Australia Challenges Hong Kong in International Dispute Resolution Market

Australia opened its first international dispute resolution center, challenging Hong Kong and Singapore for business in the growing legal market.

“Unfortunately we let those regional centers get the jump on us,” federal Attorney General Robert McClelland said at the opening of the Australian Centre for International Commercial Arbitration in Sydney today. “Now, we’re back in the game.”

Australia’s cross-border and export legal services income was worth A$675 million ($615 million) in fiscal 2007, a report by a government advisory council said. Companies and investors want to avoid the uncertainty of litigation in foreign courts and are increasingly opting to resolve disputes by arbitration, said Doug Jones, president of the Australian center.

Australia is constrained by its location, being more than seven hours flying time from key jurisdictions including Hong Kong, Yu-Jin Tay, lawyer in Shearman & Sterling LLP’s International Arbitration Group in Singapore, said in a phone interview today. “That’s a natural disadvantage,” Tay said.

Australia should focus on domestic disputes and may win business that spills over from Indonesia or Malaysia, he said.

Singapore tried to take on Hong Kong’s dominance last year, when the city-state opened its legal market to foreign firms, offered tax incentives and developed a building with 14 hearing rooms. Hong Kong hosted about three times as many international arbitration cases as Singapore in 2009.

In Hong Kong, international legal services generated HK$10.5 billion ($1.35 billion), or about 0.7 percent of the city’s gross domestic product, in 2007. For Singapore, income came to S$1.3 billion ($962 million).

‘Significant Player’

The Hong Kong International Arbitration Centre had 309 international cases last year, compared with 114 at the Singapore International Arbitration Centre.

Arbitration typically involves private hearings of disputes such as patent infringement or property boundary disagreements between mining companies. The parties usually agree they won’t dispute a decision made in arbitration.

McClelland said he expects Australia to become a “significant player” in international commercial arbitration.

The country is negotiating with the Permanent Court of Arbitration in the Hague to operate from a location in Sydney, McClelland said.

To contact the reporters on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.