Month: September 2019

ASEAN consumer law harmonisation: trends and prospects

[Written by Luke Nottage, Justin Malbon, Jeannie Paterson and Caron Beaton-Wells, for a posting on the blog of Cambridge University Press, which has just published the e-book version of our 8-chapter book on “ASEAN consumer law harmonisation and cooperation: Achievements and challenges”. It will be launched by NSW Chief Justice Bathurst and discussed, with “Contract Law in Japan” co-authored by Luke Nottage, on 27 November 2019 at HSF in Sydney.]

The ten states now comprising the Association of Southeast Asian Nations have collectively become a major part of the world economy, bringing together over 600 million people including a growing middle class. Yet they are highly diverse in socio-economic development, political structure and legal traditions, as outlined in chapter 1 of our book. What hope is there for real legal harmonisation or cooperation, especially for consumer protection?

The “ASEAN Economic Community” project significantly expanded intra-regional trade and investment liberalisation commitments, aiming to raise individual member states’ living standards. But this does not necessarily mean weakening consumer protection. Chapter 2 shows how and why ASEAN, through AEC Blueprints and related law reform and capacity-building initiatives, has tried to “trade up” to higher consumer law standards. It also applies other theoretical perspectives to explore the actual achievements of ASEAN, generally and for consumer protection.

Chapter 3 chronicles national enactments of consumer product safety laws and regulations, often as part of general consumer protection law statutes, as well as (often strict liability based) product liability laws, in three stages including the 2007-2015 AEC phase. It highlights regulatory gaps and demarcation problems among “line ministries” and newer consumer affairs regulators, as well as problems of access to justice for consumers seeking compensation for harm from unsafe products.

Chapter 4 focuses on consumer contracts, contrasting the widespread bans on misleading conduct with more variable treatment of unfair contract terms. A uniform approach is more unlikely but most existing laws may be sufficient if backed by effective education and enforcement.

Chapters 5 and 6 take a regional perspective in examining how ASEAN collectively can deal with pressing issues regarding consumer finance and professional health services. The challenge for consumer finance is having all states apply consumer protection measures at least against abusive lending practices, including debtor harassment. Another challenge reducing the number of people who are financially excluded. New technologies offer opportunities to achieve this, but ASEAN can strengthen knowledge and experience sharing networks amongst government agencies and other key players in this fast-evolving field.

ASEAN’s trade liberalisation agenda needs to be applied in a carefully nuanced way concerning professional health services. These services are not only a consumer product; access to health services is a basic human right. Attuning public policy to meet universal health objectives while also gaining the benefits of being subjected to competitive marketplace disciplines is tricky, especially when national budgets are highly constrained. The challenges may be exacerbated if members implement ASEAN’s commitment to mutual recognition of professional qualifications, so health professionals gravitate from poorer countries to higher income states.

Chapter 7 explores the development of competition policy and associated laws and enforcement institutions in ASEAN, at both the national and regional levels. It explains the interface between competition and consumer protection and examines the implications for substantive and institutional design and operation that have been increasingly recognised around the world.  Highlighting the general lack of coordination between competition and consumer protection endeavours in ASEAN to date, it poses some explanations for this and argues that a more coordinated and outcome-focused approach would assist in achieving the economic and social objectives of the AEC.

The book concludes by considering whether transgovernmentalism or “regional shared value” can promote more coordinated and effective consumer law, galvanising the cooperative and consensus-building approach traditionally preferred by ASEAN.

New Frontiers in International Arbitration for the Asia-Pacific Region (7): Australia’s parliamentary inquiries into ISDS in HK, Indonesia and UN/Mauritius treaties

Related to the joint HKU/USyd research project on Asia-Pacific international dispute resolution, and for possible discussion at the related 15 November symposium at USydney, recently I was asked to give evidence at Joint Standing Committee on Treaties inquiries into Australia’s ratification of a new FTA with Indonesia (including an Investment Chapter) and a new Investment Treaty with Hong Kong (alongside an FTA). A transcript of my one-hour Q&A with parliamentarians is here, and my Submission (No 6, including comparative table) is eg here. My key points favouring ratification are set out below, followed by a related news article from the Australian Financial Review on 26 August soon after the Sydney hearings.

