Category: Uncategorized

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.

The Kurdish people have a cultural identity distinct from their Arabic-speaking neighbours. ‘Kurd’ itself, historically, was not an ethnic grouping but rather ‘a general term meaning shepherd.’[1] Of course, since then the term has evolved to refer to a people populating regions of Iran, Iraq, Syria and Turkey, and linked by a common language and religion.

Despite being natives of the Middle East, where dialects of Arabic remain the most widely spoken languages, the Kurdish people primarily speak Kurdish languages (Kurmanji, Sorani and Southern Kurdish) or Zaza-Gorani languages which are unique to the North-Western Iranian region.[2] Unlike the majority of Iranians and Iraqis, however, most Kurdish people are adherents of the Sunni sub-sect of Islam, as opposed to the less practised Shia branch of Islam.[3] While Sunni Muslims believe that the prophet Muhammad did not designate a successor and that his father-in-law Abu Bakr was rightly elected as the first caliph, Shia Muslims believe that Muhammad named his cousin Ali ibn Abi Talib as his successor.[4] From this initial divergence two separate schools of practice emerged, morphing into a contentious debate over which is the ‘right’ form of Islam.

The Kurdish Institute of Paris estimates that as of 2016, there were between 36.4 and 45.6 million Kurds living in the world, including significant diaspora communities in Europe and the former USSR. In Turkey, Iran, Iraq and Syria, this number is between 36 and 44.1 million.[5]

Were a Kurdish state to be recognised, its territory would likely span over the current borders of all four countries and would consist of a sizeable portion of modern Turkey, where between 15 and 20 million Kurds live.[6] This fear of secession is potentially driving Turkey’s recent excursion into Northern Syria.

However, the Kurds have also been persecuted historically. In the 1920 Treaty of Sevres, Western nations granted territory for a Kurdish state, but only three years later they reneged on this promise when the Treaty of Lausanne set the borders of Turkey.[7] By essentially relegating the Kurdish people to minority status in their own nations, Western states ensured decades of conflict to come. In Turkey especially, during the 1920s and 1930s, the government responded to rebellions by Kurdish minority groups with strict measures against the entire ethnic group. Kurdish names and attire were banned, and restrictions were placed on the use of Kurdish languages.[8] Between 1925 and 1939, approximately 1.5 million Kurds in Turkey were either deported or massacred.[9] Since then, there have been numerous reports of unlawful detentions, executions and torture of Kurds, with the European Court of Human Rights finding Turkey to be in violation of its human rights obligations multiple times.[10] In this time, Kurdish rebel groups within Turkey have also fought for independence and greater autonomy both through activism and armed conflict.[11]

The Kurdish people living in Turkey may not have a right to secede under international law, as although the majority of the ICJ refused to decide the issue in their Kosovo advisory opinion, Koroma J in his dissent persuasively concluded that secession without the consent of the current state would be contrary to international law’s preservation of territorial boundaries.[12] Nevertheless, the Kurdish people’s well-established right to self-determination is likely being infringed by the Turkish government. It is possible that their level of oppression rises to the standard suggested in the Canadian Quebec case,[13] or perhaps we can draw analogy with the situation in Kosovo, where a persecuted ethnic minority has been granted a pseudo-state by the international community. If so, there may be a case for Kurdish separatism compatible with international law. However, clearly Turkey will not allow the rise of a Kurdish nation without protest and as recent events show, it will pursue Kurds even beyond its own borders.

---

[1] Izady, Mehrdad R. The Kurds : a Concise Handbook London, UK: Routledge, 2015.

[2] https://www.britannica.com/topic/Kurdish-language

[3] https://thekurdishproject.org/history-and-culture/kurdistan-religion/

[4] ‘Sunnis and Shia: Islam’s ancient schism.’ https://www.bbc.com/news/world-middle-east-16047709

[5] https://www.institutkurde.org/en/info/the-kurdish-population-1232551004

[6] https://www.institutkurde.org/en/info/the-kurdish-population-1232551004

[7] ‘Who are the Kurds?’ https://www.bbc.com/news/world-middle-east-29702440

[8] Ibid.

