Prakash Pillai conducted an exclusive interview with Toby Landau QC, a renowned British lawyer and arbitration expert who is the first Queen’s Counsel (QC) to be called to the Singapore Bar since the independence of Singapore. Mr. Landau's admission to the Singapore Bar has been described as "a historic occasion in the legal history of Singapore".
PP: Firstly, let me congratulate you on making legal history in Singapore by becoming the first QC to be admitted to the Singapore Bar on a permanent basis. What prompted you to apply?
TL: I have for a number of years been very active in Singapore on a sort of “fly-in fly-out” basis. I have done a number of cases in Singapore courts, both in the first instance and the appellant level on ad-hoc admissions. I have worked for a long period for the government in a number of capacities, been on the panel advisors for the Attorney-General's Chambers for a number of years and assisted in a number of international matters for the government. I have been teaching here for some time. So there has always been a focus on Singapore in my practice and it seemed a natural next step to just extend it a little bit and try and get rights of audience again.
PP: Singapore has largely kept the litigation side out of the hands of foreign firms. There was no real sign of this sort of thing happening and from the point of view of the legal fraternity and practitioners such as me it was a bit of a surprise because I in fact didn’t think that I would live to see the day that I actually saw a QC being admitted to the Singapore Bar on a permanent basis. So is this something that you just took a chance on or did you get soundings from the government?
TL: They gave a lot of support throughout. I have been quite close to Singapore in many ways for a long period of time and so it wasn’t completely out of the blue in the sense that I felt it was a time where I could apply and as I said, everyone has been very supportive along the way.
PP: Was this something that you were encouraged to do as well?
TL: Yes, because if you look at the way Singapore is placing itself internationally, it has been striving to be an international legal centre for dispute resolution and it has been singularly successful in doing that. So, that has a number of components to it. The attitude of the judiciary is one of the components, the attitude of the local bar, the facilities that are provided for international clients for dispute resolution services are others and one element is also the sort of internationalisation of the Bar locally. I think that is something which as I understand it, that there is a feeling and a willingness (perhaps it is not universally shared) but nevertheless there is a willingness to be open and to attract people here and Singapore has been doing that for some time and lot of big names, particularly in the arbitration field have come to Singapore. All of that contributes to the standing of the Singapore profession and so I think that is why as I say, I have had support in my application because I think it is not that this is the dawn of the new era by any means, not that this is opening floodgates, not that this is going to be whole change. It’s a very small incremental step which I think and I am hoping, will allow me to contribute locally and the Singapore perspective on that is not for me to increase my own practice, it is to contribute to Singapore in a way that I could do previously but I think can do much more if I am actually part of the local scene.
PP: Do you think that this is going to lead to more QC's being admitted or do you still think that your situation is unique and you are a one off?
TL: I think it is incremental. I think if there are people who arguably are willing to come and make a commitment locally again which I put in a different category from just the ad hoc application, somebody who is not coming to Singapore other than for the purposes of a case. If somebody else is coming with a commitment, the fact that they are a QC or not should not make any difference. If they are here and they are willing to contribute to Singapore's goal and to the development of the local legal market, then I hope that they would be welcomed.
PP: Ok, so let's move on to the next topic, the rise of Singapore as a centre for disputes. You are on the Court of the SIAC. Just looking at SIAC as a sort of benchmark to show the growth of arbitration in Singapore, in 2006, SIAC had 90 cases, 10 years later, in 2016, SIAC had 343 cases. What do you think are the factors that have led to this exponential growth in international arbitration in Singapore?
TL: I think there are a number of points. Singapore has been an incredibly agile environment that has adapted itself in a way that many other seats are simply unable to do and it is partly because of its small size and partly because of a very conscious government that is aware that it has a mission. The government is very single minded about it. So it really has done everything that an arbitration centre should do. It has kept its law absolutely up-to-date and it has the ability to change its law very quickly in order to deal with unfortunate court decisions or with the needs of the market. For example, there are instances which are well known where decisions have been poorly received or they have had some fall out and so they corrected the law. Third party funding is an issue which suddenly Singapore has adapted itself. My memory of contributing to the drafting of the English Arbitration Act in 1996 is that after a very, very painful period of 10 years to get back together, we finally got the Act through the Parliament and on the day that we were packing up and leaving from our room at what was then the Department of Trade & Industry who were the government ministry sponsoring the bill, the parting words from the civil servant in charge were, "Thank you very much, don’t come back for 40 years". That was it, there was no way that their was Parliamentary time going to be given for this again and the whole exercise was difficult. So it’s a very different system here. That's the sort of legal environment. You put on top of that a very, very skilled highly respected judiciary. On top of that, a skilled and highly respected local Bar that is accessible, that has an international catchment area; rates that are competitive and are seen by many people as better than London, plus the facilities of Maxwell Chambers, plus the general facilities of Singapore, excellent hotels, unbelievable restaurants etc. Put all of that together, it is difficult to see why one wouldn’t chose Singapore.
