GC: How did you come to be at Discovery?
Marcello Dolores (MD): I’m now in my seventh year at Discovery. I started to work for Fox International Channels, based in Rome, and in those seven years, there was a big expansion and startup of Fox’s business in Europe. Continue reading “In conversation: Marcello Dolores, VP – Corporate Legal and Regulatory Affairs for Southern Europe, Discovery Networks”
Change in business is inevitable and the in-house legal department is no exception. GCs, the teams they lead, the way they are viewed and the work that they do are all changing. Continue reading “Facing The Inevitable: shaping the legal department and the law firm of the future”
One would be forgiven for thinking that a sense of normality may be returning to Spain following a calming of the rhetoric coming from separatists in Catalonia. Continue reading “A fresh start for Spain”
GC: Could you tell me about Edison and about your role?
Marco Lorefice (ML): Edison is the oldest European energy company. It’s named after Thomas Edison – a Milanese engineer met him at the end of the 19th century, and set up the first electric energy company in Italy after his name. Continue reading “In conversation: Marco Lorefice, Senior Oil and Gas and International Arbitration Lawyer, Edison SpA”
GC: What is your role at AIG, and how did you come to be here?
Diego Manzetti (DM):Â I joined AIG in 2011. I was previously working for Norton Rose Fulbright. The time I joined, AIG in Italy did not have a legal department. Continue reading “In conversation: Diego Manzetti, Head of Legal South European Zone, AIG”
For this quarter’s column, I’m going to take a look at legal operations, which appears to have replaced ‘innovation’ as the main buzzword in legal circles. Continue reading “Legal Operations: have you drunk the Kool-Aid?”
Many were surprised when Darren Jones was elected Labour MP for Bristol North West – none more so than Jones himself. Except for, perhaps, his boss at BT Legal. Continue reading “In-house to in the house”
GC: Can you tell me a little bit about your background, and how you came to be working in-house, in the banking sector in Singapore?
Stanley Park (SP): : I went to school in the US, and then spent a couple of years after graduating in the federal courts as a law clerk – a year in New York at the trial court and a year in Providence, Long Island at the appeal court level.
Then I spent about nine years working in two law firms in New York City. I was at Cleary Gottlieb for four years and five years at Coudert Brothers, doing mostly corporate and corporate finance.
In 2001, I moved to Tokyo to join Salomon Smith Barney, which is now part of Citigroup.
I spent about six and a half years in Tokyo – three at Solomon and about three and a half at UBS, and after that I went to Hong Kong to work as chief compliance officer for a hedge fund. But that was 2008, the year of the Lehman crisis, so the hedge fund didn’t last very long. So I went back to Tokyo, to join Barclays Global Investors, and I was general counsel until they were acquired by BlackRock. That happened shortly after I arrived there, so my tenure there was not very long either.
Then I came to Singapore, to join Daiwa Capital Markets, a Japanese broker-dealer. I stayed for three years, and then had the opportunity to join Scotia about four and a half years ago.
GC: Was it always a desire of yours to do so much travelling?
SP: My father is Korean and my mother Japanese, and I was born in the US. I had grown up living in different parts of the world – I lived in the US until I was 12, then I moved to Germany for a year, then we moved to Beirut, Lebanon. I didn’t like it very much, so after a year I went to Japan to work as a waiter – I just quit high school and went to work as a waiter in my uncle’s Greek restaurant. After a year, I came back to Beirut to continue with high school, then went back to Germany for my junior year, and then my family moved from Beirut to Vienna, so I re-joined them in Vienna for my last year of high school, before coming back to the US for university. So it is natural to live in different countries.
GC: What are the main challenges of operating in the banking sector in Singapore?
SP: Singapore is a large financial centre, but it’s still not one of the largest financial centres, so I think the challenge for Singapore is to establish itself as one of the leading financial centres in the world. Most people would admit it’s not quite in the same league as New York or London, and so that is its aspiration – to rise to the level of the true financial centres.
A lot of what gives London and New York their financial heft is the strength or the size of the economies that support them. So it’s the US economy that supports New York as a financial centre, and it’s the European economy, the EU, that really supports London as a financial centre. The economic strength of South East Asia, although considerable, is still somewhat less than North America, or the US and the EU. But it’s catching up.
GC: What is the regulatory environment like in Singapore for the financial sector?
SP: I think it’s solid, which is one of the reasons why Singapore has been as successful as it has. That’s down to a couple of things: one, the reputation of the financial regulators here in Singapore, and two, their reasonableness in dealing with financial institutions and financial problems. I think they’ve been good at maintaining a good balance in their approach to all of the major issues and problems that the financial industry faces.