[9] https://www.culturalsurvival.org/publications/cultural-survival-quarterly/kurdish-repression-turkey

[10] https://echr.coe.int/Documents/Annual_Report_2014_ENG.pdf

[11] ‘Who are the Kurds?’ https://www.bbc.com/news/world-middle-east-29702440

[12] https://www.icj-cij.org/files/case-related/141/141-20100722-ADV-01-02-EN.pdf

[13] Reference re Secession of Quebec [1998] 2 SCR 217, [131]-[135]. https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/1643/index.do.

In recent weeks, Turkey has launched operation “Peace Spring”, which aims to establish a “corridor of peace” in Northern Syria through open combat with Kurdish forces who were in control of the area.[1] The operation is “obviously” against international law.[2]

In its letter to the UN, Turkey asserted its right to self-defence, guaranteed by Article 51 of the UN Charter, and claimed that its use of force in the region was necessary “to counter the imminent terrorist threat, to ensure Turkey’s border security, to neutralize terrorists […] and to liberate Syrians.”[3] However, as many academics have pointed out, the threat posed by Kurdish forces is vaguely defined and likely does not meet the requisite threshold of an “armed attack”,[4] meaning the operation does not constitute lawful self-defence. Additionally, in the DRC v Uganda case, the ICJ found that self-defence cannot be used in response to acts by non-state actors because their actions cannot be attributed to a state.[5] Therefore, without the shield of “self-defence”, Turkey’s actions constitute an illegal use of force, contrary to the jus ad bellum.[6] Yet, despite this and perhaps because of President Erdogan’s threats to unleash a flood of Syrian refugees upon Europe should the EU criticise Turkey’s conduct, many states have failed to appropriately characterise operation “Peace Spring” as an act of aggression and an unlawful occupation of Syrian territory, [7] if Turkey’s military control over Northern Syria becomes a permanent fixture of its proposed peace corridor.

All states are obliged, under customary international law, to cooperate to bring to an end any serious breach of a peremptory norm of international law,[8] but state practice in response to unlawful uses of force has arguably evolved since the prohibition was codified in the UN Charter. The consequences for Turkey are uncertain, but will likely not be severe if our historical failure to police and enforce violations of the prohibition is any indication.

In the 1970s, India used force to help secure the independence of Bangladesh from Pakistan. By training Bangladeshi insurgents and involving air and naval forces in the Pakistani civil war,[9] India breached the prohibition on the use of force. However, after Pakistan’s surrender, little attention was given to this fact. Bangladesh successfully became a recognised nation and India retained control over some regions of Pakistani territory seized during the war.[10] The United States, Pakistan’s biggest supporter at the time, re-established diplomatic ties with India before the end of the century.[11] Therefore, although at the time there was some condemnation of India from Pakistan’s allies, without sanctions or isolation India’s unlawful use of force has not dramatically affected its position in the international community. In fact, the successful liberation of the ethnically distinct Bangladeshi from foreign control is today perceived positively,[12] suggesting an almost pardoning response by states, incompatible with the law’s absolutist prohibition.

Similarly, the recent use of force by NATO members in Syria was unchallenged by most governments. One claim put forth by NATO countries was that a use of force against Islamic State, a non-state actor, could be justified through the doctrine of self-defence, because the organisation controlled significant territory and was analogous to a state.[13] As discussed above, the ICJ has in the past rejected such an interpretation of self-defence. However, the absence of significant opposition by other states, and similar actions taken against other non-state terrorist groups, imply that an expanded understanding of self-defence would be amenable to most states. It is unsurprising then, that Turkey would seek to justify operation Peace Spring through a questionable application of “self-defence.”

In some cases, it is true that the international community has reacted swiftly and harshly to condemn uses of force. Russia’s interference in and annexation of Crimea was met with economic sanctions and Russia’s expulsion from the G8, now the G7. However, two facts are of note. First, Russia relied on the precedent set by Kosovo to legitimise its incursion, arguing that states had accepted an exception to the principle of territorial integrity, where the independence of culturally distinct peoples was at stake (this is perhaps also suggested by the international response to India’s use of force against Pakistan).[14] Through this, the danger of allowing abrogations of international law’s fundamental tenets in sui generis cases or on an ad hoc basis becomes clearer: they can be used to justify more violent and invasive uses of force in the future. Applying this logic to Turkey, we can see similarities between Turkey’s characterisation of the Kurds and NATO’s assessment of Islamic State as a terrorist pseudo-state actor. Perhaps the same precedent-based approach then explains Turkey’s apparent confidence in the legality of its actions.