I then provided a Submission to JSCOT for its inquiry into the “UN ISDS Convention”, for public viewing soon here. (My Submission appends a draft paper on confidentiality vs confidentiality in ISDS vs international commercial arbitration, focusing on Australia and Japan in regional context, which I will present at the USyd symposium on 15 November.) I also favour Australia quickly ratifying this framework convention so as to retrofit expansive transparency provisions to its many past treaties if counterparties (like Indonesia) similarly ratify this 2014 Mauritius Convention on Transparency in Investor-State Arbitration.

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JSCOT Submission on Australia-Indonesia CEPA (FTA) & Australia-Hong Kong revised Investment Agreement: compared

(a) Both treaties are generally well drafted and balanced, in the familiar (US-inspired) CPTPP-like style, so should be ratified.

(b) The treaty with Indonesia is more pro-host-state (as indicated in red [in the comparative table]). This may be why Australia doesn’t seem to be proposing to terminate the existing BIT, but because AANZFTA also remains in effect with Australia (with clearer advance consent to ISDS arbitration[1] and significant pro-investor features), Australia should consider terminating the existing BIT (as it usually does when concluding broader new treaties).[2]

(c) The treaty with Indonesia helpfully innovates in allowing the host state to require the foreign investor to mediate before filing for ISDS arbitration.[3] This is useful in light of recent empirical evidence from settlement patterns, suggesting that there exists more scope than perceived for pre-arbitral settlements (perhaps therefore with the help of formal mediation)[4] to address concerns over arbitration costs.[5]

(d) It is disappointing that double-hatting by arbitrators is not expressly prohibited in either treaty (unlike under the CPTPP), nor that there is any mention of (even potential future) appellate review mechanisms for ISDS arbitrators. But these are still not deal-breakers.[6]

(e) Ratification is important for Australia to retain credibility in debating and promoting further reforms to ISDS in multilateral forums (especially UNCITRAL), and to encourage Indonesia as it re-engages with ISDS-backed treaties after terminating many old ones amidst pressures towards “economic nationalism”.[7]

[1] But cf Nottage, Luke R., Do Many of Australia’s Bilateral Treaties Really Not Provide Full Advance Consent to Investor-State Arbitration? Analysis of Planet Mining v Indonesia and Regional Implications (April 14, 2014). Transnational Dispute Management, Vol. 12, No. 1, pp. 1-18, 2015; Sydney Law School Research Paper No. 14/39. Available at SSRN: https://ssrn.com/abstract=2424987.

[2] See also Voon, Tania and Mitchell, Andrew D., Old Agreements Must Be Terminated to Bring Life to Investment (May 18, 2019). Available at SSRN: https://ssrn.com/abstract=3390677.

[3] Nottage, https://www.eastasiaforum.org/2019/05/25/settling-investor-state-disputes-asia-pacific-style/

[4] Ubilava, Ana, Amicable Settlements in Investor-State Disputes: Empirical Analysis of Patterns and Perceived Problems (March 13, 2019). Sydney Law School Research Paper No. 19/17. Available at SSRN: https://ssrn.com/abstract=3352181.

[5] Nottage, Luke R., In/Formalisation and Glocalisation of International Commercial Arbitration and Investment Treaty Arbitration in Asia (2014). Formalisation and Flexibilisation in Dispute Resolution, J. Zekoll, M. Baelz, I. Amelung, eds, Brill, The Netherlands, 2014; Sydney Law School Research Paper No. 17/47. Available at SSRN: https://ssrn.com/abstract=2987674.

