SPEECH TO THE BRUNEI JUDICIARY
"The Role of an Effective and Efficient Judiciary in Promoting Economic Development – The Singapore Perspective"
Thursday, 4 July 2024
The Honourable the Chief Justice Sundaresh Menon*
Supreme Court of Singapore
I. Introduction
1. Good afternoon. Let me first thank Chief Justice Steven Chong and the Brunei Judiciary for inviting me to address this distinguished audience, and for the extremely warm and generous welcome that has been extended to the whole Singapore delegation – and, indeed, for the very generous introductory remarks of the Chief Justice. The special relationship of our two nations is reflected also in the deep and extensive exchanges between our respective judicial and legal establishments. So, it is a real pleasure for us to be here, and for me to have the opportunity to share the Singapore perspective on the role of the judiciary in promoting economic development and in supporting broader initiatives directed to this end.
2. My primary message today is that an effective and efficient judiciary can play a vital role in this context through its contributions on at least three levels:
(a) first, by deciding individual cases in a way that is sensitive to commercial realities and responsive to new developments in the wider operating environment;
(b) second, at the institutional level, by providing efficient and appropriate dispute resolution mechanisms; and
(c) third, by supporting the broader transnational system of commercial justice, which provides a sound legal framework for transnational commercial activity that is conducted on a globalised basis. Given the importance of economic development as a means of improving the wellbeing of our societies, I suggest that it is the responsibility of the judiciary to do what it can to support this broader goal.
II. The role of the judiciary in promoting economic growth
3. But let me first set the stage by underscoring a foundational point, which is the importance of the rule of law to economic development. I suggest that a robust rule of law framework provides a stable and predictable environment governed by clear and transparent rules, in which commercial parties can transact with one another with the confidence that property rights will be protected and contractual obligations will be enforced. It is wholly unsurprising that studies have noted a positive correlation between the rule of law and economic growth.(1) Indeed, I would go so far as to say that this has been an integral part of the Singapore story. Since our independence, the strength of the rule of law has provided the foundation for our journey and our transformation from what was famously described by our Founding Prime Minister, Mr Lee Kuan Yew, as a “political, economic and geographical absurdity”(2) – in the context of Singapore being a very small nation lacking natural resources – to a leading financial and business centre today.(3)
4. The rule of law is a crucial pillar supporting economic activity for the simple reason that commercial parties transact with one another in the shadow of the law. What this means is that where the legal system and infrastructure are known to operate effectively and efficiently to uphold and enforce legal rights, then there is an obvious incentive to act in accordance with one’s legal duties and obligations because one knows that any failure in this respect will be met by the swift and effective response of the legal system. And this in turn will typically mean that there is less need to invoke that infrastructure, which is ultimately conducive to business because it provides stability and predictability in commercial relations while also reducing operating costs. While securing adherence to the rule of law is an endeavour shared by all three branches of government, I suggest that the judiciary has a particular responsibility for administering and maintaining a justice system that gives practical expression to the rule of law, by bridging the gap between “law in the books” and “law in action”; and as I have said, the courts can do this on at least three levels.(4)
A. Navigating commercial realities
5. The first way in which the courts do this is by articulating, interpreting and applying legal rules, in individual cases, in a manner that is principled, sensible, and sensitive to the nuances and realities of the commercial world. This makes it critical for judiciaries to ensure that they develop and maintain strong expertise in commercial matters. If judges are to be trusted by commercial parties to determine their rights and liabilities and to resolve their disputes effectively, they must not only be competent in the law, but must also have a sufficiently sophisticated grasp of business and industry practice.(5)
6. The importance of ensuring that courts are well-equipped to handle commercial matters has long been recognised. Indeed, this was a key reason for the establishment of the London Commercial Court in 1895, in response to calls by the business community for a specialised court for commercial cases, staffed by judges with knowledge and experience of commercial practice and realities.(6) In Singapore, we have sought to develop the commercial nous of our bench by appointing local and International Judges who bring with them a wealth of experience as commercial practitioners and commercial judges, including in specialised areas such as arbitration, insolvency, shipping and intellectual property.
