Saturday 23 January 2016

New Asian Business Law Institute to lift cross-border trade

Ensuring consistency and standards across region will help boost business confidence
By Grace Leong, The Straits Times, 22 Jan 2016

A new research institute has been formed to ensure that Asian business law keeps up with the accelerating pace of economic integration in the region.

The Asian Business Law Institute (ABLI) aims to address inconsistent regulations and standards across the region that can increase uncertainty, add costs and impede cross-border trade.

Chief Justice Sundaresh Menon announced the initiative at the Singapore Academy of Law (SAL) conference yesterday, noting that tackling the barriers to cross-border trade is becoming significant in the light of rising integration through developments such as the ASEAN Economic Community, the Asian Infrastructure Investment Bank, China's "One Belt One Road" and the Trans-Pacific Partnership.

"This confluence of watershed developments suggests that the integration of Asian markets will happen on a scale, and at a pace, not yet seen," he told 500 senior judges, lawyers and business leaders at the conference.

"To capitalise on this monumental opportunity, it is imperative that our business laws keep up."

Ensuring certainty when it comes to enforcing court judgments will give businesses greater confidence to invest and trade freely.

"There is nothing more frustrating ... than for a business to obtain a judgment in one jurisdiction, and then find that it is in fact only a paper judgment in others," he added.

ABLI will be steered by a 12-member board of governors drawn from the judiciary and academia in Singapore, China, India and Australia.

Its first task will be to publish a comprehensive review on harmonising rules on enforcing foreign judgments in Asia. Other priorities are to draw up global principles on data privacy and develop rules for contracts in cross-border deals.

Mrs Lee Suet Fern, managing partner of Morgan Lewis Stamford and chair of SAL's steering committee on legal convergence, said legal convergence will help the region to sooner realise the benefits of the recent trade pacts. "We are trying to simplify, clarify and make consistent the laws at a time when there is economic turmoil... It will help the upswing."

While they back legal convergence, some business leaders noted yesterday that there may be challenges driving the initiative.

"The pressure test for harmonisation of legal systems and financial rules comes not when markets are good, but when the situation starts to deteriorate, because that's when the mutual trust that is needed to achieve convergence is really tested," AXA chairman and chief executive Henri de Castries said.

Singtel chairman Simon Israel noted that there are considerable risks to building digital businesses when the model may be undermined by future laws.

"Some of our challenges are about countries having different laws over who owns the data, where it can be stored, and who can access it," he said.

"While harmonising is a critical first step, its impact and effectiveness are contingent on a... framework that goes hand in hand with a common interpretation and implementation of laws, and... timely resolution."

Even as the pace of business integration may be decelerating in the light of economic woes, legal convergence should still be pursued, said Professor Ashish Nanda, director of the Indian Institute of Management.

New institute to 'help unlock region's economic potential'
Asian Business Law Institute will aid investment flows: Minister
By Grace Leong, The Straits Times, 23 Jan 2016

Modernising Asia's commercial laws will help unlock the region's full economic potential, said Home Affairs and Law Minister K. Shanmugam yesterday.

He told a Singapore Academy of Law conference that a survey showed that different legal systems and regulatory standards were the the single biggest barrier holding back investments into Asia.

"If we had greater convergence, the investment flows would be much more," he added.

Mr Shanmugam pointed out that the Asian Business Law Institute (ABLI) launched on Thursday can help in this area.

The ABLI aims to address Asia's diverse regulatory standards and legal systems, which can increase uncertainty, add costs and impede cross-border trade.

It can help lay the groundwork for "dialogue between countries... on harmonisation and for businesses to change their practices in a way that can help reduce their costs and increase the business flows", Mr Shanmugam said.

This is becoming significant as the ASEAN Economic Community's 2025 blueprint "commits ASEAN to legal convergence on e-commerce and other regulatory standards", he added. "But to fully address ASEAN's existing challenges and deepen integration, serious action has to be taken to improve its current legal infrastructure."

Chief Justice Robert French of Australia's High Court told the conference that international conventions and free-trade agreements provide "an important framework for developing convergent business laws".

Singapore has taken steps to promote legal convergence by adopting several instruments geared towards harmonising international laws.

"Our International Arbitration Act is based on the UNCITRAL Model Law for Arbitration. We have kept our arbitration regime relevant to support commercial entities," Mr Shanmugam said.

Singapore, which hosts around 7,000 multinational companies, has also become a legal hub through its efforts to support transnational businesses and their operations.

There are 800 local law firms, more than 6,000 lawyers and 130 international law firms employing 1,000 foreign lawyers here.

Cross-border commercial dispute resolution options such as the Singapore International Commercial Court, the Singapore International Arbitration Centre and the Singapore International Mediation Centre are already part of the country's legal infrastructure.

"With the launch of ABLI, Singapore companies will benefit by being in the centre of research and practical guidance in the field of Asian legal development. SMEs could look forward to greater clarity, familiarity and transparency in cross-border business," Mr Gerald Singham, deputy managing partner at law firm Rodyk & Davidson, said.

Rajah & Tann deputy managing partner Patrick Ang sees the divergence in legal systems and laws in Asia as a deterrent to investors.

"For investors, legal certainty is key. When I make an investment, will investment laws protect my investment if something goes wrong?" he said.

"If ASEAN can get its act together after the ASEAN Economic Community and get some of their laws for trade and commerce to converge, that would facilitate investors' interest. That will increase legal work for us," he said.

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