Luke R. Nottage

The ABCs of Product Safety Re-Regulation in Japan: Asbestos, Buildings, Consumer Electrical Goods, and Schindler's Lifts

Australia is considering a full-scale Free Trade Agreement with Japan. This gives added importance to the trajectory of Japanese product safety regulations, and consumer law more generally. Generally, Japan has been dismantling ex ante regulation while strengthening private liability regimes, especially information disclosure obligations, over its ‘lost decade’ of economic stagnation since the early 1990s. Yet it has also re-regulated more broadly in response to safety concerns, as evidenced by four recent case studies involving asbestos (for the third time), buildings, electrical goods, and elevators manufactured by a market leader worldwide. This makes Japan converge on a broader pattern identified within ‘global business regulation’, and makes it likely that the nation (like Australia) will revamp general consumer product regulation along recently revised European Union lines. Yet Japan’s regulatory mix still diverges from that in several other industrialised democracies, particularly in the prominent roles played by criminal prosecutions and the spectre of state liability.

Corporate Governance and Law Reform in Japan: From the Lost Decade to the End of History?

Much has been made of Japan’s ‘lost decade’. With economic stagnation, financial crisis and record corporate insolvencies during the 1990s, Japan’s once mighty economic machine appears to have lost its way. But its sluggish economic performance stands in contrast to an enormous burst of activity in law reform. On a scale comparable to the massive legal innovations made after Japan reopened itself to the world during the Meiji Restoration from 1868 and the democratization of constitutional and economic law during the Allied Occupation from 1945 to 1952, Japan is embarking on a ‘third wave’ of legal and regulatory reform. The primary driver of the reform movement is growing desperation to regain economic momentum. A guiding theme is dismantling ex ante regulation of businesses by public authorities and introducing more indirect means of ex post control by empowering private entities with private or corporate law remedies.2

The Vicissitudes of Transnational Commercial Arbitration and the Lex Mercatoria: A View From the Periphery

AFTER A lengthy gestation period, a new Arbitration Act was enacted in New Zealand on 2 September 1996, coming into force on 1 July 1997.1 It has already attracted considerable commentary.2 A dozen or so judgments have applied or discussed the new legislation. Many early cases involved interpretation of the transitional provisions set out in Article 19, which New Zealand lawyers and judges alike seem to have had trouble understanding.3 More recent cases have focused on the issue of appeal on points of law.4 That right is provided for in clause 5 of the Second Schedule to the Act for domestic arbitrations, and the Schedule applies unless expressly excluded by the parties (‘opting out’). Parties to international arbitrations can also expressly agree to adopt this Schedule (‘opting in’). The rules in the First Schedule apply to both domestic and international arbitrations, by contrast, and these correspond closely to those contained in the UNCITRAL Model Law. The Model Law therefore now provides a central core to arbitration law in New Zealand, adding it to an increasing number of jurisdictions drawing on that model.5 Although the Act is somewhat distinctive in containing express provisions regarding confidentiality of arbitral proceedings, for instance, generally it follows the key themes of the Model Law along with recent trends in transnational arbitration law and practice: an increased emphasis on party autonomy, reduced judicial scrutiny of arbitration, and increased powers for the arbitral tribunal.6 This amounts to a departure from the English law tradition, to which New Zealand is a perhaps increasingly wayward heir.7 Yet Englands Arbitration Act 1996 itself moves away from judicial scrutiny of arbitration and favours more private autonomy, even if ultimately the legislation hews less closely to the provisions and structure of the UNCITRAL Model Law. …

Consumer Rights in Japan

The discourse and practice of consumer rights protection are well entrenched in contemporary Japanese society. Japanese consumers have long been known for their exacting standards regarding quality, but they also now increasingly expect diversity and price-competitiveness, with much more access to imported goods and foreign services providers. The consumer voice is expressed not only through what is and is not purchased, but also via claims for redress (for example, for unsafe or non-performing goods) or to terminate contracts (especially for burgeoning types and volumes of services transactions), and through demands for better substantive and procedural law frameworks to operate within. There has been a shift towards boosting private law protections, premised on individual consumers taking the initiative to terminate or withdraw from contracts and – increasingly – to sue for injunctions or damages. This is part of a broader ‘third wave’ of judicial sector reform underway since 2001, aimed at completing the transplantation of a modern Western legal system first begun following the Meiji Restoration of 1868, and boosted by Occupation-era reforms during 1945–51 (Foote [ed.], 2007).

