New Frontiers in International Arbitration for the Asia-Pacific Region (6): 15 November symposium @USydney

As part of a research project jointly funded by HKU and USydney over 2019 (see background and many related postings via https://japaneselaw.sydney.edu.au), Sydney Law School will host a second symposium on Asia-Pacific business dispute resolution, all day on 15 November (the Friday before Australia Arbitration Week, this year in Brisbane), with support from CAPLUS, SCIL, TDM and various other ADR or international law related organisations. Registration and speaker bios are here, and presentation Abstracts and/or online publications are being uploaded below. During refreshments following symposium presentations and panel discussions, there will also be a book launch of Vivienne Bath and Gabriel Moens, Law of International Business in Australasia (Federation Press, October 2018).

Challenges and opportunities for Asia-Pacific international commercial arbitration symposium

15 November 2019

Building on Reyes & Gu (eds), The Developing World of Arbitration: A Comparative Study of Arbitration Reform in the Asia-Pacific (Hart, 2018), this symposium examines more recent challenges for international commercial arbitration (ICA), especially the proliferation of international commercial courts, the 2018 UN Convention on enforcement of mediated settlement agreements, and dispute resolution for the Belt & Road initiative. The main focus is on Hong Kong and Singapore (competing jurisdictions in the top “Stage 4” for ICA venues, as identified by Reyes & Gu), Australia (a “Stage 3” venue), China and Japan (“Stage 2” venues).

The symposium will also compare approaches in these jurisdictions to investor-state dispute settlement (ISDS). Building on Chaisse and Nottage (eds) International Investment Treaties and Arbitration Across Asia (Brill, 2018), participants will chart evolving treaty practices and high-profile ISDS cases (including eg in Indonesia), assess whether these do or might impact on public attitudes even towards ICA or other forms of arbitration, and explore alternatives or complements to ISDS.

Speakers:

  • Professor Shahla Ali, University of Hong Kong
  • Professor Vivienne Bath, University of Sydney Law School
  • Adj Prof Max Bonell, Henry Williams Lawyers & Sydney Law School
  • Professor Simon Bronitt, Dean, Sydney Law School
  • Professor Simon Butt, University of Sydney Law School
  • Professor James Claxton, Kobe University
  • The Hon Dr Clyde Croft AM SC, Supreme Court of Victoria
  • Daniel Forster, Clifford Chance & University of Sydney Law School
  • Dr Benjamin Hayward, Monash University
  • Brenda Horrigan, ACICA President & Herbert Smith Freehills
  • Dr Jeanne Huang, The University of Sydney Law School
  • Wilson Mbugua, University of Hong Kong
  • James Morrison, ACICA & Morrison Law
  • The Hon Kevin Lindgren AM QC FAAL, formerly Federal Court of Australia (in lieu of Roger Gyles AO QC, ABA rapporteur for inquiry available via https://austbar.asn.au/singapore-2019/papers)
  • Professor Luke Nottage, University of Sydney Law School
  • Jonathan Redwood, Banco Chambers
  • Yi Tang, University of Hong Kong
  • Dr Nobumichi (Nobu) Teramura, University of Adelaide
  • Professor Leon Trakman, UNSW
  • Professor The Hon Marilyn Warren AC QC, former Chief Justice of the Supreme Court of Victoria

VIEW THE DRAFT PROGRAM (as at 9 August 2019; update via Registration webpage)

ABSTRACTS:

Ali, Shahla, “ICA and ISDS Developments in Hong Kong in the Context of China’s Belt and Road Initiative” (September 13, 2019). Available at SSRN: https://ssrn.com/abstract=3453061
This article examines the impact of both the Belt and Road Initiative and the UNCITRAL Model Law on International Arbitration (the Model Law) on both international commercial and investor state arbitration practice in Hong Kong. Given the significance of Hong Kong as a gateway to OBOR project financing and logistics, understanding current dispute resolution policy is critical for gaining insights into China’s approach to the resolution of OBOR disputes. Measures taken to modernize the practice of arbitration including training programmes and legislative reforms are examined with a view to gaining insights into challenges and future developments.

