Category: Dispute resolution

ANJeL “Team Australia” 2nd again in INC Negotiation & Arbitration Moot!

Congratulations to University of Sydney Law School LLB and JD students Michelle Chen Daniel Hu, Kim Nguyen and Sean Yalcinkaya. They combined with other students mostly from ANU to form “Team Australia”, which again came second in the INC negotiation  and arbitration competition held over 9-10 December 2023 in Japan (this time pipped by UTokyo, with KyotoU coming third).

Importantly and deservedly, Team Australia won the ANJeL-sponsored prize for best (marks in) Teamwork. That was particularly impressive as the students have to cooperate cross-institutionally, and focus on moot preparations over the tense exam period. The students were also able to have a special tour of the apex Supreme Court, helped by ANJeL’s longstanding support for judicial visitors from Japan.

Special thanks to the lead coach and ANU law lecturer, James C. Fisher (and in past years Profs Kent Anderson and Veronica L. Taylor, ANJeL Advisors) as well as CAPLUS affiliate Nobumichi Teramura and Inma Conde for practice arbitrations. We are also grateful for support from DFAT (New Colombo Plan scholarships), Dean Simon Bronitt, Mitsui Matsushima and many past Moot alumni – including Ben Hines  and Irene Ma (both in the 2022 Team that also came second) and Eriko Kadota (now with Linklaters in Tokyo). For more details about this and past Teams see here.

Arbitration and Sports Law (Baseball) Dispute Resolution in Australia and Japan

As part of the Japanaroo suite of events, ANJeL is delighted to coordinate at Sydney Law School the two free public seminars below, both including a strong comparative focus on Japan and Australia, and involving a former Chief Justice of Victoria. One on Thursday 21 September compares arbitration’s historical trajectory (hybrid-format seminar, including two ANJeL program convenors based abroad – register via https://law-events.sydney.edu.au/events/intarbitrationaujp). The second on Friday 22 September compares sports law and dispute resolution (generally and with baseball as a major case study; in-person only, chaired by another ANJeL convenor Micah Burch – register via https://law-events.sydney.edu.au/events/globalsports-767).

1. Comparative History of International Arbitration: Australia, Japan and Beyond

This hybrid-format webinar compares the historical trajectory of international arbitration law and practice in Australia and Japan in regional and global contexts. An aim is to explore the evolving images and contours of arbitration and scope for cross-border collaboration in promoting this popular but sometimes contested form of dispute resolution.

Speakers

Commentator: Prof Luke Nottage (University of Sydney)(Drawing on the concluding chapter in his 2021 book: https://japaneselaw.sydney.edu.au/2020/08/book-in-press-with-elgar/ and his Encyclopedia entry on ACICA (with Prof Richard Garnett) at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4431276 )

Thursday 21 September

Time: 4-5.30pm

Location: The University of Sydney, Common Room, Level 4, New Law Building (F10), Eastern Avenue, Camperdown

Cost: Free, but registration is essential. Please select your attendance type during registration.

CPD points: 1.5 points

This event is being held an online and in-person at Sydney Law School. Please indicate your viewing preference when registering.

This event is proudly co-presented by the Centre for Asian and Pacific Law, the Resolution Institute and the Australian Network for Japanese Law at the University of Sydney Law School.

2. 2nd Annual Global Sports Law Symposium: Dispute Resolution

In-person event

This symposium brings together luminary experts and practitioners in sports law to discuss dispute resolution in the world of sports (it follows on from ANJeL’s seminar on international arbitration). The symposium’s first panel will feature two giants of the Australian sports law world reflecting on their careers in jurisprudence and sports administration resolving disputes in the sports area. The second panel will be a case study focusing on dispute resolution in baseball with two experts on both Japanese and Australian baseball.

About the Speakers

A. Dispute Resolution in Sports: Expert Reflections

Professor Deborah Healey (University of New South Wales)

Deborah Healey is the Director of the Herbert Smith Freehills China International Business and Economic Law (CIBEL) Centre and the Editor of the Sports Law Journal. She has more than 30 years of experience serving on the boards of major sports governance organizations and serves on the National Sports Tribunal.

Professor the Hon Marilyn Warren AC KC (Monash University)

Marilyn Warren is a Vice Chancellor’s Professorial Fellow of Monash University and is the former Chief Justice of Victoria. She practices as a commercial arbitrator and teaches law as a Professor at Monash’s Law Faculty.

B. Dispute Resolution in Sports: Baseball Case Study

Mr. Mark Marino (CEO, Baseball NSW)

Mark Marino has been the CEO of Baseball NSW since 2014 and is an Executive Committee Member of the Australian Baseball Players Alumni Association. Mark played collegiate and professional baseball in the United States and was the CEO of the Sydney Blue Sox 2014-2018.

Dr. Matt Nichol (Lecturer, Central Queensland University, (Melbourne))

Matt Nichol is a lecturer and sports law academic at the School of Business and Law at Central Queensland University and a board member of Baseball Victoria. His research uses approaches to labour law and regulatory theory to understand the regulation of labour in professional team sports.

Moderator: Mr. Micah Burch, Senior Lecturer, Sydney Law School.

Hosts: Sydney Law School, Australian Network for Japanese Law, Australia New Zealand Sports Law Association

Date: Friday, 22 September 2023

Time: 4.00-5.30pm

Location: Common Room, Level 4, New Law Building (F10), The University of Sydney

Please follow directional signage on arrival.

CPD Points: 1.5

This event is proudly co-presented by The University of Sydney Law School, the Australian Network for Japanese Law and the Australia New Zealand Sports Law Association.

History of International Arbitration in Japan

[This is the Introduction to a draft chapter written with ANJeL-in-ASEAN Convenor Asst Prof Nobumichi Teramura, for a book being edited by Lars Markert et al on International Arbitration in Japan]

Arbitration has had quite a long modern history in Japan, including a fascinating inter-state dispute that arose in 1872 (Part 2 below). The first arbitration legislation, modelled on German law, was enacted in 1890 and survived for over a century (Part 3).

In 1961, Japan also became one of the first states in Asia, indeed world-wide, to ratify the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYC). A few years after the 1985 release of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (ML), a group comprising mostly academics proposed new legislation based on that emerging global standard. However, the concept was only enacted 15 years later as the Arbitration Act (Law No 138 of 2003),[1] as part of the government’s broader package of reforms into justice system reforms. Instead, in 1996, legislation was amended to allow “fly-in” foreign lawyers (in addition to “foreign law solicitors” registered in Japan under legislation since 1986) to represent clients in international arbitrations in Japan. Their scope of permitted practice was somewhat expanded in 2021, as part of the government’s initiatives from 2018 to have Japan catch up with larger regional hubs for international arbitration. As another part of that program, the first amendments to the Arbitration Act were approved in 2023 (Part 4).

Despite this rather slow development of cutting-edge legislation for international arbitration in Japan, the courts have been comparatively consistent in rendering pro-arbitration decisions complying with the NYC and ML as international instruments (Part 5). Japan’s two main arbitration institutions, The Tokyo Maritime Arbitration Commission (TOMAC, established in 1926) and the Japan Commercial Arbitration Association (JCAA, established in 1953), have also helped keep arbitration practices updated by periodically revising their Arbitration Rules. The government’s push since 2017 to promote Japan more actively as a seat has led to further new Rules as well as new arbitral institutions, including for sports and intellectual property disputes (Part 6).

Japan has also become a comparatively active proponent of investor-state dispute settlement (ISDS) arbitration provisions in international investment agreements, although again after a slow start. Japan has seen few outbound and even fewer inbound ISDS arbitration claims. However, this means that arbitration generally may not attract as many negative associations with the general public as in other states experiencing more and/or high-profile ISDS arbitration claims from foreign investors (Part 7).

Despite such positive developments, arbitration has not yet captured the imagination in Japan. The general public remained quite unfamiliar with it, although awareness nowadays may be improving. Indeed, one colloquial understanding or definition of arbitration (chusai) was closer to mediation (chotei), even though the latter does not involve imposition of a binding decision by the agreed third-party neutral.[2] This confusion may have persisted from the Tokugawa era (1603-1867),[3] when notions of judiciable rights were comparatively weak and mediation was actively practiced to resolve civil disputes.[4]

As for awareness among Japanese firms in the modern era, the larger ones have long been quite familiar with the advantages of including arbitration clauses especially in maritime matters and other cross-border commercial contexts. Accordingly, some have got involved in some arbitrations and even some high-profile related court proceedings particularly abroad. In addition, sustained efforts by arbitral institutions and business associations since World War II have made smaller and medium sized enterprises more likely to include arbitration clauses in their own growing cross-border trade and then investment contracts, although many probably remain quite unfamiliar with arbitration. Furthermore, as a whole, Japanese firms have been more willing to agree to arbitration clauses specifying a seat outside Japan. In addition, they have appeared more reluctant actually to proceed with arbitration claims even under such clauses, or locally when the seat is agreed to be in Japan, compared to companies from other states in Asia and beyond.[5]

The result has been that Japan’s major arbitration institutions have not yet seen the significant growth in international case filings evident in several states in the region. Arbitration is also still used infrequently to resolve domestic commercial disputes. As with Japan’s still comparatively low per capita civil litigation rate, the reasons may be related to (general, organisational or legal) culture or institutional barriers (including comparatively few lawyers, experts, arbitrators and institutions pro-actively specialising in the field, at least until recently). These questions, and therefore the prospects for expanding arbitration services in Japan, are explored further in the Conclusions (Part 7).

