A ground-breaking initiative led by Singapore is under way to promote cross-border trade and investment through the convergence of Asia's business laws.
The Asian Business Law Institute (Abli) will be launched by the Singapore Academy of Law (SAL) at the international conference on Jan 21-22 on legal convergence in Asia.
Backed by leading regional judiciaries, corporations and law firms, the Ministry of Law and the Economic Development Board, Abli will be a forum for the business and legal community and policymakers to discuss how Asian commercial legal frameworks can be linked up.
This would tackle the biggest barrier to growth: legal uncertainty or inconsistent regulations and standards. Often, companies have to make decisions on regulatory compliance in the dark, so they are missing out on business opportunities.
This problem is becoming significant in the light of rising economic integration among Asian countries through the Trans-Pacific Partnership (TPP) trade deal, and initiatives such as the Asean Economic Community (AEC) and China's "One Belt, One Road".
These are potential game-changers that could reinvigorate investment and growth in Asia.
"In terms of laws, unintentionally, we have a legal haze. If we can clear the legal haze, it will be good for everyone," said Mrs Lee Suet Fern, managing partner of Morgan Lewis Stamford LLC and chair of SAL's Steering Committee on legal convergence.
"There are many issues that the region's legal and business communities can work on, including identifying the inconsistencies which undermine transnational business, the solutions that are acceptable, as well as the sort of uniform rules which can apply to cross-border contracts, and how to enforce them," she said.
National University of Singapore law dean Simon Chesterman, a steering committee member, cited a "fundamental contradiction". He said: "Asia is the economic engine of the world, but we haven't seen any of the pay-offs in terms of making Asia more coherent as a single market. The reason is that governments can't or won't do it... so that creates a space for Abli."
Professor Chesterman said that Abli is "not about transforming the laws, but sharing enough information so that the knowledge gap can be addressed".
It is about creating opportunities for countries to modify laws, or for businesses to modify their practices so they can simplify the costs of doing business across multiple jurisdictions, he said.
Rajah & Tann partner Paul Tan, also on the committee, noted that the challenges stem from differences in laws across the region, and the inaccessibility of laws, particularly from Laos, Vietnam and Cambodia.
"If you are a businessman sitting in Singapore or America, there is no way to find out what those laws are unless you instruct someone in those jurisdictions, and it is often not easy figuring out who to instruct. The laws may not be in English, but in the countries' national languages," he said.
The TPP and AEC are helping to bring down trade barriers but a need exists for "business-to-business links and contract agreements, and that's where divergence in national laws is an issue", he added.
"There is also no mutual recognition among Asian countries for judgments from a national court, so that increases the costs of trying to do business or resolve disputes in Asia," he said.
Getting acceptance and buy-in from the region is also a challenge.
SAL's senior director and chief legal counsel Sriram Chakravarthi said: "The proof will be in how many countries will come on board, partner with us, and take this to the next stage."
Abli hopes to start with focusing on enforcement of foreign judgment rules in Asean, Australia, China and India and fleshing out guiding principles for Asian data privacy laws. Streamlining Asian cross-border small claims procedures, an area relevant to the rapidly growing e-commerce sector, is another issue to be addressed.