Author: Luke Nottage

At their AGM on 27 January 2021, the CPR Institute for Dispute Resolution awarded Sydney Law School PhD student Ana Ubilava the Joseph T. McLaughlin 2020 Outstanding Student Article Award. The commendation was presented by the Hon. Elizabeth S. Stong, US Bankruptcy Court Judge (EDNY), with remarks reproduced below with permission.

“For many years, it has been my great pleasure, and my great honor, to serve as one of the judges in the annual CPR awards competitions, and in particular, to serve as a judge in the Outstanding Student Article category.  The Student Article recognition is given to an article or paper written by a student on events or issues in ADR. 

The articles in this category reflect the best of young scholarship, the most creative new thinking, and the most innovative approaches to research in and about ADR.  The articles also often challenge our assumptions, our common knowledge, our received wisdom, all those things that “everybody knows” but sometimes, somebody questions. 

It’s my pleasure to announce that the Joseph T. McLaughlin 2020 Outstanding Student Article award is presented to Ana Ubilava.  We recognize her for her article entitled “Amicable Settlements in Investor-State Disputes:  Empirical Analysis of Patterns and Perceived Problems,” which is a chapter from her thesis that was published this year in the Journal of World Investment and Trade.

Ana holds an LLM from the University of Manchester and a Bachelor’s in Law from Ivane Javakhishvili Tbilisi State University in Tblisi, Georgia.  She is currently a Ph.D. candidate at the University of Sydney Law School (Australia). 

Ana’s paper is the fourth in a series that she has written on the resolution of investor-state disputes.  In her work, she notes potential advantages to using compulsory mediation together with arbitration in investor-state disputes, and she observes that major concerns about compulsory mediation are unsupported by the available empirical evidence.  With little source material on the voluntary mediation of these disputes available, Ana turned to data from the pre-hearing settlement of cases in which a demand for arbitration had been filed.  She reasons that these cases were presumably resolved using mediation-like techniques – including negotiation or conciliation – or actual mediation, and therefore, they can be used as proxies for what might happen if parties were required to mediate.  

Using case outcome information from the International Centre for Settlement of Investment Disputes or ICSID database, the United Nations Conference on Trade and Development or UNCTAD database, the Investment Arbitration Reporter, and italaw.com, Ana was able to collect data on and evaluate more than 500 disputes.

She looked at four key questions about amicable settlement: 

• First, are certain types of investor-state disputes unsuitable to be settled amicably?
• Second, do amicable settlements impede transparency?
• Third, do amicable settlements pay less compared to when investors win in arbitration? And
• Fourth, is the non-enforceability of settlement agreements a problem in practice?

Ana concludes that the available evidence suggests these problems might not be as common or as severe as conventional wisdom may suggest.  She also recognizes the limits of the data, and the opportunity for further study.  She has set forth an empirical basis for taking a fresh look at many of the conventional objections to the imposition of investor-state mediation as a prerequisite to arbitration.  And for the quality of her questions, the quality of her research and analysis, and – as I like to say – based on the entire record, CPR is proud to award Ana Ubilava the Joseph T. McLaughlin 2020 Outstanding Student Article award. 

Ana, congratulations!“

Written by: Prof Luke Nottage & Ana Ubilava

The UNCITRAL Coordination Committee for Australia (UNCCA) and the Commercial Law Association (CLA) is holding an online seminar on Monday 26 October 2020 partly to celebrate the fortieth anniversary on the CISG (UN Convention on Contracts for the International Sale of Goods). The live, interactive seminar will be supplemented by a full conference package including pre-recorded presentations. A longer (30-minute) version of a pre-recording by UNCCA Fellow Dr Luke Nottage (Professor of Comparative and Transnational Business Law) and Ana Ubilava (PhD student at Sydney Law School and ANJeL Executive Coordinator) can be viewed here. Our presentation is entitled “Australia’s recent investment treaty ratifications and reviews: The UN Transparency Convention and investor-state mediation”. It is based on Ana’s recent postings on investor-state mediation (her PhD thesis topic) for the Kluwer Mediation Blog (reproduced here) and for the Kluwer Arbitration Blog with Luke and Prof James Claxton, as well as her lead-authored chapter with Luke for his co-edited book on Asia-Pacific international business dispute resolution due out from Kluwer by end-2020:

Ubilava, Ana and Nottage, Luke R., Novel and Noteworthy Aspects of Australia’s Recent Investment Agreements and ISDS Policy: The CPTPP, Hong Kong, Indonesia and Mauritius Transparency Treaties (March 4, 2020). in Nottage, Luke; Ali, Shahla; Jetin, Bruno; Teramura, Nobumichi (eds), “New Frontiers in Asia-Pacific International Arbitration and Dispute Resolution”, Wolters Kluwer, (Forthcoming) , Sydney Law School Research Paper No. 20/12, Available at SSRN: https://ssrn.com/abstract=3548358 or http://dx.doi.org/10.2139/ssrn.3548358

Our presentation updates for recent developments including DFAT’s public consultation to review Australia’s remaining BITs, with Luke’s Submission here and a related thought-provoking Clayton Utz / University of Sydney International Arbitration Lecture this year by Prof Zachary Douglas; but a summary of our original chapter manuscript is as follows.

Abstract: Investment treaties, and especially investor-state dispute settlement (ISDS) provisions, became a political hot potato from around 2011 when Philip Morris brought the first-ever ISDS claim against Australia under an old bilateral investment treaty (BIT) with Hong Kong. A Labor-Greens Government declared that it would no longer agree to ISDS provisions in future treaties, but when a centre-right Coalition Government regained power from 2013 it reverted to concluding treaties containing ISDS clauses on a case-by-case assessment. Australia therefore agreed to ISDS in FTAs with Korea and China, but not bilaterally with Japan. However ISDS-backed provisions apply between Australia and Japan since the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) can into force between them (and five other Asia-Pacific nations so far) from January 2019. Yet the Australian parliament engaged in robust debate about ratification of the CPTPP, with Labor Opposition (and Greens) parliamentarians continuing to voice concerns over ISDS provisions, despite the Philip Morris claim against Australia’s tobacco plain packaging having been rejected on jurisdictional grounds in 2015.

This paper examines how (US-style) CPTPP drafting compares with two important recent investment agreements subsequently signed by Australia over 2019, namely with Indonesia as part of a wider free trade agreement (IA-CEPA), and with Hong Kong (AHKIA, alongside a bilateral FTA covering non-investment matters). AHKIA came into force from 17 January 2020, while IA-CEPA has been ratified by Australia but not yet by Indonesia. IA-CEPA adds a provision unique in the universe of over 3000 investment agreements world-wide, probably proposed by the Indonesian side: a compulsory mediation step prior to arbitration, if the host state requests mediation after the foreign investor initiates ISDS. The paper also highlights other features of both treaties that may help reduce delays and hence costs in ISDS. The paper summarises empirical data about delays and costs, as well as transparency around ISDS as another growing public concern, including some of our own empirical data provided as evidence to an Australian parliamentary inquiry into ratifying the CPTPP.

We also examine the 2019 parliamentary inquiry that agreed with the submission that Australia should ratify the Mauritius (“UN ISDS”) Convention, thereby retrofitting extensive transparency provisions on pre-2014 treaties between Australia and other states that might also accede to that framework Convention. Even if Mauritius Convention ratifications proliferate, however, it will not retrofit extra transparency provisions to treaties concluded even after 1 April 2014 even among those states (say between Australia and Indonesia, where the investor chooses the ICSID Rules rather than UNCITRAL Rules option for arbitration). Accordingly, states ratifying the Mauritius Convention will still need to agree bilaterally to expand any still-limited transparency provisions in such post-2014 treaties, which is quite inefficient compared to a multilateral solution. Nonetheless, we conclude from these new developments that Australia is now better placed to play a more active role in guiding the future path of international investment treaty-making multilaterally and especially in the Asia-Pacific region.

Written by: Ana Ubilava (final-year PhD in Law student, University of Sydney; ANJeL Executive Coordinator)

[Re-posted from the Kluwer Mediation Blog, and drawing on discussions during and after the Kluwer book related SCIL/CAPLUS/ANJeL webinar on “Beyond the Pandemic: New Frontiers in Asia-Pacific International Dispute Resolution” (4 August 2020, with video recording here). A related posting with Profs James Claxton and Luke Nottage is available on 5 September 2020 on the Kluwer Arbitration Blog.]

In recent years, mediation has been actively discussed for the investor-state dispute settlement (ISDS) regime, particularly as a means of reducing costs and delays. This interest is one reaction to growing discontent about the option of investor-state arbitration (ISA) typically offered by host states in international investment treaties, to make substantive commitments (like non-discrimination) more credible for foreign investors. Investor-state mediation (ISM) has been raised by some states in ISDS reform deliberations underway since 2018 through the United Nations Commission on International Trade Law (as mentioned recently on this Blog). In August 2018, the Centre for Settlement of Investment Disputes (ICSID) announced new draft ICSID Mediation Rules, in addition to longstanding but hardly ever used ICSID Conciliation Rules. These Mediation Rules will be accessible to States and investors irrespective of their membership to ICSID.

