Regulation – Page 4 – Japanese Law and the Asia-Pacific

Product Safety and Product Liability Laws in ASEAN

Chulalongkorn University’s ASEAN Studies Centre will sponsor this major international conference in Bangkok over 28-29 July 2015, with collaboration from and at the downtown venue of the Department of International Trade Promotion within Thailand’s Ministry of Commerce. The key organiser is the immediate past Dean of Law at Chula, Prof Sakda Thanitcul, assisted by Prof Luke Nottage, immediate past Associate Dean (International) at the University of Sydney Law School and a visiting professor at Chula for parts of 2015. Other speakers include Professor Geraint Howells, renowned consumer product safety law expert and presently Dean of Law at the City University of Hong Kong, as well as the following other country reporters:
1. Singapore: Mr. Lawrence Teh (lawrence.teh@rodyk.com)
2. Vietnam: Mr. Anh Thi Phuong Pham (phuonganh.p@tilleke.com)
3. Cambodia: Mr. Ly Tayseng (tayseng@hbslaw.asia)
4. Laos: Mr. Sornpheth Douangdy (Sornpheth.douangdy@la.pwc.com)
5. Myanmar: Prof. Dr. Khin Mar Yee (dr.khinmaryee.ygn@gmail.com)
6. Malaysia: Mr. Lim Chee Wee (lcw@skrine.com)
7. Indonesia: Mr. Riza Buditomo (Riza.Fadhli.Buditomo@bakernet.com)
8. Philippines: Prof. Emmanuel Lombos (emlombos@syciplaw.com)
9. Brunei: Prof. Dr. Colin Ong (onglegal@gmail.com)
Country reporters will summarise key features in their respective jurisdictions, elaborating eg from Jocelyn Kellam (ed) Product Liability in the Asia-Pacific (3rd ed 2009), but focus on new developments in private law, public regulation, enforcement and media coverage of product safety issues. The conference also draws on my research for a smaller project, focusing on free trade agreement aspects, for the Sydney Southeast Asia Centre.

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Guest Blog – “The Cautionary Tale of HIH: ‘Independent’ Directors as Lemons”

The second stage conference for the book project critically comparing and assessing “Independent Directors in Asia” is hosted by co-editor A/Prof Dan Puchniak at the National University of Singapore Law Faculty over 26-27 February 2015. In addition to comprehensive reports from different countries in the region, including one co-authored by myself and Sydney Law School colleague Fady Aoun regarding Australia), the project will include a chapter comparing significant case studies from various jurisdictions, based on short (1000-word) contributions from experts in various jurisdictions. Below is the (unfootnoted) text of Mr Aoun’s contribution on a very significant corporate collapse in Australia in 2001.

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Consumer Product Safety Regulation – Recalls and Accident Information Disclosure Mechanisms

[The following is an un-footnoted longer draft of one of two Policy Digests prepared for a Sydney Southeast Asia Centre joint research project and an ASEAN Secretariat conference on consumer protection law in Hanoi over 8-9 December 2014. The footnoted final version is available at: http://www.asean.org/resources/publications/item/consumer-protection-digests-and-case-studies-a-policy-guide-volume-1?category_id=382]
1. Overview
Consumer product safety is a major contemporary concern for developing, middle-income and developed economies. ASEAN, through its Committee on Consumer Protection (ACCP), has recognised this as a priority topic for international collaboration, as trade in goods accelerates through the region with its major trading partners world-wide. Part 2 of this Digest highlights the policy challenge. Part 3 shows how market and even private law incentives are unlikely to provide sufficient incentives for manufacturers to produce safe products; some minimum regulatory standards are needed. Part 4 focuses on regulatory powers to force recalls of unsafe goods, but also requirements for suppliers to notify national regulators about ‘voluntary’ recalls. It also outlines recall information disclosure efforts underway nationally, regionally (notably within the European Union, EU, but also through ACCP since early 2011), and now internationally (especially through the Organization for Economic Cooperation and Development, OECD, since late 2012). This Digest suggests there is scope already for greater engagement by ACCP and individual ASEAN member states particularly with the OECD initiative in this field. Part 5 also urges broader information-sharing as the OECD clearing-house expands over the next few years, as well as with product safety incident reporting systems already developed particularly in the EU and the United States (US).

