Justice Steven Chong: Speech given at the Chartered Institute Of Arbitration (Ciarb) Young Members Group Conference

Chartered Institute Of Arbitration (Ciarb) Young Members Group Conference
"Change and Continuity in the World of Arbitration"
Wednesday, 21 February 2024
The Honourable Justice of the Court of Appeal Steven Chong*
Supreme Court of Singapore

Distinguished guests
Ladies and gentlemen

I.     Introduction 

1.     Thank you for inviting me to deliver this keynote address. I have on several occasions, in the past, spoken about how far we’ve come in the field of international arbitration and what we’ve achieved in bringing Singapore to the forefront of this field.⁽¹⁾ Today, I want to focus instead on where we are headed. 

2.     What does the future hold for the world of arbitration? To answer that question, it is essential to have a clear understanding of significant recent developments in the arbitration space. This would encompass the emergence of new technologies which bring with them new types of disputes, and the introduction of new arbitration laws in other jurisdictions. This can perhaps be summed up in one key word – change. The times are changing, and it would be remiss of us to ignore these new developments or to adopt a wait and see attitude. We should be ready to embrace change if doing so will serve to strengthen our pole position. But at the same time, we must guard against the notion of change for its own sake. We should not forget the strengths and values that have brought us here, for they will continue to serve us well in our quest to remain at the forefront of international arbitration. That would engage the second aspect of today’s address – continuity. Our challenge is to strike a balance between change and continuity. In that spirit, I propose to reflect on the changes and reforms which are taking place in the other mature arbitration jurisdictions and share my views on whether it would be appropriate for Singapore to adopt them. 

3.     Finally, a talk about change and continuity in the arbitration space would be incomplete without addressing young lawyers entering the field such as yourselves. I shall therefore share a few words at the end of this address as to what you can do to be ready for the future world of arbitration.

II.     New Disputes 

        A.     The dominance of technology 

4.     Let me first address the topic of change. The key driver of change in the modern world (lawyers included) is technological development. Technology now plays a dominant role in the business world. This dominance can be seen in at least two dimensions.

5.     First, we have witnessed the spectacular growth of tech-focused companies in recent times. Seven tech companies now account for almost one-third of the market value of the S&P 500 and have collectively been responsible for driving its value up this past year.⁽²⁾

6.     Second, businesses across every industry imaginable have adopted and integrated new technologies into their processes. Blockchain technology has the potential to revolutionise international trade and is also being used in industries like logistics and supply chain management. Smart contracts, which are themselves based on blockchain technology, are being used to automate payments. Over and above these specific examples, there has also been an explosion in the use of data and artificial intelligence models across the board.

       B.     Dispute arising from new technologies 

7.     These technical terms have often been bandied around as meaningless buzzwords, and one may be left wondering how, if at all, they are relevant to the practice of law. The answer is simple – new technologies inevitably bring new types of disputes, and consequently new opportunities for lawyers. Let me now map out a few of these new areas of opportunity.

8.      First, one can expect some friction in the process of adopting new technologies. Many businesses do not possess the capabilities to develop technological solutions and products in-house. There is therefore a need for collaboration with an external party which does possess the necessary expertise. One clear example of this is in the automotive industry, where manufacturers are entering into collaborations with software providers, battery producers and start-ups.⁽³⁾ These are often long-term collaborations and disputes are bound to arise in this time. There may be clashes because of differing mindsets and risk appetites, or over the allocation of IP and know-how, or over challenges brought about by subsequent changes in circumstances such as new government regulations.⁽⁴⁾ 

9.      The issue of government regulations probably deserves mention as an entire subject of its own. As the role of technology continues to grow, so will the degree of regulatory scrutiny. We are already witnessing a slew of digital and data regulations coming from the European Union in particular. New regulations could frustrate commercial agreements and commercial parties alike. This could lead to disputes not only between parties who have to deal with the fallout of these regulations, but also between parties and the governments imposing the regulations.⁽⁵⁾

10.     Thirdly, the adoption of blockchain technology and smart contracts may itself be a source of dispute. No technology is completely infallible, and technological failings can have massive consequences. Disputes arising from these failings have already reached the highest court in our land.⁽⁶⁾ 

     C.     The dominance of technology 

11.     I have thus far outlined the changes we are already witnessing, in the shape of new areas of disputes. Through all these changes, however, we can be assured of one thing – the continuing attraction of of arbitration as a form and perhaps even the preferred mode of dispute resolution.

