Author: Luke Nottage

Prof Luke Nottage (BCA, LLB, PhD VUW, LLM LLD 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.

Reforming Private International Law – Finally ‘Australia in the Asian Century’?

Australia is long overdue for statutory intervention in private international law (PIL), so the recent ‘Discussion Paper 1’ (DP) from the federal Attorney-General’s Department (AGD) is very welcome. From a background in comparative and transnational business law, I strongly support legislative reform, particularly for cross-border consumer transactions and/or in relation to international arbitration. This can now draw on a wealth of experience at an international level and from our major (now mostly Asia-Pacific) trading partners. Such reforms will add tangible evidence of the Government’s recently declared commitment to ‘Australia in the Asian Century‘.

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Guest Blog – Long-Term LNG Sales to Japan and Beyond

Guest blog by Paul Davis (Baker & McKenzie, Sydney/Tokyo) – “IMPORT OF US SHALE GAS INTO ASIA: THE EFFECT ON EXISTING LONG-TERM CONTRACTS FOR THE SALE OF LNG”
[A footnoted version of the following note is forthcoming on the Baker & McKenzie website. The firm supports ANJeL’s ‘Team Australia’ law students in the INC negotiation and arbitration moot competition in Tokyo (held over 1-2 December this year), and Mr Davis is a guest lecturer in Sydney Law School’s LLM courses in “Global Energy and Resources Law” and “Law and Investment in Asia”. The law and practice of long-term contracts is not only of immediate practical significance for bilateral and regional trade and investment (including Australia-Japan FTA negotiations), but also more broadly for contract law reform projects now underway in both Australia and Japan.]
Current Top Concern to Asia’s LNG Buyers and Sellers
The main issue exercising the minds of Asia’s LNG sellers and buyers is what will happen to their current LNG sale and purchase agreements (SPAs), which are priced based upon the Japan Crude Cocktail (JCC), as cheaper (Henry Hub linked) shale gas imports start to flow into the region from North America.
Buyers will be under pressure to “close the gap.” At the same time the sellers are concerned to maintain the prices based on which they made the decision to develop their LNG projects.
SPAs differ, depending upon the LNG SPA model preferred by the seller – in effect the operator of the project. However most SPAs contain two provisions of relevance to the current issue.

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The Olympus scandal and corporate governance in Japan

On 22 October Sky News ‘Late Agenda’ interviewed me and Rick Wallace (Tokyo-based correspondent for ‘The Australian’) following an interview with Michael Woodford, former CEO of Olympus in Japan (click here and then here for 200-MB mp4 video-clips). Corporate governance in Japan is important for Australia, given the countries’ strong trade and investment relationship and recent pressure to finalise a bilateral Free Trade Agreement, as well as from broader regional and theoretical perspectives.

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Australia-Japan Business Cooperation: The Last 50 Years and a New FTA?

[A version of the second half of this Comment, on the potential impact of Australia’s new policy against treaty-based Investor-State Arbitration provisions on the pending FTA negotiations with Japan, appears also on the East Asia Forum – cited by Rowan Callick ‘Arbitration Hitch Holds Up FTAs’ The Australian (2 November 2012, p10).]
The remarkably well-attended and interactive 50th Anniversary Australia Japan Joint Business Conference took place in Sydney over 8-9 October. It was hosted by the Australian Committee, established in 1962 and comprising Australia-based firms involved with Japan. But the conference program was developed with its counterpart in Japan, which hosts there a Joint Conference in alternate years. This cooperative arrangement has become unusually close, and provides an inspiration for other bilateral business community centred relationships. (By contrast, for example, the Australia China Business Council hosts its own main events quite independently of those organised by its Chinese counterpart, comprising firms interested in doing business in Australia.) The Australia-Japan Committees’ arrangement is also very longstanding: the first joint conference took place in 1963 at the Tokyo Chamber of Commerce, with the second in 1964 at the Australian National University.
As ANU Emeritus Professor Peter Drysdale reminisced in his keynote address at this year’s conference in Sydney, this cooperative arrangement – and indeed the entire bilateral relationship between Australia and Japan – proved to be an unexpected success. After all, both countries were bitter foes during World War II. For several ensuing decades Australia maintained concerns about engaging with Asia, as well as trade liberalisation and inbound foreign investment more broadly, with Japan also habouring mercantilist tendencies.

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“Consumer Law and Policy in Australia and New Zealand” – and Beyond

As emphasised in this Blog for many years, Japan has accelerated its consumer law reforms over the last two decades. Australia has also introduced major amendments since 2009, in turn prompting pending initiatives in New Zealand.
Professor Justin Malbon and I recent completed co-editing the first research monograph examining recent Trans-Tasman developments, including significant comparisons with Japan (and beyond) particularly in chapter 3 (generally) and in chapter 8 (consumer product safety regulation). Our 15-chapter book will be published by Federation Press in Sydney in late January 2013.