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Independent Directors in Australia, Japan and the Asian Region

Requirements or inducements for (especially listed) company boards to adopt a minimum number or proportion of “independent” directors (IDs), who are not executives as well as free from other relationships that might impede their capacity to exercise independent judgement on behalf of the company as whole, are spreading through the Asian region. This is rather curious, as many countries (including in fact Australia) have a tradition of large non-institutional blockholders, which typically have the capacity and incentive to exercise shareholder rights to extract information and influence the management and direction of the company. The need for IDs is therefore reduced, compared to countries with more dispersed shareholders, such as the US and especially the UK. However, blockholders can take advantage of dispersed shareholders, so the latter (or policy-makers more generally) may still press to have more IDs on boards. Yet blockholders can be expected to lobby to resist such measures, and anyway the impact of IDs on corporate performance may be less in such jurisdictions.
This backdrop may explain the difficulties in introducing requirements for IDs into Japan, despite calls for more IDs in the wake of corporate failures (such as Olympus) and the enactment of the Companies Reform Act on 20 June 2014 (after extensive deliberations). But it is also consistent with the history and reality of IDs in Australia’s listed companies. Below is the Abstract for a detailed draft paper comparing Australian developments, co-authored with my colleague Fady Aoun, for the Berlin conference / book project on “IDs in Japan and other Major Asian Jurisdictions” (click here for a PDF of our Powerpoints), as well as the third joint research conference for USydney, UGeneva, Harvard and Renmin Law Schools (hosted in Beijing over 11-12 July: click here for an audio file of my 13-minute presentation by video link).

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Taking Seriously Consumer Product Accident Reporting Duties under Australian Law

On 8 June 2013 the Sydney Morning Herald reported that Volkswagen Australia would be formally recalling Golf and other Volkswagen-made models that had suddenly lost power. The family of one driver and the driver of a truck that rear-ended her Golf vehicle are arguing before the coroner that this was a possible cause for her fatal accident. Over 300 other owners of Volkswagen-made vehicles have also reported problems. Similar concerns about some of Volkswagen’s direct-shift gearboxes had led to formal recalls of some models as early as 2009 in the USA, then in China, Singapore, Japan, Malaysia and Taiwan. However, Volkswagen reportedly stated that Australia does not have the same gearboxes, and instead had initially undertaken a program involving its dealers. Marketing experts have criticised the recall recently commenced in Australia, suggesting that Volkswagen will have suffered extensive damage to its brands by not acting publically earlier to address consumer concerns – in addition to the estimated $170m in direct repair costs.
It will probably come as no surprise that Volkswagen conducted recalls more promptly in the USA. Toyota suffered extensive adverse publicity there relating especially to problems instead involving sudden acceleration, generating recalls of over 10 million vehicles over 2009-2011 and a recently-finalised $1.6b class action settlement. Nor should it be surprising that Volkswagen undertook a recall in Japan. Japanese consumers have become increasingly sensitive about product safety issues, especially since 2000 – when Mitsubishi Motors was found to have been conducting illegal clandestine recalls over an extended period. The delay in Australia is disturbing, especially given the increased attention otherwise being paid to consumer protection since “re-harmonisation” pursuant to the Australian Consumer Law (ACL) reforms enacted in 2010.

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Process and Substance in Contract Law Reform in Japan – and Australia?

Japan’s is well underway on the path to completing its first comprehensive reform of contract law since enactment of the Civil Code in 1896. A driving force has been Takashi Uchida, a prominent participant in Japan’s intense discussions over contract law theory in the early 1990s. He resigned in 2007 as Professor of Civil Law at the University of Tokyo in order to spearhead deliberations within the Legislative Council (hosei shingikai) of the Ministry of Justice (MoJ), now charged with recommending specific reforms.
At the Council’s first Working Group meeting on 22 November 2009, one member reportedly suggested that deliberations should proceed “without paying too much attention to ‘the Basic Policy for the Law of Obligation Reform’ (draft proposals by [the] Japanese Civil Code (Law of Obligations) Reform Commission)” because it had been confirmed that the Working Group’s deliberations should start “from zero”. However, the Draft Proposals (DP) published in April 2009 by that semi-private Reform Commission, along with a detailed five-volume commentary written by its members, were clearly intended to frame the subsequent debate in the formal Working Group arena – and have mostly achieved that effect.

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Book review – “Collateral Knowledge: Legal Reasoning in the Global Financial Markets”

This is a rich book, written by Cornell Law School’s Professor Annelise Riles (University of Chicago Press, 2011, xii+295 pages). It is full of ideas and observations drawn partly from extensive fieldwork – particularly in Tokyo over 1997-2001 (p. ix), just as Japan was implementing its “Big Bang” reforms aimed at making its financial markets more “free, fair and global” (p. 120). It deserves careful reading, and re-reading, by those researching Japan as well as those interested in financial markets, regulatory theory, contract law, international commercial law, socio-legal studies and anthropology more generally.

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Guest blog – The Implications of an Abe Government for public law in Japan

Written by Joel Rheuben (University of Tokyo)
After facing more than a year of deadlock in the Diet and a legislative agenda monopolised by earthquake recovery measures and the increase in the consumption tax, the outgoing Democratic Party of Japan (DPJ) Government has left in its wake a mess of unfinished business in a number of legislative areas. One of these areas is public law reform. The DPJ had been elected in 2009 on a platform of change after the long reign of the Liberal Democratic Party (LDP), and had promised a new era of government transparency and accountability. Behind the early pageantry of the “Government Revitalization Unit”, in which ministers publicly grilled senior civil servants over their agencies’ expenditure, the DPJ worked diligently to bring about much-needed change in matters such as local government, the civil service, freedom of information and administrative appeals.
With a more than comfortable majority in the House of Representatives and the passage of several of the more critical recovery measures out of the way, it remains to be seen which, if any, of the DPJ’s public law reforms the presumptive prime minister, Shinzo Abe, will run with. The LDP’s election manifesto calls for “administrative reform”, but is short on detail. However, the tenor of Mr Abe’s previous prime ministership (from September 2006 to September 2007) gives an indication of Mr Abe’s likely priorities.