Secondly, in the years since it annexed Crimea, Russia has built an almost sanction-proof economy which relies on a sovereign wealth fund and locally-produced technologies to evade the worst effects of the penal measures imposed upon it for its unlawful use of force.[15] In the short term, the consequences were quick and severe, but in the long term, it seems Russia has been able to overcome the worst of its punishment for breaching international law. Moreover, Russia has been able to retain control over Crimea, proving that unlawful uses of force, met with ineffective penalties, still allow wrong-doing states to achieve their illegal aims.

That is when penalties are imposed at all. For years, independent agencies have questioned whether Israel’s occupation of the West Bank and interference with territory granted to the Palestinian people are permissible under international law. [16] Under the 1907 Hague Regulations, territory is considered occupied when it placed under the authority of hostile forces.[17] Israel’s actions plausibly fit this definition and the UN has formally recognised the illegality of the occupation.[18] Although numerous General Assembly resolutions and some Security Council Resolutions have criticised Israel’s treatment of the Palestinian people,[19] indicating serious diplomatic consequences and wide-spread condemnation, no sanctions have been imposed against Israel, and it still maintains friendly relations with the world’s most powerful countries, including the United States,[20] China,[21] and the U.K..[22]

Similarly, Turkey itself has transferred its civilians into Northern Cyprus and operates what it calls the “Turkish Republic of Northern Cyprus,” (“TNRC”) [23] clearly constituting an occupation of the territory. Of course, most states refuse to formally acknowledge Turkey’s effective annexation of Northern Cyprus,[24] just as they refuse to acknowledge Russia’s annexation of Crimea. Turkey’s actions were condemned by the UN Security Council,[25] the year after the TRNC declared independence. In the time since, while negotiations have been taking place between the Republic of Cyprus, supported by Greece, and Turkey, the United States has lifted the arms embargo applied on Turkey (it was in force for just 3 years). It was only this year that it approved a bill to remove the same embargo from Cyprus.[26] The EU has also recently pledged to ease their trade embargo against the TNRC.[27] In practice, Turkey, like Russia, still controls the area and the occupation has become increasingly normalised.

Why then should President Erdogan fear significant reprisal for this latest move or even regard it as impermissible, when state responses to uses of force have been inconsistent if not implicitly approving? Yes, Turkey faces the prospect of sanctions from the United States, but in October sanctions against Turkey were lifted after being in force just one week,[28] and few other states appear eager to act. Moreover, as Turkey has no doubt learnt from Russia and Israel, you can tolerate sanctions and condemnation without giving in.

Potentially, some solace can be found in Turkey’s attempts to justify its actions with reference to well-established rules of international law. By publicly relying on the doctrine of self-defence, Turkey suggests that, nominally at least, it still respects the fundamental prohibitions against the use of force and interference with other states’ territory. Maybe then we can assume that divergent state practice and our apathy, if not tolerance, towards contraventions of international law have not produced a dramatic shift in the state of customary law itself. Yet, the failure to enforce these laws adequately, despite Turkey’s forceful rhetoric and evident breach of its international obligations, reflects an implicit acceptance of continuing disobedience of international norms, rendering them ineffective. Of course, if we’re going to start policing international law, we’d all have cause to fear, never having delivered on our promise to end violations of international law’s most basic tenets.

---

[1]https://www.youtube.com/watch?v=Bve1yt0SEb4&feature=youtu.be&t=858&fbclid=IwAR2rMtqGKFFZEWQYiKZHcCIs5eRGGL897cwK6DFVZ87vhfWZFdFJhahaDA8

[2] Janik, R. ‘Research Services of German Budndestag Rejects Turkey’s Syria Invasion: Illegal but Who Cares?’ http://opiniojuris.org/2019/10/23/research-services-of-german-bundestag-rejecting-turkeys-syria-invasion-illegal-but-who-cares/.

