SINGAPORE - The launch last week of the Singapore International Commercial Court (SICC) positions Singapore decisively as a leading city where international commercial disputes can be heard in a court of law.
London and New York, both leading global financial centres, have traditionally been the two leading locations for international commercial dispute resolutions.
English law and New York state law, in turn, have traditionally been the preferred neutral choice of governing law for the international business community, even when the business transactions are done in Asia.
The law follows financial and business flows.
With Asia outperforming the global economy and attracting a higher share of international capital as well as trade, the legal services sector in the Asia-Pacific region will grow significantly, as Law Minister K. Shanmugam observed recently.
He added that cities in Asia - Singapore, Hong Kong and others - are in a position to service large, growing economies such as India and China.
With the recent launch of the SICC, Singapore courts will provide the necessary institutional framework for disputants to resolve their disputes where the mediation option has been exhausted or where arbitration is not an available or preferred option.
This is where Singapore, as a trusted neutral centre with an established tradition of judicial integrity and efficiency, can fill a natural gap in Asia.
What does the establishment of the SICC mean for the Singapore economy?
First, it can boost the legal industry in Singapore. As the past experience in promoting Singapore as an arbitration centre has shown, more international arbitration in Singapore means more Singapore lawyers being engaged to provide legal support services. More complicated commercial disputes brought before an international court in Singapore will require sophisticated legal services. This will enhance the professional development of the legal industry.
Second, it strengthens Singapore's brand as a premier dispute resolution hub in Asia. The setting up of a court complements Singapore's ongoing effort to provide mediation and arbitration services, not just for ASEAN but also for Asia.
Third, the setting up of the SICC will eventually help boost the Singapore economy, especially with Singapore emerging as an increasingly sophisticated service economy.
In recent years, the legal industry in Singapore has been growing faster than Singapore's economic growth. According to Mr Shanmugam, the growth rate of legal services compounded over the past six years is about 7 per cent per year, compared with GDP growth of about 5.4 per cent per year.
According to the minister, the value of legal services has grown between 2008 and 2013 by 71.5 per cent, and the nominal value-add of the sector has grown by 40 per cent in the same five-year period. Singapore has seen the legal profession grow in the last five years, not just due to the banking and financial services sector, but as a whole.