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Japanese Business Law in Western Languages: An Annotated Selective Bibliography (2nd ed, Hein)

[This is the Preface and Table of Contents manuscript for the 2nd edition, published in 2013 by Hein.]
The literature in Western languages on Japanese law, especially in English and German, continues to proliferate – despite, or perhaps because of, Japan’s economic slowdown after its own “asset bubble” burst in 1990. Law reform has been particularly intense and widespread in business law, necessitating this second edition updating for important works published over the last 15 years.
In 1998 Harald Baum and Luke Nottage published the first edition of their Annotated Selective Bibliography of Japanese Business Law in Western Languages, building on a chapter in Baum’s compendium on Japanese business law published in German in 1994. A new version of the latter published in 2011 included a chapter by Baum, Nottage and Markus Thier listing subsequent works on Japanese business law. That chapter provided the core for the updated references in the second edition of the Annotated Selective Bibliography, co-authored also by Joel Rheuben, but this adds many more references. We also regrouped various chapters and introduced new chapters for fields of law such as Legal Education, Environmental Law, Communications and Information Technology, Employee and University Inventions, Consumer Protection, Product Liability, and Medical Law.
The present edition of the Annotated Selective Bibliography further comprehensively updates the annotated introduction to general works related to Japanese law and the economy, including a completely rewritten guide to finding Japanese business law materials via the internet (for a much briefer version in 2009, see here). Below we set out the rest of the Preface & Acknowledgements, along with the Table of Contents. This second edition went to press in August 2012 and will be published by Hein in early 2013. There are also plans for an e-book version that links to journal articles for subscribers to the HeinOnline database.

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Abandoning all Investor-State Dispute Settlement Mechanisms Also Not Supported by the Facts (updated 17 August)

I am glad the High Court of Australia rejected today the argument by major tobacco companies that Australia’s plain packaging legislation is an unconstitutional “acquisition” of their rights. I dislike those companies’ products, their marketing and their litigation strategies, and I support the plain packaging legislation. I’ve also made numerous submissions to the Australian government since 2005 seeking to improve safety regulation for general consumer goods – partially achieved in the 2010 “Australian Consumer Law”.
But I hope that the ongoing arbitration claim of “expropriation”, initiated by Philip Morris Asia under the 1993 Hong Kong – Australia bilateral investment treaty, does not feed into blanket rejection of any forms of investor-state dispute settlement (ISDS) in investment treaties. Although that system has flaws, it also has benefits, and there is ample scope to draft treaties to provide clear and appropriate mechanisms to balancing private and public interests. With others familiar with international investment law, I provide further examples of the most promising substantive and procedural law reforms in an Open Letter dated 28 July 2012, in response to a recent OECD Public Consultation on ISDS.
My comment will therefore address points made recently on The Conversation blog by Dr Kyla Tienhaara, who remains completely opposed to any form of ISDS. In fact, she urges the Gillard Government to try to excise ISDS from all Australia’s existing FTAs and investment treaties (dating back to 1988), in addition to eschewing them for future treaties – as the Government seems to be attempting, pursuant to its policy shift on ISDS announced in the 2011 Trade Policy Statement (TPS). An alternative is for the Government to approach Hong Kong authorities to seek agreement on amending the 1993 treaty to suspend PMA’s pending claim. More generally, Australia should consider including ISDS provisions in future treaties but expressly reserve its right to agree with the treaty partner to suspend particular types of claims, for example regarding public health issues. This compromise approach is already essentially found in investment treaty practice where the claim involves allegations of “expropriatory taxation”.

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Finding Legal Work in Japan – the “France of Asia”!

What does “Japan” evoke for you? Fine food, delicate design, pride in a long history and rich culture, powerful bureaucrats, some very big business? But it also has a sophisticated modern legal system, open to outside influences and impacting on other parts of the world – including Thailand, and more recently Cambodia and Vietnam. Just like France, in all these respects! To take the analogy even further: perhaps China is the “Germany of Asia” – now the slightly larger economy, with more focused politics, and a friendly rival for regional leadership.
On 20 August, Sydney Law School (SLS) will hold a student information session on legal practice and educational opportunities in Asia, kindly sponsored this year by “Herbert Smith Freehills”. Offshore units available for SLS course credit include the Kyoto and Tokyo Seminars in Japanese Law, co-taught by Australian- and Japan-based professors and practitioners, every February for Australian, other international and Ritsumeikan University Law School students. I also want to talk briefly about practice opportunities in Japan, based on my personal experience (as a “trainee” with Osaka law firms in the early 90s, while a postgraduate student at Kyoto University) and especially an excellent introduction to “finding legal work in Japan” written a few years ago by a SLS student (“Anon”, still living in Tokyo).