[1] For a semi-official translation, see Japan Ministry of Justice, ‘Arbitration Act (Act No. 138 of 2003)’ (Japanese Law Translation) https://www.japaneselawtranslation.go.jp/en/laws/view/2784 accessed 14 April 2023.

[2] Tatsuya Nakamura, Chusaiho Gaisetsu [Outline of Arbitration Law] (Seibundo Shinkosha 2022) 1.

[3] Yoshihisa Hayakawa, ‘Nihon ni okeru Chusai no Rekishiteki Isou [Historical Phases of Arbitration in Japan]’ (2015) 87 Horitsu Jiho 19, 19-20.

[4] Nonetheless, some litigants did actively press their rights even during this pre-modern era, when Japan largely closed itself off from the wider world: see e.g., Herman Ooms, Tokugawa Village Practice: Class, Status, Power, Law (University of California Press 1996).

[5] Compare generally [[X-ref to Chapter 3 (Japan as seat) in this volume].

Japan’s International Investment, Evolving Treaty Practice and Arbitration Related to Corruption and Illegality

Written by: Luke Nottage and Nobumichi Teramura#

Abstract: This article forthcoming in 55 Journal of Japanese Law (mid-2023), part of an interdisciplinary book project on Corruption, Illegality and Asian Investment Arbitration [including a conference held in Brunei on 29 May 2023 (booklet here) supported by ANJeL and CAPLUS], addresses for Japan the difficult practical and policy question facing arbitration tribunals when a foreign investor claims mistreatment by a host state but the latter alleges that the investment was tainted by corruption or other similar serious illegality. By way of background, Japan emerged from the 1980s as a leading exporter of foreign direct investment (FDI). Yet it has low inbound FDI despite some significant growth since the late 1990s (Part II). This is despite Japan having comparatively very little corruption, which is often problematic for foreign investors (Part III).

To protect and promote outbound FDI after a hesitant start, over the last two decades, Japan has accelerated ratifications of standalone bilateral investment treaties (BITs) as well as investment chapters in free trade agreements (FTAs). Almost all allow foreign investors from the home state to directly initiate investor-state dispute settlement (ISDS) arbitration against host states to get relief from violations of substantive treaty commitments, such as non-discrimination or compensation for expropriation (Part IV.1).

Japan’s investment treaty practice on corruption and illegality is comparatively interesting for two reasons (Part IV.2). First, from around 2007, its treaties have often required host states to take measures against corruption. This should help Japan’s outbound investors, but these obligations are generally weakly phrased. Secondly, Japan’s treaties have been less consistent in expressly limiting their protections to foreign investments made in accordance with host state laws (including against corruption). This may be due to treaty drafters from Japan and counterparty states being less aware of the significance of such express legality provisions, which will often lead tribunals to decline jurisdiction if corruption is established, thus leaving foreign investors without treaty protections. Such outcomes may also incentivise host states to ensure a bribe is taken, to use as a treaty defence if foreign investors ever launch treaty claims, whereas other outcomes for tribunals are possible if there is no express legality provision. Another possibility is that this drafting is deliberate, again to benefit Japanese outbound investors as claimants because the absence of a legality provision renders more difficult defences from host states, which typically have more corruption than in Japan.

Japan may adopt more and clearer legality provisions if it becomes subject to more inbound ISDS arbitration claims, and/or if claims by Japanese outbound investors are mostly against well-governed host states with little scope for corruption. Yet both types of claims remain few (Part V). The shift may therefore come more from other counterparty states pushing for such legality provisions and Japan agreeing in its future treaties to demonstrate its overall commitment to combatting corruption, and to preserve the legitimacy of the ISDS arbitration system (Part VI).

# Respectively: Professor, University of Sydney Law School; Assistant Professor, Institute of Asian Studies, Universiti Brunei Darussalam.

“Corporate Environmental Responsibility in Investor-State Dispute Settlement” by Tomoko Ishikawa

[This is my draft review – for the Manchester Journal of International Economic Law – of an excellent new book (Cambridge University Press, 2023, ISBN 978-1-316-51397-2) by one of Japan’s leading international investment law and dispute resolution scholars, Professor Tomoko Ishikawa of Nagoya University’s Graduate School of International Development. She was previously Associate Professor at Tsukuba University and Assistant Professor at Waseda University. Unusually for a Japanese academic, Prof Ishikawa also served as a judge of the Tokyo District Court (2002-5) and working on international law matters in the Ministry of Foreign Affairs (2010-12). She has been appointed to the Panel of Conciliators by the Chairman of ICSID over 2017-23. Her research intersects with my current book project with Nobumichi Teramura and Bruno Jetin on corruption and investor illegality in Asian investment arbitration.]

This thought-provoking, extensively researched and well-argued book combines two hot topics for international economic law experts as well as the general public: corporate environmental responsibility, comprising both hard law and voluntary Corporate Social Responsibility (CSR) and investor-state dispute settlement (ISDS). It is highly recommended for scholars, practitioners and policy-makers, including national delegates, observers and the Secretariat of the United Nations Commission on International Trade Law (UNCITRAL) engaged in ongoing multilateral reform deliberations on ISDS since 2019.

Chapter 1 outlines how ISDS arbitration reinforces substantive protections offered through international investment agreements (IIAs) to foreign investors typically going beyond customary international law, notably against discrimination, uncompensated indirect as well as direct expropriation, and violation of fair and equitable treatment (FET) including denial of justice in national courts and administrative procedures. Yet burgeoning IIAs and ISDS cases have highlighted how foreign investment can adversely impact the environment and often related human rights in host states. The book’s key concern is how the ISDS system, which seems “asymmetrical” in only allowing foreign investors to claim against host states, also does or can significantly allow counterclaims by host states to offer relief against environmental degradation.

Professor Tomoko Ishikawa’s well-structured book (pp17-21) devotes the first part of chapter 2 (pp 24-48) to the challenges of regulating and pursuing the responsibility of transnational corporations (TNCs) in domestic legal orders (including poor governance capacity and access to impartial justice), but also the persistent lack of effective general mechanisms internationally. Ishikawa examines the paucity of customary and treaty-based international law obligations and enforcement mechanisms, recent attempts to expand the international human rights obligations of corporations, and some “soft law” instruments to promote corporate social responsibility (including private initiatives involving CSR). The second part analyses 1000 randomly selected IIAs and Model IIAs (pp 49-55). There is a trend especially over 2010-19 to add express provisions reinforcing the host state’s general “right to regulate” (such as “no lowering of standards” or general exceptions clauses). Yet very few IIAs (39) set express investor obligations (plus six out of 56) Model IIAs), although somewhat more (54) refer to voluntary CSR in the preamble or especially main text (plus 11 Model IIAs), and both types of provisions have also emerged particularly over the last decade or so.

Chapters 3-5 delve into the procedural mechanism of counterclaims potentially under IIAs. Chapter 3 outlines the benefits compared to pursuing investor responsibility under domestic law (pp 60-65). These include problems with the rule of law (such as judicial corruption, mentioning some notable cases) and cross-border enforceability, which I would add are essentially the flipside of problems faced by foreign investors without (especially ISDS-backed) IIAs.

In addition, Ishikawa deals with a fascinating and little-discussed issue, pointing out that in some cases the actual victims of environmental harm may not benefit from the host state proceeding with a counterclaim. A primary conclusion is that ISDS arbitral tribunals should be able to rule it inadmissible based on due process concerns (as a general principle of international law) if allowing the counterclaim “would result in effective deprivation of remedy for the victims” (p84). One factor in this determination will be the host “state’s representation of the interests of its people” (p84), presumed if it has representative democracy but rebutted for example if the host state colluded with the investor in causing the damage. A second suggested factor is doubts about the distribution to victims of compensation potentially awarded. Nonetheless, Ishikawa rightly concludes that in proving such matters, the investor faces “a difficult task. After all, there is a strong presumption that the host state acts on some public purpose, and tribunals would be very reluctant to interfere with internal political affairs by second-guessing the issues of representation and fair distribution” (p85, footnotes omitted).

