UNCCA conference (video) presentation: “Australia’s investment treaties and reviews”

Written by: Prof Luke Nottage & Ana Ubilava

[This posting and linked video presentation, reproduced from Erga Omnes, relates also to my book in press with Elgar comparing international arbitration in Australia and Japan in regional and global contexts.]

The UNCITRAL Coordination Committee for Australia (UNCCA) and the Commercial Law Association (CLA) is holding an online seminar on Monday 26 October 2020 partly to celebrate the fortieth anniversary on the CISG (UN Convention on Contracts for the International Sale of Goods). The live, interactive seminar will be supplemented by a full conference package including pre-recorded presentations. A longer (30-minute) version of a pre-recording by UNCCA Fellow Dr Luke Nottage (Professor of Comparative and Transnational Business Law) and Ana Ubilava (PhD student at Sydney Law School and ANJeL Executive Coordinator) can be viewed here. Our presentation is entitled “Australia’s recent investment treaty ratifications and reviews: The UN Transparency Convention and investor-state mediation”. It is based on Ana’s recent postings on investor-state mediation (her PhD thesis topic) for the Kluwer Mediation Blog (reproduced here) and for the Kluwer Arbitration Blog with Luke and Prof James Claxton, as well as her lead-authored chapter with Luke for his co-edited book on Asia-Pacific international business dispute resolution due out from Kluwer by end-2020:

Ubilava, Ana and Nottage, Luke R., Novel and Noteworthy Aspects of Australia’s Recent Investment Agreements and ISDS Policy: The CPTPP, Hong Kong, Indonesia and Mauritius Transparency Treaties (March 4, 2020). in Nottage, Luke; Ali, Shahla; Jetin, Bruno; Teramura, Nobumichi (eds), “New Frontiers in Asia-Pacific International Arbitration and Dispute Resolution”, Wolters Kluwer, (Forthcoming) , Sydney Law School Research Paper No. 20/12, Available at SSRN: https://ssrn.com/abstract=3548358 or http://dx.doi.org/10.2139/ssrn.3548358

Our presentation updates for recent developments including DFAT’s public consultation to review Australia’s remaining BITs, with Luke’s Submission here and a related thought-provoking Clayton Utz / University of Sydney International Arbitration Lecture this year by Prof Zachary Douglas; but a summary of our original chapter manuscript is as follows.

Abstract: Investment treaties, and especially investor-state dispute settlement (ISDS) provisions, became a political hot potato from around 2011 when Philip Morris brought the first-ever ISDS claim against Australia under an old bilateral investment treaty (BIT) with Hong Kong. A Labor-Greens Government declared that it would no longer agree to ISDS provisions in future treaties, but when a centre-right Coalition Government regained power from 2013 it reverted to concluding treaties containing ISDS clauses on a case-by-case assessment. Australia therefore agreed to ISDS in FTAs with Korea and China, but not bilaterally with Japan. However ISDS-backed provisions apply between Australia and Japan since the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) can into force between them (and five other Asia-Pacific nations so far) from January 2019. Yet the Australian parliament engaged in robust debate about ratification of the CPTPP, with Labor Opposition (and Greens) parliamentarians continuing to voice concerns over ISDS provisions, despite the Philip Morris claim against Australia’s tobacco plain packaging having been rejected on jurisdictional grounds in 2015.

This paper examines how (US-style) CPTPP drafting compares with two important recent investment agreements subsequently signed by Australia over 2019, namely with Indonesia as part of a wider free trade agreement (IA-CEPA), and with Hong Kong (AHKIA, alongside a bilateral FTA covering non-investment matters). AHKIA came into force from 17 January 2020, while IA-CEPA has been ratified by Australia but not yet by Indonesia. IA-CEPA adds a provision unique in the universe of over 3000 investment agreements world-wide, probably proposed by the Indonesian side: a compulsory mediation step prior to arbitration, if the host state requests mediation after the foreign investor initiates ISDS. The paper also highlights other features of both treaties that may help reduce delays and hence costs in ISDS. The paper summarises empirical data about delays and costs, as well as transparency around ISDS as another growing public concern, including some of our own empirical data provided as evidence to an Australian parliamentary inquiry into ratifying the CPTPP.

We also examine the 2019 parliamentary inquiry that agreed with the submission that Australia should ratify the Mauritius (“UN ISDS”) Convention, thereby retrofitting extensive transparency provisions on pre-2014 treaties between Australia and other states that might also accede to that framework Convention. Even if Mauritius Convention ratifications proliferate, however, it will not retrofit extra transparency provisions to treaties concluded even after 1 April 2014 even among those states (say between Australia and Indonesia, where the investor chooses the ICSID Rules rather than UNCITRAL Rules option for arbitration). Accordingly, states ratifying the Mauritius Convention will still need to agree bilaterally to expand any still-limited transparency provisions in such post-2014 treaties, which is quite inefficient compared to a multilateral solution. Nonetheless, we conclude from these new developments that Australia is now better placed to play a more active role in guiding the future path of international investment treaty-making multilaterally and especially in the Asia-Pacific region.

Pioneering Mandatory Investor-State Conciliation Before Arbitration in Asia-Pacific Treaties: IA-CEPA and HK-UAE BIT

Reproduced from the Kluwer Arbitration Blog, which subsequently ran a series on investor-state mediation; and written by: James Claxton (Rikkyo University), Luke Nottage (University of Sydney & Williams Trade Law), and Ana Ubilava (University of Sydney).

Arbitration has been the default dispute resolution mechanism in the investor-state dispute settlement (ISDS) regime for a long time. Provisions for third-party procedures other than arbitration have been relatively rare in older generation bilateral investment treaties (BITs). Even where those have provided in advance for the option of ICSID (Convention or Additional Facility) Conciliation Rules, investors have rarely invoked them. Only 13 cases have been filed since 1982 with four filed since 2016. The latest Conciliation Rules case was filed by Barrick Niugini Ltd against Papua New Guinea on 22 July 2020 under a mining lease contract. Barrick Niugini is a joint venture between Chinese Zijin Mining and Canadian Barrick Gold. In parallel, Barrick Gold’s Australian subsidiary instituted ICSID Convention arbitration on 11 August 2020 under the 1990 Australia-PNG BIT.

Over the past decade, calls have grown for other alternative dispute resolution mechanisms with a special focus on mediation. Mediation is believed to be a time- and cost-efficient dispute resolution mechanism that can prevent disputes from escalating to arbitration. Various stakeholders have taken up the call to facilitate and promote investor-state mediation. UNCITRAL Working Group III is discussing mediation in the context of ISDS reform and so is the Academic Forum on ISDS (see, for example, a March 2020 paper circulated for discussion). Mediator trainings are being offered for investor-state disputes, and ICSID is promulgating mediation rules for the first time that will be available even if neither the home nor host state has ICSID membership status. The UN Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention) is also set to come into force from 12 September 2020. While this Singapore Convention does not extend expressly to investment disputes, there is broad agreement that at least some settlement agreements resulting from investor-State mediations will fall within its scope.

Some newer treaties include additional express references to mediation or conciliation in ISDS clauses, but disputing parties must agree separately and later to those procedures.1) While the use of such voluntary mediation may be growing, until recently there has been little to no interest in mandatory mediation – as a pre-condition to arbitration. Some still see mediation as unlikely to be or even incompatible with the aims of ISDS. Perceived obstacles include: (a) some States may have difficulty determining an authority to conclude settlements on their behalf; (b) settling an investment dispute could be associated with risks of personal liability and criminal prosecution (especially in developing economies or totalitarian States with weak rule of law); (c) settling a dispute could be considered an admission of guilt by the respondent State; (d) settlements do not pay as much as what a Claimant could be awarded through a successful award; (e) some investment disputes have non-monetary claims that require certain legislative or policy measures from the Respondent State which would go beyond the capacities of mediation; and (f) settlements promote secrecy of outcomes.

Several such arguments have been challenged through a recent empirical study analysing 541 concluded, treaty-based investor-state arbitration cases with the focus on settlement outcomes. The findings suggest that none of the key factors — such as the economic industry of the investment, size of the initial claim (or whether it was monetary or non-monetary), or the economic development status of the respondent state (and claimant home state) — have a negative impact on settlements. The study also found that in settlements the average compensation rate is 32%, very similar to that of the awarded-to-claimed compensation rate (31%). In addition, settlement agreements have been reached on non-pecuniary terms even when the claim was monetary, suggesting that the non-pecuniary claimed relief is not an unsurmountable impediment to reaching a settlement agreement. The study did find that settlements are associated with increased confidential outcomes compared to those ending in arbitration awards, but recently the rate of confidentiality for all outcomes has remained stable while the rate of settlements keeps falling. This suggests that leaving investor-state disputes to arbitration does not guarantee increased transparency either. Such findings, highlighting more potential for amicable settlements generally than many may have assumed, dovetail with emerging interest by investors and States in mandatory mediation. A forthcoming report by Queen Mary University of London finds that 64% of respondents (mostly in-house counsel plus some management representatives of firms investing internationally) favour integrating mediation as a mandatory pre-condition to arbitration in ISDS.

Already, the new Hong-Kong-United Arab Emirates BIT (HK-UAE BIT) and the Indonesia-Australia Comprehensive Economic Partnership (IA-CEPA) free trade agreement, add unusual provisions for mandatory conciliation as a pre-condition to arbitration. These provisions mark a break with existing IIAs that do not even mention mediation or conciliation – much less make such provisions mandatory. Under the HK-UAE BIT and IA-CEPA, both signed in 2019, respondent States can require claimant investors to attempt conciliation before they can raise their claims in arbitration. Investors do not have the same right to mandatory conciliation. Both of the treaties carve dispute resolution out of their most-favoured nation provisions (Art. 14.5(3) of IA-CEPA and Art. 4(8) of the HK-UAE BIT), which means that there is no risk that this conciliation requirement can be circumvented by investors on the basis of MFN treatment.

These provisions mark an innovative approach to conciliation and a significant rethinking of its place in the ISDS system. They coincide with ongoing attempts to put States on better footing to manage and defend investor claims that include control mechanisms on treaty interpretation, procedures to address frivolous claims, and the potential creation of a multilateral advisory centre. The State option to require mediation as a precondition to arbitration could serve as a model for other treaties, although the forthcoming Queen Mary report suggests that there may also be appetite for mandatory mediation among investors. Quite similarly, some commentators have argued that greater transparency around investor-state disputes can appeal to investors, not just host states, by highlighting state practices (such as discrimination in favour of well-organised local interests) that diminish overall welfare among more disparate citizens. Accordingly, in advocating compulsory investor-state mediation, reformers may find more widespread support than expected.

Nonetheless, to minimise the risks of just adding extra time and expense to ISDS proceedings, such provisions need to be well drafted. A separate analysis already identifies some uncertainties in interpretation, including for different timeframes established by IA-CEPA compared to the HK-UAE BIT. In theory, different timelines might be expected if the treaty involves a developing country, likely to have more inbound than outbound ISDS claims. Indeed, Indonesia seems more likely to have proposed the compulsory mediation step than Australia, as it has been subject to 7 inbound treaty-based claims according to UNCTAD (including a high-profile one brought ultimately unsuccessfully by Australian/British mining companies under the now-terminated 1992 Australia-Indonesia BIT). Indonesia has also mentioned mediation in UNCITRAL reform deliberations, whereas no compulsory mediation step was included in the Australia-Hong Kong BIT – even thought that too was signed in 2019.

