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Daily Express
7 hours ago
- Business
- Daily Express
Sanctions making arbitration difficult
Published on: Thursday, July 31, 2025 Published on: Thu, Jul 31, 2025 By: Sherell Jeffrey Text Size: L/R: Steve, Dutsadee, Kevin, Ning and Fei. Kota Kinabalu: International arbitration is faced with challenges due to sanctions and corruption concerns, adding risks, costs and complexity to global trade dispute resolution. 'Arbitration is now a clash of international law, policy and economic law. It is more than just arbitration procedures that we need to know,' said Beihai Asia International Centre (Singapore) Founding President cum Executive Director Prof Steve Ngo. Steve, a recognised International Arbitrator, said this at the recent Borneo International Centre for Arbitration and Mediation (Bicam) Global alternative dispute resolutions (ADR) Horizons conference where he moderated Session 7's Navigating Impact of Sanctions and Corruption Allegation in Arbitration. What Is International Arbitration and why should we care? Before diving into the problems, it is important to understand what international arbitration is. Think of it as hiring a neutral referee when two companies from different countries have a business disagreement. Instead of going to court which can be slow, expensive and potentially biased toward the local company, businesses agree to let a neutral expert (called an arbitrator) hear both sides and make a binding decision. It is private, usually faster than court and the decision can be enforced in most countries around the world through international treaties. For decades, this system has been the backbone of international trade, giving companies confidence to do business across borders knowing they have a fair way to resolve disputes. But now, as the experts at the Bicam conference notes, that confidence is being shattered. Pisut & Partners' Dutsadee Dutsadeepanich, a major legal firm in Thailand, spoke about how international sanctions are crippling the arbitration system. 'Since the Russia-Ukraine conflict began in 2022, sanctions imposed by the United States, European Union and United Kingdom have created a maze of obstacles that make conducting fair arbitrations nearly impossible when certain parties are involved,' said Dutsadee who is also a member of Thailand's parliament. 'Arbitration is no longer straightforward for sanctioned parties,' she said, pointing out how even basic steps like paying arbitration fees become impossible when banks refuse to process transactions involving sanctioned companies. 'The problem is far more than just payment issues. This is a chilling effect where experienced arbitrators, the neutral referees' businesses rely on, simply refuse to take cases involving sanctioned parties. 'Why? They are worried about getting paid, damaging their reputations or even breaking laws in their home countries. 'For example, EU-based arbitrators may be prohibited from working on a case involving a Russian entity without special government permission,' she said, adding that this destroys one of arbitration's key advantages, which is the ability for parties to choose arbitrators they trust. The same problems face legal representation. 'Law firms from countries imposing sanctions often need government authorisation to represent sanctioned parties, while frozen bank accounts can make it impossible for sanctioned companies to pay their lawyers. The result? A fundamentally unfair playing field,' she said. Dutsadee cited examples of RCA (a Russian company) and Linde (a German company) fighting over a natural gas project. 'What should have been a single, clean arbitration turned into a messy battle across multiple countries and courts, exactly what the arbitration system was designed to prevent,' she said. Even worse, she noted, when arbitrations do proceed and decisions are made, there is no guarantee they can be enforced if sanctioned parties are involved. Courts may simply refuse to enforce decisions on public policy grounds. On corruption, Dutsadee said Thailand's challenge is that corruption issues often do not surface during the arbitration itself, but later when trying to enforce decisions. 'In Thailand, we have a lot of corruption related to arbitration, but at the stage of enforcement, especially when it involves contracts between private companies and government entities,' she said. Her prediction for the future? A shift toward arbitration centres in neutral countries like Singapore and Hong Kong as companies seek to avoid sanctions-related complications. Legal Solutions LLC (Singapore) Director Kevin Tan who works as both a lawyer and arbitrator, offered insights from Singapore, one of the world's top arbitration destinations. 'Singapore has built its reputation on being business-friendly while maintaining strict standards. We have zero-tolerance policy for corruption. As many of you would know, this includes tickets for concerts and the like,' Kevin said, pointing out how seriously the city-state takes these issues. He said corruption in arbitration comes in two flavours, namely corruption related to the original business deal (like bribing someone to get a contract) and corruption of the arbitration process itself (like bribing the arbitrator). 