Chapter 4 first deals with jurisdiction or consent to counterclaims. Again, Ishikawa makes good use of her empirical dataset. She agrees with some other commentators that treaties’ (typical) “absence of reference to the host state’s right to file a counterclaim, which is already responsive to the principal claim, is a logical choice and does not necessarily indicate the parties’ intention to exclude counterclaims” (p97, footnote omitted). She argues this conclusion is buttressed because 706 IIAs out of the 1000 sample contain seemingly narrow locus standi provisions (only expressly mentioning the investor’s right to claim) but 263 go on to provide narrow definitions of investment disputes and claims (pp 98-99). Only the latter subset of treaties, Ishikawa contends, impede tribunals taking jurisdiction over counterclaims because such IIAs allow only for disputes and claims over host state obligations assumed under the treaty. She further argues that a narrow applicable law clause (not expressly referring to domestic law, but only international law: 140 IIAs and 12 Model IIAs) does not imply exclusion of domestic law in ISDS as tribunals “always possess the incidental jurisdiction to apply domestic law to questions that cannot be answered by international law” (p101).

Nonetheless, the second half of Chapter 4 investigates whether tribunals, despite taking jurisdiction under (most) treaties, should rule counterclaims as inadmissible (pp 104-115). Ishikawa argues that there need only be a factual not legal nexus between the principal claims and counterclaims. More complicated is whether a parent’s counterclaim for damage caused by its subsidiary should be inadmissible due to the principle of limited liability. Ishikawa concludes otherwise, noting for example that investment treaties often allow conversely for parent companies to bring claims on behalf of local companies they control or (more controversially nowadays) have shareholdings in. She further concludes that “the question of whether the parent company directly owes a duty of care or is shielded from liability in a particular case must be considered at the merits stage, in accordance with a careful interpretation and application of the relevant domestic law” (p115). This sub-topic, and perhaps the arguments about jurisdiction presented in this Chapter, nonetheless will likely generate some significant divergences among other commentators and tribunals.

Chapter 5 turns to assessing the merits to be considered by tribunals for counterclaims (pp. Ishikawa first elaborates quite compellingly the argument that tribunals generally can and should apply aspects of domestic law, including those imposing responsibility for environmental harm. Concerns about the legitimacy of international adjudicators applying such laws can be addressed by them adopting a “domestic jurisprudence” approach (like the Permanent Court of International Justice), considering a wide range of domestic law sources (pp 128-9) and more use of local legal experts (although very few sampled treaties provide expressly for tribunals to appoint ex curia experts, and only for factual issues: p 131).

The second half instead considers counterclaims based on international law (pp 135-56). An interesting but ambitious argument is that for some instruments imposing liability on TNCs but not expressly providing for remedies or others not yet implemented into national laws, host states might seek to fill that gap through tribunals applying domestic law (as for example in some US case law). Ishikawa also argues that violation of proliferating CSR commitments through treaties (as well as national laws, evolving corporate practices and representations) might generate civil tort claims under at least some domestic laws.

Having considered an investor’s environmental responsibility as a ground for the host state’s counterclaim, Chapter 6 discusses the effects of such responsibility in assessing the investor’s principal claims. Problems usually arise with environmental harm during the performance phase, and Ishikawa argues that misconduct at that stage will usually have only a limited impact on a tribunal’s jurisdiction and even admission of the claim (pp 159-66). However, when considering the merits, host state liability for lack of FET (especially “legitimate expectations”) can arguably be obviated by the investor’s performance-phase misconduct as part of the principle’s balancing exercise and (more controversially) the evolving notion of a corporation’s “social licence to operate” (pp 166-191). More commonly found in investment arbitration and other international law for a is the application of contributory fault to reduce relief awarded, although Ishikawa urges sufficient reasoned explanation over percentages applied by ISDS tribunals (pp 191-98).

Chapter 7 concludes with “implications for reform”. Although the book mainly argues that there is already most scope for counterclaims under many IIAs than most have appreciated, Ishikawa suggests that more explicit rights to counterclaims in treaties would be useful. Substantively, moreover, treaties should expressly provide obligations on investors to comply with host state laws, but if and when extra international standards are set they should be “clearly specified so as to constrain the interpretative discretion of tribunals” (pp 204-5) and provide secondary rules determining consequences for breach (rather than tribunals having to invoke domestic law).

By contrast, a reform option of requiring exhaustion of local remedies before ISDS claims is unclear concerning the extent this “would contribute to advancing the victims’ interests” given “the known cases suggesting corruption and a lack of political independence in the judiciary in the context of TNCs’ misconduct” (p206). Ishikawa also suggests that the most drastic reforms, allowing host states and affected third parties to initiate claims against TNCs (rather than responding with counterclaims) is better pursued outside the IIA regime (eg through the 2019 Hague Rules on Business and Human Rights Arbitration). Otherwise, the regime including its legitimate interests for investors could unwind: “ISDS reform should strike a careful balance between the need to keep its value for the regime’s participants and the need to advance responsible investment” (p208).

The most detailed reform proposal, not really prefigured in the preceding chapters, involving promoting third party participation in investor-state mediation. This more consensus driven dispute resolution procedure has been promoted in recent years by various institutions and commentators due to growing concerns about ISDS arbitration, including its costs and delays.[1] Ishikawa interestingly highlights how some UNCITRAL reform discussions have mentioned that participation by affected third parties through mediation could allow more public interest to be represented, while some scholars support including “non-disputant” stakeholders in mediation (p213). Various suggestions are made to make this process work well for cases involving alleged environmental harms, including appointing co-mediators with relevant expertise, partially lifting confidentiality and reporting and establishing best practices through capacity building and other initiatives.

However, Ishikawa shares scepticism with some other commentators about reforming IIAs by mandating mediation before arbitration – including through a multilateral instrument retrofitting such a step to old treaties, along the lines of the UN’s 2019 Mauritius Convention on transparency (pp 214-5). She notes only a few treaties currently provide a mandatory mediation step, while acknowledging the 2019 Indonesia-Australia FTA (Art 14.23), 2019 Hong Kong – UAE BIT (Art 8), and the Investment Agreement for the COMESA Common Investment Area (Art 26(4) of the 2007 version).[2] Nonetheless, the general argument that mandating mediation goes against its consensual essence is challenged by developments in domestic legal systems (with courts often requiring some initial good faith mediation attempt) and cross-border resolution (with many contracts now committing to mediation before arbitration). Recent empirical research into investment dispute settlement patterns also challenges other concerns often expressed about mediation.[3] Ishikawa’s proposals for mediation, to involve third parties in resolving disputes involving environmental issues, could therefore be bolder on this point. Overall, this book is comprehensive, erudite and balanced, articulating many compelling insights for a variety of legal experts interested in counterclaims and other mechanisms to reassess ISDS and the IIA system. It richly deserves to inform ongoing debates on ISDS reform in UNCITRAL and other fora internationally and domestically, treaty negotiators, future academic research, and investment arbitration practice – even if some of Ishikawa’s more innovative arguments do not prevail among investment tribunals.

[1] See also eg Claxton, James and Nottage, Luke R. and Williams, Brett G. and Williams, Brett G., Mediating Japan-Korea Trade and Investment Tensions (December 3, 2019). in Nottage, Luke; Ali, Shahla; Jetin, Bruno; Teramura, Nobumichi (eds), “New Frontiers in Asia-Pacific International Arbitration and Dispute Resolution”, Wolters Kluwer, (2021), https://ssrn.com/abstract=3497299 (with an earlier version in Journal of World Trade).

[2] The relevant provision in the latter treaty, as revised in 2017, is Art 34(4)). Ishikawa also refers to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (Art 9.18) but that does not mandate mediation (emphasis added): “(1) … the claimant and the respondent should initially seek to resolve the dispute through consultation and negotiation, which may include the use of non-binding, third party procedures, such as good offices, conciliation or mediation”. See further: 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, (2021) https://ssrn.com/abstract=3548358; and (with James Claxton) http://arbitrationblog.kluwerarbitration.com/2020/09/05/pioneering-mandatory-investor-state-conciliation-before-arbitration-in-asia-pacific-treaties-ia-cepa-and-hk-uae-bit/ (updated and elaborated in Volume XIII of the Indian Journal of International Economic Law (2022) via https://ijiel.in/volume-xiii).

[3] Ubilava, Ana, Amicable Settlements in Investor-State Disputes: Empirical Analysis of Patterns and Perceived Problems (March 13, 2019). Journal of World Investment and Trade, Vol. 21, 2020, pp. 528-557, https://ssrn.com/abstract=3352181; incorporated into her PhD thesis based book (2022) https://brill.com/display/title/63844?rskey=uPsqiO&result=6.