PP: I was actually going to ask you about that. Does Singapore have any unique advantages over the rest? The way you have described Singapore, could you apply the same kind of praise to centres like Hong Kong or London? It sounds like no actually from the way you described it.
TL: I think there are some features that I described that are shared elsewhere. So, Hong Kong is a major centre. London is still a major centre. Some of the features I described are not shared. The agility of the government is not shared. I cannot think of any other government that works in the same way as this one. I can't think of any government as responsive and that can change the environment for arbitration so easily and so readily. Hong Kong comes close but it has a different governmental system and it has its own issues to deal with. London has its own issues to deal with; London has a lot of historical value and is a bigger place. So all of those are vibrant centres but if the question is how come Singapore has suddenly risen and is so fast moving, I think it is this whole cocktail of points that have come together.
PP: But do you think it has risen at the expense of other centres?
PP: Or do you think there is general growth, the pie is growing and that explains the numbers.
TL: It's a bit of both. The pie seems to be growing because you can see an increase in numbers everywhere so obviously there is a general increase and if you were to break it down into sectors and types of arbitration, you would see year-on-year increases in many areas, for example, investor state seems to be growing. There are other areas which are slightly declined probably everywhere. I think there is a general growth but I do think that the success of Singapore is at the expense of some other centres and in particular, London actually. I mean London is still a very vibrant centre but there are some areas of work that I think have noticeably shifted. South Asian work, in particular India, Pakistan and other South Asian countries that traditionally would have gone to London are now being seen to be coming to Singapore as a first reaction. Perhaps, it is closer geographically and it is also seen to be cheaper, reliable and a trustworthy centre as far as a South Asian perspective is concerned, so I think that’s the change.
PP: On that point, out of the 343 cases more than 150 cases came from just one country which is India and with China there is another 76. So, about two-thirds SIAC's portfolio comes from just two countries and these are the two countries that really matter. In particular India. Why do you see such a shift towards Singapore?
TL: I think the shift has been possible because a lot of what London offers can also be found in Singapore. So there is obviously the English language, common law system, a recognisable court process, the law itself is recognisable and Singapore has a huge English influence. So all of that makes it easier to shift from London to Singapore than for example London to Stockholm or a country which would not have any particular cultural references or identification within India or Pakistan. I think that allows the transition to have happened quite easily and then there are issues perhaps of cost and the perception that you can get a similar experience in Singapore as you can in London.
PP: And do you think that is actually borne out by the evidence? Is Singapore significantly cheaper than London?
TL: I don’t know is the answer. I think that is the perception. These things are quite difficult to measure because cases come in all shapes and sizes. People bill at different rates. There are different levels of representation one can have. People bill their teams differently so I just don’t know whether actually that's right.
PP: And what about China? Would the same sort of principles apply for why Chinese companies use Singapore? Even though they have no history of using London.
TL: They don’t and so I think that probably isn’t the same shift that is identifiable on the South Asian interests but obviously Singapore geographically is convenient for China as it is seen as neutral..
PP: Another interesting trend is the rise of American companies who are using Singapore as a seat. How would you explain that? My experience of the Americans, say 10 years ago, is that they wouldn’t step out of the US. Arbitration clauses would say seat of arbitration in California or New York or somewhere in the US and at most they would venture to Europe, London or Paris but Asia was a little bit distant for them. So what explains the rise of US companies?
TL: I think that is really the rise of international arbitration departments within France, because the scene that you describe is really outdated or it is describing a whole different area of practice which is domestic American practice because American law firms now are very, very dominant in international arbitration circles and like any law firm that is going to be active in this field, you have to be adaptable to travel anywhere and so that's when they are fully internationalised. So these are now law firms, like law firms in other countries that have got mixed personnel, some Americans, some non-American and they are perfectly adept at doing cases anywhere around the world. So you now see them in Singapore but you also see them in Hong Kong, you also see them in Stockholm and you see them in Geneva and Zurich. The whole field has just become truly internationalised.