GC: Has there been much regulatory change in recent years?
SP: There’s been a lot of change, I think especially after the Lehman crisis. The financial regulatory landscape has changed considerably from the G20 Summit in 2009 until the present day. Regulators have been increasingly seen to maintain good control over the financial industry, and so the regulatory framework has become stricter in various ways. Dodd-Frank, MiFID and other similar laws or regulations are some examples of the increased scrutiny that has been placed on the financial industry.
GC: Practically and culturally, what are the main challenges or oppotunities for you as a GC in Singapore?
SP: I think Singapore provides GCs with a good opportunity to gain international exposure and experience, and provides a good environment to develop their skillset and competence. That’s for various reasons: the solid regulatory framework, the international energy that comes together in the city, the respect that Singapore commands in the region and even globally, the reliability of the Singapore courts and law, the integrity of the court system and the institutions. All of this makes a good environment for GCs to thrive.
GC: Thinking about your own career, are there any highlights or achievements that you’re most proud of, over the years?
SP: I’m glad that I had substantial exposure in four major financial centres – New York, Tokyo, Hong Kong and Singapore. I also I think I’m lucky to have had the opportunity to work in different types of financial institutions – investment banks, a commercial bank, a hedge fund and an asset manager. I’ve also worked in different roles on the legal side – I’ve been a compliance officer, I’ve been in-house counsel as well as a law firm lawyer. So I’m really grateful for the opportunity to have had these different experiences and perspectives within the finance industry. That has made me a more well-rounded in-house counsel.
GC: What does your legal team look like?
SP: We currently have a lean, but highly effective legal department. Currently we have three lawyers – one who is responsible for corporate legal and secretarial, another responsible for government relations, and another for litigation respectively.
GC: On the flip side, how about challenges? Have there been any particular challenging times in your in-house career?
SP: I think that my years at law firms in New York, although they were very fruitful and helpful in developing some of the basic skills of lawyering, were very demanding. I’m glad to have made it. But you know what they say – what doesn’t kill you makes you stronger. It didn’t kill me, and made me stronger!
The financial crisis, the Lehman shock, was a particularly turbulent and challenging time in my career. I have moved around quite a bit due, in large part, to some of the adjustments that had to be made as a result of the financial crisis – moving from Hong Kong back to Tokyo, and then from Tokyo to Singapore, a lot of that really had roots in the financial crisis.
GC: What did it feel like, in the midst of the financial crisis? Was there real anxiety among the people around you at that time?
SP: Sure. The anxiety was mostly as a result of uncertainty. During the very peak of the crisis, we would leave work on a Friday afternoon not knowing what the financial industry would look like the following Monday. It was no exaggeration. Major changes occurred over the weekend – for example, Merrill Lynch disappeared over the weekend and was merged with Bank of America, Bear Stearns disappeared over the weekend and was purchased by JPMorgan. Lehman disappeared over the weekend as well. Every weekend, we’d wonder what sort of backroom deals were being done at the Federal Reserve, and who would buy whom, or who would be left, or who would fall apart Monday morning. Literally, changes had occurred on two or three weekends that just rocked and shook the entire industry. It was really quite a fearful time.
There was a time when Citibank was trading at less than a dollar per share. People were wondering whether we would go broke. No one could imagine a bank like Citibank going bankrupt, at least in New York 10 years ago, but in the end, the government decided to step in and save them. But over that weekend, we didn’t know if they would. They didn’t step in and save Leman, and the way they saved Merrills was to have Bank of America buy them. Who knew what would happen next? So it was really a frantic time, mostly due to the anxiety.
GC: What are your day-to-day challenges?
SP: One of the biggest is prioritisation. A general counsel needs to prioritise the limited resources he or she has in terms of time, in terms of effort or energy, and in terms of team members, especially in this era of cost-consciousness. The amount of work or tasks at hand will always outstrip the amount of resource available, so one of the biggest and most important challenges as a GC is to prioritise among different tasks, or among different businesses, among different countries, and among different matters.
Second, a GC has to make good judgements. More than anything else, a GC has to exercise good judgement in matters small and large. Every day, every hour, we are making judgements about all sorts of things we are involved in. It could be about things as small as who to include in an email or invite to a meeting, to things as large as whether or not your bank or your company should actually start a law suit, approve a particular product, or close down an office, close down a new business or start a new business – and everything in between.
