Category: Regulation

Redesigning Consumer Law for the E-Commerce Era: Insights from Comparing Australia and Japan

Written by: Luke Nottage (University of Sydney) and Souichirou Kozuka (Gakushuin University, ANJeL-in-Japan program co-convenor)

Leading up to Australia’s federal election due by May 2025, the Commonwealth Treasury has (re-)initiated public consultations into reforms to the Australian Consumer Law (ACL), partly responding to the growth of e-commerce especially since the COVID-19 pandemic. Two main consultations in fields outlined below, compared to regimes in Japan, highlight some intriguing features for policy debate – extending also into the wider Asia-Pacific region.

First, unlike consumer laws in most jurisdictions across Asia, the ACL has already come to apply to many business-to-business (B2B) transactions. A typical economic argument is that this levels the playing field so businesses compete transparently and consumers have more trust in the market. However, there is a risk of individual consumers cross-subsidising through higher overall prices the businesses gaining similar protections. An additional political dynamic may be that Australia has often closely-fought elections, and many small businesses pressing for the same protection as individual consumers.

Secondly, the federal consumer affairs regulator, the Australian Competition and Consumer Commission (ACCC) and State or Territory regulators also have comparatively strong enforcement powers. Thirdly, the ACL and some proposed reforms highlight whether consumer law can and should rely on generally worded standards, more specific rules, or both.

Australia’s Treasury last year renewed a consultation into whether the ACL should add further prohibitions on unfair commercial practices, to address burgeoning concerns such as ‘subscription traps’ (suppliers making it much harder to cancel subscriptions than to sign up). Such practices are not easily covered by the ACL’s prohibition on misleading conduct by any suppliers ‘in trade’ (hence also B2B, since the 1970s). Nor do they usually fall within the broadly worded prohibition on unconscionable conduct, taking advantage of particular vulnerable groups (gradually extended to B2B since the 1990s).

The latest Treasury-led proposal sought further views on adding both a general prohibition on unfair practices (for example as in the EU, but there limited to business-to-consumer or B2C transactions, ie involving an individual transacting with a supplier for a non-commercial purpose). It also discussed specific prohibitions (as with legislation recently added in Germany, the UK and the USA against subscription traps). Regulators like the ACCC would enforce such new prohibitions in both B2B and B2C situations, including through injunctions, as for unconscionable or misleading conduct and specific types of prohibited misrepresentations.

Japan’s comparable regime instead regulates only B2C transactions and has come to preference specific prohibitions. The Consumer Contracts Act 2000 allows consumers to cancel contracts arising from some types of misrepresentations, plus various very specific situations of unconscionable advantage-taking. Business associations argue that a broader general provision would be very hard to comply with.

Extra challenges for consumers arise because injunctions against suppliers’ bad advertising and practices leading into contracts can only be brought through government-certified consumer NGOs. This system was inspired by German law but Japan’s NGOs are very small and under-resourced. Further, because the Consumer Contracts Act applies only B2C, it is hard to generate sufficient momentum among claimants, and hence case law.

The Consumer Affairs Agency, when established independently in 2009, assumed jurisdiction from the Japan Fair Trade Commission (the competition regulator) only to enforce the Act against Unjustifiable Premiums and Misleading Representations that prohibits representations promoting the quality of goods or services as ‘significantly superior’ or describing trade terms as ‘significantly more advantageous’ than they actually are.  Particular bad practices are also regulated by the Designated Commercial Transactions Act (as it was renamed from the Door-to door Sales Act in 2000), for example allowing ‘cooling off’ (withdrawal rights) for consumers in high-pressure situations like door-to-door selling or buying. Besides administrative orders now issued by the Agency, criminal penalties can be imposed for not providing contracts in writing or alerting consumers to such rights.

A second major Treasury consultation in Australia from 2024 asks for further views on whether regulators should be able to issue civil fines on suppliers failing to give ACL remedies for minimum performance standards in contracts (‘consumer guarantees’, as in New Zealand and Malaysia, but extending to some B2B situations). These require goods to be of ‘acceptable quality’ and services to be provided with due care. Since 2023, Australian regulators already have such a power to fine for first-time use of unfair terms in standard-form contracts. From 2016, regulation of such terms was extended to contracts with  ‘small business’, including now some medium-sized ones.

Adding such civil pecuniary penalties was seen as more effective than relying on injunctions to stop misuse of unfair terms, and/or consumers proving they are unfair so are void. This innovation, adding public sanctions, is despite Australia gradually introducing from the 1990s a US-style ‘opt-out’ class action system. That was premised on lawyers (perhaps with third-party litigation funders, allowed since 2006) might efficiently aggregate smaller value claims (such as excessive and therefore unfair bank fees). Yet even this regime seems to have been insufficient to prevent the spread of unfair terms, including in online businesses.

Japan’s Consumer Contracts Act similarly voids a few specific types of unfair terms. It does have also a general provision voiding others where contrary to good faith (ie unreasonable, compared to general Civil Code default provisions for contracts). However, business associations are opposed to listing in the Act even a ‘grey list’ of further contract terms that may be unfair, as in the ACL (and the EU law on unfair terms that influenced Australia, as well as partly Japan).