A year later, in 2019 the United Nations Convention on International Settlement Agreements Resulting from Mediation was opened for signature, coming into effect from 12 September 2019, and in principle can be used for ISDS. This Singapore Convention on Mediation does not differentiate between mediation and conciliation or any other dispute resolution mechanism resulting in settlements, as long as the procedure that resulted in such settlement agreements complies with the definition of Article 2(3):

“Mediation” means a process, irrespective of the expression used or the basis upon which the process is carried out, whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person or persons (“the mediator”) lacking the authority to impose a solution upon the parties to the dispute.

Some recent treaty practice also reflects this growing popularity of ISM dispute settlement mechanisms. Unlike the older bilateral investment treaties (BITs) and even some newer investment chapters in Free Trade Agreements (FTAs), the newest generation of such international investment agreements (IIAs) often have express references to mediation and conciliation. However, even when they do, almost all IIAs only make such third-party procedures voluntary; foreign investors and host states would have to agree later and separately to try mediation.

Out of over 3000 IIAs world-wide, it seems that only two treaties – the Hong-Kong – United Arab Emirates BIT (HK-UAE) and Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) FTA, both signed in 2019 – provide instead for mandatory conciliation as a pre-condition to arbitration. However, under both treaties, conciliation becomes mandatory only for the claimant investor, not for the respondent state.

HK-UAE BIT has a three-tier dispute resolution system: amicable settlement through standard consultations (direct negotiations) during a specified cooling-off period, an additional conciliation step before arbitration (if requested by the host state), and finally investor-state arbitration through the relevant arbitration rules of ICSID, UNCITRAL or the Stockholm Chamber of Commerce. Article 8(3) stipulates:

When required by the Contracting Party, if the dispute cannot be settled amicably within six months from the date of receipt of the written notice, it shall be submitted to the competent authorities of that Contracting Party or arbitration centres thereof, for conciliation.

Initially disputants are allowed six months to try and settle their dispute amicably through consultations. Once this six-month period is over and if the dispute is not settled amicably, conciliation becomes mandatory (for the claimant investor) only if it is initiated by the respondent (the Contracting Party to the BIT). It seems the conciliation is then allocated another six months. According to Article 8(5):

If the dispute cannot be settled amicably within six months from the date of receipt of the written notice or from the start of the conciliation referred to in paragraph (3) of this Article, the dispute shall upon the request of the investor be settled by arbitration…

Therefore, unless the respondent initiates conciliation, the claimant can proceed directly to arbitration once the cooling-off period for amicable settlements ends. However, it is unclear when the condition of mandatory conciliation is deemed to be met: (a) whether the initiation of conciliation and its submission to competent authorities is enough; or (b) whether actual participation in the process is also mandatory.

The BIT is also silent on whether it is possible to cut down the additional six months for conciliation because the settlement is unlikely. One scenario would be where it becomes obvious from the beginning that the respondent had initiated conciliation with the sole purpose of delaying arbitration and has no intention of actually attempting to settle. Overall, this unilaterally mandatory conciliation step increases the total ISDS timeline by six months because conciliation is not integrated into the cooling-off period. Instead it represents an additional middle step. in between the existing amicable settlement and consequent arbitration.

Another multi-tiered ISDS clause, as unconventional as that of the HK-UAE BIT, is the ISDS clause provided under the IA-CEPA. Its uniqueness lies similarly in the unilaterally mandatory nature of conciliation (mediation), which the host state can make a pre-condition to the foreign investor proceeding to arbitration. Article 14.23 states:

If the dispute cannot be resolved within 180 days from the date of receipt by the disputing Party of the written request for consultations, the disputing Party may initiate a conciliation process, which shall be mandatory for the disputing investor…

The claimant can proceed to ISA in two ways: (1) if the consultations were unsuccessful, and once the cooling-off period is over, but only if conciliation has not been initiated by either of the disputants; and (2) if the consultations were unsuccessful, but the conciliation has been initiated, whereupon it becomes mandatory for the investor. Therefore, conciliation too has to be unsuccessful for the claimant to then progress to investor-state arbitration.

Under one interpretation, the ISDS timeline for each of the dispute resolution steps under IA-CEPA are cumulative. In particular, the timeline without mandatory conciliation under IA-CEPA is 180 days for consultations plus 90 days before the claim is submitted to arbitration. By contrast, the timeline with mandatory conciliation consists of consultations (180 days) followed by conciliation (120 days) plus 60 days before the claim is submitted to arbitration. Therefore, under this interpretation mandatory conciliation increases by 90 days the otherwise 270-day process before reaching arbitration by 90 days.

A second interpretation is that these timeframes are overlapping. Specifically, if the notice of intent for arbitration is permitted to be given to the respondent during the consultation or conciliation period, then the 60- or 90-day waiting period  before commencing arbitration could be counted within these times. However, the treaty is not clear whether the notice of arbitration can be issued within the 180-day cooling off period and/or 120-day conciliation period, or whether the notice of arbitration can be given only after these stipulated time periods end (as under the first interpretation). This is because, while initiating conciliation is permitted during the consultations (Article 14.23), no such provision is provided for the notice of intent for arbitration (Article 14.26). Therefore, what can be said with certainty is that mandatory conciliation increases the overall ISDS timeline by (up to) 120 days.

In addition, like the HK-UAE BIT, IA-CEPA provides no additional information on whether it is permissible to have the 120 days of mandatory conciliation waived for the claimant if it becomes apparent that the respondent is not participating or when the settlement becomes unlikely.

Another important element to consider in IIAs when incorporating mandatory ISM is whether claimants can bypass the mandatory conciliation step through the most-favoured nation (MFN) obligation. This is when States are required to treat each other’s investors and investments no less favourably than they treat investors and investments of other, non-contracting states. Accordingly, claimant investors may invoke a treaty between the host State (respondent) and a different State (other than the home State of the claimant) which does not have a multi-tiered ISDS clause and that instead provides direct access to ISA. (Sometimes, however, the MFN provision expressly limits its applicability to later treaties signed by the host state with third parties.) IA-CEPA (Article 14.21(3)) and HK-UAE (Article 4(8)) doo have an express carve-out of ISDS from MFN, so an investor is not allowed to bring claims alleging the breach of MFN clause because any other IIA contains a more favourable ISDS provision.

Notwithstanding the recent steps towards promoting more ISM, the concept of mandatory mediation is still not widely practiced. Various commentators and practitioners have voiced concerns over the role of mediation in ISDS, even on a voluntary basis, which has sometimes progressed into arguments against the idea of mandatory ISM as a pre-condition to arbitration. However, my new empirical study, which examines the validity of common concerns against mandatory ISM through statistical and econometric analysis of amicable settlements generally among concluded ISA cases, has found that none of some commonly purported concerns were strongly significant in practice. For example, settlements do not pay less than awards, and settlements do not impede transparency of outcomes because the confidentiality of awards depends largely on the decision of the parties regardless of the outcome.

With the Singapore Convention on Mediation promising greater enforceability of settlement agreements, the new ICSID Mediation Rules being promoted for investor-State disputes, and an emerging trend of express references to mediation and conciliation in new treaties, it seems like the right time to explore the grounds of integrating mandatory ISM in the current ISDS regime. This would ensure the full utilisation of this dispute resolution step, which is unlikely to happen with current voluntary, opt-in references. Nonetheless, the two recent treaties analysed here highlight some issues of interpretation, including for timelines, deserving careful consideration by future treaty negotiators and drafters.

Written by: Dr Michael Hwang SC

This is a book which looks forward to possible future outcomes in the development of cross-border dispute resolution in the Asia-Pacific region, focusing on major economies in East and South Asia, as well as neighbouring countries such as Australia which are closely linked economically and geographically. The principal questions posed are: (a) whether international commercial arbitration can improve its attractiveness through law reform and case law development, overcoming criticisms about cost and delay; (b) whether growing concerns about ISDS issues in current investment treaties will lead to Asian states to become rule-makers in international investment law, rather than continue as rule takers; (c) whether innovations in existing or new fields can assist the Asia-Pacific region to develop international dispute settlement mechanisms further. It is therefore an exciting book that challenges existing procedures and frameworks for cross-border dispute resolution both in commercial as well as in treaty arbitration, rather than being another book which is simply descriptive of the existing mechanisms (valuable as such books might be).

There are clearly catalysts for change within the existing framework of dispute resolution in Asia, and several could be real game changers, like China’s Belt and Road initiative (examined in detail in Chapter 7) and the Singapore Convention on Mediation (Chapter 14). The team of writers specially assembled for this project have impressive credentials, led by the prolific and perceptive Professor Luke Nottage, and supported by several authors whom I have the privilege of knowing personally, and whose work I can wholeheartedly recommend as being worth reading, both for their knowledge and experience, but particularly for their insight.