7. But there is another dimension to this need that goes beyond expertise in the established areas. In the dynamic environment in which our societies operate today, a responsive and commercially sound judiciary can also provide guidance and guardrails in emerging fields that are not yet fully regulated by the state,(7) but which may have significant implications for commercial actors. In particular, the dramatic scale and rapid pace of technological advances mean that we are often in uncharted waters, and legislatures and policymakers may – quite understandably – be unwilling, unable or not yet ready to take positions that could have wide-ranging and unforeseen implications. Yet, at the same time, these new commercial realities will give rise to legal questions in specific cases, particularly where harm has been suffered; and in the absence of a clear legislative response, commercial parties will inevitably look to the courts for answers. We need to be ready to give those answers.
8. Take cryptocurrencies, for instance. While governments around the world have taken steps to regulate or at least to address some aspects of cryptocurrencies and crypto assets,(8) resolving difficult legal questions such as the legal status of cryptocurrency through legislation is likely to take time. But these questions have already been raised before the courts. For example, in Singapore, in the ByBit case,(9) an employee had wrongfully transferred quantities of the crypto asset known as US Dollar Tether to addresses that she secretly owned and controlled. In that case, the Singapore High Court had to determine whether such crypto assets gave rise to incorporeal rights of property which were recognisable by the common law as things in action. The High Court held that they did and were consequently capable of being held on trust.
9. Another example is artificial intelligence (or “AI”), which also poses significant challenges for legislatures and regulators, not least because of the fast-moving nature of developments in this field. Against this background, the courts have been asked to provide guidance on some of the specific issues that have arisen from the use of AI. For example, in the domain of intellectual property, the UK Supreme Court has had to consider the question of whether an AI system could be named as an “inventor” in a patent application, and the Supreme Court held that it could not.(10) On the other hand, the Beijing Internet Court has held that an AI-generated image could be protected by copyright, with the natural person who used the AI system to generate the work being the copyright owner.(11)
10. These are just some examples of how judiciaries have had to address these questions and have found themselves in the vanguard of having to offer clear and certain answers to commercial actors in areas where human ingenuity and inventiveness have outpaced regulatory responses. But in order to discharge this role effectively, given the pace of change, judiciaries will not only need to ensure that the knowledge and skills of their judges keep pace with new legal and technical areas – they should also cultivate in their judges a mindset of lifelong and self-directed learning. This is why we in Singapore have invested significantly in the field of continuing judicial education and training through the Singapore Judicial College, and have emphasised the need for our judges to become lifelong “learning judges”.(12) We consider this a necessity in this environment.
B. Providing efficient and appropriate dispute resolution mechanisms
11. The second way in which judiciaries can promote economic growth, at the institutional level, is by providing efficient and appropriate dispute resolution mechanisms for managing and resolving the disputes that will inevitably arise in the course of doing business.
i. Time- and cost-efficiency
12. Let me first elaborate on efficiency. Dispute resolution mechanisms form a crucial part of the infrastructure that bridges the enforcement gap between “law in the books” and “law in action”. When these mechanisms are designed or in fact operate inefficiently, this increases the uncertainties and costs involved for commercial parties who seek to enforce their rights, and this will likely have a negative impact on investment activity, entrepreneurship and business growth. It is therefore imperative that the courts provide time- and cost-efficient dispute resolution mechanisms.
13. We in Singapore owe a debt of gratitude to former Chief Justice Yong Pung How, who oversaw reforms to our court system in the 1990s that had the effect of modernising the litigation process and that cleared the backlog of cases that had previously bedevilled our courts.(14) These reforms laid the foundations for the tradition of efficiency that we have sought to maintain ever since. And we have continued to work on streamlining and improving our processes in new ways. Just as an example, three days ago, we launched what is known as the Express Track scheme in our High Court, to facilitate the more expeditious resolution of certain civil matters that can be resolved within four days of trial.(15)
i. Contextuality
14. Aside from being efficient, dispute resolution mechanisms should also be context-appropriate. I have suggested elsewhere that contextuality is one of the procedural norms that should guide the design of our justice systems, and this requires that dispute resolution processes be tailored to the nature, size and complexity of the dispute, and the circumstances and interests of the parties.(16) Commercial disputes come in all shapes and sizes, ranging from small claims to multi-million dollar mega-suits – and the range of dispute resolution mechanisms that are available should be capable of dealing effectively with disputes across this broad spectrum. To this end, judiciaries should consider developing special procedural regimes to offer dispute resolution mechanisms that are tailored to particular types of disputes. Let me give two examples.
