International Commercial Arbitration Reform in Australia, Japan and Beyond

Australia’s long-awaited International Arbitration Amendment Act 2010 (Cth) received Royal Assent on 6 July, after the Senate agreed on 17 June to the Bill introduced to the House of Representatives on 25 November 2009 as revised by the federal Government itself on 17 March 2010. The International Arbitration Act 1974, as thereby amended (‘amended IAA’, at http://www.comlaw.gov.au), is set in broader context by the first book devoted to this important field of dispute resolution (‘DR’) law and practice: Luke Nottage and Richard Garnett (eds) International Arbitration in Australia (Federation Press, Sydney, forthcoming October 2010: see Prelims PDF downloadable here).
This eleven-chapter work adds a Preface from NSW Chief Justice Spigelman, a powerful proponent of arbitration and broader access to justice as well as judicial exchange with Japan. It is partly dedicated to Professor Yasuhei Taniguchi, one of my inspiring former teachers at Kyoto University in the early 1990s and a Distinguished Visitor to Sydney Law School over July-August 2009. He is also renowned as a practitioner of international commercial arbitration (ICA), having served for example as arbitrator in an ICC arbitration in Melbourne, as well as a former Judge on the WTO Appellate Body.
The amended IAA brings new promise for ICA in Australia, and may offer lessons for countries like Japan. But Australia can also learn from Japan, especially the thorough way in which it goes about legislative reform.

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Guest Blog: Japan’s Quest for a Leadership Role in Asia

On 11 March, the Japan Foundation hosted a lecture at Blake Dawson’s offices in Sydney entitled ‘Japan at a Foreign Policy Crossroads: New Direction or More of the Same?’ by Kyoko Hatakeyama, a former official in Japan’s Foreign Ministry who recently completed her doctorate under the supervision of Professor Craig Freedman at Macquarie University. She discussed the possible changes in Japanese foreign policy under the new government led by the Democratic Party of Japan (DPJ), and the lecture included the launch in Australia of ‘Snow on the Pine: Japan’s Quest for a Leadership Role in Asia’, a book based on her thesis and co-authored with Dr Freedman. Here are some notes subsequently provided by Dr Hatakeyama, setting a broader context for many postings and comments on this Blog.

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Judicial Education and Training in Japan

To qualify as a lawyer (bengoshi) with full rights to give legal advice and represent clients – and also to be appointed as a senior court judge or public prosecutor – candidates must pass the National Legal Examination (shiho shiken), and then be trained at the Legal Research and Training Institute (LRTI). University legal education still takes place primarily at the undergraduate level. Every year, about 45,000 students graduate with a Bachelor of Laws. However, most of them do not become lawyers, instead finding employment in governmental organs or private corporations, because it has been extremely difficult to pass the National Legal Examination. In 2004, while more than 40,000 people took the Examination, less than 1,500 examinees passed. The number of successful examinees is intentionally limited. The number was 500 in 1990, then gradually increased to 1,000 in 2000, and to around 1500 in 2004. It was expected rise to around 3,000 per annum in 2010, as part of a broader program of judicial reforms underway since 2001, but the recent election of a new President for the Japan Federation of Bar Associations now makes this very unlikely.
Another aspect of the agenda advanced by the Judicial Reform Council (JRC) related to the training of prospective legal professionals was the inauguration of 68 new postgraduate “Law Schools” from April 2004. However, although it is easier for their (carefully selected) students to pass a “New Legal Examination” (shin-shiho shiken), it remains one of the most difficult in Japan – with a pass rate of about 30%. The old shiho shiken, which could be attempted without any university degree, has been gradually phased out to allow the new Law Schools to get established, although (as recommended by the JRC in 2001) a small new scheme will be introduced to allow those unable to afford Law School to still qualify to become a bengoshi, prosecutor or Judge.
But what happens after this Examination and when one joins the almost 3,000-strong judiciary in Japan?

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Will Privately-Supplied ADR Keep Growing in Japan?

