Leon Trakman

Confidentiality in International Commercial Arbitration

The issue of confidentiality is key to the successful practice of international commercial arbitration. The confidentiality of arbitration proceedings is a reason for resorting to arbitration, as distinct from litigation.1 It is a collateral expectation of parties to an arbitration that their business and personal confidences will be kept. Despite its central importance, confidentiality cannot be assumed in all jurisdictions. It is therefore critical that arbitrators be fully informed about the legal and policy issues surrounding confidentiality in order to appropriately resolve disputes concerning those aspects of the arbitration that should, or should not, be confidential. It is widely viewed that confidentiality is one of the advantageous and helpful features of arbitration. Nevertheless, there is no uniform answer in national laws as to the extent to which the participants in an arbitration are under the duty to observe the confidentiality of information relating to the case. Moreover, parries that have agreed on arbitration rules or other provisions that do not expressly address the issue of confidentiality cannot assume that all jurisdictions would recognise an implied commitment to confidentiality. Furthermore, the participants in an arbitration might not have the same understanding as regards the extent of confidentiality that is expected. Therefore, the arbitral tribunal might wish to discuss that with the parties and, if considered appropriate, record any agreed principles on the duty of confidentiality. (United Nations Commission on International Trade Law.)2 This article is intended to alert both arbitrating parties and fellow arbitrators to the importance of confidentiality in international commercial arbitration. Drawing on the authors experience, the intent is to share with other arbitrators the complex and sometimes conflicting conceptions of arbitral confidentiality. Sections II and III of the article explore concerns about confidentiality, the conflict between the need for transparent decision-making and to preserve private confidences …

Investor-State Arbitration: Evaluating Australia's Evolving Position

This article examines Australia’s contentious 2011 Trade Policy Statement in which the Federal Government indicated that it will no longer provide for investor-state arbitration (ISA) in future bilateral and regional trade agreements (BRTAs), choosing instead to rely on alternatives to ISA. These are likely to vary from encouraging investor-state parties to negotiate contracts that provide mechanisms for dispute resolution to providing by treaty that domestic courts resolve such disputes. Notwithstanding a change in Australia’s Federal Government in 2013, two years after the Policy Statement was announced, the new Liberal Government has retreated from that Policy notably by including ISA in the Korea-Australia Free Trade Agreement (KAFTA) concluded on 5 December 2013. However, it has not rejected the Policy, but has indicated instead that it will consider ISA in its treaties on a case-by-case basis. As a result, the Policy could still have significant ramifications for Australia in negotiating BRTAs; it could have a material impact on Australia’s inbound and outbound investors, as well as upon other states and investors directly or indirectly impacted by Australia’s Policy. It is also conceivable that other states will follow Australia’s initiative and reconsider whether to agree to ISA in their BRTAs. In analysing the policy shift against ISA, the paper evaluates the nature of foreign direct investment (FDI) and its economic and legal significance to host and home states, as well as to inbound and outbound foreign investors. Following this analysis, the paper outlines the rationale behind Australia’s rejection of ISA in 2011. It evaluates the perceived advantages and disadvantages of alternatives to ISA, such as diplomatic intervention in investor-state disputes and conciliation proceedings between investorstate parties. However, it focuses on the most likely alternative to ISA, namely, reliance on domestic courts to resolve investment disputes. The paper argues against the complete rejection of ISA. It illustrates the challenges of Australia relying on domestic courts to resolve investor-state disputes in light of the impending Investment Chapter of the Trans-Pacific Partnership Agreement (TPPA) and the preservation of Australia’s investment interests in Asia.As an alternative, the article proposes the adoption of a BIT policy which would provide investor-state parties with a choice among dispute-avoiding measures, including access to either domestic courts or ISA. The rationale is that such an approach is likely to preserve the national interests of Australia, while also gaining support within the international community of states and among foreign investors.

