Japanese and Asia-Pacific Dispute Resolution events over October 2021

Over this month I am pleased to contribute to three events regarding Asia-Pacific arbitration and dispute resolution. On 1 October, I am moderating a session on International Commercial Arbitration in Japan and Germany, at the comparative ADR conference hosted by Institute of Japanese Law at the FernUniversität in Hagen to commemorate the 30th anniversary of its online courses in Japanese law. The speakers are well-known lawyers Ms Yoshimi Ohara (Nagashima Ohno & Tsumematsu) and Dr Christian Strasser (HEUKING KÜHN LÜER WOJTEK). Other sessions compare investment treaty arbitration as well as mediation.

On 20 October I present two classes in a new postgraduate law course on international commercial arbitration developed for the University of Chile by Santiago-based lawyer and former USydney LLM student Ricardo Vasquez Urra, which we hope will be offered annually. This too draws on my recently published book on international commercial and investor-state arbitration, and parallels my co-teaching (with barrister Dr Anna Kirk) the LLM course on international commercial arbitration at the University of Auckland late last year and in 2022.

On 2 October, I present the module on consumer redress and access to justice for a new postgraduate intensive course on consumer protection developed by the University of Malaya. I highlight law and policy developments mostly by comparing Australia, Japan and Southeast Asia, building on books including ASEAN Consumer Law Cooperation and Harmonisation (CUP 2019) and Contract Law in Japan (Wolters Kluwer 2019, 2nd ed 2022), as well as other recent publications including Studies in the Contract Laws of Asia (especially Volume III, all reviewed here for the Journal of Japanese Law). We explore some law and practice around courts and tribunals, Ombudsman and related arbitration-like processes, mediation, and other processes for consumer redress.

P.S. On 26 October I also present on “Corporate Governance and Independent Directors in Southeast Asia” (focusing on Thailand and somewhat Malaysia) for a webinar on the Role of Independent Directors in Contemporary Asia, part of the Contemporary Asia International Forum Series 2021 at National (National Chung Hsing University) hosted by Professor I-Tzu (Edith) Su.

P.P.S. This marks the 250th posting on this Japanese Law and the Asia-Pacific blog, over more than a decade. Many thanks to occasional guest bloggers and all readers!

Asia ADR Week 2021 session on roles of in-house counsel [& ‘errors of law in arbitration’]

[Updates: A. Also in August 2021, I chaired a presentation via Monash University on “Errors of Law in Arbitration – Revisited”, with a recording here. Dr Benjamin Hayward argued that a tribunal’s application of a substantive law different from that expressly chosen by the parties, or not applying the conflict of law provisions of the seat (and any chosen Rules) where such substantive law is not expressly chosen, could constitute an error of applicable procedure and thus a ground for challenging the consequent arbitral award.

B. My co-authored article on the new ACICA Rules (mentioned at 7 below), including comparative references to Japan and other Asian jurisdictions, is available in manuscript form: Nottage, Luke R. and Dreosti, Julia and Tang, Robert, The ACICA Arbitration Rules 2021: Advancing Australia’s Pro-Arbitration Culture (September 26, 2021). Journal of International Arbitration, 38:6, 2021 (Forthcoming), Available at SSRN: https://ssrn.com/abstract=3931086

C. My co-authored article empirically examining the “formalisation” of international arbitration, and the diminishing influence of non-lawyers (or even in-house counsel) across key nodes of influence, is available in manuscript here (and shortened for a forthcoming Elgar book co-edited by Shahla Ali, Giorgio Colombo et al on “Sustainable Diversity in International Arbitration”): Nottage, Luke R. and Teramura, Nobumichi and Tanna, James, Lawyers and Non-Lawyers in International Arbitration: Discovering Diminishing Diversity (September 20, 2021). Available at SSRN: https://ssrn.com/abstract=3926914]

As part of the “Asia ADR Week” of events for 2021, coordinated by the Asian International Arbitration Centre based in Kuala Lumpur, as session was scheduled for the first day of the main conference – Thursday 19 August 4-5pm AEST (2-3pm KL time) – on the topic of “Starting In-House: The Role of General Counsel of Multinational Corporations in ADR”. [A recording is available on request for my USydney students.] Agreed session contributors were myself as moderator and:

  1. Ms Debolina Partap (Wockhardt Limited, general counsel based in Mumbai)
  1. Ms Esther Chow (Kone Elavator (M) Sdn Bhd, general counsel based in KL)
  1. Mr Nick Longley (Holman Fenwick Willan, based in Melbourne; formerly in a law office in Hong Kong as well as in-house for four years with a Japanese civil engineering company and now significant engagement with Korean firms)
  1. Mr Cameron Ford (Squire Patton Boggs, based in Singapore, and formerly in-house for over a decade)
  2. Mr Raymond Goh (China Tourism Group Corp Ltd, Group general counsel – International, in Hong Kong / China).

The assigned description was: “The role of an in-house counsel in shifting the focal point on dispute resolution from the traditional standpoint of litigation to the innovative vigor of ADR has resulted in the majority of Fortune 1000 companies preferring to use ADR as a means of resolving both international and domestic disputes. This session focuses on the multi-faceted role of in-house counsel in spearheading ADR as a principal means of resolving disputes.” The focus therefore was on evolving in-house counsel perceptions around Asia regarding alternatives to litigation (arbitration, mediation, other Alternative Dispute Resolution) to resolve cross-border disputes. Part of the backdrop is resurgent delays and especially costs in international commercial arbitration despite its continued spread east from the traditional (European then US) venues.