12.     Some of the disputes I have just illustrated can be said to fall naturally within the realm of arbitration. Companies aggrieved by new data and digital regulations may pursue claims against the government through investor-state arbitration – one clear example of this is Huawei’s recent ICSID claims against Sweden in response to the Swedish government banning the company from participating in its 5G networks.⁽⁷⁾ 

13.     Moving to the realm of disputes with tech businesses and platforms, arbitration will likely remain a popular choice as well. Many of these businesses and platforms use arbitration clauses in their agreements.⁽⁸⁾ The core advantages of arbitration – confidentiality and enforceability across virtually the entire world – lend themselves well to tech disputes, which are often of a cross-border nature and are likely to involve proprietary information.

14.     Moving on from these more “traditional” disputes, there is a question mark when it comes to disputes arising out of transactions on a blockchain network, otherwise known as “on-chain” disputes. For these types of disputes, there is a premium placed on cheap and fast dispute resolution – these are perhaps not the hallmarks of arbitration today. Instead, it appears that some blockchain networks have embraced the old ways. That is, to be judged by a jury comprised of your peers (meaning to say, other users on the blockchain). Notwithstanding this, arbitration may yet take a foothold, with new arbitration rules like the Digital Dispute Resolution Rules published by the UK Jurisdiction Taskforce designed specifically for such disputes.⁽⁹⁾ 

15.    Therefore, even in a changing world with new emerging and technically complex disputes, there is continuity in the relevance of arbitration as a dispute resolution mechanism.

III.     New Laws

16.     Now, while we can be confident in the continuity of arbitration, it is crucial to examine whether our arbitration laws continue to be fit for purpose. Speaking for myself, I would think that the answer is in the affirmative. Our arbitration framework has survived technological developments in the past. When we moved from letters and handwritten signatures to electronic communications and electronic signatures, our laws adjusted accordingly with the amendment of section 2A of the International Arbitration Act to ensure that these would continue to satisfy the writing requirement for arbitration agreements. The transition towards virtual hearings, prompted to a large extent by the COVID-19 pandemic, has also not caused insurmountable disruptions. Therefore, I believe we can be quietly confident that our existing framework can handle this new wave of technological development, with some amendments where necessary. 

17.     I turn now to address change in a different aspect – not in technology but in the law. There have been some interesting developments in some of the leading jurisdictions for arbitration, most notably in the UK with the reform of the Arbitration Act 1996, which I want to focus on. 

18.     But first, what should our approach to these changes be? I think that we must of course keep a keen eye on what is happening in other jurisdictions. While Singapore is presently the joint top arbitration seat in the world alongside London, now is not the time to rest on our laurels. If we wish to maintain our position, then we must keep abreast of the best practices in other jurisdictions, where they are of relevance and value to us. We have done so in the past. For example, section 2A of the International Arbitration Act which I mentioned earlier was in fact an adaptation from the provisions of the 2006 UNCITRAL Model Law on International Commercial Arbitration. At the same time, we cannot pursue change for its own sake. Not all changes are for the better or even necessary.  