Furthermore, Japan’s Act again applies only B2C, although there is also some weak regulation of standard form terms extending to B2B under Civil Code amendments for contracts concluded after 2020. Injunctions to prevent misuse of unfair terms are only possible through certified NGOs, not consumer regulators, and the latter cannot issue fines. A class action regime introduced in 2013 also requires coordination through certified NGOs (not eg a law firm), and inefficiently requires individual consumers to opt-in to claim damages if and when a court finds liability for a class. Unsurprisingly, few claims have been made so far.

Despite these comparative limitations on consumer protection law in Japan, the practical outcomes in Australia may not be so different until recently, thanks to better customer service and reputational effects in Japan. However, the explosion in e-commerce and new types of marketing or practices, as well as possible transplantation of unfair terms into online contracts, may lead to a stronger message being sent to Japan (and Asian countries like Singapore, similarly lacking a broad unfair practices prohibition). This could be achieved by law reforms extending protections to some B2B situations, beefing up generally worded and/or specific prohibitions, expanding powers of regulators (for injunctions and even fines), and/or moving to a US-style opt-out class action system. However, the compliance costs and chilling effects on business innovation also need to be weighed carefully.

Regulating ‘subscription traps’ and other unfair commercial practices

Happy New Year of the Snake!

In my presentation on 5 December 2024 at the annual Australasian Consumer Law Roundtable, hosted by Deakin U in Melbourne’s CBD, presented an updated version of my 2024 CCLJ article with Prof Souichirou Kozuka comparing consumer law administration, contracts and product safety. I mentioned my Submissions (linked below) to three recent federal Treasury-led public consultations (perhaps prompted by a general election due by May 2025!) into (i) facilitating the Australian government adopting foreign standards for minimum safety of specific goods, (ii) adding civil pecuniary penalties for consumer guarantee remedies not provided by suppliers (including regarding safety, as an aspect of “acceptable quality” for goods), and (iii) a generic unfair commercial practices prohibition. Japanese consumer law has none of these features, but each raises interesting issues.

Relatedly on 6 January 2025, perhaps a slow day for the news (after the excitement of Australia winning a test cricket series against India!), I was quoted in an ABC article focusing specifically on Subscription Traps, whereby suppliers make it easy for consumers to sign up (sometimes including “free trials”) but hard to cancel subscriptions. This led to a 3AW radio morning interview (7-minute recording here) with Tony Jones in Melbourne, where I talked about the trap experienced with The Economist (elaborated in my Submission available here for the first Treasury-led consultation in 2023 on adding a general unfair trading prohibition to the Australian Consumer Law, and in this 21 August 2024 interview with SBS Radio: podcast and transcript here). And then an ABC Radio interview (14-minute recording here) with Lisa Pelligrino in Sydney, where I talked in a spirit of bilateral fairness about the trap experienced more recently with The Japan Times.

Momentum seems to be building for ACL amendments to regulate generally against unfair trading practices, and specific practices such as subscription traps, adding to the chorus of concern expressed also eg at the annual Consumer Law Congress in mid-2024.

Guest Blog: “A new explanation of China’s patenting phenomenon with a focus on the patenting of traditional medical knowledge”

Written by: Corinna Chen (CAPLUS research assistant, 2024)

On 2 September 2024, Melbourne Law School lecturer and researcher Dr Ben Hopper presented a thought-provoking seminar on the patenting of traditional medical knowledge in China and its contribution towards China’s patent boom phenomenon. The event was hosted by Sydney Law School’s Centre for Asian and Pacific Law (CAPLUS) as part of its ongoing PhD/Early Career Researcher presentation series. Dr Hopper’s thesis offered a fresh perspective on the broader motivations and societal trends behind the growing number of patent applications for traditional medical practices, particularly in China’s southwestern province of Guizhou, challenging more conventional explanations based on strengthened patent laws, state subsidisation, research and development intensification and increases in foreign direct investment.

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Dr Hopper began by outlining the historical development of China’s patent laws, from early attempts during the Qing Dynasty to the establishment of the country’s first modern patent law in 1984. He highlighted how China’s unique legal landscape, influenced by Marxist economics and socialist characteristics, has shaped the evolution of its patent system. This paved way for the ensuing discussion on the “patent boom” that has seen China become the world’s leading filer of patents, with an extraordinary level of growth occurring from the late 2000s into the early 2010s.  

The core of Dr Hopper’s research thesis lies in his claim that traditional explanations for China’s patent boom – such as research and development (R&D) intensification, foreign direct investment (FDI), and patent subsidies – are incomplete. He argues that the epistemological shift in individual perspectives, led by the intense commoditisation of the economy, is a critical yet often overlooked factor. He further hypothesises that there exists a positive correlation between an individual’s marketisation (that is, how market-oriented a person is) and their ‘patent grip’ index (the likelihood of engaging with the patent system and complying with patent laws), with the individual’s proximity to the State being an enhancing factor.