The first part of the session asked some general questions focused on our panelists currently or having worked extensively as in-house counsel [Ms Chow, Ms Partap, Mr Goh, Mr Ford]:

1. How do or should in-house counsel teams nowadays decide generally whether to provide for and/or engage in arbitration, mediation, expert determination or other ADR rather than cross-border litigation?

2. Does or should the approach change if the disputes involve commercial and government parties?

The second part of the session posed some more specific questions:

3. The latest QMUL international arbitration survey (with more than usual Asia-Pacific respondents) confirms the continued popularity of multi-tiered DR clauses, which commit parties contractually to try eg mediation before arbitration (rather than having waiting for the dispute to arise, and then try to achieve agreement to try other ADR before proceeding to pre-agreed arbitration). Yet are such multi-tiered clauses equally negotiated and invoked among companies and legal advisors in the Asian region? See http://www.arbitration.qmul.ac.uk/research/2021-international-arbitration-survey/ [cf eg Japan, Korea (Mr Longley), Malaysia (Ms Chow)]

4. Especially in the region, are there difficulties in enforcing say the mediation step (as a jurisdictional requirement say before being able to proceed to arbitration), and issues in determining the law applicable to that question? Cf eg this US report / chapter for a book / project by Profs Gu and Reyes: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3601337, and recent case law in Hong Kong etc (https://pulse.kwm.com/hong-kong/multi-tiered-dispute-resolution-clauses-what-happens-if-you-dont-comply/) [Mr Longley]

5. What prospects are there for more establishment and use of dedicated centres for mediation, especially in the Asian region (eg already Singapore / SIMC, but also recently Japan / JIMC and Vietnam / VMC)? See eg https://www.jimc-kyoto.jp/. Would it be easier for in-house counsel to promote cross-border mediation if institutional, rather than ad hoc?

6. Why is the 2019 Singapore Mediation Convention, aimed at facilitating enforcement of settlement agreements along the lines of the NYC, attracting many signatures (but not eg from Japan or Australia) but few ratifications? See https://uncitral.un.org/en/texts/mediation/conventions/international_settlement_agreements/status. What have been experiences in enforcing settlement agreements cross-border in Asia even without this new Convention?

7. Is there declining interest and practice of Arb-Med across Asia (except perhaps in mainland China and to a lesser extent Japan), linked perhaps to more use of separate mediation as part of multi-tiered DR clauses, and/or a sense that Arb-Med is not “global practice” which arbitration institutions and practitioners feel increasingly required to follow? Cf ACICA (for which Mr Longley and I served on the Rules drafting committee) which decided not to proceed with an Arb-Med provision in its 2021 Rules, although modelled on legislative provisions for domestic arbitrations: http://arbitrationblog.kluwerarbitration.com/2021/05/01/is-arb-med-un-australian/ [Mr. Goh]

8. Are there already or likely to be changes towards more use of mediation (either separate, or in Arb-Med) due to the pandemic, or eg has the enforced move to remote hearings etc created enough time, cost and arbitrator availability benefits to maintain adequate attractiveness for international arbitration? Is the recent rise of Expert Determination in Australian domestic dispute resolution driven by arbitration costs and delays in arbitration and litigation, thus likely to carry over into cross-border dispute resolution and beyond the pandemic? [Mr Longley, compared with say Malaysia – Ms Chow, and experiences from Singapore – Mr Ford]

Re-imagining the Japan-Australia (international arbitration) relationship

As a submission to the ANU’s Australia-Japan Research Centre project on “Reimagining the Japan Relationship”, funded by the DFAT-linked Australia-Japan Foundation, I have submitted the concluding chapter of my newly-published book: International Commercial and Investor-State Arbitration: Australia and Japan in Regional and Global Contexts (Elgar, 2021), which will be launched by Chief Justice Allsop of the Federal Court of Australia on 17 June 2021.

The book tracks the historical evolution of international arbitration, as the primary mechanism for resolving cross-border business disputes nowadays, in the direction of more globalisation but also more formalisation – reflecting in growing costs and delays. The COVID-19 pandemic has belatedly forced international arbitration mostly online, and new practices will likely persist as travel restrictions are eased (Part I). However, to maximise those possibilities and keep reducing costs and delays, there should be more structured and sustained bilateral cooperation between governments, law reform initiatives, arbitral institutions, judges, lawyers and academics (Part II).


Arb-Med for International Arbitration: in Japan, not Australia?

Active settlement facilitation by arbitrators in Japan, mirroring mediation by judges following the historically German/Austrian civil procedure law tradition, remains quite persuasive. This was evident from JCAA statistics analysed a decade ago by Prof Tatsuya Nakamura, prompting my commentary on this Blog (incorporated into chapter 4 of my new Elgar book, to be launched Thursday 17 June 2021 by Chief Justice Allsop of the Federal Court of Australia). Australia has also experimented with statutory Arb-Med provisions in New South Wales from 1990, and nation-wide from 2010 for domestic arbitrations under a more restrictive model, but Arb-Med has been far less popular in practice. The 2021 Rules of the Australian Centre for International Commercial Arbitration ended up not including Arb-Med provisions, but they were included (based largely on the 2010 legislation for domestic arbitration) in the September 2020 Consultation Draft Rules, so draft Article 55 reproduced below.