[3] https://undocs.org/S/2019/804

[4] Kreb, C. ‘A Collective Failure to Prevent Turkey’s Operation ‘Peace Spring’ abd NATO’s Silence on International Law,’ https://www.ejiltalk.org/a-collective-failure-to-prevent-turkeys-operation-peace-spring-and-natos-silence-on-international-law/

[5] Case Concerning Armed Activities on the Territory of the Congo (DRC v Uganda), Judgement, ICJ Reports2005, p. 168, [146]-[147]. https://www.icj-cij.org/files/case-related/116/116-20051219-JUD-01-00-EN.pdf

[6] Todeschini, V. ‘Turkey’s Operation ‘Peace Spring’ and International Law,’ http://opiniojuris.org/2019/10/21/turkeys-operation-peace-spring-and-international-law/

[7] Janik, R. ‘Research Services of German Budndestag Rejects Turkey’s Syria Invasion: Illegal but Who Cares?’  http://opiniojuris.org/2019/10/23/research-services-of-german-bundestag-rejecting-turkeys-syria-invasion-illegal-but-who-cares/

[8] Ahmad, H. ‘Turkey’s (Latest) Invasion of Syria,’ https://www.justsecurity.org/66632/turkeys-latest-invasion-of-syria-aggression-proportionality-and-legal-consequences-for-nato-and-third-party-states/; Article 41, ILC Draft Articles on the Responsibility of States for Internationally Wrongful Acts (2001) http://legal.un.org/ilc/texts/instruments/english/draft_articles/9_6_2001.pdf#page=10

[9] Raman, B. ‘The Role of RAW in the Liberation of Bangladesh,’ http://www.indiandefencereview.com/spotlights/role-of-raw-in-liberation-of-bangladesh/

[10] ‘1971 War: The Story of India’s Victory, Pak’s Surrender, Bangladesh freedom,’ https://www.business-standard.com/article/current-affairs/vijay-diwas-how-india-ended-pak-s-atrocities-and-ensured-freed-bangladesh-118121600120_1.html

[11] https://www.cfr.org/timeline/us-india-relations

[12] Dummett, M. ‘Bangladesh War: The Article That Changed History,’ https://www.bbc.com/news/world-asia-16207201

[13] Croft, A. ‘Action Against Islamic State Would Prevent Genocide – NATO,’ https://www.reuters.com/article/us-syria-crisis-nato/action-against-islamic-state-would-prevent-genocide-nato-idUSKBN0HA1KR20140915

[14] Vasile Rotaru & Miruna Troncotă (2017) Continuity and change in instrumentalizing ‘The Precedent’. How Russia uses Kosovo to legitimize the annexation of Crimea, Southeast European and Black Sea Studies, 17:3, 325-345, DOI: 10.1080/14683857.2017.1348044

[15] Korsunskaya, D. ‘Russia, Wary of U.S. Sanctions, Puts Saving Before Growth,’ https://www.reuters.com/article/us-russia-economy-budget-analysis/russia-wary-of-us-sanctions-puts-saving-before-growth-idUSKCN1N51B9

[16] https://www.ochaopt.org/location/west-bank

[17] Article 42.

[18] http://unscr.com/en/resolutions/465

[19] ‘List of United Nations Resolutions Concerning Israel,’ https://en.wikipedia.org/wiki/List_of_United_Nations_resolutions_concerning_Israel.  

[20] ‘U.S. Relations with Israel,’ https://www.state.gov/u-s-relations-with-israel/.

[21] Abrams, E. ‘What’s Behind Israel’s Growing Ties with China?’ https://www.cfr.org/expert-brief/whats-behind-israels-growing-ties-china.

[22] ‘Israel and the UK’ https://www.gov.uk/world/israel/news

[23] https://mfa.gov.ct.tr/cyprus-negotiation-process/historical-background/

[24] ‘Which Countries Recognise Northern Cyprus,’ https://www.worldatlas.com/articles/which-countries-recognize-northern-cyprus.html

[25] https://www.securitycouncilreport.org/un-documents/document/cyprus-sres550.php

[26] ‘U.S. House Approves Bill to End Arms Embargo on Cyprus,’ https://ahvalnews.com/greek-cyprus/us-house-approves-bill-end-arms-embargo-cyprus.

[27] ‘EU to Ease Northern Cyprus Trade Ban,’ http://news.bbc.co.uk/2/hi/europe/3668371.stm.

