under the Rules of Arbitration (“ICC Rules”) of the International Chamber of Commerce (“ICC”). The past statistics published by ICC also indicate that while the number of Singaporean parties is not generally among the top parties involved in ICC arbitrations, the number of foreign parties choosing Singapore as a seat for arbitration is on the rise.
This is also consistent with the results of the 2021 Arbitration Survey conducted by Queen Mary University of London, which found that the five most preferred places for arbitration are London, Singapore, Hong Kong, Paris and Geneva.
Why is this so?
For starters, Singapore’s reputation in the region as “neutral ground” by companies in Southeast Asia in commercial dealings, not involving Singaporean companies, also allows for easy acceptance into the dispute resolution clause in the contract, as companies generally trust that they will get a just and fair outcome in Singapore.
This is boosted by the increasing presence of international arbitration institutions on the island, such as the ICC International Court of Arbitration (“ICC Court”).
The ICC Court was the first international arbitral institution to set up a physical case management office and team in Singapore in 2018, offering the highest standards in dispute resolution to serve the companies in Southeast Asia and beyond. The ICC Court also signed an memorandum of understanding with the Singapore Ministry of Law in June 2017 to develop and promote Singapore as a seat and venue for arbitration in Asia through advancing thought leadership, developing talent and arbitration services and undertaking joint marketing.
Singapore’s reputation for its robust legal system and arbitration-friendly stance also provides companies in Southeast Asia with a reliable and efficient platform for resolving disputes.
Singapore is a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) that provides very limited grounds for the setting aside of arbitral awards. This provides further assurance to companies that its arbitral awards will be recognised and enforced globally across the signatory states.
The scrutiny process conducted by the ICC Court under the ICC Rules further serves to maximise the legal effectiveness of an award and to improve the award’s general accuracy, quality and persuasiveness. This was recognised by the Singapore International Commercial Court in the recent case of CZT vs. CZU [2023] SGHC(I) 11, which dismissed an application to set aside an ICC arbitral award.
The growing pool of arbitrators, lawyers and other professionals in Singapore well-versed in Indonesian law and business practices also assures Indonesian companies that their disputes will be handled by professionals who can navigate the cultural nuances towards an effective resolution.
“Arbitration in Singapore gives us flexibility in proceedings, handled by professionals, ensuring fairness, speed, and cost-effectiveness. We are also assured of the certainty of international awards, as most countries worldwide are friendly towards executing ICC arbitration awards”, says Mr R. Mohamad Edwin, Director of PT Kalimantan Jawa Gas.
The little red dot also offers the world’s first integrated dispute resolution complex in the form of Maxwell Chambers. Companies who choose to resolve their disputes via arbitration in Singapore can access the world-class hearing facilities in Maxwell Chambers, which goes beyond the physical hearing room to state-of-the-art virtual hearing solutions.
The geographical accessibility of the island, in the event a physical hearing is needed, is also an important factor. Singapore is only approximately 2 hours from Jakarta, Indonesia, with multiple flights across the day connecting Singapore to multiple cities in Indonesia. As Mr R. Mohamad Edwin puts it, “Singapore’s geographical location is close to Jakarta, and the short flight time allows us to attend proceedings without interrupting business activities”.
Ms. Melati Siregar, Senior Partner of UMBRA – Strategic Legal Solutions, says, “All hands are on deck when it comes to promoting and improving dispute resolution in Singapore – from the government, the legislature, the courts, to the dispute resolution institutions; they all have the common goal of attracting more disputes to Singapore. Efforts made range from providing a business-friendly framework, having a well-developed body of commercial and procedural law and openness for international law firms to practice in Singapore”.
Indeed, the popularity of Singapore as the go-to destination for the resolution of Indonesian disputes wasn’t built in a day, and the ICC Court is proud to have been a part of this journey and to have contributed to its success.
Hazel Tang, Counsel at the ICC’s International Court of Arbitration, Singapore