Corporate Governance and M&A in Australia: An Overview for Assessing Japan and the 'Americanisation' Thesis

This paper sketches a roadmap of key features and directions in Australian corporate governance, generally (Part 1) and specifically regarding takeovers law and practice (Part 2). In particular, it introduces highlights from a growing corpus of empirical studies, and identifies points that may be of special interest to those familiar with major changes or debates underway in many parts of the Asia-Pacific, particularly in Japan. Part 1.A begins with the insight that Australia may not be so Anglo-American after all, because traditionally it has more blockholders (concentrated shareholdings) and less active institutional investors. This may help explain still limited changes to law and/or practice regarding derivative shareholder suits, as well as more arms-length market-based monitoring mechanisms such as disclosure, independent directors, and executive remuneration packages (Part 1.B). On the other hand, Australia is experiencing a new boom in M&A (Part 2.A), and its levels of hostile takeovers and success rates even in the 1990s appear close to those in the UK (2.B), although success rates in both countries are much higher than the US. This arms-length control mechanism may have become more prevalent due to broader economic changes, such as liberalisation of financial markets to allow easier financing of takeovers. But another factor seems to have been the historical legacy of following the law in England, despite the latters less concentrated shareholding patterns (2.C). The environment is likely to have become even more conducive to hostile takeovers from 2000, when disputes were largely diverted from the courts to a full-scale Takeovers Panel (2.D), similar to that introduced along with the UK City Code on Takeovers in 1968. However, Australias version is somewhat more formalised, and was recently challenged for unconstitutionally usurping judicial power. Overall (Part 3), this analysis suggests a more complex picture of corporate governance transformations. They do not necessarily pull all in the same direction (as the takeovers market shows), and there remain some important differences from developments in the UK and especially the US.

Nothing New in the (North) East? Interpreting the Rhetoric and Reality of Japanese Corporate Governance

As Japan emerges from a lost decade of economic stagnation, attention is also focusing on its corporate governance system. Shareholders are gaining ground vis--vis other stakeholders. This is also evident in a plethora of legislative reforms culminating in the consolidated Company Law of 2005, leading some to proclaim the Americanisation of Japanese Law. Part I of this paper outlines two pairs of views. It confirms significant but gradual transformation towards a more market-driven system, involving some modes of change paralleled elsewhere. In assessing change more broadly, Part II urges care in selecting the temporal timeframe and countries to compare, balancing blackletter law and wider socio-economic context, disclosing normative preferences, and focusing on processes as well as outcomes.

Special Issue: International Investment Arbitration in Southeast Asia: An Introduction

The dynamic economies of the Association of Southeast Asian Nations (ASEAN) have individually concluded many standalone bilateral investment treaties (BITs) and a growing number of bilateral and regional free trade agreements (FTAs), supplemented by intra-ASEAN and ‘ASEAN+’ agreements. These aim to facilitate and protect burgeoning foreign direct investment (FDI) flows, outlined in Part 2, including large outflows recently from several states. Part 3 outlines treaty-making trends, including considerable consistency from many member states as well as some interesting innovations, against the backdrop of persistent problems of poor governance. Part 4 highlights nonetheless the relative paucity of investor-state dispute settlement (ISDS) claims against ASEAN member states, with only a few adverse awards, which helps explain why treaty-based ISDS has not been abandoned. Part 5 also notes several contributions from this ISDS case law to international investment law, and Southeast Asia’s potential to keep influencing its trajectory.

International Investment Arbitration in Thailand: Limiting Contract-Based Claims While Maintaining Treaty-Based ISDS

Thailand was initially cautious with its bilateral investment treaties (BITs), consistently eschewing investor-state dispute settlement (ISDS). From 1989 it began agreeing to ISDS, but only if both states were party to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, which Thailand signed in 1965 but never ratified. From 1993, BITs increasingly provided for ad hoc arbitration. Major disputes emerged from the 1990s instead under contracts with foreign investors containing arbitration clauses. From 2004 concession contracts required Cabinet pre-approval. This limitation was extended to all public contracts from 2009, after the first treaty-based ISDS award against Thailand, although two further claims have been filed recently. A 2002 Model bit was revised in 2013 to incorporate more pro-host-state provisions, but Thailand had net foreign direct investment (FDI) outflows in 2011 and still concludes treaties with ISDS. These patterns suggest ‘more than bounded’ rationality.

Independent Directors in Asia. A Historical, Contextual and Comparative Approach

The first part of this seminar will explore the often underappreciated and misunderstood rise of the independent director in Asia. Using extensive empirical and case study evidence, it will demonstrate that what appears to be a straightforward example of a significant legal transplant from the United States to Asia is far more complex than conventional wisdom suggests. Although the label ‘independent director’ has been transplanted precipitously from the US (in some cases via the UK) throughout Asia, who is labelled an ‘independent director’ (i.e., the ‘form’ that independent directors take) and what independent directors do (i.e., the ‘function’ they perform) in Asia differ significantly from the American concept of the independent director. To add to the complexity, the form and function of ‘independent directors’ varies within Asia from jurisdiction to jurisdiction. As such, in reality, there are varieties of independent directors in Asia—none of which conform to the American concept of the independent director. This challenges the widelyheld assumption that ‘independent directors’ are universally similar and follow the American concept of the independent director. The practical and theoretical implications of this finding will be explored in the first part of this seminar, which is based on Dan W. Puchniak and Kon Sik Kim, Varieties of Independent Directors in Asia: A Taxonomy, in Independent Directors in Asia: A Historical, Contextual and Comparative Approach (Puchniak et al. eds., Cambridge University Press, 2017).

International Investment Treaties and Arbitration Across Asia

International Investment Treaties and Arbitration Across Asia examines whether and how the Asian region has or may become a significant ‘rule maker’ in contemporary international investment law and dispute resolution, focusing on the ‘ASEAN+6’ economies.