The various authors are not simply writing about existing practices and procedures in the region, but are examining the situation on the ground with a critical eye, and making informed observations about where changes are needed and educated guesses about the chances of reforms being successful, and the consequences if they are not. It has been written in the time of COVID-19 and accordingly points out the special challenges to the field of international dispute resolution in this unprecedented situation. Those include whether lawyers can adapt to new technological solutions to overcome the difficulties of conducting virtual hearings, and whether players in the field of dispute resolution can continue to afford the time and cost of long drawn-out forensic procedures to resolve the inevitable disputes that have been caused by the pandemic, or whether there will be added impetus to use mediation in place of confrontation. There are also protectionist issues affecting the future of maintaining the rule of law in settling cross-border commercial disputes. Local judges might be influenced by the fact that certain apparent breaches of contract have been caused by events beyond the control of their local businesspeople, and the law may become stretched or even disregarded for what may be perceived to be a fairer commercial solution, when performance of a contractual obligation has been rendered impossible in the light of conditions brought on by the pandemic. Such situations could lead possibly to foreign judgments and/or foreign arbitration awards not being recognised or enforced, relying on an overly liberal interpretation of the doctrine of public policy to justify such non-enforcement.

There are also challenges arising from internal social and political challenges in certain Asian jurisdictions such as Malaysia and Hong Kong, where rule of law issues may affect investor confidence in those territories. This mistrust of the application of the rule of law will likely also lead to an international lack of confidence in the reliability of the dispute resolution system of the countries concerned, and Hong Kong in particular may find it difficult to maintain the hitherto proud record of independence and efficiency of its courts and arbitral tribunals. And there are legacy challenges which were there in several Asian countries before Covid-19 and remain as challenges to be overcome, without which their attractiveness as international investment and commercial centres will surely decrease if the legacy problems are not resolved.

The best introduction to this book is actually to start from the succinct final chapter (Chapter 15) jointly authored by Professors Anselmo Reyes, Shahla Ali and Nobumichi Teramura. This gives an excellent summary of the aims and contents of the 14 preceding chapters, and will highlight to readers which chapters might be of particular interest and therefore help determine in which order to read which chapters, although all 14 are worth reading.
I therefore congratulate Professors Nottage, Ali, Jetin and Teramura and their team of other authors on producing a timely and lively study. It will certainly stimulate ideas and discussion among its readers and perhaps also contribute to some positive changes in the jurisdictions which are the subject of this critical study.

Below are summaries of the 15 chapters in our forthcoming book, building on a joint HKU/USydney project throughout 2019 (background and draft bios here). The Foreword by Michael Hwang SC and all author bios are here. Please consider registering or telling your networks about a free Webinar with the co-editors, some authors and others, scheduled for Tuesday 4 August 2020 5-6pm (Sydney time): https://law-events.sydney.edu.au/talkevents/beyond-the-pandemic-new-frontiers-in-asia-pacific-international-dispute-resolution

1. Introduction: New Frontiers in Asia-Pacific Trade, Investment and International Business Dispute Resolution –Luke Nottage & Bruno Jetin

Abstract: Asia-Pacific trade and investment flows have burgeoned over recent decades, albeit impacted by China-US trade tensions and especially the COVID-19 pandemic (§1.02). International investment agreements have proliferated to liberalise and protect investments (§1.03), mostly adding the option of investor-state dispute settlement (ISDS). Asia-related ISDS cases have also started to grow, albeit somewhat belatedly (§1.04), complementing a more longstanding upward trend in international commercial arbitration (ICA) cases involving Asian parties filed in the region as well as the traditional Western centres (§1.05). The eastward shift in international dispute resolution has already involved initiatives to improve not just support for ICA and ISDS arbitrations, but also to develop alternatives such as international commercial courts and mediation. Core arguments from ensuing chapters (§1.06) cover the main existing venues for international dispute resolution in Asia (China, Hong Kong and Singapore) but also some emerging contenders (Japan, Malaysia, India and Australia). Overall (§1.07), can ICA venues improve their attractiveness through law reforms, case law development and other measures, despite growing concerns about costs and delays? Will some emerging concerns about ISDS prompt Asia-Pacific states to become more active “rule makers” in international investment law? How might these issues be affected by the COVID-19 pandemic?

Keywords: international trade, foreign direct investment (FDI), free trade agreements (FTAs), international investment treaties, international economic law, arbitration, mediation, international commercial courts, Asia, COVID-1

2. An International Commercial Court for Australia: An Idea Worth Taking to Market – Marilyn Warren & Clyde Croft

The time has come for Australia to join others in establishing a new “International Commercial Court” as another international dispute resolution option especially for the Asia-Pacific region. This chapter outlines the existing international legislative architecture (the 1958 NYC for international arbitration, inspiring the 2005 Hague Choice of Court Convention), and the models provided by London’s venerable Commercial Court and since 2015 the Singapore International Commercial Court (including the latter’s composition, jurisdiction, procedure and confidentiality provisions, appeals, and cross-border enforceability of its judgements – facilitated by Singapore ratifying the 2005 Hague Convention). It uses these topics to frame the proposal for an Australian International Commercial Court, including the possibility of allowing its litigants to exclude the application of the Australian Consumer Law (which otherwise may apply also to many business-to-business disputes). It concludes that the COVID-19 pandemic has bolstered the case for such a new Court, by minimising the obstacle of Australia’s physical distance as litigation has had to move rapidly online, and because the pandemic’s economic dislocation will undoubtedly lead to more cross-border disputes.

Keywords: international arbitration, international litigation, international commercial courts, Australia, Singapore, United Kingdom, COVID-13.

3. New Frontiers for International Commercial Arbitration in Australia: Beyond the ‘Lucky Country’ – Albert Monichino & Nobumichi Teramura

Abstract: Australia is not a lucky country in the context of international commercial arbitration (ICA) due to its geographical isolation. However, the problem of remoteness has luckily been ameliorated since the COVID-19 pandemic, thanks to the dramatic spread of video-conferencing technologies in arbitrations and even in some court proceedings. ‘Luck’ can no longer excuse Australia for running behind other regional competitors. Analysing recent cases in Australian judiciary, this chapter puts forward seven proposals for legislative reform that may be useful for Australia to attract more ICA cases on its shores: establishing an indemnity costs principle for failed challenges in ICA matters, notably regarding arbitral awards; enabling Australian courts to issue subpoenas to support foreign arbitrations; clarifying choice of law rules on the existence and scope of arbitration agreements; limiting or excluding the application of Australian Consumer Law to cross-border business-to-business transactions; defining ‘Australian Law’; provisions to catch up with recent arbitration innovations; clarifying arbitrability of trust disputes; and centralising judicial power for ICA appeals. Implementing those proposals will pave the way for Australia to become an attractive arbitration hub in the Asia-Pacific region.

Keywords: Australia, international commercial arbitration, International Arbitration Act, Commercial Arbitration Act, law reform, COVID-19, e-proceedings. 

4. Confidentiality and Transparency in International Arbitration: Asia-Pacific Tensions and Expectations – Luke Nottage

Abstract: Confidentiality is considered a significant advantage for international commercial arbitration over cross-border litigation, as seen in rules of most arbitral institutions. Automatic (opt-out) confidentiality is also now found in many national laws, including statutory add-ons to the UNCITRAL Model Law and/or through case law for example in New Zealand, then Hong Kong, Singapore, Malaysia, and eventually Australia. Yet there remain variations in the timing of these developments as well as the scope and procedures associated with exceptions. There is also no confidentiality provided in Japan’s later Model Law adoption, although parties mostly choose the JCAA so opt-in to its Rules, which have gradually extended confidentiality obligations. Another complication is growing public concern over arbitration procedures through investor-state dispute settlement (ISDS), particularly in Australia since an ultimately unsuccessful treaty claim by Philip Morris. Statutory amendments in 2018 reverse automatic confidentiality for Australia-seated ISDS arbitrations applying the 2014 UNCITRAL Rules on Transparency. Concerns over ISDS may even impede Australia enacting provisions for confidentiality of arbitration-related court proceedings. These provisions could not be revised recently in New Zealand, against the backdrop of its new government’s anti-ISDS stance. This chapter elaborates such expectations and tensions regarding the double-edged sword of confidentiality in international arbitration, focusing on Australia and Japan in regional context.

Keywords: international commercial arbitration, investor-state dispute settlement (ISDS), confidentiality, transparency, Australia, Japan, Asia, costs, delays, law reform

5. Novel and Noteworthy Aspects of Australia’s Recent Investment Agreements and ISDS Policy: The CPTPP, Hong Kong, Indonesia and Mauritius Transparency Treaties – Ana Ubilava & Luke Nottage

Abstract: This chapter updates on recent investment treaty practice by Australia, which attracted regional and global attention when a centre-left government over 2011-13 declared Australia would no longer agree to ISDS provisions when negotiating further treaties. The chapter compares substantive commitments and ISDS provisions in Australia’s treaties signed with Indonesia and Hong Kong in 2019 (IA-CEPA and AHKIA) compared especially with the mega-regional CPTPP signed in 2018. The new bilateral treaties remain quite heavily influenced by US-style drafting, epitomised by the CPTPP. The chapter then elaborates on the costs and delays associated with ISA. It examines empirical studies, then relevant provisions of the three new treaties, including an innovative investor-state mediation provision in IA-CEPA probably proposed by Indonesia. The chapter also considers transparency of proceedings and outcomes. It again examines mainly CPTPP, IA-CEPA and AHKIA, but also a parliamentary inquiry into Australia ratifying the Mauritius Convention. This seeks to retrofit extensive transparency provisions on pre-2014 treaties between Australia and other states that might also accede to that framework Convention. More bipartisanship may be emerging in domestic politics regarding international investment treaty-marking, so Australia is now better placed to play a more active role especially in the Asia-Pacific region.