[Adapted on 10 April for the East Asia Forum blog]
The shift since the 1990s in the self-image of many bengoshi lawyers outlined in my previous posting, underpinned also by the slowly changing nature of their work generally as well as the emergence of corporate law firms, helps explain the quite swift enactment of the 2004 Law to Promote the Use of Out-of-Court Dispute Resolution Procedures (translated here), driven also by a Judicial Reform Council (JRC) recommendation in 2001. After a slow start, the Law also seemed to be gaining some traction in promoting privately-supplied ADR services.
However, Court-annexed mediation and recent improvements in the litigation process itself leave a formidable competitor. And the conservative backlash among bengoshi in electing their new JFBA President is likely to further dampen the emergence of private ADR services and institutions. Especially now, that only seems probable if and when private suppliers develop niche markets like more facilitative (not evaluative) forms of ADR – a characteristic of ADR in Australia that has impressed ANJeL Visiting Professor Tatsuya Nakamura (see his columns in Japanese reproduced here) – and if litigation costs balloon like they have in countries like Australia.

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Japan’s Legal Profession (and ADR and Legal Education) at a Crossroads

Japanese bengoshi lawyers, as the most influential group within the legal profession, stand at a crossroads. Overall, through the overarching Japan Federation of Bar Associations (JFBA), their work and attitudes have become more amenable to collaborating with the judiciary and even public prosecutors in implementing reforms to the litigation system; to increasing the numbers allowed to pass the National Legal Examination as the gateway to careers as a lawyer, judge or prosecutor; and even to allowing Japan’s many “quasi-lawyers” to expand their legal practice, as well as more promotion of privately-supplied ADR services. Reforms in all these areas were propelled by the Judicial Reform Council’s final recommendations to the Prime Minister in 2001, but they were consistent with the trajectory of bengoshi as a whole. However, the controversial election of a new JFBA President may derail all this, with implications also for related initiatives such as Japan’s new postgraduate “Law School” programs inaugurated in 2004.

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Guest blog: “Learning from Toyota’s Troubles — Where’s the Board?”

Do Toyota’s woes indicate, as some have argued, the last nail in the coffin of the mass production based export model that had served the Japanese economy so well at least through to the 1980s? In other words, does Japan need to wind down even high-tech goods manufacturing and further expand its services sector? Are consumer product safety expectations both within Japan and abroad just too demanding nowadays? Or is Toyota similar to Mitsubishi Motors, an aberrant company which for years conducted clandestine recalls – taking consumers and regulators for a ride – until an employee blew the whistle in 2000 … almost destroying the Mitsubishi brand name? And does the Toyota saga suggest that Japan’s gradual transformation in corporate governance is, well, TOO gradual?
For one view on that last point, and to encourage public comments on any of these questions or others that have been raised by Toyota’s saga, I am pleased to reproduce (with permission) the following posting by an American ANJeL member on JURIST, the University of Pittsburgh’s blog:
JURIST Guest Columnist Professor Bruce Aronson of Creighton University School of Law says that Japanese automobile manufacturer Toyota’s current safety crisis – now the subject of Congressional hearings – should prompt the company to address its seriously flawed system of governance more than just its public image….

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Book Review: Hiroshi Oda, Japanese Law (3rd ed 2009, OUP)

This third edition textbook by University of London Professor Hiroshi Oda continues to fill an important niche in the ever-growing English-language (and even Western-language) literature on Japanese law.
It provides clear, succinct, up-to-date and comprehensive coverage. The effort to cover all major areas of law does mean some trade-off with contemporaneity, but this is largely unavoidable especially now that Japanese law has been changing so quickly and extensively since the mid-1990s. A brief Introduction is followed by parts on:
• The Basis of the System”: chapters on modern legal history, sources of law, administration of justice (including arbitration and ADR), legal profession, and human rights protection – ie the constitution); then
• “The Civil Code – The Cornerstone of Private Law”: general rules, law of obligations and contracts, property law, (only then) tort law, family law and inheritance;
• “Business-related Laws”: corporate law, insolvency law, securities (and financial instruments) law, anti-monopoly law, IP and labour law; and
• “Other Laws”: civil procedure, criminal law and procedure, international relations (eg nationality law, foreign exchange and trade law, transnational disputes).
To read the rest of this Book Review, contact me or see (from mid-2010) the Australian Journal of Asian Law.

