In/Formalisation and Glocalisation of International Commercial Arbitration and Investment Treaty Arbitration in Asia

chapter 9 In/formalisation and Glocalisation of International Commercial Arbitration and Investment Treaty Arbitration in Asia

Luke Nottage

1 The Rise and Fall of International Arbitration’s “Golden Age”?

It must have been a glittering spectacle. On 10 June 2012, at the new Marina Bay Sands Expo and Conference Centre in Singapore, hundreds of élite international arbitrators and advocates, representatives from the world’s major arbitral institutions, senior judges and other well-connected individuals had assembled for the 22nd Congress of the International Council for Commercial Arbitration (ICCA). It was the first time for this premier association to have held its major conference in South-East Asia, and only the second time to have held it in Asia—since the 13th Congress in Seoul in 1996.1 The opening speech started well for the then Attorney-General of Singapore, a former managing partner of one of Singapore’s major law firms (Rajah & Tann) and soon afterwards (on 25 June 2012) to be appointed Chief Justice of Singapore. Sundaresh Menon SC suggested that international arbitration had entered a “golden age”, characterised by rising caseloads reported by both old and new arbitral institutions, and widespread judicial deference to arbitration in the name of party autonomy.2 He went on to outline several key features of contemporary international arbitration: the rise of institutional (over ad hoc) arbitration, the harmonisation of arbitration legislation, as well as institutional

* For helpful assistance, feedback and references, I thank the organisers and participants at the international conference on “Dispute Resolution: Alternatives to Formalisation— Formalisation of Alternatives”, Goethe University Frankfurt, 19–21 July 2013 especially Prof Moritz Bälz; Markus Thier; and Melanie Trezise. 1 See http://www.arbitration-icca.org/conferences-and-congresses.html, last accessed 5 Sep tember 2013. 2 Sundaresh Menon, “International Arbitration: The Coming of a New Age for Asia (and Elsewhere)”, Paper presented at the Opening Plenary Session of the ICCA Congress 2012, Singapore (10 June 2012), available at: http://www.arbitration-icca.org/media/0/ 13398435632250/ags_opening_speech_icca_congress_2012.pdf, last accessed 5 September 2013, pp. 1–5.

© koninklijke brill nv, leiden, ��4 | doi ��.��63/9789004281172_�11 212 Nottage rules adopted by agreement of the parties, the transformation of the arbitration process into “a highly sophisticated, procedurally complex and exhaus- tive process dominated by its own domain experts”,3 and a burst of activity in investor-state arbitration (ISA). By pitting private investors against host states for allegedly violating substantive protections (for example, against expropria- tion) provided in treaties concluded with the investors’ home states, ISA was also, arguably, fuelling the emergence of new “substantive law” of arbitration (a type of “international administrative law”), in a manner reminiscent of the new lex mercatoria principles that developed out of international commercial arbitration (ICA) between private firms.4 Then, however, Menon’s speech took what must have been a surprising turn for many of the distinguished delegates to this ICCA conference. Most of the rest of his remarks focused on “potential hotspots in this golden age”. Menon pointed out, for example, that increasing “judicialisation” through institutional arbitration “comes at a cost . . . Expedition, informality and efficiency, the attri- butes traditionally associated with arbitration, are sacrificed”.5 With respect to the transformation of the arbitral process, moreover:6

. . . arbitration is now seldom the economic alternative . . . the complexity and comprehensiveness of the modern-day process has led to an explo- sion of costs to the detriment of clients who are its end-users. In large and complex arbitration, cost claims for legal fees and disbursements can go up to between 20 and 40 million dollars. Beside runaway counsel fees that significantly drive the costs of arbitration up, arbitrator and institutional fees are also on the rise.

3 Ibid., p. 10. 4 Ibid., pp. 5–9. On the ongoing evolution of lex mercatoria principles of contract law through the ICA process, see, generally, Joshua Karton, The Culture of International Arbitration and the Evolution of Contract Law, (Oxford, Oxford University Press, 2013). 5 Menon, note 2 above, p. 12. He goes on to refer to cases decided recently in the US, Sweden and Singapore involving challenges alleging that fees were excessive. See, also, Jörg Risse, “Ten Drastic Proposals for Saving Time and Costs in Arbitral Proceedings”, (2013) 29 Arbitration International, p. 453, urging greater attention (especially by parties and their legal advisors) to the perennial tension among “cost savings”, “time efficiency” and “quality of the award” in ICA. Interestingly, when while pursuing the value of “service to business”, the arbitrators interviewed by Karton (note 4 above, pp. 102–6) tend to perceive the parties as primarily wanting a carefully reasoned decision and quite elaborate procedural safeguards. By contrast, corporate counsel and other users increasingly express concerns about delays and costs, as outlined in Section 2.1 below. 6 Menon, note 2 above, p. 13 (original emphasis).