Keywords: Investment treaties, Investor-State Dispute Settlement (ISDS), Australia, Hong Kong, Indonesia, mediation, arbitration, transparency, costs, delay

6. New Frontiers in Hong Kong’s Resolution of ‘One Belt One Road’ International Commercial and Investor-State Disputes – Shahla Ali

Abstract: Given the rapid increase in Chinese outward foreign direct investment since the start of the ‘One Belt One Road’ Initiative (OBOR), international commercial and investor state disputes involving Chinese and Hong Kong investors will likely multiply. Given the significance of Hong Kong as a fulcrum for OBOR project financing and logistics, understanding Hong Kong’s approach to the resolution of OBOR disputes will offer a window into the region’s new frontiers in commercial and investor-state dispute resolution.

Keywords: international commercial arbitration, mediation, investment treaties, investor-state dispute settlement (ISDS), Hong Kong, China, Belt and Road

7. Harmonising the Public Policy Exception for International Commercial Arbitration along the ‘Belt and Road’ – Gu Weixia

Abstract: In context of a rising volume of cross-border transactions generated by the BRI, this chapter argues that a robust legal framework for dispute resolution is required to forge investor confidence and enable BRI’s integral goal of economic integration. In light of the substantial levels of harmonization among arbitration laws, arbitration is arguably constitutes the primary vehicle for international commercial dispute resolution in an economically integrated Asia under the BRI. Against this backdrop, this chapter argues that the BRI provides a unique opportunity to contemplate the possibility of regional harmonization, as within the Asian economies along the BRI, of the “public policy” exception to arbitral award enforcement. Such an arbitration initiative in Asia, in which China is anticipated to take a pro-active role, holds much potential to project renewed momentum on China as an engine of not only economic power, but also “soft power” transformation in pioneering international legal norms.

Keywords: international commercial arbitration, New York Convention, UNCITRAL Model Law, China, Belt and Road

8. Recent Developments in China in Cross-Border Dispute Resolution: Judicial Reforms in the Shadow of Political Conformity – Vivienne Bath

Abstract: The rapid expansion of China’s international trade and investment in the 21^st century has necessarily brought with it the need for modern and effective cross-border dispute resolution mechanisms.  At the international level, China is playing an active role in the review of investor-state dispute settlement in UNCITRAL Working Group III and participating in dispute resolution developments in the WTO.  Domestically, the Supreme People’s Court has been working to set up new institutions (the China International Commercial Court), improve mechanisms for the review and enforcement of arbitral awards and encourage mediation, both domestically and internationally. Much of this activity has been generated and spurred on by the Belt and Road Initiative (BRI) and the anticipated associated increase in cross-border disputes arising from the many commercial transactions involved in the BRI. Its execution also reflects the desire to encourage and expand the international use of Chinese law and build up China as a centre for international dispute resolution. At the same time, however, the Chinese Communist Party is tightening its ideological and administrative control over the courts and judicial system.  This chapter examines and discusses the implications of these recent developments.

Keywords:  China, arbitration, mediation, cross-border dispute resolution, one-stop diversified dispute resolution, investor-state dispute settlement (ISDS), online arbitration, communist party (CCP), Supreme People’s Court (SPC), China International Commercial Court (CICC)

9. Malaysia’s Involvement in International Business Dispute Resolution – A Vijayalakshmi Venugopal

Abstract: Malaysia has had some early but comparatively limited involvement in formally resolving trade disputes, but more engagement in investor-state dispute resolution – including as home state for investors bringing claims, not just as host state respondent. Some companies in Malaysia and its main international arbitration centre have also been involved in domain name dispute resolution. That centre and some other organisations have also long promoted various types of Alternative Dispute Resolution (ADR), with renewed efforts in recent years to develop new procedures and attract more international commercial arbitrations. Malaysia has also been quite active in negotiating free trade agreements (FTAs). This creates a solid platform to comtinuing becoming more of a rule maker in international investment law as well as a significant regional hub for international business dispute resolution services, although Malaysia still has a way to go in both respects compared to larger Asia-Pacific economies and/or more established hubs.

Keywords: Malaysia, World Trade Organization (WTO), free trade agreements (FTAs), international investment treaties, investor-state dispute settlement (ISDS), domain name dispute resolution, settlement

10. Disruption as a Catalyst for International Dispute Services in Japan: No Longer Business as Usual? – James Claxton, Luke Nottage & Nobumichi Teramura

Abstract: The Japanese government, supported by various stakeholders, has recently been attempting to develop Japan as another regional hub for international business dispute resolution services. Tracking this development is important for both theoretical and practical reasons. How it unfolds should reveal which of various theories for explaining Japanese law-related behaviour have more traction nowadays, especially for international commercial arbitration but also for investor-state arbitration. Assessing the new initiatives is also important for legal practitioners and others interested in the practical question of where to arbitrate or mediate cross-border business disputes, particularly in the Asia-Pacific region. This chapter therefore focuses mainly on current attempts to promote existing and new international arbitration centres in Japan as well as the recent establishment of the Japan International Mediation Center – Kyoto. It locates such developments in the context of intensifying competition from other regional venues for dispute resolution services, but also the challenges and potential opportunities created by the COVID-19 pandemic since 2020.

Keywords: international commercial arbitration, investor-state dispute settlement (ISDS), mediation, Japan, culture, COVID-19

11. Litigating, Arbitrating and Mediating Japan-Korea Trade and Investment Tensions – James Claxton, Luke Nottage & Brett Williams

Abstract: In July 2019, Japan introduced measures tightening export restrictions to South Korea on three chemicals critical to the manufacture of consumer electronics. The restrictions prompted an animated response by the Korean government, including World Trade Organization (WTO) consultations and threats to terminate an intelligence-sharing agreement. The controversy also filtered down to the public with boycotts of Japanese products in Korea. Tension between the states has been unusually high since 2018 when the Korean Supreme Court affirmed a judgment against Japanese companies accused of forcing Korean nationals to labour in factories during Japan’s colonial rule. Japan argued that these claims were precluded by a 1965 treaty normalizing post-war relations. While Japan claims that its trade restrictions were not motivated by the judgment, the disputes have contributed to the worst breakdown in cross-border relations in five decades. This chapter evaluates Korea’s trade claims against Japan, means of resolving them, and challenges faced in the WTO dispute settlement system. Alternatives or additions to WTO dispute settlement procedures are considered including claims before the International Court of Justice, interstate arbitration, and investor-state dispute settlement. Mediation offers an effective means to facilitate negotiations and centralise the trade and treaty disputes in a single forum.

Keywords: international trade law, World Trade Organization (WTO), exports, international investment treaties, investor-state dispute settlement (ISDS), arbitration, mediation, Japan, Korea

12. Indian Investment Treaty and Arbitration Practice: Qualitatively and Quantitatively Assessing Recent Developments– Jaivir Singh

Abstract: This chapter provides a perspective of investment treaty practice from India, which lies at the periphery of what is traditionally associated with the Asia Pacific region. While on the periphery, India has signed investment and trade treaties with many Asia Pacific countries and is also involved in disputes with them. India had in fact endorsed a number of investment treaties with many countries around the world but has recently gone on to denounce all of them and seeks to renegotiate fresh treaties using a template provided by a new model treaty that is oriented towards privileging state rights. The chapter begins by a qualitative review of cases that have been instituted against India by investors, followed by a discussion of the many reactions that this has elicited – a new model treaty, subsequent denunciation of treaties, signing of new treaties and  attempting changes in the domestic law as a device to protect foreign investors.  The next half of the chapter assesses these outcomes by looking at econometric evidence pointing to a positive impact of investment treaties signed by India on foreign investment inflows into India, going on to argue that the manner in which state rights have been enhanced in the new treaties – drawing inspiration from trade law – demonstrably curbs investment.

Keywords: foreign direct investment (FDI), international investment treaties, arbitration, econometrics, law reform, India, Australia

13. FTA Dispute Resolution to Protect Health Can Free Trade Agreements and their Dispute Resolution Mechanisms Help Protect the Environment and Public Health? The CPTTP, MARPOL73/78 and COVID-19 – Jiaxiang Hu & Jeanne Huang

Abstract: Preventing or managing a global pandemic such as COVID-19 requires states to strictly comply with the International Health Regulations 2005 (IHR). However, the IHR lacks a strong enforcement mechanism, like many multilateral environmental protection agreements. Over the past fifteen years, several such conventions have been incorporated into free trade agreements (FTAs) to enhance State compliance and therefore promote environmental protection. A typical example is the International Convention for the Prevention of Pollution from Ships and its Protocols (MARPOL 73/78). Vessels, like viruses, are globally mobile. Vessel-sourced pollution also mirrors human-carried viral infection, because the locations of potential harm are unpredictable and widespread. This Chapter examines first whether FTAs (especially mega-regional FTAs) can effectively encourage States to comply with MARPOL 73/78. Through this analysis, it generates implications regarding whether the IHR regime could also rely on new or renegotiated FTAs, or be reformed directly, to enhance state compliance with public health initiatives.