[28] ‘Trump Lifts Sanctions Against Turkey,’ https://www.politico.eu/article/us-president-donald-trump-lifts-sanctions-against-turkey/.

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

Background

Ex-President Al-Bashir of Sudan is accused of several counts of crimes against humanity, war crimes and genocide. The International Criminal Court (ICC) issued a warrant for Al-Bashir’s arrest in 2009 and then again in 2010. In March 2017, Jordan hosted the 28^th Summit of the Arab League in Amman. As Sudanese President at the time, Al-Bashir, attended the summit. Jordan did not arrest the visiting Head of State while he was in the country.

In May 2019, the ICC Appeals Chamber ruled that Jordan had failed to comply with its obligations under the Rome Statute by not executing the warrants. As a State Party to the Rome Statute, Jordan is required to ‘cooperate fully’ with the ICC,[1] precluding them from relying on the doctrine of State Immunity to refuse to execute an ICC warrant. UNSC Resolution 1593 had referred the situation in Darfur, Sudan to the ICC and obliged Sudan to ‘cooperate fully’ with the court.[2] Controversially, the ICC found that this meant Sudan, a country which is not party to the Rome Statute, was equally bound by the Statute’s requirements and could not have relied on State Immunity to protest its Head of State’s arrest by Jordanian authorities.

This so called ‘Security Council Route’ into the ICC’s jurisdiction has been widely criticised since the decision was published. The ICC found that UNSC Resolution 1593 meant that Sudan was bound by Art. 27(2) of the Rome Statute, which says that immunities ‘shall not bar the Court from exercising its jurisdiction over such a person.’ Therefore, Sudan could not rely on State immunity to evade the ICC’s jurisdiction. This leaves open the possibility that other States not party to the Rome Statute could be similarly compelled to give up their right to immunity. All members of the UN are obliged by Art. 25 of the UN Charter to comply with UNSC resolutions, greatly widening the potential application of the ‘Security Council Route.’

The Critics

Unsurprisingly, the ramifications of this decision have been divisive.

UNSC Resolution 1593 contains no explicit reference to State Immunity. The ICC’s reliance on the broader requirement imposed on Sudan to ‘cooperate fully’ suggests the UNSC may now implicitly prohibit reliance on immunity in response to an ICC warrant. This discretionary power enables the UNSC, already largely controlled by Western powers, China and Russia, to infringe the sovereignty of less powerful States by forcing their compliance with the Rome Statue and removing their right to immunity. The capacity to do so without the consent of the affected State only increases the UNSC permanent members’ hegemony over the international justice system.

Moreover, this power has been inconsistently used. Despite similar allegations against Bashar al-Assad, President of Syria, and a request co-sponsored by 65 States, for the UNSC refer the situation in Syria to the ICC,[3] no such resolution has been made. Meanwhile, the United States itself is not subject to the ICC’s jurisdiction and vehemently opposes ICC enquiries into its nationals. Therefore, whether the United States should hypocritically play a role in obliging other States to comply with the ICC’s directives is debateable.

The African Union has also raised concerns over whether such decisions by the ICC threaten the long-term stability of the region, stressing that ‘justice should be pursued in a way that does not impede or jeopardise efforts aimed at promoting lasting peace.’[4] The practical realities of compelling States to arrest foreign officials, who otherwise enjoy immunity from national jurisdictions, may undermine the purpose of State Immunity in facilitating international relations. International gatherings, like the Arab League’s summit in this case, and visits by foreign delegations to other States are crucial in ensuring international cooperation and civility as they provide irreplaceable forums for peaceful discussion and dispute resolution. If Heads of State cannot participate in such diplomatic events, without fear of arrest and prosecution, they are unlikely to meaningfully engage with other States. This may then only increase regional tensions and alienate States already operating on the periphery of legality, escalating conflicts in the long-term.

Why it’s not so bad

However, Al-Bashir’s alleged commission of genocide, war crimes and crimes against humanity was a heinous contravention of accepted jus cogens norms, so by all measures it is certainly preferable for Al-Bashir to be prosecuted if legally possible.