A third challenge is personal relationships. A lot of our success really depends, if not entirely then in large part, on the quality of the relationships that we have with the people we work with, both within the company that we’re working in or outside the company. We have all sorts of relationships and, at the GC level, our effectiveness depends not so much on how smart we are or how brilliant we are at writing a contract or spotting issues, it depends more on the quality of the relationships that we have. How much they trust us, how well we communicate with them, how well they communicate with us. How well we relate to outside counsel and other vendors and service providers from outside. And how effective we are at engaging with them, negotiating with them, and working with them – getting them to cooperate with us.
And then the fourth important challenge is management: managing the team, managing the businesses, managing the senior management, managing expectations, managing outside counsel.
GC: What challenges are coming over the horizon for GCs over the next year or two?
SP: I think one challenge that almost every GC faces, is how to do more with less. Increasingly, GCs are being asked to cut their budgets, to reduce their headcount or at least not to grow their headcount, but yet take time to take on a greater and greater role within their companies. The challenge is how to take on greater responsibility, perform at a higher level, and contribute more to the company with fewer resources, or at least with resources that are limited. I think part of that may be achieved through technology, but otherwise it’s left to the creativity or ingenuity of the GCs themselves to figure out how to do more with less.
The second challenge coming over the horizon is how to adapt to, and use for our own benefit and advantage, new technology. Sometimes it’s called RegTech, sometimes people refer to AI, sometimes people refer to big data. However you want refer to it, technological development is coming in and nothing is going to stop it, so the challenge for GCs is to, first, learn and understand about technology and be comfortable with it and second, to really integrate technology meaningfully into their own practices.
GC: Are you able to give any examples of how technology can help GCs?
SP: I honestly haven’t seen many clear examples of practical application of advanced technology. I’ve heard a lot of talk about it – nearly every conference I go to, every roundtable, discussion or seminar broaches, in some shape or form, RegTech, or tech, or AI, or big data.
What I’m looking for in the future is applications that will help me deal on two fronts. First, is an understanding of the black letter law in each relevant jurisdiction. I have started seeing some law firms produce websites or digital libraries of relevant legal guidance in particular subject matters. For example, aosphere (Allen & Overy) has a website that outlines all of the antecedent advice for many countries in the world, including those of APAC, with respect to cross-border data transfers. All sorts of questions. You can go online and research them. I would hope that would increase even more. That’s one way in which technology can be helpful: in providing a practically useful compendium of relevant legal guidance across different subjects, and to index it and make it user friendly.
The second would be useful help in drafting and negotiating legal documentation. I hear talk about it, especially for simpler agreements like NDAs, but I haven’t seen a whole lot yet.
People throw questions at me all the time and so I want to have some repository, some database – whether you want to call it AI or big data or whatever – that I can go to, and even ask the question orally, like Siri. ‘Please tell me whether or not I need client consent to disclose client confidential information in Hong Kong’, and it will fill out the answer. We’re definitely not there yet, but that would be in the future.
GC: Would that place law firms at the centre of that as opposed to legal tech companies?
SP: Yes.
GC: Are there any upcoming developments in the financial sector or the banking world that you’re looking out for?
SP: I think how to combine prudent risk management and risk assessment imperatives with the increasingly competitive landscape for financial institutions in Asia as well as globally, is going to be the key to success for any financial institution. The financial institution that can integrate commercial imperatives with risk management imperatives is going to be the institution that succeeds. How to define each of those imperatives is going to be important, as well as how to reconcile the imperatives, so those are the two key ingredients of successful integration. One is a clear definition of what your commercial imperatives and your risk management imperatives are, and then reasonable and creative thinking about how the two can be reconciled. It’s much easier said than done, and much easier to speak conceptually about it rather than practically but, at least conceptually, that is what needs to be done.
Banks the world around are subject to a level of supervision and regulatory scrutiny over and above almost any other entity. In certain parts of Asia, and in an increasing number of Western countries, banks have even more to contend with. In Southeast Asia, where Muslims number 240 million and over 40% of the population, the demand for financial products that adhere to Sharia legal principles is similarly high.
Ernst & Young estimates that Islamic banking assets grew at an annual rate of 17.6% between 2009 and 2013, and further estimates that it will continue to grow by an average of 19.7% up to 2018. A report by Thomson Reuters in 2017 projected global Islamic financial assets to be worth $3.2tn by 2020.
‘A credible Islamic finance offering is becoming one of the key differentiators among banks in Southeast Asia,’ explains Lee Chin Tok, group general counsel at CIMB, Malaysia’s second largest bank.