My analysis for the Kluwer Arbitration Blog (posted 1 May 2021) examines this topic in more detail. I suggest those draft Rule provisions could still be adapted anyway for individual contracts by parties and legal advisors (especially those from or familiar with Japan), other arbitral institutions (such as the JCAA) or legislators.

55. Mediation by an Arbitrator

55.1 An arbitrator may act as a mediator in relation to the dispute or a part of the dispute between the parties if each party has consented in writing prior to the arbitrator so acting.

55.2 If an arbitrator acts as a mediator, the arbitral proceedings must be stayed to facilitate the conduct of the mediation proceedings.

55.3 An arbitrator who is acting as a mediator:

(a) may communicate with the parties collectively or separately; and

(b) must treat any confidential information obtained from a party as confidential and for the purposes of these Rules, any information provided by one party to the arbitrator which that party: (i) has not provided to all the other parties; or (ii) has not expressly agreed can be provided to all the other parties, shall be treated as confidential.

55.4 If, during the course of any mediation, confidential information is obtained by the arbitrator and if the mediation terminates without a settlement of the entire dispute being reached, before recommencing the arbitration:

(a) the arbitrator must inform the parties if he or she has obtained confidential information during the mediation; and

(b) after so informing the party, the arbitrator must obtain the express written consent of all the parties before resuming to act as an arbitrator.

55.5 Following the termination of any mediation, no objection may be taken to the future involvement in the arbitration proceedings by the arbitrator on the grounds that the arbitrator acted as a mediator in relation to the dispute:

(a) if the arbitrator obtains the express written consent of all the parties to the arbitration required by Article 55.1; or

(b) if the arbitrator did not obtain any confidential information during the course of the mediation.

55.6 If an arbitrator has obtained confidential information during the course of any mediation and all parties do not consent to the resumption of the arbitration proceedings by the arbitrator, the arbitrator’s appointment is taken to have been terminated. Upon such termination, a replacement arbitrator is to be confirmed or appointed pursuant to the procedure by which the arbitrator being replaced was confirmed or appointed, except that:

(a) if there is a sole arbitrator, and if within [40] days of the parties authorising the arbitrator to act as mediator the parties have not reached agreement on the choice of a replacement sole arbitrator and provided written evidence of their agreed nomination to ACICA, the replacement sole arbitrator shall be appointed by ACICA with a mandate to commence upon termination of the appointment of the arbitrator who acted as mediator; or

(b) if there are three arbitrators, and if within [60] days of the parties authorising one or more arbitrators to act as mediator the parties have not reached agreement on the choice of one or more replacement arbitrators arbitrator and provided written evidence of their agreed nomination to ACICA, the replacement sole arbitrator(s) shall be appointed by ACICA with a mandate to commence upon termination of the appointment of the arbitrator(s) who acted as mediator.

ANJeL/JSAA “Japanese Law in Context” Podcasts Project – Going Live

The Australian Network for Japanese Law (ANJeL) in collaboration with the Japan Studies Association of Australia (JSAA) and thanks to Mini-Grant funding from the Japan Foundation Sydney awarded in November 2020, has completed 20 podcasts introducing Japanese Law in comparative and socio-economic contexts. The interviews include segments on the current or likely impact of the COVID-19 pandemic across the diverse sub-fields of Japanese law and society. The podcast “playlist” is here on Youtube and a report is here on the design and some key points from the podcasts, written by Melanie Trezise (PhD candidate and research assistant at the University of Sydney Law School, and past ANJeL Executive Coordinator).

The expert interviewees have taught in the Kyoto and Tokyo Seminars in Japanese Law, co-organised by ANJeL and Ritsumeikan University‘s postgraduate Law School since 2005 for Japanese, Australian and other international students, and/or the interviewees have been ANJeL visitors or advisors. Interviewers are ANJeL co-directors Prof Luke Nottage (University of Sydney Law School) and A/Prof Leon Wolff (QUT), along with Micah Burch (Senior Lecturer at Sydney Law School) and Melanie Trezise (who was also primarily responsible for the editing). Others who helped make this possible include Dr Nobumichi Teramura (now Assistant Professor at the University of Brunei) and the terrific tech team from Sydney Law School (Lana Kolta, Andy Netherington and Ross West).

ANJeL and JSAA are very grateful to all who supported this project. We hope that these resources available via their websites (or directly via Youtube) will be useful for the wider public when engaging with the fascinating and ever-changing world of Japanese law. The sub-topics and interviewees are listed below, with video-recordings edited to around 15-20 minutes each. There are also several mostly longer Bonus Features as well as a shorter introduction (by Luke Nottage), such as reflections about the innovative Kyoto and Tokyo Seminar program from some of its key architects (including past ANJeL Co-Director Kent Anderson and Ritsumeikan University Professor Naoya Yamaguchi). Other Seminar program organisers over the years include Professors Makoto Ibusuki (Program Convenor: ASEAN-in-Japan), Tsuneyoshi Tanaka and Chihara Watanabe.