Nonetheless, the HK-UAE BIT shows that even developed economies can be willing to add a compulsory investor-state mediation step. It seems more likely to have been proposed from the UAE side, as the latter has experienced 4 inbound claims (although its outbound investors have also initiated 12), whereas Hong Kong has not been subject to any – although Hong Kong has also been trying to position itself as a hub for investor-state mediations generally. Just as Lauge Poulsen’s earlier empirical research showed a significant (though temporary) slowdown in investment treaty signings after a host state’s first inbound ISDS claim, it may be that states subject to several claims become more likely to negotiate for compulsory investor-state mediation provisions. Australia instead has only been subject to one serious inbound claim, albeit the very high-profile Philip Morris Asia claim brought unsuccessfully under the now-terminated 1993 BIT with Hong Kong, and its government may be mindful that Australian investors (especially resources companies) are now initiating quite a few outbound claims. Accordingly, even if a counterparty proposes a compulsory mediation step (like Hong Kong may have done for the new BIT), Australia may be less likely to agree unless pressed strongly (as Indonesia may have done with IA-CEPA).

If such hypotheses are plausible, it may take more sustained effort to “nudge” more states towards adding such compulsory investor-state mediation provisions in addition to the default arbitration clause. This could be done through international bodies (UNCITRAL, ICSID, UNCITRAL and the OECD) but also widespread consultation among stakeholders domestically, including firms or industry groups interested in outbound investment as well as the civil society groups that are typically more concerned about inbound ISDS claims. Broader discussion is needed anyway as Poulsen’s study reveals how “status quo bias” extends to treaty negotiators, and jurists may be particularly risk averse and wedded to precedent. A rethink may be particularly timely as concerns are emerging, including in Australia, about potential ISDS claims in the wake of the COVID-19 pandemic. The Australian government has also just announced public consultation to review remaining older bilateral investment treaties. One question for stakeholder submissions is whether those should incorporate modern provisions from Australia’s FTA practice. Compulsory mediation before arbitration is not specifically mentioned but is worth considering.

Book in Press with Elgar: ‘International Commercial and Investor-State Arbitration – Australia and Japan in Regional and Global Contexts’

[The following book’s 160,000-word manuscript has just been submitted to Elgar, to be published in early 2021, after careful kind proof-reading by James Tanna (CAPLUS student intern, 2020) and research assistance from Dr Nobumichi Teramura (CAPLUS Associate and co-editor/author in other works).]

Abstract: The COVID-19 pandemic has forced many international arbitrations online, potentially making the field increasingly global and informal, as arbitrators adopt more efficient procedures and experience fewer challenges. But will it last? We have seen a similar trend before, over the 1990s, reacting to concerns over growing costs and delays over the 1970s and 1980s, linked to the influx of Anglo-American law firms into the international commercial arbitration world. Yet formalisation has resurfaced over the last 10-15 years, despite arbitration’s move East and consequent globalisation, partly due to the rapid growth of treaty-based investor-state arbitration. This 12-chapter book examines how international commercial and investor-state arbitration has been framed by this evolving relationship between twin tensions, ‘in/formalisation’ and ‘glocalisation’. Interweaving historical, comparative, empirical and doctrinal research over two decades [updating and expanding several publications hyperlinked below], the book focuses on attempts by Australia and Japan to become less peripheral players in international arbitration, especially in Asia-Pacific context.

Keywords: international dispute resolution, international commercial arbitration, investor-state dispute settlement (ISDS), foreign investment (FDI), Asian and comparative law, treaty-making and law reform processes

Special features: The book (1) combines analysis of both international commercial and investment treaty arbitration, (2) using mixed methods (historical, comparative, empirical and doctrinal research), (3) presenting the first detailed comparison of Australia and Japan, (4) drawing implications for their stakeholders as well as post-pandemic arbitratio

Chapter 1. In/formalisation and Glocalisation Tensions in International Arbitration

Abstract: This introductory Chapter outlines the trajectory of two growing fields of cross-border dispute resolution – international commercial arbitration (Part I of the Book) and international investment treaty arbitration (Part III) – as well as some crossovers (Part II). Australia and Japan, bearing important similarities in both fields and a few significant differences, are examined in Asia-Pacific and global contexts. An evolving and complex tension emerges between more formal versus informal approaches within international arbitration (‘in/formalisation’) and between globalisation and national or local circumstances (‘glocalisation’). International arbitration was first quite informal yet global, then became more formalised under growing influence of the common law tradition. It then saw some pushback towards more informal (or at least speedier) arbitrations amidst further globalisation over the 1990s, a tendency now re-emerging amid the COVID-19 pandemic. Yet the last 10-15 years have seen resurgent costs and delays, which could well resurface.

Part I: International Commercial Arbitration in Japan and Australia

2. The Vicissitudes of Transnational Commercial Arbitration and the Lex Mercatoria: A View from the Periphery

Abstract: This Chapter outlines two important empirical studies from the 1990s, setting an historical and theoretical benchmark for assessing the past and future of international arbitration. Those highlighted a growing formalisation of international commercial arbitration’s over the 1970s and 1980s, influenced by growing influence from Anglo-American legal practice. Yet this Chapter finds some pushback by the late 1990s towards more informal and global approaches. It also highlights further historical contingency by outlining Japan’s attempts around then to revamp its arbitration law. Although that was partly aimed at meeting the evolving international standard, epitomised by the UNCITRAL Model Law, it was part of a much wider justice reform program over 1999-2004 focusing primarily on domestic dispute resolution. Such ‘localised globalism’ contrasts with Japan’s efforts from 2018 to promote itself as another regional hub for international arbitration (outlined in Chapter 4), which therefore instead suggest more ‘localised globalism’.

3. The Procedural Lex Mercatoria: The Past, Present and Future of International Commercial Arbitration

Abstract: The substantive lex mercatoria (international contract law) is showing signs of growing formalisation. Similarly, international commercial arbitration law and practice – as the procedural lex mercatoria – became increasingly formalised over the 1980s. However, during the 1990s there was some shift back towards more informalism (especially to regain the advantage of speedier proceedings compared to cross-border litigation) as well as more global solutions to major issues arising in the arbitration world. This is illustrated by outlining developments across thirteen key ‘pressure points’ in international commercial arbitration law and practice, covering hot topics related to the arbitration agreement, arbitral procedure, award enforcement, and overarching issues. The Chapter indicates scope for further and more consistent developments towards restoring globalised and informal approaches. Yet it leaves open the possibility of international arbitration reverting to greater formalisation – in fact found especially over the last 10-15 years (as illustrated in Part II of this Book).

4. Japan’s Arbitration Law of 2003: Early and Recent Assessments

Abstract: Japan’s Arbitration Act 2003 was part of justice system reforms focused on domestic dispute resolution, although based on the UNCITRAL Model Law. The Act left few major interpretive issues, and created scope eventually to enhance international arbitration in Japan. Yet neither type of cases has grown significantly. There were also significant continuities evident from the persistent use of Arb-Med to promote early settlement during arbitrations. The stagnation in annual arbitration filings cannot be linked to adverse Japanese case law. That developed in an internationalist, pro-arbitration spirit, evident through a comparative analysis for example with Australian case law. Other institutional barriers to arbitration remain, despite Japan’s new initiatives since 2018 demonstrating ‘localised globalism’. General, organisational and legal culture in Japan will likely keep mutually reinforcing economically rational motivations helping to curb costs and delays in dispute resolution, even as Japan now seeks to promote international arbitration through updated global models.

5. International Commercial Arbitration in Australia: What’s New and What’s Next?

Abstract: Not much had changed by 2013, after Australia amended in 2010 its International Arbitration Act 1974, incorporating most of the 2006 revisions to the UNCITRAL Model Law. There was no evidence yet of a broader anticipated ‘cultural reform’ that would make international arbitration speedier and more cost-effective. One dispute engendered at least five sets of proceedings, including a constitutional challenge. Case disposition statistics for Federal Court cases decided three years before and after the 2010 amendments revealed minor differences. Various further statutory amendments therefore seemed advisable to encourage a more internationalist interpretation. However, an updated analysis notes only a few minor revisions. There remains a significant step-up in annual cases filed under the Act, and some improved Federal Court case disposition times only since 2017. Despite generally more pro-arbitration case law, challenges remain in pushing international arbitration in Australia towards a more informal (especially time- and cost-effective) and global approach.

Part II: Crossovers from International Commercial to Investor-State Arbitration

6. In/formalisation and Glocalisation of International Commercial Arbitration and Investment Treaty Arbitration in Asia

Abstract: International (commercial) arbitration has experienced a dramatic diffusion from West to East, but ‘in/formalisation’ and ‘glocalisation’ tensions endure. Empirical research shows that delays and especially costs have been escalating world-wide, reflecting and promoting formalisation. This is not just due the growing volume and complexity of deals and disputes. It parallels a dramatic worldwide expansion of international law firms, and large home-grown law firms emerging in Asia. Confidentiality in arbitration exacerbates information asymmetries, dampening competition. Such developments are particularly problematic as large law firms have moved into investment treaty arbitration. Yet moves underway towards greater transparency in that burgeoning and overlapping field could eventually help reduce some of these problems. Somewhat ironically, they are likely to persist in the world of international commercial arbitration despite the growing concerns of users themselves, including a new wave of Asian companies that have started to resolve commercial disputes through international arbitration.

7. A Weather Map for International Arbitration: Mainly Sunny, Some Cloud, Possible Thunderstorms

Abstract: This Chapter helps anticipate the future trajectory of international arbitration by first revisiting how Anglo-American influence over the 1970s and 1980s contributed to the formalisation of international arbitration, generating costs and delays. Over the 1950s and 1960s, many cases involved investment disputes with host states, yet the normative paradigm was more global and informal. Despite arbitration’s ‘move East’ over the last 20 years, formalisation of international commercial arbitration persists, linked to information asymmetries. Investment treaty arbitration may exert counterbalancing influence, through its greater transparency. Yet it risks promoting even greater formalization, and there are serious doubts about its long-term viability, including in Asia. The main theoretical underpinning for international commercial arbitration has settled into a variant of ‘neoclassical’ theory in contract law, with some recent arguments for even greater formalisation, but investment treaty arbitration opens the possibility for more theoretical diversity and therefore debate about international arbitration’s foundations and future.

8. Confidentiality versus Transparency in International Commercial and Investor-State Arbitration in Australia and Japan

Abstract: Confidentiality is still widely seen as significant advantage of international commercial arbitration over cross-border litigation, especially in Asia. This is evident in most arbitral rules, and many arbitration statutes – including eventually in Australia. Yet no confidentiality is provided in Japan’s later adoption of the Model Law, although parties mostly choose local arbitral institutions so opt-in to their Rules, which have somewhat expanded confidentiality obligations since 2014. Another recent complication is growing public concern over arbitration procedures through (especially treaty-based) investor-state dispute settlement, particularly in Australia. Statutory amendments in 2018 reverse automatic confidentiality for Australia-seated arbitrations applying the 2014 UNCITRAL Transparency Rules. Yet such concerns may impede enactment of provisions extending confidentiality to court proceedings involving commercial arbitrations. Confidentiality could allow more informal and efficient arbitrations, but exacerbate information asymetries allowing service providers increase costs. Greater transparency is more justified (and increasingly found) in investment arbitration, implicating greater public interests.

