Making the case for Singapore law 

IT IS no accident that Singapore is the pre-eminent centre for dispute resolution and legal services in Asia today, particularly for arbitration. According to White & Case’s 2021 international arbitration survey, it is the preferred choice of arbitral seat (or venue) in cross-border transactions in Asia, ranking among the top five most preferred venues in all regions, alongside established venues Hong Kong and Paris. The choice of Singapore law as the governing (substantive) law of contracts has likewise grown in tandem, although not to the same extent. In an independent survey commissioned by the Singapore Academy of Law and conducted by the global research company Ipsos Pte Ltd in 2019, Singapore law (29 per cent) was found to be the second most widely adopted governing law in cross-border transactions in Asia after English law (43 per cent). Interestingly, the survey also found that where Singapore was chosen as the dispute resolution venue, the most frequently used governing law was Singapore law (37 per cent).

As they say, Rome was not built in a day, and these achievements are the result of years of planning and concerted efforts by all relevant stakeholders.

In 2021 and 2022, we conducted a study involving transaction (corporate and finance) lawyers from international law firms based in Singapore. We wanted to understand the considerations which influence the choice of Singapore as preferred dispute resolution centre in cross-border transactions, and relatedly, the extent to which the parties’ choice (through their lawyers) of governing law is associated with the choice of dispute resolution venue. We approached these lawyers for their views as we found that lawyers typically (but not always) drive the choice of venue and governing law. In particular, we were interested in determining the extent to which the choice of Singapore law as governing law was driven by the parties’ (lawyers’) choice of Singapore as a dispute resolution venue, specifically Singapore-seated arbitration.

Our study yielded some interesting results. Pertinently, the choice of venue and governing law are separate issues – the choice of Singapore as dispute resolution venue does not necessarily (or invariably) mean that Singapore law would be chosen as the governing law. Transaction lawyers viewed Singapore’s neutrality as a dispute resolution venue and its ability to accommodate a range of governing laws, together with other factors (progressive legislation, supportive judiciary, good infrastructure) as important contributors to Singapore’s success as a dispute resolution venue. Such is the attraction of Singapore that this holds true even if the parties choose a foreign governing law; in such cases, that foreign governing law would be “paired” with Singapore dispute resolution. In this respect, the transaction lawyers whom we spoke with opined that English law is still the preferred governing law, albeit with Singapore law a close second. This mirrors the findings of the Ipsos survey, viz, that English law is the most widely adopted in cross-border transactions, followed by Singapore law.

Why the preference for English law? Transaction lawyers cited its perceived neutrality, in addition to factors such as familiarity and comfort (in addition to the limited ability of international firms to practise Singapore law). Notwithstanding this, there has been increasing acceptance of Singapore law as a “neutral” law, particularly in cases where the parties desire the traits of a common law system (for example, certainty of contract, plain language interpretation, etc) but are not prepared to accept a “Western” governing law. It was observed that in many cross-border “regional” deals (done in for example, Indonesia, the Philippines and Vietnam), or where there is a Singapore law nexus (for example, the holding company is a Singapore incorporated company or the assets are situated in Singapore), there are compelling reasons to choose Singapore law as the governing law.

The survey brings to the fore the question – what can, or ought to be done to further promote the adoption and use of Singapore law? Before we proffer some thoughts on this all-important question, we first address a prior question which some readers may have, namely, whether policymakers ought to do so. To the extent that this (normative) question needs to be addressed, we say that the answer is (or should be) obvious. Advocating for and promoting the adoption and use of Singapore law is (or ought to be), first and foremost, a matter of national (and personal) pride, just as the development of an autochthonous Singapore legal system attuned to the mores, needs and aspirations of Singapore society is an imperative (as an eminent legal scholar and Supreme Court judge once opined). While English law principles continue to be relevant (and English cases continue to be cited to the Singapore courts), the decisions of the Singapore courts are now cited in preference over English decisions. On issues of arbitration law, for example, they are frequently cited by courts of other jurisdictions and discussed by leading international commentators. Stakeholders, including the legal profession, can rightly be proud of how far the Singapore legal system and jurisprudence has come, not forgetting that as recently as the late 1980s, there was hardly an autochthonous jurisprudence to speak of. Would a Singapore lawyer be proud to say that they are qualified to practise Singapore law, if Singapore law did not have the standing and recognition it has attained? Surely, the professionalism and spirit of service with which stakeholders (including lawyers) fulfil their roles is due in no small measure to the pride that they rightly take in the Singapore legal system and Singapore law.