15. The first relates to smaller-value disputes. While one might instinctively assume that the typical commercial party is large and well-resourced, it is in fact small and medium-sized enterprises that have been the “engines of growth and innovation” in the Asia-Pacific region, accounting for over 97% of all businesses and between 40 and 60% of the gross domestic product of most economies in this region.(17) But, especially when the amounts in dispute are relatively small, it may not be realistic or practical to expect these parties to litigate in the same way that large corporations would, or in the same way that they would approach a larger-value dispute. With this in mind, we designed and implemented simplified processes for proceedings in our Magistrate’s Courts and District Courts,(18) and for certain smaller-value intellectual property cases.(19) These simplified processes focus on proportionality and accessibility, and are aimed at ensuring that the cost of litigation does not prevent smaller-value claims from being pursued, or preclude less well-resourced parties from enforcing their rights.(20)
16. At the same time, globalisation has brought about a dramatic expansion of transnational trade and commerce, which has led to a proliferation of transnational commercial disputes.(21) These call for modes of dispute resolution that are thoroughly international in their outlook, beyond what may be possible or desirable within domestic court systems.(22) International commercial courts like the Singapore International Commercial Court (or “SICC”) fill this gap by providing neutral and effective fora that are attuned to the needs and realities of international commerce,(23) and they harness the best aspects of litigation to complement international arbitration.(24)
17. The SICC, for example, offers a bespoke procedural regime for international commercial disputes, drawing upon international best practices.(25) Claims can be channelled into one of three adjudication tracks: the pleadings track, which looks more or less like the traditional common law approach; the statements track, which applies where there are no real contested factual issues; and the memorials track, which draws inspiration from the procedural framework typically in place in civil law systems and in many international arbitrations. Each of these tracks has its own advantages. The SICC can also modify the applicable default procedures as it considers appropriate. All this enables the procedures in each case to be customised to suit the needs of a diverse range of parties and disputes.(26) For instance, the SICC’s procedural regime also provides for the special management of disputes on the Technology, Infrastructure and Construction List, which otherwise can easily become unwieldy due to their technical and evidential complexity. And the Simplified Adjudication Process Protocol that is in use for cases on that List offers parties the option of streamlining the resolution of smaller-value claims in cases containing numerous distinct claims.(27)
18. These procedural innovations are part of our continuing efforts to ensure that our courts continue to supply dispute resolution mechanisms that meet the needs of the commercial world in a variety of settings and contexts, and which assure commercial parties that any disputes that arise between them can and will be resolved in a sensible and suitable way.
C. Supporting the transnational system of commercial justice
19. This brings me to the third way in which the courts can act to support economic growth. The increasingly transnational economic and legal environment that we operate in today means that domestic courts cannot afford to work solely within jurisdictional siloes. Instead, they should view themselves as part of a broader transnational system of commercial justice that seeks to ensure the orderly and coherent resolution of legal problems that have given rise to proceedings not only across jurisdictions, but also across different modes of dispute resolution. We see this frequently in cases where some parts of the dispute are governed by an arbitration clause, but other parts are not; or where some parts of the dispute are contested in one jurisdiction, and other parts of the dispute are contested in another. This, in turn, enables the transnational system to provide a trusted and robust legal framework for resolving the disputes that arise from transnational commercial activity.(28)
i. Proceedings across jurisdictions
20. Let me deal first with proceedings across jurisdictions, where courts in multiple jurisdictions find themselves confronted with distinct parts or facets of the same legal problem.(29) If those courts can deliver outcomes that are broadly consistent, or at least compatible, this will help to secure overall predictability and harmonisation, and minimise the practical complexities posed by transnational litigation.