Claxton, James M. and Nottage, Luke R. and Teramura, Nobumichi, “Developing Japan as a Regional Hub for International Dispute Resolution: Dream Come True or Daydream?” Journal of Japanese Law, Issue 47, 2019; Sydney Law School Research Paper No. 19/01. Available at SSRN: https://ssrn.com/abstract=3299097
The Japanese government, supported by various stakeholders, has recently been attempting to develop Japan as another regional hub for international business dispute resolution services. Tracking this development is important for both theoretical and practical reasons. How it unfolds should reveal which of various theories for explaining Japanese law-related behaviour have more traction nowadays. Assessing the new initiatives is also important for legal practitioners and others interested in the practical question of where to arbitrate or mediate cross-border business disputes. This paper therefore reports on current attempts to promote existing and new international arbitration centres in Japan as well as the recent establishment of the Japan International Mediation – Kyoto, in the context of intensifying competition from other regional venues for dispute resolution services. [Our presentation also updates on the Japan-Korea trade and investment tensions that escalated from mid-2019, and the various dispute resolution options that could be engaged.]

Teramura, Nobumichi, Luke Nottage and James Morrison, “International Commercial Arbitration in Australia: Judicial Control over Arbitral Awards” (updated June 2019)
Geographical remoteness has not prevented Australia from pursuing its ambition to become a major hub for international commercial arbitration (ICA). While regional competitors in the Asia-Pacific region such as Singapore and Hong Kong have already achieved great success in the arbitration world, Australia’s ‘Tyranny of Distance’ requires extra efforts to attract ICA cases. Recent marketing from the Australian government emphasises (1) a harmonised legal framework for ICA in line with international standards; (2) sophisticated arbitration institutions; and (3) some of the world’s leading arbitration practitioners.
While these factors do reveal strong potential to attract ICA cases, to ensure that this goes beyond a mere possibility, the Australian government and judiciary are making quite concerted broader efforts. The former has recently become more vigorous in marketing Australia-based ICA in and out of the country. The latter has generally tried to issue pro-arbitration judgments particularly over the last ten years, and in public speeches or publications leading judges have been actively summarising and promoting Australian developments both domestically and world-wide. However the court system has structural problems, due to the shared ICA jurisdiction of State and Territory Courts alongside the Federal Courts, compared to the unitary system in Hong Kong and Singapore. There are also persistent delays in court-related ICA matters under the IAA, even in the Federal Court of Australia. Nonetheless, perfection is never attainable.
The rest of this paper argues that Australia has significantly improved legal environment for ICA in line with international standards, focusing on the main topics identified for a wider cross-jurisdictional research project: (1) arbitrator bias; (2) conflicts of interests; (3) procedural irregularities and arbitrator’s misconduct during proceedings; (4) arbitrability (objective arbitrability) (5) judicial interpretation of arbitration clauses (subjective arbitrability); and (6) enforceability of arbitral awards (especially regarding public policy).

Nottage, Luke, “Confidentiality versus Transparency in International Arbitration: Asia-Pacific Tensions and Expectations” (August 29, 2019) Sydney Law School Research Paper No. #19/52, August 2019. Available at SSRN: https://ssrn.com/abstract=3444692

Both Australia and Japan lie geographically on the periphery of the Asian region, where international arbitration has been burgeoning especially over the last 15 years. Both countries have struggled to attract significantly more arbitration cases, despite quite extensive efforts (especially by Australia); most cases still go to Hong Kong, Singapore and (especially where local parties are involved) China. This is despite increasingly strict confidentiality obligations being introduced through the rules of the major arbitration institutions, and/or legislation, in Japan and especially Australia. Although aiming to meet the usual expectations of businesspeople and their legal advisors in international commercial dispute resolution, these changes may be “too little, too late”. By contrast, transparency obligations have been added increasingly around the investor-state dispute settlement (ISDS) option included in almost all investment treaties concluded respectively by Australia and Japan. This tendency arguably reflects growing concerns about the public interests implicated by ISDS cases (especially in Australia). Australia has gone the next step of revising its legislation in 2018 to automatically exempt some investment treaty arbitrations from the confidentiality obligations otherwise imposed by default on parties and others in Australia-seated international arbitration proceedings since 2015. Japan does not need to, because its legislation does not apply confidentiality to arbitrations by default. This paper explores possible tensions between these two trajectories in each country. The lessons may be particularly interesting for other jurisdictions (perhaps like Italy) interested in how best to promote and attract international arbitration cases amidst evolving expectations in business and wider communities. The tensions may also influence the EU’s ongoing negotiations for investment protection treaties with respectively Australia and Japan.