Collective Reflections from Team Australia: Second Again in INC Moot!

Guest blog by: Ben Hines, Irene Ma, Damian Young (USyd), Isabella Keith (ANU) and Orian Ibraheim (Monash), with James Fisher (coach, ANU)

Competing in the INC Negotiation and Arbitration Competition in Tokyo was a fantastic experience for us all, substantially developing a variety of our skills in alternative dispute resolution and opening our eyes to the possibilities that exist in Japan.

From the outset, the intense preparation began even before the problem question was released. As members of Team Australia supported by the cross-institutional Australian Network for Japanese Law (ANJeL), we came together from a number of the country’s leading law schools to meet like-minded students and our fantastic coach, James. The intensity of our preparation was never a burden, and the fascinating subject matter and intellectually stimulating training developed our skillsets and collective ability to work effectively as a team unit. In addition to the competition itself, this process was invaluable to us all.

Interestingly, we discovered that INC is more than just a mooting competition: it is unique and a fantastic experience in so many ways. First, unlike other mooting competitions where you sign up for either arbitration or negotiation, INC is a competition that really tests all of your skills. Across the two rounds, both arbitration and negotiation, we were required to train for these two very different skillsets, gaining knowledge and insights that will undoubtedly benefit us all in the future. It is also not a one-off competition, and throughout our experiences with INC alumni we learned that by competing for Team Australia you really do join an extensive and amazing network comprised of teams from years past. Every alum we met was incredibly friendly and happy to give back. The team was lucky enough to visit the offices of several leading international law firms, where Team Australia alums offered their insight and experiences working in Japan and provided their office space for our preparation efforts.

In Japan, we were lucky enough to gain the unique cultural exposure that only venturing to the country itself could bring. James, a verified local after his decade in Tokyo, showed us the sides of Tokyo that might be missed by tourists alone. But our experience didn’t finish there.  Of course, the INC trip to Tokyo is very different from the usual trip of a tourist. Instead of going to Disneyland (despite our year’s question centring around a theme park) or Mount Fuji, we visited different law firm offices, including Herbert Smith Freehills and Linklaters, and the classrooms at Sophia University where we spent our time in intense preparation for the competition.

The competition itself lasted across two days and was conducted in an order that was carefully considered by the competition organisers – arbitration on the first day, and negotiation on the second day. According to the steering committee, this is because they wished to encourage a collaborative and intercollegiate approach to future disputes, and by practicing both forms of resolution the legal minds of the future will be well-equipped. Both rounds ran for approximately 4 hours, though the arbitration round ran even longer given that the process was entirely controlled by the Tribunal. This was a huge test of physical and mental endurance, and if you decide to compete in the future, we will strongly suggest you bring some food so you can recharge during the break!

We were lucky enough to compete against Chuo University and Sophia University across our two hard-fought yet collegial rounds. The quality of the competition was exceptionally high, which put our skills to the test in order to achieve the best results we could. Thankfully, given our extensive preparation efforts, we were able to face any challenge thrown at us. After our round, both opposing teams were incredibly kind, and we made new friends that we are excited to stay in contact with!

Sitting in the final closing ceremony, we were happy to learn our hard work had paid off, and not only had we won the Best English Negotiation and second in English Arbitration by a mere one point but had come second overall in the competition (by a similarly minor margin)!

We will never forget the experience, and we encourage anybody interested to apply – you certainly won’t regret it.

Postscript by James Fisher (Lecturer @ ANU, ANJeL co-convenor for teaching and learning):

As the team’s coach, it was a pleasure and privilege to witness their skills develop and watch their stunning performances at the competition in Tokyo. They definitely demonstrated the high quality of the emerging jurists at Australia’s top law schools. Their personal success, the growing and supportive alumni community they have joined, and the lessons they will apply to their future studies and careers prove the enduring value of the collaborative inter-varsity project that is INC Team Australia, supported by the Australian Network for Japanese Law. I hope Ben, Irene, Damian (USyd), Isabella (ANU) and Orian (Monash) are as proud of themselves as we are of them!

Australia’s (Dis)Engagement with Investor-State Arbitration: A Sequel

A seminar held on 10 November 2022 during the Australian Arbitration Week, organised by the UNCITRAL National Coordination Committee for Australia (UNCCA) and hosted by Allens in Melbourne, discussed “Australia’s engagement in the ISDS [investor-state dispute settlement] reform process”. My presentation divided successive governments’ approach into three significant eras over the last decade or so: anti-ISDS (2011-13), case-by-case ISDS (2014-21), and uncertainty (2022-).

Some of the uncertainty in this current third era has dissipated since the seminar. On 14 November Australia’s current Trade Minister Dan Farrell declared that the new Labor Government “will not include ISDS in any new trade agreements” and would attempt to reduce their impact in existing agreements. On the latter point, he stated that “when opportunities arise, we will actively engage in processes to reform existing ISDS mechanisms to enhance transparency, consistency and ensure adequate scope to allow the Government to regulate in the public interest”. The announcement has already generated concern from commentators from the Business Council of Australia and legal practice, including Dr Sam Luttrell (who also presented at the UNCCA seminar). Below I locate the Trade Minister’s announcement in context and sketch some implications, drawing partly on my 2021 book of selected essays on investor-state and commercial arbitration, focusing on Australia and Japan in regional and global contexts. 

Before this sequel, in the first era beginning in 2011, the centre-left (Labor/Greens) Gillard Government had declared that Australia would no longer agree to any form of ISDS in future bilateral investment treaties (BITs) or FTA investment chapters. That stance derived partly from the Productivity Commission’s recommendation (by majority) in its 2010 report into international trade policy more generally, which favoured more unilateral liberalisation measures and was skeptical about proliferating FTAs from a more laissez faire perspective. On ISDS provisions, the draft and then final reports asserted that there was no good evidence that offering them led to more FDI flows, Australian investors did not invoke investor-state arbitration, and ISDS could lead to “regulatory chill”. Additionally, the Gillard Government anti-ISDS policy from 2011 was driven by concerns from the political left about investment and trade liberalisation generally. It was probably also influenced by Philip Morris Asia initiating the first-ever ISDS dispute against Australia around this time, challenging Australia’s tobacco plain packaging legislation under the (then) BIT with Hong Kong. The anti-ISDS policy delayed conclusion of major FTAs with China, Korea and Japan, large exporters of capital to Australia which pressed for such provisions.

However, after the centre-right Coalition government won the election in late 2013, it reverted to the pre-2011 approach of agreeing to ISDS provisions on a case-by-case assessment. FTAs were soon concluded with China and Korea, including ISDS. The FTA concluded with Japan did omit ISDS, but probably because it did not offer Australia sufficient extra export market access or other benefits, at a time when the Coalition Government had difficulties passing legislation through the upper house of Parliament. Japan’s longer positive experience of investing in Australia also meant it could play the long game and seek ISDS-backed protections through other treaties, which it eventually achieved in fact through both countries ratifying the Comprehensive and Progressive Agreement for Trans-Pacific Partnership mega-regional FTA (CPTPP, in force for both states from 2019). The Labor Opposition voted with the Government to pass tariff-reduction legislation needed to ratify these ISDS-backed treaties, unlike the Greens, declaring the Labor Party’s continued opposition to ISDS but assessing the FTAs as overall in the national interest.

Additionally over this second era, the Coalition Government omitted ISDS in the PACER-Plus FTA with Pacific Island micro-states, given their limited inbound investment prospects and capacity as host states to defend ISDS claims; and in the Regional Comprehensive Economic Partnership (RCEP) ASEAN+5 FTA, probably because almost all pairs of its 15 member states have at least one ISDS-backed treaty among themselves anyway. The Coalition Government also renegotiated a few early FTAs and BITs (eg with Singapore, Uruguay and Hong Kong), replacing them with CPTPP-like provisions to clarify provisions or make them somewhat more pro-host-state in light of emerging investment treaty case law. It also solicited public submissions to inform a review of older treaties, although the Government did not then publish a report (let alone any Model BIT) formalising its evolving negotiating preferences. Australia further ratified the Mauritius Convention in 2020 to help retrofit transparency provisions on older treaties, although this will bite primarily only if other states also ratify the Convention and so far few have done so.

Australia’s renewed nuanced approach towards ISDS over 2014-21 may have been influenced by some (but not very strong) evidence, in Asia and more widely, that ISDS provisions do in fact have significant positive impacts on FDI flows. Also, ratifying investment treaties globally certainly impacted FDI, meaning that a minority of states increasingly holding out against all ISDS would have instead reduced ratifications and therefore FDI flows. Other empirical research, highlighted by Dr Sam Luttrell at the recent UNCCA seminar, adds that ISDS-backed treaties reduce the cost of syndicated loan finance for cross-border investors.

