The launch last week of the Singapore International Commercial Court (SICC) positions Singapore decisively as a leading city where international commercial disputes can be heard in a court of law.
London and New York, both leading global financial centres, have traditionally been the two leading locations for international commercial dispute resolutions.
English law and New York state law, in turn, have traditionally been the preferred neutral choice of governing law for the international business community, even when the business transactions are done in Asia.
The law follows financial and business flows. With Asia outperforming the global economy and attracting a higher share of international capital as well as trade, the legal services sector in the Asia-Pacific region will grow significantly, as Law Minister K. Shanmugam observed recently. He added that cities in Asia - Singapore, Hong Kong and others - are in a position to service large, growing economies such as India and China.
With the recent launch of the SICC, Singapore courts will provide the necessary institutional framework for disputants to resolve their disputes where the mediation option has been exhausted or where arbitration is not an available or preferred option.
This is where Singapore, as a trusted neutral centre with an established tradition of judicial integrity and efficiency, can fill a natural gap in Asia.
What does the establishment of the SICC mean for the Singapore economy?
First, it can boost the legal industry in Singapore. As the past experience in promoting Singapore as an arbitration centre has shown, more international arbitration in Singapore means more Singapore lawyers being engaged to provide legal support services. More complicated commercial disputes brought before an international court in Singapore will require sophisticated legal services. This will enhance the professional development of the legal industry.
Second, it strengthens Singapore's brand as a premier dispute resolution hub in Asia. The setting up of a court complements Singapore's ongoing effort to provide mediation and arbitration services, not just for Asean but also for Asia.
Third, the setting up of the SICC will eventually help boost the Singapore economy, especially with Singapore emerging as an increasingly sophisticated service economy.
In recent years, the legal industry in Singapore has been growing faster than Singapore's economic growth. According to Mr Shanmugam, the growth rate of legal services compounded over the past six years is about 7 per cent per year, compared with GDP growth of about 5.4 per cent per year.
According to the minister, the value of legal services has grown between 2008 and 2013 by 71.5 per cent, and the nominal value-add of the sector has grown by 40 per cent in the same five-year period. Singapore has seen the legal profession grow in the last five years, not just due to the banking and financial services sector, but as a whole.
Regionalising Singapore law
THE choice of forum is separate from the substantive law governing commercial transactions.
International businesses have traditionally preferred to adopt English law or New York state law because of their historically trusted legal traditions and predictable commercial practices.
There is a compelling case to promote the Singapore law strategy, which if successful, will further advance Singapore's standing as a regional or international legal hub.
As Chief Justice Sundaresh Menon said at the launch of the SICC, the establishment of the SICC might expand the scope for internationalising Singapore law. This, in my view, is a good and necessary move to further bolster the development of Singapore legal jurisprudence to support business growth in Asia and beyond.
Now that the SICC is set up, what's next?
In my view, the next challenge will be to design a preventative regime and create a legal eco-system that focuses on prevention of disputes.
To quote Sun Tze, the ancient military strategist, "to win without fighting is best". Litigation costs money and if disputes can be prevented, all the better.
The existing international forums for mediation, arbitration and litigation in the court system are meant to resolve disputes after they have taken place. With Singapore pushing ahead in the area of analytics, it might be useful to explore how we can leverage technology in the area of legal analytics to prevent disputes from arising. So instead of settling disputes after they have arisen, we process "big data" in the litigation and dispute resolution space to gain insights on the source of disputes and understand the picture better to enable us to take proactive measures to prevent disputes from arising. In the United States, there are already companies and legal practices moving into this new space. As the Singapore economy transforms to become more innovation-driven and knowledge-based, the legal profession and the judicial service will have to address increasingly issues of legal and judicial innovation to push the boundaries further and move up the legal value chain.
The design and development of a preventative regime will require a new paradigm shift in the way we look at the sources of conflict and how we should proactively manage such dispute-related risks from emerging. There is a real opportunity to develop a unique Singapore methodology and development model to manage disputes in the international arena by leveraging our trusted brand, legal and judicial talents and technology.
The writer is a technology and intellectual property lawyer, author and associate law lecturer at RMIT University.