PP: Right, but do you think there is a more fundamental reason possibly, which is the rise of Asian companies with better bargaining power? In the past you would surrender that desire for neutrality or home ground advantage to an American counterparty, simply because you wanted their foreign investment but these days Asian companies insist on a neutral venue and when it comes to a neutral venue you look round the world and Singapore offers itself and its because of the rise of Asia that the US has been drawn into our arena. That's how I look at it. Do you agree with me?
TL: It may be right but I am not sure that is just the rise of Asia because America has been drawn into lots of markets around the world so you still have the same phenomena of American parties in an arbitration by consent in Geneva or in Stockholm. So it may be that Asia work has managed to pull American interests to Singapore in the same way that perhaps other interests have pulled them to Europe. I just think overall there has been much more fluidity. People are now readily agreeable to an international seat and that's just how the market has changed. We are all now busy flying around.
PP: And if you look at other Asian countries like South Korea, Indonesia and so on, do you see them embracing international arbitration even more?
TL: Yes, absolutely. For example South Korea has got an incredible vibrant arbitration community with a major centre in Seoul and a schedule of conferences and activities and a noticeable increase in their participation in international arbitrations and in their case load locally.
PP: Indonesia which has always been a big exporter of disputes to Singapore for arbitration and litigation because they are connected here, there is the Chinese community that has lots of wealth in Singapore and economic activity in Singapore. Using that as an example, is Singapore also the beneficiary of the inefficiencies in these sorts of countries? When you think of it from a foreign investor point of view, you would tread very carefully before you decide on litigation in Indonesia or India or China and it's that inefficiency that brings Singapore into play. This is a major factor and it is possibly a big contributor to Singapore's success. Would you agree?
TL: Totally. I think you are being charitable in a way. There are many jurisdictions around the world that are very active in international trade and other international economic activity that are known to be unsafe for arbitration and other dispute resolution. For instance, for many years now, India has been unsafe. It is not to say that it is always unsafe and it is not to criticise everybody in that country. One cannot criticise all the institutions in India but it has had a chequered history in terms of international dispute resolution and in particular in arbitration. You could also add many other countries such as Pakistan, Bangladesh, Sri Lanka and Indonesia to this list. You could also add many other countries in other regions around the world. There has always been an advantage for well-placed local, efficient, secure and neutral safe havens for dispute resolution and London has benefitted from that and now so are Singapore and Hong Kong. I think it is also interesting because it shows the difficulty with some initiatives that we have seen recently where people have tried to set up institutions within these countries. Look at LCIA, India- that was a valiant attempt. It did not work out and it may be that one could have said all along that however good the institution is, you are placing it in an environment that people have difficulty with and which has historically been unsafe so what you actually need is a good institution like that but in a country/region that is safe.
PP: Moving on to the next topic, which is that of investment treaty arbitration. Before the interview I had a look at what you had been writing about and this is certainly an area that you have expressed your opinions on a number of occasions. Now one of the things about investment treaty, there was a time when there was a big explosion of investment treaties but recently there seems to be some kind of pulling back. Indonesia has terminated many of its investment treaties. India as well and there are lots of complaints particularly by developing countries that somehow these treaties are unfair and weighted very heavily in favour of the foreign investor. What's your view on this? How would you describe the current state of play in the investment treaty world?
TL: That's a big question you have asked. What is interesting about this field is that it is still a developing area as it is very new. The jurisprudence is still developing. We have only really seen a sort of modern full scale activity for say 15 years if that. So everyone is feeling their way. Alongside that development in 15 years, we have also had the development of the so-called backlash which has also increased in intensity as the general activity has increased and that backlash is a function of a number of different factors. A lot of it is perception based. So it is not based upon scientific evidence as to what is actually happening in these cases and when you look at empirical evidence.
PP: Sorry, whose perception?