'Both can destroy an arbitration's validity,' he said. He cited a case study involving a Dutch investor and the government of Laos over gambling and casino investments. 'When corruption allegations surfaced, the arbitrators did not just ignore them, they conducted a thorough investigation using banking records, accounting reports, emails and witness testimony. 'The tribunal found that allegations of corruption were made out on balance of probabilities. 'When the losing party tried to challenge this decision in Singapore's courts, the judges refused and made a strong statement that arbitrators have a public duty to investigate corruption, regardless of what the parties might prefer. 'This sends a message that even in Singapore's pro-business environment, courts would not hesitate to intervene when corruption is involved,' he said. On sanctions, Kevin pointed out how Singapore follows United Nations sanctions while trying to be practical. He cited a recent case where Singapore courts granted a conditional delay when a company claimed US sanctions prevented it from paying an arbitration award. 'This shows that Singapore courts do not automatically enforce sanctions, but will consider them practically if compliance would make payment impossible for a party,' he said. He pointed out three worrying trends, namely companies are choosing different locations for their arbitrations when sanctions might be involved, arbitration centres are doing much more background checking and lawyers are having to become sanctions experts just to draft contracts. 'Law firms now need dedicated sanctions teams to protect their clients and their own reputations, a cost that ultimately gets passed on to businesses and consumers,' he said. Hui Zhong Law Firm Managing Partner Ning Fei from a China law firm, shared his perspective on how seriously corruption can be taken in arbitration. 'China operates what may be the world's strictest anti-corruption system for arbitration. The rules are so tough they make other countries look permissive by comparison,' he said. 'Chinese arbitration laws explicitly ban arbitrators from having private meetings with parties, receiving gifts or accepting any form of entertainment. 'In China, such practices are normally not allowed. It is quite strict,' Ning Fei said, referring to informal communications that are routine in other countries. But here is the kicker, China imposes criminal penalties on corrupt arbitrators. 'China is probably one of the few countries that impose criminal liability for arbitrators. If you take bribes from parties or have personal interest in a case, you may be sentenced from three to seven years in jail,' Ning Fei said. He cited examples of arbitrators being caught and banned from practice, including one who was followed by a suspicious party and photographed having dinner with the opposing side and another who was discovered making private phone calls to one party. 'Unlike other countries where arbitration centres take a hands-off approach, Chinese institutions actively monitor arbitrator behaviour through secretariat departments that can observe proceedings and participate in internal discussions. 'The secretary department knows well about arbitrators, who are good people, who may be biased. 'They have internal discussions and reviews. You can see regularly every couple of years, some people join the list, some people are released,' he said. He also pointed out that China has also had to deal with sham arbitrations, namely fake proceedings where parties collude to create enforceable court orders without genuine disputes. He cited examples of cases where companies essentially sued themselves or created artificial disputes just to get official-looking decisions they could enforce elsewhere. On sanctions, Ning Fei acknowledged the political complexity while noting that enforcement depends heavily on specific circumstances and which courts are involved. 'Interestingly, China's own retaliatory sanctions have not had much practical impact on business or arbitration enforcement,' he said. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
Daily Express
a day ago
- Business
- Daily Express
65pc success in mediation cases: Yet 99pc cases opt for full trial
