Building Up Credentials

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The sultanate is seeking to establish its credentials as an international arbitration centre, looking both to boost the economy and attract overseas investors by guaranteeing a creditable dispute resolution mechanism.

To have a strong domestic arbitration system in place, especially when dealing with international firms, could bring significant benefits to the local economy, Dato Paduka Awang Haji Hamdillah, deputy minister of industry and primary resources told international media. Rather than having to meet the costs of conducting arbitration overseas, disputing parties would feel confident in Brunei's own system to resolve their differences, he added.

The availability of arbitration would also serve to attract international investors, who will be "very keen to see some of the mechanisms in place so that they will be a lot more comfortable coming to this country," said the deputy minister.

Additionally, if Brunei becomes an accepted centre for international arbitration, with bickering parties coming to the sultanate to settle their differences, local businesses such as hotels, conference centres and secretarial facilities would all benefit, he said.

Brunei has its own arbitration system in place, operated by the Arbitration Association Brunei Darussalam (AABD). Established in 2004, its activities are in line with accepted international conventions and the Brunei Arbitration Act, 1994.

However, Brunei does not have its own arbitration centre and all dispute settlements currently carried out are on an ad hoc basis, or where formal arbitrations are sought, are referred to an international centre such as the Kuala Lumpur Regional Centre for Arbitration (KLRCA).

Arbitration is becoming an increasingly accepted form of dispute resolution in Brunei, according to Colin Ong, president of the AABD. Under Brunei's laws, the government has immunity from suits being opened before the country's courts. As such, arbitration is often the only means available for individuals and companies to try and settle business disputes with the state, he outlined.

This situation has prompted many domestic and international contractors and investors to have an arbitration clause included in any contracts they enter into with government agencies, Ong explained.

He told media on August 5 that the forthcoming conference would serve as a catalyst for the further development of Brunei's arbitration system.

"The conference hopes to show that our country has serious interests in the usage of arbitration thereby respecting the rule of law and allowing international investors the option to arbitrate in Brunei," he said. "If it is able to attract more international arbitrations to come to Brunei as a neutral and safe forum, this will further assist in creating an alternative sustainable industry, he added."

As part of this campaign, Brunei is to host a major regional arbitration conference in mid-August. However, according to Dato Paduka Awang Haji Hamdillah, this will take a long time to achieve.

For Brunei to establish itself as a regional arbitration centre, it will need to ensure that it has the trained human resources to support its aspirations. While Dato Hamdillah said his ministry was committed to working with the AABD to develop a pool of skilled arbitration experts, this will take time.

The sultanate will also face stiff competition in the KLRCA, which has been operating since 1978 and has the advantage of being located in a major transport and communications hub, which is an important factor for professionals having to travel long distances to attend hearings.

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