21. Cooperation and collaboration between courts in different jurisdictions is especially important in a field like cross-border insolvency. Insolvency law and practice is, at its core, concerned with recycling capital – by maximising the prospects of recovery of struggling businesses and, when this is not possible, maximising the realisation of value for stakeholders.(30) There is therefore a compelling case for insolvency courts to adopt the pragmatic approach of “modified universalism”, under which the courts in the jurisdictions where ancillary proceedings have been filed should – as far as is consistent with justice and public policy – strive to coordinate with the court in the jurisdiction managing the main insolvency proceedings. Such a harmonised approach will help to ensure that the insolvent entity’s assets are distributed to its creditors under a managed and coherent scheme.(31)
22. Such coordination can take place through procedural mechanisms, such as court-to-court communication and cooperation under protocols modelled on the Judicial Insolvency Network’s Guidelines(32) and Modalities.(33) But it can also be achieved by courts in different jurisdictions taking harmonised and broadly consistent approaches to managing cross-border insolvencies. In particular, while international instruments like the UNCITRAL Model Law on Cross-Border Insolvency provide a useful framework for securing the orderly resolution of cross-border insolvencies, their scope and effect in practice will depend on how these instruments – or legislation based upon them – are interpreted and applied by the courts in each jurisdiction.(34)
23. I can illustrate this with an example. In the recent Ascentra Holdings case, our Court of Appeal had to interpret the term “foreign proceeding” in Art 2(h) of the Model Law, as enacted in Singapore. We came to the conclusion that the term “foreign proceeding” was not limited to foreign proceedings involving companies that were insolvent or in severe financial distress. Accordingly, the solvent liquidation of the company in that case was recognised as a foreign main proceeding in Singapore. In arriving at this conclusion, we noted that this interpretation was consistent with the overall purpose of the Model Law, one of the fundamental objects of which was to prevent creditors from rushing to satisfy their claims against a debtor company in a particular jurisdiction. This, in turn, ensured a sensible and orderly dissolution of the company or, as the case may be, facilitated its successful rehabilitation; and this rationale for according recognition to foreign proceedings was engaged regardless of whether the proceedings were based on the solvency or insolvency of the company in question. We also noted that this interpretation was broadly harmonious with the approaches taken in the US, the UK, Australia and New Zealand.(35)
ii. Proceedings across different modes of dispute resolution
24. Beyond cross-border proceedings, the courts can also facilitate the orderly resolution of disputes across different modes of commercial dispute resolution. Litigation is one mechanism – and a very important one – but it is part of the suite of dispute resolution options that are available to meet the needs of international commerce.(36) There are other increasingly important alternative modes of dispute resolution, and the courts should be supportive of these.
25. Arbitration, for instance, has long been popular among commercial parties(37) due to its key features, such as flexibility and confidentiality. Courts in key commercial nodes have secured the pre-eminent place of international arbitration within the transnational system of commercial justice in several ways.(38) For example, courts have safeguarded the jurisdictional space of arbitral tribunals, recognising that arbitration and litigation are legitimate and complementary partners in the system for resolving transnational disputes.(39) These courts have also facilitated the enforcement of arbitral awards, whether under the regime established by the New York Convention or by applying and developing doctrines such as transnational issue estoppel in the context of international arbitration.(40) By adopting a suitable pro-arbitration stance, the courts have helped to strengthen the effectiveness of arbitration when that is the primary mode the parties have chosen for the substantive resolution of their dispute.
26. Another alternative mode of dispute resolution that is rising in prominence is mediation. Mediation offers a unique value proposition for commercial parties because it strives to achieve an amicable resolution of the issue that separates the parties, in a way that preserves their relationship and that focuses on advancing their shared interests, and it is generally much more affordable and accessible compared to arbitration and litigation.(41) A major obstacle to the widespread adoption of mediation had been the concerns regarding the enforceability of mediated settlement agreements. But the Singapore Convention on Mediation,(42) which establishes an enforcement regime for international commercial mediated settlement agreements that is similar to the New York Convention, is now in place and can overcome that obstacle. And it will fall to courts around the world to develop and apply this regime in a way that is sensitive to the nuances of mediation practice, and that facilitates the enforcement of mediated settlement agreements. Again, when courts follow the jurisprudence and practices of other courts with a view towards achieving broad consistency, if not also convergence, they are supporting the broader transnational system of commercial justice in which mediation will play an increasingly important role. In this way, the support of the courts will be vital if we are to fully realise mediation’s immense potential in the resolution of international commercial disputes.(43)
III. The role of the judiciary in promoting sustainable economic development
27. I have thus far focused on the role of the courts in establishing and maintaining an environment that promotes economic growth, by facilitating commercial activity and enterprise. But I want, in this last segment of my address, to touch on how the courts can support the longer-term sustainability of economic development, in a broader sense. The role of the judiciary here may be less obvious, but I suggest that it is nonetheless crucial and should not be overlooked.
