By Nobumichi Teramura (PhD candidate in Law at UNSW)
A version of this article was originally published on the SCIL Blog on 23 April 2018.
Ongoing dramatic geopolitical transitions in the world have inevitably impacted on the international business environment of the Asia-Pacific region. This requires Australia and other countries in the region to re-examine their legal infrastructure for transnational business disputes. Convergence and divergence of legal systems of competing and sometimes cooperating states in the Asia-Pacific require the Australian government and other stakeholders to address unprecedented legal complexities in private to private, private to public, and public to public commercial dispute resolution.
On 19 April 2018, the Sydney Centre for International Law (SCIL) at the University of Sydney Law School organised a post-ICCA symposium: “International Commercial Dispute Resolution for the 21st Century: Australian Perspectives”. The symposium, the second recently with the University of Western Australia (UWA) Law School and also supported by Transnational Dispute Management (TDM), brought together leading experts in international arbitration, investment law and international business law from all over the world. They examined broad and perhaps increasingly overlapping fields such as investor-state dispute settlement (ISDS) in a changing legal and political environment, cross-border litigation in the Asian region, other international commercial dispute resolution mechanisms (arbitration and mediation), and inter-state dispute settlement.
The first session was chaired by the Hon Wayne Martin AC (Chief Justice of Western Australia), who had directed final discussions at the first joint symposium held at UWA in February. It was dedicated to exploring the future of investor-state arbitration amidst new developments in dispute resolution for international business. The panel discussants first considered: “Whether there is a potential for Australia to develop international commercial courts for dealing with international litigation like the newly established international commercial courts in Singapore, Dubai or even Kazakhstan?”. A/Prof Amokura Kawharu (University of Auckland) emphasized the success and advantages of international commercial arbitration and pointed out difficulties in creating a new international commercial court in New Zealand, where courts have few judges and therefore “lists”. Dr Rajesh Sharma (RMIT University) commented that an Australian international commercial court could bring economic and financial benefits to the Australian legal sector by enabling lawyers to service in particular the Indian market, but practical issues such as visas would need to be addressed.
The second panel topic was: “Challenges and opportunities in making Australia an attractive seat for arbitrating international business disputes.” A/Prof Kawharu suggested that the Comprehensive and Progressive Partnership for Trans-Pacific Partnership (TPP-11) might further activate the arbitration market in Asia-Pacific region. Dr Sharma emphasised the need for more active marketing by Australian practitioners, mentioning that the apparently disproportionately high rate of Australian practitioners in international commercial cases seemed to have been brought about by repeat appointments. Prof Catherine Rogers (PennState Law and QMUL) commented that the geographical location of Australia could be a disadvantage so that creating online dispute resolution platforms may be a viable solution. Prof Luke Nottage (University of Sydney) added that Australia’s location could even become an advantage if targeting dispute resolution between South America and (South) Asia or “One Belt, One Road” countries or Africa.
The third topic was: “Should Australia, like the US under Trump Administration now skeptical of ISDS, reform existing provisions”? Jessica Casben Fell (Office of International Law in the Commonwealth Attorney-General’s Department of Australia) pointed out the diverse nature of ISDS provisions in various FTAs and suggested that Australia needed to work for multiple reform options at the same time to protect the national interest. A/Prof Kawharu regretted that the inadequate improvements contained in the TPP-11 would probably not reverse the negative public perceptions that have emerged in New Zealand recently, resulting in the new Coalition government renouncing ISDS for future treaties. Dr Sharma enumerated some recent dispute resolution initiatives in Asia that might could be used for investment disputes (such as Belt and Road, ASEAN, Japan, and the Indian Ocean Rim association), pointing out that they have all included the option of mediation.
In the second symposium session, Prof Vivienne Bath (University of Sydney) provided her insights on developments on cross-border litigation in Asia. Overlapping jurisdictions brought about by long-arm jurisdictions of common law countries (such as Australia) but also China posed fascinating legal challenges to the region. Explaining various possible solutions to the issue (especially arbitration, exclusive jurisdiction clauses, and international commercial courts) and their limitations, she concluded that Australia and Asia could not ignore the legal development of China in doing international business. Adjunct Prof Donald Robertson (Herbert Smith Freehills and University of Sydney) then commented about the rise of the movements for establishing international commercial courts on a global scale and added that the abundance of such movements outside of traditional international commercial dispute resolution venues reflected current real-politik. As an example, he introduced a case in which a Russian company decided to resort to the Singapore International Commercial Court (SICC), which, in his view, came from the company’s distrust of London’s Commercial Court.