Using original fieldwork data from 53 traditional medical practitioners in Guizhou, Dr Hopper found statistically significant results in support of his hypothesis that more market-oriented individuals are more likely to be subject to the patent grip. In particular, the case study focused on how traditional medicine practitioners in Guizhou, many of whom belong to ethnic minorities, navigated the patent landscape. Dr Hopper’s mixed-methods research, combining surveys and qualitative interviews, revealed that market exposure influences how these practitioners increasingly view their traditional knowledge as commodities that can be protected, sold, or licensed. This shift in perspective aligns with a broader trend towards the commodification of knowledge in China’s rapidly evolving market economy.

Dr Hopper’s findings challenge assumptions that traditional medical knowledge is inherently resistant to patenting due to cultural norms of secrecy and communal ownership; instead, they suggest that even within the realm of traditional knowledge, market forces and closer relationships with the state play a vital role in driving patenting activity.

At the end of the presentation, Dr Olugbenga Olatunji from Sydney Law School offered insightful commentary on the unique nature of China’s patent phenomenon compared to other developing countries such as India, where similar population levels and much stronger patent legislation have not produced comparable results in terms of the ‘boom’ observed in China. Dr Olatunji also raised interesting questions about how traditional knowledge is protected, shared and commercialised in China, pointing to inherent conflicts between customary practices in the field and the more stringent legal requirements of full disclosure in patent applications.

The session concluded with a lively discussion on the broader policy implications and potential transferability of the Chinese model in other countries navigating through similar issues, with one example raised being the approach towards traditional and Indigenous knowledge in Australia.

Guest Blog – Corruption and Investment Arbitration in Asia: New Frontiers

Written by: Corinna Chen (CAPLUS research assistant, 2024)

On 1 August 2024, the University of Sydney Law School hosted an insightful seminar jointly presented by its Centre for Asian and Pacific Law (CAPLUS) and the Australian Network for Japanese Law (ANJeL). The event featured the local re-launch of a new book titled Corruption and Illegality in Asian Investment Arbitration (Teramura, Nottage and Jetin eds, published in Open Access in Springer’s Asia in Transition series in April 2024) as well as discussions on the latest research in the field.

Professor Simon Bronitt, immediate past Dean of Sydney Law School with personal research interests in criminal law and Indonesia, opened the session with a brief welcome and address. Assistant Professor Nobumichi Teramura from Universiti Brunei Darussalam – lead co-editor of the new book – then presented an overview of the book’s aims, research questions and key findings (also summarised in a recent piece here and in the East Asia Forum). Professor Luke Nottage from the University of Sydney, also co-editor, complemented this by sharing empirical results from his recent research on corruption-related provisions in international investment agreements (IIAs).

Various other contributing authors also spoke on their areas of focus within the book. These included Professor Vivienne Bath from the University of Sydney discussing China and the Hong Kong SAR, Professor Simon Butt from the University of Sydney and Antony Crockett from Herbert Smith Freehills (Hong Kong) discussing Indonesia, as well as additional commentary from Dr Amokura Kawharu, President of the New Zealand Law Commission. The seminar concluded with closing remarks from the Honourable Wayne Martin AC KC, former Chief Justice of Western Australia, who officiated the book re-launch.

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Despite avid efforts to combat corruption through international treaties and domestic legislation, corruption and illegality in foreign direct investment (FDI) remains prevalent across many Asian countries. Associate Professor Teramura highlighted this as the key motivation behind the project, emphasising the book’s focus on illustrating ‘Asian’ perspectives towards corruption in investment arbitration and exploring the potential for significant Asian states to become ‘rule makers’ rather than ‘rule takers’ in this field (PDF of Powerpoints here). 

The research examines the practical impacts of corruption on FDI and local economies in Asia, as well as how illegality in foreign investment projects and disputes have been dealt with across various Asian jurisdictions such as China, Hong Kong, India, Japan, Lao Republic, the Philippines, the Republic of Korea and Thailand. Associate Professor Teramura noted that while some ‘Asian approaches’ are emerging, they are still far from establishing a uniform stance across the region.

The book concludes by proposing a roadmap for developing a more cohesive Asian approach. This includes establishing a regional forum for discussing FDI-related corruption, developing unified rules for handling corruption in investment arbitration, and considering the creation of an independent institution or permanent court to address allegations of corruption in Asian investment disputes.

Following this, Professor Luke Nottage presented compelling insights from his recent paper co-authored with Associate Professor Teramura: “Corruption-related Provisions in East and South Asian Investment Agreements: An Empirical Analysis” (PDF of Powerpoints here). The study revealed a nuanced and often rational approach by Asian countries in negotiating bilateral investment treaties, particularly in their treatment of anti-corruption provisions and legality clauses. 

The research found that net FDI-exporting countries like Japan tend to prefer anti-corruption provisions (59%) over direct legality clauses (16%) in their IIAs, aligning with the aim to reduce corruption in investment destinations and protect their outbound investors. Conversely, net FDI-importing countries such as China are more likely to include legality clauses (95%) and almost no anti-corruption provisions, as the former can be invoked to protect their government and domestic taxpayers from inbound ISDS claims. Overall, the empirical analysis found largely rational treaty drafting practices around these two types of provisions across most countries, based on their FDI status. 

