Singapore draws level with London as most popular arbitration seat

Singapore: Growing popularity

London’s dominance as the most popular venue for international arbitration is under serious threat from Singapore and Hong Kong, major new research has found.

It also found increasing support for using arbitration in conjunction with other forms of alternative dispute resolution (ADR), along with a strong preference for procedural hearings in future to be all or partly remote.

The School of International Arbitration at Queen Mary University of London’s 12th international arbitration survey was based on 1,218 responses to an online questionnaire from the fourth quarter of 2020 and 198 interviews conducted between last November and March this year. The vast majority of respondents were lawyers and arbitrators.

Asked to name their organisation’s most preferred seats of arbitration, 54% said London – down from 64% in 2018 – while Singapore drew level, up from 39% in 2018 and just 19% in 2015.

Half of respondents also named Hong Kong, up from 28% and 22% in the previous two surveys.

“Interviewees confirmed that these seats [Singapore and Hong Kong] are considered safe, obvious choices of established quality.”

Paris fell even further than London, from its second place showing in 2018, with 53% of respondents including it in their selections, to fourth place this year, as a seat of choice for 35% of respondents. Geneva (13%) and New York (12%) came next.

Researchers said some interviewees mentioned the presence of well-established arbitration institutions, such as SIAC in Singapore, as an additional factor they consider when choosing the seat.

“The growth in popularity of seats in this region year-on-year may reflect an increasing willingness by parties with commercial interests linked to that locale to also resolve disputes ‘locally’.

“It will be interesting to see whether large-scale commercial projects, such as the Belt and Road Initiative, will continue to impact this in the future.”

There were regional variations as well to worry London-based arbitrators. While London topped the charts for all regions in the 2018 survey, it was not selected as the most preferred seat for respondents in Asia-Pacific and did not feature at all in the top picks for the Caribbean/Latin America.

In Asia-Pacific, both Singapore and Hong Kong surpassed London by a significant margin (more than 20%).

The findings chime with comments this week from the chief executive of Burford Capital, who warned that London risked declining popularity as a litigation and arbitration centre, with Singapore particularly coming up on the rails.

The most popular changes to increase the attractiveness of locations were greater support for arbitration by the local courts and judiciary, increased neutrality and impartiality of the local legal system, and a better track record in enforcing agreements to arbitrate and arbitral awards.

Overall, international arbitration was the preferred method of resolving cross-border disputes for 90% of respondents, either on a stand-alone basis (31%) or in conjunction with ADR (59%).

The latter figure was significantly higher than in 2018 and 2015: “These results reflect an ongoing trend, as confirmed in interviews. Although the question expressly referred to the post-Covid-19 landscape, interviewees explained that their answers were not influenced by the pandemic.”

Asked what their preferred format would be for post-Covid procedural hearings and conferences, 48% backed purely virtual hearings and 44% a mixture of virtual and in-person, leaving only 8% in favour of purely in-person hearings.

When asked about their preferences for substantive hearings, the situation was almost the exact opposite, with 45% backing purely in-person hearings and 48% a mixture, while 8% favoured a purely virtual approach.

Most (60%) favoured a hybrid approach when it came to meetings with clients or expert witnesses.

The most popular reason for choosing a virtual format was saving time and cost (61%), followed by the increased confidence and familiarity with virtual hearings gained “as a result of recent experience” (43%) and availability of more reliable and secure technology (37%).

Two practical problems topped the list of “main disadvantages” with virtual proceedings. Four out of 10 respondents cited the difficulty of accommodating multiple time zones, and the same proportion the fact that virtual hearings made it harder for counsel to confer.

A slightly smaller proportion (38%) said they believed it was “more difficult to control witnesses and assess credibility” at virtual hearings, while 35% cited technical malfunctions or limitations.

A majority of lawyers and arbitrators (61%) said they believed progress had been made with gender diversity on arbitral tribunals over the past three years.

However only 36% said they believed the same was true of age diversity, 35% cultural diversity and only 31% ethnic diversity.

Dr Nora Gallagher, deputy director at the School of International Arbitration, commented: “The arbitration community had to adapt quickly, and some of these changes will remain after the pandemic recedes.

“Virtual hearings and increased reliance on technology are clear examples of changes that will persist.”

The study was carried out in partnership with US law firm White & Case.

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