Luttrell’s presentation further reinforced how Australian investors (particularly in long-term resources projects) not only take into account ISDS protections but also started commencing outbound investor-state arbitrations under Australian treaties (or contracts) alleging host states have violated their substantive commitments. This is especially so since the successful White Industries v India award in 2010, which the Productivity Commission seems to have been been unaware of. Concerns about “regulatory chill” also seem to have declined as Australia defeated Philip Morris Asia on jurisdiction in 2015 (and Uruguay later defeated the parent company on the merits regarding its own tobacco packaging measures), and as no further inbound ISDS arbitrations were commenced against Australia. Nonetheless, perhaps because ISDS remained a live issue in parliamentary treaty ratification hearings and successive Coalition Governments did not control the upper House, Australia does not seem to have been particularly vocal in multilateral ISDS reform discussions in UNCITRAL or ICSID, although it has participated.

After Labor won the general election in May 2022, the new Government had not publically declared its policy approach towards ISDS, until the Trade Minister’s announcement on 14 November. At the UNCCA seminar the week before, I noted that the foreign ministry’s website still stated that Australia assesses ISDS on a case-by-case assessment. However, setting policy going into the election, the Labor Party’s 2021 National Platform had reiterated that “Labor will not enter into agreements that include ISDS provisions” (p9 para 45). In addition, it stated (p94, paras 33-34):


“Labor in government will review ISDS provisions in existing trade and investment agreements and seek to work with Australia’s trading partners to remove these provisions. While this process is underway, Labor will work with the international community to reform ISDS tribunals so they remove perceived conflicts of interest by temporary appointed judges, adhere to precedents and include appeal mechanisms.

Labor will set up a full time negotiating team within the Department of Foreign Affairs and Trade whose sole job will be to negotiate the removal of ISDS clauses …”

Until 14 November 2022, there had been no public announcement about any such initiatives.

* * *

Accordingly, at the UNCCA seminar, I pointed out that Australia’s major ongoing FTA negotiations involving investment were with India (with a provisional agreement reached only on trade related matters) and the European Union. India unilaterally terminated its BIT with Australia in 2017, as part of its broader policy of winding back protections for foreign investors since the White Industries award and successive claims against India under other older treaties. Although India’s new Model BIT from 2016 retains ISDS, it provides a narrow window and its substantive protections are heavily circumscribed, and India has been able to only conclude a few new investment treaties from this negotiating position. Even maintaining the second era’s case-by-case assessment policy, I therefore considered it quite possible that Australia and India could end up agreeing on a parallel investment treaty that leaves only inter-state arbitration, especially if India offered significant preferential market access to Australian investors.

Omitting ISDS is now the only possibility, under the newly announced Labor Government stance, but India now may not offer as much market access or other benefits to Australia. A better compromise, given problems encountered by foreign investors in India as well as JNU Prof Jaivir Singh’s empirical evidence that ISDS-backed treaties cumulatively have had positive impact on FDI inflows for India, could have been a CPTPP-like investment treaty with some further innovations. Those might include a mandatory mediation step before arbitration, as Australia agreed upon (unusually) with Indonesia in 2019 but not with Hong Kong.

Australia is also still negotiating an FTA with the EU. Since 2015, as a partly political compromise internally, the EU offers only an “investment court” alternative to traditional ISDS, on a take it or leave it basis. Singapore took this option, for example, but Japan did not (preferring to stick with pre-existing BIT with EU member states with traditional ISDS, and watching longer term multilateral reform discussions). Australia should probably take the investment court option, to secure an overall better FTA deal, as I have argued (with Prof Amokura Kawharu) also for New Zealand after it too from 2018 mimicked Australia’s first anti-ISDS policy. Arguably, this option is not “ISDS” so it would not conflict with the Labor Party’s 2021 platform and now the 14 November 2022 Labor Government’s anti-ISDS position. Although the EU’s investment court model allows foreign investors the right to directly commence arbitration, they cannot nominate arbitrators; they instead are pre-selected only by the home and host states, and then randomly assigned to hear the claim (and any appeal). If Australia adopts this interpretation of its stance eschewing ISDS, to conclude a deal with the EU, this would also signal to other regional players and UNCITRAL delegates that there is scope to be flexible in investment treaty negotiations.

However, one wild card for Australia has been that a right-wing politician and mining magnate (Clive Palmer) escalated complaints in 2020 by formally seeking consultations with the federal Government and then notifying a dispute through his Singaporean company (Zeph), after unsuccessful constitutional and other domestic law challenges. They allege expropriation and breach of fair and equitable treaty (denial of justice) related to Western Australian state legislation impacting on iron ore rights and related past domestic arbitration awards. Given his high public profile, and rights originally held by his Australian company being transferred to Zeph in Singapore, if and when an ISDS arbitration is commenced (potentially from early 2023) under one of Singapore’s multiple treaties with Australia, this risks another Philip Morris Asia moment. An arbitration filing would certainly rekindle media and political interest in ISDS, which peaked in Australia over 2010-16.

In addition, concerns were reportedly being raised last week about potential ISDS claims brought by Asian and other investors and in Australian gas resources under the Labor Government’s plans to deal with the global energy crisis. Announcing now a renewed anti-ISDS policy may help pre-empt public criticisms in this respect as well. However, any such claims would be preserved under existing treaties, while substantive commitments made under Australia’s treaties (especially FTAs) anyway give the host state considerable scope to introduce emergency measures.

Whatever the impact of these potential claims on its policy-makers, Australia’s renewed anti-ISDS posture will make it even more difficult for RCEP to add ISDS protections, unless the Labor Government backtracks or loses the next elections in 2025. ISDS must be discussed again among member states within 2 years of RCEP coming into force, with a decision then on whether and how to add ISDS to be reached within another 3 years (Art 10.18). Any implications for Australia’s recently concluded review of its FTA with New Zealand and Australia have yet to be spelled out. In addition, the new Labor Government policy will probably have further ripple-on effects particularly across the Asia-Pacific region. It could also potentially impact on wider multilateral discussions about ISDS in UNCITRAL, and even on the “modernisation” of or withdrawal from the ISDS-backed Energy Charter Treaty (which Australia signed in 1994 but never ratified), especially if the Australian government can articulate more specifically the arguments and evidence for adopting this renewed anti-ISDS position.

Commercial Dispute Resolution and Arbitration in Japan

Written by: Luke Nottage and Nobumichi Teramura (unfootnoted draft for Sarah Biddulph and Kathryn Taylor (eds) Elgar Concise Encyclopedia of Asian Law, Elgar, forthcoming)

 “Commercial Dispute Resolution and Arbitration in Japan”

For: Elgar Concise Encyclopedia of Asian Law

Luke Nottage and Nobumichi Teramura

1. Civil Procedure and Litigation

The Civil Procedure Code, enacted as the framework for civil litigation in the late 19th century as Japan adopted a modern Western legal system, derived mainly from German law. The Code  experienced significant reforms after WW2 (adopting the more “adversarial principle”) and 1998 (based partly on some emerging court practices, to streamline identification of legal issues and related evidence-taking, as well as new small claims procedures and other provisions to reduce delays).[1] The 1999-2001 Justice System Reform Council Recommendations resulted in introducing expert commissioners to advise judges in complex cases, an advance notice of suit option, and other “micro”-level reforms, but also expanded numbers of bengoshi lawyers and judges aiming for “macro”-level impact.[2] Those Recommendations sought mainly to reduce perceived “structural barriers” to initiate lawsuits, which arguably underpin a comparatively low civil litigation rate in Japan especially over the 1950s-70s. However, some instead argue that this low propensity to sue is related to “cultural” factors like preferences to avoid confrontation and fear of “losing face” (although this may be related to risk-averseness especially in larger organisations), or a rational avoidance of litigation costs by settling in the shadow of comparatively predictable substantive law in Japan.[3]

Japan’s still predominantly civil law tradition means that civil litigation maintains various features not usually found in common law systems. These include limited pre-trial discovery (although some analogues[4]), non-continuous trials (though delays decreased from 2000s), no juries (only for some serious criminal cases, reintroduced from 2009), active case management by judges (including right not duty to “clarify” the law especially for self-represented litigants, and encouragement of settlement), three career judges hearing complex civil cases at first instance, and no dissenting opinions published (other than in the highest Supreme Court).[5]

