30 Aug 2019 Posted in Speeches
Thank you for being here.
This is SIAC’s inaugural investment arbitration conference in India and it’s a pleasure to be here with you all.
- Investment arbitrations are getting a lot of attention.
- If you look at investor states cases, as of 2018, there were 942 known treaty-based investor state dispute settlement cases. 71 new arbitrations were initiated in 2018 alone. And if you contrast that with 10 years ago, there were generally less than 50 new arbitrations every year. 20 years ago, the numbers were in single digits.
- If you look at India, it has already been involved in 30 cases. 24 cases as the respondent state and 6 as the home state of the claimant, which I think is an indicator of the importance of outward global investment from India into other countries. As you all know, companies and sectors of economy have become bigger and stronger and looking outwards.
- The World Investment Report of 2019, released by UNCTAD, stated that last year, the FDI in India rose by 6% to US$42 billion. The FDI outflows were US$11 billion.
- When you look at the needs of India, in big picture terms, what India needs just in one area, infrastructure alone, over the next say five years, you can easily put a figure of US$800 billion. But that’s the amount of investment that India can easily absorb.
- At present, the levels are modest. Inevitably, the investment flows will increase from the current levels to much higher levels. How high would depend on a whole variety of factors but I think one can say that investment flows have to increase and will increase.
- And inevitably, with those types of flows, dispute resolution mechanisms are going to become more and more important. Now, if you look at it from an overall macro perspective, many of these disputes will undoubtedly be dealt with in India. That’s the majority of cases.
- The parties who invest in India, the likelihood is that they will find some way of dealing with it in India. Whether it is the Court process or the commercial arbitration process. But there will be a number of cases where the parties will prefer another jurisdiction, where the investor is quite substantial and has the bargaining power, and both that investor and the Indian party feel that arbitration can be done outside of India, in a jurisdiction that has got no connection to the investee or the investor.
- And that’s where we come in. We can and we have played a complementary role in that context.
- And we are also prepared to work with the Indian arbitration centres – collaborate, cooperate, everyone benefits. I was in Mumbai yesterday, and I met the Arbitration Centre there too and they took very similar views on how we can all work together, where there has been a need to look for a destination outside of India for arbitration.
- The default choice over the last six to eight years, from an Indian perspective has been Singapore.
- And geo-political events have shown, how important it is that the centre, whichever place that one goes to, has political stability, a transparent legal system and a good regulatory framework. Commercial parties favour these jurisdictions because they offer them a sense of security, certainty, party autonomy which is respected and supported by the legal framework as well as by the courts.
- And critical for the parties is the ability to choose the lawyers they want to argue, rather than having restrictive rules in the destination, which prevents lawyers of their choice from appearing. So if you look outside India, I think really you can compare it with any place in Asia, I think Singapore stands as number one.
- Beyond the choice of seat is the choice of institution which administers the arbitration, which is critical. SIAC is independent - but we support SIAC in its growth. You choose an arbitral institution because of what the rules are and how it manages the arbitration. And in that sense, SIAC has become one of the top institutions in the world, helped by its court and also the very impressive panel of arbitrators.
- If you look at investment arbitrations, most of them are administered by ICSID, the International Center for Settlement of Investment Disputes, or PCA, the Permanent Court of Arbitration. These are administered under ICSID or UNCITRAL rules. In 2017, SIAC moved into the space more clearly with the first edition of SIAC’s investment arbitration rules, or IA Rules. Wide consultations were conducted for stakeholders and SIAC’s investment arbitration rules deal with some of the most important issues, the most pressing issues, that face international investment arbitrations. It deals with delays, costs, confidentiality, public interest considerations, submissions by non-disputing third parties, and also funding arrangements. The scope of issues that are covered by SIAC’s rules, together with SIAC’s own experience in administering cases, will give assurance that cases can be resolved quickly, fairly, with minimal delay.
- For the last five years, SIAC has administered investor state arbitrations every year, involving direct state parties and commercial parties. And it has been very fortunate to be able to draw on the experience of its Board and its Court, chaired by Gary Born, including several experts from India. So, I hope that Indian parties will continue to find Singapore and SIAC useful, relevant, a place they can go to when for any reason, it cannot be done in India.
- Before concluding, let me also make mention of the Singapore Convention on Mediation because it is the most recent thing that has happened. This, to give its full title, UN Convention of International Settlement Agreements Resulting from Mediation. It would be much easier to say “Singapore Convention on Mediation”. Signed by 46 states, in Singapore, a few weeks ago on the 7th of August, it now awaits ratification by at least 3 states for it to come into force. We have every expectation that this will happen very soon.
- Mediation is rising in popularity. In the past, the use of mediation has been affected by enforceability – it’s all very nice to have a mediated order but if you cannot get your money, it does not get you anywhere. So, the Singapore Convention provides for cross border enforcement of mediated settlement agreements. And the fact that UN passed its resolution on the Convention only in December last year and within 8 months you had 46 countries signing up for it, with a great enthusiasm, including the US and China and South Korea, India, just to name a few from Asia. EU is in a special category, because whether the EU has to sign as a block or the individual countries can sign, it needs to be sorted out but we are fairly confident that in due course that will happen.
- So it has been something that has received very wide acceptance amongst countries and the international trend and momentum for use of mediation I think is likely to grow. It is likely to become a more serious option in investor state disputes in the future, including in combination with arbitration proceedings. Yesterday, my Senior Minister of State discussed mediation with a number of people - one of the things that Singapore does is train people from around the world in mediation, including India - and the Indian mediators who went through that process are now back here, and they can see the benefits of it. They are also looking at the Convention and how it can work here.
- And so, like I said earlier, we are delighted that India, which is a key partner for us in these areas, has signed up. With that, I hope that you will have a fruitful conference.
- Thank you very much.
Last updated on 03 Sep 2019