The ICC criticised the alternative proposed by some States, where States Parties to the Rome Statute or those referred to the ICC could be permitted to rely on State Immunity to refuse to execute warrants: ‘the Court depends on State cooperation to execute warrants of arrest. The result would be that, in effect, the Court would be barred from exercising its jurisdiction because of the existence of immunities.’[5] Such a result would incapacitate the ICC. Currently, the ICC is the only permanent international court capable of prosecuting individuals who have been accused of perpetrating the most reprehensible crimes: genocide, war crimes, crimes against humanity and crimes of aggression. Many of these crimes have jus cogens status and attract the universal condemnation of States. Therefore, preventing the ICC from exercising its jurisdiction when such crimes have been committed would be incongruous with the international community’s expectation that these crimes cannot go unpunished.

Additionally, concerns that this decision is an unprecedented infringement of State sovereignty are perhaps also overstated. As Talita de Souza Dias from Oxford University observes, ‘limitations on State sovereignty are the very purpose of Chapter VII resolutions, which are meant to impose coercive measures on UN member States.’[6] Members of the UN have already acquiesced to the possibility of being bound by UNSC resolutions by assenting to Art. 25 of the UN Charter. To accept that the UNSC may also oblige them to submit their nationals to the ICC’s jurisdiction, in the limited situations where these nationals have behaved with the utmost disregard for the most fundamental jus cogens norms, does not put a substantially greater burden upon the principle of State sovereignty.

While requiring States to execute warrants against the heads of other States may indirectly jeopardise future peace, the continuing commission of war crimes, genocide or crimes against humanity more directly endangers peace in the present. The very nature of these violent unconscionable crimes invites rebellion and intervention by other States. In turn this precipitates wars, like in Syria, or equally violent reactions in pursuit of justice, like the actions of rebel groups in Palestine. Allowing States to harbour accused war criminals like Al-Bashir would reflect an implicit acknowledgement by the ICC of its inability to effectively prosecute these crimes. In the absence of individual accountability, Heads of States would not be deterred from committing such crimes and would not resign from their positions, voluntarily relinquishing their immunity. Therefore, with this decision, the ICC possibly counters the perception that Heads of State, so long as they remain in power, are in effect immune from prosecution, discouraging the perpetuation of violence and the corresponding emergence of cycles of violence.

Conclusion

The ‘Security Council Route’ is an imperfect system, still allowing powerful States to escape the ICC’s jurisdiction. However, the net good achieved by prosecuting the perpetrators of the most egregious crimes, even when these perpetrators are current Heads of State, outweighs any strain it places on the principle of State sovereignty or international relations.

---

[1] Rome Statute, Art. 86.

[2] https://www.icc-cpi.int/NR/rdonlyres/85FEBD1A-29F8-4EC4-9566-48EDF55CC587/283244/N0529273.pdf

[3] https://www.theguardian.com/world/2014/may/22/russia-china-veto-un-draft-resolution-refer-syria-international-criminal-court

[4] http://www.iccnow.org/documents/AU_142-communique-eng.pdf

[5] Prosecutor v Al-Bashir (Pre Trial) (International Criminal Court, Appeals Chamber Case No ICC-02/05-01/09 OA2, 6 May 2019), [122]. https://www.icc-cpi.int/CourtRecords/CR2019_02856.PDF

[6] https://www.ejiltalk.org/the-discussion-of-the-security-council-roots-to-the-derogation-from-personal-immunities-in-the-al-bashir-case-how-explicit-must-security-council-resolutions-be/#more-16485

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”