2. Mediation

In Japan, mediation is mostly court-annexed, with tradition going back to the pre-WW2 era (eg farm tenancy disputes,[6] although such disputes were often settled through direct and informal negotiations between land owners and tenants). Parties may choose between two main types of mediation. One is conducted by the judge(s) assigned the case, although in larger courts like Tokyo and Osaka, the case may be referred to a division where mediation is attempted by other judges, and then returned to the original judge(s) if settlement fails. The second type is mediation under the 1951 Civil Conciliation Act, mandated by the court or more typically agreed by parties: a conciliation committee consisting of a judge and two non-judges having expert knowledge and experience lead the mediation settlements. In both scenarios, it is quite common among the judicial mediators to caucus separately with each party (unlike eg Germany, where judges encourage settlement in open court).[7]

The government also provides mediation service. For instance, some formal government-supported mediation is available, eg for environmental pollution or neighbourhood disputes (eg noise),[8] or recently for financial institutions.[9] Informal government-supported mediation schemes are available too for consumer disputes, through Consumer Lifestyle Centre. The government also promoted criteria (such as independence of formal mediators from any industry associations) for Product Liability (PL) ADR Centres, created from the mid-1990s.[10]

Due to very high public trust in the court-annexed and government-supported schemes, government financial support for them and perhaps still comparatively fewer disputes, Japan has less privately-supplied mediation services. The Justice Reform Council perceived this as another structural barrier, so the 2004 Act on Promotion of Use of Alternative Dispute Resolution encouraged private mediation through government certification to build trust and visibility, allowing such organisations to make limitation periods tolled during their mediations (unlike non-certified mediation suppliers).[11] Many got certified, both some old institutions (like Bar Associations providing mediation services) and quite a few new ones (such as Japan Sport Arbitration Agency),[12] but caseloads have not increased much especially for commercial dispute resolution.[13]

3. Arbitration

Arbitration legislation was also initially also derived originally from Germany: the arbitration section in its Civil Procedure Code also from the late 19th century. This legislation remained basically unchanged in Japan’s 1998 civil procedure reform, despite an earlier push from academics to adopt the 1985 UNCITRAL Model Law template that was starting to spread especially around the Asia-Pacific region. Arbitration was seen as less important compared to improving the civil litigation and mediation environment because it was little used domestically (except eg a scheme for disputes between construction companies and the government).[14] For international transactions, Japanese commercial parties seemed quite content to agree to arbitration in foreign seats, perhaps in exchange for other benefits received in contract negotiations. Part of the thinking may also have been they were unlikely to get involved in (expensive) formal dispute resolution and, in particular, to initiate claims. Hence some Japanese parties and their legal advisors established the comparatively unusual practice of “finger-pointing clauses” in arbitration agreements, designating the defendant’s domicile as the seat of arbitration.

Accordingly, the caseloads of the Japan Commercial Arbitration Association (JCAA) and Tokyo Maritime Arbitration Commission (TOMAC), as well as other international arbitrations with seat in Japan (eg under the ICC Arbitration Rules or ad hoc UNCITRAL Arbitration Rules), remained few even over 2000s, while Asian centres in Singapore, China and HK recorded large increases in arbitration cases. Nevertheless, more foreign counsel and arbitrators joined the arbitration market especially after the 2003 reform of the Act on Special Measures Concerning the Handling of Legal Services by Foreign Lawyers (the Foreign Lawyers Act) that allowed full profit sharing with international firms established in Japan. There also remained a salient practice of Arb-Med, with arbitral tribunals actively encouraging settlement, especially when Japanese parties, counsel and/or arbitrators were involved.[15]

As part of Justice System Reform Council Recommendations, however, the 2003 Arbitration Act was enacted based on the 1985 UNCITRAL Model Law. Some tweaks to that template included extending it from international to domestic arbitration cases (hence, allowing no appeals for errors of law), adding criminal sanctions for corrupt arbitrators (to build trust in arbitration), and requiring express written consent from parties for Arb-Med (given natural justice concerns). Case law has been generally pro-arbitration, enforcing most foreign arbitral agreements and awards in accordance with the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.[16] However, not many judgments, including those related to international arbitration, are translated into English. Few judges give speeches promoting Japan as a seat for arbitration or go on to become arbitrators after retirement — instead, most have been professors and (increasingly) local or foreign lawyers —  unlike in common law jurisdictions like Singapore or Australia where (former) judges play more active roles in promoting arbitration generally. JCAA and TOMAC did amend their Rules around the time of the 2003 Act and subsequently from time to time. However, they continued to mostly administer cases involving at least one Japanese party, without marketing their centres aggressively to see large increases in caseloads.[17]

Since 2018, nonetheless, we have witnessed an elevated political push for Japan to catch up with international competitors and become more of an international dispute resolution hub regionally. Along with the Japan International Mediation Centre (JIMC) Kyoto (an earlier academic / law society joint venture), the Japan International Dispute Resolution Centre (JIDRC) was established with government-supported facilities in Osaka and then Tokyo, with quite intense marketing despite the pandemic. A new Tokyo-based institution, International Arbitration Centre in Tokyo (IACT), focuses on intellectual property arbitration. These governmental initiatives prompted JCAA to enact three sets of new Rules from 2019. Amendments to allow more foreign law representation in foreign-related arbitrations seated in Japan.[18] Moreover, formal consultation was launched in 2020, albeit belatedly by Asia-Pacific standards, to revise the 2003 Arbitration Act along more of the lines of the 2006 UNCITRAL Model Law amendments especially on tribunal-issued interim measures.[19]  This is important especially for marketing Japan as a seat, although the 2003 Act had already anticipated a few provisions on interim measures that were being discussed in UNCITRAL and incorporated into their 2006 Model Law amendments.[20]

Those new public and private initiatives should help further reduce structural barriers to arbitrating in Japan, but it is still unlikely that arbitration will ever become popular for domestic dispute resolution. Moreover, it is too early to tell whether these efforts will make Japan a significantly more popular seat for international arbitrations.

[1] Yasuhei Taniguchi, ‘The 1996 Code of Civil Procedure of Japan-A Procedure for the Coming Century?’ (1997) 45 The American Journal of Comparative Law 767.

[2] Translated at https://japan.kantei.go.jp/policy/sihou/singikai/990612_e.html; Luke Nottage, ‘Civil Procedure Reforms in Japan: The Latest Round’ (2005) 22 Ritsumeikan Law Review 81,  available at SSRN: https://ssrn.com/abstract=837864.

[3] Masaki Abe and Luke Nottage, ‘Japanese Law’ in Jan Smits (ed), Elgar Encyclopedia of Comparative Law (3rd edn, Edward Elgar Publishing 2022), available at SSRN: https://ssrn.com/abstract=3672112 or http://dx.doi.org/10.2139/ssrn.3672112 .

[4] Andrew M. Pardieck, ‘Discovery in Japan’ (2021) 31 Indiana International & Comparative Law Review 61.

[5] See generally eg Shusuke Kakiuchi, ‘Access to justice in Japan’ (2007) Japanese Law Resources <http://www.asianlii.org/jp/other/JPLRes/2007/1.html> .

[6] Dimitri Vanoverbeke, Community and State in the Japanese Farm Village: Farm Tenancy Conciliation, 1924-1938 (Leuven University Press 2004). “

[7] Yasunobu Sato, Commercial Dispute Processing and Japan (Kluwer Academic Publishing 2001); Harald Baum, ‘Mediation in Japan. Development, Forms, Regulation and Practice of Out-of-Court Dispute Resolution’ in Klaus J. Hopt and Felix Steffek (eds), Mediation: Principles and Regulation in Comparative Perspective (Oxford University Press 2012).

[8] Mark D. West, ‘The Resolution of Karaoke Disputes: The Calculus of Institutions and Social Capital’ (2002) 28 The Journal of Japanese Studies 301 (demonstrating the success of the Internal Affairs Ministry’s Pollution Complaint Counsellor in dealing with noise complaints); Shiro Kawashima, ‘A Survey of Environmental Law and Policy in Japan’ (1994) 20 North Carolina Journal of International Law and Commercial Regulation 231; Luke Nottage, ‘The Cultural (Re)Turn in Japanese Law Studies’ (2009) 39 Victoria University of Wellington Law Review 755.

[9] Tomohiko Maeda and Andrew M. Pardieck, ‘ADR In Japan’s Financial Markets & the Rule of Law’ (2018) 10 Northeastern University Law Review 400.

[10] Luke Nottage and Yoshitaka Wada, ‘Japan’s New Product Liability ADR Centers: Bureaucratic, Industry, or Consumer Informalism?’ (1998) 3 Journal of Japanese Law 40.

[11] Aya Yamada, ‘ADR in Japan: Does The New Law Liberalize ADR From Historical Shackles or Legalize It?’ (2009) 2 Contemporary Asia Arbitration Journal 1.