  • Introduction to the Podcast Series – Luke Nottage (USydney)
  • Pop Culture – Leon Wolff (QUT)
  • Comparative and Theoretical Perspectives- Tetsuro Hirano & Chihara Watanabe (Ritsumeikan) with Luke Nottage
  • Mediation – James Claxton (Rikkyo / Waseda U) & Kyoko Ishida (Waseda U)
  • Arbitration – Giorgio Colombo (Nagoya U), Tatsuya Nakamura (Kokushikan U) & Nobumichi Teramura (UBrunei)
  • Civil Procedure – Yoko Tamura (Tsukuba U)
  • Lawyers – Jiri Mesteky (Kitahama Partners) & Yoshihiro Obayashi (Yodoyabashi & Yamagami)
  • Criminal Justice – Kent Anderson (ANU / Advisor to Australia’s Education Minister) & Makoto Ibusuki (Seijo U)
  • Government – Narufumi Kadomatsu (Kobe U)
  • Gender – Kyoko Ishida (Waseda U)
  • Labour – Takashi Araki (U Tokyo)
  • Contracts – Veronica Taylor (ANU/ ANJeL Advisor) & Tomohiro Yoshimasa (Kyoto U)
  • Consumers – Marc Dernauer (Chuo U)
  • Corporate Governance – Souichirou Kozuka (Gakushuin U)
  • Finance – Akihiro Wani (Morrison & Forster)
  • Tax – Justin Dabner (formerly JCU) with Micah Burch (USydney)
  • Bonus: Sports – Matt Nichol (CQU) with Micah Burch
  • Bonus: Gender, Past & Present – Masako Kamiya (Gakushuin U)
  • Bonus: Pandemic & Japanese Law – Compilation
  • Bonus: Kyoto and Tokyo Seminars – Kent Anderson, Leon Wolff & Naoya Yamaguchi (Ritsumeikan) with Luke Nottage

“ADR Academic of the Year 2020” Award

Based partly on his new book of selected, updated and new essays on “International Commercial and Investor-State Arbitration: Australia and Japan in Regional and Global Contexts”, Luke Nottage was recently awarded “2020 ADR Academic of the Year” by the Australian Disputes Centre. This leading centre administering and promoting Alternative Dispute Resolution has presented the “Australian ADR Awards” since 2016 across various categories. Open to all Australia-based experts, the “ADR Academic of the  Year” award “recognises the achievements of individuals who have in the last 12 months demonstrated excellence in academia in the field of [ADR, with work having] benefitted individuals, organisations or communities to achieve outcomes in more effectively resolving disputes.” More detailed criteria (work undertaken, process management, and benefits) and how Luke successfully met them over 2020 with kind letters of support from  Malcolm Holmes QC and Corrs consultant Prof Richard Garnett, are set out below.

  1. Detail outstanding work [over 2020] that illustrates excellence in academic endeavour in the area of alternative dispute resolution. [NB: Manuscript versions of most papers are freely downloadable via SSRN.com]

–       Four articles in leading refereed journals: on ISDS arbitrator neutrality (JWIT – as part of the special issue co-authored by the Geneva-based Academic Forum for ISDS), arbitration transparency (AIAJ), resolving Japan-Korea trade and investment disputes (JWT), Japan’s initiatives in international dispute resolution services (JJL)

–       Six chapters published or in press for books: on judicial control of arbitral awards (CUP Handbook), Asian investment treaty arbitration (including Japan and Australia, for Springer Handbook), arbitration and ‘society at large’ (CUP Compendium), ISDS impact on FDI (CUP), and a detailed analysis of ACICA (for the Oxford Encylopedia of International Procedural Law, with Prof Richard Garnett)

–       lead-edited New Frontiers in Asia-Pacific International Arbitration and Dispute Resolution (15 chapters, Wolters Kluwer, published end-2020), including my own five (co-)authored chapters (eg on Australia’s recent investment treaty arbitration practice): outline at https://japaneselaw.sydney.edu.au/2020/07/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-webin/

–       put into press 12-chapter International Commercial and Investor-State Arbitration: Australia and Japan in Regional and Global Contexts (Elgar, February 2021): outline at https://japaneselaw.sydney.edu.au/2020/08/book-in-press-with-elgar/

–       taught international arbitration at Sydney Law School (over 200 students across 5 JD/LLB and LLM courses) and UAuckland (LLM)

–       Supervising two PhD students in international arbitration and mediation, awarded Sydney University Postgraduate Representative Association “supervisor of the year” in late 2019

–       Academic Co-advisor for “Team Australia” law students across multiple Australian universities, who came second in Tokyo’s Intercollegiate Negotiation and Arbitration Competition in December 2019, and again second in November 2020 competing remotely (https://www.teamaustralia-inc.net/),

–       Only full-time academic on the ACICA Rules Drafting Committee, which released new draft Rules recently for public consultation

  1. How have you researched and developed this work and what skills have you used to ensure its effective delivery? [‘process management’]

–       Provided freely downloadable versions of almost all above publications (and most earlier arbitration or ADR-related publications) via http://ssrn.com/author=488525 (with 2700+ downloads of all my papers over last 12 months, so one of the most widely-read Australia-based law authors via SSRN.com)

–       For the Kluwer New Frontiers book: obtained competitive funding from USydney and Hong Kong University for two conferences, ran the USydney-based one in November 2019, mentored a project assistant to become a book co-editor, reported on presentations and related work in progress via https://japaneselaw.sydney.edu.au,  http://arbitrationblog.kluwerarbitration.com/author/luke-nottage/ and http://mediationblog.kluwerarbitration.com/author/luke-nottage/

