Singapore becomes top choice for governing law

Dispute resolution has become a focal point of legal activity, thanks to the country’s open regime.

2019 has been another year of growth for Singapore’s legal sector as 11 firms reported increases in their lawyer count. The total number of lawyers in Singapore Business Review’s annual Legal Industry Survey of the 22 largest law firms hit 3,008, up 2.66% YoY from 2,930 in 2018.

Allen & Gledhill retained its top spot as its headcount grew from 378 to 405. This was followed by Rajah & Tann Singapore LLP, with a lawyer count of 376; WongPartnership at 324; Drew & Napier at 269; and Dentons Rodyk & Davidson LLP at 209.

Firms such as TSMP Law, Baker McKenzie and Dentons Rodyk & Davidson all shared that they raised their headcounts to keep up with the increasing demand around dispute resolution and cross-border or M&A transactions. Singapore’s rising attractiveness as a leading dispute resolution hub has urged the government in 2019 to push this further.

In fact, the World Economic Forum’s Global Competitiveness Report, ranked Singapore as the world’s most efficient legal framework for settling disputes. A spokesperson from the Ministry of Law (MinLaw) stated that what sets Singapore apart from other markets is their open arbitration regime, where parties are free to engage lawyers, arbitrators and mediators of any nationality and use any governing law. They also shared Singapore International Arbitration Centre’s (SIAC) latest figures, where it saw more than 400 case filings in 2018, which jumped four times over the last decade.

Nandakumar Ponniya, Asia Pacific chair for international arbitration practice at Baker McKenzie, added that demand for such services are growing as it remains the most cost-efficient way to resolve disputes that parties are unable to resolve themselves, and clients understandably are keen to explore further. “On Restructuring & Insolvency, Singapore now is an alternative to the US and UK in offering a platform that would cater to restructuring on a global basis. Singapore has extensively reformed its insolvency and restructuring regime in the last few years which now offers a unique blend of provisions drawn from US Chapter 11 legislation and those retained from UK-based legislation.”

One specific case involving iron ore firm H&C S Holdings, which applied for court hearing in the UK. This firm applied for Singapore’s moratorium law, where they were successfully granted a relief. This law pertains to Section 211B(1) of the Companies Act (Cap. 50) as foreign main proceedings under the UNICITRAL Model Law, where Singapore court will be able to help firms that are unable to pay its creditors. It was recognised by the High Court of England and Wales, according to Rajah & Tann Asia.

“This is the first time a court outside Singapore has recognised section 211B of the Companies Act,” the law firm said. “The overhaul was also aimed at attracting debtors and creditors in the region to come to Singapore for corporate restructuring.”

Moving forward, MinLaw shared the other proposals they had in mind, such as allowing conditional fee agreements where firms will not have to pay their solicitor if the hearings are deemed unsuccessful. Another involves the public consultation had to add improvements to the International Arbitration Act.

“A potentially exciting development would be that of third-party funding to fund investigations and potential claims in dispute resolution. Following from a case where Justice Chia Lee Ming made a declaration to permit it in the context of a corporate collapse affecting Singaporean retail investors, it could lead to wider implications for the funding of commercial litigation in Singapore,” PE Ashokan, partner at Withers KhattarWong LLP, noted.

Cross-border transaction hub
Other than cross-border disputes, Loh Kia Meng, COO & senior partner Dentons Rodyk, added that large M&A transactions are another focal point of Singapore’s legal activity. Singapore’s M&A value skyrocketed 154% YoY in 2019 to $17.1b. “I think the government has done a very good job of encouraging and promoting both the use of Singapore as a dispute resolution, but also uses Singapore law as a governing law and cross border, M&A and joint venture transactions,” said Andrew Martin, managing principal at Baker McKenzie.

“The constant re-evaluating of our legal industry will allow Singapore to further establish itself as an overall attractive destination for corporations to do business,” Ashokan added.