SINGAPORE - With Asean on track to become the fourth largest economy in the world by 2030, there will likely be more cross-border disputes between businesses in the region, said Second Minister for Law Edwin Tong on Tuesday (Aug 30).
And Singapore, with its strong legal system and infrastructure, can play a central role in resolving these disputes, added Mr Tong, who is also Minister for Culture, Community and Youth.
Speaking at a fireside chat at the United Nations Commission on International Trade Law Academy (Uncitral) - a three-day event headlining the Singapore Convention Week - he noted that a record level of foreign direct investments flowed into Asia last year, and as these investments mature, disputes are expected to arise.
Mr Tong added: "We've seen many large businesses come (to Singapore) and try to resolve disputes because their relationship goes back many years, if not decades.
"For large infrastructure projects, we tend to end up with the same contractors and subcontractors - specialists in the area - and it will do them well to try and preserve that relationship as far as they can."
Through mediation, parties in a cross-border dispute can attempt to negotiate a new deal, facilitated by a neutral third-party mediator, to salvage a commercial relationship which would otherwise disintegrate if the litigation or arbitration routes were taken.
Minister for Law and Home Affairs K. Shanmugam, who gave a speech at the conference, said that with rising geopolitical tensions and supply chain disruptions, there is an even greater need for a good dispute resolution framework.
In this context, the Singapore Convention on Mediation plays an even more important role, he said. The multilateral treaty came into force in September 2020.
A total of 55 countries have signed and 10 have ratified the convention, which makes it easier for mediated agreements to be enforced in acceding countries.
Without the treaty, a settlement agreement made in one country may have no legal force in another, and parties would have to go to court to have it enforced.
Mr Shanmugam noted the Russian-Ukraine War and the Covid-19 pandemic have made a deep impact on businesses around the world.
"We're looking at slow growth and high inflation. According to International Monetary Fund in July, global growth this year (3.2 per cent) would probably be half of what it was last year (6.1 per cent)," he said.
"At the same time, there have been supply constraints because production capacity is not yet fully back to pre-pandemic levels," he added.
"With geopolitical tensions between the United States and China, many countries are placing greater emphasis on resilience to withstand external shocks and this often means turning inwards."
Mr Shanmugam said: "It is a very uncertain environment, globalisation as we knew it has obviously suffered a setback.
"Countries have to work even harder to try and come together, to keep to what is possible in terms of cooperation, and keep the global trading environment as healthy as possible."
Mr Shanmugam called for more countries to come on board the Singapore Convention on Mediation, since the effectiveness of the convention depends on how many parties ratify it.
"(Mediation) is relatively faster, cheaper, more flexible and helps to preserve business relationships, which is probably even more important in today's fractured landscape," he said.