–       Further disseminated research findings to practitioners and others through professional journals such as ACICA Review (December 2019 pp54-6, with Rome-based seminar co-presenter) and multiple international and domestic conference or seminar presentations (including Kluwer book related seminar organised and chaired on 4 August 2020 webinar, with over 200 registrants: https://law-events.sydney.edu.au/talkevents/beyond-the-pandemic-new-frontiers-in-asia-pacific-international-dispute-resolution)

–       Provided three submissions (twice invited to give oral evidence) for parliamentary inquiries into four treaties related to investment arbitration, with associated media commentary (eg AFR 26 August 2019) and analysis quoted in related JSCOT Reports (eg No 188, December 2019)

–       Co-organised and co-moderated ACICA Rules Revision public consultation webinar for Australian Arbitration Week in October 2020

–       Joined williamstradelaw.com as Special Counsel from July 2020 to provide legal advice in international arbitration nationally and internationally

  1. How do you believe this work has benefitted individuals, organisations and/or communities?

–       Improved understanding of the trajectory and current issues of international commercial and investment treaty arbitration, as well as cross-border mediation generally, among lawyers, academic and student researchers, government and other policy-makers (including treaty negotiators) as well as the general public

–       Mentored younger and mid-career practitioners and academics in these fields

–       Created closer institutional linkages between USydney and other leading law schools for ADR (notably over 2020 the University of Hong Kong)

–       Expanded connections between academia generally and professional bodies (eg ACICA, AFIA), government (especially DFAT, including through February 2020 co-organised SCIL conference in Sydney) and international organisations (including UNCITRAL via UNCCA.org.au Fellowship and October 2020 conference (recorded) presentation, and representation on the Academic Forum for ISDS as one of only a few Australians among over 100 professors world-wide: https://www.cids.ch/academic-forum-concept-papers)

–       Helped draft and publicise new-generation Arbitration Rules for ACICA

ANJeL’s “Team Australia” Students Second in INC Negotiation & Arbitration Moot

A cross-institutional “Team Australia” is Runner-Up in the 19th Intercollegiate Negotiation Competition “in” Tokyo last weekend (but held remotely this year). The Team also won the Chartered Institute of Arbitrators Prize for the best score in the English-language arbitrations held on 14 November (applying the UNIDROIT Principles of International Commercial Contracts, but also other international instruments). Over 15 November the Team successfully negotiated a complex cross-border joint venture agreement.

This year’s Team included Stella Lee (who also competed previously in English) and Tomohiro Sato from Sydney Law School, several students from ANU (another founding core partner of the Australian Network for Japanese Law, ANJeL) and others from various law schools across Australia. Stella and Tomo joined two others in the Japanese language division sub-Team (matched against Gakushuin and Osaka Universities). There were also two sub-Teams competing in the English language division (matched against Rikkyo, Sophia, Tokyo and Chulalongkorn Universities – “Chula” joined for the first time and all but one opposing universities also ended up in the top seven, so competition over Zoom was intense). The overall winner was the National University of Singapore, competing in the English-language division.

A primary coach was CAPLUS Associate Dr Nobumichi Teramura (and a co-editor of our co-edited Kluwer book on Asia-Pacific international dispute resolution, out next month), who also helped coach Team Australia to win the competition in 2018 and come second in 2019 (pipped by the University of Tokyo). The main academic coordinator was again ANJeL Advisor and ANU Professor Veronica Taylor. My modest contributions involved some introductions to arbitration and international contracting, judging a mock arbitration by the Team, providing ANJeL funding for coaching (plus a donation) and assessing the USydney students.

Heartfelt thanks also go to Dr Carol Lawson (UNSW) and Kieran Pender (helping with coaching this year and/or previously), Peter Cleary, A/Prof Jeanne Huang (for the practice moot with me), Cara Scarpato, A/Prof Stacey Steele (UMelbourne-based ANJeL Judges Program convenor) and Huw Watkins. Partial travel funding for some LLB students was available (as last year) from the Australian government’s New Colombo Plan grant administered by ANU, but was deferred due to pandemic-related travel restrictions.

Team Australia students had to conduct all their preparations remotely across multiple universities, missing out on the usual weekend practising face-to-face in Canberra plus final sessions together in Tokyo before the weekend competition, while preparing for end-of-year course assessments. Congratulations on rising to the extra challenges!

Comparing Case Disposition Times for Judgments related to International Arbitration (& Bibliography for Australia)

As elaborated in (abstracts of) chapters 4 and 5 of my book by Elgar forthcoming in February 2021, comparing international arbitration in Australia and Japan in regional and global contexts, the case law in both countries applying UN instruments (then New York Convention and Model Law) has shared an internationalist pro-arbitration trajectory. This can be seen also through the secondary literature on international arbitration law published in Australia in recent years, listed on the Blog here through to end-2014 and published subsequently as listed at the end of this posting below (with thanks to CAPLUS intern James Tanna).

However, this shift has really only become more consistent in Australia over the last decade, as indicated also with Nobu Teramura et al here. The tardiness is partly due to residual more English approaches to arbitration law and dispute resolution generally. Another reason arises because Federal and diverse State/Territory courts share jurisdiction over International Arbitration Act (IAA) matters – making it slower and hard to move in a consistent direction.

A. IAA-related Case Disposition Times in the Federal Court of Australia

A related challenge for Australia is that even when the outcome rightly upholds an international arbitration agreement or award, IAA-related case disposition times in Australian courts seem to have remained quite lengthy. In 2013 and (with Diana Hu) in 2016 I published articles analysing timeframes taken by the Federal Court (arguably the most pro-arbitration over the last 15 years). Statistical analysis showed that they had not changed much in the three years before the 2010 IAA amendments that adopted almost all the 2006 revisions to the Model Law (now also being considered by Japanese law reformers).