Part III: International Investment Treaties and Investor-State Arbitration

9. Throwing the Baby with the Bathwater: Australia’s 2011-13 Policy Against Treaty-Based Investor-State Arbitration

Abstract: Treaties allowing investors to initiate arbitration claims directly against host states, for illegally interfering with cross-border investments, are increasingly common in Asia. Yet a centre-left government declared over 2011-2013 that Australia would no longer include such protections in future treaties. This risked undermining the entire investor-state arbitration system, and major then-pending treaty negotiations by Australia with Japan, China and Korea, significantly reducing FDI flows and having other adverse effects. This Chapter criticises the underlying cost-benefit analysis conducted in 2010 by an Australian government think-tank. The arguments and evidence are more nuanced, justifying more tailored and moderate changes for future treaties. Yet an interest-group analysis suggests surprisingly few public or private constituencies preferring such reforms, and the problem could spread around Asia. A sharp shift would indicate a more idiosyncratic, nation-centric rather than global approach, but with somewhat mixed effects regarding formalisation of the overall international arbitration field.

10. Investor-State Arbitration: Why Not in the Japan-Australia Economic Partnership Agreement?

Abstract: Japan signed a bilateral Free Trade Agreement with Australia in 2014, notably omitting investor-state dispute settlement (ISDS). Japan seems not to have offered enough to secure this extra protection for its firms’ investments in Australia, for the latter to risk domestic political controversy. Japan probably also hoped to obtain the protection through a mega-regional treaty– in fact achieved from 2019. The omission should also be understood in the wider context of Japan’s investment treaty practice. That was initially belated and flexible, but has become more pro-active since 2013. Japan’s practice overall presents another example of ‘localised globalism’. Japan’s treaties have also become more formalised as they have adopted more consistently US-style drafting since 2002 (like Australia). This greater detail may perversely result in to more costs and delays if and when the mostly ISDS-backed treaty provisions are invoked. Yet there are few claims formally pursued by Japanese investors, and none yet filed against Japan.

11. Investor-State Arbitration Policy and Practice in Australia

Abstract: Australia has investment treaties in force with 32 economies, all with investor-state dispute settlement (ISDS), except regarding New Zealand and the USA. Yet ISDS only started being debated politically as Australia signed its FTA with the US in 2004, and particularly around 2011 when a mega-regional treaty was being negotiated and Philip Morris Asia brought the first ISDS claim against Australia over tobacco controls. A centre-left Government over 2011-13 eschewed ISDS for future treaties, but centre-right governments reverted to allowing it on a case-by-case assessment, and the Greens’ ‘anti-ISDS’ Bill went nowhere. The debate belatedly raised awareness of how Australia’s domestic law provides some lesser investment protections than under international law. More bipartisanship has been emerging since 2019. Australia may therefore keep reverting to a more globalised approach towards ISDS, while continuing to target reforms that can reduce formalisation, particularly in the form of ISDS-related costs and delays.

12: Beyond the Pandemic: Towards More Global and Informal Approaches to International Arbitration

Abstract: Overall, this Book traces the trajectory of both international commercial arbitration and investor-state arbitration, especially since the 1990s, focusing on Australia and Japan in regional and global contexts. It demonstrates the usefulness of the dual themes or vectors of ‘in/formalisation’ and ‘glocalisation’ for understanding the past and for assessing future developments in international arbitration. Part I of this Chapter considers the longer-term impact of the COVID-19 pandemic from 2020. It speculates about the future for the observed proliferation of webinars, and the pandemic’s push towards virtual hearings or e-arbitrations, as well as further diversification of arbitral seats – including potentially for Australia and Japan. Part II ends more normatively with recommendations for more productive cooperation, bilaterally but also regionally, among academics, lawyers and arbitrators, judges and governments. It identifies key Asia-Pacific organisations and opportunities for promoting a global and somewhat more informal approach to international arbitration into the 21st century.

Guest Blog by Michael Hwang: Foreword, for Nottage, Ali, Jetin & Teramura (eds) New Frontiers in Asia-Pacific International Arbitration and Dispute Resolution (Wolters Kluwer, end-2020)

Written by: Dr Michael Hwang SC

This is a book which looks forward to possible future outcomes in the development of cross-border dispute resolution in the Asia-Pacific region, focusing on major economies in East and South Asia, as well as neighbouring countries such as Australia which are closely linked economically and geographically. The principal questions posed are: (a) whether international commercial arbitration can improve its attractiveness through law reform and case law development, overcoming criticisms about cost and delay; (b) whether growing concerns about ISDS issues in current investment treaties will lead to Asian states to become rule-makers in international investment law, rather than continue as rule takers; (c) whether innovations in existing or new fields can assist the Asia-Pacific region to develop international dispute settlement mechanisms further. It is therefore an exciting book that challenges existing procedures and frameworks for cross-border dispute resolution both in commercial as well as in treaty arbitration, rather than being another book which is simply descriptive of the existing mechanisms (valuable as such books might be).

There are clearly catalysts for change within the existing framework of dispute resolution in Asia, and several could be real game changers, like China’s Belt and Road initiative (examined in detail in Chapter 7) and the Singapore Convention on Mediation (Chapter 14). The team of writers specially assembled for this project have impressive credentials, led by the prolific and perceptive Professor Luke Nottage, and supported by several authors whom I have the privilege of knowing personally, and whose work I can wholeheartedly recommend as being worth reading, both for their knowledge and experience, but particularly for their insight.

The various authors are not simply writing about existing practices and procedures in the region, but are examining the situation on the ground with a critical eye, and making informed observations about where changes are needed and educated guesses about the chances of reforms being successful, and the consequences if they are not. It has been written in the time of COVID-19 and accordingly points out the special challenges to the field of international dispute resolution in this unprecedented situation. Those include whether lawyers can adapt to new technological solutions to overcome the difficulties of conducting virtual hearings, and whether players in the field of dispute resolution can continue to afford the time and cost of long drawn-out forensic procedures to resolve the inevitable disputes that have been caused by the pandemic, or whether there will be added impetus to use mediation in place of confrontation. There are also protectionist issues affecting the future of maintaining the rule of law in settling cross-border commercial disputes. Local judges might be influenced by the fact that certain apparent breaches of contract have been caused by events beyond the control of their local businesspeople, and the law may become stretched or even disregarded for what may be perceived to be a fairer commercial solution, when performance of a contractual obligation has been rendered impossible in the light of conditions brought on by the pandemic. Such situations could lead possibly to foreign judgments and/or foreign arbitration awards not being recognised or enforced, relying on an overly liberal interpretation of the doctrine of public policy to justify such non-enforcement.

There are also challenges arising from internal social and political challenges in certain Asian jurisdictions such as Malaysia and Hong Kong, where rule of law issues may affect investor confidence in those territories. This mistrust of the application of the rule of law will likely also lead to an international lack of confidence in the reliability of the dispute resolution system of the countries concerned, and Hong Kong in particular may find it difficult to maintain the hitherto proud record of independence and efficiency of its courts and arbitral tribunals. And there are legacy challenges which were there in several Asian countries before Covid-19 and remain as challenges to be overcome, without which their attractiveness as international investment and commercial centres will surely decrease if the legacy problems are not resolved.

The best introduction to this book is actually to start from the succinct final chapter (Chapter 15) jointly authored by Professors Anselmo Reyes, Shahla Ali and Nobumichi Teramura. This gives an excellent summary of the aims and contents of the 14 preceding chapters, and will highlight to readers which chapters might be of particular interest and therefore help determine in which order to read which chapters, although all 14 are worth reading.
I therefore congratulate Professors Nottage, Ali, Jetin and Teramura and their team of other authors on producing a timely and lively study. It will certainly stimulate ideas and discussion among its readers and perhaps also contribute to some positive changes in the jurisdictions which are the subject of this critical study.

New Frontiers in Asia-Pacific International Arbitration and Dispute Resolution (Luke Nottage, Shahla Ali, Bruno Jetin & Nobumichi Teramura, eds., Wolters Kluwer, end-2020): Abstracts, Keywords, Bios & Webinar

Below are summaries and author bios of the 15 chapters in our forthcoming book, building on a joint HKU/USydney project throughout 2019 background and draft bios here), with a Foreword by Michael Hwang SC here. Please consider registering or telling your networks about a free Webinar with the co-editors, some authors and others, scheduled for Tuesday 4 August 2020 5-6pm (Sydney time): https://law-events.sydney.edu.au/talkevents/beyond-the-pandemic-new-frontiers-in-asia-pacific-international-dispute-resolution

  1. Introduction: New Frontiers in Asia-Pacific Trade, Investment and International Business Dispute Resolution –Luke Nottage & Bruno Jetin

Abstract: Asia-Pacific trade and investment flows have burgeoned over recent decades, albeit impacted by China-US trade tensions and especially the COVID-19 pandemic (§1.02). International investment agreements have proliferated to liberalise and protect investments (§1.03), mostly adding the option of investor-state dispute settlement (ISDS). Asia-related ISDS cases have also started to grow, albeit somewhat belatedly (§1.04), complementing a more longstanding upward trend in international commercial arbitration (ICA) cases involving Asian parties filed in the region as well as the traditional Western centres (§1.05). The eastward shift in international dispute resolution has already involved initiatives to improve not just support for ICA and ISDS arbitrations, but also to develop alternatives such as international commercial courts and mediation. Core arguments from ensuing chapters (§1.06) cover the main existing venues for international dispute resolution in Asia (China, Hong Kong and Singapore) but also some emerging contenders (Japan, Malaysia, India and Australia). Overall (§1.07), can ICA venues improve their attractiveness through law reforms, case law development and other measures, despite growing concerns about costs and delays? Will some emerging concerns about ISDS prompt Asia-Pacific states to become more active “rule makers” in international investment law? How might these issues be affected by the COVID-19 pandemic?

Keywords: international trade, foreign direct investment (FDI), free trade agreements (FTAs), international investment treaties, international economic law, arbitration, mediation, international commercial courts, Asia, COVID-1

2. An International Commercial Court for Australia: An Idea Worth Taking to Market – Marilyn Warren & Clyde Croft

The time has come for Australia to join others in establishing a new “International Commercial Court” as another international dispute resolution option especially for the Asia-Pacific region. This chapter outlines the existing international legislative architecture (the 1958 NYC for international arbitration, inspiring the 2005 Hague Choice of Court Convention), and the models provided by London’s venerable Commercial Court and since 2015 the Singapore International Commercial Court (including the latter’s composition, jurisdiction, procedure and confidentiality provisions, appeals, and cross-border enforceability of its judgements – facilitated by Singapore ratifying the 2005 Hague Convention). It uses these topics to frame the proposal for an Australian International Commercial Court, including the possibility of allowing its litigants to exclude the application of the Australian Consumer Law (which otherwise may apply also to many business-to-business disputes). It concludes that the COVID-19 pandemic has bolstered the case for such a new Court, by minimising the obstacle of Australia’s physical distance as litigation has had to move rapidly online, and because the pandemic’s economic dislocation will undoubtedly lead to more cross-border disputes.

Keywords: international arbitration, international litigation, international commercial courts, Australia, Singapore, United Kingdom, COVID-13.

