Speech by Law Minister K Shanmugam during the Committee of Supply Debate 2011

9 Mar 2011 Posted in Parliamentary speeches and responses

1. Sir, I thank the Members who have spoken. I will respond to Members’ questions on the legal services sector, arbitration and legal aid, and Professor Ho will answer the other questions.

Singapore as a global legal hub

2. Mr Alvin Yeo asked about the impact of recent initiatives to spur the growth of the legal sector and whether these initiatives should be revised or accelerated. The legal sector in Singapore is an important cornerstone in our efforts to develop as a financial services hub, and as a regional and international base for local and foreign multinational firms. A strong legal services sector is an economic engine in itself; it is also a key enabler for work in many other sectors of our economy.

3. Over the past few years, we have taken various steps to liberalise the legal sector and make Singapore an important international legal hub. As a result of these measures, we now have a more vibrant and diverse legal sector, with 104 foreign law firms registered in Singapore and 983 foreign lawyers practising here. Eight of the world’s top 10 law firms by revenue now have offices in Singapore.

4. The foreign firms in Singapore complement our 804 local firms and 3,822 local lawyers. Together, there has been a broadening and deepening of legal services expertise in Singapore, and of the ability of the legal sector to support complex international commercial transactions and corporate transactions, especially in industries important to Singapore such as energy, maritime and financial services sectors. Since 2005, the value -added of the legal sector to Singapore’s economy has grown by more than 50 per cent.

QFLP Scheme

5. With the Qualifying Foreign Law Practice (QFLP) scheme in place, we now have six top foreign law firms practising and promoting the use of Singapore law in permitted areas to their clients. The six QFLP firms have been operating for close to two years now, and have done well despite the global financial crisis.

6. In the second half of this year, my Ministry will be reviewing the performance of the QFLP firms at the two-year mark with a view to further liberalisation. The review will also take into account information collected from a broad range of law firms, both local and foreign, as well as data on the supply and demand of legal professionals in Singapore.

7. Based on present data available, most of the QFLP firms are well on track to exceed their previously committed two-year manpower and offshore revenue targets. Since the commencement of the QFLP scheme, the six firms have increased their manpower by over 200 lawyers. About two-thirds of these lawyers were hired from overseas, and more than half of these were the result of transfers from the QFLPs’ overseas offices.

8. The QFLP scheme is therefore achieving one of our desired outcomes – the attraction of more legal talent to Singapore, while at the same time providing more exciting opportunities for local lawyers to work in top international law firms without having to leave Singapore. And of course, they have the choice of working in top Singapore law firms as well. So this gives them a broader choice. As for the QFLPs’ revenue, a very large part has come from offshore work, work which might not otherwise have come to Singapore without the scheme.

9. The past year also saw three new Joint Law Ventures, leveraging the enhanced Joint Law Venture scheme. We now have a total of eight Joint Law Ventures and Formal Law Alliances in Singapore.

10. Next year, the new Foreign Practitioner Examination (FPE) will increase the pool of lawyers in Singapore qualified in multiple jurisdictions, and will further add to the diversity and richness of Singapore’s legal capabilities.

SILE & FPE

11. The Singapore Institute of Legal Education (SILE) will be conducting the new FPE. It will allow foreign lawyers who pass the examination to practise Singapore law within the “permitted areas”. “Permitted areas” exclude litigation and domestic areas of law, as set out in the legislation.

12. The new examination was created to help meet industry demand for further high-calibre lawyers. It will be set at a standard that experienced foreign lawyers can pass. Foreign lawyers can take the examination only if they are already employed by or have a job offer from a local or foreign law firm in Singapore. This will ensure that only those foreign lawyers with the skills and experience required by the market will be admitted.

13. The inflow of lawyers through the FPE will add to the vibrancy of our legal sector without diminishing the attractiveness of Singapore lawyers. Singapore lawyers will continue to be highly sought after because of their training and expertise in Singapore law. It will anchor foreign talent in Singapore and make available a broader range of qualified lawyers in the market.

14. SILE is currently developing the FPE and will make further announcements in due course. MinLaw, together with SILE , will monitor the scheme after its launch and will fine-tune it as required.

Arbitration

15. Let me now turn to arbitration.

16. Mr Yeo commented on the progress that Singapore has made as an arbitration centre and asked what steps we are taking to stay one step ahead of the competition. Mr De Souza asked how we could leverage our reputation as a regional arbitration hub to make Singapore a global legal hub.

17. As an aside, if I may say, comparing the number of arbitration cases from India and China – there may be a perception that the number of cases from India are much more than those from China. But in fact, the number of arbitration cases from Greater China – which of course includes Hong Kong – is about equal to the number of cases from India. So in fact, there have been cases from both these high growth economic areas.

18. 2010 was a good year for Singapore arbitration:
    • The inaugural Singapore International Arbitration Forum took place and was attended by many of the luminaries of the global arbitration community.
    • The Singapore International Arbitration Centre’s (SIAC) caseload reached a record of 198 new cases last year – double the number of new cases it handled in 2008.
    • 120 cases were heard at Maxwell Chambers last year, up from 46 cases after it opened in mid-2009.