For chapter 5 of the Elgar book, I added a statistical analysis for 21 significant IAA-related Federal Court of Australia cases (listed in this PDF) filed from August 2016 (WDR Delaware) and decided by July 2020 (although not counting Energy City Qatar, as the first-instance decision of 16 July 2020 to enforce the foreign award has been appealed). These 21 included two judgments that were not directly but still somewhat related to the IAA, and which largely cancel each other out for timeframes. One is another judgment in the Sino Dragon dispute, where Beach J decided quite quickly (1.6 months) and briefly not to follow eg Hong Kong and apply an “indemnity costs in principle” approach to failed challenges to awards. The second was a judgment in the Rinehart trust domestic arbitration under the Commercial Arbitration Act, but discussing also the IAA.

Overall, the average case disposition time was 8.1 months, with a median of 5.2 months, with these figures largely unchanged if we exclude both of the last-mentioned cases. If we then exclude an outlier (Sanum, 30.8 months to final judgment), the longest case disposition time becomes 18.4 months (Dalian Huarui), still with a median of 5.2 but standard deviation dropping from 7.3 to 5.2 months. Overall, these typical timeframes for the four years from mid-2016 do suggest some improvement compared to the three preceding three-year periods (see summary Table 5.2 here)

However, it remains disappointing that the numbers of cases being contested across all Australian courts have remained at quite high levels, rather than lawyers bringing fewer cases as might have been hoped under clearer and more pro-arbitration law through the 2010 (and 2015) amendments plus related case law. Figure 5.6 (here) charts a significant step up in litigation decided in the three calendar years after the 2010 amendments, and indeed a second step up over 2014-18, suggesting enduring formalisation around international arbitration in Australia. However, a significant proportion of judgments in 2017-8 made only passing reference to the IAA (thus being categorised “Other”), and total judgments rendered annually (especially non-Other) started to drop back from 2017. Nonetheless, the data analysis for 2020 only ran until end-August, and even if annual cases stabilise at around 2018-19 levels there will still have been a significant step-up compared to 2010.

It would also be interesting to compare case disposition times in non-federal courts in Australia, and in courts across Japan, as well as checking if Japanese judgments related to international cases under its Arbitration Act have increased much since its enactment in 2003. Unfortunately, it is much harder to obtain such data, and also to generalise from the Japanese case filings as not all judgments are reported (unlike in Australia including via Austlii).

B. Secondary Literature on International Arbitration in Australia since 2015

B.1 Books, chapters and journal articles

Evans, P. and G. Moens, eds (2015). Arbitration and Dispute Resolution in the Resources Sector An Australian Perspective. Cham, Springer International Publishing.

Holmes, M. and C. Brown (3rd ed 2018). The International Arbitration Act 1974: A Commentary, LexisNexis.

Lewis, D. (2016). Interpretation and Uniformity of the UNCITRAL Model Law on International Commercial Arbitration: Australia, Hong Kong and Singapore. Kluwer

Nottage, L. (2021). International Commercial and Investor-State Arbitration: Australia and Japan in Regional and Global Contexts Cheltenham, Edward Elgar.

* * *

Allsop, J. (2018). Commercial and Investor-State Arbitration: The Importance of Recognising Their Differences. ICCA Congress 2018. Sydney.

Carroll, L. and F. Williams. (2019). “Australia: Investor-State Arbitration Laws and Regulations 2020.” from https://iclg.com/practice-areas/investor-state-arbitration-laws-and-regulations/australia.

Dickson-Smith, K. D. and B. Mercurio (2018). “Australia’s Position on Investor-State Dispute Settlement: Fruit of a Poisonous Tree or a Few Rotten Apples?” Sydney Law Review 40(2): 213.

Garnett, R. (2017). “Arbitration of Cross-Border Consumer Transactions in Australia: A Way Forward?” Sydney Law Review 39(4): 569-599.

Holmes, M., L. Nottage and R. Tang (2016). “The 2016 Rules of the Australian Centre for International Commercial Arbitration: Towards Further ‘Cultural Reform’.” Asian International Arbitration Journal 12(2): 211-234.

Kawharu, A. and L. Nottage (2018). “Renouncing Investor-State Dispute Settlement in Australia, Then New Zealand: Déjà Vu.” Sydney Law School Research Paper 18/03.

Kawharu, A. and L. Nottage (2018). “The Curious Case of ISDS Arbitration Involving Australia and New Zealand.” University of Western Australia Law Review 44(1 2): 70.

Kawharu, A. and L. Nottage (2018). Foreign Investment Regulation and Treaty Practice in New Zealand and Australia: Getting it Together in the Asia-Pacific? International Investment Treaties and Arbitration Across Asia. L. Nottage and J. Chaisse, Brill | Nijhoff: 443–485.

Kawharu, A. and L. Nottage (2019). Towards an Asia-Pacific Regional Investment Regime: The Potential Influence of Australia and New Zealand as a Collective Middle Power. J. Chaisse. Cambridge, Cambridge University Press.

Kurtz, J. and L. Nottage (2015). “Investment Treaty Arbitration ‘Down Under’: Policy and Politics in Australia.” ICSID Review – Foreign Investment Law Journal 30(2): 465-480.