Keywords: free trade agreements (FTAs), environmental protection, public health, COVID-19, WHO, MARPOL, dispute resolution, arbitration, Asia-Pacific

14. Promoting International Mediation through the Singapore Convention – S.I. Strong

Abstract: This chapter seeks to determine whether and what extent the recent promulgation of the United Nations Convention on International Settlement Agreements Resulting from Mediation will promote the use of mediation within the international legal and business communities. The discussion analyses the issue from a unique interdisciplinary perspective, applying concepts from dispute system design, default theory, psychology, and law and economics to both identify and resolve potential problems with the convention. The chapter also includes data from a recent empirical study conducted by the author on the use of mediation in international commercial disputes. Through this discussion, the chapter hopes to identify how individuals and institutions can complement the effect of the convention to support the development of international commercial mediation in the coming years.

Keywords: International mediation, treaty-making, law reform, Singapore Convention, interdisciplinary perspectives

15. Expanding Asia-Pacific Frontiers for International Dispute Resolution: Conclusions and Recommendations – Nobumichi Teramura, Shahla Ali & Anselmo Reyes

Abstract: Asia’s emergence as a global economic powerhouse has corresponded with a prolonged upward trend in international commercial arbitration (ICA) cases involving Asian parties, as well as a belated expansion of investor-state dispute settlement (ISDS) arbitrations involving Asian states or investors. Further accelerating the eastward shift in international dispute resolution, various initiatives to improve support for ICA and ISDS have been taken and alternatives (such as international commercial courts and international commercial mediation) have been promoted. This book aimed to examine significant ‘new frontiers’ for Asia-Pacific cross-border business dispute resolution, focusing on major economies in East and South Asia and countries (such as Australia) that are closely linked economically and geographically. The principal questions posed were: (1) whether existing and new venues for ICA could improve their attractiveness through law reform, case law development, and other measures, despite worries about cost and delay; (2) whether emerging concerns about ISDS-backed investment treaty commitments would prompt Asian states to become rule-makers in international investment law, rather than be mere rule-takers; and (3) whether innovations in existing or new fields might assist the Asia-Pacific region to develop international dispute settlement further. The foregoing chapters have discussed these broad themes, focusing on developments in Australia, Japan, Hong Kong, China, India and Malaysia, while paying attention to broader regional initiatives (such as China’s Belt and Road Initiative (BRI)) and recent international instruments (such as the Singapore Convention on Mediation, in force from 12 September 2020). This concluding chapter highlights key findings in the individual chapters and identifies some challenges for the post-COVID-19 era.

Keywords: international trade, foreign direct investment (FDI), free trade agreements (FTAs), international investment treaties, international economic law, arbitration, mediation, international commercial courts, Asia, COVID-19

Written by: Associate Professor Jeanne Huang, University of Sydney Law School

 

The coronavirus outbreak and the federal government’s travel ban have so far prevented more than 100,000 Chinese students from travelling to and studying in Australia. Online teaching has been considered as one of the positive measures that Australian universities may provide to minimise the negative impacts of the coronavirus outbreak on Australian tertiary education sector. However, requesting that China relax the great firewall is not the only legal issue that Australian universities should be aware of.

More importantly, online teaching is a type of trade in services and is thus subject to international trade agreements. Under the Australia-China Free Trade Agreement (“ChAFTA”), China is not committed to provide market access for Australian universities to teach Chinese students online. This means China can shut down the online teaching platforms at any time without violating the ChAFTA. Moreover, when providing online instruction, Australian universities must also comply with Chinese laws for internet audio-visual service. Furthermore, online teaching may require the use of materials protected by intellectual property (IP) rights registered in Australia. The IP right-holders should be cautious if their rights are not registered in China.

A solution would be for the Australian government to consider requiring an urgent meeting of the Committee on Trade in Services under the ChAFTA to ask the Chinese government to grant permission for Australian universities to enter its online teaching market.

Australia-China Free Trade Agreement

ChAFTA entered into force on 20 December 2015. Education, as a type of “trade in services,” is regulated by Chapter 8 of ChAFTA. Item 24 of Article 8.2 of ChAFTA provides that “trade in services” can be provided in four modes:   

(i)        from the territory of a Party into the territory of the other Party (“cross-border supply mode”);

(ii)       in the territory of a Party to the service consumer of the other Party (“consumption abroad mode”);

(iii)      by a service supplier of a Party, through commercial presence in the territory of the other Party (“commercial presence mode”); and

(iv)      by a service supplier of a Party, through presence of natural persons of that Party in the territory of the other Party (“presence of natural persons mode” or “movement of natural persons mode”)

These four modes of service are also adopted by the General Agreement on Trade in Services of the World Trade Organization (“GATS”). Without the travel ban, Chinese students are able to travel and attend courses in Australia. In international trade, this belongs to the mode of consumption abroad under item 24 (ii) of article 8.2. Teaching courses in Australia, streaming or saving the video or audio recordings online, and then providing these recordings to students in China would go beyond the “consumption abroad mode,” instead falling into the mode of “cross-border supply” (item 24 (i) of article 8.2).

Importantly, ChAFTA does not provide market access for Australian universities to provide education services in the mode of “cross-border supply.” This is because China has not made such a commitment in ChAFTA. China’s commitments can be found in the Schedule of Specific Commitments on Services Schedule of the People’s Republic of China (“schedule”). China as adopted a positive-list approach for ChAFTA, as it has for all free trade agreements that it has concluded so far.  This means that a foreign service provider is allowed in the listed sectors only and market access and national treatment to foreign service providers are not offered to the sectors unbound in the Schedule

China does not allow any Australian service provider to provide higher education services by online teaching or any other mode of “cross-border supply.” This is because China considers the provision of education as a sovereign power: allowing foreign education service providers to provide online education services may affect the normal exercise of the state’s power to administer and supervise education.

China generally made more commitments in the ChAFTA than in the WTO GATS (acceded to by China in 2001). However, in terms of cross-border supply of higher education, China’s commitment in the ChAFTA is the same as that in the GATS, so Australia cannot rely on the latter either. Although Chinese domestic law can provide better market access than it is obliged to under ChAFTA and GATS, thus far, China has not done so for foreign higher education service provided in the mode of cross-border supply.

Since some Australian universities have decided to offer online teaching to Chinese students who remain in China, the Australian Department of Foreign Affairs and Trade should request an urgent meeting of the Committee on Trade in Services with Chinese counterpart to prevent online teaching websites from being shut down by China,. In this meeting, the Australian government should request that China waive the limitation on the mode of cross-border supply of higher education because the World Health Organization has declared the coronavirus a public health emergency of international concern and the current international travel ban has made the mode of consumption abroad not possible.

On 24 March 2017, Australia and China made the Declaration of Intent regarding Review of Elements of the China-Australia Free Trade Agreement. During the Review, Australia should require that China reconsider the absence of a commitment on online education because the ChAFTA is a long-term agreement that should address travel bans or reduced travel due to global epidemics or climate change. In addition, in accordance with the Chinese Service Center for Scholarly Exchange’s (CSCSE) Notice on the Verification of Overseas Academic Degrees and Diplomas, degrees or diplomas obtained through distance education, network education, and other non-face-to-face education will not be verified by China’s Ministry of Education. Therefore, when providing online instruction to Chinese students in China, Australian universities should ensure their degree programs include some face-to-face instruction.

Internet audio-visual service regulation

Online teaching also involves audio-visual data transmission and Australian universities must comply with Chinese laws for internet regulation. The Internet Audio and Video Information Service Management Regulation came into effect on 1 January 2020. This regulation applies to all audio-visual services provided through the Internet in China. Australian universities should work with companies that provide online teaching platforms, such as Canvas and Blackboard, to comply with this regulation. For example, internet logs should be kept for the supervision and law enforcement of the Cyberspace Administration of China and other relevant Chinese government agencies.

In terms of the content taught online, all audio and video service providers must comply with the Chinese Constitution and other laws, adhere to the correct political direction and value orientation, and promote the core values of socialism (Article 4 of the Regulation). This may jeopardise the freedom of speech that Australian universities espouse. 

Providing internet audio-visual services in China must also follow Chinese Cybersecurity Law, Internet Information Service Management Rules, and the Provisional Internet Cultural Management Regulations, to name a few.

Furthermore, online teaching may also require providing teaching materials to Chinese students in China. Intellectual property rights are limited by geography. Some publishing houses may have copyrighted versions of textbooks for different markets. Course convenors will need to check all issues related to intellectual property rights before uploading materials online.

In conclusion, although online teaching is one of available solutions to alleviate the negative impact of the coronavirus outbreak on Australian universities and their Chinese students, it should be done legally. If China does not waive its restriction on cross-border supply of higher education service in ChAFTA, China could potentially shut down Australian online teaching platforms at any time. Therefore, universities should seek legal advice before providing online instruction.

Associate Professor Dr. Jie (Jeanne) Huang, the University of Sydney Law School in Australia. She is widely known for her research on legal issues in digital trade and e-commerce, especially conflict-of-law issues in cross-border privacy protection and data regulation issues in free trade agreements. The Author can be contacted at Jeanne.huang@sydney.edu.au.This article is published under a Creative Commons Licence and may be republished with attribution.