3. New Frontiers for International Commercial Arbitration in Australia: Beyond the ‘Lucky Country’ – Albert Monichino & Nobumichi Teramura

Abstract: Australia is not a lucky country in the context of international commercial arbitration (ICA) due to its geographical isolation. However, the problem of remoteness has luckily been ameliorated since the COVID-19 pandemic, thanks to the dramatic spread of video-conferencing technologies in arbitrations and even in some court proceedings. ‘Luck’ can no longer excuse Australia for running behind other regional competitors. Analysing recent cases in Australian judiciary, this chapter puts forward seven proposals for legislative reform that may be useful for Australia to attract more ICA cases on its shores: establishing an indemnity costs principle for failed challenges in ICA matters, notably regarding arbitral awards; enabling Australian courts to issue subpoenas to support foreign arbitrations; clarifying choice of law rules on the existence and scope of arbitration agreements; limiting or excluding the application of Australian Consumer Law to cross-border business-to-business transactions; defining ‘Australian Law’; provisions to catch up with recent arbitration innovations; clarifying arbitrability of trust disputes; and centralising judicial power for ICA appeals. Implementing those proposals will pave the way for Australia to become an attractive arbitration hub in the Asia-Pacific region.

Keywords: Australia, international commercial arbitration, International Arbitration Act, Commercial Arbitration Act, law reform, COVID-19, e-proceedings. 

4. Confidentiality and Transparency in International Arbitration: Asia-Pacific Tensions and Expectations – Luke Nottage

Abstract: Confidentiality is considered a significant advantage for international commercial arbitration over cross-border litigation, as seen in rules of most arbitral institutions. Automatic (opt-out) confidentiality is also now found in many national laws, including statutory add-ons to the UNCITRAL Model Law and/or through case law for example in New Zealand, then Hong Kong, Singapore, Malaysia, and eventually Australia. Yet there remain variations in the timing of these developments as well as the scope and procedures associated with exceptions. There is also no confidentiality provided in Japan’s later Model Law adoption, although parties mostly choose the JCAA so opt-in to its Rules, which have gradually extended confidentiality obligations. Another complication is growing public concern over arbitration procedures through investor-state dispute settlement (ISDS), particularly in Australia since an ultimately unsuccessful treaty claim by Philip Morris. Statutory amendments in 2018 reverse automatic confidentiality for Australia-seated ISDS arbitrations applying the 2014 UNCITRAL Rules on Transparency. Concerns over ISDS may even impede Australia enacting provisions for confidentiality of arbitration-related court proceedings. These provisions could not be revised recently in New Zealand, against the backdrop of its new government’s anti-ISDS stance. This chapter elaborates such expectations and tensions regarding the double-edged sword of confidentiality in international arbitration, focusing on Australia and Japan in regional context.

Keywords: international commercial arbitration, investor-state dispute settlement (ISDS), confidentiality, transparency, Australia, Japan, Asia, costs, delays, law reform

5. Novel and Noteworthy Aspects of Australia’s Recent Investment Agreements and ISDS Policy: The CPTPP, Hong Kong, Indonesia and Mauritius Transparency Treaties – Ana Ubilava & Luke Nottage

Abstract: This chapter updates on recent investment treaty practice by Australia, which attracted regional and global attention when a centre-left government over 2011-13 declared Australia would no longer agree to ISDS provisions when negotiating further treaties. The chapter compares substantive commitments and ISDS provisions in Australia’s treaties signed with Indonesia and Hong Kong in 2019 (IA-CEPA and AHKIA) compared especially with the mega-regional CPTPP signed in 2018. The new bilateral treaties remain quite heavily influenced by US-style drafting, epitomised by the CPTPP. The chapter then elaborates on the costs and delays associated with ISA. It examines empirical studies, then relevant provisions of the three new treaties, including an innovative investor-state mediation provision in IA-CEPA probably proposed by Indonesia. The chapter also considers transparency of proceedings and outcomes. It again examines mainly CPTPP, IA-CEPA and AHKIA, but also a parliamentary inquiry into Australia ratifying the Mauritius Convention. This seeks to retrofit extensive transparency provisions on pre-2014 treaties between Australia and other states that might also accede to that framework Convention. More bipartisanship may be emerging in domestic politics regarding international investment treaty-marking, so Australia is now better placed to play a more active role especially in the Asia-Pacific region.

Keywords: Investment treaties, Investor-State Dispute Settlement (ISDS), Australia, Hong Kong, Indonesia, mediation, arbitration, transparency, costs, delay

6. New Frontiers in Hong Kong’s Resolution of ‘One Belt One Road’ International Commercial and Investor-State Disputes – Shahla Ali

Abstract: Given the rapid increase in Chinese outward foreign direct investment since the start of the ‘One Belt One Road’ Initiative (OBOR), international commercial and investor state disputes involving Chinese and Hong Kong investors will likely multiply. Given the significance of Hong Kong as a fulcrum for OBOR project financing and logistics, understanding Hong Kong’s approach to the resolution of OBOR disputes will offer a window into the region’s new frontiers in commercial and investor-state dispute resolution.

Keywords: international commercial arbitration, mediation, investment treaties, investor-state dispute settlement (ISDS), Hong Kong, China, Belt and Road

7. Harmonising the Public Policy Exception for International Commercial Arbitration along the ‘Belt and Road’ – Gu Weixia

Abstract: In context of a rising volume of cross-border transactions generated by the BRI, this chapter argues that a robust legal framework for dispute resolution is required to forge investor confidence and enable BRI’s integral goal of economic integration. In light of the substantial levels of harmonization among arbitration laws, arbitration is arguably constitutes the primary vehicle for international commercial dispute resolution in an economically integrated Asia under the BRI. Against this backdrop, this chapter argues that the BRI provides a unique opportunity to contemplate the possibility of regional harmonization, as within the Asian economies along the BRI, of the “public policy” exception to arbitral award enforcement. Such an arbitration initiative in Asia, in which China is anticipated to take a pro-active role, holds much potential to project renewed momentum on China as an engine of not only economic power, but also “soft power” transformation in pioneering international legal norms.

Keywords: international commercial arbitration, New York Convention, UNCITRAL Model Law, China, Belt and Road

8. Recent Developments in China in Cross-Border Dispute Resolution: Judicial Reforms in the Shadow of Political Conformity – Vivienne Bath

Abstract: The rapid expansion of China’s international trade and investment in the 21st century has necessarily brought with it the need for modern and effective cross-border dispute resolution mechanisms.  At the international level, China is playing an active role in the review of investor-state dispute settlement in UNCITRAL Working Group III and participating in dispute resolution developments in the WTO.  Domestically, the Supreme People’s Court has been working to set up new institutions (the China International Commercial Court), improve mechanisms for the review and enforcement of arbitral awards and encourage mediation, both domestically and internationally. Much of this activity has been generated and spurred on by the Belt and Road Initiative (BRI) and the anticipated associated increase in cross-border disputes arising from the many commercial transactions involved in the BRI. Its execution also reflects the desire to encourage and expand the international use of Chinese law and build up China as a centre for international dispute resolution. At the same time, however, the Chinese Communist Party is tightening its ideological and administrative control over the courts and judicial system.  This chapter examines and discusses the implications of these recent developments.

Keywords:  China, arbitration, mediation, cross-border dispute resolution, one-stop diversified dispute resolution, investor-state dispute settlement (ISDS), online arbitration, communist party (CCP), Supreme People’s Court (SPC), China International Commercial Court (CICC)

9. Malaysia’s Involvement in International Business Dispute Resolution – A Vijayalakshmi Venugopal

Abstract: Malaysia has had some early but comparatively limited involvement in formally resolving trade disputes, but more engagement in investor-state dispute resolution – including as home state for investors bringing claims, not just as host state respondent. Some companies in Malaysia and its main international arbitration centre have also been involved in domain name dispute resolution. That centre and some other organisations have also long promoted various types of Alternative Dispute Resolution (ADR), with renewed efforts in recent years to develop new procedures and attract more international commercial arbitrations. Malaysia has also been quite active in negotiating free trade agreements (FTAs). This creates a solid platform to comtinuing becoming more of a rule maker in international investment law as well as a significant regional hub for international business dispute resolution services, although Malaysia still has a way to go in both respects compared to larger Asia-Pacific economies and/or more established hubs.

Keywords: Malaysia, World Trade Organization (WTO), free trade agreements (FTAs), international investment treaties, investor-state dispute settlement (ISDS), domain name dispute resolution, settlement

10. Disruption as a Catalyst for International Dispute Services in Japan: No Longer Business as Usual? – James Claxton, Luke Nottage & Nobumichi Teramura

Abstract: 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, especially for international commercial arbitration but also for investor-state arbitration. 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, particularly in the Asia-Pacific region. This chapter therefore focuses mainly on current attempts to promote existing and new international arbitration centres in Japan as well as the recent establishment of the Japan International Mediation Center – Kyoto. It locates such developments in the context of intensifying competition from other regional venues for dispute resolution services, but also the challenges and potential opportunities created by the COVID-19 pandemic since 2020.

Keywords: international commercial arbitration, investor-state dispute settlement (ISDS), mediation, Japan, culture, COVID-19

11. Litigating, Arbitrating and Mediating Japan-Korea Trade and Investment Tensions – James Claxton, Luke Nottage & Brett Williams

Abstract: In July 2019, Japan introduced measures tightening export restrictions to South Korea on three chemicals critical to the manufacture of consumer electronics. The restrictions prompted an animated response by the Korean government, including World Trade Organization (WTO) consultations and threats to terminate an intelligence-sharing agreement. The controversy also filtered down to the public with boycotts of Japanese products in Korea. Tension between the states has been unusually high since 2018 when the Korean Supreme Court affirmed a judgment against Japanese companies accused of forcing Korean nationals to labour in factories during Japan’s colonial rule. Japan argued that these claims were precluded by a 1965 treaty normalizing post-war relations. While Japan claims that its trade restrictions were not motivated by the judgment, the disputes have contributed to the worst breakdown in cross-border relations in five decades. This chapter evaluates Korea’s trade claims against Japan, means of resolving them, and challenges faced in the WTO dispute settlement system. Alternatives or additions to WTO dispute settlement procedures are considered including claims before the International Court of Justice, interstate arbitration, and investor-state dispute settlement. Mediation offers an effective means to facilitate negotiations and centralise the trade and treaty disputes in a single forum.

Keywords: international trade law, World Trade Organization (WTO), exports, international investment treaties, investor-state dispute settlement (ISDS), arbitration, mediation, Japan, Korea

12. Indian Investment Treaty and Arbitration Practice: Qualitatively and Quantitatively Assessing Recent Developments– Jaivir Singh

Abstract: This chapter provides a perspective of investment treaty practice from India, which lies at the periphery of what is traditionally associated with the Asia Pacific region. While on the periphery, India has signed investment and trade treaties with many Asia Pacific countries and is also involved in disputes with them. India had in fact endorsed a number of investment treaties with many countries around the world but has recently gone on to denounce all of them and seeks to renegotiate fresh treaties using a template provided by a new model treaty that is oriented towards privileging state rights. The chapter begins by a qualitative review of cases that have been instituted against India by investors, followed by a discussion of the many reactions that this has elicited – a new model treaty, subsequent denunciation of treaties, signing of new treaties and  attempting changes in the domestic law as a device to protect foreign investors.  The next half of the chapter assesses these outcomes by looking at econometric evidence pointing to a positive impact of investment treaties signed by India on foreign investment inflows into India, going on to argue that the manner in which state rights have been enhanced in the new treaties – drawing inspiration from trade law – demonstrably curbs investment.