[6] Nottage, Luke R. and Ubilava, Ana, Costs, Outcomes and Transparency in ISDS Arbitrations: Evidence for an Investment Treaty Parliamentary Inquiry (August 6, 2018). International Arbitration Law Review, Vol. 21, Issue 4, 2018; Sydney Law School Research Paper No. 18/46. Available at SSRN: https://ssrn.com/abstract=3227401.

[7] Nottage, Luke R. and Butt, Simon, Recent International Commercial Arbitration and Investor-State Arbitration Developments Impacting on Australia’s Investments in the Resources Sector (April 16, 2014). ARBITRATION AND DISPUTE RESOLUTION IN THE RESOURCES SECTOR: A COMPARATIVE PERSPECTIVE, P. Evans and G. Moens, eds., Springer, 2015; Sydney Law School Research Paper No. 13/71. Available at SSRN: https://ssrn.com/abstract=2340810.

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Trade pacts needed amid global turmoil: Birmingham

Andrew Tillett

Political Correspondent Aug 26, 2019 — 5.28pm [Australian Financial Review]

Free trade deals with Indonesia and Hong Kong are needed to help protect Australia’s economy against the  worsening stand-off between the US and China, Trade Minister Simon Birmingham warns.

Ratcheting up pressure on Labor to support the FTAs, Senator Birmingham said the Indonesian deal was also critical to Australia’s “regional and strategic architecture”. Parliament’s treaties’ committee opened hearings on Monday into both deals, taking evidence from industry groups and trade experts.

The vexed issue of investor state dispute settlement [ISDS] clauses emerged, with the inquiry hearing the multitude of free trade agreements and investment treaties involving the same countries is adding to red tape for governments and businesses.

University of Sydney transnational law professor Luke Nottage told the committee the Indonesian FTA, a 26-year-old Indonesian bilateral investment treaty and the separate ASEAN-Australia-New Zealand FTA all contained ISDS provisions, which allow foreign companies to sue governments over policy decisions. Advertisement

“One thing is the extra complications and therefore potentially the costs involved in trying to work out what you can and cannot do as a host state if you try to change your regulatory system,” he said.

Professor Nottage said the Australian government was not proposing to eliminate the Indonesian bilateral investment treaty, despite doing so in the past when other treaties had been superseded by FTAs.

He suggested this might be because the Indonesian FTA is more in favour of the host state when in dispute with a company, whereas the older treaty was more pro-investor.

Professor Nottage said the older bilateral treaties had helped attract foreign investment in developing countries but newer trade deals sought to strike a better balance between the rights of investors and government autonomy, and the 1993 treaty should be scrapped when the Indonesian FTA was in place.

With Donald Trump escalating his trade war with China by urging US companies to withdraw from China, roiling global markets, Senator Birmingham said the region and the world had benefited from the opening up of global trade and deeper integration of investment flows.

He said the agreements with Indonesia and Hong Kong would continue to contribute to two-way growth in trade and investment.

Senator Birmingham said a raft of business groups wanted the agreements to “come into force as quickly as possible because it will allow those Australian businesses to diversify their exports, to have new market opportunities, and critically, to be more deeply engaged in the case of Indonesia, with a very close, very large, and rapidly growing economy”. Advertisement

He said Indonesia was projected by some to become the fourth biggest economy in the world and also had huge strategic importance to Australia.

“So against the backdrop of all of those points, I would hope that the Labor Party make it clear as quickly as possible that they will allow entry into force of this trade agreement with Indonesia which is so critical to our economic positioning as well as to our regional and strategic architecture,” he said.

Senator Birmingham said the government looked forward to the treaties’ committee report on the FTAs and would consider the inquiry’s findings in due course.

Labor is yet to say whether it will back the free trade agreements, with the inclusion of ISDS clauses a major sticking point. The party’s trade spokeswoman Madeleine King last week said Labor would let the treaties committee run its course before making a decision.

But Opposition Leader Anthony Albanese signalled his support for good ties with Indonesia and the trade opportunities by making his first overseas visit as Labor leader to Jakarta.

“Indonesia is central to the shape and character of our region,” Mr Albanese said.