Indian Arbitration in Singapore
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2009 was a bumper year for SIAC arbitration, with the number of cases reaching a new high of 160 – a 60% increase on the year before.1 Almost 20 per cent, of these relate to India, the highest total for any one country. This note suggests why that might be.
International dispute resolution in India
The extraordinary growth in the Indian economy over the past decade has seen increasing numbers of foreign investors doing business there; and, just as in other jurisdictions, international arbitration in a neutral country is often their favoured dispute resolution method.
That choice is given greater impetus by delays in the Indian court system, which also affect arbitrations taking place in India via related applications to the courts. The Delhi High Court reported recently that it has a backlog of cases that will take 466 years to clear.2 Steps are being taken to reform the process, in particular with the proposal to create new Commercial Divisions in each High Court.3 In the meantime, the delays are driving parties elsewhere.
To where? In selecting a neutral venue the first issue is whether an arbitral award from that country can be enforced in India if needed. Although India is a signatory to the New York Convention,4 only awards made in territories that have been notified in the Official Gazette may be enforced under the Convention in India.5Notification has been made of over 40 states, but a notable absentee from that list as far as arbitration in Asia is concerned is Hong Kong. That makes enforcement of Hong Kong awards in India difficult to achieve. By contrast, Singapore is one of the notified countries.
Convenience of Singapore
In selecting Singapore from among those notified countries, other factors come into account. First and foremost are accidents of geography. Among major centres for international arbitration in the world, Singapore is one of the most convenient for Indian parties, in relative terms, as regards both distance and time zones.
Singapore's location, of course, has also been a prime factor in its development since its foundation, as an international city. Another reason has been the focus of the Singapore Government on delivering efficient public services. Internationalism and efficiency have been watchwords for the creation of the modern business environment in Singapore; the same attracts international arbitration to its shores.
For Indian parties, history combines with geography. At its foundation, Singapore was an offshoot of British India, and the origins of the modern-day legal systems in the two countries are intertwined. Both derive from English law, and in the nineteenth century a number of Indian Acts were directly applied to Singapore – most notably the Penal Code.6 Today, for all the subsequent divergence between their respective legal systems, Singapore and India are united by their common law heritage.
Prevalence of the English language in the two countries is also the product of history. English may be the common language that divides Britain and America, but where international arbitration is concerned, it makes Singapore an easy place for Indians to operate.
Finally, cost. Much is said of the expense of European arbitration (and particularly London arbitration) compared to Singapore; but in truth comparisons are difficult. The greatest proportion of parties' costs derive from their lawyers, and Indian Counsel (for example) can be employed in arbitration in London just as in Singapore. Perception of reduced cost, though, works in Singapore's favour.
Arbitration in Singapore
Added to such convenience are the particular reasons why international arbitration has blossomed in Singapore. In recent years the Singapore Government has given its backing to arbitration. The most notable result of this is Maxwell Chambers. The former Customs House, Maxwell Chambers is now a state-of-the-art dispute resolution centre that has few rivals anywhere in the world.
Bricks and mortar are not the sole expression of such enthusiasm, however. Indian lawyers know well the contortions that the Indian courts have performed in dealing with injunctions in support of foreign arbitrations, under the Indian Arbitration and Conciliation Act.7 It is likely that the problem can only be fixed by legislative intervention. A similar problem was identified in Singapore by the courts;8 the Singapore Parliament has fixed this in short order by amendment to the International Arbitration Act.9
The Singapore legal profession has adopted international arbitration whole-heartedly, as is shown by the various arbitration conferences, forums and symposiums held in Singapore. That in turn has attracted the international law firms which have set up shop here.
The Singapore courts, too, are "arbitration-friendly". Recently the Court of Appeal saved an arbitration clause that in some countries might have been condemned as pathological, because it married the rules of one institution (ICC) with administration by another (SIAC).10
Conclusion
Enthusiasm can be infectious, and must not blind one to the fact that Singapore will not be the first choice for every Indian party on every occasion. The advantages of other arbitration centres in some situations cannot be ignored.
However, the happy combination of factors in Singapore makes plain why attention has on the whole turned South-East as far as Indian parties are concerned. In the future, they might also consider Dubai, or Sydney, or Kuala Lumpur, as arbitration develops there; for the present, Singapore leads the pack, and it is likely that SIAC will report even greater numbers of Indian arbitrations next year.