Keywords: foreign direct investment (FDI), international investment treaties, arbitration, econometrics, law reform, India, Australia

13. FTA Dispute Resolution to Protect Health Can Free Trade Agreements and their Dispute Resolution Mechanisms Help Protect the Environment and Public Health? The CPTTP, MARPOL73/78 and COVID-19 – Jiaxiang Hu & Jeanne Huang

Abstract: Preventing or managing a global pandemic such as COVID-19 requires states to strictly comply with the International Health Regulations 2005 (IHR). However, the IHR lacks a strong enforcement mechanism, like many multilateral environmental protection agreements. Over the past fifteen years, several such conventions have been incorporated into free trade agreements (FTAs) to enhance State compliance and therefore promote environmental protection. A typical example is the International Convention for the Prevention of Pollution from Ships and its Protocols (MARPOL 73/78). Vessels, like viruses, are globally mobile. Vessel-sourced pollution also mirrors human-carried viral infection, because the locations of potential harm are unpredictable and widespread. This Chapter examines first whether FTAs (especially mega-regional FTAs) can effectively encourage States to comply with MARPOL 73/78. Through this analysis, it generates implications regarding whether the IHR regime could also rely on new or renegotiated FTAs, or be reformed directly, to enhance state compliance with public health initiatives.

Keywords: free trade agreements (FTAs), environmental protection, public health, COVID-19, WHO, MARPOL, dispute resolution, arbitration, Asia-Pacific

14. Promoting International Mediation through the Singapore Convention – S.I. Strong

Abstract: This chapter seeks to determine whether and what extent the recent promulgation of the United Nations Convention on International Settlement Agreements Resulting from Mediation will promote the use of mediation within the international legal and business communities. The discussion analyses the issue from a unique interdisciplinary perspective, applying concepts from dispute system design, default theory, psychology, and law and economics to both identify and resolve potential problems with the convention. The chapter also includes data from a recent empirical study conducted by the author on the use of mediation in international commercial disputes. Through this discussion, the chapter hopes to identify how individuals and institutions can complement the effect of the convention to support the development of international commercial mediation in the coming years.

Keywords: International mediation, treaty-making, law reform, Singapore Convention, interdisciplinary perspectives

15. Expanding Asia-Pacific Frontiers for International Dispute Resolution: Conclusions and Recommendations – Nobumichi Teramura, Shahla Ali & Anselmo Reyes

Abstract: Asia’s emergence as a global economic powerhouse has corresponded with a prolonged upward trend in international commercial arbitration (ICA) cases involving Asian parties, as well as a belated expansion of investor-state dispute settlement (ISDS) arbitrations involving Asian states or investors. Further accelerating the eastward shift in international dispute resolution, various initiatives to improve support for ICA and ISDS have been taken and alternatives (such as international commercial courts and international commercial mediation) have been promoted. This book aimed to examine significant ‘new frontiers’ for Asia-Pacific cross-border business dispute resolution, focusing on major economies in East and South Asia and countries (such as Australia) that are closely linked economically and geographically. The principal questions posed were: (1) whether existing and new venues for ICA could improve their attractiveness through law reform, case law development, and other measures, despite worries about cost and delay; (2) whether emerging concerns about ISDS-backed investment treaty commitments would prompt Asian states to become rule-makers in international investment law, rather than be mere rule-takers; and (3) whether innovations in existing or new fields might assist the Asia-Pacific region to develop international dispute settlement further. The foregoing chapters have discussed these broad themes, focusing on developments in Australia, Japan, Hong Kong, China, India and Malaysia, while paying attention to broader regional initiatives (such as China’s Belt and Road Initiative (BRI)) and recent international instruments (such as the Singapore Convention on Mediation, in force from 12 September 2020). This concluding chapter highlights key findings in the individual chapters and identifies some challenges for the post-COVID-19 era.

Keywords: international trade, foreign direct investment (FDI), free trade agreements (FTAs), international investment treaties, international economic law, arbitration, mediation, international commercial courts, Asia, COVID-19

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BIOS OF EDITORS AND CONTRIBUTORS

Dr Shahla Ali is Professor and Associate Dean (International) and Deputy Director of the LLM in Arbitration and Dispute Resolution at the Faculty of Law of the University of Hong Kong. Her research and practice center on questions of governance, development and the resolution of cross-border disputes in the Asia-Pacific region. Shahla is the author of Court Mediation Reform (Edward Elgar 2018), Governing Disasters: Engaging Local Populations in Humanitarian Relief (Cambridge University Press 2016), Consumer Financial Dispute Resolution in a Comparative Context (Cambridge University Press 2013), and Resolving Disputes in the Asia Pacific Region (Routledge 2010) and she writes for law journals in the area of comparative ADR. She has consulted with USAID, IFC/World Bank and the United Nations on issues pertaining to access to justice, peace process negotiation training and land use conflict resolution. She serves as a bilingual arbitrator (English/Chinese) with CIETAC, HKIAC (ADNDRC) and SIAC and has served on the IBA Drafting Committee for Investor-State Mediation Rules, the DOJ Mediation Regulatory Committee, the UN Mediation Roster and the FDRC Appointments Committee. Prior to HKU, she worked as an international trade attorney with Baker & McKenzie in its San Francisco office. She received her JD and PhD from UC Berkeley in Jurisprudence and Social Policy and BA from Stanford University.

Dr Bruno Jetin is Associate Professor and Director of the Institute of Asian Studies, University of Brunei Darussalam (UBD). His current work focuses on the ASEAN Economic Community, the One Belt One Road initiative, Chinese investments in Southeast Asia, and the impact of income distribution on growth in Asia. He is also an expert in the automobile industry. Before joining UBD, he was a researcher at the Institute for Research on Contemporary Southeast Asia (IRASEC, CNRS-MAEE, Bangkok) and Associate Professor at the University of Paris 13 Sorbonne Paris Cité, where he obtained his PhD in economics and was Deputy Director of the Research Center in Economics. He was also involved in promoting taxes on financial transactions as alternative sources for financing development as well as innovative regulation of global finance. Bruno’s recent publications include ASEAN Economic Community: A model for Asia-wide Integration? (Palgrave McMillan 2016, edited with Mia Mikic); Global Automobile Demand (Palgrave McMillan 2015, two edited volumes); International Investment Policy for Small States: The Case of Brunei, in International Investment Treaties and Arbitration Across Asia (Julien Chaisse and Luke Nottage eds., Brill 2018, with Julien Chaisse); One Belt-One Road Initiative and ASEAN Connectivity, in  China’s Global Rebalancing and the New Silk Road (B.R. Deepak ed., Springer 2018).

Dr Luke Nottage is Professor of Comparative and Transnational Business Law at the University of Sydney Law School, founding Co-Director of the Australian Network for Japanese Law (ANJeL) and Special Counsel at Williams Trade Law. He specialises in comparative and transnational business law (especially arbitration and product safety law), with a particular interest in Japan and the Asia-Pacific. Luke has or had executive roles in the Australia-Japan Society (NSW), the Law Council of Australia’s International Law Section, the Australian Centre for International Commercial Arbitration, and the Asia-Pacific Forum for International Arbitration. Luke is also a Rules committee member of the Australian Centre for International Arbitration (ACICA) and listed on the Panel of Arbitrators for the AIAC (formerly KLRCA), BAC, JCAA, KCAB, NZIAC, SCIA and TAI. Luke serves on Working Group 6 (examining arbitrator neutrality) for the Academic Forum on ISDS. He qualified as a lawyer in New Zealand in 1994 and in New South Wales in 2001, and has consulted for law firms and organisations world-wide (including ASEAN, the EC, OECD, UNCTAD and the Japanese government). His 16 other books include International Arbitration in Australia (Federation Press, 2010, eds) and International Investment Treaties and Arbitration Across Asia (Brill, 2018, eds). He is or has been Visiting Professor teaching and researching at universities throughout Asia, Oceania, Europe and North America.

Dr Nobumichi Teramura is an Associate at the Centre for Asian and Pacific Law at the University of Sydney (CAPLUS) and Legal Consultant at Bun & Associates (Cambodia). He is the author of Ex Aequo et Bono as a Response to the Over-judicialisation of International Commercial Arbitration (Wolters Kluwer 2020), based on his doctoral thesis from the University of New South Wales that received a PhD Excellence Award when completed in 2018. Nobu also published recently in the Asian International Arbitration Journal (2019) and ASA Bulletin (2020), and has co-authored a chapter comparing Australia forthcoming in Larry di Matteo et al (eds) The Cambridge Handbook of Judicial Control of Arbitral Awards (Cambridge University Press, 2020). Specialising in commercial law, his current research interests include legal integration in Asia and legal development for South East Asian nations severely affected by colonisation and the Cold War, including Cambodia, Vietnam, Laos and Myanmar. He has teaching and research experience in Asia-Pacific jurisdictions including the Philippines, Australia, Japan, Taiwan, Hong Kong, Cambodia and Brunei.

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Vivienne Bath is Professor of Chinese and International Business Law at Sydney Law School and Director of the Centre for Asian and Pacific Law at the University of Sydney (CAPLUS). Her teaching and research interests are in international business and economic law, private international law and Chinese law. She has first class honours in Chinese and in law from the Australian National University, and an LLM from Harvard Law School. She has also studied in China and Germany and has extensive professional experience in Sydney, New York and Hong Kong, specialising in international commercial law, with a focus on foreign investment and commercial transactions in China and the Asian region. Representative publications include: Vivienne Bath & Gabriël Moëns, Law of International Business in Australasia (2nd ed., Federation Press 2019); Overlapping Jurisdiction and the Resolution of Disputes before Chinese and Foreign Courts, 17 Yearbook of International Private Law 111-150 (2015-2016) and The South and Alternative Models of Trade and Investment Regulation – Chinese Outbound Investment and Approaches to International Investment Agreements, in Recalibrating International Investment Law: Global South Initiatives (Fabio Morosini & Michelle Ratton Sanchez Badin eds., Cambridge University Press 2018).

James Claxton is Professor of Law at Rikkyo University in Tokyo and Adjunct Faculty for the White & Case International Arbitration LL.M at University of Miami Law School, as well as an independent arbitrator and mediator. He teaches and researches in the fields of international investment law, business and human rights, and international dispute settlement. Previously, he was legal counsel at the International Centre for Settlement of Investment Disputes (ICSID) in Washington and attorney in the international arbitration practices of law firms in Paris. James regularly advises dispute resolution institutions in Asia and is a member of various working groups devoted to improving international dispute resolution systems.

The Hon Clyde Croft AM SC is Professor of Law at Monash University in Melbourne, as well as a commercial arbitrator and mediator. Until retiring in 2019 he was the judge in charge of the Arbitration List, the Taxation List, and a General Commercial List in the Commercial Court of the Supreme Court of Victoria. Prior to his Court appointment in 2009, he practiced extensively in property and commercial law and was an arbitrator and mediator in property, construction and general commercial disputes, domestically and internationally. Dr Croft was appointed Senior Counsel in 2000 and holds the degrees of BEc, LLB and LLM from Monash University, and PhD from the University of Cambridge. He has chaired the Expert Advisory Committee of the UNCITRAL National Co-ordination Committee of Australia (UNCCA) to support UNCITRAL Working Group II (Disputes) since May 2018. He represented the Asia Pacific Regional Arbitration Group (APRAG) at UNCITRAL from 2005 to 2010, revising the UNCITRAL Model Law and Arbitration Rules, and later co-authored A Guide to the UNCITRAL Arbitration Rules (Cambridge University Press, 2013). Dr Croft is a Life Fellow of the Australian Centre for International Commercial Arbitration (ACICA) and of the Resolution Institute (incorporating the Institute of Arbitrators and Mediators Australia), a Fellow of the Arbitrators’ and Mediators’ Institute of New Zealand (AMINZ), the Chartered Institute of Arbitrators, the Australian Academy of Law and UNCCA.

