This week, reporter Eddie Morton talks to the Hong Kong government’s top legal official, Rimsky Yuen. As part of a whirlwind trip to Vietnam and Cambodia, Yuen stopped off for a day in Phnom Penh, where he promoted Hong Kong’s international arbitration service – a kind of independent business court catering to firms from different countries that want to solve disputes on neutral ground. Yuen says trade volume increases in the Asia-Pacific have provided a greater need for global mediation.
To start with, how does international arbitration work?
In the old days, when legal disputes were primarily confined to one country, businesses were happy to have them resolved in local courts. But with globalisation, regional economic integration and advances in technology, the sheer volume of cross border and international trade has increased substantially. As a result, the need for an objective, offshore arbitrator has arisen. For example, if I were a US firm involved in a trade dispute with a Chinese firm, it would be natural for both parties not to want to litigate in the other party’s courts for fear of bias. International arbitration allows both parties to decide on the location and members of the presiding tribunal.
Why is Hong Kong a reasonable offshore and objective arbitration location as opposed to, say, Kuala Lumpur or Singapore?
Each city has its own arbitration specialties, I guess. One of Hong Kong’s advantages is that while we are part of China, we have our own legal system known for its rule of law. As such, I think it would be quite natural for companies that have commercial relationships with China to select Hong Kong as the independent arbitrator. That said, if the dispute was related to Islamic finance, maybe they would conduct legal proceedings in Singapore or Malaysia, whichever is not directly involved in the dispute.
Does the Cambodian business community understand this alternative option is out there?
I think international arbitration is at a rather early stage of development here, so it is natural that it will take a bit of time for people to understand how it works and how it can assist the business community. On the other hand, the more that Cambodia does business with offshore enterprises, the more exposure they have to international legal frameworks. That increase could facilitate Cambodia’s understanding of the processes involved. In Hong Kong, we went through the same thing, but many years ago.
How has Cambodia’s international trade, currently valued at $15.9 billion, highlighted more of a need for independent arbitration?
I was saying only recently to a friend, businessmen do not follow lawyers, lawyers follow businessmen. Businessmen would not go to a country specifically for their lawyers, in fact, I suspect they would probably try to avoid lawyers. But certainly, lawyers smell business opportunities as business activity increases. So definitely, Cambodia’s increase in trade volume has been a reason for our trip here. Also, the Asia-Pacific region as a whole continues to impress economists overseas.
Hong Kong remains partly governed by China. Could this create a conflict of interest when Cambodian and Chinese companies mediate?
No. In fact, I think Cambodia’s trade relationship with China and Hong Kong would benefit from Hong Kong-based arbitration services. Trade between Hong Kong and Cambodia is increasing every year, and so is trade between Cambodia and China. A lot of Cambodia-China trade indirectly goes through Hong Kong, so we have a good working knowledge of the two country’s relationship. The independent legal system ensures that Hong Kong provides a neutral territory for both China and Cambodia.
This interview has been edited for length and clarity