INTERNATIONAL ARBITRATION AT NEXT STAGE OF MATURITY IN SINGAPORE
~ Leading arbitration practice Drew & Napier LLC tracks increasing sophistication of disputes across a range of industries ~

11 December 2007 – In the last five years there has been a perceptible change in the types of international arbitrations being conducted in Singapore. Since the early 1990s when Singapore started promoting itself as a leading arbitration venue for the region, disputes heard here have broadened and deepened, signaling a growing maturity of alternative dispute resolution. In addition to the numerous cross-border joint venture and construction disputes often arbitrated in Singapore, increasingly complex and specialised issues are being brought before local counsel to resolve. Significantly, a number of arbitrations here have moved beyond the realm of private disputes between commercial enterprises, to ones where national and state governments are parties to the claim. Larger issues like public international law are brought to bear, and this is a new development that is likely to persist.

IT arbitrations involving enterprise-wide software contracts is one of the growth areas that Cavinder Bull is witnessing, among his diverse portfolio of disputes. Mr Bull is a director at law firm Drew & Napier LLC. This year the firm was ranked as the sole Tier 1 dispute resolution firm in Singapore for the third consecutive year. It is also a multiple winner of Asia Legal Business’ Commercial Litigation Firm of the Year award and the first local firm to win this year’s award for International Arbitration Firm of the Year.

“Singapore has always been a preferred destination for multinationals to set up a regional office for Asia,” explains Mr Bull. “And one aspect of having a regional office here also involves setting up a regional IT operation in Singapore. Inevitably with large software contracts, disputes will arise over areas like programming, source codes, delivery, implementation and so on.” Aside from multinationals, Singapore companies and government agencies also form part of the group of customers of IT services bringing arbitration proceedings against vendors and consultants.

Continued IT outsourcing and business process outsourcing are trends that will no doubt feed the growth of IT arbitrations in Singapore. With its high degree of technicality, software contract disputes lend themselves well to arbitration. Expert arbitrators and counsel with experience in handling such disputes are a must. “There is a lot of nitty-gritty and minutiae involving source code issues that can be quite esoteric,” continues Mr Bull. “These matters can be broken up and examined thoroughly, often taking weeks. So arbitration is well-suited both for technical reasons and for its ability to accommodate lengthy proceedings.”

Intellectual property is another specialised area where cross-border disputes are increasingly being arbitrated in Singapore. In 2007 Drew & Napier LLC was ranked the top intellectual property law firm in Singapore by Euromoney publication Managing Intellectual Property in its annual World IP Survey. It was the eighth consecutive year that the law firm has won, based on peer and client reviews. 2007 was similarly the ninth consecutive year that the firm was top ranked for IP by Asia Pacific Legal 500.

Morris John, head of Intellectual Property at Drew & Napier, was sole arbitrator in a trademark licensing arbitration that lasted almost half of this year. “Arbitration suited this dispute well as the parties were from around the region and confidentiality was of the utmost importance to them..” Mr John observed that as recently as five years ago, such disputes would likely have been heard in the United States or Europe instead. He has also been counsel in IP arbitrations here involving technology like voice-over internet protocol (VoIP).

Mr John, who is a Fellow of the Chartered Institute of Arbitrators (London) as well as Fellow of the Singapore Institute of Arbitrators, points out the importance of procedural issues when bringing a dispute for arbitration. “In one of these IP arbitrations, a substantial amount of time was spent on resolving procedural issues even before we could begin to address the points of law. With the increased choice and flexibility offered by international arbitration that is not found in domestic litigation, parties must be careful from the outset to specify and clarify their preferences before relationships sour and agreement is difficult to obtain, even on non-substantive issues. Disputes over choice of law, seat of arbitration, arbitrator and so on can hamstring an arbitration before it gets off the starting blocks.”

But perhaps the most sophisticated arbitrations are those involving bilateral investment treaties, BIT, or multilateral investment treaties. In Singapore recently, they have certainly been very public, taking up more column inches in the news media than other arbitrations, which are instead better known for their discretion and absence from the spotlight.

BITs are designed to encourage foreign investment by guaranteeing foreign investors a layer of legal protection above and beyond that provided by the host state’s laws. The critical aspect of such agreements is that they usually provide that qualifying foreign investors can hold the host state liable for breaches committed by any branch of government (executive, legislative, or judicial) and at any level of government (federal,state, provincial, or local). With Singapore’s many bilateral free trade agreements signed around the world, the country may well join the worldwide trend of proliferating BIT disputes.

Such disputes may arise between state-state or investor-state. Drew & Napier again has been instructed on a number of these matters, including the alleged anti-trust violations made by Indonesia’s Business Competition Supervisory Commission or KPPU against Temasek Holdings, Singapore Technologies Telemedia and Singtel.

Typically, claims under such agreements are subject to some form of arbitration, frequently through the International Centre for Settlement of Investment Disputes, an arbitral institution affiliated with the World Bank. It is therefore timely that the Singapore International Arbitration Centre and the International Centre for Dispute Resolution –the international division of the American Arbitration Association - have collaborated to establish the International Centre for Dispute Resolution-Singapore.
 
Looking ahead, Mr Bull anticipates a clear uptrend for arbitrations of all types in Singapore. “We are also getting involved in more disputes involving the energy industry. With oil and coal prices escalating rapidly, suppliers are breaching supply contracts as they are no longer willing to deliver based on the earlier, much lower price stipulated in the agreement.

“Still, despite the widening variety of issues and industries involved, Drew & Napier sees traditional joint venture and infrastructure/ construction arbitrations as continuing to form a significant proportion of our work.”

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About Drew & Napier LLC

Established in 1889, Drew & Napier LLC is one of Singapore’s largest and most established law firms, with over 200 lawyers. Consistently rated top tier in dispute resolution over the years by international ranking organisations like Asia Pacific Legal 500, Chambers Global: The World’s Leading Lawyers, and Asia Law Profiles, the firm has five senior counsel, the largest number in Singapore. Drew & Napier LLC is headed by chief executive officer, Davinder Singh, SC. Drew & Napier LLC is also highly rated in Intellectual Property and Tax, with market leading practices in Banking & Corporate, Corporate Restructuring & Insolvency, Telecommunications, Media & Technology, Competition, and Admiralty & Shipping.  

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