Whether free trade agreements (“FTAs”) can be used to promote trade-related environment concerns are widely debated. Since the North American Free Trade Agreement, the U.S. has strongly pushed its trading partners to sustainable trade liberalization without scarifying environment. Vessel-sourced pollution is a serious threat for global marine environment. The major international conventions to regulate vessel-sourced pollution are including the International Convention for the Prevention of Pollution from Ships and its Protocols (collectively “MARPOL 73/78”), and the UN Convention on the Law of the Sea (“UNCLOS”). Starting from 2006, the U.S. has incorporated MARPOL 73/78 into four of its bilateral FTAs and used trade law to combat vessel-sourced marine pollution (namely, the U.S.-Peru FTA, the U.S.-Colombia FTA, the U.S.-Panama FTA, and the U.S.-South Korea FTA.) The most recent U.S.-Mexico-Canada Agreement also incorporates MARPOL 73/78. Moreover, based on the U.S. proposal, with its successful conclusion in 2018, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) becomes the first megaregional FTA to incorporate MARPOL 73/78 (see Art. 20.6). All these FTAs require its members to adopt, maintain, and implement laws, regulations, and all other measures to fulfil their obligations under MARPOL 73/78 (e.g., Art. 18.2 of the U.S.-Peru FTA, and Art. 18.2 of the U.S.-Colombia FTA.)
Besides MARPOL 73/78, the CPTPP and the U.S. FTAs that incorporates MARPOL 73/78 all expressly incorporate to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (hereinafter “CITES”) as well. However, CPTPP and longer-standing US FTA practice is good for enforcing environmental treaties like CITES but not quite so good for MARPOL 73/78. One important reason is that all these FTAs require the victim countries of a vessel-sourced pollution to demonstrate the pollution “affect[s] trade or investment between the parties”, but such requirement is not imposed to violations of CITES.
For violations of CITES, although members are encouraged to address any related disputes through CITES, a member’s failure to adopt, maintain and implement its laws and regulations incorporating CITES obligations allows other CPTPP members to bring a claim by utilising the CPTPP’s dispute resolution mechanism (Art. 20.17.2 and footnotes 23-24 of the CPTPP). Nevertheless, for MARPOL 73/78, a member’s failure to maintain its implementation laws and regulations does not allow other CPTPP members to bring a claim by utilising the same dispute resolution mechanism. The claimant needs to prove the non-implementation affected trade or investment between the parties (CPTPP, art. 20.5.1, art. 20.6, footnotes 5 and 8). Following this vein, commencing the CPTPP dispute settlement mechanism requires more than a violation of MARPOL 73/78; the violation must be (1) sustained and recurring and (2) affecting trade or investment between the parties (CPTPP, art. 20.3.4). Therefore, a MARPOL 73/78 violation is not a violation of the CPTPP unless it affects trade or investment between the parties.
In Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines, the World Trade Organization (hereinafter “WTO”) Appellate Body laid down a test to determine whether a domestic measure affects trade between the parties:
“The analysis…requires a careful examination “grounded in close scrutiny of the ‘fundamental thrust and effect of the measure itself’”, including of the implications of the measure for the conditions of competition between imported and like domestic products. This analysis need not be based on empirical evidence as to the actual effects of the measure at issue in the internal market of the Member concerned. Of course, nothing precludes a panel from taking such evidence of actual effects into account.” (Para 129 of WT/DS371/AB/R.)
In other words, when imported and like domestic products are subject to a single regulatory regime, only the imported products must comply with additional requirements. This would imply that imported products are treated less favourably so the measure affects trade between the parties. Without requiring empirical evidence on negative trade effect, this test is favourable for environmental-related trade disputes.
Nevertheless, “[a]ffecting trade or investment between the Parties” may seriously impede an FTA’s efficacy to enhance the MARPOL 73/78 compliance. This can be demonstrated by the following example. Suppose, the Oceanside, a Panama-registered oil tanker, collided with a Hong Kong-registered bulk freighter. The tanker was sailing from Iran to South Korea to deliver tonnes of condensate, an ultralight crude oil which is highly volatile when exposed to air and water. The bulk freighter was carrying grain from the U.S. to China. The Oceanside caught fire as soon as it hit the freighter. Further suppose that the collision site is within the Zhoushan Fishing Ground which is one of the biggest in the East China Sea, particularly for mackerel and Atlantic croaker. After the collision, the Oceanside slowly drifted into Japan’s exclusive economic zone. It ultimately exploded and sank. If the large-scale spill occurs, it will be devastating to the marine life and fishery economy in the East China Sea. After examining the Oceanside shipwreck, the investigators concluded that had the Oceanside fully complied with the technical requirement for ship building under MARPOL 73/78, the collision would not lead to such a large-scale oil spill. This is largely due to the flag state failing to effectively require the Oceanside to comply with MARPOL 73/78.
The limitations of FTAs to enhance MARPOL 73/78 compliance can be found in the following three aspects.
First, FTAs generally have very limited membership, which often do not include flag of convenience (“FOC”) states that relax MARPOL 73/78 requirements in order to attract foreign registration. For example, in the Oceanside incident, Panama is not a CPTPP member and has not concluded an FTA with either with China or Japan.
Second, supposing that Panama is a CPTPP member, Japan would still carry the onus to prove causation between the spill and the harm to its trade or investment, and Panama’s failure to meet its obligations under the CPTPP. Although the spill occurred in Japan’s exclusive economic zone, this does not necessarily mean that the spill would harm trade or investment between Panama and Japan. Panama, like most of FOC states, does not have a large trading volume with Japan. In other words, the spill has done significant damage to the fishery resources in Japan’s economic zones and will impact on Japanese fishery trade, but not necessarily the trade between Japan and Panama.
Third, even if we broaden FTAs to include the WTO regime, in the case of the Oceanside, the victim coastal countries like China and Japan cannot seek the remedies through the WTO dispute settlement proceedings with any of the relevant parties. (Among the three relevant parties, Panama and Hong Kong are WTO Members while Iran is not.) In contrast, other WTO Members may withdraw their market commitments and stop the imports of seafood from these two countries for the sake of water pollution. Article XX(b) of the GATT and Article 2.1 of the Sanitary and Phytosanitary Agreement authorize WTO Members the right to take necessary measures to protect human, animal or plant life or health provided that such measures are not inconsistent with the provisions of this Agreement. In this regard, the prohibition of this seafood is allowable only if a WTO Member imposes it in conformity with relevant WTO rules. Therefore, it is ironical that, while the victim coastal states like China and Japan cannot seek remedies from the flag states like Panama in the Oceanside incident, they may even face the economic loss due to the polluted fishing industry.
Therefore, the requirement of “[a]ffecting trade or investment between the Parties” is designed to prevent parties from bringing disputes not related with trade and investment to the CPTPP dispute resolution mechanism.
However, in practice, this requirement can essentially keep most of MARPOL cases outside of the FTA dispute resolution mechanism. Arguably, the requirement of “[a]ffecting trade or investment between the Parties” should be deleted for MARPOL 73/78 violation as the CPTPP does for the CITES violation. In this way, FTAs, despite having been heavily criticised, might in fact protect the marine environment further (ie. raise the bar of environmental protection and not merely make sure that trade and investment liberalisation do not have negative impacts on the environment).
For further reading, see https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3259734

