[This blog by my colleague Dr Brett Williams is based on his research for our project, ‘Fostering a Common Culture in Cross-Border Dispute Resolution: Australia, Japan and the Asia-Pacific‘, supported by the Commonwealth through the Australia-Japan Foundation which is part of the Department of Foreign Affairs and Trade.]
As part of this project on possible dispute settlement provisions that could be incorporated into an Australia Japan Free Trade Agreement, Dr Brett Williams is working on papers suggesting two innovations that could be incorporated into the provisions for inter-state dispute resolution regarding alleged violations of market access commitments. Both of these innovations would enhance the transparency of the issues at stake in the potential dispute, and potentially promote earlier and more cost-effective dispute resolution.
One important further aspect of both of these possible innovations would be that they would be capable of being incorporated into the WTO dispute settlement procedure. Both Australia and Japan have long traditions of support for the multilateral trading system and both have a keen interest in being active players in enhancing and improving the system. Therefore, in suggesting these innovations for possible incorporation into an Australia Japan FTA, Dr Williams also considers whether Australia and Japan could use the FTA as a way of trialling some procedures which could later be the subject of a joint proposal by Japan and Australia to amend the WTO dispute settlement procedure. Neither of the proposed innovations are particularly contentious in their concept but there could be some contention about the practical aspects of implementing them.
Category: Dispute resolution
WikiLeaks and “A Whale of A Story”
[This is based on research for the project, ‘Fostering a Common Culture in Cross-Border Dispute Resolution: Australia, Japan and the Asia-Pacific‘, supported by the Commonwealth through the Australia-Japan Foundation which is part of the Department of Foreign Affairs and Trade. An edited version was published on Australia Day by the East Asia Forum blog.]
My Sydney Law School colleague Dr Tim Stephens convincingly criticises the Sydney Morning Herald and others recently for over-sensationalising Australia’s alleged “Secret Dealing on Whale Hunts”, in reporting drawing on documents released by WikiLeaks. He also analyses reports indicating some opposition with the Australian government about the proceedings it has now initiated against Japan before the International Court of Justice (ICJ). A lively debate has emerged on the ABC’s website in response to Dr Stephens’ article entitled “A Whale of a Story”, with many more excellent points made on both sides of the whaling debate. Here is my own two yen’s worth.
Australia’s Productivity Commission Still Opposes Investor-State Arbitration
[This is based on research for the project, ‘Fostering a Common Culture in Cross-Border Dispute Resolution: Australia, Japan and the Asia-Pacific‘, supported by the Commonwealth through the Australia-Japan Foundation which is part of the Department of Foreign Affairs and Trade.]
The Australian Government’s Productivity Commission (PC) released on 13 December its Research Report on Bilateral and Regional Trade Agreements (BRTAs). Recommendation 5 of the Draft Report in July had suggested that BRTAs (including International Investment Agreements or IAAs) should include Investor-State Dispute Resolution (ISDS) only if Australia’s counterpart country has a relatively underdeveloped legal system, and more generally only if foreign investors did not obtain more expansive protections than domestic investors. Following criticism of some factual errors and various arguments included in the Draft Report, the PC convened a policy workshop for officials, academics (including myself) and other stakeholders. Some views expressed there are partly reflected in the longer and somewhat better-argued section on ISDS now found in the final Report (at Part 14.2, pp265-77). Unfortunately, however, there remain serious problems with the analysis, which includes the following Findings by the PC:
‘1. There does not appear to be an underlying economic problem that necessitates the inclusion of ISDS provisions within agreements. Available evidence does not suggest that ISDS provisions have a significant impact on investment flows.
2. Experience in other countries demonstrates that there are considerable policy and financial risks arising from ISDS provisions.’
Below I focus on the implications of this approach. They are particularly acute for Australia’s present negotiations for a Free Trade Agreement (FTA) with Japan, for accession to the Trans-Pacific Partnership Agreement (TPP, which Japan is also interested in joining), and for developments more generally within APEC and at the multilateral level
Continue reading “Australia’s Productivity Commission Still Opposes Investor-State Arbitration”
Good for the Goose, Not Good for the Gander? Australian versus Japanese Approaches Towards Investor-State Arbitration
[This is based on research for the project, “Fostering a Common Culture in Cross-Border Dispute Resolution: Australia, Japan and the Asia-Pacific”, supported by the Commonwealth through the Australia-Japan Foundation which is part of the Department of Foreign Affairs and Trade. An edited and updated version is also on the East Asia Forum.]
