The law of the Far East

THE emphasis of power in the maritime industries continues to shift inexorably towards the Far East. Conservative estimates put the share of the world's fleet now controlled by Asian interests at around 45 per cent. Against this background, Hong Kong and Singapore are expected to play an increasingly active role in the conduct of maritime law.

UK firms have an especially strong presence in Hong Kong - a legacy of 99 years of British rule. This legacy is also reflected in the similarities between the UK and Hong Kong legal regimes. Maritime law in Hong Kong is to all intents and purposes British Admiralty law, with local amendments where necessary. It is not surprising, then, that a thumb through the directory of firms practising admiralty law reveals a list of names that could have been photocopied from the UK's Legal 500. Yet, it is easy to overstate the Britishness of maritime law in Hong Kong today.

"Whilst it is generally true to say that maritime law is mostly in the hands of UK firms with offices in Hong Kong, one should not infer from this that the level of Chinese interest in maritime law is limited," says Chris Kidd, partner at Ince & Co, and secretary of the Hong Kong Maritime Law Association. "There is, generally speaking, a high degree of Chinese interest in maritime law in Hong Kong, and this is reflected by the fact that most firms have a large number of Chinese-speaking partners and assistants. I do not think that it would be right to describe Hong Kong as a British bastion."

Indeed not. There is a tangible sense of pride among Hong Kong's Chinese inhabitants that the city is no longer governed by foreigners, and their eyes have turned firmly towards the mainland. For its part, China has become more outward- looking. A sure sign of this is the gradual increase in its stake in the international shipping industry. More ships, more yards, better ports, increased trade. And, according to Kidd, the Chinese are "keen to learn from Hong Kong's experience."

Many thought the opposite would happen, and that China would mould Hong Kong in its own image. It is an opinion that can still be heard, according to Chris Potts, principal partner at Crump & Co. "There is a perception that Hong Kong has been sucked into the People's Republic of China system," he says. "This is misguided. The PRC has gone out of its way to preserve Hong Kong's status. It sees Hong Kong as a window to the outside world, and it wants to nurture this."

In doing so, the PRC is also preserving Hong Kong's well-developed arbitration forum, which has grown up around the Hong Kong International Arbitration Centre, established in 1985 to fulfil a perceived need for such a facility. In its first year, it handled nine cases. In 1998, it handled 240 cases in a variety of sectors. "The centre has panels of international and local arbitrators. There are between thirty and forty names in all, including a few specialist maritime arbitrators," says Robin Peard, a partner in Johnson Stokes and Master, himself a maritime arbitrator and vice-chairman of the arbitration centre.

Unlike competing arbitration forums in the region, Hong Kong does not restrict arbitration to members of the Hong Kong bar only. According to Peard, anyone can arbitrate in Hong Kong. "The fact that this is allowed provides the centre with a much greater pool of experts to draw from than is available in other Asian arbitration centres," he says.

With the fundamentals in place, Hong Kong looks set to increase the amount of maritime work handled by its lawyers and arbitrators. A healthy, and growing, client base and plenty of expertise to draw upon. But, in Hong Kong, there is a feeling that there is nothing that cannot be improved upon.

For example, Justice William Waung, Hong Kong's admiralty judge and chairman of the Hong Kong Maritime Law Association, says, "We are looking into improving the auction process in Hong Kong. At the moment, it is tender-based, and we'd like to get rid of the gap between the bids made for a vessel and the asking price or the value of the ship." If the gap between the asking price and that offered is too large, the case has to be referred to Justice Waung, who has the power to grant permission for the sale to go ahead. This delays the process unnecessarily, he feels, and he is keen to find an alternative.

"The expertise in Singapore is comparable to that in London. Fifteen years ago, that probably wasn't the case. Now it definitely is"

This continuous tinkering with the system serves not only to refine what Hong Kong already has. It also keeps the special administrative region ahead of the game. It cannot afford to rest on its laurels, as there are moves afoot that may create a credible rival further south. Singapore has ambitions to improve its standing in the maritime industry, recently announcing plans to create a one-stop maritime services hub, providing, among other things, legal expertise to the shipping industry.

According to the Singapore Shipping Association (SSA), which represents all sectors of the Singapore maritime industry, the city state already has a formidable legal infrastructure in place. The SSA says, "Singapore has made significant progress in developing marine legal services and maritime arbitration. Besides entrenching a core group of international maritime lawyers such as Ince & Co, Clifford Chance, Sinclair Roche and Temperley, and Holman Fenwick, Singapore has also built up its own pool of local expertise in this specialised field. There are at least nine local law firms with expertise in maritime services."

"Our local pool of maritime legal experts includes seven judges, three permanent members drawn from the Court of Appeal judges and three senior counsel specialising in maritime matters. Established in 1991, the Singapore International Arbitration Centre has developed a local panel of 23 accredited arbitrators and experts in the law and practice of international arbitration and conciliation for shipping and maritime insurance."

Unquestionably a rosy picture. Yet, the SSA, a promotional body in many respects, may be overplaying its hand. Singapore may have domestic lawyers, arbitrators and judges, but these in themselves do not guarantee a thriving admiralty bar. As yet, clients are not breaking down the doors to make use of what Singapore has to offer. There is nowhere near the amount of maritime-related work that there is in Hong Kong, despite the fact that both city states have British admiralty law as their models. One of the reasons is the barrier that Singapore has cast up around its courts to keep British law firms out.

At present, foreign law firms can set up a practice in Singapore, but are restricted in their activities to the law of their home countries. UK firms must stick to UK law, US firms to US law, and so on. Moreover, foreign law firms do not have the right of audience in Singapore courts. They may, though, act as advisers to their clients, provided they don't stray beyond their legal competence. This is how they are used, regularly employed to give counsel to domestic firms in cases of maritime law.

"It is up to clients to decide whether they want to employ a foreign firm or a local firm, but if a case proceeds to court, a local firm will have to be retained," says Belinda Ang of Ang & Partners, one of the nine domestic firms that the SSA recognises as having maritime expertise.

The use of foreign law firms in Singapore to advise on cases is common, according to Ang, especially as local lawyers lack experience in certain areas of maritime law, such as salvage. "A salvage case involving a LOF signed in Singapore will go back to London to be dealt with," she says.

The dearth of maritime-related cases in Singapore means the number of true maritime law firms is small. Ang estimates that there are only ten serious maritime law firms, though you will find many more registered with the Supreme Court as practising admiralty law. The nature of those registered as maritime lawyers is perhaps reflected in the status of Singapore's maritime law association, which Ang describes as "not very active."

Nonetheless, Ang does feel that there are some good admiralty lawyers in Singapore. Moreover, domestic lawyers have significant experience of finance. "The expertise in Singapore is comparable to that in London. Fifteen years ago, that probably wasn't the case. Now it definitely is," she says.

How the next fifteen years pan out for maritime law in Singapore will depend on how credible an alternative it can become to Hong Kong. That in turn depends on the extent to which the government is willing to liberalise the laws governing the maritime bar, and whether the recently announced drive to create a multi-discipline maritime services hub produces a sufficient mass of Singapore-based owners and service providers to employ local legal expertise. Unlike Hong Kong, Singapore as yet does not have a large body of domestic shipping interests looking for legal advice. However, history shows that, what Singapore wants, Singapore often gets.