However, Professor Nottage noted some curious exceptions to this rationality, particularly in the case of Singapore. Despite being virtually corruption free, Singapore rarely includes anti-corruption provisions in its IIAs (only 4%) but retains many legality clauses (61%). This apparent irrationality might be related to Singapore’s outbound FDI often coming from government-linked companies. Such instances of “bounded rationality” or status quo bias provide valuable insights for policymakers and IIA drafters, emphasising the need to consider these complex dynamics when addressing corruption and illegality in international investment frameworks. He concluded with the observation that although most countries appear to be acting rationally with regard to their national interests, such approaches may not be entirely conducive towards addressing the overall prevalence of corruption in the Asian region. 

Professor Vivienne Bath then presented insights on China and Hong Kong, based on her chapter with former student Dr Tianqi Gu. In particular, she highlighted several inconsistencies in China’s stance towards eliminating corruption. While China has increasingly sought to tackle these issues through extensive regulations, anti-corruption campaigns and signing the UNCAC, there is a notable lack of transparency with investigations and details of cases, both domestically and in investor-state dispute settlement proceedings. Official Chinese court databases feature very few corruption cases relating to foreign investors or FDIs. Professor Bath also pointed out the absence of legislation addressing corruption by companies and officials outside China, raising this as an important area for future development. 

Antony Crockett and Professor Simon Butt spoke on Indonesia, which is infamous for having high levels of corruption across its numerous levels of government. The pervasiveness of corruption in the Indonesian government was illustrated by reference to the three high-profile cases of Churchill / Planet Mining, Al Warraq and Rafat. They noted that judicial corruption dramatically increases the attractiveness of international commercial arbitration, as commercial parties lack confidence in the judiciary and therefore refuse to settle disputes locally. An in-depth analysis of corruption in Indonesian courts can be found in Professor Butt’s recent book, Judicial Dysfunction in Indonesia. This details 30 trials involving allegations of corruption against judges from the supreme court, constitutional court, administrative court, and most disconcertingly, the anti-corruption court itself.

Finally, Dr Amokura Kawharu, who wrote the foreword to the book, briefly discussed the perspective of New Zealand, currently ranked the third least corrupt country in the world. Despite this, New Zealand only ratified the UNCAC and enacted anti-corruption legislation in 2015. This, according to Dr Kawharu, might be explained by the difficulty policymakers face in competing for space on the legislative agenda, an issue compounded by the country’s short 3-year parliamentary terms.

The Hon Wayne Martin AC KC concluded the evening’s discussions with his perspective on the importance of continued efforts to tackle corruption and illegality, which strike at the heart of the rule of law. He added some caution towards the idea of establishing a permanent international court, citing practical challenges such as the inability to attract strong candidates for the bench as well as the customary process of state appointments giving rise to further risks of nepotism.

“Rule-based International Traceability of Critical Raw Materials Supply Chains”

Written by: A/Prof Jeanne Huang & Prof Luke Nottage

This is the theme for our project (with Jeanne Huang as one Chief Investigator) funded recently by the University of Sydney, jointly with institutional partner Fudan University (Shanghai). The sub-theme is “Climate and Environmental Justice between China, Australia, and Other Selected Countries”, including Japan. It is part of series of research projects aimed at advancing the UN’s Sustainable Development Goals (SDGs), and involves also from our Sydney Business School Prof Hans Hendrischke (specialist in China). The other Chief Investigator from the Fudan University side is A/Prof Ping Jiang, assistant director of the Department of Environment Science and Engineering.

Abstract: “The US Inflation Reduction Act and the EU Digital Product Passport both underscore the urgent need for enhanced Environmental, Social, and Governance data traceability across Australian miners, Chinese processors, and US/EU regulators and consumers of critical raw materials (CRM) like Lithium. Addressing this need, this project explores how to establish a rule-based traceability framework to foster sustainable CRM supply chains between Australia, China, the US, and the EU. It adopts a multifaceted approach, incorporating law-business-engineering interdisciplinary research, interviews, case studies, conflict-of-law concepts, and comparative law methodology to address cross-border legal and ethical tensions and promote circular economy within CRM supply chains. It aims to use traceability to enhance transparency, visibility, and trust in CRM supply chains, and promote responsible sourcing and consumption, crucial for global digitalization, electric vehicles deployment, energy transition, and ultimately achieving the UN Sustainable Development Goals.”

The first of many planned research outputs planned through to mid-2025 is our presentation (slides here) on 12 July 2024 at the “Law and Sustainability” conference at the University of Sydney, co-organised with Singapore Management University and Hong Kong University (program and other details here). We look forward to feedback as we develop our presentation, “Private International Law and Sustainable Development: Establishing International Traceability of Critical Raw Materials Supply Chains” into a full paper that assesses and adapts models particularly from international dispute resolution (arbitral award and judgment recognition) and other international treaty regimes to facilitate recognition of CRM certificates in cross-border supply chains.