65pc success in mediation cases: Yet 99pc cases opt for full trial Kota Kinabalu: Only one per cent of court cases are sent to mediation - an alternative dispute resolution (ADR) mechanism - despite it helping to resolve 65 per cent cases without needing a trial which helps clear the backlog of unfinished cases. This was among topics discussed by senior judges, lawyers and mediation experts at a recent conference on Global ADR Horizons organised by the Borneo International Centre for Arbitration and Mediation (Bicam), here. Advertisement 'Mediation works in 25 to 52 per cent of cases across different courts, but judges are only sending a pathetically low 1-1.5 per cent of all cases to mediation,' said former Chief Judge of Sabah and Sarawak Tan Sri David Wong Dak Wah. The Bicam Chairman shared his own experience with mediation, remembering how lawyers first saw it as bad for business when it started over 20 years ago. SPONSORED CONTENT 'The lawyers' reaction was that mediation was stealing our work,' he said. His view changed when he became a judge in 2005 and was drowning in unfinished cases. Advertisement After taking required mediation training, David tried his first mediation, a property fight between a father and son. The experience was eye-opening, but not in a good way. 'After about two hours, I think both sides were getting nowhere. And the father just suddenly got up. He said, 'Judge, whatever you say, I agree'. Advertisement 'That is not mediation. When people come before a judge, they think the judge will decide for them. That is not mediation,' he said. This experience convinced him that judges and court staff think very differently from real mediators, they approach problems in completely different ways. 'The mindset of a judge and legal officers are completely different to what we call real mediators,' he said. Now working as a private mediator, David admits he still benefits from being a former judge, but notes the difference. He also pointed out the need for better public awareness about mediation. 'We try to connect with, for example, developers' associations and tell them, do you know there is something called mediation? Many say they had no idea,' he said. For major construction disputes worth millions, David said the mediation fees of RM5,000 per day would be tiny compared to potential legal costs and the value of solving things quickly. Kuala Lumpur legal firm Samrith Sanjiv & Partners Managing Partner Samrith Kaur, who works as both an arbitrator and mediator, agreed with David about the intimidation problem. 'There is definitely an intimidation factor when a judge sits as a mediator. No denying that,' she said. 'People feel that the judge knows best, that the judge has the power. He knows the facts and the law. 'But on the flip side, sometimes you need someone with authority to help parties reach a conclusion,' she said. She said success often depends on how well lawyers prepare for mediation. 'If lawyers are well-trained in mediation, it is good because they will prep their clients. But if they are not, then there are problems. And when you come out, it is no longer a win-win situation. 'There are two types of mediation. One is facilitative and the other is evaluative. 'Lawyers should know whether they want facilitative mediation where the mediator helps parties talk to each other, or evaluative mediation where they need a judge to assess the situation,' she said. On how mediation relates to other ways of solving disputes, Samrith said mediation both works alongside and competes with court cases and arbitration. 'It works together when the court sends cases out or gets another judge to handle the mediation. 'It also keeps things private and preserves relationships,' she added. 'Courts do not come up with creative solutions. They just follow what the law says. Mediation is very flexible, so the outcomes are flexible too. 'You can see parties apologising to each other. Sometimes people just want an apology. We do not see that in arbitration or court cases,' she said. She said timing matters, noting that mediation can happen at different stages before legal action to preserve relationships, after filing when issues are clearer or during court proceedings when parties are tired of the process and rising legal bills. Hong Kong's Mediation Chambers Mediator, Alix Povey provided an international perspective, sharing how their jurisdiction has developed court-annexed mediation over the past two decades. 'Our history is quite similar to Malaysia,' she said, pointing out how Hong Kong initially had informal mediation in the early 2000s before formalising it through the Mediation Ordinance in 2013. 'The Hong Kong experience revealed the important role of lawyers in mediation success. When Practice Direction 31 was introduced, making mediation virtually mandatory with cost consequences for unreasonable refusal, the results were telling. 'There were two camps in some ways, the really pro-mediation lawyers and others who maybe did not understand it. They thought they were going to be losing their business if you go to mediation,' she said. She said Hong Kong's latest numbers from their trial settlement programme showed how much lawyers influence the outcome. 'Of 541 cases that went to mediation, 329 settled overall. But the breakdown showed 247 cases with legal representation settled, while only 16 cases without lawyers reached agreement. 'You can see the huge difference between having lawyers as part of the process and not having lawyers. Whereby 75 per cent were settled with lawyers as opposed to four per cent,' she said. She also pointed out that certain types of cases lend themselves better to mediation. 'I personally think that family cases really lend themselves to mediation, because we go back to that win-win situation. 'You do not want family members fighting each other. 