The Productivity Commission (PC) released on 16 July a Draft Report for its Review of Bilateral and Regional Trade Agreements, commissioned by the Assistant Treasurer to reconsider the Australian Government’s policy in negotiating Free Trade Agreements (FTAs). It acknowledges the inefficiencies of preferential agreements compared to multilateral approaches. However, given the persistent impasse in WTO negotiations, the Report pragmatically suggests various means to maximise benefits in the short-term, which may also lead to longer-term multilateral solutions. Unfortunately, that ideal is unlikely to be achieved – risking perverse implications throughout the Asia-Pacific, where Australia has concentrated its FTA activity – if the PC’s Final Report ends up including all these suggestions in its Draft Recommendation 5:
1. “Where the legal systems of partner countries are relatively underdeveloped, it may be appropriate to refer cases to third party dispute settlement mechanisms.
2. However, such process should not afford foreign investors in Australia or partner countries with legal protections not available to residents.
3. Investor-state dispute settlement procedures should be subject to regular review to take into account changing international best practice and the evolving legal systems in partner countries.”
As explained in my Submission to the PC (reproduced here), I have no great difficulty with the last point, although I suggest that one way to achieve that goal would be for Australia to develop and update a Model Bilateral Investment Treaty (BIT). I have much more difficulty with the PC’s second recommendation, but I focus now on problems with the first as it is particularly relevant to Australia’s policy position in regard to the Asia-Pacific, and especially now Japan.
Fostering A Common Culture in Cross-Border Dispute Resolution: Australia, Japan and the Asia-Pacific
This is the title of a project funded by the Australia-Japan Foundation over 2010-11 for myself and Sydney Law School colleagues, Dr Brett Williams and Micah Burch, which will consider the scope for both countries to develop greater common ground in cross-border dispute resolution law and practice, to facilitate bilateral, regional and even multilateral economic integration. Australia and Japan have recently amended their Double-Tax Treaty and are now negotiating a Free Trade Agreement (FTA). Former Prime Ministers Kevin Rudd and Yukio Hatoyama floated the idea of a broader “Asia Pacific Community” or “East Asian Community”, not limited to matters conventionally found in FTAs. The project will look at the possibility of adding:
(a) novel inter-state arbitration mechanisms, namely for:
(i) disputes about interpretation of Double Tax Treaties, a process triggered by taxpayer in a state (which must then obtain a decision from arbitrators binding on both states) and now envisaged since the 2005 revisions to the OECD Model Tax Treaty;
(ii) disputes about market access for goods and services (including typically some forms of investment), usually modelled on provisions set out in the 1994 Dispute Settlement Understanding of the World Trade Organization (itself under review, with considerable leadership from Australia);
(b) appropriate mechanisms for disputes involving a broader array of investments, in response to discriminatory or other illegal treatment from the host state, allowing investors to bring arbitration proceedings directly (often now provided in FTAs and bilateral investment treaties or “BITs”) instead of via appeals to their home state for inter-state dispute resolution;
(c) provisions or measures to improve commercial arbitration law and practice for the resolution instead of business-to-business disputes, achieved through commitments that might also be entrenched through treaties, but potentially instead through parallel legislation in each state, or through common Rules or agreements among the main Japanese and Australia arbitral institutions).
The project will also involve Professor Tatsuya Nakamura, former ANJeL Research Visitor and General Manager in the Japan Commercial Arbitration Association, and anyone willing to share experiences or views in these three fields (particularly in Australia or Japan) is very welcome to contact me at first instance.
New Legislative Agendas, Legal Professionals and Dispute Resolution in Australia and Japan: 2009-2010
This is the title of my third paper in a series of edited and updated selections of my postings to the ‘East Asia Forum’ blog (indicated with a double asterisk in the Table of Contents below) and this partly-overlapping ‘Japanese Law and the Asia-Pacific’ blog. They mainly cover developments from mid-2009 through to mid-2010, with a focus on law and policy in Australia and Japan in a wider regional and sometimes global context. The paper is freely downloadable here.
Half of the postings edited for the paper introduce some new policy and legislative agendas proclaimed by the then Prime Ministers of Australia (Kevin Rudd, in late July 2009) and Japan (Yukio Hatoyama, through the Democratic Party of Japan [DPJ] which he led to a remarkable general election victory in late August 2009). Both had resigned by mid-2010, indicating some of the difficulties involved in implementing ambitious reforms in both countries. All the more so, perhaps, if innovative measures are to be added to both countries’ Free Trade Agreements (FTAs) in order to foster more sustainable socio-economic development in the aftermath of the Global Financial Crisis (GFC).
The remaining postings end by introducing Australia’s regime for international (and domestic) commercial arbitration enacted in mid-2010, centred on a United Nations Model Law – like Japan’s Arbitration Act of 2003. However it sets these enactments in broader context by focusing on legal professionals – lawyers, judges and specialists in Alternative Dispute Resolution (ADR) – as well as aspects of the legal education systems in both countries. Those systems will need to gel better as well for both Australia and Japan to achieve the ‘cultural reform’ needed to generate sustainable critical mass in commercial (and investor-state) arbitration activity.
