Growing reputation helps Asian cities gain momentum as arbitration venues
Matthew Secomb says legal improvements have helped Hong Kong and Singapore steal a march on their international arbitration rivals
Singapore and Hong Kong have both strived to establish themselves as the "go to" venues for arbitration in Asia, and it seems to be working. Indeed, both seats are beginning to compete with the traditional hegemony of London and Paris.
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As our 2015 International Arbitration Survey shows, London and Paris remain the most used and preferred venues. However, the research - conducted by Queen Mary University of London with White & Case - reveals that Hong Kong and Singapore are gaining momentum, coming third and fourth.
The numbers show that these Asian seats are quickly closing the gap, but what are the factors behind their improvement? The research suggests that they were deemed to have improved due to better hearing facilities, the availability of quality arbitrators who are familiar with the seat, better local arbitral institutions and improvements to the national arbitration laws.
So while respondents' choice of the most preferred and used seats were driven by legal infrastructure, the reason behind those which had improved the most focused on convenience. Only one factor (improvements to national arbitration law) directly related to formal legal infrastructure. This is in contrast to why seats are most used - where the predominant reason given was the "reputation and recognition of the seat".
This suggests that once a seat's formal legal infrastructure reaches a certain threshold of quality, convenience factors become more important for potential users. In this situation, features such as the quality of hearing facilities become more prominent.
Indeed, the research suggests that the two most improved seats - Hong Kong and Singapore - fit these criteria. They were well-established seats five years ago and have now built on this foundation, making significant investments in their international arbitration "infrastructure".
The two have also benefited from the growth of emerging markets in Asia. This growth has created a West-East capital flow - often to fund mega-infrastructure, oil and gas and other energy projects. But these projects can lead to disputes over access to resources, finance and funding and conflicts of interest. Indeed, we're seeing more and more disputes involving Asian parties, with Singapore and Hong Kong becoming increasingly attractive as arbitral venues.
What must Singapore and Hong Kong do to cement their position? The key lies in further enhancing their reputation. But as Lord Browne, former chairman of BP, noted: "Reputation is best seen as a reservoir of goodwill, which takes years to fill up and only hours to empty." It's now up to these seats to fortify their gains.
Matthew Secomb is a Singapore-based partner (international arbitration practice) of White & Case LLP