In 2015, 65% of the global assets were held by those based in Saudi Arabia, Iran and Malaysia. Another report by the Islamic Financial Services Board, an international body based in Malaysia, which is responsible for setting standards and giving guidance on Islamic banking and finance, reported that the total value of Islamic financial assets had grown from $1.4tn to $1.5tn in 2017.
In many countries, Malaysia and Indonesia included, the demand for Islamic financial products has carved out an increasingly prominent role for Sharia within the traditional legal system. Naturally, this is felt by legal teams operating within these jurisdictions and this industry, where Islamic finance isn’t just a public relations issue, but a regulatory one, too.
‘We have a dedicated Islamic Legal team that covers Islamic finance. However, I also encourage my other legal colleagues who are not on that team to also have familiarity with the Islamic principles that we use for our Islamic products,’ explains Lee.
‘Although we do have various specialist legal teams for a particular area of law or particular area of business and notwithstanding the fact that we have a dedicated Islamic legal team, the rest of our legal colleagues are encouraged to learn about Islamic finance because it is an important component for our business.’
Indonesia has begun to solidify the boundary between Sharia and non-Sharia offerings. The country introduced the so-called ‘New Insurance Law’ in 2014, which is intended to be the definitive source on insurance law in the country. One of the requirements it introduced was that all Sharia business units within conventional insurance companies must be segregated.
‘In terms of regulation, insurers have to be ready to spin off their Sharia units, as required by the 2014 insurance law. We have to submit the blueprint for the spinoffs by 2020, and they have to be spunoff by 2024, so this is becoming a hot topic of conversation everywhere in the industry. We have to be able to ensure that the process is running smoothly and successfully,’explains Randi Ikhlas Sardoni, head of legal at Panin Dai-ichi Life.
‘Now, the issues relate to how to ensure that when the spinoff company is independent from the holding company or the conventional company, it will be competing with the other Sharia companies in Indonesia, and not with the conventional company.’
‘There will also be a lot of discussion about how to train the financial advisers. Currently, we have financial advisers that hold two licences, a conventional licence and a Sharia licence. But after the regulation takes effect, they have to advise just the conventional or just the Sharia businesses. So these will be several things that have to be taken care of and discussed properly.’
According to Thomson Reuter’s Islamic Finance Development Indicator, Malaysia is the best-developed Islamic Finance market by a significant margin, scoring 128.87, ahead of the next-best, Bahrain, by over 45 points.
The regulation of Islamic finance in Malaysia is sophisticated. Islamic financial products and services are regulated by the Central Bank of Malaysia, which regulates specifically for the Islamic finance market in the hopes of establishing Malaysia as a global hub. Islamic finance is specifically provided for in the Central Bank of Malaysia Act 2009, which states that ‘the financial system in Malaysia shall consist of the conventional financial system and Islamic financial system’.
‘The legal infrastructure in Malaysia, in the context of Islamic products, is generally quite well-established by the regulatory authorities. On the banking side, we have the Malaysian Central Bank (Bank Negara Malaysia) and on the capital markets side, we have our Securities Commission’ says Lee.
‘What we are looking at, for the next stage, is not simply the administration of disputes, but it’s going a step forward and moving to dispute avoidance.
For example, what we have done now, which did not really exist in Malaysia previously, we realised a few years ago that there is not really any standard form contract for construction deals. You would have a vast range of contracts between companies and this of course caused a lot of difficulties for everyone, because everybody needs to go through every single contract in full for every case. We came up with our own standard form contract and, at least when we launched it in August last year, we were the only institution to do that. These contracts have now been downloaded thousands of times from Malaysia and from abroad.
What we also offer to parties looking at finding their contract, is certain modules, within those standard form contracts. They can put everything together online, where they can jointly see the draft contract, and then track all the changes automatically on our website. The moment they’re done, they click a button and they can just download it, and then it’s the finalised product.
One of the leading principles was really to balance each party’s opportunities and benefits, so that you would not be disadvantaged in the contract, and the contractor would not be disadvantaged in construction contracts. It’s very balanced, and it’s also made in a way that whenever a problem arises, it has to be addressed right away. Remember, this is the pre-dispute stage: here we are talking about problems that arise before the dispute takes place. With that in mind, if you address problems early on, you will be able to hopefully resolve them and you don’t need to go all the way to arbitration.
We want to be in a place where if you have a dispute, if we cannot help you avoid it, you can then come to us to help you resolve it.’