International Commercial Arbitration Reform in Australia, Japan and Beyond
Australia’s long-awaited International Arbitration Amendment Act 2010 (Cth) received Royal Assent on 6 July, after the Senate agreed on 17 June to the Bill introduced to the House of Representatives on 25 November 2009 as revised by the federal Government itself on 17 March 2010. The International Arbitration Act 1974, as thereby amended (‘amended IAA’, at http://www.comlaw.gov.au), is set in broader context by the first book devoted to this important field of dispute resolution (‘DR’) law and practice: Luke Nottage and Richard Garnett (eds) International Arbitration in Australia (Federation Press, Sydney, forthcoming October 2010: see Prelims PDF downloadable here).
This eleven-chapter work adds a Preface from NSW Chief Justice Spigelman, a powerful proponent of arbitration and broader access to justice as well as judicial exchange with Japan. It is partly dedicated to Professor Yasuhei Taniguchi, one of my inspiring former teachers at Kyoto University in the early 1990s and a Distinguished Visitor to Sydney Law School over July-August 2009. He is also renowned as a practitioner of international commercial arbitration (ICA), having served for example as arbitrator in an ICC arbitration in Melbourne, as well as a former Judge on the WTO Appellate Body.
The amended IAA brings new promise for ICA in Australia, and may offer lessons for countries like Japan. But Australia can also learn from Japan, especially the thorough way in which it goes about legislative reform.
Continue reading “International Commercial Arbitration Reform in Australia, Japan and Beyond”
Will Privately-Supplied ADR Keep Growing in Japan?
[Adapted on 10 April for the East Asia Forum blog]
The shift since the 1990s in the self-image of many bengoshi lawyers outlined in my previous posting, underpinned also by the slowly changing nature of their work generally as well as the emergence of corporate law firms, helps explain the quite swift enactment of the 2004 Law to Promote the Use of Out-of-Court Dispute Resolution Procedures (translated here), driven also by a Judicial Reform Council (JRC) recommendation in 2001. After a slow start, the Law also seemed to be gaining some traction in promoting privately-supplied ADR services.
However, Court-annexed mediation and recent improvements in the litigation process itself leave a formidable competitor. And the conservative backlash among bengoshi in electing their new JFBA President is likely to further dampen the emergence of private ADR services and institutions. Especially now, that only seems probable if and when private suppliers develop niche markets like more facilitative (not evaluative) forms of ADR – a characteristic of ADR in Australia that has impressed ANJeL Visiting Professor Tatsuya Nakamura (see his columns in Japanese reproduced here) – and if litigation costs balloon like they have in countries like Australia.
Continue reading “Will Privately-Supplied ADR Keep Growing in Japan?”
Japan’s Legal Profession (and ADR and Legal Education) at a Crossroads
Japanese bengoshi lawyers, as the most influential group within the legal profession, stand at a crossroads. Overall, through the overarching Japan Federation of Bar Associations (JFBA), their work and attitudes have become more amenable to collaborating with the judiciary and even public prosecutors in implementing reforms to the litigation system; to increasing the numbers allowed to pass the National Legal Examination as the gateway to careers as a lawyer, judge or prosecutor; and even to allowing Japan’s many “quasi-lawyers” to expand their legal practice, as well as more promotion of privately-supplied ADR services. Reforms in all these areas were propelled by the Judicial Reform Council’s final recommendations to the Prime Minister in 2001, but they were consistent with the trajectory of bengoshi as a whole. However, the controversial election of a new JFBA President may derail all this, with implications also for related initiatives such as Japan’s new postgraduate “Law School” programs inaugurated in 2004.
Continue reading “Japan’s Legal Profession (and ADR and Legal Education) at a Crossroads”
Guest blog: “Learning from Toyota’s Troubles — Where’s the Board?”
Do Toyota’s woes indicate, as some have argued, the last nail in the coffin of the mass production based export model that had served the Japanese economy so well at least through to the 1980s? In other words, does Japan need to wind down even high-tech goods manufacturing and further expand its services sector? Are consumer product safety expectations both within Japan and abroad just too demanding nowadays? Or is Toyota similar to Mitsubishi Motors, an aberrant company which for years conducted clandestine recalls – taking consumers and regulators for a ride – until an employee blew the whistle in 2000 … almost destroying the Mitsubishi brand name? And does the Toyota saga suggest that Japan’s gradual transformation in corporate governance is, well, TOO gradual?
For one view on that last point, and to encourage public comments on any of these questions or others that have been raised by Toyota’s saga, I am pleased to reproduce (with permission) the following posting by an American ANJeL member on JURIST, the University of Pittsburgh’s blog:
JURIST Guest Columnist Professor Bruce Aronson of Creighton University School of Law says that Japanese automobile manufacturer Toyota’s current safety crisis – now the subject of Congressional hearings – should prompt the company to address its seriously flawed system of governance more than just its public image….
Continue reading “Guest blog: “Learning from Toyota’s Troubles — Where’s the Board?””