Japanese Law and the Asia-Pacific

Emeritus Professor Peter Drysdale recently presented in Sydney a preview of his now-published consultancy report for Austrade, which urges (p3):

“a paradigm shift in thinking about Australia’s relationship with the Japanese economy. The Japanese market is no longer confined to Japan itself. It is a huge international market generated by the activities of Japanese business and investors, especially via production networks in Asia. It is a market enhanced by the economic cooperation programs of the Japanese government throughout the developing world, particularly in the Asian and Pacific region. And it is a market in which Japanese business now plays an increasingly important role from an Australian base in manufacturing, agriculture and services.”

The Australian Financial Review now confirms that Japan has led China and other Asian investors into Australia over the last year (“What Crisis? Asian Investors rush to our shores”, 24 September 2009). But many probably remain unaware of these facts highlighted by Drysdale’s report (pp 3-4):

“The stock of Japanese investment in Asia amounted to A$ 180 billion out of Japan’s global investment of A$ 772 billion at end-2008. The flow of export and import trade which Japanese business generates in Asia each year was US$ 690 billion in 2008. Procurements through Japanese corporate subsidiaries in Asia amount to A$ 1.2 trillion annually. In addition, Japan spent A$ 11 billion (901 billion yen) in Asia on Overseas Development Assistance programs and procurement through economic cooperation programs. Japanese business has now also established a platform for export to the region from Australia, with diversified investments across food, manufacturing as well as resources, that already delivers A$ 6 billion in Australian sales to Asian markets other than Japan. These are all large new elements in the economic relationship with Japan beyond the A$ 51 billion export trade and A$ 20 billion import trade that Australia already does each year with Japan itself.”

These pervasive economic ties are underpinned by very wide-ranging and stable relations between Australia and Japan at all sorts of levels: governmental, judicial, educational, working holidays, and so on. As pointed out in another recent report “Australia and Japan: Beyond the Mainstream”, by Manuel Panagiotopolous and Andrew Cornell for the Australia Japan Foundation, the GFC has led policy-makers as well as businesspeople to look again more favourably on relationships that combine lower risk with less return, compared to high risk/return ventures.

We can take advantage of these strong and still very profitable Australia-Japan bilateral relationships, as well as the investment and trading links each country (especially Japan) has developed in other parts of Asia particularly since the 1990s, by more actively joining Australian and Japanese partners for ventures throughout Asia. This spreads the risks typically associated with the possibility of higher returns, and also allows each partner to contribute goods or services in which that country has more of a comparative advantage. Thus, for example, Drysdale suggests (p25):

“partnership with Australian services firms in finance, legal services and engineering could be mutual productive. … In FTA talks with Japan the Rudd Government is trying to open the way for professional and financial services firms to set up in Japan, encouraging wider recognition of qualifications and the removal of barriers to obtaining licences in Japan”.

As an example of “legal and consultancy services”, Drysdale mentions that several Australian law firms have long experience in the Asian region, and gives the example of Mallesons Japan. But he concludes that “if we are serious about joining global supply chains and capturing service industry opportunities in Asia then Australian firms need to be there on the ground to capture the business”.

Following on from my previous report on Mr Akira Kawamura's talk in Sydney about the significant transformations impacting on the legal profession in Japan, East Asia and world-wide, let us briefly consider also some inter-related changes to legal education in our region. ANJeL Judges-in-Residence Program Convenor Stacey Steele is co-editing, with Kathryn Taylor, "Legal Education in East Asia: Globalisation, Change and Contexts" (forthcoming in December from Routledge: ISBN 978-0-415-49433-5) to commemorate the late Professor Mal Smith, who did so much for ANJeL, Australia-Japan relations, and legal education particularly in the Asia-Pacific region. ANJeL Co-director Kent Anderson and Competitions Program Convenor Trevor Ryan have contributed a very useful chapter on "Gatekeepers: A Comparative Critique of Admission to the Legal Profession and Japan’s New Law Schools", which they and Stacey have kindly shared with me in manuscript form.