TL: It started with a collection of people who came from many different perspectives- not just anti-globalists and anti-capitalists, people from the developing world, people who perhaps had lost cases. It's a whole host of people that had come together and a lot of academic writing as well. It's given rise to a whole series of complaints about the process but most of them are not empirically based. There are perceptions that it is unfair, that arbitrators are over-reaching, that it is all unfairly weighted against particular interests whether it's developing or particular regional areas. So that is something which has become a force. Now whether or not that is based on real facts doesn’t really matter because it has an impact as you have already suggested from your question. The fact that there is that perception has led to calls for withdrawals from treaties.
PP: And what direction is this going to take you?
TL: I think some years ago people were not taking the backlash so seriously and now everyone is because it has taken hold and it has some concrete effects. We already have a number of countries like India, South Africa and South American countries that have terminated investment treaties. We have got a general public feeling of resistance and that is something which many governments are very alive to and all of that has culminated into concrete proposals for reform so the direction now is that this area probably does have to change and probably will change. Not sure of the timeline for that.
PP: And how will it change.
TL: That of course is not yet clear but what has changed over the last few years is that we now actually do have some concrete proposals. For a number of years now, there has been much dialogue about the process without any particular alternative being suggested. Now however, there are some alternatives being suggested and we see them for example in the EU commission's working papers on possibly setting up a standing court for investor state disputes and as an alternative setting up a standing appellant structure. We have also gotten a number of treaties, BITs, FTAs that have already gone in the provisions allowing for an appellant structure or a standing court if that should come to pass if that can be agreed upon.
PP: Now looking at the rest of the investment treaty arbitration as a process. One of the things that seems to be happening is that the process, to use your words, is being “shoe-horned” into a kind of commercial arbitration framework. I would like to explore that. Do you see that as a major problem for the process of investment treaty arbitration and if so why?
TL: I think it is a problem. I think a certain amount of criticism that I described is actually a result of this shoe-horning. When the treaties were drafted, nobody had really perceived how they would develop. Arbitration was used as a dispute resolution mechanism and people just defaulted to the existing model at that time which was commercial arbitration. The problem is that commercial arbitration is a totally different animal and there are number of distinguishing features. In particular, commercial arbitration is a mechanism for dispute resolution between the contracting parties, defined immediate parties who know each other and have agreed to their dispute being resolved. The interest in most commercial arbitrations is only the interest of the immediate parties. Unlike that in investor state arbitration, the interest can be much broader. The actual audience, the constituency that may be impacted by the award could be a whole community or a whole country.
PP: On top of that a tribunal seems to have much more power because it can regulate state conduct in a private commercial arbitration.
TL: A commercial arbitration can involve state interests but if one analyses the relationship, it can be said that in commercial arbitration, the relationship is horizontal as you have got parties (whether a state or not), who are contracting at the same level as commercial entities. With the investment treaty arbitration, it's a vertical relationship where you have got a state government that is implementing a policy on the one hand and on the other hand, you have an individual entity investor who is impacted by that policy and wants it to be reviewed rather like in public law. That's a big, big difference. So the tribunal’s mandate in investor state arbitration is actually broader. It's not just to resolve a horizontal dispute, it is to review government activity obviously through the prism of how it has impacted an immediate party but the result may be much, much more significant. The example that I often give is the Biwater-Tanzania case in which I was involved in as one of the arbitrators. That case was a classic investor- state dispute. The configuration was an investor company in the water sector in dispute with the government but actually the issues that were raised in that case had the potential to impact upon 350,000 water users in Dar es Salaam. So that doesn’t mean that the dispute gets necessarily determined differently but it does have a wider significance. Now if you think about that process and think of the best way of resolving it as a procedure, the commercial arbitration model isn’t obvious. You might think it to be more likely an administrative law matter, and in that the critical features that are different are things like openness to other interests. The ability for other interests to come in and have their say to actually direct the flow of the mechanism.
PP: Could you also draw from an interstate sort of dispute model?
PP: Because investment treaty arbitration seems to actually lean more in that direction.
TL: I am not sure that is a perfect analogy either because interstate is also horizontal so it is two states that are at the same level and the dispute resolution mechanism will be as between them at an equal claim. So you don’t necessarily have the same dynamic of other interests that are involved. The investor state I think is a little bit unique actually. It's more like a sort of human rights convention where you have got an individual who can bring an issue before an international forum vertically against the state. Unless those wider interests are catered for, there are stresses in the system that I think are a very key point to understand as to what is this backlash. If we didn’t have the commercial arbitration model and we actually had a different model that had always been transparent and was always felt to be accountable where people could actually have their say that would have diffused a lot of the criticism. People wouldn’t be saying who are these arbitrators, we don’t know what's going on, we haven’t had any input, and this has an impact on our rights. Then the mechanism would have said, well actually, you can come in and have your day.