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TPP negotiations and the IBA’s Draft Rules on Investor-State Mediation

As NZ lawyer Daniel Kalderimis points out recently, concerns about treaty-based investor-state arbitration (ISA) have been:

stirred up by the release of an “Open Letter from Lawyers to the Negotiators of the Trans-Pacific Partnership Urging the Rejection of Investor-State Dispute Settlement” on 8 May 2012. The letter is backed by well-meaning, and several well-known, signatories; most of whom are not especially well-informed about investor-state arbitration. The fact of the letter is welcome, as the issues are important. But the letter itself contains several overstatements and does not make a balanced contribution to the debate.

Another oddity about the “Open Letter” is that it refers generically to “Investor-State Dispute Settlement” (ISDS) and ends by calling on “all governments engaged in the TPP [Trans-Pacific Partnership FTA] negotiations to follow Australia’s example by rejecting the Investor-State dispute mechanism and reasserting the integrity of our domestic legal processes”. ISDS incorporates both ISA (where the parties agree to be bound by the arbitrators’ decision) and investor-state mediation (“ISM”) or conciliation procedures (where the parties agree to negotiate a settlement but are not obliged to accept any proposals made by the third-party neutral mediator). At least the rest of the “Open Letter” indicates that the primary objection is to binding ISA.
By contrast, the “Gillard Government Trade Policy Statement” (April 2011) simply eschews ISDS in Australia’s future treaties, including the TPP. Perhaps the Statement meant only ISA, which allows greater inroads into host state sovereignty, given that overall it draws on the Productivity Commission’s recommendations from a 2010 Trade Policy Review report. But, by seemingly eschewing all forms of ISA, the Statement seems to go beyond the Commission’s recommendation on ISA itself.
Hopefully the Australian government, other states involved in FTA negotiations (such as the TPP) and those who wish to improve the ISA system (such as myself) or abandon it altogether (as do some signatories to the Open Letter) will not simply transpose their objections over to ISM too. There is significant scope for mediating investor-state disputes, and indeed the Draft Rules on ISM published recently by the International Bar Association (IBA) are a valuable guide to conducting mediation more effectively. Below I set out some preliminary analysis of those Draft Rules, prepared for the Law Council of Australia but representing my own personal views – particularly regarding the scope for arbitrators to adopt them as a means of settling ISA claims earlier and more effectively (ie ‘Arb-Med‘). A fully-footnoted version of my views is available on request, and I encourage feedback.

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“Asian Investment and Finance Law” – Special issue 34(1) Sydney Law Review (March 2012)

Professor Vivienne Bath and myself are guest editors and authors of two articles for this special issue, the first dedicated the Sydney Law Review to developments in or across Asian legal systems. The issue also includes an article on Indonesian law co-authored by Dr Simon Butt, presently serving as Director of the Centre for Asian and Pacific Law at the University of Sydney (CAPLUS).
The special issue contains the following nine contributions, with full-text PDF versions freely downloadable from the Sydney Law Review webpage:

Introduction: Asian Investment and Finance Law
Vivienne Bath and Luke Nottage
Articles:
Corporate Rescue in Asia – Trends and Challenges
Andrew Godwin
Lessons from Product Safety Regulation for Reforming Consumer Credit Markets in Japan and Beyond?
Luke Nottage and Souichirou Kozuka
Embracing Sharia-Compliant Products through Regulatory Amendment to Achieve Parity of Treatment
Kerrie Sadiq and Ann Black
Between Piety and Prudence: State Syariah and the Regulation of Islamic Banking in Indonesia
Tim Lindsey
Reining in Regional Governments? Local Taxes and Investment in Decentralised Indonesia
Simon Butt and Nicholas Parsons
Foreign Investment, the National Interest and National Security – Foreign Direct Investment in Australia and China
Vivienne Bath
Responding to Industrial Unrest in China: Prospects for Strengthening the Role of Collective Bargaining
Sarah Biddulph
The Influence of the WTO over China’s Intellectual Property Regime
Natalie P Stoianoff
Book Review: The Derivative Action in Asia: A Comparative and Functional Approach [edited by Harald Baum, Dan Puchniak and Michael Ewing-Chow, Cambridge University Press, 2012]
Luke Nottage and Fady Aoun

Vivienne Bath and I also reproduce below the text of our Introduction (omitting footnote references). It outlines and commemorates the long and strong tradition of engagement with Asian legal systems on the part of Sydney Law School, CAPLUS and the Australian Network for Japanese Law (ANJeL).

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