2nd ANJeL Australia-Japan Business Law Update CLE Seminar: 13/02/10 in Tokyo

Happy New Year of the Tiger!
Registrations are now open for the 2nd ANJeL Australia Japan Business Law Update seminar: Saturday 13 February 2010 2-5.30pm at the Kasumigaseki building of Ernst & Young in Tokyo (http://shinnihon.vo.llnwd.net/o25/image/aboutus/eytax_access_mapE.gif).
Learn about post-GFC financial markets reg and (yes) the amended Australia-Japan double tax treaty. And even get 3 MCLD/PLD credits. Just A$200 – with no GST chargeable! At least some of us will follow up with an informal (PAYG) dinner.
For more details and registration please visit: http://www.usyd.edu.au/news/law/457.html?eventcategoryid=39&eventid=5139

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Comparing Product Safety Re-Regulation in Australia: The Never-Ending Story

Product Safety is one major theme for the 4th Consumer Law Roundtable, hosted this year at Sydney Law School on 4 December 2009. Others include unfair contract terms and consumer credit, and this Roundtable will have an Asia-Pacific focus. Professor Michelle Tan will join us again from Japan, and keynote speakers are Professor Tsuneo Matsumoto (chair of Japan’s new Consumer Commission, which he outlines here) and VUW’s Kate Tokeley (considering unfair contract terms from a New Zealand perspective). A major role of the new Consumer Affairs Agency – supervised by Commission – is to collect and analyse consumer product-related accident data, which Japanese suppliers need to disclose since amendments in 2006.
Meanwhile, on 16 November the Australian Treasury initiated yet another public Consultation: “Regulatory Impact Statement – Australian Consumer Law – Best Practice Proposals and Product Safety Regime”. Before being considered for a Bill, a cost-benefit analysis (RIS) has been required for these proposals, based on consumer law reform recommendations from the Productivity Commission in 2008 other than those (especially unfair contract terms regulations) which were introduced as a separate Bill in July – without the extra hurdle of such a RIS analysis. Unfortunately, the Treasury did not publicise well this latest Consultation (eg not via their http://www.treasury.gov.au/consumerlaw/ portal) and required Submissions by 30 November. They wanted to report to the Ministerial Council of Consumer Affairs (MCCA), also scheduled for 4 December – alongside, incidentally, PM Rudd’s major conference on the Asia Pacific Community concept (see my revised blog on that here).
Despite this very tight deadline, I provided the following Submission in response to Part II (pp 82-98) of this consultation, regarding Product Safety (PS) re-regulation. I elaborated mainly on a few key points developed in my Submission to the first consultation on the Australian Consumer Law reform announced in February 2009. Hopefully Australia will finally join Japan and many other Asia-Pacific countries (China, Canada and the US) in adopting the new global standards for PS.

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Asia-Pacific Product Safety Regulation and Other Regional Architecture for a Post-FTA Era

Imagine an international regime with these institutional features:
1. Virtually free trade in goods and services, including a “mutual recognition” system whereby compliance with regulatory requirements in one jurisdiction (eg qualifications to practice law or requirements to offering securities to the public) basically means exemption from compliance with regulations in the other jurisdiction. And for sensitive areas, such as food safety, there is a trans-national regulator.
2. Virtually free movement of capital, underpinned by private sector and governmental initiatives.
3. Permanent residence available to nationals from the other jurisdiction (and strong pressure to maintain flexible rules about multiple nationality).
4. Treaties for regulatory cooperation, simple enforcement of judgments (a court ruling in one jurisdiction is treated virtually identically to a ruling of a local court), and to avoid double taxation (including a system for taxpayer-initiated arbitration among the member states).
5. Government commitment to harmonising business law more widely, eg now for consumer and competition law.
No, the answer is not the obvious one: I am NOT talking about the European Union (EU). I am referring to the Trans-Tasman framework built up between Australia and New Zealand, particularly over the last decade, sometimes through treaties (binding in international law) but sometimes in softer ways (eg parallel legislation in each country). And since both countries are actively pursuing bilateral and now some regional Free Trade Agreements (FTAs), especially in the Asia-Pacific region, can’t at least some of these Trans-Tasman initiatives become a template for a broader “Asia Pacific Community”?
This question is particularly timely as the new DPJ-led government in Japan, has declared its support not only for the WTO system but also for FTAs, particularly in the Asian region. It also advocates improvements in food and consumer product safety measures. Whether or not Australia is considered part of Asia, either by Japan or itself, the two countries are continuing bilateral FTA negotiations in the context of growing involvement in regional arrangements in the Asia-Pacific region. Such developments constitute one theme at the NZ Centre for International Economic Law conference, “Trade Agreements: Where Do We Go From Here?”, over 22-23 October 2009 in Wellington. Below is an edited introduction to my four-part paper, now available in further updated form as a Sydney Law School Research Paper. Powerpoint slides are also available in PDF here.

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