A. Limits of permissible commercial activity
28. One way in which the courts can support the sustainability of economic development is by articulating and enforcing principled limits on commercial activity. In particular, in the face of the grave existential threat posed by climate change,(44) people around the world are turning to the courts to challenge the actions of public and private sector entities and to try to hold them to account for the impact of their actions on the environment.(45) Courts will therefore increasingly be confronted with disputes that relate directly or indirectly to climate change and climate damage.
29. For example, in Milieudefensie v Royal Dutch Shell, the Hague District Court held that Shell had an obligation to reduce carbon dioxide emissions from the Shell group’s business operations and products by 45% by the end of 2030, relative to 2019 levels.(46) Shell’s appeal is pending. And in New Zealand, the ongoing Smith v Fonterra litigation involves tortious claims against certain greenhouse gas emitters based on public nuisance and negligence, which are familiar to us, but also on a proposed new “climate system damage tort”. When an application was made to strike out those claims, in February this year, the Supreme Court of New Zealand allowed those claims to proceed to trial.(47)
30. In cases like these, the courts will be called upon to articulate the obligations owed by various actors – and I dare say this will extend to the fiduciary duties of directors of companies – and the standards that should apply in assessing their conduct. When courts respond to this invitation, they can provide commercial actors with greater clarity and certainty as to the legal frameworks that will govern disputes in this developing field. In turn, this facilitates the conduct of business activity in compliance with these requirements and standards, and may ultimately encourage the development of more sustainable models of economic growth.(48)
B. Access to Justice
31. Another dimension of economic growth that may become unsustainable is rising socio-economic inequality in many parts of the world, which reflects the uneven distribution of the benefits of economic growth.(49) This has contributed to a global justice gap of staggering proportions.(50) If a society’s economic development is measured not only by its overall wealth, but also by its members’ quality of life,(51) the endeavour to promote economic development – in this broader sense – should also be concerned with ensuring that people have adequate access to recourse for their legal problems.
32. Of course, the judiciary does not have the mandate to tackle the complex socio-economic issue of inequality head-on. But, as the institution responsible for the administration of justice, the judiciary can play a legitimate and important stabilising role in ensuring that, as far as possible, would-be litigants are not denied justice on account of the cost and other obstacles they may face in navigating court systems and processes.(52) It is with this policy imperative of advancing access to justice in mind that the Singapore Courts have made significant efforts to provide legal information and practical assistance to laypersons, and this extends to exploring the use of AI tools.(53) We have also established the Access to Justice Programme Office to drive our transformation as an institution into a more outward-facing and user-centric institution.(54)
33. This dimension of the judiciary’s role – which I have described as its “systemic” role, in contrast to its adjudicative role(55) – is, in turn, an integral component of a broader conception of the rule of law. Bridging the gap between “law in the books” or in theory, and “law in action” or in reality, gives practical expression to the rule of law – but it is society’s shared conviction that the law should rule that brings the rule of law to life. Maintaining that conviction requires not only excellence within our court systems, but also that we take steps actively to ensure that those systems can be reached by those who need to use them(56) – including, and perhaps especially, those who may feel they have been left behind despite economic growth.
IV. Conclusion
34. I began by outlining three levels on which an effective and efficient judiciary can play a vital role in promoting economic development. At the heart of that role is the judiciary’s responsibility for administering the procedural and substantive legal frameworks that provide order, justice, and a “currency of trust” for the conduct of business activity. But a broader perspective on the relationship between the courts, the rule of law and economic development shines a light on how the nature and contours of this role are – at least in some respects – still evolving. And the continued effectiveness of judiciaries today, I suggest, requires not only that we continue doing what we may have done well, but also that we continually reflect on what we are doing and how we might be able to do it better.
35. All this makes understanding the experiences and perspectives of our colleagues and counterparts from other jurisdictions particularly valuable. In this light, let me close by thanking Chief Justice Steven Chong once again for this opportunity for our judiciaries to engage with one another; for the thoughtfulness and warmth of the arrangements that were made for our delegation; and for the outstanding welcome that has been extended to us throughout our visit.
36. Thank you all very much.
* I am deeply grateful to my colleagues, Assistant Registrars Tan Ee Kuan, Wee Yen Jean and Bryan Ching, for all their assistance in the research for and preparation of this address.