19. Maxwell Chambers has been well received by the global arbitration community. In fact, the Global Arbitration Review shortlisted the opening of Maxwell Chambers as one of the “Best Developments” in the arbitration industry in 2010. SIAC was also shortlisted as one of the arbitral Institutions of the Year. A White & Case survey found that after London and Geneva, Singapore, together with Paris and Tokyo, are the next most popular seats for arbitration. As for choice of arbitral institution, SIAC was ranked fourth after the International Chamber of Commerce, London Court of International Arbitration, and American Arbitration Association / International Centre for Dispute Resolution.

20. Other countries are now looking at building or improving their own arbitration facilities. They aspire to match or even exceed the standards set by Maxwell Chambers. They have set their sights on competing with Singapore to be the arbitration hub for the region.

21. A recent article on the Kuala Lumpur Regional Centre for Arbitration talked about competing with Singapore. Another article mentioned South Korea’s aspirations to be “the Singapore of Northeast Asia”. It is interesting, that when South Korea mentions its aspirations to be the Singapore of Northeast Asia, it did not mention – as a reference point – any other city either in Northeast Asia or in Southeast Asia. Hong Kong, is also now reported to be looking at what it can do to compete more effectively. Reports suggest that some in Hong Kong acknowledge the efforts that Singapore has put in, and the results that have been achieved.

22. Ultimately, the success of Singapore as an arbitral destination is not dependent on a building alone. If it were only the building, others can build bigger and plusher buildings. What makes Singapore a top international arbitration centre of choice is that our entire eco-system facilitates and supports independent arbitration, and that is not going to be so easy to replicate. Let me set out some of these aspects.

23. In terms of the legislative framework, my Ministry updated the International Arbitration Act two years ago. We continue to monitor legislative and other developments in other jurisdictions, and seek feedback from practitioners and users of Singapore’s arbitration services on a regular and systematic basis. We have given our commitment to update our laws to reflect best practices, and we have moved fast – and will continue to move fast – when the need arises.

24. Second, we have a highly regarded, strong and independent judiciary. Our legal system is free of corruption, and is based on Common Law. International best practices are adopted and investors as well as lawyers who advise them can easily understand our system, and work within it.

25. Another key element of our eco-system is the approach taken by the judiciary in Singapore, in supporting the arbitral process and avoiding too ready a judicial intervention in the arbitral process.

26. And we can list other factors.

27. The result of these factors is that some of the top arbitration law firms in the world have opened offices in Singapore, including more than 10 of the Global Arbitration Review’s top 30 arbitration groups, and renowned arbitration outfits such as 20 Essex Street, Essex Court Chambers, and – most recently – Bankside Chambers. We are working with EDB to encourage these firms to expand their practices in Singapore, and to attract even more top arbitration firms to set up here.

28. We will host the second Singapore International Arbitration Forum on 1 June this year and the International Council for Commercial Arbitration’s (ICCA) annual conference next year. The ICCA is one of the most prestigious conferences in the arbitration calendar. These high-profile events will give us further opportunities to showcase Maxwell Chambers and Singapore as an arbitration venue.

29. We do not intend to sit back and wait for the world to come to us. We will continue to work closely with various key players to cement Singapore’s position as one of the key arbitration venues in the world and the leading centre in Asia.

Legal Aid Bureau

Revisions to Legal Aid Means Test made in 2007

30. Let me now touch on the issue of legal aid. We last reviewed the means test in 2007, during which we made several significant amendments such as increasing the personal deductible from $3,000 to $4,500, the dependent deductible from $2,000 to $3,500, and increasing the disposable capital limit from $7,000 to $10,000. As a result of these changes, an additional 846 people received help in FY2007 who otherwise would not have qualified. This number increased to 1,186 in FY2008, 1,360 in FY2009, and an estimated 1,400 in FY2010.

31. Mr Palmer suggested that we review the Means Test. We do periodically review the Means Test to ensure that it is relevant and effective, and will continue to do so. But at the same time we have to be mindful that legal aid should only be provided to those who truly need it, because there are many law firms who provide assistance to various economic groups, including people who are slightly above what we have set out as the means test. But I give Mr Palmer our commitment that we will continually review our limits.

Give Director of Legal Aid more discretion to determine qualification for Legal Aid

32. The 2007 means test revision also granted the Director of Legal Aid greater discretionary powers to help persons who fail the means test, but are still deserving of legal aid in situations given by members including Mr Palmer. The Director has the discretion to decide these cases and the Director does in fact exclude the husband’s means in determining the wife’s disposable income.

Introduce different tests or parameters for different types of cases

33. Mr Palmer’s alternative suggestion was that we should apply different parameters for different types of cases. That is a bit more difficult to do. As we informed this House on 27 February 2008 during the Budget Debate, the principle behind the provision of legal aid is to ensure adequate access to justice for deserving individuals, based on the means test and merits test, regardless of the nature of their case.

34. I think it is going to be very difficult to make distinctions based on the nature of cases to decide which case should or should not qualify for legal aid. I think it is better to keep it simple – based on the means test, and deciding on a level, which can assure us that those who would not be able to afford lawyers on their own will get help. That is a test that people can understand, and it is defensible.

35. Thank you.

Last updated on 25 Nov 2012