Linderfalk, U. (2017). “Philip Morris Asia Ltd. v. Australia – Abuse of Rights in Investor-State Arbitration.” Nordic journal of international law = Acta scandinavica juris gentium 86(3): 403-419.

Luttrell, S. and I. Devendra (2015). “Inherent jurisdiction and implied power to stay proceedings in aid of arbitration: ‘A nice question’.” Journal of International Arbitration 32(5): 509.

Luttrell, S., C. Hassall, V. Lemaic and M. d. Marco. (2020). “International Arbitration 2020: Australia.” from https://practiceguides.chambers.com/practice-guides/international-arbitration-2020/australia.

Monichino, A. (2015). “The future of international arbitration in Australia.” Victoria University Law and Justice Journal 5(1): 60-74.

Monichino, A. (2016). “Arbitration Downunder – Two Steps Forward, One Step Back; Samsung C&T Corporation v Duro Felbuera Australia Pty Ltd [2016] WASC 193”. Australian Construction Law Newsletter 169: 28-31.

Monichino, A. (2016). “Privilege Disputes in International Arbitration.” The ACICA Review 4(2): 46-49.

Monichino, A. and A. Fawke (2014). “Enforcement of Foreign Arbitral Awards, Issue Estoppel and Comity: Developments in Australia”. Asian Dispute Review 16(1): 10-14.

Monichino, A. and A. Fawke (2014). “International arbitration in Australia: 2013/2014 in review.” Australasian Dispute Resolution Journal 25.

Monichino, A. and A. Fawke (2015). “International arbitration in Australia: 2014/2015 in review.” Australasian Dispute Resolution Journal 26.

Monichino, A. and A. Fawke (2016). “International arbitration in Australia: 2015/2016 in review.” Australasian Dispute Resolution Journal 27.

Monichino, A. and A. Fawke (2018). “International Arbitration in Australia: 2016/2017 In Review.” Australasian Dispute Resolution Journal 28.

Monichino, A. and A. Fawke (2019). “International Arbitration in Australia: 2017/2018 in Review.” Australasian Dispute Resolution Journal 29.

Monichino, A. and L. Nottage (2018). “Australia Country Update.” Asian Dispute Review (July 2018).

Monichino, A. and N. Teramura (2020). New Frontiers for International Commercial Arbitration in Australia: Beyond the ‘Lucky Country’. New Frontiers in Asia-Pacific International Arbitration and Dispute Resolution. L. Nottage, S. Ali, B. Jetin and N. Teramura, Wolters Kluwer.

Morrison, J. (2019). “Recent Developments in International Arbitration in Australia 2017-2018.” Journal of International Arbitration 36(3): 416.

Morrison, J. and M. Flanagan (2016). “Recent Developments in International Arbitration in Australia 2015/2016.” Journal of International Arbitration 33(6): 723-737.

Nottage, L. (2014). “Investor-State Arbitration: Not in the Australia-Japan Free Trade Agreement, and Not Ever for Australia?” Journal of Japanese Law 38: 37-52.

Nottage, L. (2015). “Do Many of Australia’s Bilateral Treaties Really Not Provide Full Advance Consent to Investor-State Arbitration? Analysis and Regional Implications.” Transnational Dispute Management 12: 1-18.

Nottage, L. (2015). “Investment Treaty Arbitration Policy in Australia, New Zealand and Korea.” Journal of Arbitration Studies 25(3): 185-223.

Nottage, L. (2015). “The Evolution of Foreign Investment Regulation, Treaties and Investor-State Arbitration in Australia.” New Zealand Business Law Quarterly 21: 266-276.

Nottage, L. (2016). “The TPP investment chapter and investor-state arbitration in Asia and Oceania: assessing prospects for ratification.(Trans-Pacific Partnership Agreement, 2015)(The Age of Mega-Regionals: TPP & Regulatory Autonomy in International Economic Law).” Melbourne Journal of International Law 17(2): 313.

Nottage, L. (2017). Investor-State Arbitration Policy and Practice in Australia. Second thoughts : investor-state arbitration between developed democracies. A. de Mestral. Ontario, Canada, Centre for International Governance Innovation: 377-430 (also in 2016: CIGI Investor-State Arbitration Series Paper 6: http://ssrn.com/abstract=2685941)

Nottage, L. (2020). “Confidentiality and Transparency in International Arbitration: Asia-Pacific Tensions and Expectations.” Asian International Arbitration Journal 16(1): 1-23.

Nottage, L. and A. Ubilava (2018). “Costs, Outcomes and Transparency in ISDS Arbitrations: Evidence for an Investment Treaty Parliamentary Inquiry.” International Arbitration Law Review 21(4): 111-117.

Nottage, L. and J. Hepburn (2018). Investment Treaty Arbitration Claims Over Tobacco Plain Packaging: Running Out of Puff? Hochelaga Lectures 2017. A. Reyes. Hong Kong, Hong Kong University Faculty of Law.

Nottage, L. and J. Morrison (2017). “Accessing and Assessing Australia’s International Arbitration Act.” Journal of International Arbitration 34(6): 1-43.

Nottage, L. and R. Garnett (2019). The Australian Centre for International Commercial Arbitration. Max Planck Encyclopedia of International Procedural Law H. R. Fabri, Oxford University Press.

Shankar, T. (2016). “Natural justice in international commercial arbitration: TCL air conditioner (Zhongshan) Co Ltd v Castel electronics Pty Ltd.” University of Western Australia Law Review 40(2): [113]-122.