'If they go to court, they will just want to destroy one another. But with mediation, you can help them reconcile and get along again. 'Things like fraud and criminal cases cannot be mediated. Or if you need the court to set a legal precedent, then it should probably go to trial,' she said, pointing out which cases are not suitable for mediation. Special Officer to the Chief Judge of Sabah-Sarawak Dr Melissa Chia offered the perspective of someone who has conducted countless mediations within the court system while developing innovative approaches to overcome its limitations. 'I did not choose to become a mediator on my own. Judges would send cases to me. My first boss was Tan Sri David and he was the one who taught me how to mediate,' she said. Melissa has found ways to deal with the intimidation problem that other speakers pointed out. She purposely changes how she looks and acts during mediation sessions. 'I would tell them I am not acting as a judge today. That is the first thing I would say when they came to see me. 'I would wear colourful jackets instead of the usual black and white court robes. I would say, my name is Melissa, please just call me Melissa. 'Today, I am not a judge, I am nobody special. I am just someone helping you work things out,' she said. She has come up with creative ways to handle family disputes involving children. 'With the children, I use drawings. I draw with them. In one case, I actually played hide and seek with a girl before she felt comfortable enough to tell me what was bothering her,' she said. 'Mediation is not just about finding a quick fix or deciding how much someone should pay and calling it done. To me, mediation is about rebuilding relationships. We need to understand what is really troubling people,' she said. She shared a story of one of Malaysia's biggest mediation wins, the longest Native Customary Rights case that involved 300,000 pages of court papers and dragged on for 15 years before being solved through court mediation. 'Every day in court, everyone was protesting outside. But guess what? The case was settled through court mediation. The parties were so happy that afterwards, they were celebrating outside the court. They even built a statue to represent making peace,' she said. Melissa linked this success to local traditions, pointing out that among Sabah's native communities, the old concept of Sogit means making peace, fixing what is wrong and keeping the community in harmony. 'We do not want the native people to think of Sogit as punishment, but as a way to make peace instead,' she said. 'If you ask me whether courts should send all cases to outside mediators, I would say maybe we can work together. We need a balance because not everyone can afford private mediation. 'Everyone, from the people in court cases to the lawyers, needs to understand what mediation really is and why we do it in the first place,' she said.
Daily Express
5 days ago
- Business
- Daily Express
Tackling key themes in modern dispute resolution
Published on: Saturday, July 26, 2025 Published on: Sat, Jul 26, 2025 By: Larry Ralon Text Size: Kota Kinabalu: This year's conference tackled key themes in modern dispute resolution, including an ESG (Environmental, Social and Governance) Roundtable, the launch of the Expert Determination Rules and a session exploring the role of Generative AI in arbitration. Another highlight is a discussion on Court-Annexed Mediation and its practical applications for enforcing settlement agreements, an issue gaining traction under the Singapore Convention on Mediation. Wong also praised Harbans Singh, a well-respected mediator and Bicam Council member, for leading recent training sessions for the judiciary, Housing Ministry and Justice of the Peace Associations in Penang and Selangor. 'Harbans does this for free and even donates his own well-regarded book on mediation to participants. His dedication is a reflection of the spirit we aim to cultivate at Bicam,' he said. As Bicam positions itself at the forefront of institutional arbitration and mediation in the region, Wong emphasised that continued growth will come through education, engagement and public trust. 'Every effort has reaffirmed one principle: ADR, when accessible and well-administered, is a powerful tool to resolve conflict and promote progress,' he said. 'This conference is yet another step in our journey, to build a lasting, inclusive and innovative dispute resolution ecosystem for Sabah and beyond.' * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
Daily Express
5 days ago
- Business
- Daily Express
Smooth work pass clearance a plus for Bicam