19.     With this approach in mind, I turn to briefly examine two features of the recent reforms in the UK. 

20.     The first is an addition to the Arbitration Act 1996 specifically empowering the tribunal to make an award on a summary basis if a party has no real prospects in its claim or defence. Such summary disposal procedures already exist in the rules of leading arbitral institutions like the SIAC, ICC and HKIAC. However, the Law Commission observed that there was a reluctance among arbitrators to utilise these procedures for fear that they might be accused of not giving a party a reasonable opportunity to present its case. The addition of this section would therefore provide some degree of “statutory” assurance to arbitrators and courts in enforcement jurisdictions that the use of these procedures should be seen as proper under English law.⁽¹⁰⁾ 

21.     The courts are, of course, no stranger to summary disposal procedures. We have a rich jurisprudence on summary judgment and striking out. The advantages are obvious – such procedures are a useful tool to save time and costs. The fact that these procedures have been incorporated into the rules of leading arbitral institutions speaks to their relevance in the field of arbitration as well. 

22.     The challenge presented here is with the principle that one should have a reasonable opportunity to present his case. But how are we to understand the contours of this principle? Are you entitled to full liberty to present an absolutely hopeless case? That is clearly not the case in the courts, and I struggle to see why it should be the case in arbitration, subject of course to the parties’ agreement. 

23.     Therefore, in my view, there is much merit to the adoption of this feature within our own International Arbitration Act. As I mentioned earlier, summary disposal procedures exist within the SIAC’s rules as well. If the inclusion of a statutory empowerment will give tribunals the confidence to use these procedures, then there is value to that change. Again, where there is value in change, we must embrace it. That said, by adopting this change, we would in a way be bringing back something that has long existed in litigation – even in change, there is an element of continuity.

24.     I acknowledge that this change might give rise to some potential difficulty. Even if Singapore expressly recognises that a Singapore-seated tribunal can summarily dispose of issues without infringing upon a party’s right to have a reasonable opportunity to present its case, a court in an enforcement jurisdiction may nonetheless take the contrary view and refuse to enforce such an award. That is of course a matter for courts in such jurisdictions to decide, and the task may fall to you as counsel to persuade them as to the propriety of this procedure. I would have thought that a reasonable response to such a challenge is to argue that where a party has chosen a seat which expressly recognises summary disposal procedures, that party must be taken to have accepted the parameters and limitations as to what constitutes a reasonable opportunity to present its case under the law of that seat. It should then be impermissible for that party to resile and argue to the contrary.

25.     I move on to the next area of reform in the UK. This has to do with the governing law of the arbitration agreement. The present approach in the UK to determine the governing law of the arbitration agreement is the three-stage approach laid down by the UK Supreme Court in Enka v Chubb [2020] UKSC 38 (“Enka”). Under this approach, the law applicable to the arbitration agreement would be the law expressly chosen by the parties to govern that agreement, or failing such a stipulation, their implied choice (which would generally be their choice of governing law for the main contract); and failing that, the system of law with which the arbitration agreement is most closely connected. The proposed Bill amending the Arbitration Act 1996 departs from this position in favour of a new default rule that an arbitration agreement is governed by the law of the seat unless parties expressly agree otherwise.

26.     In proposing this reform, the Law Commission took the view that the new default rule was simpler and more certain than the approach in Enka, which it regarded as complex and unpredictable. It was also acknowledged that this would ensure that more arbitration agreements would ultimately be governed by English law – that was seen as a boon, as courts could then apply the more generous English law position on issues of separability, arbitrability and interpretation of arbitration agreements. The Law Commission went so far as to say that this would preserve party autonomy in the choice to arbitrate, without that choice being undermined by an implied choice of a foreign law.⁽¹¹⁾

27.     I am sure most if not all of you here are aware that the UK Supreme Court’s approach in Enka is quite similar to our approach in Singapore, as laid out in my own decisions in BCY v BCZ [2017] 3 SLR 357 (“BCY”) and BNA v BNB and another [2020] 1 SLR 456 (“BNA”). 