Hayward, Ben, “Arbitration in Australia – Efficient, Effective, Economical? A Retrospective”
On 4 December 2009, Australia’s arbitration profession met in Melbourne for a conference hosted by ACICA – the Australian Centre for International Commercial Arbitration – Australia’s leading international arbitral institution. The conference was titled ‘International Commercial Arbitration: Efficient, Effective, Economical?’ – reflecting efficiency, effectiveness, and economic viability’s status as important concerns held by the profession.  Australia’s arbitration laws have been amended many times since then, with a number of significant cases also having been handed down since that time.  One decade later, it is an apt time to ask whether post-2009 developments in Australia’s arbitration laws have addressed these three concerns, and if so, to what extent.  This is the analysis undertaken by this project, which draws upon ten years of developments in Australian arbitration law to identify implications for future law reform in this area.

Warren, Margaret and Croft, Clyde, “An International Commercial Court for Australia: An Idea Worth Taking to Market”

[Extracted from Conclusion of the draft paper:] When the significant trade agreements negotiated by the Federal government are considered with respect to Asia, especially China, and the Pacific, the opportunities offered by an Australian international court are almost boundless. Indeed, there is a symmetry in the establishment of an Australian court which would complement the trade agreements. The proposal for an international commercial court for Australia cannot be left to the Courts themselves or the legal profession to develop and agitate. The experiences of Singapore, Dubai, Abu Dhabi, and indeed, London demonstrate that it is vital for there to be government interest and support for such a proposal.

It is also important to be reminded that a proposal for an Australian court occurs within an international context [… including also] an important legal institute … established in the Asian region in which Australia is an active participant: The Asian Business Law Institute …

A stronger contribution can be made to the rule of law by courts working together than if they are working separately. The early 21st Century is being defined by something of a return to internationalisation and globalisation, although the form and forms that will take remain to be seen. It is for us to shape those forms in the capacity we can and to make contributions towards global stability, harmonisation and due recognition of the law in the context of commercial enterprise. These common purposes, as well as quality of justice and the manner of its administration provided at commercial courts and arbitral tribunals, international and domestic, should be promoted and indeed marketed.

Trakman, Leon “An Australian Perspective on Investment Treaty Negotiations and Investment Arbitration

Notwithstanding the vision of model Investor-State Dispute Settlement (ISDS) provisions across the international community of states, the obstacles are profound.  Supporters propose a cost-benefit analysis to determine the provisions’ utility.  But states are likely to diverge over the costs and benefits of such a multilateral instrument  Material factors will include the stages of development of the states in issue, the kinds of foreign investors (likely) attracted, and alternatives to investor-state arbitration (including recourse to host state courts). Prospects for a model investment treaty that applies internationally are doubtful at best.  Indeed, states that already have their own models, such as the US and China, agonise over their content when revising them, including in relation to ISDS. 

Notably, too, some (especially developing) states that have lost arbitration claims brought by foreign investors have forsaken ISDS in favour of leaving recourse to domestic courts.  Some Latin American states, such as Ecuador and Bolivia, adopted this position after massive losses to foreign investors from developed countries.  More recently, developed states have displayed wariness of ISDS. Australia, unlike Germany and Canada, has never lost an investor-arbitration claim – including the ISDS claim brought by Philip Morris. But it briefly forsook ISDS arbitration a decade ago under a Labour Coalition Government, partly due to a recommendation of Australia’s Productivity Commission.  A Liberal Government soon reverted to a case-by-case approach towards ISDS, excluding it from a new bilateral treaty with Japan (although ISDS is now available via CPTPP) and PACER Plus, while including ISDS in treaties with Korea, China, and (updated) Singapore. Australia’s most recent but as yet unratified treaties, notably with Hong Kong and Indonesia, also include ISDS.  What is distinctive in these various treaties providing for ISDS is how that choice is expressed.