Teramura, N., L. Nottage and J. Morrison (2020). Judicial Control of Arbitral Awards in Australia. The Cambridge Handbook of Judicial Control of Arbitral Awards. L. A. DiMatteo, M. Infantino and N. M.-P. Potin, Cambridge University Press: 175-197.

Trakman, L. (2018). The Reform of Commercial Arbitration in Australia: Recent and Prospective Developments The developing world of arbitration: a comparative study of arbitration reform in the Asia Pacific. A. Reyes and W. Gu. Oxford [UK], Hart Publishing: 251-278.

Trakman, L. E. and D. Musayelyan (2016). The Repudiation of Investor–State Arbitration and Subsequent Treaty Practice: The Resurgence of Qualified Investor–State Arbitration, Oxford University Press. 31: 194-218.

Ubilava, A. and L. Nottage (2020). Novel and Noteworthy Aspects of Australia’s Recent Investment Agreements and ISDS Policy: The CPTPP, Hong Kong, Indonesia and Mauritius Transparency Treaties. New Frontiers in Asia-Pacific International Arbitration and Dispute Resolution. L. Nottage, S. Ali, B. Jetin and N. Teramura, Wolters Kluwer.

B.2 ACICA Review and other shorter articles

Bernard, C. M. and J. Morrison (2018). “Amendments to the International Arbitration Act 1974 (Cth).” The ACICA Review 6(2): 9-10.

Bonnell, M., D. Mallett, R. Gao and K. Tam (2016). “Philip Morris v Australia: lessons for structuring investments.” The ACICA Review 4(1): 20-21.

Brimfield, F. (2016). “Gutnick v Indian Farmers Fertiliser Cooperative Ltd: Another strong example of Australian Court’s pro-enforcement attitude.” The ACICA Review 4(1): 26-28.

Chung, L. and P. Winch (2016). “Indemnity costs and the enforcement of arbitral awards in Australia.” The ACICA Review 4(2): 16-17.

Dearness, M. and L. Chung (2018). “Case Note: Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (in liquidation).” The ACICA Review 6(2): 11-13.

Dearness, M., L. Chung and P. Winch (2018). “Case Note: Trans Global Projects v Duro Felguera Australia ” The ACICA Review 6(1): 11-13.

Delaney, J. (2018). “A race to set aside or enforce the award: Hyundai Engineering & Steel Industries Co Ltd v Alfasi Steel Constructions (NSW) Pty Ltd.” The ACICA Review 6(2): 25-27.

Gleeson, M. (2015). “Evidence in international commercial arbitration: Some issues.” Victorian Bar News(158): 40-45.

Govey, I. (2018). “Australia’s Framework for International Commercial Arbitration.” The ACICA Review 6(2): 21-24.

Horrigan, B., I. Bacvic and P. Holloway (2017). “Federal Court Sets Aside International Arbitration Awards and Removes an Arbitrator.” The ACICA Review 5(2): 19-20.

Jones, D. (2019). “Arbitration in Australia – Rising to the Challenge.” The ACICA Review 7(2): 28-36.

Karantonis, J. (2015). “The 3rd Annual International Arbitration Conference in Sydney.” The ACICA Review 3(2): 43-45.

Monichino, A. (2016). “Privilege Disputes in International Arbitration.” The ACICA Review 4(2): 46-49.

Monichino, A. (2017). “Enforcement of Arbitration Agreements Against Non-Signatories: Which Law (the Chicken and the Egg)?” The ACICA Review 5(2): 43-46.

Monichino, A. (2019). “Application of Arbitration Agreements to Non-Signatories: The ‘Through or Under’ Route.” The ACICA Review 7(2): 47-50.

Monichino, A. and M. Carroll (2019), “The Proper Approach to the Interpretation of Arbitration Agreements: Australian High Court Speaks Out”. The ACICA Review 7(1): 8-15.

Nottage, L. (2017). “Book review: Dean Lewis, ‘The Interpretation and Uniformity of the UNCITRAL Model Law on International Commercial Arbitration: Focusing on Australia, Hong Kong and Singapore’ ” The ACICA Review 5(1): 48-51.

Paton, A. and L. Nottage (2019). “Confidentiality versus Transparency in International Commercial and Investment Treaty Arbitration in Australia, Japan and Beyond.” The ACICA Review 7(2): 54-56.

Quan-Sing, J. and L. Hands (2016). “Samsung C&T Corporation v Duro Felbuera Australia Pty Ltd [2016] WASC 193.” The ACICA Review 4(2): 20-23.

Sladojevic, A. (2015). “The International Arbitration Act 1974 – summarising recent legislative amendments.” The ACICA Review 3(2): 39-40.

Teramura, N. (2018). “Australian Perspectives on International Commercial Dispute Resolution for the 21st Century: A Symposium.” The ACICA Review 6(1): 36-38.

Thompson, S. (2016). “Federal Court of Australia imposes substantial costs order as a deterrent to those requesting that it set aside or intervene in Australian International Arbitral Award.” The ACICA Review 4(2): 18-19.

Ubilava, A. (2017). “International Investment Arbitration Across Asia: A Symposium.” The ACICA Review 5(1): 45-47.

Wakefield, J. and K. Narkiewicz (2015). “Australia’s new arbitration regime: five years on.” LSJ: Law Society of NSW Journal(8): 72.

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.