28.     What then are we to make of the change in the UK? Here, I would suggest that we really must keep a critical eye. It appears to me that the goal of the Law Commission in proposing this default rule was this – first, to create a clear, bright-line rule that only one law can govern the arbitration agreement; and second, to make sure that that law is English law where the seat is in London. My immediate observation is that perhaps there is no need for Singapore to go in that direction. I would venture to suggest that our approach as set out in BCY and BNA has always been to give effect to party autonomy, whether or not that points to Singapore law ultimately. Party autonomy is, after all, of paramount importance in international arbitration.

29.     I also do not agree that our existing approach is necessarily an uncertain one. It could equally be argued that it would promote certainty for the governing law of the main contract to apply to the arbitration agreement (with a narrow exception where that law would negate arbitration altogether). This was the point made in BCY, and even by the UK Supreme Court in Enka. The experience of our courts in BNA as well as Anupam Mittal v Westbridge Ventures II Investment Holdings [2023] 1 SLR 349 also demonstrates that while parties can dispute the implied choice of law for the arbitration agreement, these are inquiries that our courts are regularly tasked to resolve and which must, in any event, be undertaken in the absence of an express choice of law for the main agreement.

30.     At the moment, I am not convinced that this reform is necessary given the way in which our laws have developed and how the arbitration community has reacted. As of now, I believe it is better that we continue charting our own path here.

IV.     A New Generation of Lawyers 

31.    Thus far, I have dwelled on the subject of new disputes and new laws, of changes that have come, and changes that will come. Through these changes, there is always an element of continuity that must remain. I say the same in relation to the last topic I will address today, and that is you – the next generation of lawyers. One thing is for certain, there will continue to be a need for competent lawyers to act as advisers and advocates. 

32.     At the same time, the world is changing, and lawyers must change with it. This will be a challenge for all lawyers and arbitrators. But for you as young lawyers, this is a prime opportunity. Your generation has grown up with technology, and there is no doubt that you are much savvier and better equipped to understand the nuances of this field as compared to those in my generation. Many of you even brand us as “dinosaurs” because of this. I must sound a word of warning. Having the ability to do something and actually doing it are two entirely different matters. You must take the conscious effort to educate yourself on these new developments. Fail to do so, and you may one day end up as a dinosaur yourself. 

33.     Again, with your capabilities, learning is the easy part. Harder still is the task of educating your arbitrator on the issues, especially one who is closer to my vintage.

34.     However, technology does pose one challenge for young lawyers. While I have spoken on how arbitration will remain relevant as a dispute resolution mechanism in the future, and how the services of lawyers will continue to be required, I am concerned with the effect that improving technology will have on the growth and development of young lawyers. 

35.     Many tasks that have traditionally been left to younger lawyers – legal research, discovery, drafting first cuts of pleadings and submissions – are at risk of being automated to a large extent by generative AI and other technologies. Today, we can perhaps laugh at the spectacle of those who attempt to cite authorities from ChatGPT. But ChatGPT will only get better with time, and soon enough this may no longer be a laughing matter. What happens to the young lawyer then? 

36.     I would say that you must move up the value chain and master the tasks and skills which are not so easily automated – advocacy, cross-examination, litigation strategy. Over and above all these, you have to possess the requisite experience and intuition to react and respond when things don’t go as planned. These skills, however, cannot be learned from a textbook or online. Neither can they be learned by simply watching a senior. You have to do it yourself, make your own mistakes, and in that process learned from those episodes. Trust me, you will never forget those lessons learned.

37.     That, of course, is easier said than done. A young lawyer cannot hone these higher-level skills if he or she does not even have the opportunity to undertake these tasks. I fear that this is a problem that may be particularly acute in the practice of arbitration. It is easy to see the allure of practising in an international arbitration team, fighting cross-border disputes over sums measured in the millions or billions. However, those high stakes also mean that a young lawyer in his or her formative years is not going to get the opportunity to lead arguments or cross-examine witnesses or have any say in the overall management of such cases. And it is imperative that these skills are learned in your formative years. You would not want to be cross-examining a witness for the first time as a tenth-yearer. 