A Plural Account of the Transnational Law Merchant

Abstract The Law Merchant is depicted today as a transnational system based on merchant practice operating outside the fabric of national law. It is conceived as cosmopolitan in nature, universal in application, expertly delivered, and independent of other regulatory systems. This article critiques these qualities attributed to the historical as well as present-day Law Merchant. It disputes that it has evolved ‘spontaneously’ out of merchant practice; that it is uniform in nature; and that it transcends national law. It argues instead that the Law Merchant is often fragmentary in nature and subject to disparate national and transnational influences. It challenges, in particular, unitary conceptions of ‘autonomy’ ascribed to the Law Merchant, presenting a pluralistic conception of Law Merchant ‘autonomy’ instead. It illustrates these arguments in relation to the so-called Cyberspace Law Merchant and to transnational commercial arbitration.

The Binding Force of Agreements to Negotiate in Good Faith

This article evaluates the established judicial proposition that an agreement to negotiate in good faith is antithetical to the principles of the common law. English courts are reluctant to enforce such agreements on the ground that they constitute unenforceable “agreements to agree”. Recently, courts have started to recognise an exception in cases where parties agree to negotiate over a term mandated by an existing agreement, such as to review a price clause or resolve a dispute by undertaking negotiations in good faith. The primary arguments against enforcing an independent agreement to negotiate in good faith are threefold. First, parties engaged in good faith negotiations are assumed to lack a serious legal intention to contract. Second, such an agreement is substantively uncertain in nature and does not promise to produce a contract. Third, the failure of parties to conclude their negotiations does not lead to an easily identifiable loss. In light of these considerations, this article considers the viability of enforcing an agreement to negotiate in good faith in the absence of a pre-existing contract. It argues that the legal obstacles to recognizing agreements to negotiate have been overstated. Given the commercial value of enforcing such agreements, it proposes that agreements to negotiate in good faith should be recognised and given legal content by common law courts.

China and Foreign Direct Investment: Looking Ahead

Notwithstanding China’s endorsement of investor-state arbitration more than a decade ago, few investor claims have been initiated against it and none has concluded with an award. This does not necessarily mean that foreign investors will not make such claims in the future, but rather that proceeding against China, from an economic rationalist perspective, is likely to be contentious, costly and dilatory. However, these concerns are not peculiar to China. Economically and politically powerful states, not least of all the United States, are less frequently subject to investor-state arbitration than poorer states for much the same reason.What is increasingly likely is that China is preparing itself and its investors abroad for investor-state proceedings in the future. This is evident, for example, in China’s growing interest in the functioning of the International Center for the Settlement of Investment Disputes (‘ICSID’), in its inclusion of investor-state arbitration in its Model Bilateral Investment Agreement and in various regional and bilateral agreements it has concluded.China is overtaking the United States as the biggest recipient of foreign direct investment (‘FDI’) in the world. It is also one of largest sources of outward FDI, with its outward investors initiating large-scale claims against foreign governments, such as Ping An, China’s second largest insurer’s recent claim for USD 2.2 billion against the Belgian Government In light of China’s rise in the FDI and the consequence this may have on its engagement with investment claims, this paper has three primary purposes. The first purpose is to explore China’s history and practice in concluding bilateral investment agreements (‘BITs’) with foreign countries. The second purpose is to examine China’s limited experience with investor-state arbitration under such BITs. The third purpose is to identify how China is likely to develop its dispute resolution regime through strategic investment alliances with other states without sacrificing its distinctive national interests including those of its investors abroad. Particular emphasis will be given to China’s dilemma, in seeking to liberalize investment treaties to protect growing outbound investments, while also trying to protect its national interest from arbitration claims by inbound investors.

The Proposed European and Australian Free Trade Agreement: And the Importance for Small and Medium-Sized Enterprises

This chapter investigates how Free Trade Agreements (FTAs) can assist the small and medium-sized enterprise sector (SME) to benefit from reduced tariffs and opening overseas markets. It identifies the importance of SMEs when negotiating the proposed European Union Australian Free Trade Agreement (EU-Australian FTA) which commenced in 1995 when the EU and Australia agreed on a political framework to establish an FTA. This chapter argues how promoting SME trade emanating from Australia into the EU can strengthen economic ties with the EU and benefit Australian SMEs and that, just as the single EU market has benefitted SME’s across member states, Australian SMEs can benefit significantly through an EU-Australian free trade agreement that encourages and stimulates bilateral SME trade.