[12] As of 9 April 2022, there are 163 certified organisations: Ministry of Justice, ‘The List of Certified ADR Providers [in Japanese]’ (n.d.)  <https://www.moj.go.jp/KANBOU/ADR/jigyousya/ninsyou-index.html> accessed 9 April 2022.

[13] James Claxton, Luke Nottage and Nobumichi Teramura, ‘Disruption as a Catalyst for International Dispute Services in Japan: No Longer Business as Usual?’ in Luke Nottage and others (eds), New Frontiers in Asia-Pacific International Arbitration and Dispute Resolution (Wolters Kluwer 2021).

[14] Tatsuya Nakamura and Luke Nottage, ‘Arbitration in Japan’ in Shahla F. Ali and Tom Ginsburg (eds), International Commercial Arbitration in Asia (3rd edn, Juris 2013).

[15] Luke Nottage, International Commercial and Investor-State Arbitration: Australia and Japan in Regional and Global Contexts (Edward Elgar Publishing 2021), Chapter 4.

[16] Yasuhei Taniguchi and Tatsuya Nakamura, National Report for Japan (2019 through 2022), in Lise Bosman (ed), ICCA International Handbook on Commercial Arbitration (ICCA & Kluwer Law International 2020, Supplement No. 120, February 2022) at 36-39.

[17] Nobumichi Teramura and Luke Nottage, ‘Arbitration Reform in Japan: Reluctant Legislature and Institutional Challenges’ in Weixia Gu and Anselmo Reyes (eds), Arbitration Reform in Asia (Hart Publishing 2018).

[18] Junya Naito and Ryo Otobe, ‘The Act on Special Measures concerning the Handling of Legal Services by Foreign Lawyers —Recent Developments toward Internationalization’ (2020) 1 Japan Commercial Arbitration Journal 34.

[19] WeiJian Teo and Yusuke Iwata, ‘The Rise of Japan Arbitration: A Balance to the Common Law Forces of International Arbitration in Asia?’, (Kluwer Arbitration Blog, 6 July 2021) <http://arbitrationblog.kluwerarbitration.com/2021/07/06/the-rise-of-japan-arbitration-a-balance-to-the-common-law-forces-of-international-arbitration-in-asia/>.

[20] James Claxton, Luke Nottage and Nobumichi Teramura, ‘Developing Japan as a Regional Hub for International Dispute Resolution: Dream Come True or Daydream?’ (2019) 47 Journal of Japanese Law 109.

“Declining Professional Diversity in International Arbitration”

By: Dr Nobumichi Teramura (Assistant Professor, Universiti Brunei Darussalam; Affiliate, Centre for Asian and Pacific Law at the University of Sydney), Dr Luke Nottage (Professor of Law, University of Sydney; Special Counsel, Williams Trade Law) and Mr James Tanna (Research Assistant, University of Sydney)[1]

[Update: a version of this posting was published by Kluwer Arbitration Blog on 3 April 2022, associated presentations were then made eg at the ASLI conference in Tokyo and Lawasia conference in Sydney in 2022, and our chapter on which it is based has now been published in Shahla Ali et al (eds) Diversity in International Arbitration (Elgar, 2022)]

On 20 June 2016, the Australian Centre for International Arbitration (ACICA) signed the Equal Representation in Arbitration Pledge, to improve the profile and representation of women in arbitration.[2] Since then, we have witnessed the international arbitration (IA) community’s significant collective progress towards greater diversity, especially over the last few years. These initiatives include Racial Equality for Arbitration Lawyers (REAL), the Rising Arbitrators Initiative (RAI) and the appointment of first woman President of the ICC International Court of Arbitration. We should certainly celebrate this advancement of equality in race, age and gender, although the main beneficiaries of the diminishing gender gap are reportedly white women based in Europe or North America.[3]

In addition, we should be aware that the burgeoning debate seems to leave out discussion of a further area where diversity is lacking in the IA community – an analysis of professional diversity. While the key groups and publication outlets for IA are dominated nowadays by those practising primarily as full-time lawyers, there is hardly any awareness or sustained discussion about the limitations of overlooking diversity of professional backgrounds, perhaps partly because arbitration rules usually do not require arbitrators to have any specific experience, training or qualifications. Nonetheless, for example, the ACICA Guidance Note on the Appointment of Arbitrators prompts parties to consider ‘diversity and issues of equal representation, such as gender, age, geography, culture, ethnicity, and professional background of the arbitrator’.[4]

Involving more non-lawyer practitioners (NLPs, such as engineers, architects, accountants) or those who are primarily academics could significantly reduce the persistent formalisation in IA.[5] Expanding professional diversity could also lead to other benefits, including indeed more gender diversity, given that academia does not have the same non-linear remuneration structures for lawyers that disadvantage career progression for many women.[6] These and other issues associated with professional diversity are outlined in our recent research article entitled “Lawyers and Non-Lawyers in International Arbitration: Discovering Diminishing Diversity”.[7] That research article also empirically analyses the ways legal practitioners have come to prevail across the key nodes of influence within the IA sector. The rest of this blog post introduces our key empirical findings.[8]

Associations and Institutions Promoting Arbitration

First, we examined key groups that promote IA but do not themselves administer arbitration cases. The influential groups examined were the International Council for Commercial Arbitration (ICCA), the Chartered Institute of Arbitrators (CIArb) and the International Bar Association (IBA).

The ICCA Board as of September 2021 largely comprised individuals falling primarily in the category of practising “Lawyer” (84%), executives of “International or Arbitral Organisations” (IAOs, typically leaders within arbitral institutions) (5%), “Mixed” (typically those having multiple professional engagements) (5%) and “Academic” (4%, essentially full-time). We also examined the composition of ICCA Taskforces for all years: Lawyer (61%), IAOs (18%), lawyers and NLPs working in Litigation Finance (7%), Mixed (7%) and Academic (6%). Authors of entries in the Young ICCA Blog between 19 October 2010 and 17 February 2021 fell into the categories of Lawyer (86%), Academic (10%) and Mixed (2%). Analysis of presentations in ICCA Congresses and related chapters in the ICCA Congress Series over the last 30 years also indicated the growing prevalence of Lawyers (60% over the entire period) within ICCA publications, and in parallel reflecting only small proportions of IAOs (14%), Academic (12%) and Mixed (9%).

The lack of diversity in professional backgrounds was also salient in the other groups. For example, the vast majority of CIArb Board Members in 2021 were from the Lawyer category (78%), in contrast to NLPs making up 15% of the Board (despite the earlier influence of NLPs in CIArb until around the 1990s) and no members falling into the Academic category. Speakers in CIArb Webinars from July 2020 to March 2021 comprised Lawyers (75%), Academic (12%), NLPs (9%) and IAOs (2%).

Meanwhile, the data is comparable at the IBA. As for the committee membership for proliferating IBA instruments, such as the Evidence-Taking Rules, there was an even heavier prevalence of Lawyers (95%) although this was less surprising given that the IBA is essentially a global federation of lawyers’ associations. Similarly, for IBA webinars, mostly from 2020 but also some from 2021, 94% of the key participants were Lawyer; only 4% could be coded as IAOs, while 2% were Academic.

Arbitration Institutions and Their Leaders

Next, we analysed the international and regional arbitration institutions having high caseloads and/or those deemed reasonably representative of civil or common law traditions and geographical diversity. These were ACICA, the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), the Swiss Arbitration Centre, the International Centre for Dispute Resolution (ICDR), the Singapore International Arbitration Centre (SIAC), the Hong Kong International Arbitration Centre (HKAIC), the China International Economic and Trade Arbitration Commission (CIETAC), the Asian International Arbitration Centre (AIAC), the Japan Commercial Arbitration Association (JCAA), the Korean Commercial Arbitration Board (KCAB), the Thai Arbitration Institute (TAI) and the newer Thai Arbitration Centre (THAC).

To discern professional diversity within the leadership of these arbitration centres, we looked overall at the membership of various Boards, Councils, Committees, Taskforces and Courts as of 2021. The combined analysis confirmed Lawyers’ predominance (76%), as well as the comparatively small ratios of NLPs (11%), Academics (6%) and IAOs (1%).[9] We further investigated speakers and moderators at webinars and conferences organised by those arbitration centres in 2020 and the first half of 2021: Lawyers (80% in 2020 and 83% in 2021), IAOs (8% and 4% respectively), Academics (5% and 6%) and NLPs (4% and 5%).   

