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“.

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

Guest blog: Corporate (Mis)Governance in Malaysia (& Japan)

Written by: Dr Vivien Chen (Monash University) & Preeti Sze Hui Lo (USydney law student and CAPLUS intern)
[Introduction by Luke Nottage: A Nikkei article of 3 April 2019 highlights how activist investors are increasingly calling for shakeups of corporate boards across Asia, especially in Japan since 2014, but also China, Singapore, South Korea and Hong Kong. It also reports how the Asian Corporate Governance Association has downgraded Japan from 4th ranking in 2016 to 7th ranking in 2018, and upgraded Malaysia from 7th to 4th. Is that switch justified?
Perhaps Japan is being judged too harshly for the recent Toshiba and Nissan (Carlos Ghosn) scandals, or the 2012 Olympus saga, despite the country introducing new Stewardship and Corporate Governance Codes from 2015. Perhaps too much weighting is given in rankings or assessments for the numbers or proportions of independent non-executive directors on boards. This is despite mixed evidence about whether corporate performance has generally improved or other expected benefits have accrued as independent director requirements have become an increasingly popular reform across other Asian economies, as reviewed in the chapters on Australia and Japan in my 2017 co-edited book.
And what about Malaysia? Even the largest 100 listed companies, based on their formal disclosures, don’t score too well on the ADB-supported ASEAN Corporate Governance Scorecards – although they seem to be improving. Around 40 percent of all listed firms remain government-linked companies (GLCs), in sharp contrast to Japan (as illustrated in Figure 4 of this 2018 OECD report on Asian stock markets), but government ownership can be problematic especially when the same political party (like UMNO until last year) remains in power over extended periods. Some good news from a 2018 book by UMalaya Prof Edmund Gomez et al is that since the Asian Financial Crisis in 1997 there are far fewer appointments of (ex-)UMNO politicians to the boards of GLCs and the various government-linked investment companies or sovereign wealth funds that invest in them and other listed companies. Directors and CEOs are increasingly professionalised. The bad news is that many may still rely directly or indirectly on the Minister of Finance for appointments, and so might be expected (like good butlers!) to anticipate the Minister’s preferences. The risk of conflicted interests grows if the Minister of Finance is also the Prime Minister, as was the case for Dr Mahathir Mohamad after the AFC (1998-2003) and especially Najib Razak (2008/9-2018) until UMNO remarkably lost the general election last year. Part of the reason for that election loss was the collapse of 1MDB (1Malaysia Development Berhad), a sovereign wealth fund established by Najib when he became Prime Minister in 2009.
One guest blog posting below, by this semester’s CAPLUS student intern Preeti Lo, highlights some of the warning signs that all was not well with 1MDB, linking to her PDF timeline of key events in that scandal drawing partly on a book by Wall Street Journal authors (“The Billion Dollar Whale“, 2018). The other posting, by Monash University’s Dr Vivien Chen, outlines her forthcoming article on challenges afflicting corporate governance in Malaysia more broadly and especially when it comes to enforcing directors’ duties. They provide useful context to my ongoing research, supported by the Sydney Southeast Asia Centre, extending to Malaysia (and Thailand and Cambodia) a previous analysis of the proliferation and realities of independent directors in Asia.]

Continue reading “Guest blog: Corporate (Mis)Governance in Malaysia (& Japan)”

New Frontiers in International Arbitration for the Asia-Pacific Region (2): Japan, China, Hong Kong, Australia and Singapore

Here are some papers to be presented and discussed at a symposium on Monday 15 July at Hong Kong University, as part of a joint research project over 2019 with the University of Sydney Law School.

Continue reading “New Frontiers in International Arbitration for the Asia-Pacific Region (2): Japan, China, Hong Kong, Australia and Singapore”

New Frontiers in International Arbitration for the Asia-Pacific Region (1): HKU/USyd research project

The central administrations of the University of Hong Kong and the University of Sydney have provided A$17,000 each for this joint research project over 2019, centred around two conferences at HKU on Monday 15 July and at USydney on Monday 18 November. The lead co-investigators are respectively A/Prof Shahla Ali and Prof Luke Nottage. Below we set out the project’s Aims, Significance and Outcomes. Further updates are expected on this Blog.