Weixia Gu is Associate Professor at the University of Hong Kong Faculty of Law and Co-Chair of the American Society of International Law Asia-Pacific Interest Group. Her research focuses on international arbitration, dispute resolution, private international law and cross-border legal issues. She is the author, editor, and co-editor of 3 books, including The Developing World of Arbitration in the Asia Pacific (Hart, 2018) and Arbitration in China: Regulation of Arbitration Agreements and Practical Issues (Sweet & Maxwell, 2012). She is the author of more than 50 journal articles and her recent works appear in leading international and comparative law journals, such as the American Journal of Comparative Law, Vanderbilt Journal of Transnational Law, Cornell International Law Journal, among others. Her scholarship has been cited by the US Federal Court 11th Circuit, Texas Supreme Court, Hong Kong High Court, Singapore Law Gazette, and China Council for the Promotion of International Trade. Dr. Gu is an elected Member of the International Academy of Comparative Law, and sits on the governing councils of Hong Kong Institute of Arbitrators and China Society of Private International Law. She also serves as a panel-listed arbitrator in a number of leading arbitration institutions in China and Asia. Before joining the Faculty, she was selected as an Honorary Young Fellow to the New York University Law School in association with her Fulbright Award from the US Department of State.

Dr Hu Jiaxiang is Professor at the KoGuan Law School at the Shanghai Jiao Tong University. His research areas include public international law, international economic law and WTO law. He holds the degrees of BA and MA from Hangzhou University, MPhil in Law from Zhejiang University and PhD from the University of Edinburgh. In the past three decades, Professor Hu has published more than ten books and one hundred articles both in Chinese and English. He has been awarded various honours by the Ministry of Education of China and Shanghai Municipality for his excellence in teaching, and is currently leading several national research programmes.

Dr Jeanne Huang is Associate Professor at the University of Sydney Law School. She was previously Senior Lecturer at the University of New South Wales, and Associate Professor / Associate Dean at Shanghai University of International Business and Economics School of Law in China. She obtained her Doctor of Juridical Science (SJD) degree from Duke University School of Law in 2010. She was a Foreign Research Fellow at the Max Planck Institute for Comparative and International Private Law in Hamburg, and also had research experience at The Hague Academy of International Law, and the Paris-based Academy of International Arbitration Law. Jeanne teaches and researches in the fields of private international law, e-commerce regulation, international investment law and dispute resolution (international litigation and arbitration). She has published four books including Interregional Recognition and Enforcement of Civil and Commercial Judgments: Lessons for China from US and EU Laws (Hart, 2014) and her articles have appeared in many peer-reviewed law journals, with extensive competitive funding include from the China National Social Science Fund. In 2015, she won the First Prize of Excellent Scholarship awarded by the China Society of Private International Law and the Nomination Award of the Dong Biwu Prize for Youth Research in Law. Jeanne serves as an arbitrator at the Hong Kong International Arbitration Center, Shanghai International Economic and Trade Arbitration Commission (Shanghai International Arbitration Center), Nanjing Arbitration Commission and Xi’an Arbitration Commission. She also serves as expert witness on issues of private international law and Chinese law in courts in Australia and the US.

Dr Michael Hwang SC is a Singapore-based international arbitrator. He was the Deputy Chief Justice of the Dubai International Financial Centre (DIFC) Courts upon its establishment in 2005, and subsequently appointed Chief Justice in 2010, retiring at the end of 2018. Throughout that period, he has continued practising as an international arbitrator in commercial and treaty arbitrations. He has written two volumes of essays on international arbitration and international dispute resolution respectively, and was awarded an honorary LLD from the University of Sydney.

Albert Monichino QC is a Melbourne-based barrister and arbitrator, with over 25 years of experience in resolving commercial disputes domestically and internationally. He was appointed Senior Counsel in 2010, and is a former Vice President (Convenor) and Co-Chair of the Arbitration and ADR Section for the Commercial Bar Association of the Victorian Bar (COMMBAR). Albert is a Chartered Arbitrator and Past President of the Chartered Institute of Arbitrators Australian Branch (CIArb, 2014-17), and is a Fellow of CIArb, ACICA, the Resolution Institute and the Singapore Institute of Arbitrators. He writes extensively on international commercial arbitration in Australia and the Asia-Pacific, including an annual Australian survey for the Australian Dispute Resolution Journal.

Anselmo Reyes SC practises as an arbitrator. He was Professor of Legal Practice at Hong Kong University from October 2012 to September 2018. Before that, he was a judge of the Hong Kong High Court from September 2003 to September 2012, when he was in charge of the Construction and Arbitration List (2004-8) and the Commercial and Admiralty Lists (2008-12). He was Representative of the Hague Conference on Private International Law’s Regional Office Asia Pacific from April 2013 to July 2017. He became an International Judge of the Singapore International Commercial Court in January 2015.

Dr Jaivir Singh is Professor at the Centre for the Study of Law and Governance, Jawaharlal Nehru University, having previously taught at the University of Delhi. Trained as an economist at the Delhi School of Economics, University of Delhi, his research work aims at an interdisciplinary exploration of the interaction between the law and the economy. He has published on diverse topics including the Indian Constitution, Regulation, Labour Law, Competition Law, Corporate Law and International Investment Treaties.

Dr S.I. Strong is an Associate Professor at the University of Sydney Law School, specialising in international dispute resolution and comparative law, particularly international commercial arbitration and large-scale (class and collective) suits. Prior to joining the University of Sydney, she taught at the Universities of Cambridge and Oxford as well as Georgetown Law Center and the University of Missouri. Dr Strong is an experienced practitioner, having acted as Counsel at Baker & McKenzie after working as a dual-qualified lawyer (US attorney and English solicitor) in the New York and London offices of Weil, Gotshal & Manges. She has published over 130 award-winning books, chapters and articles in Europe, Asia and the Americas, including Legal Reasoning Across Commercial Disputes: Comparing Judicial and Arbitral Analyses (anticipated 2021), Arbitration of Trust Disputes: Issues in National and International Law (2016), and Class, Mass, and Collective Arbitration in National and International Law (2013) fromOxford University Press as well as International Commercial Arbitration: A Guide for U.S. Judges (2012) from the Federal Judicial Center. Dr Strong’s scholarly work has been translated into Spanish, French, Russian and Chinese and has been cited as authority by numerous state and federal courts and international tribunals. She Strong sits as an arbitrator and mediator on a variety of international commercial and trust-related matters. 

Ana Ubilava is a Research Assistant and PhD candidate at the University of Sydney Law School, where she is in the final stages of completing a thesis on investor-state mediation. She has published on international dispute resolution in several periodicals including the Journal of World Investment and Trade. Ana is also Executive Coordinator of the Australian Network for Japanese Law (ANJeL).

The Hon Marilyn Warren AC QC is a Vice-Chancellor’s Professorial Fellow at Monash University, where she is a member of its Global Leaders Summit, and teaches postgraduate commercial law and international arbitration. She was a long-serving Chief Justice of the Supreme Court of Victoria (2003-2017), and earlier on that Court (1998-2003) included service as the Judge in Charge of the Commercial List and the Corporations List (now combined as the Commercial Court). Professor Warren was a foundation Council member of the Asian Business Law Institute in Singapore. She now also sits as a domestic and international commercial arbitrator, and is a member of the Dawson Chambers Senior Arbitrator Group at the Victorian Bar (where she became Queen’s Counsel in 1997). 

A. Vijayalakshmi Venugopal is Senior Lecturer at Taylor’s University Law School in Malaysia. Her teaching and postgraduate supervisory experience includes WTO law, international dispute resolution, international sale of goods and intellectual property law. She was a visiting lecturer at the University of Rotterdam Business School. She holds Masters degrees in law and educational psychology, and has presented conference papers in these fields. She is the author of three books, and articles in peer-reviewed law journals.

Dr Brett Williams, an Australian Legal Practitioneris the principal of Williams Trade Law and an Honorary Senior Lecturer at the University of Sydney Law School. His legal practice specialises in the law of the World Trade Organization and of bilateral and regional trade agreements, including representation in WTO dispute settlement, accession issues, and also trade issues under Australian law. He has taught WTO law at Sydney Law School since 2001 and is a Research Affiliate of both the Sydney Centre International Law and the Centre for Asian and Pacific Law at the University of Sydney. His publications include the co-edited book China and the World Trade System (Cambridge University Press, 2003), building on his PhD research, and articles on WTO negotiations on agricultural trade, China’s WTO accession, trade in services and innovations in dispute settlement mechanisms in trade agreements. Brett also serves on the Editorial Board of the Australian International Law Journal. He has held various professional positions, including on the Executive of the International Law Section of the Law Council of Australia (2012-2016) and as inaugural co-chair of the International Economic Law Interest Group of the Australia New Zealand Society of International Law (2010-2012).

Submission to ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) upgrade consultation

[The following analysis provided to Australia’s Department of Foreign Affairs and Trade (Regional Trade Agreements Division) is relevant also for assessing Australia’s other trade and investment agreements, including with Japan bilaterally and through regional treaties such as the CPTPP and the recently concluded Regional Comprehensive Economic Partnership.]

Thank you for the opportunity to provide a submission to this important public consultation. I see some others are online,[1] and please upload there my present submission. Unfortunately other commitments probably preclude my attendance at the Thursday 2 April meetings in Sydney, but please let me know that day’s timetable as one or more of my co-researchers cited below may be willing and able to attend.

1. For the Services chapter, an important matter for Australia to review will be provisions around delivery of education. The coronavirus epidemic this year has highlighted that Australia’s FTAs (even more recent ones as with China) often do not include commitments allowing cross-border supply (ie service delivery over the internet), which may otherwise conflict with the national laws in our overseas partners.[2] As well as negotiating more expansive commitments, Australia should seek to draft in provisions around procedures for meeting and discussing urgently with counterparties about counter-measures during public health emergencies, as suggested by our A/Prof Jeanne Huang at the recent SCIL International Law in Review conference (in the context of China-Australia FTA upgrades). Such procedural provisions could also be extended to other chapters, including Trade in Goods.

2. For the Investment chapter, AANZFTA in 2009 originally lacked significant liberalisation commitments.[3] A work program for negotiations around expanding market access was envisaged but never completed.[4] This AANZFTA upgrade should at least lock in (through Schedules) liberalisation commitments made under other treaties concluded by Australia with counterpart ASEAN states (including the still undisclosed RCEP), but should go further to provide “value added”. If a Work Program is agreed for further negotiations, the revised AANZFTA should include commitments about when and how to meet, including provisions allowing for public consultation.

3. For the Investment chapter, on protections for foreign investors (including significantly now into ASEAN compared to a decade ago),[5] Australia presumably goes into upgrade negotiations using its most recent significant treaties as a starting point, especially the US-style template (building on NAFTA and epitomised by the CP/TPP) that has become the most common drafting approach around the Asia-Pacific region more generally.[6] However, views around ISDS-backed protections have changed in recent years, regionally (with the EU proposing several novel features, impacting also on Asia[7]) and in multilateral forums (UNCTAD, ICSID and especially UNCITRAL). Australia needs to become more consistently pro-active (arguably working with close partners especially New Zealand) in addressing persistent concerns about ISDS-backed protections in investment agreements, and this review of AANZFTA therefore should propose:

3.1 Minimising costs and delays through promoting amicable settlement,[8] by allowing a disputing party to require the other to attempt to mediate an investment dispute, before proceeding to arbitration. (This was provided under Australia’s recently signed bilateral FTA with Indonesia, although that was seemingly proposed by Indonesia and only allows the host state to compel mediation,[9] whereas an investor should be able to compel it too.).