I am pleased finally to see and now have the opportunity to make a Submission on a draft Regulatory Impact Statement (“Consultation RIS”) setting out various options for reforming Australia’s consumer product safety system, in light of developments locally and internationally (CAANZ, October 2019).[1] Especially as it has been more than 4 years since the Australian Consumer Law (ACL) Review was initiated by federal and state/territory consumer affairs Ministers. And more than 2.5 years since CAANZ’s Final Report agreed with submissions by myself and many others that Australia was long overdue in adding to the ACL a General Safety Provision (GSP).

I reiterate recommendations dating back over a decade, made to multiple governmental inquiries in Australia, to introduce an EU-style GSP (RIS option 6). This requirement for suppliers only to put safe consumer products on the market is spreading also around the Asia-Pacific region, where Australia concentrates more and more of its trade and wider “transgovernmentalist” network activity.[2]

• In addition, but not as an alternative because these do not place sufficient obligations on suppliers to pro-actively manage their product risks, I also support implementing:
• Option 3 (allowing regulators rather than Ministers to ban unsafe products); and
• Option 4 (allowing the regulators to issue orders against conduct causing or likely to cause significant consumer detriment, inspired by ASIC’s new financial product intervention powers).

If and when adding Options 3 and/or 4 to Option 6, a new “product safety substantiation order” power could be introduced for regulators too.

Problems with Australia’s current regime: socio-economic and legal

• I agree with the Consultation RIS’s summary of the three key sets of problems with the current ACL (and wider) product safety law regime:
  • many unsafe products entering the Australian market and causing harm;
  • slow (mostly post-market) regulatory responses; and
  • uncertainty and lack of knowledge about the regime.

• Indeed, my co-researchers in an ARC-funded research project underway into child product safety compared especially to the US reported in a recent peer-reviewed article that, for 2011-17 voluntary recalls:
  • “Australian child-related recalls increasing by 88% over 7 years, while US child-related recalls decreased by 21% over the same period. This result is unexpected given the US consumer market is 18 times larger than the Australian consumer market and suggests a need to change the reactive approach to product safety in Australia”.[3]

• In post-publication private conversation, Catherine Niven further informs me that voluntary recalls across all consumer products have been trending upwards in Australia over 1998-2018, according to the Product Safety Australia website:

2018: 675 2017: 593 2016: 612 2015: 583 2014: 515 2013: 455

2012: 427 2011: 401 2010: 359 2009: 384 2008: 371 2007: 419

2006: 388 2005: 367 2004: 367 2003: 400 2002: 436 2001: 307

2000: 199 1999: 237 1998: 163

• I note particularly the increase from around 2012. I suggest this relates to the dramatic growth of online trading and shopping in Australia, which is only set to increase further.[4] This expands the influx of cheaper but often lower-quality goods imported from abroad (such as China), noted in the RIS and in literature or data from other jurisdictions. It is unlikely that the increase in voluntary recalls can be explained by better education and awareness (given the lack of clarity and understanding about Australia’s current regime noted in the RIS and elsewhere). Nor by a significant increase in mandatory safety standards (only a few have been added in recent years) or public safety warnings (as the RIS notes, there have only been ten since 2013 and some later / belatedly triggered further regulatory responses anyway – eg ethanol fireplaces, Takata airbags, hoverboards).

• Rather, the attitude among (perhaps especially smaller) suppliers seems to be increasingly: “let’s just import or supply the product, see what happens; if we get reports of injuries or complaints, and especially if the regulators query us, let’s issue a voluntary recall and hope that solves the problem”. This attitude can also be inferred by another surprising finding from the recent publication by Niven and co-authors (emphasis added):

“the majority of Australian child-related recalled products failed to comply with mandatory safety requirements. While various factors might contribute to the lower level of non-compliance reporting in US child-related recalls, it is worth noting that the USA introduced conformity certification reforms in 2008 to address safety issues with imported consumer products. A manufacturer of a children’s product imported into the USA must issue a certificate stating that the product complies with applicable US regulatory safety requirements. The certificate must be based on third-party conformity testing and accompany the product or shipment. Australia does not have a similar conformity certification requirement, placing a significant burden on regulators to identify, test and remove non-compliant products from the Australian market. The high level of product non-compliance identified in the Australian recalls points to a need for Australia to consider additional premarket procedures, such as a conformity certification requirement for children’s products of types that are subject to mandatory safety standards.”

• Especially if this US-style requirement is not added to the ACL regime, an EU-style GSP should be added so that importers and suppliers assess and monitor product risks beforehand, rather than after injuries or complaints occur. The GSP arguably leads to a more pro-active approach to safety risk assessment taken by UK suppliers, before putting goods on the market, as voluntary recalls are far less frequent in the UK compared to Australia.[5]

Limitations in existing ACL provisions on recalls and accident reporting

• Another problem highlighted by Niven and co-authors is the comparative lack of specificity required in Australia regarding the content of recall notices (emphasis added):

“First, the inclusion of de-identified injury information is not a requirement for Australian recalls, and the absence of data restricts the ability to analyse injuries associated with recalls. More fundamentally, the lack of injury information in a recall notice impacts on the ability to effectively communicate the product hazard to consumers. Second, country of origin data were not available in the Product Safety Australia published recall notices and were, instead, extracted from Australian recalls published on the OECD global recall portal. The reason for this irregularity is unclear, and the inclusion of country of origin data is valuable to identify leading source countries for recalled products, which can then inform cross-border safety communications and surveillance. Lastly, Australian recalls could be improved by requiring information on the number of product units being recalled to more effectively communicate the extent of public exposure to the hazard.”

These criticisms echo concerns raised during the ACL Review process (but not adopted the CAANZ Final Report) by myself and Choice and others, calling also for suppliers to have to periodically and publically disclose progress in recalls.

• A further problem with the ACL regime is that the scope of mandatory accident reports introduced (belatedly) from 2011 is comparatively narrow (not extending to all serious health risks) and the reports are not disclosed to the public (unlike the narrower subset of voluntary recalls, which have to be notified to the regulators and then are made public).[6] Penalties for not making mandatory accident reports are also low, and increases were not enacted in recent ACL amendment, seemingly because of federal guidelines.[7] Each infringement anyway must be proved separately, which likely explains why the ACCC has not brought many actions and even where it has sought larger aggregate amounts by adding arguments about misleading conduct (as in claims against Woolworths and Thermomix: see below).

• Such limitations around mandatory accident reporting obligations also contribute to suppliers not taking product safety as seriously as in other jurisdictions with broader reporting requirements. Since the ACL Review did not adopt Submissions by myself and others to broaden them, and the recommendation to set up a public complaints or product safety incident database seems to be making very slow progress, this further bolsters the case to introduce an EU-style GSP.

Deficiencies in coordinating general and sector regulation

• Another aspect that the Consultation RIS downplays is the problem of coordination between the general consumer regulators (already dispersed among the ACCC and State/Territory regulators) and sector-specific regulators. There is some mention of the TPA and FSAANZ as well as the transport department (p63) and an acknowledgement that the Takata airbag recall remains very problematic (only 80% recalled: p21).[8] A recent newspaper editorial calls this a disgrace, and asks why registration is not being cancelled for 20000 vehicles recently warned by the government to be “critical” (out of over 400000 vehicles still to be fixed) or why their resale is not banned.[9] Interestingly, the Korean government banned BMW vehicles recalled for other reasons from being driven, underpinned by criminal penalties on drivers, prompting BMW to provide free replacement vehicles to those drivers while it completed recalls and remediation of their unsafe vehicles.[10]

• Even without such reforms to Australia’s laws on recalls, our regulators could already seek sanctions against car companies in Australia for poor progress in completing recalls of cars with dangerous Takata airbags. Because amendments to motor vehicles legislation, extending recall powers (and sanctions) to the transport regulator, have not been enacted and even when so will not take effect until 2021, only the ACCC can seek sanctions to incentivise suppliers to complete airbag related recalls – and should do so.

• I recently provided a witness statement for the NSW coronial inquest into the fatality from an exploding airbag in a Honda vehicle in 2017.[11] It highlighted issues in obtaining responses from the ACCC when I alerted various officials to perceived problems much earlier. I expect the coroner’s impending report will urge more pro-active involvement by general consumer regulators rather than deferring readily to sectoral regulators.

• The other big problem area has been the interaction between the consumer regulators and those dealing with electrical products (exemplified by problems with recalls involving Infinity cabling in homes, with follow-up apparently now being provided by the NSW OFT rather than ACCC, and Samsung washing machines). A more contemporary example may be e-vaping, where Australia’s consumer regulators (despite being experts in safety, marketing and consumer behaviour generally) have not been evident in the current public debate.[12] Again, unless consumer regulators decide to take a more active role in monitoring and intervening in consumer product markets where there is also a sectoral regime and regulator, suppliers need to be better incentivized to supply safe products by the introduction of a GSP.

