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This is the title of a project funded by the Australia-Japan Foundation over 2010-11 for myself and Sydney Law School colleagues, Dr Brett Williams and Micah Burch, which will consider the scope for both countries to develop greater common ground in cross-border dispute resolution law and practice, to facilitate bilateral, regional and even multilateral economic integration. Australia and Japan have recently amended their Double-Tax Treaty and are now negotiating a Free Trade Agreement (FTA). Former Prime Ministers Kevin Rudd and Yukio Hatoyama floated the idea of a broader "Asia Pacific Community" or "East Asian Community", not limited to matters conventionally found in FTAs. The project will look at the possibility of adding:

(a) novel inter-state arbitration mechanisms, namely for:
(i) disputes about interpretation of Double Tax Treaties, a process triggered by taxpayer in a state (which must then obtain a decision from arbitrators binding on both states) and now envisaged since the 2005 revisions to the OECD Model Tax Treaty;
(ii) disputes about market access for goods and services (including typically some forms of investment), usually modelled on provisions set out in the 1994 Dispute Settlement Understanding of the World Trade Organization (itself under review, with considerable leadership from Australia);

(b) appropriate mechanisms for disputes involving a broader array of investments, in response to discriminatory or other illegal treatment from the host state, allowing investors to bring arbitration proceedings directly (often now provided in FTAs and bilateral investment treaties or "BITs") instead of via appeals to their home state for inter-state dispute resolution;

(c) provisions or measures to improve commercial arbitration law and practice for the resolution instead of business-to-business disputes, achieved through commitments that might also be entrenched through treaties, but potentially instead through parallel legislation in each state, or through common Rules or agreements among the main Japanese and Australia arbitral institutions).

The project will also involve Professor Tatsuya Nakamura, former ANJeL Research Visitor and General Manager in the Japan Commercial Arbitration Association, and anyone willing to share experiences or views in these three fields (particularly in Australia or Japan) is very welcome to contact me at first instance.

Within each of these fields one particular focus of the project will be the potential for efficient but legitimate means for the arbitrators to facilitate settlement among the parties. Japan has a long tradition of such "Arb-Med" in international commercial arbitration, linked to its court law and practice derived mainly from continental European law. But Australian law reformers and practitioners are also becoming more interested initiatives underway world-wide to promote Arb-Med variants. Arbitrators empowered to facilitate settlement can resolve cases more efficiently and amicably, even after initiation of formal proceedings, but mechanisms need to be designed to minimise procedural justice concerns especially if they meet separately with each party ("caucusing" or "shuttle diplomacy").

A second focus will be transparency of the dispute resolution processes. There are strong calls for this and third-party participation where states are involved, for example in investor-state arbitration. Greater transparency can also increase predictability of outcome, especially in relatively new areas of law, which can facilitate early settlement (or even avoid filing of claims) as parties "bargain in the shadow of the law". However, there are fewer public interests involved in international commercial arbitration among private firms and the law (mostly contract law) applied is more well-established. Accordingly, confidentiality provisions are more justifiable and common, either through legislation or arbitral institution Rules. Nonetheless, some are calling for greater transparency, at least in terms of government support for arbitral institutions themselves.

If Australia and Japan can agree on middle ground in these two important respects, and many other hot topics across these fields, this will also generate cross-border dispute resolution improvements particularly in the Asia-Pacific region. That too has countries with quite diverse legal traditions, derived for example from continental Europe or the English common law traditions, and needs to find broadly acceptable solutions if a new "Community" is really to emerge. Bilateral and regional initiatives, underpinned by this research project, may even impact on discussions underway to improve multilateral frameworks such the WTO's Dispute Settlement Understanding, and possibly even an OECD Model Bilateral Investment Treaty.

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Japanese Law in Asia-Pacific Socio-Economic Context