This presentation will explore ISDS in Australia’s bilateral treaties. It will identify disparate provisions, the manner in which they are manifest, and the reasons for and significance of their adoption.  It will explore some perceived costs-benefits underlying such divergence over ISDS.  It will evaluate the rationale that Australian seeks to shield its outbound investors from the domestic courts of its treaty partner states, while protecting itself from excessive claims by their inbound investors.  It will critically evaluate the proposition that ISDS may be more expeditious and transparent than proceeding before domestic courts.  [For an earlier paper focusing on the Asia-Pacific, see here.]

Tang, Yi, “Applying PRC’s BITs in Hong Kong and Macao SARs: Contradictions Between the Chinese Government and Investment Tribunals”

In recent years, it is observed that the investor-state tribunals have more frequently encountered a difficult problem of the territorial application of investment treaties, especially bilateral investment treaties (BITs). Among all the investment treaty arbitration cases concerning the application of BITs concluded by the People’s Republic of China (PRC), the cases of Tza Yap Shum v Peru and Sanum Investment Ltd v Laos stand out due to the special status of China’s Hong Kong and Macao Special Administrative Regions (SARs). In these two cases, one key dispute is whether PRC’s BITs can be applied to Hong Kong or Macao SARs. And the tribunals and courts in both cases reached the conclusion that PRC’s BITs do apply to Hong Kong or Macao, which has presented a sharp contrast with the Chinese official stance. Against this background, this paper intends to analyze how and why the international investment tribunals’ decisions contradict from the Chinese official position. It will first examine the two controversial cases by teasing out the opposing arguments and standpoints, then it will analyze what might explain the confrontation between the positions held by the Chinese government and the investment tribunals respectively. What are the driving forces behind the two contradictory stances? This paper attempts to conduct a relatively comprehensive analysis on this issue by delving into the reasons from historical, legal, political and economic perspectives. This analysis hopes to offer an innovative prism through which we can gain some new insights into the question of applying PRC’s BITs to SARs. It is also of value to the future implications and policy suggestions as to what China should do to solve the current dilemma, and to prevent future confusion. 

Mbugua, Wilson, “Dispute Resolution in International and Bilateral Investment Agreements” (earlier draft paper with Shahla Ali at: https://ssrn.com/abstract=3168996)

Investor-state dispute settlement (ISDS) claims have mainly centred on impairment of investments by the host state in banking, infrastructure development, mining, among other sectors. Intellectual properties as a form of investments are protected by a considerable number of bilateral investment treaties, however, they have rarely been invoked in ISDS claims until recently. This paper sketches the fabric and the structure ISDS in bilateral investment treaties and how it is applied in practice. Secondly, it will examine how arbitration tribunals have dealt with the subject of intellectual property rights by focusing on two standards of protections- expropriation and fair and equitable treatment. Lastly, the paper will conclude with a discussion on the criticism facing ISDS and possible paths for reforms.   

Huang, Jie (Jeanne), “Data Protection in Investment Arbitration: Privacy, Confidentiality and Transparency

Two recent cases, Tennant Energy v Canada and Elliott v. Korea, demonstrate that the booming domestic and regional data protection laws have brought real and significant challenges to investment arbitration. The unprecedented but unclear role of data protection in investment arbitration requires serious attention from both academic and practising communities. This paper intends to address four issues. Firstly, how to determine whether an investment arbitration is subject to a domestic or regional data protection law? Second, suppose that a domestic or regional data protection law (e.g. GDPR) should be applied to an ISDS, what are the similarities and differences between the concept of ‘privacy’ under the data protection law and the general assumption that arbitration proceedings are both ‘private’ and ‘confidential’? The third issue is the interplay between the immunity under public international law and the privacy obligation under a domestic and regional data protection law. Last but not least, may the transparency obligation under the UN Convention on Transparency in Treaty-based Investor-State Arbitration (now being considered by the Australian Parliament) conflict with the privacy obligation under a domestic or regional data protection law? If so, how to resolve the conflict?

Author: Luke Nottage

Prof Luke Nottage (BCA, LLB, PhD VUW, LLM Kyoto) is founding co-director of the Australian Network for Japanese Law (ANJeL), Associate Director (Japan) of the Centre for Asian and Pacific Law at the University of Sydney (CAPLUS), and Professor of Comparative and Transnational Business Law at Sydney Law School. He specialises in international dispute resolution, foreign investment law, contract and consumer (product safety) law.

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