Consumer Law Compared and Refreshed

[Update of 4 December 2024: in my presentation tomorrow at the annual Australasian Consumer Law Roundtable, hosted by Deakin U in Melbourne’s CBD, I will present an updated version of my 2024 CCLJ article with Prof Souichirou Kozuka comparing consumer law administration, contracts and product safety. This will mention my Submissions (linked below) to three recent federal Treasury-led public consultations (perhaps prompted by a general election due by May 2025!) into (i) facilitating the Australian government adopting foreign standards for minimum safety of specific goods, (ii) adding civil pecuniary penalties for consumer guarantee remedies not provided by suppliers (including regarding safety, as an aspect of “acceptable quality” for goods), and (iii) a generic unfair commercial practices prohibition. Japanese consumer law has none of these features, but each raises interesting issues. Update of 6 January 2026: on the last-mentioned, see also my media commentary here.]

Yesterday (28 June 2024) I enjoyed attending the ACCC National Consumer Congress in sunny Sydney (program here). This annual invitation-only event provides an excellent opportunity to discuss cutting-edge law and policy issues with new and old colleagues working in Australian state and federal governments, consumer NGOs, businesses and academia (more limited, but I am pictured here with QUT’s Nicola Howell [expert in consumer credit, co-convenor of the academic-focused annual Consumer Law Roundtable] and Dr Catherine Niven [expert in product safety regulation, major contributor to my ARC Discovery Project on child product safety begun before the pandemic- with our last research output published in 2023 here] and Monash Em Prof Justin Malbon [co-author of my 2019 book on ASEAN Consumer Law Harmonisation, with UMelb Prof Jeannie Paterson who had to attend the Congress virtually this year]). It would be good to see more such events bringing together such stakeholders in Japan (compared with in my recent CCLJ article with Souichirou Kozuka), ASEAN and other Asian states.

The first session was on “Buying in Australia – Are We Safe?”. The answer was “No” from panellists including Catherine (except perhaps one speaker). The opening speaker gave a moving account of how long and traumatic the process was to secure a mandatory product safety standard around button batteries, which were fatally ingested by her infant Bella. Another early fatality involving Britney was highlighted in my 2020 piece for The Conversation (leading to an ABC radio interview). That related also to my then Journal of Consumer Policy article arguing that the Australian Consumer Law did need to add an EU-style “general safety provision” (GSP) to fill gaps so suppliers switched to a more pro-active approach to risk assessments to ensure only safe consumer products were put onto the market, rather than waiting for accidents or risks to be identified and then conduct “voluntary” recalls of unsafe goods (mainly then only to avoid potential product liability claims for compensation and/or adverse reputational effects). In my comments at the Congress, I mentioned that after Canada added such a requirement in 2010, its recall rates went down; and when Singapore added a partial GSP (requiring all products to comply with EU, specified American or ISO standards) there were immediately fewer unsafe toys on their market. Yet the Treasury-led Consultation in 2020 into adding a GSP has led nowhere.

As alternatives, it seems, we find from late 2021 a further Consultation about allowing foreign standards to be adopted into the ACL (which I commented was a no-brainer) and another Consultation into allowing civil penalties for suppliers not providing remedies to consumers from defective – including unsafe – products under mandatory consumer guarantees (which I suggested was rather broad-brush and indirect, compared to ex ante regulation).

I also mentioned that unfortunately the written Submissions made by myself and others to all three Consultations have still not been made public. This is also true of the 2023 Consultation into adding to the ACL a general unfair trading prohibition (as under EU, US or Singaporean law). That would go beyond existing ACL prohibitions on misleading or unconscionable conduct to better address eg “dark patterns” facilitated by new technologies (such as “subscription traps” that the ACCC CEO reiterated at the Congress remain a concern). There were moves to make public Submissions to that Consultation (including mine, reproduced here for convenience and giving as an example such a subscription trap laid by The Economist magazine) and they were disclosed from 28 June (the day after the ACCC Congress) noting “79 submissions were received for this consultation, including 8 confidential submissions”. But in principle I believe such consumer law reform consultations should automatically make public submissions unless confidentiality is requested. That is now common good practice across Australian law reform bodies, including the Productivity Commission. In the same vein, Australia’s consumer law reform agencies should publicise at least a short report stating whether and why they may not be proceeding with ACL amendments.

I ended my comments by alerting Congress attendees to new developments in the EU that intersected with concerns raised by the panelists. The new General Product Safety Regulation requires suppliers to document product risk assessments (and implement traceability measures), notify regulators of progress on recalls, set up a public complaints portal (as the US has had for over a decade, but was not recommended in the 2017 ACL Review report) and make mandatory for online platforms some requirements (like responding within set time frames to complaints about unsafe products) that larger firms had adopted voluntarily under the 2018 EU Product Safety Pledge (mirrored by Australia’s 2020 Pledge). The EU Product Safety Pledge has itself been updated, and existing firms have re-signed it, to allow eg regulators to have access to the platforms’ portals to better monitor them for unsafe products.

The EU’s Product Liability Directive, which was adopted in 1992 has also recently been revised to better address new technologies and trends. For example, Article 7 makes an online platform jointly liable for harm if it suggests to an average consumer that products are provided either by the online platform itself or by a recipient of the service who is acting under its authority or control. However a recent comparative law article that Jeannie Paterson co-authored (and I helped with) noted a risk that platforms will avoid this liability potential by website and other disclaimers about exercising control over the suppliers. The article contrasts Californian cases against Amazon and other legal concepts that go further in imposing shared liability on such platforms, including pros and cons of such initiatives.