Singapore law also has an important role in enhancing the republic’s stature in tandem with its status as a leading financial and legal hub, and the gateway to Asia. In this regard, policymakers have embarked on a deliberate course of gradually liberalising the legal profession by enabling more foreign lawyers to advise on Singapore law in cross-border transactions. This has been done by enhancing the legislative framework to allow for joint law ventures, formal law alliances, and qualifying foreign law practices – which permit a wider group of lawyers, including foreign lawyers with the requisite practising credentials, to practise in permitted areas of Singapore law (that is, all areas except domestic litigation and general practice areas such as criminal law, family law, retail conveyancing and administrative law). At the same time, these vehicles have afforded Singapore-qualified lawyers greater training and career opportunities, and exposed them to a broader range of practice areas. The experience and expertise gained as a result of the exposure to cross-border work is invaluable, as is the international outlook that comes with, or from, doing such work. This benefits not only the lawyers who have the opportunity to do cross-border work, but also the legal profession as a whole through the raising of standards generally. Japan’s experience in this regard may be instructive: liberalisation of the legal profession began in April 1987 and the profession has been largely fully liberalised since 2005. Since then, the quality of service and advice delivered to clients by both Japan-headquartered and foreign firms has improved significantly. As policymakers intended, the legal pie has grown, and many more lawyers stand to benefit. No country can be an island, and neither can Singapore law remain closed to external developments.

Yet, many Singapore lawyers are concerned, and understandably so, at the increased liberalisation of the legal profession as economic headwinds grow and there is a sustained (and possibly prolonged) slowdown in economic activity. To cite an example, foreign lawyers are not permitted to appear before the Singapore Courts. However, the relevant legislation was recently amended to allow the Singapore International Commercial Court (SICC) to hear cross-border restructuring and insolvency matters, and foreign lawyers to participate in cross-border insolvency, restructuring and dissolution proceedings before the SICC. Although this development was met with consternation in some quarters, policymakers have emphasised that these changes were made with a view to enhancing Singapore as an international debt restructuring hub.

Just as some Singapore lawyers have benefitted from the development of Singapore law as a recognised brand, many more may potentially benefit from the further liberalisation of the legal sector. On one level, further liberalisation of the legal sector is likely beneficial and, given Singapore’s open economy and the legal sector’s supporting role with respect to commerce and industry, inevitable. We should thus stop asking if this will happen; rather, the real questions are the pace and extent of the changes. The financial services sector has been through a similar (and at times painful) process of liberalisation and consolidation, and key institutions have emerged stronger and better positioned to take on new challenges. Perhaps this is the path forward for the legal sector as well, albeit one that will be fraught with uncertainty and likely, much anxiety on the part of many of those who will inevitably be affected. However, it is a necessary process to take Singapore law to the next level. There will be many challenges ahead and, as is usually the case, the devil will be in the details. Among the questions that many will have is how policymakers can position the legal profession to weather these changes, and emerge stronger. This will be no easy feat, considering that the profession itself may already be in a crisis of sorts: according to a recent Straits Times report summarising the results of a poll of nearly 300 lawyers, fewer lawyers would advise their children to take up law as a career (48 per cent, down from 77 per cent in 2021). In managing the transition, stakeholders, including the Singapore legal profession, will surely desire to have more in-depth engagement with policymakers to express their concerns and explore how these can be accommodated.

All said and done, while we can all accept that progress is an imperative, this must not come at the expense of our roots and identity, not forgetting that Singapore law ultimately derives its legitimacy from its expression of the shared consensus on the mores, needs and aspirations of Singapore society. Singapore lawyers must not forget that they have a key, and possibly even pivotal, role to play in this process of transformation and progress alongside other stakeholders.

Dawn Tan Ly-Ru is managing director of Singapore law firm ADTLaw LLC and Tony Grundy is counsel at Mori Hamada & Matsumoto (Singapore) LLP. Tony provided an international perspective to the discussion. The article is based on a longer piece that was first published in the journal SAL Practitioner on 8 September 2022. The views expressed here are the authors’ personal views.