CJ zeroes in on rising arbitration costs

CJ Sundaresh Menon said "unnecessarily long and complicated proceedings" heightened arbitration costs.
CJ Sundaresh Menon said "unnecessarily long and complicated proceedings" heightened arbitration costs.

He warns that international arbitration could lose its lustre without steps to control costs

Even as it is in its golden age, Chief Justice Sundaresh Menon has warned that international arbitration could lose its shine as rising costs drive its users elsewhere.

"Despite many calls for reform, we are far from winning the war on rising costs in international arbitration," he said in London last week.

CJ Menon spoke at a conference to mark the 100th anniversary of the Chartered Institute of Arbitrators - a body with over 13,000 members from more than 120 countries - of which he is the patron.

While lauding what international arbitration had achieved with Singapore cited as a model, he said the new mission was to safeguard the success of international arbitration into the 21st century and beyond.

In arbitration, parties submit their commercial, cross-border or other disputes to be settled by arbitrators, as an alternative outside the court system.

CJ Menon noted that other options to arbitration, such as the courts or mediation, had resurged. "Unnecessarily long and complicated proceedings" heightened arbitration costs, he added.

TIMELY WARNING
 

Despite many calls for reform, we are far from winning the war on rising costs in international arbitration.

CHIEF JUSTICE SUNDARESH MENON, who has warned that arbitration is losing its shine due to rising costs

He pointed out that unlike before when the arbitration award was final, which made it attractive, more time and money is now being spent challenging these awards by taking the cases to court.

To illustrate, he noted that in Singapore, there were just five reported challenges against an award in court over a 20-year period from 1985, all of which were unsuccessful.

But in the 10 years that followed, there were 19 reported challenges, with applicants succeeding entirely in only three cases. In the past 18 months, there were seven challenges, of which six were dismissed.

Most of the challenges were in essence bids to have the courts rehear the cases already settled by arbitrators, or "backdoor appeals". He cited two reports which recommended measures to promote efficiency and techniques to control costs.

"We are not short of ideas, but it would be encouraging to see some widespread adoption of these techniques and measures... because all have much to gain from taking an active stance against unnecessary escalation of costs."

His remarks come against the backdrop of Singapore's success as an international hub in this golden age of arbitration. The number of arbitrations administered by the Singapore International Arbitration Centre alone quadrupled within a decade to 259 cases in 2013.

Singapore has been consistently ranked among the top five International Chamber of Commerce seats for arbitration after London, Paris, Geneva and Zurich, said CJ Menon.

Lawyers contacted said the CJ's remarks were timely as he spoke from an informed position.

"Arbitration is not necessarily cheap, given the potential for court challenges and the cost for a panel of three, among other things," said lawyer Dhamendra Yadav.

A version of this article appeared in the print edition of The Straits Times on July 11, 2015, with the headline 'CJ zeroes in on rising arbitration costs'. Print Edition | Subscribe