Continue reading “New Frontiers in International Arbitration for the Asia-Pacific Region (1): HKU/USyd research project”

Asia’s Changing International Investment Regime: Sustainability, Regionalization and Arbitration – Book Review (Part III)

[Parts I and II of this book are reviewed in earlier postings.]
Asia’s Changing International Investment Regime: Sustainability, Regionalization and Arbitration, Julien Chaisse, Tomoko Ishikawa and Sufian Jusoh (eds),
Springer, 2017, xii + 260pp, ISBN 978-981-10-588, 120 Euros
Reviewed by: Luke Nottage and Ana Ubilava

Continue reading “Asia’s Changing International Investment Regime: Sustainability, Regionalization and Arbitration – Book Review (Part III)”

Asia’s Changing International Investment Regime: Sustainability, Regionalization and Arbitration – Book Review (Part II)

[Part I and Part III of this book are reviewed in earlier and subsequent postings]
Asia’s Changing International Investment Regime: Sustainability, Regionalization and Arbitration, Julien Chaisse, Tomoko Ishikawa and Sufian Jusoh (eds),
Springer, 2017, xii + 260pp, ISBN 978-981-10-588, 120 Euros
Reviewed by: Luke Nottage and Ana Ubilava

Continue reading “Asia’s Changing International Investment Regime: Sustainability, Regionalization and Arbitration – Book Review (Part II)”

Asia’s Changing International Investment Regime: Sustainability, Regionalization and Arbitration – Book Review (Part I)

Asia’s Changing International Investment Regime: Sustainability, Regionalization and Arbitration, Julien Chaisse, Tomoko Ishikawa and Sufian Jusoh (eds),
Springer, 2017, xii + 260pp, ISBN 978-981-10-588, 120 Euros
Reviewed by: Luke Nottage and Ana Ubilava (University of Sydney Law School PhD candidate)

This 14-chapter book published in late 2017 provides a succinct and quite comprehensive overview, as well as some detailed analysis, of key developments and themes in the rapidly evolving field of Asia-Pacific international investment treaties. It is particularly useful for readers in the antipodes, given for example Australia’s emphasis on concluding bilateral investment treaties (BITs) and especially more recently Free Trade Agreements (FTAs) with investment chapters, with counterparties in the Asia-Pacific region. Although the book’s title refers to “Asia”, several chapters refer to foreign direct investment (FDI) and treaties extending around the Pacific Rim, as well as some developments in Central Asia (a very different sub-region to South or especially East Asia).
The editors’ short Introduction, comprising helpful chapter summaries, explains that the book derived from the recent “rapid evolution of the international investment regime in the Asia-Pacific region”. It aims “to help predict the future regulatory framework in the region, and how the regional trends affect the development of global rules for foreign investment” (p1). Part I sets the scene by outlining “regional trends in an evolving global landscape”, including a growing concern about rebalancing FDI and treaties to promote sustainable patterns. Part II focuses on the “regionalization of investment law and policy ”, especially key intra-regional treaties concluded recently or under negotiation. Part III ends by asking whether we will see a trend “towards a greater practice of investment arbitration in the Asia-Pacific?”. The backdrop is that treaties and FDI flows are triggering somewhat belated, but nonetheless sometimes controversial, increases in both inbound and outbound investor-state dispute settlement (ISDS) claims involving Asian states or investors.

Continue reading “Asia’s Changing International Investment Regime: Sustainability, Regionalization and Arbitration – Book Review (Part I)”

Australian Perspectives on International Commercial Dispute Resolution for the 21st Century: A Symposium

https://brill.com/abstract/title/36129Guest blog written by: Nobumichi Teramura (UNSW PhD in Law candidate)
Ongoing dramatic geopolitical transitions in the world have inevitably impacted on the international business environment of the Asia-Pacific region. This requires Australia and other countries in the region to re-examine their legal infrastructure for transnational business disputes. Convergence and divergence of legal systems of competing and sometimes cooperating states in the Asia-Pacific require the Australian government and other stakeholders to address unprecedented legal complexities in private to private, private to public, and public to public commercial dispute resolution.
On 19 April 2018, the Sydney Centre for International Law (SCIL) at the University of Sydney Law School organised a post-ICCA symposium: “International Commercial Dispute Resolution for the 21st Century: Australian Perspectives”. The symposium, the second recently with the University of Western Australia (UWA) Law School and also supported by Transnational Dispute Management (TDM), brought together leading experts in international arbitration, investment law and international business law from all over the world. They examined broad and perhaps increasingly overlapping fields such as investor-state dispute settlement (ISDS) in a changing legal and political environment, cross-border litigation in the Asian region, other international commercial dispute resolution mechanisms (arbitration and mediation), and inter-state dispute settlement.