The central administrations of the University of Hong Kong and the University of Sydney have provided A$17,000 each for this joint research project over 2019, centred around two conferences at HKU on Monday 15 July and at USydney on Monday 18 November. The lead co-investigators are respectively A/Prof Shahla Ali and Prof Luke Nottage. Below we set out the project’s Aims, Significance and Outcomes. Further updates are expected on this Blog.

Continue reading “New Frontiers in International Arbitration for the Asia-Pacific Region (1): HKU/USyd research project”

Written by: Ana Ubilava (PhD in Law candidate) and Prof Luke Nottage
[This is a version of a submission to the Attorney-General’s Department in response to the call by ICSID to comment on its comprehensive draft revisions to its rules governing various types of investor-state dispute settlement (ISDS) procedures.]
In August this year the International Centre for the Settlement of Investment Disputes (ICSID) announced its fourth and most extensive changes to dispute resolution rules, to date. The proposed amendments only concern the rules and not the Convention itself. ICSID Additional Facility (AF) rules will now be applicable to cases where neither respondent nor claimant is the ICSID Contracting State or national of a Contracting State, whereas previously at least one side had to be a (national of a) Contracting State. Thus, these dispute settlement facilities will be more widely available world-wide.
These proposals are important not only due to their scale, but also some unique aspects. ICSID is proposing a new dispute settlement mechanism, the Mediation Rules, deemed to be part of the ICSID AF Rules. These will be the first set of institutional rules for investor-state mediation (ISM) released by the world’s main arbitral institution for investment disputes. The International Bar Association published ISM Rules in 2012 but so far these seem to have had little impact in practice. The new ICSID Rules are likely to have more impact, but States like Australia should do more than just agree to AF Rules in its investment treaties or contracts.

Continue reading “ICSID’s New Mediation Rules: A Small but Positive Step Forward”