Singapore breaks new ground as arbitration hub

Business Times, Singapore

Singapore breaks new ground as arbitration hub

By Claire Huang

15 May 2015

Singapore/The first win by a Singapore law firm in an investor-state arbitration case is expected to pave the way for the Republic to play a more active role as an international dispute resolution hub, particularly in international investment law - a field dominated by law firms based in London, Paris and the United States.

WongPartnership said that it was the first Singapore law firm to be instructed as counsel in an arbitration registered with the International Centre for Settlement of Investment Disputes (ICSID).

Heard last year, the ICSID tribunal delivered its arbitral award in early May, finding in favour of the Independent State of Papua New Guinea, WongPartnership’s client.

The law firm said that this was the first win for a Singapore law firm in an ICSID arbitration. WongPartnership had acted for the Independent State of Papua New Guinea in the investor-state arbitration started by PNG Sustainable Development Program Limited (PNGSDP).

PNGSDP was represented by Senior Counsel James R Crawford, who is a Judge of the International Court of Justice. He was supported by Clifford Chance partners from their Australia, Hong Kong, Singapore and London offices.

PNGSDP had alleged, among other things, that the state had expropriated its 63 per cent shareholding in Papua New Guinea’s largest taxpaying mining company. The company operated one of the world’s largest gold and copper mines - the OK Tedi Mine in the Western Province.

It had claimed that the alleged expropriation was conducted through the passage of an allegedly unlawful Parliamentary Act in 2013, which breaches various investment guarantees and protections accorded to PNGSDP under the Investment Promotion Act, a domestic legislation.

The state had argued that the tribunal had no jurisdiction to adjudicate upon any of the claims, as the state never provided a standing offer to arbitrate disputes under the ICSID Convention via its Investment Promotion Act.

The ICSID tribunal, comprising Gary Born, its president, Justice Duncan Kerr and Michael Pryles, agreed with the submissions.

The tribunal’s decision would have a significant impact on foreign investors and investments in Papua New Guinea - a country rich in natural resources such as gold, copper and oil that has attracted major foreign investors including Exxon-Mobil, InterOil Corp and Sime Darby, said WongPartnership.

Currently, there are parallel proceedings before the Singapore High Court relating to the management of PNGSDP’s US$1.5 billion assets.

Alvin Yeo, Senior Counsel and lead counsel for Papua New Guinea, said that investor-state arbitration was a relatively new area of practice that is rapidly growing in the region.

"Since the first bilateral investment treaty (BIT) was concluded in 1959 between Germany and Pakistan, there are now almost 3,000 BITs worldwide. With increased cross-border and international trade, disputes have invariably arisen between investee states and their foreign investors, who are also growing more assertive in relation to their BIT protections."

Mr Yeo said that many of these disputes are heard under ICSID, which has hearing facilities at the centre’s headquarters in Washington, DC, as well as at the World Bank Conference Centre in Paris.

But Singapore, he noted, is playing an increasingly active role as an alternative venue for such proceedings.

The Singapore International Arbitration Centre and Singapore Maxwell Chambers have concluded agreements with ICSID to provide hearing facilities, he added.

Another indication of the country’s growing dispute resolution sector is that, as reported on Monday, the Singapore International Commercial Court will be hearing its first case - a US$800 million spat involving Australian, Indonesian and Singapore business interests.