China’s Regulation of Foreign Direct Investment

China’s exponential grown as a destination for inbound investment and source of outbound investment is exceptional. Indeed, China is expected to become the global leader in foreign direct investment [FDI] within a decade. Consistent with these developments, China is increasingly liberalizing its Bilateral Investment Treaties [BITS]. It is also granting a greater range of protections to foreign investors. What is unclear is whether these developments will lead to expanded investor-state arbitration [ISA] claims against China, or expanded ISA claims by outbound Chinese investors against China’s BIT partners. This chapter explores these issues in light of China’s evolving BIT regime, past ISA claims brought against China and claims brought by China’s outbound investors against foreign host states. It also considers the prospects of China’s BIT regime changing in the immediate future.

Domicile of Choice in English Law: An Achilles Heel?

This article examines the conceptual and functional difficulties associated with the English common law conception of domicile. It outlines the judicial challenges involved in verifying a domicile of choice in cases varying from the legitimacy of a marriage, to the validity of a will in the law of succession. The article challenges the existing approach used in establishing domicile on grounds that the prevailing domicile test is often illusive. Specifically, the test encourages sham domicile claims because domicile determinations are often difficult to predict. To improve the existing practice, the author argues against counting physical and personal points of connection between a person and another place on the grounds that checklist requirements are unduly mechanical and lead to unpredictable results. The article further proposes replacing domicile with a residence test based on a persons continued residence in a jurisdiction. It argues that such a residency-based test can include a persons subjective choices as a secondary line of inquiry. However, the primary inquiry should concentrate on that persons physical residence and not his/her choice of a domicile.

Contracts: Legal Perspectives

This article analyzes the common law of contracts from both legal and social behavioral perspectives. Section Contracts in Common and Civil Law Systems distinguishes between contract law in civil and common law systems, giving primary focus to the common law – or ‘judge made’ law – of contracts. Section Freedom to and Freedom from Contracts identifies the often seemingly irreconcilable ideological tension between the freedom of parties to and the freedom of parties from contracts. It illustrates that this tension is manifest differently according to the type of contract, such as business and consumer contracts. It also suggests that this ideological tension over contractual freedom often transcends the kind of contract in issue, focusing instead on competing conceptions of fairness and efficiency in judicial practice. Section The Judicial ‘Management’ of Common Law Contracts evaluates how judges manage contracts. It identifies different methods by which they do so, such as by interpreting contracts according to the contract text, or by implying terms into those contracts. It evaluates the perceived strengths and limitations of these methods, including the critical view that contract law can perpetuate social and economic advantage more than redress them. The conclusion is that competing conceptions of contract law, and the role of common law judges in construing them, will continue. However, these tensions are preferable to complacency or resigned acceptance of the status quo.

Substantive Equality in Constitutional Jurisprudence: Meaning Within Meaning

The city…lists a host of nonracial factors which would seem to face a member of any racial group attempting to establish a new business enterprise, such as deficiencies in working capital, inability to meet bonding requirements, unfamiliarity with bidding procedures, and disability caused by an inadequate track record. To accept Richmond’s claim that past societal discrimination alone can serve as the basis for rigid racial preferences would be to open the door to competing claims for “remedial relief” for every disadvantaged group. The dream of a Nation of equal citizens in a society where race is irrelevant to personal opportunity and achievement would be lost in a mosaic of shifting preferences based on inherently unmeasurable claims of past wrongs… We think such a result would be contrary to both the letter and spirit of a constitutional provision whose central command is equality. The minority ownership policies…are aimed directly at the barriers that minorities face in entering the broadcasting industry. The Commission’s task force identified as key factors hampering the growth of minority ownership a lack of adequate financing, paucity of information regarding license availability, and broadcast inexperience. We hold that benign race-conscious measures mandated by Congress—even if those measures are not “remedial” in the sense of being designed to compensate victims of past governmental or societal discrimination—are constitutionally permissible to the extent that they serve important governmental objectives within the power of Congress and are substantially related to achievement of those objectives. The excerpts introducing this article are drawn from two recent decisions of the Supreme Court of the United States on equality rights. Illustrating the directional changes in the nature of equality rights, they vary from antagonism to ambivalence towards remedial relief for disadvantaged groups. In particular, they illustrate the current debate between traditional individual rights and a new communitarian conception of equality rights.