‘Both Bank Negara Malaysia and the Securities Commission have their respective Shariah Advisory Councils to, amongst others, deliberate, provide guidance and issue rulings on all Sharia matters, including products and structures and and therefore. helps the banks to structure their products in a Sharia compliant manner.’
The Malaysian Central Bank, referred to as BNM, is empowered by statute to legitimise the duality of both Malaysia’s conventional and Islamic financial systems. It has a dedicated Shariah Advisory Council, to which all questions of Islamic finance under Sharia should be referred.
The Securities Commission is similarly mandated to regulate the Malaysian capital market, which includes the Islamic capital market. According to the Securities Commission, the Islamic capital market in Malaysia accounts for over 60% of the total capital market. To bolster this, the Securities Commission set up a dedicated Islamic Capital Market Department, mandated to carry out research and development aimed at strengthening the long-term prospects of the Islamic capital market in the future.
Malaysia’s dual judicial system is supported by two separate courts: the Civil Court and the Sharia Court. Unlike the Civil Court, the Sharia Court only has jurisdiction over those professing the religion of Islam, and on select areas of Islamic law, including family law and the administration of trusts. Islamic banking and finance, while subject to Sharia law, are dealt with in the civil court system.
‘Here in Malaysia, we have the regular courts and then we have the Sharia courts. If you’re a muslim and you want to get a divorce, you cannot go to the regular courts – you go to the Sharia courts. Sharia is very important, but where we don’t see it play a big role, is in business disputes,’ explains Harald Sippel, head of legal services at the Asian International Arbitration Centre.
‘For Islamic products which are being offered to bank customers in Malaysia, they come under the jurisdiction of the Malaysian civil courts, and not the Islamic courts. That helps in terms of making sure, in terms of the treatment of Islamic products, that they also follow the same principles in terms of enforceability,’ adds Lee.
‘That also helps to keep the wider public informed of any issues about Islamic products, as the cases are also litigated in the civil court system.’
This position has been affirmed on the basis that disputes over Islamic financial transactions still involve the application of civil law statutes; that Sharia courts hold few powers in terms of enforcement and remedies to function as a banking court; and that the Sharia courts are independent state courts with their own lines of appeal – making them a confusing source of authority on financial matters.
Despite this, the line between Sharia and civil law when talking about issues of Islamic finance, is not as well defined as it appears. Even in the civil courts, adjudicating on Islamic finance requires an application of both Sharia and the civil law. That Islamic finance cases are filed in the civil court at every level has muddied the procedural waters and has often left judges who are not sufficiently trained in Sharia law in the position of presiding over Islamic finance cases. Worse still, Islamic finance cases are often brought before lower courts who are not empowered to grant the kinds of remedies that would normally be appropriate in cases of non-compliance, leading to costly delays in proceedings.
The obvious answer may be to establish a dedicated court to hear matters of Islamic finance, but Malaysia’s legal architecture makes this difficult. In Malaysia, the courts are set up based on territoriality, with the intent of providing easy access to the legal system for citizens. This focus on geography would not lend itself to the establishment of dedicated sharia courts, where the volume of Islamic finance cases will vary greatly depending on location.
A dedicated court, the Muamalah Court, was established in 2009 and is designated to hear all cases on Islamic finance. While viewed as a positive step, the scope of the Muamalah Court is limited and it still defers to Malaysia’s other commercial courts for execution proceedings. Further, appeals from the Muamalah Court follow the same path as appeals from other lower level courts, meaning that cases appealed will eventually end up before a panel of non-Sharia experts, despite their origins in the specialised Muamalah Court. Additionally, this court is resident only in Kuala Lumpur, meaning it can only hear cases filed in Kuala Lumpur. This renders citizens based in regional Malaysia without easy access.
While various figures within the Malaysian legal system have called for the establishment of the Mualamah Court at state level, citizens outside Kuala Lumpur have no option but to take the traditional route to justice. That means applying to non-expert commercial civil courts to rule on matters of Islamic finance, or seeking alternative methods of dispute resolution altogether.
Malaysia is one part of a tightly knit collection of economies in Southeast Asia. Despite their geographic proximity and co-dependence, these countries are diverse culturally and, as a result, legally. Whereas a small niche of Sharia law sits alongside the civil code in Malaysia, some of its would-be trading partners see Sharia take a much more dominant part of their legal code. This, Sippel explains, can be a barrier to trade.
