Business disputes can cost a lot of money, time, and effort. While many international and Fortune 500 firms can afford these resources, at the end of the day, they are still better used to improve cash flow and profit and support expansion.
If these weren’t enough, being dragged into the courtroom can tarnish a brand reputation. In 2018, Facebook faced what counts as its biggest issue to date when it found itself embroiled in the Cambridge Analytica scandal.
While Facebook remains a strong brand, the initial backlash resulted in the largest drop in market value in modern history. The company lost an astounding $120 billion because of the scandal, while Mark Zuckerberg suffered a $17 billion setback.
For this reason, more companies prefer to settle arguments and disagreements as quietly as possible. This makes arbitration attractive. As an alternative to dispute resolutions, warring parties can choose arbitrators or individuals and law entities that can hear both sides and decide neutrally for everyone.
Today, many countries are set to become the premier arbitration centers, but the leading the pack now is Singapore.
Singapore Makes It to Number One
In the latest survey by the Queen Mary University of London, participated by over 1,000 arbitrators and lawyers in nearly 40 countries, Singapore coveted the much-sought-after first place along with London. Each was the preferred location of over half of the respondents.
Meanwhile, cities like Paris slipped from the rankings. The survey was also the first time an Asian city-state topped the list, although Hong Kong also made it to the top five.
To corroborate the results, the Singapore International Arbitration Centre (SIAC) also shared that the number of its caseloads broke a new record. In 2020, the center received over a thousand case filings or more than twice what they processed in 2019. This is even if the country was not spared from the COVID-19 pandemic.
From 2011 until 2020, the number of new case filings every year also jumped by fivefold. The new cases it administered also increased by six times.
But what makes Singapore an ideal place for arbitration?
1. Geography and Accessibility
Although Singapore is a small nation, it is directly connected to Malaysia and Indonesia. The airport, Changi, considered the world’s best, serves 70 countries and territories and at least 400 cities. Many international businesses have either headquarters or satellite offices in the country.
Singapore also has a diverse population. Two of its biggest demographics are from China and India, which incidentally also account for the biggest sources of arbitration cases by the SIAC. SIAC, too, has an excellent global reach. It has offices not only in China and India but also in South Korea and New York.
While Hong Kong is another Asian country to make it to the top preferred arbitration places, its political tension seems to work to its disadvantage.
Most of all, Singapore is currently home to some of the best arbitration experts in the world. Lawyers like Toby Landau possess extensive experience in the field.
Landau, for example, had already argued and arbitrated in both Singapore and the UK. He also participated in some of the landmark cases, including Halliburton v Chubb, which helped clarify matters about arbitration bias.
2. Excellent Integrity and Independent Judiciary
Singapore is also known for its tough policies that support integrity and promote trust in the branches of the government and its officials.
In the 2020 Corruption Perception Index by Transparency National, Singapore scored 85, which made it the third least corrupt country globally. This is then corroborated by the data by the Corrupt Practices Investigation Bureau (CPIB), which showed that the number of corrupt-related reports declined over the years.
In the same year, the public perception survey amongst 1,000 respondents conducted by the CPIB, almost 95 percent, said that the corruption controls of the government are effective. About 90 percent shared that heavy punishment and political determination are two of the primary factors for low corruption in the city-state.
Meanwhile, Singapore has always maintained an independent judiciary, which means it is not influenced by other branches of the government, like the legislative and the executive.
Moreover, because it is a party to the New York Convention, an arbitration ruling in Singapore, including an award, can be enforced in 166 countries. Participants in proceedings can have control over the people they choose as arbitrators as well as locations.
However, Singapore always promotes confidentiality. This ensures parties can settle disputes with less fanfare and, above all, zero risks to their reputation.
That Singapore ranks first place as an arbitration hub is, therefore, not due to chance or luck. It’s the country’s goal.