The second Congress session was on “Justice delayed: strengthening consumer dispute resolution in Australia”. Panellists highlighted persistent problems of access to justice, focusing initially on (prolific) defective vehicles and National Disability Insurance Scheme services. Although Prof Kozuka and I also highlight problems in Japan, I think Australia can do better in various ways. For example, because of the evidentiary issues raised in tribunals or magistrates’ courts, regulators should first more pro-actively use their ACL powers since 2010 to bring representative actions against suppliers who claim for example that cars or other complex products comply with the consumer guarantee of acceptable quality, such as reasonable durability. They can also support consumer NGOs who could run such test cases (eg to to determine how long a mid-value washing machine should last) and then publicise the outcomes, to help facilitate future negotiations and settlements.

Secondly, the NSW Office of Fair Trading should actually use its powers (added before the COVID-19 pandemic) to order suppliers to compensate consumers for up to $3000 in harm caused by products not complying with consumer guarantees, and publicise this among suppliers and consumers. Other jurisdictions should add such powers too, especially as the ACL is supported to be uniform across Australia. It is true that some suppliers may contest such orders. But they will also likely do that if and when the ACL adds powers for all consumers regulators to order civil pecuniary penalties for major failures, as mooted in late 2021 Consultation (paralleled by the Productivity Commission’s recommendations from an inquiry into Rights to Repair). Decisions from tribunals and courts, even at lower levels, will help clarify the meaning of general terms like reasonable durability.

Thirdly, we should introduce effective public complaints registers across Australia. Most jurisdictions lack them. And for example the NSW register does not differentiate by sales volumes or other measures of scale, making it hard for consumers or their advisors to determine if one supplier is really better or worse than others. These and other questions were raised in a 2017 Report by the Productivity Commission and should be revisited to improve access to consumer redress (and indeed informed purchasing decisions).

The third Congress session was on “Regulating for real people: understanding consumer behaviour to drive effective markets”. In his thought-provoking introduction (kindly shared now here), Consumers Federation of Australia chair Gerard Brody highlighted observed limits even with “nudges”, for example regarding electricity contract switching, and asked why suppliers shouldn’t just promise or be required to automatically put customers on the best plan. The CEO of (peak NGO) Consumers NZ pointed out that past consumption patterns may not be a good guide. I also wonder about handing over so much power and data to suppliers, and making consumers too passive (which is partly why for unfair contract terms regulation the price and subject matter cannot be impugned: consumers are assumed to be able at least to investigate and consider those, provided these items are not presented in a misleading way). A better solution might be electricity bills that say “if you switched to our Plan B you would save $XXX dollars” and then the customer could opt-in. [Update of 4 December 2024: after a recent problem with my electricity company in NSW, which had stated something like this on their bills but in a confusing way, I now am more amenable to Gerard Brody’s suggestion for an automatic “upgrade”.]

The Consumers NZ CEO provided an update on the progression of a private Member’s Bill to introduce a right of repair for New Zealand, including around spare parts availability, and likely mandatory labelling about durability (as recommended also by the Productivity Commission’s Right to Repair report). Again, I would add that the EU provides some good lessons for the antipodes (and say Japan). In February 2024 the EU institutions reached provisional agreement to enact the Right to Repair Directive, as part a larger environmental initiative aiming to extend a product’s life cycle and support a circular economy. Relevant features compared to the ACL regime (which for example allows the supplier not consumer to chose between repair and replacement):

“The Directive will require producers to carry out repairs outside of the legal guarantee for products covered by repairability obligations under certain EU ecodesign regulations listed in an Annex … [likely beginning with] certain white goods (including household washing machines, dishwashers and refrigerators), vacuum cleaners, electronic displays, and mobile phones and tablets (among others)

… [requirements for] information on certain spare parts to appear on a website, making them available to all parties in the repair sector and preventing certain practices that can hinder repair – including contractual clauses or certain software- and hardware-related barriers

… [seemingly] loan devices to be provided to consumers while they wait for repair in certain cases and to enable a consumer to opt for a refurbished unit as an alternative

… Under the existing Sale of Goods Directive, the seller is liable to the consumer for any lack of conformity which exists at the time when the goods were delivered and which becomes apparent within two years of that time. In the event of non-conformity, the Sale of Goods Directive sets out a hierarchy of remedies, allowing consumers to initially choose between repair and replacement … to encourage consumers to choose repair over replacement, the legal guarantee under the Sale of Goods Directive would be extended by 12 months following a repair …”.

This EU development also intersects with greenwashing, and the hot topic of the last Congress session – “Lightbulb moments: bold ideas to help consumers play a meaningful role in the green transition”.

Corruption and International Treaty Developments in Asia

Written by: Luke Nottage (University of Sydney) and Nobumichi Teramura (Universiti Brunei Darussalam)

[Ed. Note: Our related new book (open access through Springer) was launched by the Attorney-General of Brunei at a symposium held there on 28 May 2024 (as reported here). A follow-up seminar and local re-launch by former Chief Justice of Western Australia Wayne Martin (pictured below with other book contributors/speakers), including some new research emerging from the book, was held at USydney Law School on 1 August (further details here, with Nobu Teramura’s presentation/overview Powerpoints also for LSA conference presentation here). Many thanks to all involved in this book project, including for funding from the Centre for Asia-Pacific Law at the University of Sydney (CAPLUS), Universiti Brunei Darussalam, and the University of Wollongong’s Transnational Law and Policy Centre.