PP: Arbitral institutions like SIAC have come up with their own body of rules which are specifically geared towards investment treaty arbitration. Is that something that would help the process?
TL: It does.
PP: How so?
TL: Because it focuses upon some of these key differences, in particular the ability of third parties to be involved in the process which to me is a really important element. In commercial arbitration, it is just unheard of and people are resistant to it. It's another very important point. People who come to the process with a commercial arbitration mind-set feel the process is no different to general commercial arbitration even though they know its investor state. If they are carrying that mindset even when somebody wants to intervene from outside, their instinctive reaction is no, because that will make the dispute more complicated. This is a dispute about these immediate parties in front of me; all I have to do is resolve their dispute. That mindset issue is a commercial arbitration mindset so I think it helps when the rules are more detailed on these points.
PP: I will end with a final topic which is party appointed arbitrators. What do you think of the current system of party appointed arbitrators? Do you think it’s a moral hazard in the sense that you are getting your man to bat for you on the tribunal which may lead to some sort of bias or unfairness? Or do you think it is an inevitable and inherent part of the system and you have got to have that in order for people to sign on and actually proceed with international commercial arbitrations.
TL: I think on the one hand there is mild hazard. I think that there are serious problems in the process but the second point is whether it is inevitable. I don’t think it has to be inevitable but there is definitely a strong force to continue it because people like to have their choice.
PP: Party autonomy is the corner stone of international arbitration. If you didn’t have that, you wouldn’t have international arbitration. Broadly, to have your say in the way arbitration is conducted and through that process you want to have the ability to nominate the person you are comfortable with.
TL: I don’t think that is necessarily true. You could have your say by choosing an institution which has for example in it an established mechanism for appointing all three arbitrators. It is still party autonomy. Party autonomy doesn’t equal you have to choose your own arbitrator. It just means you structure the process.
PP: It doesn’t equal that but it is part of that in a general sense.
TL: I think those two points are related. This is the key to it. Why is it that people are so keen on having their choice of arbitrator? Here's the point, people want it because they want to secure a vote in their favour, that's what they want. There is of course an ideal situation- which is to have a neutral high level tribunal. But ultimately they want to win and to win means collecting votes on the tribunal and so you start by securing your first vote, which is your choice of arbitrator. That's what the system has become and that means you invest a huge amount of due diligence and time and money in researching the arbitrator to try and predict which way he or she is going to vote and make sure that it is going to be in your favour and the other side will then do the same. Now that is very different from the ideal of a neutral tribunal. It's a tribunal. It is a tribunal that is stacked in your favour and it puts a premium on how good your due diligence is and your ability to predict human nature and that to me is a flawed system and that is where we are at. Now what's the answer to all of that? I mean my own preference would be to do away actually, if one could find a good way of doing it, to finish with party appointed arbitrators and I can tell you just my very personal experience when I sit as an arbitrator and I am party appointed whether I like it or not, being totally honest, it is a different feeling, fundamentally different feeling, from sitting when I have been appointed by an institution. It just is and that means that, and I am not sure everybody is honest about it, but if you are honest about it and I again this is my experience, people may differ. I think that what it comes down to is you then feel that you have to resist certain forces when you are party appointed. You are resisting the temptation to be nice to the person who is being nice to you by appointing you. You are resisting the force of doing something which might uphold your reputation for the next appointment. You should not have those forces and pressure on you. When you are appointed by an institution you are going to do the right thing. You don’t have any of those issues.
PP: I think that's a view which has been articulated by a lot of people now and there is a rising chorus of criticism about the system. Do you think the system is going to change? Are we going to move into a system of party appointed arbitrators or do you think that we have to accept the defects in the system as part of life’s realities?
TL: I am not entirely optimistic that it will change. I think it is so ingrained and I think it is also a question of trying to keep a level playing field. I mean people will give up their choice if they are sure everyone else is going to give up their choice and that requires a sort of universal change at one time and I think that's difficult to see how that's going to happen actually. So in an ideal world it will change, but at the moment I am pessimistic.
PP: Toby, thank you very much for your time.
TL: My pleasure, thank you.