• At present, as well as resource constraints (apparently only around 60 staff for product safety activities out of over 1000), the ACCC and other consumer regulators may feel constrained by the Government’s current “Statement of Expectations – ACCC”, especially where there could be “duplication” of supervisory activities of other regulators.[13] But if that cannot be interpreted more liberally (and resources devoted to the ACCC) to achieve more “robust and effective” partnerships, then the Statement of Expectations should be revised by the Government. After all, not only do consumer regulators have general technical expertise in safety issues, they have more general expertise about consumer and supplier behaviour (including marketing / impacts) that other sectoral regulators.

Private law mechanisms: Diminishing impact

• A final aspect not emphasised in the Consultation RIS is that private law mechanisms potentially incentivizing suppliers do not seem to be playing much role. Despite significant media-reported product failures and the observed increase in voluntary recalls, there is very little caselaw on the ACL’s (EU-style) strict product liability provisions or the (NZ-style) consumer guarantees related to safety. What case law there is tends to be in tribunals, with conflicting decisions, and/or with little precedential value; and the ACCC is not bringing representative actions as allowed by the ACL. Class action law firms also continue to focus on investor cases, not product liability claims any more, due to fewer problems establishing causation or loss among larger groups of victims.

• The Consultation RIS does rightly highlight the big penalty ordered in ACCC v Thermomix [2018] FCA 556 (p25), for misleadingly not disclosing safety issues. Yet there the company conceded liability (like in the earlier Woolworths judgment). Further, if injured consumers had brought suit they would have to claim under different ACL causes of action (excluding misleading conduct as it is no longer claimable for personal injury). Once again, this diminished capacity for private law to incentivise suppliers bolsters the case for stronger interventions through public regulation.

Overall economic costs and benefits

• I also note that the ACCC estimates the annual cost to the Australian economy from unfair products, killing 780 Australians and injuring 52000 each year, to be “at least $5billion and … likely … much higher”, compared to consumer goods market of $173billion in 2018-9 (p18). But the related Appendix does not explain where the data comes from re annual deaths or disability. Our ARC project identifies the very disparate and poor data collected in and from hospitals in Australia, compared say to the USA where the consumer regulator sends staff to and coordinates much better information-gathering. It is also unclear whether the ACCC calculations includes deaths and serious injuries from products covered by sectoral regulators, like vehicles (the Appendix separates out quad bikes). The calculations also may only count an economic loss from a disability starting from one year, whereas many consumer product safety problems affect victims for shorter periods (but collectively putting significant drain on the economy). Such incidents[14] are also far less likely to be reported.

• Anyway, even a conservatively estimated economic loss of $5billion is a very significant ground for regulatory intervention. We should recall that the 2010-11 ACL re-harmonisation nation-wide and “trading up” to higher standards in some respects (eg the mandatory accident reporting requirements, or unfair terms regulation for consumer contracts) was bolstered by the Productivity Commission’s 2008 Inquiry Report estimating that its “reform package could provide a net gain to the community of between $1.5 billion and $4.5 billion a year”.[15] I hope ACCC experts are present at all consultation events being planned by Treasury regarding this Consultation RIS, to elaborate on their Appendix calculations and respond to other points raised below regarding legal and practical limitations to the ACL’s current regulatory regime.

• We must also acknowledge the economic gains in harmonizing and “trading up” to higher product safety regulatory standards, through having laws aligned with those of major trading partners, and educating accordingly our suppliers (including actual and potential exporters) and legal or other professional advisors. For the GSP in Option 6, the RIS emphasizes the UK General Product Safety Regulations 2005 (p41), but the UK in fact introduced a form of GSP as early as 1987, influencing Malaysia in 1999 as well as the EU from 1992, which in turn influenced Hong Kong, Macau and later Canada and partly Singapore. There is a wealth of experience available for regulators as well as suppliers through sticking to the tried and test EU-style GSP to add to the ACL regime.

CONCLUSIONS: Adopt Option 6 (possibly with but not instead of Options 3 and 4, adding therein in a “product safety substantiation order” power for regulators)

• Option 5 lacks that advantage, because it is an Australian innovation. It is also conceptually incoherent and confusing because it takes the “safety defect” definition in the ACL (designed for strict product liability) and combines it with a reasonableness test. It will likely generate significant uncertainties for suppliers, regulators and courts to try to square that circle in a consumer product safety context.

• Option 4 is another Australian innovation, inspired by recent ASIC Act amendments in response to calls for regulators to be able to ban detrimental financial services.[16] Yet the proposed power’s differences with existing ACL product ban powers are hard to assess, and so would likely to lead to significant uncertainties and therefore costs. A more clearly reformulated power could be introduced but that would still put the burden on the regulator to act, rather than more directly on the supplier to assess their own product risks as with an EU-style GSP. So Option 4 should be additional to introducing Option 6, not instead of it.

• Option 3 is even more inadequate on its own because it is still a completely reactive post-market power (triggered by actual not potential or emerging safety risks), and it only really shifts powers from the Ministers to make bans or public warnings to the regulators. Again, however, it could be useful to implement together with pre-market Option 6 (alongside perhaps also Option 4).

• When adding Options 3 and 4 to Option 6, the ACL regime could also be made more pro-active by adding a new power for regulators to have suppliers show cause as to how they believe their products are in fact safe. (In other words, add a “product safety substantiation order” power for regulators, like that usefully added to the ACL in 2010 to address potentially misleading conduct.) With Option 6 on the EU model, being able to show cause is already required because they would have to keep and disclose if necessary a risk assessment file, to establish compliance with a GSP.

• Options 1 (no change) and 2 (better education) are inadequate given the demonstrated extent of the problem as well as the uncertainties and gaps in the current ACL regime.

[1] https://consult.treasury.gov.au/market-and-competition-policy-division-internal/main-consultation/

[2] See generally Nottage, Luke R. and Malbon, Justin E. and Paterson, Jeannie Marie and Beaton Wells, Caron Y., ASEAN Consumer Law Harmonisation and Cooperation: Backdrop and Overarching Perspectives (June 3, 2019). Luke Nottage, Justin Malbon, Jeannie Marie Paterson and Caron Beaton-Wells, “ASEAN Consumer Law Harmonisation and Cooperation: Achievements and Challenges”, Cambridge University Press (Forthcoming); Sydney Law School Research Paper No. #19/32. Available at SSRN: https://ssrn.com/abstract=3398046

[3] Catherine Niven et al (2019) https://injuryprevention.bmj.com/content/early/2019/08/08/injuryprev-2019-043267.full

[4] See eg https://www.transdirect.com.au/blog/aus-ecommerce-stats and https://www.webalive.com.au/ecommerce-statistics-australia/

[5] As tabulated at pp38-9 of Choice’s submission in 2015 to CAANZ regarding the ACL Review Issues Paper, over 2013-5 voluntary recalls in the UK were half the numbers annually as in Australia. This is despite the UK population (and consumer market place) being much larger than for Australia.

[6] Nottage, Luke R., Suppliers’ Duties to Report Product-Related Accidents under the New ‘Australian Consumer Law’: A Comparative Critique (May 4, 2010). Commercial Law Quarterly, Vol. 25, No. 2, pp. 3-14, 2011; Sydney Law School Research Paper No. 10/41. Available at SSRN: https://ssrn.com/abstract=1600502

[7] https://www.ag.gov.au/Publications/Pages/GuidetoFramingCommonwealthOffencesInfringementNoticesandEnforcementPowers.aspx

[8] This

[9] https://www.canberratimes.com.au/story/6423207/takata-airbag-recall-delays-are-a-disgrace/

[10] https://www.dw.com/en/south-korea-bans-recalled-bmws-over-fire-fears/a-45072421

[11] See eg https://www.smh.com.au/national/nsw/man-who-died-in-airbag-malfunction-would-have-been-quadriplegic-if-he-survived-inquest-told-20190924-p52ucy.html. Unfortunately the hearings were not completed this month and will resume from March 2020, whereupon my statement should be available on request.

[12] See eg https://www.smh.com.au/national/what-is-vaping-and-is-it-bad-for-you-20190926-p52v8l.html. However, the ACCC did successfully obtain penalties in 2017 against e-cigarette suppliers that misleadingly stated they contained no harmful chemicals found in ordinary cigarettes: https://www.accc.gov.au/media-release/e-cigarette-companies-to-pay-penalties

[13] On “regulatory cooperation”, it states (emphasis added): “The Government expects that the ACCC will maintain robust, effective and collaborative working partnerships with other Commonwealth and State and Territory agencies, as well as the ACCC’s counterpart regulators in overseas jurisdictions, to ensure the proper functioning of Australia’s regulatory framework.  The ACCC should avoid the duplication of the supervisory activities of other regulators, and should consider whether outcomes could be achieved by using existing regulation administered by another regulator, in order to ensure an integrated regulatory framework and minimise compliance costs.” Compare the ACCC’s current Response to the Government: https://treasury.gov.au/sites/default/files/2019-03/ACCC_Statement_of_Intent.pdf

[14] I can give examples eg in the online survey just from my own personal knowledge over the last few years, especially those involving a Takata airbag in a Honda, Fisher & Paykel fridge, Dyson vacuum cleaner and Aldi gas cooker (just to mention those from larger suppliers with more market reputation presumably to preserve).