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Open Letter – Assessing Treaty-based Investor-State Dispute Settlement

Some are concerned about treaty-based Investor-State Dispute Settlement (ISDS), especially binding Investor-State Arbitration procedures in investment treaties and Free Trade Agreements. One response includes public calls for states to eschew such procedures completely in future treaties, for example in the expanded Trans-Pacific Partnership Agreement presently under negotiation. This approach would essentially leave foreign investors to approach local courts if host states illegally interfere with their investments, or to encourage their home states to activate an inter-state dispute resolution process, or to try to negotiate individualised arbitration agreements with host states.
An alternative approach is to identify and address more specific concerns with treaty-based ISDS. An example is the scoping paper and Public Consultation on ISDS generated by the Organisation for Economic Cooperation and Development, over 16 May – 23 July.
As a constructive contribution to this debate, we created an online form asking for views on whether ISDS should be left as is, abandoned completely, or adapted in various listed ways. As explained below, no respondents favoured eschewing ISDS completely. Yet that position represents the policy shift announced by Australia in the “Gillard Government Trade Policy Statement” (April 2011), resulting in ISDS being omitted from the Australia-Malaysia FTA (May 2012) but difficulties in negotiating other bilateral treaties (with Korea, and Japan) and the TPPA. Implications and other topics related to the TPPA negotiations will be discussed at a Roundtable in Canberra on 8 August, hosted by the Crawford School of Public Policy (ANU College of Asia and the Pacific).

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International Commercial Arbitration in Japan and Australia: Addressing Australia’s “Legislative Black Hole” and Comparing Caselaw

Profs Tatsuya Nakamura, J Romesh Weeramantry and myself will present a public seminar at JCAA in Tokyo on 20 July to compare recent developments in jurisdictions that have based their arbitration legislation on the UNCITRAL Model Law (respectively: Japan, Hong Kong and Australia). Below are details of a follow-up seminar on 13 September in Sydney organised by Sydney Law School and hosted by Clifford Chance, where Prof Nakamura will be the main speaker.
Prof Nakamura and I will also participate on 12 September in Brisbane in an interactive AFIA (Australasian Forum for International Arbitration) symposium hosted by Corrs Chambers Westgarth.
These events are part of our joint research project, “Fostering a Common Culture in Cross-Border Dispute Resolution: Australia, Japan and the Asia-Pacific“, supported by the Commonwealth through the Australia-Japan Foundation which is part of the Department of Foreign Affairs and Trade.
Background materials for these three events include:
1. Nakamura, Tatsuya and Nottage, Luke R., Arbitration in Japan (May, 30 2012). ARBITRATION IN ASIA, T. Ginsburg & S. Ali, eds., Juris: NY, Fothcoming; Sydney Law School Research Paper No. 12/39. Available at SSRN: http://ssrn.com/abstract=2070447
2. Garnett, Richard and Nottage, Luke R., What Law (If Any) Now Applies to International Commercial Arbitration in Australia? (May 2012). Sydney Law School Research Paper No. 12/36. Available at SSRN: http://ssrn.com/abstract=2063271
The latter identifies the following serious and growing legislative lacuna that has emerged since Australia revised its framework for international arbitration from 2010:

The amendments to the International Arbitration Act 1974 (Cth) (‘IAA’) enacted on 6 July 2010 aimed to reposition Australia as a leading Asia-Pacific venue for international commercial arbitration. They also aimed to streamline and revitalise domestic arbitration by providing the new template for reforms to the uniform Commercial Arbitration Act (‘CAA’) regime, originally enacted in the mid-1980s based on a more interventionist English law tradition.
Yet the IAA amendments did not clearly indicate whether some were intended to apply to (a) international arbitration agreements, (b) specifying the seat of the arbitration to be in Australia, (c) concluded before 6 July 2010, especially if (d) the parties had expressly or impliedly excluded the UNCITRAL Model Law on International Commercial Arbitration pursuant to the original s21 of the IAA. The present authors had suggested that these amendments, especially s 21 which no longer allows such an exclusion, were not intended or presumed to have retrospective effect. The Western Australian Court of Appeal recently agreed, unlike a Federal Court Judge at first instance, although in obiter dicta in both cases.
This article restates the problems created by the IAA amendments (Part II), analyses Australian case law decided since 6 July 2010 (Part III), and then proposes a way forward – including comparisons with other Asia-Pacific jurisdictions that have recently enacted arbitration law reforms, especially Singapore and Hong Kong (Part IV). It recommends prompt further IAA amendments that: (i) clarify that at least the new s 21 does not have retrospective effect, (ii) limit a persistent tendency among some Australian courts to infer that a selection of arbitration rules amounts to an implied exclusion of the Model Law under the old s 21, and (iii) consider several other reforms addressing other issues left unclear or not covered in the IAA as amended in 2010.
The article also urges reforms to the new uniform CAA regime (including CAA legislation already enacted in NSW, Victoria and South Australia) that ‘save’ old international arbitration agreements satisfying conditions (a)-(d) above. The old CAA legislation, or at least the new CAA regime, should clearly apply to such agreements – otherwise they will fall into a ‘legislative black hole’. That problem arises because states are enacting the new CAAs to apply only to ‘domestic’ arbitration agreements, while simply repealing the old CAAs (which applied also to international arbitration agreements, especially if the parties had agreed to exclude the Model Law as permitted by the old s 21 of the IAA).

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