Hopefully without stealing too much of their thunder, I would like to extend it to locate especially Australian legal education. Below are my opening remarks for a co-authored National Report on Topic I.D "The Role of Practice in Legal Education" for the 18th International Congress of Comparative Law, held four-yearly in different venues - this time from 25 July 2010 in Washington DC. Through the Sydney Centre for International Law, Professor Cheryl Saunders, Justice James Douglas and I have arranged for many other National Reporters on diverse topics selected for the Congress. We can also expect there many National Reports from Japan, although it remains to be seen whether anyone has volunteered one for the same Legal Education topic. There remains considerable uncertainty about Japan's new postgraduate "Law School" programs and their relationship to the National Legal Examination system, as I explained in a paper first presented a conference organised by Stacey in Melbourne where the "gatekeeper" framework was first unveiled.

Mr Akira Kawamura is senior partner in Anderson Mori & Tomotsune (AMT), one of Tokyo’s “big four” firms - each of which now has around 400-500 lawyers, compared to around 50 just a decade ago. He is also Vice-President of the International Bar Association (IBA), a federation of law societies from 136 countries comprising over 20,000 members world-wide. Kawamura-sensei is also one of Sydney Law School’s distinguished alumni, obtaining an LLM here in 1979, and he is a founding Advisor to the Australian Network for Japanese Law (ANJeL) as well as a generous donor for the ANJeL Akira Kawamura course prizes in Japanese Law. On 21 September he visited the new Law School building and spoke with staff and students about global legal practice, developments in Japan, and the work of the IBA.

Japan has reintroduced a system involving lay participation in serious criminal trials. As discussed in several Australian Network for Japanese Law (ANJeL) events over recent years, this saiban’in system involves randomly selected ‘Lay Judges’ and professional career judges jointly assessing the facts to reach a verdict, as well as deciding on sentences. The model is more Continental European than Anglo-American, but a shared concern is to bring the justice system closer to citizens’ everyday life – a guiding principle in the Judicial Reform Council’s Final Recommendations issued in 2001. Diverse dimensions to greater popular participation throughout Japan’s legal process, including also my study of how the Japanese government organizes its litigation services beyond the criminal justice sphere, will be the subject of ANJeL’s third book from Edward Elgar (forthcoming around December 2010, co-edited with Leon Wolff and Kent Anderson).

Legislation establishing this saiban’in system was enacted in 2004, but implementation was delayed for five years to allow all stakeholders to get used to the idea and many practical implications. (For example, many of the ANJeL Judges-in-Residence sent to Australia by the Supreme Court of Japan have carefully compared how this country manages jury trials, especially in connection with the media.) The enactment illustrates my previous point that the former Liberal Democratic Party (LDP) led coalition had already shifted away from more conservative stances even before its dramatic loss of power in the general election on 30 August this year. Even more ironically, although the first saiban’in trial took place without apparent mishap earlier that month, campaigns by the Democratic Party of Japan (DPJ) and other then-Opposition parties drew on growing concerns among the general public about actually having to serve as Lay Judges. Hopefully, however, Japan's experience will become similar to Australia's - where the general public is quite negative about serving on juries, but individual jurors afterwards report that it was a worthwhile experience. (A similar pattern is also observed in the US.)

Tezukayama University Professor Michelle Tan (who Commented recently on my previous blog on the new DPJ government and law reform) spoke with me on this topic at the big SOCAP (Society of Consumer Affairs Professionals) conference in Sydney over 25-6 August. Key conference themes were the impact of the GFC and world-wide recession, and the new nation-wide Australian Consumer Law reforms. We emphasised the need for Australia to unify consumer nation-wide by ‘trading up’ not only to best practice from among its states and territories, but also to emerging global standards. Our presentation compared developments in consumer policy/administration generally, product liability and safety, consumer credit and unfair contract terms, collective redress and consumer ADR. (Powerpoints and a related Working Paper are here, drawing on my various Submissions to aspects of Australia's current consumer law reform program.)