Published on: Saturday, July 26, 2025 Published on: Sat, Jul 26, 2025 By: Larry Ralon Text Size: Wong said the move is a key enabler to strengthen cross-border access to justice and international arbitration in Sabah. Kota Kinabalu: The Borneo International Centre for Arbitration and Mediation (Bicam) has secured a significant milestone Sabah Immigration's assurance to facilitate the smooth issuance of work passes for foreign counsel, arbitrators and experts involved in cases registered with the centre. Bicam Chairman Tan Sri David Wong said the move is a key enabler to strengthen cross-border access to justice and international arbitration in Sabah. 'For those visiting Sabah for the first time and wondering how foreign arbitrators and counsel can practise here, unlike in Peninsular Malaysia or Sarawak where ad hoc admission is not automatic, even West Malaysian need the High Court's permission to practise law in Sabah. 'But now, with the support of the State Attorney-General's Chambers and the Sabah Law Society, any case registered with Bicam will face no objection to ad hoc admission. It's essentially a formality,' he said. There have already been successful cases involving arbitrators and counsel from West Malaysia, underlining Bicam's commitment to 'borderless' arbitration. Wong also credited the Sabah Government for its proactive role in supporting Bicam's development. 'Since Bicam's inception, the State Government has issued a directive that all state government-linked companies and departments must include the Bicam ADR clause in contracts involving work in Sabah,' he said. He added that legal practitioners in Sabah have also increasingly incorporated the Bicam model clause as a matter of course in contracts, signalling wider acceptance within the legal community. 'Business will come. It may take three to five years as disputes don't arise overnight, but they will. And when they do, we'll be ready,' he said. Since its establishment in July 2023, Bicam has already handled five arbitration cases and successfully persuaded clients and lawyers to select the centre even when contracts pointed to other venues. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
Daily Express
5 days ago
- Business
- Daily Express
Bicam rules help fill arbitration gap
Published on: Saturday, July 26, 2025 Published on: Sat, Jul 26, 2025 By: Larry Ralon Text Size: Chin said the launch underscores Bicam's commitment to innovation and relevance in the dispute resolution space. Kota Kinabalu: The Borneo International Centre for Arbitration and Mediation's (Bicam) Expert Determination Rules 2025, the first of its kind in Malaysia developed by an established arbitration centre, promises to fill a crucial gap in the country's alternative dispute resolution (ADR) framework. Bicam Council Member Datuk Roger Chin, who is also the Bicam Global ADR Horizons 2025 co-organising chairman, said the centre was proud with the launch of the rules. 'This wasn't done for headlines. It was done because a need was clear, and unmet,' he said at the conference held at The Magellan Sutera Resort on Thursday. Framing the rules as a practical solution for technical and time-sensitive disputes, Chin stressed that expert determination serves a distinct and increasingly relevant role in today's legal and commercial landscape. 'Not all disputes belong to court. Not every matter benefits from arbitration. Sometimes, what parties need is technical clarity, delivered quickly and decisively,' he said. He added that sectors such as construction, infrastructure, valuation and energy often require swift and specialised resolution, where traditional litigation or arbitration may be too costly or cumbersome. 'Expert determination is not new. But it's been underused, underdeveloped and undervalued, until now,' he said. 'These new Bicam Rules offer a credible, fit-for-purpose alternative: professional, adaptable, final.' Chin said the launch underscores Bicam's commitment to innovation and relevance in the dispute resolution space. 'More than anything, these rules show what we believe Bicam must be, a platform not just for dialogue, but for delivery,' he said. 'To be nimble. To be useful. To fill the gaps that others overlook.' He emphasised that true leadership in the ADR field is about foresight and responsiveness. 'Leadership isn't about being the oldest name in the room. It's about being the one willing to move first when something needs doing,' he said. The launch of the Expert Determination Rules is just one of several forward-looking initiatives featured in this year's Bicam Global ADR Horizons 2025 programme. Chin said the three-day event would explore some of the most pressing and practical challenges facing the dispute resolution community today, including how Environmental, Social and Governance (ESG) concerns are reshaping risk and accountability; the ethical and strategic integration of generative AI into arbitration; the enforceability and design of court-annexed mediation frameworks; and whether the global ADR community is ready to embrace faster, leaner and less complex procedures. 'These are not theoretical exercises, they're real-world challenges for those building bridges, writing contracts, closing deals and solving disputes in real time, under real pressure.' Introduction of Bicam Expert Determination Rules marks a significant step forward in diversifying and strengthening the ADR tools available in Malaysia, especially in Sabah. Coupled with Bicam's growing portfolio, which includes arbitration, mediation and training, the new rules position the centre as a dynamic and solutions-driven institution. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