Indicative Journals, Books and Blogs

We also considered major journals for international arbitration, complementing an earlier analysis of periodicals and other publications.[10] These were Arbitration International (associated with the LCIA), Arbitration: The International Journal of Arbitration, Mediation and Dispute Management (CIArb), Asian International Arbitration Journal (SIAC) and the Journal of International Arbitration (published by Wolters Kluwer). Again, the overall extent of Lawyer involvement was striking. Editors of these four journals as of September 2021 were mostly Lawyer (75%), although there were somewhat more Academic (22%) than say for the leadership of the arbitration institutions as examined above. Then, we examined all the discernible articles (other than book reviews) published in the four journals from the late 1980s, when three were being published and some debate emerged about the role of NLPs in arbitration.[11] Sampling the journals essentially at five-yearly intervals (in 1989, 1994, 1999, 2004, 2009, 2014 and 2019-21) gave the following proportions for authors: Lawyer (71%), Academic (19%), IAOs (2%), NLPs (4%) and Mixed (3%). Analysing authorship categories over time found that absolute numbers and proportions of articles written by Lawyers had grown, especially over 2000-2010.

We further studied editors and authors of influential books and blogs. For books, for example, we investigated the International Arbitration Law Library Series published by Wolters Kluwer, with 59 titles since 1993 when the first volume of the Series was published. Coding editors and authors of these volumes and individual chapters demonstrated the dominance of Lawyer (50%) although a significant minority were from Academic (39%). Other professions such as IAOs, NLPs and Mixed occupied relatively small proportions (3%, 2% and 6%, respectively). On blogs, our analysis concentrated on Kluwer Arbitration Blog (KAB), as one of the most well established and widely read arbitration-related blogs. Comparing the KAB’s editorial team for August 2021 and 2018 (the latest year for which the Wayback Machine online allowed us to access a snapshot of the list of all editors), 80% were Lawyers and 20% were Academics. In addition, we studied backgrounds of blog authors in February, June and November in 2009, 2014 and 2019-21. The sampling found a similar prevalence of postings by Lawyer (79%), some by Academic (16%) and very occasionally by authors from an IAO (2%).

Concluding Remarks

The phenomena confirmed by our empirical research are clear: the entrenchment of lawyers through the world of IA, and the corresponding decline in involvement and influence of full-time academics and especially other NLPs. This growing lack of diversity in professional backgrounds contrasts with gender diversity, which has experienced some statistical improvements in appointments of arbitrators or other leadership positions in some arbitration centres.[12] One response to that ongoing “diversity deficit” might be to encourage more involvement of academics and NLPs in the leadership and activities of the significant arbitration associations and centres, as well as leading publication venues.[13] Such a response will help the IA sector develop diversity of perspectives because, as Joshua Karton suggests, such diversity may be enhanced by arbitrators with varied experiences who may think differently from the arbitration mainstream.[14] At least, we need more discussion and ongoing debate about the remarkable and continuing decline in professional diversity within IA.

[1] This article is a version of Nobumichi Teramura, Luke Nottage and James Tanna, ‘Declining Professional Diversity in International Arbitration’, Kluwer Arbitration Blog (Blog Post, 3 April 2022) <http://arbitrationblog.kluwerarbitration.com/2022/04/03/declining-professional-diversity-in-international-arbitration/>,

[2] ACICA, ‘Media Release: Australian Centre for International Commercial Arbitration Signs Equal Representation in Arbitration Pledge’ (20 June 2016) <https://acica.org.au/wp-content/uploads/2016/06/Media-Release-Equal-Representation-in-Arbitration-Pledge.pdf>.

[3] Kiran Nasir Gore, ‘2021 In Review: Continued Strides in Favor of Diversity and Sustainable Development in International Arbitration’, Kluwer Arbitration Blog (Blog Post, 27 February 2022) < http://arbitrationblog.kluwerarbitration.com/2022/02/27/2021-in-review-continued-strides-in-favor-of-diversity-and-sustainable-development-in-international-arbitration/>.

[4] See <https://acica.org.au/wp-content/uploads/2022/01/ACICA-Guidance-Note-on-the-Appointment-of-Arbitrators-FF1.pdf> (emphasis added), available via <https://acica.org.au/acica-practice-procedures-toolkit/>.

[5] Nobumichi Teramura, Ex Aequo et Bono as a Response to the ‘Over-Judicialisation’ of International Commercial Arbitration (Wolters Kluwer, 2020).

[6] Claudia Goldin, Career and Family: Women’s Century-Long Journey toward Equity (Princeton University Press, 2021).

[7] Luke Nottage, Nobumichi Teramura and James Tanna, ‘Lawyers and Non-Lawyers in International Arbitration: Discovering Diminishing Diversity’ (September 2021) manuscript at <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3926914>. A shorter version of that paper is also forthcoming in Shahla Ali, Filip Balcerzak, Giorgio Fabio Colombo and Joshua Karton (eds), Diversity in International Arbitration: Why It Matters and How to Sustain It (Elgar, 2022).

[8] As elaborated in the research article, including the methodological Appendix, we basically categorised all individuals in accordance with their primary profession at the time they were a member of the relevant arbitral organisation, the relevant publication was written, or the relevant presentation was given.

[9] The proportion for ACICA was higher in 2021: see Luke Nottage, Nobumichi Teramura and James Tanna, ‘Lawyers and Non-Lawyers in International Arbitration: Discovering Diminishing Diversity’ (n 7) 24. Tracking its Board size and composition over time, see also Luke Nottage and Richard Garnett, “The Australian Centre for International Commercial Arbitration” in Helene Ruiz Fabri (gen ed) Max Planck Encyclopedia of International Procedural Law(Oxford University Press, 2019) via https://www.mpi.lu/mpeipro/.

[10] Luke Nottage, ‘International Arbitration and Society at Large’ in Andrea Bjorklund, Franco Ferrari and Stefan Kroll (eds), Cambridge Compendium of International Commercial and Investment Arbitration (Cambridge University Press, forthcoming 2022), manuscript at <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3116528>.

[11] The Asian International Arbitration Journal was published from 2005.

[12] ICCA, Report of the Cross-Institutional Task Force on Gender Diversity in Arbitral Appointments and Proceedings (The ICCA Reports No 8, 2020).

[13] Andrea K Bjorklund et al, ‘The Diversity Deficit in International Investment Arbitration’ (2020) 21(2-3) The Journal of World Investment & Trade 410.

[14] Joshua Karton, ‘Diversity in Four Dimensions: Conceptualizing Diversity in International Arbitration’ (March 2022) <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4054031>.

Developing Diversity within Diversity Discourse: Remembering Non-Lawyers in Arbitration, in Asia and Beyond

This is the title of a presentation (Powerpoints in PDF here) for the Lawasia conference in Sydney, specifically on 20 November 2022, and earlier the 28-29 May 2022 19th ASLI Asian Law Conference, hosted this year by the University of Tokyo. It is based on an empirical study by myself, ANJeL-in-ASEAN convenor Asst Prof Nobumichi Teramura, and USydney research assistant James Tanna. It adds some directly Asia-related data to the analysis presented in a forthcoming chapter in Shahla Ali et al (eds) Diversity in International Arbitration (Elgar, late 2022), with a longer paper available via SSRN and a posting summarising key empirical findings via Kluwer Arbitration Blog.

Our presentation also suggests that given the relative influence still of law professors in developing international arbitration in Asian states, particularly perhaps those more influenced by the civil law tradition, the large and growing dominance of full-time lawyers across the field may have a significant indirect impact on international arbitration in Asia.

Presentation Abstract: This paper, co-authored with Asst Prof Nobumichi Teramura (UBrunei) and James Tanna (USydney), highlights a curious lack of diversity within the proliferating discourse about the lack of diversity in international arbitration. There is hardly any awareness or at least sustained discussion about limited diversity of professional backgrounds, and more specifically the dominance nowadays of those with practising lawyer positions or primary careers – including more recently in Asia – across the key groups and publication outlets for international arbitration. Yet this encroachment of lawyers was still being contested in the 1990s, as being linked to burgeoning costs and delays, and such “formalisation” has been re-emerging in recent years. Diversifying the world of international arbitration to involve more non-lawyers, including academics, could promote various other objectives too, and thus enhance the legitimacy and sustainability of international arbitration.

This paper therefore analyses empirically the ways lawyers have come to dominate key nodes of influence within the world of international arbitration. We examine this worldwide and in the Asian region, thus also giving a sense of geographical diversity. Part I looks at lawyers in key general associations or organisations promoting international arbitration, including their leadership and presenters at symposiums. Part II focuses on various arbitration centres globally and regionally, which actually administer cases. Part III examines contributions to some key arbitration journals (including the Asian International Arbitration Journal), an influential book series, and a widely-read Blog. The conclusion reiterates that restoring more non-lawyers in the world of international arbitration should help not only to reduce formalisation and inefficiencies in international arbitration, but also have various other salutary effects, including potentially improving gender diversity.