A version of the Blog posting below, re-titled “Corruption Control Needs a Clean-Up in Asia”, was published on 18 July 2024 by the East Asia Forum – thanks to their editors and an anonymous reviewer.]

Corruption remains a serious problem in most parts of Asia. The economic effects are serious, regionally and globally, and the COVID-19 pandemic sometimes made the situation worse. Emergency measures for government procurement and management of the economy expanded opportunities for graft and impacted adversely on enforcement activities.

This problem has persisted for many years despite many new legal instruments aimed at or potentially impacting on corruption, as explored also in our recent book (open-access, so PDFs freely downloadable).

First, the OECD Convention (signed from 1997), prompted by the US enacting the Foreign Corrupt Officials Act two decades earlier, focused on the ‘supply side’. Developed economy member states (including Japan and Korea in Asia) committed to criminalising at home the bribery of foreign officials. Secondly, the UN Convention (signed from 2005, by almost all Asian states) covered bribery of both domestic and foreign officials, including also the ‘demand side’ (solicitation and receiving bribes).

However, the commitments under these multilateral treaties are often quite general, not setting for example any minimum criminal penalties for bribery. As Anselmo Reyes elaborates in his co-authored chapter, both treaties also leave open the possibility of allowing ‘facilitation payments’ – smaller ‘grease money’ payments to expedite routine government transactions like permits. Canada disallowed these under 2017 legislation but Australia’s 2024 amendments retain this possibility – perhaps reflecting the arguments of some economists (investigated in our book by Ahmed M Khalid, Bruno Jetin and others with econometric studies) that such low-level bribery in fact may be efficient.

In addition, even for the core commitments under both treaties, there is not much incentive for transparent and effective enforcement by member states. This is especially true in developing economies with less media freedom and/or democratic accountability – also under pressure. Scrutiny of enforcement under these treaties relies mainly on ‘peer review’ mechanisms that take years to implement, and recommendations on member states for improvements are not binding.

Some states have created new anti-corruption agencies and even courts, as in Indonesia and Thailand, but have faced political backlash. Others, like Vietnam and China, have sometimes vigorously enforced anti-corruption laws (including through the death penalty), but some suspect this is done selectively for political purposes.

A few Asia-Pacific states (such as Thailand and now in Australia) have followed the lead of the UK’s Anti-Bribery Act 2010, which specifically sanctions firms that do not take reasonable measures to introduce anti-bribery compliance schemes. This makes mandatory a feature of the opt-in UN Global Compact scheme that (larger) companies have started to sign up to. They may anyway be conscious of pressures from investors influenced by environmental, social and governance (ESG) considerations.

This slow and sporadic transition towards taking corruption more seriously is also evident in provisions found in free trade agreements (FTAs) entered into by developed countries and regions: the EU, the US, Canada and (notably in Asia) Japan. These treaties also commit member states to both enact and enforce anti-bribery laws. They are reflected in some ‘mega-regional’ FTAs like the Regional Comprehensive Economic Partnership (Chapter 17) and in more detail the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (Chapter 26), but curiously not in the recently signed Second Protocol to the ASEAN Australia New Zealand FTA (except regarding government procurement: Chapter 17).

Typically, however, these treaties too are broadly worded, and corruption-related enforcement issues are not subject to their inter-state dispute settlement provisions that help make the commitments more credible. This limitation also seems to apply to the new  WTO Investment Facilitation Agreement (although its text is not yet public).

Corruption issues have been cropping up also increasingly, especially from around 2010, in investor-state dispute settlement (ISDS) arbitrations initiated under FTA investment chapters or standalone bilateral investment treaties (BITs). Occasionally under such international investment agreements (IIAs), a foreign investor claims compensation because host state officials solicited a bribe in contravention of the ‘fair and equitable treatment’ commitment under the IIA.

More often, the host state raises as a defence against an ISDS claim that the allegation that the foreign investor made a bribe when making the investment, so it is not covered under the IIA. If the arbitral tribunal agrees, it may decline jurisdiction, so the investor loses all treaty rights under international investment law and is left to the vagaries of host state law and court procedures. This typically arises where the IIA specifies expressly that it only covers investments made ‘in accordance with host state law’. Such outcomes may indeed incentivise foreign investors to avoid any form of bribery.

However, what evidence will prove such bribery, especially given that arbitrators (unlike anti-corruption agencies or courts) lack powers vis-à-vis third parties (like banks)? What if the alleged corruption is minor, vigorously solicited by public officials, commonplace and/or systemic in the host state? And what if it leads to the perverse incentive of the host state deliberately seeking a bribe, never enforcing sanctions against the official, but keeping evidence of the bribe as a ‘get out of jail free card’ if ever the foreign investor brings an ISDS claim after the host state discriminates or otherwise violates substantive commitments given under the IIA to encourage inbound investment? Focusing on East and South Asia, we and other authors in our book focus on possible more nuanced solutions for such scenarios, under existing or revised IIAs.