‘Now, there is a quickly growing volume of deals for halal product. That’s where we see a huge market for growth because these halal products are being traded more and more on an international scope. But the moment you have a second country involved, you will automatically have more disputes because of the cultural differences,’ explains Sippel.
‘When it comes to halal products, for a Malaysian company to do business with an Indonesian entity, for instance, they would be reluctant to agree to be subject to anything other than Sharia experts, which is where the Asian International Arbitration Centre (AIAC) would come in.’
Malaysia has embraced the value of alternative dispute resolution methods, which has allowed entities such as the AIAC to thrive. Formerly the Kuala Lumpur Regional Centre for Arbitration, it looks to leverage its dominance in Malaysia and establish itself as Southeast Asia’s premier arbitration hub.
‘We were established 40 years ago, in 1978. What we don’t have to a great extent yet are the international arbitrations. Of around 150 arbitrations a year in total, 80% of that is domestic,’ says Sippel.
‘It’s something that we are trying to expand, because the AIAC is the only, or is one of the only arbitral institutions in the world that has Sharia-compliant arbitration rules.’
In 2012, the AIAC introduced a new set of arbitration rules for Islamic arbitration. Called the i-Abritration rules, they are the first adapted ruleset to cater exclusively to disputes arising from commercial contracts containing issues of Sharia law.
The rules were a necessary introduction for global legal frameworks, and form a big part of the AIAC’s vision to become the go-to arbitration service in Asia. The hope for the AIAC is that it can offer another avenue to international parties looking to do business in Malaysia or wider-Asia, specifically with regards to Islamic finance.
GC: Tell me about your role and how you came to be the general counsel – East Asia and Japan at Schneider Electric.
Paul Fredrick (PF): In 2015, Schneider Electric hired me to handle legal and compliance matters for the East Asia and Japan Zone, which includes 15 countries: Brunei, Cambodia, Indonesia, Japan, Laos, Malaysia, Mongolia, Myanmar, Philippines, Singapore, South Korea, Taiwan, Thailand, Timor-Leste, and Vietnam.
I lead a team of nine lawyers based in six different countries and together we handle all of the deals/transactions/projects for about US$1.8 billion of commercial operations in our 15 countries. We also handle work for various functional departments – credit, customs, finance, HR, import/export, tax – for Schneider Electric entities in our region. Our legal team is focused on being an effective partner with the business units we support.
For the EAJ Zone, I lead the compliance council (comprised of senior management for the Zone) that addresses all of the ethics cases that arise related to the 12,000 employees who work for Schneider Electric in these 15 countries.
From the list of countries that comprise the EAJ Zone, one can see: (i) a wide diversity of laws to understand and comply with; (ii) differing levels of business and economic maturity; and (iii) varied judicial systems with different levels of efficiency and transparency.
GC: How did you come to work in Asia?
PF: In 1995, my law firm in Hawaii seconded me to the legal department of the Tokyo headquarters of ITOCHU Corporation. While there, I handled real estate, corporate and litigation/dispute resolution matters for ITOCHU’s projects in the US. Upon completing that secondment, I joined a Japanese law firm to work on outbound M&A and corporate projects throughout Asia. In 1998, ITOCHU Oil Exploration Company hired me as its first general counsel. After seven years handling the global legal affairs for ITOCHU Oil, I returned to private practice in Tokyo in 2005.
Chevron Corporation hired me in 2008 to work on its LNG and other energy projects in Asia and elsewhere globally. Five and a half of my seven years with Chevron were based in Singapore, handling LNG, oil, power and other projects / transactions throughout the A-P region including in Australia, China, Indonesia, Japan, Korea, Singapore, Taiwan, Thailand and Vietnam, which are many of the same countries I now have responsibility for with Schneider Electric.
Looking back, upon completing law school and a federal court clerkship in Indiana, I had no idea that a significant part of my legal career would involve transactions and projects throughout Asia and elsewhere internationally. I have enjoyed the variety of deals I negotiated and important projects handled over many years now along with the quality lawyers and colleagues I have worked alongside in Singapore, Tokyo and elsewhere.
GC: Did you find it difficult to make that transition?
PF: I was fortunate to have good mentors, both on legal and commercial teams, who helped to teach me how best to be culturally aware of actions in the various countries where I worked. So those lessons were of great value over the years as I negotiated deals and progressed projects in the A-P region and other parts of the world.
Whether working in the US or internationally, it is important to listen well and be able to ‘see between the lines’ to grasp the unspoken parts of a situation in order to understand what is going on in a negotiation or meeting and how to efficiently progress a mutually beneficial conclusion. I am always striving to further improve this skill.