[15] https://www.pc.gov.au/inquiries/completed/consumer-policy/report

[16] For an earlier recommendation along these lines, ie drawing from consumer product safety law to improve financial services regulation (rather than vice versa as now proposed in Option 4), see Nottage, Luke R. and Kozuka, Souichirou, Lessons from Product Safety Regulation for Reforming Consumer Credit Markets in Japan and Beyond: Empirically-Informed Normativism. Sydney Law Review, Vol. 34, No. 1, 2012, pp. 129-162; Sydney Law School Research Paper No. 11/39. Available at SSRN: https://ssrn.com/abstract=1895084

As part of a research project jointly funded by HKU and USydney over 2019 (see background and five earlier related postings via https://japaneselaw.sydney.edu.au), Sydney Law School will host a second symposium on Asia-Pacific business dispute resolution, all day on 15 November (the Friday before Australia Arbitration Week, this year in Brisbane), with support from CAPLUS, SCIL, TDM and various other ADR or international law related organisations. Registration and speaker bios are here, and presentation Abstracts and/or online publications are being uploaded below.

Challenges and opportunities for Asia-Pacific international commercial arbitration symposium

15 November 2019

Building on Reyes & Gu (eds), The Developing World of Arbitration: A Comparative Study of Arbitration Reform in the Asia-Pacific (Hart, 2018), this symposium examines more recent challenges for international commercial arbitration (ICA), especially the proliferation of international commercial courts, the 2018 UN Convention on enforcement of mediated settlement agreements, and dispute resolution for the Belt & Road initiative. The main focus is on Hong Kong and Singapore (competing jurisdictions in the top “Stage 4” for ICA venues, as identified by Reyes & Gu), Australia (a “Stage 3” venue), China and Japan (“Stage 2” venues).

The symposium will also compare approaches in these jurisdictions to investor-state dispute settlement (ISDS). Building on Chaisse and Nottage (eds) International Investment Treaties and Arbitration Across Asia (Brill, 2018), participants will chart evolving treaty practices and high-profile ISDS cases (including eg in Indonesia), assess whether these do or might impact on public attitudes even towards ICA or other forms of arbitration, and explore alternatives or complements to ISDS.

Speakers:
Professor Shahla Ali, University of Hong Kong
Professor Simon Bronitt, Dean, The University of Sydney Law School
Professor Simon Butt, The University of Sydney Law School

Professor James Claxton, Kobe University

The Hon Dr Clyde Croft AM SC, Supreme Court of Victoria

Daniel Forster, Sparke Helmore Lawyers & The University of Sydney Law School
The Hon Roger Gyles AO QC, ABA rapporteur and formerly Federal Court of Australia
Dr Benjamin Hayward, Monash University
Brenda Horrigan, ACICA President & Herbert Smith Freehills
Dr Jeanne Huang, The University of Sydney Law School
Wilson Mbugua, University of Hong Kong
James Morrison, ACICA & Morrison Law
Professor Luke Nottage, The University of Sydney Law School
Jonathan Redwood, Banco Chambers
Yi Tang, University of Hong Kong
Dr Nobumichi (Nobu) Teramura, University of Adelaide
Professor Leon Trakman, UNSW
Professor The Hon Marilyn Warren AC QC, former Chief Justice of the Supreme Court of Victoria

VIEW THE DRAFT PROGRAM (as at 9 August 2019)

ABSTRACTS:

Ali, Shahla, “ICA and ISDS Developments in Hong Kong in the Context of the Belt and Road Initiative“
This paper examines the impact of both the Belt and Road Initiative and the UNCITRAL Model Law on International Arbitration (the Model Law) on both international commercial and investor-state arbitration practice in Hong Kong. Measures taken to modernize the practice of arbitration including training programmes, and legislative reforms are examined with a view to gaining insights into challenges and future developments.

Claxton, James M. and Nottage, Luke R. and Teramura, Nobumichi, “Developing Japan as a Regional Hub for International Dispute Resolution: Dream Come True or Daydream?” Journal of Japanese Law, Issue 47, 2019; Sydney Law School Research Paper No. 19/01. Available at SSRN: https://ssrn.com/abstract=3299097
The Japanese government, supported by various stakeholders, has recently been attempting to develop Japan as another regional hub for international business dispute resolution services. Tracking this development is important for both theoretical and practical reasons. How it unfolds should reveal which of various theories for explaining Japanese law-related behaviour have more traction nowadays. Assessing the new initiatives is also important for legal practitioners and others interested in the practical question of where to arbitrate or mediate cross-border business disputes. This paper therefore reports on current attempts to promote existing and new international arbitration centres in Japan as well as the recent establishment of the Japan International Mediation – Kyoto, in the context of intensifying competition from other regional venues for dispute resolution services. [Our presentation also updates on the Japan-Korea trade and investment tensions that escalated from mid-2019, and the various dispute resolution options that could be engaged.]

Teramura, Nobumichi, Luke Nottage and James Morrison, “International Commercial Arbitration in Australia: Judicial Control over Arbitral Awards” (updated June 2019)
Geographical remoteness has not prevented Australia from pursuing its ambition to become a major hub for international commercial arbitration (ICA). While regional competitors in the Asia-Pacific region such as Singapore and Hong Kong have already achieved great success in the arbitration world, Australia’s ‘Tyranny of Distance’ requires extra efforts to attract ICA cases. Recent marketing from the Australian government emphasises (1) a harmonised legal framework for ICA in line with international standards; (2) sophisticated arbitration institutions; and (3) some of the world’s leading arbitration practitioners.
While these factors do reveal strong potential to attract ICA cases, to ensure that this goes beyond a mere possibility, the Australian government and judiciary are making quite concerted broader efforts. The former has recently become more vigorous in marketing Australia-based ICA in and out of the country. The latter has generally tried to issue pro-arbitration judgments particularly over the last ten years, and in public speeches or publications leading judges have been actively summarising and promoting Australian developments both domestically and world-wide. However the court system has structural problems, due to the shared ICA jurisdiction of State and Territory Courts alongside the Federal Courts, compared to the unitary system in Hong Kong and Singapore. There are also persistent delays in court-related ICA matters under the IAA, even in the Federal Court of Australia. Nonetheless, perfection is never attainable.
The rest of this paper argues that Australia has significantly improved legal environment for ICA in line with international standards, focusing on the main topics identified for a wider cross-jurisdictional research project: (1) arbitrator bias; (2) conflicts of interests; (3) procedural irregularities and arbitrator’s misconduct during proceedings; (4) arbitrability (objective arbitrability) (5) judicial interpretation of arbitration clauses (subjective arbitrability); and (6) enforceability of arbitral awards (especially regarding public policy).

Nottage, Luke, “Confidentiality versus Transparency in International Commercial Arbitration and ISDS in Australia and Japan”

Both Australia and Japan lie geographically on the periphery of the Asian region, where international arbitration has been burgeoning especially over the last 15 years. Both countries have struggled to attract significantly more arbitration cases, despite quite extensive efforts (especially by Australia); most cases still go to Hong Kong, Singapore and (especially where local parties are involved) China. This is despite increasingly strict confidentiality obligations being introduced through the rules of the major arbitration institutions, and/or legislation, in Japan and especially Australia. Although aiming to meet the usual expectations of businesspeople and their legal advisors in international commercial dispute resolution, these changes may be “too little, too late”. By contrast, transparency obligations have been added increasingly around the investor-state dispute settlement (ISDS) option included in almost all investment treaties concluded respectively by Australia and Japan. This tendency arguably reflects growing concerns about the public interests implicated by ISDS cases (especially in Australia). Australia has gone the next step of revising its legislation in 2018 to automatically exempt some investment treaty arbitrations from the confidentiality obligations otherwise imposed by default on parties and others in Australia-seated international arbitration proceedings since 2015. Japan does not need to, because its legislation does not apply confidentiality to arbitrations by default. This presentation explores possible tensions between these two trajectories in each country. The lessons may be particularly interesting for other jurisdictions (perhaps like Italy) interested in how best to promote and attract international arbitration cases amidst evolving expectations in business and wider communities. The tensions may also influence the EU’s ongoing negotiations for investment protection treaties with respectively Australia and Japan.

The Academic Forum for Investor-State Dispute Resolution was established through the University of Geneva (incidentally, an institutional partner of USydney) to provide input from (now around 120) professors expert in international investment law, mainly for the ongoing UNCITRAL deliberations into potential reforms of the ISDS system. Six working groups and related “Concept Papers” were published in April 2019, on topics that have attracted growing concern from the public and now various policy-makers. For each of the six topics, papers succinctly considered how particular concerns might be addressed by further targetted improvements to ISDS, the addition of an appellate review mechanism, the adoption of multilateral investment court (along EU lines), or abandoning ISDS (relying on domestic courts and/or inter-state arbitration).
Professors Chester Brown and Luke Nottage at USydney join with three others from Australian universities on the Forum. Chester co-chaired with Federico Ortino the working group (including Julian Arato) that wrote the paper addressing possible inconsistency or incoherence in ISDS awards, while Luke contributed (with Chiara Giorgetti and others) to the paper on independence, impartiality and neutrality of arbitrators or other adjudicators of international investment disputes. Below we reproduce (without hyperlinks) the introductions to short summaries of each paper written for the European Journal of International Law blog.

Continue reading “Academic Forum for ISDS: arbitrator neutrality and inconsistent decisions”