The changing landscape of arbitration in Asia

Arbitration is not an abstract thing in Asia. It has vigorous life and is promoted actively by governments, companies and lawyers.

Immense, growing volumes of multinational business in Asia provide reasonable (and unreasonable) people with occasions to disagree, often about money - sometimes a huge amount of it. This provides a natural environment for arbitration, allowing the parties to agree in advance that none should have the "home ground advantage" of local courts, and that any disputes that do come up should be decided by independent and neutral tribunals. Importantly, in a region where there is patchy application of court judgments across borders, arbitration brings the benefit of enforcement under the New York Convention principles, allowing court recognition and reciprocal enforcement of arbitration awards: most countries in Asia and the wider world have agreed to apply those principles - and even those which have not or cannot sign (for example Taiwan) often adopt them.

Adopt and advertise

It would be quicker to list those countries holding back from arbitration than those that adopt and advertise it as a sign to would-be investors that their country is open for sensible business. By way of recent example, Myanmar released a revised arbitration bill in June 2014. This approach recognises the need to endorse a suitable and trusted form of legal risk management in order to attract and protect business investment.

There is widespread desire on the part of domestic governments to provide the infrastructure (legislative and sometimes physical) to support arbitration in their jurisdictions. Countries and the arbitration institutions in Asia are engaged in healthy competition to attract more and more users to their individual arbitration services. Global institutions are in on the act, and the International Chamber of Commerce now has a very successful Hong Kong branch to service Asian arbitrations from within the same time zone, staffed by people more familiar with Asian business and languages.

The institutions and jurisdictions focus attention and resources on promoting, often internationally, the availability and the benefits of arbitration in Asia, and on providing or refining powers and procedures useful to the end users of the services. Hong Kong has recently adopted the UNCITRAL Model Law on Arbitration, more or less in its entirety. Singapore refines its arbitration statutes often, showing interest and focus in support of the process.

The Hong Kong International Arbitration Centre and the Singapore International Arbitration Centre are among the global market leaders in changing the procedures and powers for arbitrators in their arbitration rules. And what one place does, others must consider so that services offered remain competitive. This competition is a virtuous circle, driving quality and awareness throughout Asia and so providing a better understood, better presented and more attractive product to businesses.

This focus has paid off for the Asian homes to arbitration. One trend, completely understandably, is for the place of arbitration to be in Asia. The number, complexity and value of arbitrations heard in Asia increases every year, and is now completely normal. Parties can and do choose counsel or experts from anywhere, including Asia, Europe and North America. There are many potential venues, with Singapore and Hong Kong being the most recognised internationally. One must not, however, overlook the other successful arbitration centres, including those in China (particularly Beijing and Shanghai), Kuala Lumpur, Seoul, Sydney and Tokyo.

Domestic process rhythms

The distinction between domestic and international arbitration remains in many Asian countries, which recognise that the disciplines of international arbitration may well be different to the familiar rhythms of domestic process.

Some Asian jurisdictions have a common law heritage but others owe much more to civil law traditions, which, combined with cultural differences, can create tensions and challenges in the international arbitration process. Domestic approaches are sometimes adopted by counsel and arbitrators, including those who have limited experience of international disputes. But that approach can clash with different expectations from others involved in any particular arbitration. This background is familiar in many places around the world, of course, and those differences are to be recognised and managed as a natural event. Arbitrators and lawyers from different places bring useful understanding and perceptions of relevant business practices and culture. As the number of disputes grows, so does the variety of participants engaged with arbitration - patience and a willingness to engage can be useful companions in those circumstances.

Of course, an arbitration award is not the same as cold hard cash. The challenge of enforcement (which is by no means limited to Asia) remains. Local protectionism is a possibility, particularly if the relevant assets are in the same jurisdiction as one of the principal parties. Even in that situation, as with the possibility of enforcing against assets worldwide, the legal systems in Asia are responding, although at differing paces. In China, by way of example, the highest court in the land (the People's Supreme Court) automatically reviews any refusal by a local court to enforce a foreign award. Enforcement will remain a challenging outcome to predict, however.

The rise of Asia is set to continue and the growth of arbitration centred on that region is useful, popular oil for the machinery of commerce.

Andrew Aglionby, chartered arbitrator, FCIArb is a partner of Olswang and lived in Asia for 17 years before moving to London in 2010

www.ciarb.org/das