GC: That must be challenging to keep a broad mind, a bit of your brain focused on each country.
PF: Yes, at times it can be. As most GCs will acknowledge, we are only as good as our team enables us to be. So I have worked diligently to empower my nine lawyers to process a large amount of work in their respective countries and to keep me fully informed on all matters that could escalate up and require the attention of legal or commercial management at my level and above.
GC: Schneider Electric is obviously a very big company with a diverse portfolio of interests, is that something that your legal team feels? You must get a really wide variety of work coming across your desk.
PF: Schneider Electric is the global specialist in energy management, energy efficiency solutions and industrial automation. With commercial operations in over 100 countries, Schneider Electric is known worldwide for our electronic products, services, software and solutions.
On a daily basis for the 15 countries in my region, I will spend time on negotiations, drafting / revising agreements, handling compliance issues, advising management on potential litigation / dispute resolution or other issues, conferring with external counsel and various other matters related to board resolutions, corporate governance, IP or global supply chain. Every day is busy and different, but never dull.
I also try to spend some time every week developing or improving ‘plain-English’ template agreements that help to increase efficiency and enable my team and also commercial colleagues to focus on areas of high risk / high value to Schneider Electric.
Throughout the year, our legal team conducts internal seminars to highlight awareness of Schneider Electric policies and guidelines on contracting, compliance / ethics and other issues including:
Because Schneider Electric has commercial operations in in 100 countries, the legal department strives to have consistency, as much as possible, for the variety of contracts that the company enters into globally.
In the EAJ Zone, we are mindful that contractual arrangements put in place in our 15 countries can have a precedential effect with the same counterparty in other countries. Our legal department has a comprehensive internal database for agreements signed on all strategic accounts. Such database, accessible to our global legal team, helps to ensure there is some uniformity for key provisions related to liability / indemnity, warranties, dispute resolution, and financial or other critical issues.
GC: Does that become difficult to manage? How do you stay on the same page with the international departments?
PF: My team and I always check on: (i) whether Schneider Electric has entered into a similar agreement anywhere globally with the same counterparty; and (ii) if so, then what were the final position on key provisions negotiated / agreed to in that executed contract. Schneider Electric also uses global framework agreements that will establish the key terms & conditions for the contractual relationship and then enables the companies to enter into service / work orders or purchase orders anywhere in the world under such framework agreement. A global framework agreement also helps to streamline the overall negotiations that are required at the local level, which can focus on the specific order to be put in place.
GC: I imagine that would require a very robust contract menagement system.
PF: Yes it does. Schneider Electric has that in place and our lawyers / legal professionals work diligently to ensure the contract management system and other internal databases stay current and inclusive of important contracts we execute around the world. Our global legal team also communicates smoothly and effectively across geographical regions. I am regularly speaking with law colleagues in Australia, India, France, the UK and the US on matters related to compliance, data privacy, insurance, IP protection, trademark and other issues.
GC: What are your thoughts on additive manufacturing?
PF: I emphasise to my team the importance of understanding the business of Schneider Electric and our products, solutions, software and related services. Because my own training/background was not in computers, engineering or in manufacturing, I have made extra effort to learn as much as I can about digitisation, Cloud technology, the Internet-of-Things-enabled system architectures, and lots more involved in our industry. Schneider Electric has an impressive variety of products and systems we manufacture and the related platforms that are interconnected to ensure energy management and automation for our clients. Smart technologies will continue to enable lower overall energy usage in buildings and better environmental sustainability as urbanisation continues in Asia and elsewhere.
Additive manufacturing (AM) and 3D printing are important for Schneider Electric and have been for many years. These technologies allow for significant time and cost savings (up to 90%) along with reduced manufacturing and production times for injection moulds, product prototypes and products/spare parts. Plastic moulds can be done in about a quarter of the time required for an aluminium mould.
Technologies such as AM and 3D will continue to enable our company to reduce time-to-market for the new solutions that Schneider Electric is developing every year. So the innovative use of AM and 3D printing in manufacturing is a key strategy of the ‘Factory of the Future’ that will help Schneider Electric expand our leadership in global energy management and bring more sophisticated products to consumers at a faster rate.
GC: Do you see any issues arising as 3D printing is adopted more widely?
PF: My team and I closely review provisions in every agreement to ensure that the proprietary and confidential intellectual property of Schneider Electric is fully protected. We insist on comprehensive IP provisions in the contracts we prepare and add these same important protective provisions to contracts received from counterparties. Schneider Electric’s subject matter experts for IP, patents and trademarks/copyrights work well with my team.