38.     This is where I think there are merits to maintaining a practice in court litigation, where a young lawyer can hone his or her skills working on smaller cases or on interlocutory applications, in addition to your work in the arbitration practice. This is critical for your own development and staying power in your law practice. In my view and experience, there is no realistic substitute for your own independent work as a litigator. That is the most definitive way to achieve true satisfaction and fulfilment in your work as a litigator. Ultimately, it is for each one of you to figure out the proper balance for yourself. I only ask that you keep what I have said in mind when finding that balance and to have that conversation with the partners who you work for.

V.     Conclusion 

39.     To sum up, I would like to return to the theme of change and continuity. The world is changing. Commerce is changing. The nature of commercial disputes is changing. But in this new world, there will continue to be a role for arbitration, and opportunities abound for arbitration practitioners. You need to be ready when opportunity comes knocking. 

40.     Thank you very much. 

^{* I wish to acknowledge the invaluable assistance of my law clerk, Wong Weitao, in the research and preparation of this Address. 
(1)       Justice Steven Chong, “Making Waves in Arbitration – the Singapore Experience”, speech at SCMA Distinguished Speaker Series 2014 (10 November 2014) <https://scma.org.sg/SiteFolders/scma/387/Events/seminar20141110SChong.pdf> (accessed 2 February 2024).
(2)       Karl Russell and Joe Rennison, “These Seven Tech Stocks are Driving the Market”, The New York Times (22 January 2024) <https://www.nytimes.com/interactive/2024/01/22/business/magnificent-seven-stocks-tech.html> (accessed 2 February 2024).
(3)      Sam Brown et al, “Global Arbitration Trends 2023” <https://www.cliffordchance.com/content/dam/cliffordchance/Thought_Leadership/global-arbitration-trends-2023.pdf#tech> (accessed 15 January 2024).
(4)      Eric Leikin, Lutz Riede, Matthias Hofer and Sue Ng, “Arbitration in Technology Disputes”, Global Arbitration Review (11 November 2022) <https://globalarbitrationreview.com/review/the-european-arbitration-review/2023/article/arbitration-in-technology-disputes> (accessed 2 February 2024).
(5)     Eric Leikin et al, “Technology Disputes and Arbitration”, Global Arbitration Review <https://globalarbitrationreview.com/review/the-european-arbitration-review/2024/article/technology-disputes-and-arbitration> (accessed 15 January 2024).
(6)     See Quoine Pte Ltd v B2C2 Ltd [2020] 2 SLR 20. 
(7)     Sam Brown et al, “Global Arbitration Trends 2023” <https://www.cliffordchance.com/content/dam/cliffordchance/Thought_Leadership/global-arbitration-trends-2023.pdf#tech> (accessed 15 January 2024) at p 2.
(8)     Sam Brown et al, “Global Arbitration Trends 2023”  <https://www.cliffordchance.com/content/dam/cliffordchance/Thought_Leadership/global-arbitration-trends-2023.pdf#tech> (accessed 15 January 2024) at p 3; Kate Scott et al, “Arbitration for Cryptoasset and Smart Contract Disputes” <https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2022/01/arbitration-for-cryptoasset-and-smart-contract-disputes.pdf> (accessed 15 January 2024).
(9)      Dirk Wiegandt, “Blockchain, Smart Contracts and the Role of Arbitration” (2022) 39(5) Journal of International Arbitration 671 at p 686.
(10)     United Kingdom, Law Commission, Review of the Arbitration Act 1996: Final report and Bill (Law Com No 413) (Chairman: Lord Justice Green) at paras 6.1–6.24.
(11)     United Kingdom, Law Commission, Review of the Arbitration Act 1996: Final report and Bill (Law Com No 413) (Chairman: Lord Justice Green) at paras 12.18, 12.72–12.73.}