Continue reading “Australian Perspectives on International Commercial Dispute Resolution for the 21st Century: A Symposium”

The TPP is Back: Submission to Australian Parliamentary Inquiries

[Update of 22 August 2018: the JSCOT Report No 181 recommending CPTPP ratification is now available. It refers to this Submission, my oral evidence given at hearings in Sydney (transcribed here), and further statistical information jointly with PhD student Ana Ubilava (incorporated also into an article for the Sept 2018 issue of the Intl Arb L Rev).]
The Trans-Pacific Partnership was signed in February 2016 by Australia, Japan, the US and 9 other Asia-Pacific countries, but the new Trump Administration withdrew signature in January 2017, so the remaining 11 re-signed a variant (TPP11 or CPTPP) in March 2018. Inquiries into ratification are now being conducted by the the Australian Parliament’s Joint Standing Committee on Treaties (JSCOT, where the Government always had a majority of members, so will almost certainly recommend ratification) and the Foreign Affairs, Defence and Trade Committee in the Senate (where the Government lacks a majority overall). The Inquiry reports do not bind the Government anyway, so the big question remains: will the opposition Labour Party subsequently vote with the Government to enact tariff reductions consistently with this treaty, to allow the Government then to ratify the treaty so it can come into force?
A particular stumbling block will remain the TPP11’s investor-state dispute settlement (ISDS) provisions, given as an option additional to inter-state arbitration for investors directly to enforce substantive commitments offered by host states to protect foreign investment, given that the Labour Party’s policy remains opposed to including ISDS in treaties. Despite that policy position, going back to the the Gillard Government Trade Policy Statement in 2011 (in force until Labour lost power in 2013), the Labour Opposition nonetheless voted pragmatically with the Government to allow FTAs containing ISDS to come into force with Korea and China.
Below is my Submission to both Parliamentary Committees, focusing on the investment chapter and supporting ratification of the TPP11. It is based in part on my latest paper with A/Prof Amokura Kawharu focusing on recent ISDS cases and investment treaties (re)negotiated by Australia, and New Zealand where a new Labour Government has also renounced ISDS for future treaties, but pragmatically agreed to rather minimal changes to ISDS and the investment chapter overall in TPP11. The footnoted original versions of the Submission, available by the Committee websites, refer to some of my other recent writings concluding a 4-year ARC cross-institutional research project on international investment dispute management. One is a 21-chapter book on ‘International Investment Treaties and Arbitration Across Asia‘, launched by former Chief Justice Robert French on Thursday 13 April as part of a SCIL-supported symposium on international commercial dispute resolution, including Australian perspectives.

Continue reading “The TPP is Back: Submission to Australian Parliamentary Inquiries”

NZ renounces ISDS: Deja vu?

we have written to leaders in both New Zealand and Australia recommending a shift towards introducing an EU-style two-tier investment court model in lieu of traditional ISDS, as a compromise way forward

The new Labour-led coalition government in New Zealand announced this month that it would resist investor-state dispute settlement (ISDS) provisions in future Free Trade Agreements or investment treaties.
This outcome and local political circumstances bear some remarkable parallels with the situation in Australia over 2011-2013, when the centre-left Gillard Labor coalition government adopted a similar stance until the new centre-right government resumed the policy including ISDS on a case-by-case assessment. Australia was then able to agree to major bilateral FTAs with China and Korea, as well as to the Trans-Pacific Partnership Agreement.
The [unfootnoted] posting below with Amokura Kawharu from UAuckland, a version of which will be published in the Kluwer Arbitration Blog, elaborates on these developments. We note how New Zealand nonetheless subsequently reached agreement in principle on a revised TPP, but will face challenges maintaining a wholly anti-ISDS stance in the ongoing (ASEAN+6) Regional Comprehensive Economic Partnership negotiations. As a compromise way forward, we have written letters to leaders in New Zealand and Australia suggesting the substitution of an EU-style investment court mechanism.
For more background and our main paper referred to below, please see:
Kawharu, Amokura and Nottage, Luke R., Models for Investment Treaties in the Asian Region: An Underview (February 21, 2017). Arizona Journal of International and Comparative Law, 2017 Forthcoming; Sydney Law School Research Paper No. 16/87. Available at SSRN: https://ssrn.com/abstract=2845088

Continue reading “NZ renounces ISDS: Deja vu?”