LEGAL PROFESSION (AMENDMENT) BILL

Order for Second Reading read. 1.45 pm

The Minister for Law (Prof. S. Jayakumar): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, this Bill was originally introduced last year in July, but it lapsed due to the dissolution of Parliament, and I have re-introduced it.

Sir, the Bill is to amend the Legal Profession Act to clarify the position of foreign lawyers appearing in arbitration proceedings.

Why is this clarification necessary? In the local case of Turner (East Asia) Pte Ltd v Builders Federal (Hong Kong) Ltd & Anor, which I will refer to it as the Turner's case, the Singapore High Court ruled in 1988 that foreign lawyers are prohibited from appearing in arbitration proceedings in Singapore where a dispute in Singapore involved questions of law and legal rights and obligations by virtue of sections 29 and 30 (which are now renumbered sections 32 and 33) of the Legal Profession Act. The Court's decision was based on the ground that these provisions of the Legal Profession Act provided that only practising Singapore advocates and solicitors can practise law or act as agent to a party in proceedings, which the Court interpreted to include arbitration proceedings.

The Turner's case has attracted considerable local and international publicity and attention. It has given rise to both speculation and uncertainty as to the participation of foreign lawyers in international arbitrations held in Singapore. For example, one international journal (International Financial Review) reported after this decision, and I quote:

"Singapore is no longer a place for international arbitration since its High Court removed the right of foreign counsel to appear in arbitral proceedings ...".

Sir, in some other jurisdictions, arbitration proceedings are considered to be outside the scope of legal proceedings. In Malaysia, subsequent to the Turner's case, the Malaysian High Court in 1990 ruled in the opposite direction by deciding that American lawyers are entitled to appear in arbitration proceedings. I do not want to go into the legal merits of the Turner's case. But it is not in our interest that this uncertainty be allowed to remain. Whether the case was rightly decided or not, it has the unintended adverse effects on the commercial reputation of Singapore as a centre for international arbitrations.

The Singapore International Arbitration Centre was set up in July 1991 to boost Singapore's status as an international trading and business centre. It is the third Asian country to set up such a body. The other two centres in Asia are Kuala Lumpur and Hong Kong. Both these countries allow foreign lawyers to appear in arbitration proceedings. Furthermore, in the Asia-Pacific region alone, there are several other international arbitration centres such as Australia, Los Angeles and Vancouver, all competing for such international arbitral business. Hence, it is necessary to amend the Legal Profession Act to overcome the effects of Turner's case and to enable the Singapore International Arbitration Centre to be as competitive as the other centres. I might add, Sir, that in the Commonwealth Common Law jurisdiction we are the other country which does not allow foreign lawyers to appear in arbitration proceedings.

The Bill before the House will amend the Legal Profession Act to insert a new section 34A to provide that the exclusive right of practising Singapore advocates and solicitors to practise law and act as an agent in legal proceedings will not apply to arbitration where the law applicable to the dispute is foreign law. If the applicable law is Singapore law, foreign lawyers can still appear in arbitration proceedings if they appear jointly with a local practising advocate and solicitor. This requirement of appearing jointly gives flexibility to enable the client and the lawyers to decide whether the foreign lawyer is assisted by, or is to assist, the local lawyer. If Singapore law is the applicable law, then Singapore lawyers must be involved because logic and reason require this of us. This requirement of jointly appearing also acts as a safeguard as the local lawyer can advise the foreign lawyer on aspects of the local law which the foreign lawyer may not have expertise or sufficient expertise.

Sir, I beg to move.

Question proposed.

Mr Davinder Singh (Toa Payoh GRC): Sir, I support the Bill.

Sir, it is a good thing that Turner's case came to court because it helped us focus attention on the provisions of the Legal Profession Act. Before Turner's case, there was some uncertainty as to whether foreign lawyers could come into Singapore and conduct arbitration proceedings on behalf of clients in Singapore. Turner's case said that the Act, as drafted, prohibited this and therefore this amendment to the Act. Why this amendment is logical and makes sense is that if we want to improve or project ourselves as a first rate financial centre in the world, or at least in this region, we must provide a one-stop service to the multi-national corporations, to the banks and financial institutions.

At the moment, before this Bill is passed, companies can come into Singapore, enter into agreements, provide for arbitration, but the moment there is a dispute and they want to arbitrate, they have to get out of the country and fight the case if they want foreign lawyers to represent them as opposed to lawyers who are admitted to the roll in Singapore. What this does is to make it easier and to provide an overall package, as it were, to these foreign companies. While they can provide for arbitra-tion in their agreements, they can also conduct these arbitrations in Singapore in our new Singapore International Arbitration Centre. They can also bring in foreign lawyers to run these arbitrations provided that the law governing the dispute is not Singapore law.

I also welcome in this regard the safeguard where, if the law governing the dispute is Singapore law, there must be someone competent or knowledgeable in Singapore law sitting with the foreign lawyer to run the arbitration. Having said that, Sir, I would like to know from the Minister whether he has sought the views of the Law Society for the reason that this amendment would certainly impact on lawyers generally in Singapore, and I wonder what the Law Society's views on these amendments are.

Prof. Jayakumar: Mr Speaker, Sir, I thank Mr Davinder Singh for his support of the Bill.

With respect to his specific question, last year I did have more than one round of informal consultations with the President of the Law Society and some of his Council members and other lawyers. I would sum up these informal consultations as follows:

They have no problems with foreign lawyers appearing in arbitration where the applicable law is not Singapore law, but they would have some reservations for the appearance of foreign lawyers when it comes to arbitrations where the applicable law is Singapore law. One could perhaps say, from the viewpoint of the practising lawyers in Singapore, that their reservations are understandable. But from the viewpoint of Government, and indeed of Parliament, we should look at arbitrations not as the exclusive turf of any particular profession, but in the context of developing Singapore as an international financial and business centre. And as I pointed out just now, this international arbitration business is highly competitive. There are many other centres which are trying to get the same business. We in Singapore are the only country in the Commonwealth Common Law jurisdiction where we do not allow foreign lawyers to appear in arbitrations. The approach in the Bill has been crafted quite carefully and we have not overlooked the interest of Singapore lawyers.

In fact, we could have taken a completely different approach. For example, the approach in England where anyone, including a non-lawyer, can appear in arbitration proceedings, whether the law applicable is English law or French law or whatever. We have taken an approach where the law applicable is Singapore law, there must be a Singapore lawyer involved, but we leave some area of flexibility for the client to decide which should be the precise role of the foreign lawyer vis-a-vis the Singapore lawyer.

But what I wish to stress is that we must view international arbitration in Singapore in the context of developing our country as a financial international centre. As Mr Davinder Singh quite correctly pointed out, why should an international multi-national corporation or bank or financial institution which has an arbitration want to choose Singapore as a location? Or why would anyone agree to a clause in a contract providing that Singapore be the location or that the applicable law of the arbitration in the arbitral clause be Singapore law when they know in advance that they cannot bring their desired lawyer, whether he is a European, American or whatever, to appear before them in such arbitration proceedings? That is the nub of the question, Sir.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Prof. Jayakumar].

Bill considered in Committee; reported without amendment; read a Third time and passed.