Robust contractual provisions, however, are only part of a best practice for protecting IP. We also actively monitor and address situations when other entities attempt to produce (via 3D printing or other traditional technologies) or sell counterfeit products in similar packaging that violates local and international laws.
GC: In your experience, has the businesses interest changed as the nature of the manufacturing has changed?
PF: Quality IP provisions have always been important for manufacturing companies such as Schneider Electric. With new and developing technologies, however, our lawyers review and consider even more carefully now about the overall scope of information and materials / schematics, etc. will be protected in an IP provision. The breadth of information and documents available on the Internet has also had some effect also on the scope of IP that companies may be able to fully protect. Thus, competition among manufacturers of electronic and other products will likely continue over the next decade and beyond.
For Schneider Electric and other MNCs who create and manufacture products, as new technologies are developed and existing technologies advance, there will be new and different challenges that arise. Accordingly, our lawyers will continue to be vigilant about how we can best protect the strategic assets of the company.
GC: What are your thoughts on artificial intelligence?
PF: AI is changing the legal profession and that will continue in the coming years. There are so many facets to AI and now governmental agencies in the region are more actively addressing the topic. In June 2018, the Personal Data Protection Commission in Singapore released a discussion paper on AI and personal data, so we continue to review that.
My team and I strive to work efficiently because there is an increasing amount of work while our team remains stable. Thus, we welcome new technologies that might enable us to more effectively process our work. Software or online research tools powered by AI can be useful and their practical benefits will expand further over the next five years.
AI tools that can analyse contractual provisions will save valuable time. There is some lead time required, however, to ensure that the substantive text (about governing law, indemnities, liability caps, warranties, IP protection and more) of what a legal team requires in your own contract is effectively flagged by the AI programme used. For simple documents such as a confidentiality agreement, basic sale & purchase contract, and routine lease or loan agreements, AI software could be useful. Similarly, in litigation / dispute resolution matters or for due diligence on an M&A deal, both of which can involve the review of voluminous files and documents, AI programmes can save significant time by quickly locating / highlighting information on specific key issues.
For negotiations on a complex transaction and for the structuring of project finance on a large deal, my view is that AI is unlikely to assist lawyers too much at this time. For predicting results on litigation, such as personal injury cases, AI is already proving to be a valuable tool for private practice lawyers when advising clients on a likely outcome. Accordingly, law firms and in-house legal departments continue to review the most practical uses for AI and continuing legal education courses now cover AI topics.
GC: Is that something that your team currently uses?
PF: Our legal department has been actively studying a variety of AI tools and how best we can benefit from using them. We want to ensure the basic AI platforms (programmes and software) being considered will work effectively considering the types of negotiations and contract drafting progressed by our lawyers. The smarter / more interactive the platform, then the greater the overall efficiencies and likelihood of use by my legal team.
GC: There is a trend of companies and by extension electrical appliances capturing more data. What are your thoughts on the implications?
PF: Schneider Electric has a wide variety of products, solutions, services and software that improve energy efficiency and help to reduce the overall energy use in office buildings, hospitals, data centres, airports and numerous other locations including at home. On the industrial side, Schneider Electric products and services can reduce energy consumption by up to 25% or more, which translates into significant overall cost savings for the customer. For a platform to support on energy management, various information is collected about how and at what times a building is using its energy. However, this information is always well protected and often the primary control of our customers who have programs in place to safeguard such data.
GC: So suddenly, the business will have all of this data, is that concerning for you as a legal team?
PF: Our lawyers and other management, along with our IT professionals, should always be concerned about: (i) the protection and security of all types of data and how best to prevent a potential breach; and (ii) what corrective actions should a company take when such a breach occurs. As Singapore learned this past summer, when a breach occurred at the Ministry of Health affecting 1.5 million citizens (including the Prime Minister’s records), no computer system is infallible and cybersecurity breaches will happen.
Our legal team makes the best efforts possible to ensure that the contracts we put in place require proper security and protection for all data shared between companies and other information that may be collected somehow from using Schneider Electric products and services. Companies who store data in the Cloud should continue to work to improve their cybersecurity systems in order to mitigate future risks to the extent possible. This is true for Schneider Electric and also other MNCs such as Microsoft and Google (both of which have large operations in Singapore) or social media companies such as Facebook, which recently announced plans to build in Singapore its first data centre in Asia at a cost of over US$1 billion.