3.2 Maximising transparency around ISDS (including disclosure around third-party funding) by explicitly adopting the UNCITRAL Transparency Rules (as under Australia’s recently revised BIT with Uruguay), and/or including similar provisions in the upgraded AANZFTA investment chapter text (as under the CP/TPP and/or Australia’s recent bilateral FTA with Peru).[10] Greater transparency benefits almost all stakeholders, not just (especially democratically accountable) host states but also foreign investors (able therefore to better expose protectionist or other vested interests in host states, to the detriment of other groups in those host states).[11] This is also consistent with Australia’s current efforts to ratify the UN Mauritius Transparency Convention; but that only retrofits greater ISDS transparency around pre-2014 treaties even if counterparties ratify that multilateral instrument too in future.

3.3 Further enhancing legitimacy around ISDS by expressly prohibiting “double-hatting” (arbitrators acting also as counsel), as under the CPTPP Code of Conduct,[12] as well as recent EU treaties (albeit for its now-preferred “investment court” alternative to traditional ISDS). Curiously Australia has not provided such an express prohibition in any other treaty, even its recent FTA with Peru (although both states are supposed to issue Guidance for ISDS arbitrators now that it is in force, so that prohibition might still be added there).

3.4 Australia should propose the “public welfare notice” procedure added uniquely in its FTA with China. This usefully suspends ISDS claims while the home state discusses with the host state potential defences relating to public welfare interests in the host state.[13]

3.5 However, as another aspect relating to public health risks such as coronavirus, the AANZFTA upgrade should consider express provisions expediting cross-border movement of senior management related to foreign investments, even in emerging emergency situations.

4. For the Competition chapter, this should be upgraded at least to CPTPP-style standards, but it should be boosted by more expansive Consumer Protection provisions especially now that ASEAN states have made significant (albeit sometimes patchy) progress in this field over last decade as part of building the ASEAN Economic Community.[14] I understand my Business School colleague Prof Gail Pearson has completed an ACCC-funded scoping project, so urge that to be publically disclosed so further informed comment and publically discussed. I also repeat my longstanding calls for Australia to seek provisions in FTAs that require or at least allow respective regulators to exchange consumer product safety accident-related information with their counterparts abroad. This could also be extended to sharing information about consumer credit related risks.[15]

5. The AANZFTA upgrade should also propose a chapter on Environmental Protection, as this is another public concern around FTAs. In particular this should incorporate this FTA’s dispute settlement procedures into other listed environmental protection treaties. The inspiration should be the CPTPP, but drafting improvements are helpfully suggested by our A/Prof Jeanne Huang.[16]


[1] https://www.dfat.gov.au/trade/agreements/in-force/aanzfta/Pages/general-review-of-the-asean-australia-new-zealand-fta.aspx

[2] Huang, Jeanne, https://erga-omnes.sydney.edu.au/2020/02/coronavirus-outbreak-and-teaching-chinese-students-online-legal-issues-that-australian-universities-should-know/

[3] Bath, Vivienne and Nottage, Luke R., The ASEAN Comprehensive Investment Agreement and ‘ASEAN Plus’ – The Australia-New Zealand Free Trade Area (AANZFTA) and the PRC-ASEAN Investment Agreement (September 26, 2013). INTERNATIONAL INVESTMENT LAW: A HANDBOOK, M. Bungenberg, J. Griebel, S.Hobe & A. Reinisch, eds., Nomos Verlagsgellschaft: Germany, 2015; Sydney Law School Research Paper No. 13/69. Available at SSRN: https://ssrn.com/abstract=2331714

[4] Bath, Vivienne and Nottage, Luke R., International Investment Agreements and Investor-State Arbitration in Asia (February 26, 2020). Sydney Law School Research Paper No. 20/08. Available at SSRN: https://ssrn.com/abstract=3544458 (footnotes omitted):

“The AANZFTA provides that the provisions on NT in the Investment Chapter will not come into effect until the Schedules of Reservations were finalized (Art 11.16) under a Work Program. Further negotiations on an MFN provision were also to take place under the Work Program (Art 11.16).  This has not been completed. Indeed, review of the investment chapter was paused in 2017 pending the finalisation of the RCEP, although the Economic Ministers of ASEAN, Australia and New Zealand noted in late 2019 the Upgrade Negotiations to amend the AANZFTA (for the second time) as a result of a review which will include the investment chapter.”

[5] See ASEAN Investment Report 2018 ch1, via https://asean.org/asean-investment-report-2018-published/

[6] Alschner, Wolfgang and Skougarevskiy, Dmitriy, The New Gold Standard? Empirically Situating the TPP in the Investment Treaty Universe (November 20, 2015). Journal of World Investment & Trade, Vol. 17, pp. 339-373 . Available at SSRN: https://ssrn.com/abstract=2823476 or http://dx.doi.org/10.2139/ssrn.2823476

[7] Kawharu, Amokura and Nottage, Luke R., Models for Investment Treaties in the Asian Region: An Underview (September 21, 2016). Arizona Journal of International and Comparative Law, Vol 34, No. 3, pp. 462-528, 2017 ; Sydney Law School Research Paper No. 16/87. Available at SSRN: https://ssrn.com/abstract=2845088

[8] See generally, forthcoming in JWIT: 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

[9] Ubilava, Ana and Nottage, Luke R., Novel and Noteworthy Aspects of Australia’s Recent Investment Agreements and ISDS Policy: The CPTPP, Hong Kong, Indonesia and Mauritius Transparency Treaties (March 4, 2020). Sydney Law School Research Paper No. 20/12. Available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3548358

[10] Ibid.

[11] Burch, Micah and Nottage, Luke R. and Williams, Brett G., Appropriate Treaty-Based Dispute Resolution for Asia-Pacific Commerce in the 21st Century (May 24, 2012). University of New South Wales Law Journal, Vol. 35, No. 3, pp. 1013-1040; Sydney Law School Research Paper No. 12/37. Available at SSRN: https://ssrn.com/abstract=2065636

[12] See 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;

and Concept Paper on Arbitrator Independence via https://www.cids.ch/academic-forum-concept-papers

[13] For more details see Nottage, Luke R., Investment Treaty Arbitration Policy in Australia, New Zealand – and Korea? (August 13, 2015). Journal of Arbitration Studies, Vol. 25, No. 3, pp. 185-226, 2015; Sydney Law School Research Paper No. 15/66. Available at SSRN: https://ssrn.com/abstract=2643926

[14] Nottage, Luke R. and Malbon, Justin E. and Paterson, Jeannie Marie and Beaton Wells, Caron Y., ASEAN Consumer Law Harmonisation and Cooperation: Backdrop and Overarching Perspectives (June 3, 2019). Luke Nottage, Justin Malbon, Jeannie Marie Paterson and Caron Beaton-Wells, “ASEAN Consumer Law Harmonisation and Cooperation: Achievements and Challenges”, Cambridge University Press (2019); Sydney Law School Research Paper No. #19/32. Available at SSRN: https://ssrn.com/abstract=3398046

[15] Nottage, Luke R., Free Trade Agreement and Investment Treaty Innovations to Promote More Sustainable Financial Markets for Consumers (July 2, 2014). THE GLOBAL FINANCIAL CRISIS AND THE NEED FOR CONSUMER REGULATION: NEW DEVELOPMENTS ON INTERNATIONAL PROTECTION OF CONSUMER, C. Lima Marques, D. P. Fernandez Arroyo, I. Ramsay, G. Pearson, eds., Orquestra Editora, Brazil, 2012; Sydney Law School Research Paper No. 14/59. Available at SSRN: https://ssrn.com/abstract=2461568

[16] Huang, Jie Jeanne and Hu, Jiaxiang, Can Free Trade Agreements Enhance MARPOL 73/78 Compliance? (October 3, 2018). Tulane Maritime Law Journal, Vol. 43. 2018, pp. 59-91; Sydney Law School Research Paper No. 18/62. Available at SSRN: https://ssrn.com/abstract=3259734

“New Frontiers in International Arbitration for the Asia-Pacific Region”: Symposium 17 June 2020 (2-5pm) at/with Taylor’s University, Kuala Lumpur

Supported also by the Centre for Asian and Pacific Law at the University of Sydney (CAPLUS), Sydney Southeast Asia Centre (SSEAC) & Asian International Arbitration Centre (AIAC)

This half-day symposium brings together academic researchers and practitioners in international dispute resolution, exploring new developments regionally impacting on international commercial arbitration as well as investor-state dispute settlement (ISDS). These extend to initiatives around cross-border mediation, international commercial courts, and China’s Belt and Road project. The symposium builds on a research project over 2019 between the University of Sydney and Hong Kong University (focusing on Australia, HK, China, Japan and Singapore)[1], to examine more closely developments also in Malaysia and other parts of Asia.

Please register your attendance for this complimentary symposium via email to avijayalakshmi.venugopal@taylors.edu.my.

Time Session
2-2.10 pm Welcome Message Mr. Harmahinder Singh Head, Taylor’s Law School, Taylor’s University
2.15-2.40 pm Mediating Japan-Korea Trade and Investment Tensions[2] Professor Luke Nottage Sydney Law School, University of Sydney
2.45-3.10 pm Recent Developments of Institutional Arbitration in China: Specialization, Digitalization and Internationalization[3] Associate Professor Jie Huang Sydney Law School, University of Sydney
3.15-3.40 pm Malaysia’s Involvement in International Business Dispute Resolution[4] Dr. A. Vijayalakshmi Venugopal Taylor’s Law School, Taylor’s University
3.45-4 pm Closing Remarks Professor Luke Nottage & Dr. A. Vijayalakshmi Venugopal
4-4.40 pm Refreshments  

Speakers’ Profiles

Dr Luke Nottage (BCA, LLB, PhD VUW, LLM Kyoto) specialises in comparative and transnational business law (especially arbitration, investment law, contract and consumer law), with a particular interest in Japan and the Asia-Pacific. He is Professor of Comparative and Transnational Business Law at Sydney Law School, founding Co-Director of the Australian Network for Japanese Law (ANJeL), and Associate Director of the Centre for Asian and Pacific Law at the University of Sydney (CAPLUS). He has held fellowships at other leading institutions in Japan and Australia as well as Germany, Italy, Canada and Thailand.

Luke’s 16 books include International Arbitration in Australia (2010, eds), Foreign Investment and Dispute Resolution in Asia (2011, eds), International Investment Treaties and Arbitration Across Asia (2018, eds), Contract Law in Japan (2019) and ASEAN Consumer Law Harmonisation and Cooperation (2019, both co-authored).

He has or had executive roles in the Australia-Japan Society (NSW), the Law Council of Australia’s International Law Section, the Australian Centre for International Commercial Arbitration, and the Asia-Pacific Forum for International Arbitration. Luke is also a Rules committee member of ACICA and listed on the Panel of Arbitrators for the AIAC (formerly KLRCA), BAC, JCAA, KCAB, NZIAC, SCIA and TAI. Luke has consulted for law firms world-wide, the EC, the OECD, the UNDP, ASEAN and the Japanese government; and has contributed to arbitration and consumer law reform and investment treaty-making in Australia. He qualified as a lawyer in New Zealand in 1994 and in New South Wales in 2001.