Overall, addressing corruption requires a careful assessment of its various manifestations, some much worse than others (as argued for China, for example). But it should also carefully consider the procedural mechanisms under both national law and international treaty law that help ensure appropriate enforcement of substantive commitments made by states.

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.

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.

“Crisis as an Opportunity for Development of Japanese Law”

Following on the inaugural ANJeL-in-Europe symposium organised by Prof Giorgio Colombo for UPavia in late 2019, Dr Wered Ben-Sade and other attendees or associates are participating online in this law-related session on the first day of the Sixth Bi-Annual International Conference of the Israeli Association for Japanese Studies (15-17 November 2022).

Chair: Wered Ben-Sade Bar-Ilan University, Israel

CRISIS AS AN OPPORTUNITY FOR DEVELOPMENT OF JAPANESE LAW
Chair: Wered Ben-Sade
Crises create new opportunities for development, particularly when traditional perceptions and customs (or habits) are questioned and reexamined. Similarly as “Necessity is the mother of invention” (Plato), crises push us out of our comfort zone while simultaneously lowering the risks of change, thus motivating us to operate differently in order to solve them or improve our response. This is true both at the micro, personal level, and at the macro level of society. Understanding this mechanism at the macro level can facilitate us when we encounter a personal crisis and inspire us to search for the opportunity that is encapsulated within.
Five presentations will examine how crises serve as an opportunity for the development of Japanese law, both in the past (from the second half of the 19th century) and now. Some of the most debated challenges that Japan and the world are currently facing, such as inclusiveness of women, legal education, Covid19 impact and sustainability (in the context of corporate governance), will be discussed.

Béatrice Jaluzot Lyon Institute for Political Sciences & Lyon Institute for East Asian Studies
Crisis as an opportunity for development from a historical perspective: The choice of a positivist legal system following the signature of the Unequal Treaties
In the second half of the 19th century, Japan experienced the collapse of a thousand-year-old culture based on the Chinese model and the emergence of a society inspired by Western models. The disappearance of the old regime, caused by the imperialist movements of the time, gave way to a country that was profoundly renewed in all its fundamental structures. Among them, the country’s legal system was one of the essential novelties and one of the main achievements of the new leaders. They were thus able to set up institutions that are still largely those of today. The aim is to present how this legal system is the result of this brutal overthrow of the regime, but also to understand how the accelerated transition from which it emerged took place. This rupture gave rise to the powerful and efficient structures we know today.

Makoto Messersmith University of Hawaii at Manoa, USA
Insights on the possibility of inclusiveness of women in law studies of Japan
When we look at the status quo and history of female law professors in the U.S. and Japan, it shows that unlike the U.S., Japan has not experienced great improvement regarding inclusiveness of women into law studies, yet. Although it seems that Japan has made some efforts to encourage more women to enter the field of law, women in law studies are still facing unique challenges. For instance, in many universities, female law professors are still less than 20%. In my talk, I will explore their challenges and discuss how we can encourage more women to be included in law studies.

Luke Nottage University of Sydney, Australia and Ken’ichi Yoneda, Kagoshima University, Japan
Introducing ICT into Japanese Legal Education:
The Postgraduate Law School Movement and Covid-19 as Cornerstones
This report explains the evolution of online legal education in Japan, particularly in its universities. Three phases can be discerned: before and after the introduction from 2004 of a new postgraduate Law School system to improve and expand core legal professionals, as part of a wider justice system reform program, and a more dramatic expansion prompted by the COVID-19 pandemic since 2020. The Law School reforms had trickled down somewhat to undergraduate legal education, building on and linking to wider nationwide and university-sector initiatives in Information and Communications Technology. This fortunately positioned Japanese legal education quite well for pandemic-related challenges, although the transitions have not been easy.


Ying Hsin Tsai College of Law, National Taiwan University
The Development of Shareholder Activism following the COVID-19 Pandemic
The development of shareholder activism in Japan, thanks to the COVID-19 pandemic, creates new opportunities. The Japanese company law designs assorted ways by which shareholders can participate in shareholders’ meeting, even if they cannot attend in person (e.g. proxy, written voting and electronic voting). Due to the pandemic, the shareholders’ meeting could not be held in-person, and instead these other ways were gradually put to use. In this presentation I will discuss the practical merits and legal drawbacks surrounding these ways. The overall picture that emerges is that while providing a variety of ways for shareholders to participate in the shareholders’ meeting itself can certainly enhance the practice of shareholder activism, how to design these ways in a manner which overcomes the legal issues remains a challenge.


Kozuka Soichiro Faculty of Law, Gakushuin University, Japan
Introducing Sustainability into the Japanese Corporate Governance
Japan’s corporate governance practice is making rapid developments towards engaging with sustainability. Japan has already the largest number of companies in the world, which have announced support for the TCFD (Taskforce on Climate-related Financial Disclosures) framework. The development towards sustainability will probably continue, induced by the external global crisis of the need for sustainability, and by the internal pressure of the institutional investors. In this presentation I will evaluate the current and expected developments. The Japanese nuances in both regulation and practice of corporate governance will also be discussed.