The third session was dedicated international commercial arbitration and mediation in general. Prof Rogers introduced her project “Arbitrator Intelligence (AI)” whose aim was to promote transparency, accountability, and diversity in the arbitrator selection process by supplying more information about arbitrators and more opportunities for arbitration users to provide feedback about arbitrators. Dr Dominic Dagbania (UWA) positively evaluated the project since increasing transparency of arbitrator appointment process would lead to greater efficiency of international arbitration. Second, Prof Nottage presented highlights from his recent JoIA article co-authored with James Morrison (sole practitioner, associated also with Allens) that critically assessed the Australian International Arbitration Act (drawing on a more comprehensive paper). He emphasised the significance of regular reforms of the Arbitration Act, including issues not clearly regulated in Model Law itself (such as indemnity costs after unsuccessful challenges) in shaping a strong arbitration community in Australia and increasing its attractiveness as a seat. Jeffrey Waincymer (Adjunct Professor at the National University of Singapore) added that the validity of the arbitration agreement was one of the most fundamental elements, with tribunals and courts exercising concurrent control under the Model Law. He argued for more deference to tribunal decision-making with respect to jurisdiction, the standard of proof applied when testing the arbitration agreement, and its applicable law.
In the fourth session, the participants of the symposium shared their diverse insights on investor-state arbitration. Prof Stephan Schill (University of Amsterdam) proposed a comparative constitutional framework analysing private-public arbitration. He introduced the idea that, as there was no centralized method to control private-public arbitration, a framework for conceptualising legitimacy of private-public arbitration could be developed through comparative law analysis of the boundaries of constitutional principles such as democracy, human rights and the rule of law. Ana Ubilava (University of Sydney), drawing on her quantitative data set developed to research investor-state mediation for her PhD thesis, cautioned that ISDS arbitration claims were being used overwhelmingly against developing countries (where national laws and courts were expected to be problematic) and that known ISDS awards or even settlements were already mostly made at least partly public.
Dr Caroline Henckels (Monash University) analysed the current status of public-private arbitration in Australia, drawing on her national report for Schill’s book project. Australian law has not adequately kept up with the rise in government contracting so raising the public awareness of the necessity of domestic legislative reform is crucial to protect the public interest. Problems included the federal or state government’s unlimited ability to enter contracts providing for arbitration, and other lack of distinction between public-private arbitrations and purely private ones. Hon Robert French AC (UWA Chancellor and former Chief Justice of Australia) generally agreed but commented that Australian public law’s quite extensive review of executive action might already provide some oversight of public-private arbitrations.
Esme Shirlow (King’s College London) presented empirical research for her PhD thesis on how international adjudicators attribute weight or relevance to domestic decisions in the practice of international investment treaty arbitration. Analysing 1492 publicly available ‘private property’ decisions of the PCIJ, ICJ, ECtHR and ISDS tribunals, she presented a taxonomy tracking the different approaches used by these international courts and tribunals to recognise domestic authority. She further demonstrated that ISDS tribunals have exhibited respect for domestic authority over the last 10-15 years using a mixture of techniques, including good faith, procedural, and substantive review. She compared this to the approach of the the ECtHR, which has increasingly adopted procedural approaches to review, deferring to domestic decision-makers if they have adopted a measure (such as expropriation) after going through a proper procedure.
The fifth session addressed inter-state dispute settlement, especially under the WTO regime. Dr Brett Williams (Williams Trade Law) suggested a further reason behind the US threatening to close down WTO dispute settlement by blocking appointments to the Appellate Body. He argued that US steel and aluminium manufacturers had been worrying about the potential for the WTO to rule against the US’s continuous use of methods for inflating dumping margins and therefore duties on imports especially from as its status changed from 2016 to a market-based economy, 15 years after conclusion of China’s WTO accession agreement. Richard Braddock (Lexbridge Lawyers) added that it was impossible to eliminate political influence from the WTO system although it was supposed to provide a politically neutral platform for inter-state dispute settlement.
Prof Nottage rounded up the final general discussion by highlighting the overlaps identified among the various types of cross-border dispute resolution directly or indirectly involving commercial interests. He called for innovative approaches from the government in Australia, and neighbouring countries such as New Zealand, to counteract the “Back to the Future” bilateralism recently revived by the US, and other challenges to globalisation particularly in the Asia-Pacific region.