Dr Jie (Jeanne) Huang, SJD (law) Duke University School of Law in the US; Master of International Law and LLB, Shanghai University of International Business and Economics in China. Dr. Jeanne Huang is an associate professor at the University of Sydney Law School in Australia. She is widely known for her research on legal issues in digital trade and e-commerce, international investment and Chinese law. She has published four books and authored many articles in leading peer-reviewed law journals, such as Journal of International Economic Law and Journal of Private International Law. Twelve of her articles are indexed by SSCI. She has received funding from University of Sydney, University of New South Wales, China National Social Science Fund general project (equivalent to Australian ARC), China Ministry of Education, the China Law Society, Shanghai Philosophy and Social Science Fund, and Shanghai Government Development and Research Centre Fund on research topics related to international trade and investment regulations.

Dr. A. Vijayalakshmi Venugopal (LLB, MEd(Psy), LLM, PhD) is a Senior Lecturer in Taylor’s Law School, teaching various modules in the LLB and LLM degrees, including Alternative Dispute Resolution, Law of the World Trade Organization and International Sale of Goods. She has supervised a number of LLM theses on international arbitration. She is the author of 3 books and various articles on law. She has also presented conference papers on and been a trainer in education. She qualified as an advocate and solicitor in Malaysia.


[1] https://japaneselaw.sydney.edu.au/2019/02/

[2] Claxton, James M. and Nottage, Luke R. and Williams, Brett G., Mediating Japan-Korea Trade and Investment Tensions (December 3, 2019). Sydney Law School Research Paper No. 19/73. Available at SSRN: https://ssrn.com/abstract=3497299.

[3] Jie (Jeanne) Huang (2019), Recent Developments of Institutional Arbitration in China: Specialization, Digitalization and Internationalization, in Julien Chaisse & Jiaxiang Hu (Eds), International Economic Law and the Challenges of the Free Zones, (pp. 251-275), Wolters Kluwer.

[4] Venugopal, A. V., Malaysia’s Involvement in International Business Dispute Resolution, in Ali, S., Jetin, B.; Nottage, L.; and Teramura, N., New Frontiers in Asia-Pacific International Arbitration and Dispute Resolution, Wolters Kluwer.

“Ghosn is gone”: criminal justice and corporate governance in Japan

[Updated 10 July 2020] Japan welcomed in the New Year of the Mouse (or Rat) with intense media coverage nationally and internationally about former Nissan CEO then President, Carlos Ghosn, who escaped bail on 29 December 2019 to return to his native Lebanon. The ongoing saga (with background eg here) mainly highlights pros and cons of Japan’s evolving criminal justice system, where almost all prosecutions are successful. That 99% conviction rate can be seen positively: prosecutors carefully try to second-guess judges, without subjecting the accused to unnecessary trials. This enhances rule of law values such as predictability and equal treatment, even for alleged white-collar crimes (often not successfully pursued, as we have seen world-wide after the Global Financial Crisis, even in the US). [There is a similarly high conviction rate for US federal prosecutions generally, since so few are contested at trial, as pointed out by Bruce Aronson.] But there remain concerns that Japanese prosecutors unfairly force confessions and the criminal justice system undermines other rule of law values. [These various aspects were discussed along with background shifts in the global auto industry in a 30-minute ABC National Radio program, “Ghosn has flown – the rise and fall of an auto industry mogul”, which aired on 9 February 2020 and is available as a podcast here (with extracts from my interview appearing around mid-way.)] The Ghosn affair also uncovers Japan’s relative paucity of extradition treaties, as I mentioned in a 3 January 2020 Bloomberg news article reproduced below (reprinted in the Japan Times, which continues extensive coverage).

The Ghosn case also highlights the latest (December 2019) amendments to Japan’s Companies Act, “designed to increase transparency in executive compensation at major companies in the wake of the ouster of Nissan Chairman Carlos Ghosn, who was arrested last year for allegedly understating his compensation. He has continued to deny allegations of financial misconduct. Boards of directors will now be required to disclose outlines of executive pay, such as whether it is offered in cash or shares and in a fixed or variable amount.” The revised Act also now requires companies to have at least one outside director, rather than on a “comply or explain why not” basis as under the 2014 amendments. But the revision won’t take effect until June 2021. In addition, almost all listed companies already had at least one outside director, and indeed a growing majority had at least two outside directors satisfying stricter “independence” requirements, under the 2015 Corporate Governance Code (slighted revised in 2018) that continues to apply on the comply or explain basis.

Further, as a Japan Times editorial had concluded in February 2019 (“Empower outside directors“) regarding the Companies Act amendments then being proposed by the Ministry of Justice’s law reform council:

“After the arrest of Ghosn on that and other charges that raised questions about corporate governance at the major automaker, Nissan is reportedly considering increasing the number of outside directors from the current three. However, the charges against Ghosn, who is alleged to have wielded unquestioned power within the automaker, including in deciding executive pay effectively at his own discretion, also put into question whether the outside directors have been able to play substantial roles in overseeing the firm’s management.

The arrest and indictment last year of a former outside director of an electric parts manufacturer listed on the TSE’s first section, on charges of insider trading of the firm’s shares based on confidential information he obtained thanks to his position — also highlighted the question of the quality of outside directors that companies are bringing in.

Many companies are believed to look for candidates among top executives of other firms, academics and lawmakers. The companies often reportedly face difficulties finding the right person with sufficient knowledge and expertise on corporate management. In fact, many well-qualified people are reportedly serving as outside directors at several companies simultaneously. Another question is whether the companies that tap them have established an in-house environment in which these directors can fulfil the roles expected of them, such as by providing them with sufficient access to the firm’s relevant information or by enabling them to be regularly heard by the company’s top management.

Merely making it mandatory under the law for companies to have outside directors on their board won’t be enough. A legal step like this needs to be accompanied by measures that ensure they can actually contribute to improving their company’s governance.”


Ghosn’s Escape From Japan Ramps Up Pressure on Foreign Suspects

By  Lisa DuBruce Einhorn , and  Isabel Reynolds 3 January 2020, 5:55 pm AEDT

  • Foreigners expected to face tougher time posting bail
  • Ex-Nissan boss paid record bail bill, then fled the country

The Tokyo district court let Carlos Ghosn post bail last March, overruling prosecutors’ objections that he was a flight risk. After all, how could one of the most recognizable foreigners in the country flee while under round-the-clock surveillance?

As the world learned this week, the court was wrong and Ghosn’s stunning escape is bound to bode ill for future foreign suspects seeking to post bail. Yet longer term, the fallout could carry broader implications for the pace of reforms to a justice system some regard as draconian.

“It’s ironic that Ghosn criticized the Japanese justice system as hostage justice, because the prosecutor’s judgment turned out to be right since he actually fled,” said Hiroki Sasakura, a professor at Keio University Law School in Tokyo. “His action might have a reverse effect on the criminal justice system, especially the Japanese court’s way of thinking, which was turning more liberal.”

Given the high-profile nature of the suspect, Japan’s legal system was already under heightened global scrutiny, with critics lambasting prosecutors for detaining the fallen automotive titan so long.

Even after gaining release from prison, the former head of Nissan Motor Co. and Renault SA had restricted access to family members and paid the highest bail fees in Japanese history: 1 billion yen ($9.2 million) for his first bail and then another 500 million yen after he was rearrested on new charges. And the court ordered his three passports — from Brazil, France and Lebanon — be confiscated.

(Ghosn’s Legal Odyssey and What It Says About Japan: QuickTake)

Japan is unusual for its lengthy pre-trial detentions, strict bail conditions and long delays before suspects are given their day in court, said Luke Nottage, a professor at the University of Sydney Law School and co-director of the Australian Network for Japanese Law.

More Lenience

In response to criticism from defense attorneys and after the introduction of a new jury trial system and pretrial procedures, Japanese courts in recent years were more lenient in allowing bail, Keio’s Sasakura said. A backlash has already begun, with Ichiro Aisawa, a lawmaker from Japan’s ruling Liberal Democratic Party, denouncing the decision to give Ghosn bail in the first place.

“This should have never happened,” Aisawa wrote on Twitter. “We need to establish measures so we don’t screw up ever again.”

In Japan, authorities are allowed to detain suspects for two 10-day periods for questioning before a decision is made on whether to indict. Sometimes suspects are rearrested on new charges as a way to detain them longer.

Prosecutors rarely pursue cases they think they can’t win, and Japan is known for its near-perfect conviction rate.

Those indicted in Japan may apply for bail as they await trial. About 34% of those detained received bail in 2018, according to the Japan Bail Support Association. That’s up from 15% a decade ago.

‘Rigged’ System?

Such statistics reinforce the criticism by Ghosn, who issued a statement on Dec. 31 from Lebanon saying he had fled there to escape what he called Japan’s “rigged” justice system. This may lead to further calls for a more balanced system, according to Yuichi Kaido, a lawyer who has campaigned for changes to Japan’s criminal justice system.

“I think the international community will look at Japan’s criminal justice system with great severity,” Kaido said. “There will be harsh questions raised there about Japan’s criminal justice system, including the death penalty and what is called hostage justice.”

However, the Ghosn case isn’t likely to have a lasting impact on Japan’s attractiveness as an investment destination, according to Deborah Elms, executive director of Asian Trade Centre, a Singapore-based advisory firm. Foreign companies considering investments in Japan won’t be deterred by the situation surrounding Ghosn, she added, with Asian companies accustomed to unpredictable rules.

“This is just another example of an uncertain legal system that can be worked to your advantage or could come back and bite you,” she said.

Japan should resist internal calls to retaliate by making it even more difficult for suspects to win release from prison ahead of trial, said Nobuo Gohara, a former prosecutor who has been critical of the handling of Ghosn’s case.

“It’s very unfortunate that the efforts of his attorneys to obtain bail and the court’s judgment against the prosecutors to allow it was betrayed,” Gohara wrote in a blog post. “But we shouldn’t simplify the issue to that the court shouldn’t have allowed bail.”

There’s a change that may win widespread support after Ghosn’s escape: a push for more extradition treaties. Japan has only two bilateral agreements, with the U.S. and South Korea. That compares with more than 30 for South Korea and more than 100 for the U.S.

“It’s just one of those areas where they haven’t given much thought and diplomatic attention,” said Nottage, the University of Sydney Law School professor. “The Japanese government might be thinking about maybe we need more extradition treaties.”

— With assistance by Kana Nishizawa

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?

New Frontiers in International Arbitration for the Asia-Pacific Region (3): What Future for ISDS?

After Australia’s general election held on 18 May 2019, the prospects for investor-state dispute settlement (ISDS) and therefore investment chapters in free trade agreements (FTAs) remain unclear not only for Australia but also the wider Asia-Pacific region. This posting provides some backdrop and reiterates a proposal for a bipartisan (and bi-national) approach by Australia (especially with New Zealand) to more actively promote a “permanent investment court” (or at least some of its core features) as a compromise alternative to conventional ISDS, for its future treaties as well as in reviewing older ones. This should be not just in pending FTA negotiations with the European Union, which now already insists on such a court for resolving investor-state disputes (aiming also to develop a multilateral investment court), but also in (re)negotiations with other Asia-Pacific states. A version of this posting is with the East Asia Forum blog too.
This proposal will be tabled and hopefully discussed at the upcoming seminar at the University of Hong Kong, on 15 July, as part of a joint project over 2019 with USydney on “New Frontiers in International Arbitration for the Asia-Pacific Region“.

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