Mainstream Australian media provided distressingly meager coverage of Japan’s exciting general election for the more powerful lower House of Representatives last Sunday, which saw a remarkable about-face. The centrist Democratic Party of Japan (DPJ) went from 115 to 308 seats, with allies SDP (the small leftover of the once-powerful Social Democratic Party) and the New Party Nippon taking another 7 and 3 seats respectively. Overall, these and other former Opposition parties took 340 seats, whereas the conservative ruling coalition suffered a massive defeat. The Liberal Democratic Party (LDP) dropped to 119 seats, from 300 before the election (and 296 in 2005, the previous election called by Junichiro Kozumi who then retired as Prime Minister). The Komeito dropped from 31 to 21 seats, meaning that the former ruling coalition now only has 140 seats. In short, the tables have turned almost completely since 2005, in a country (in)famous for its aversion to abrupt changes in direction.

This blog posting is the first of several thinking through this result and some implications for policy and law reform in Japan.

This is the grand title of a modest Sydney Law School Research Paper (No 09/71) updating and editing another collection of my blog postings both here and on the East Asia Forum. Freely downloadable via http://ssrn.com/abstract=1446523, it is based mainly on developments from the end of 2008 through to mid-2009.

Many topics are important not only within Australia and Japan, but also potentially for bilateral relations (for example, as novel dimensions to the FTA or 'Economic Partnership Agreement' already under negotiation between these two countries). Several topics (for example, the state of economics as a discipline after the GFC, neo-communitarian perspectives on comparative law and society, the legacy of the post-War Occupation of Japan) also address more broadly how we should (re)conceptualise law, economics and public policy particularly in the Asia-Pacific context.

Compared to Australian and New Zealand legislation, Japan’s Consumer Contracts Act 2000 has quite narrow restrictions on the bargaining process leading up to the conclusion of contracts between consumers and commercial suppliers (Luke Nottage ‘Nihon-Nyujirando Shohishakeiyakuho [Consumer Contract Law in Japan and New Zealand]’ 1620 Toki no Horei 4-5, June 2000). But it adds a ‘general clause’ regulating unfair contract terms, voiding those that ‘impair the interests of consumers unilaterally against the fundamental principle’ of good faith under Civil Code Art 1(2), as well as targeting some specific types of terms. The Consumer Contracts Act also extends to all types of contracts (except employment contracts: Art 48), and defines ‘consumer’ broadly as any individual not contracting for a business purpose (Art 2).

A recent issue of the Japan Commercial Arbitration Association (JCAA) Newsletter is largely devoted to these topics (No 22, July 2009). Sydney Law School and ANJeL are privileged to host not only one of Japan’s doyens in ICA (and other cross-border dispute resolution, especially WTO procedures), Professor Yasuhei Taniguchi (over July-August 2009). We also welcome (over September – March 2010) Kokushikan University Professor Tatsuya Nakamura, a leader of Japan’s ‘new generation’ of arbitration specialists who heads JCAA’s Arbitration Department.

They have already got me thinking further about Arb-Med (arbitrators encouraging parties to settle their dispute), in the context also of interesting new JCAA Rules focused more specifically on Mediation. Both developments are important for Australia, presently reviewing its legislative and institutional framework for international commercial arbitration (ICA), as well as for many other Asia-Pacific countries intensely interested nowadays in efficient mechanisms to resolve cross-border disputes.

Australia and Japan face a remarkably similar challenge. Few international arbitrations have their seat in either country, despite various initiatives undertaken over the last decade or two. Both Australia and Japan probably need to adapt quite radical measures to overcome remaining barriers to attracting international arbitration activity to their respective shores. This shared problem is serious not just because their arbitrators, lawyers, institutions or local economies miss out on business – after all, at least the arbitrators and lawyers can still earn fees by deploying their skills in arbitrations further abroad. The problem is serious also because low levels of international arbitration activity in both countries limit the potential to develop domestic arbitration, ADR more generally, and indeed effective civil procedure.

Despite the shared challenge, however, quite radical solutions for each country may differ somewhat. Expedited arbitration procedures may be a particular selling point for Australia, but not Japan. Caucusing in Arb-Med may work in Japan, but not Australia. And Japan may have more scope than Australia to develop international arbitration through a ‘whole-of-government’ approach that promotes investment arbitration provisions, for example, even in treaties with other developed countries.

This is the title of our translated and edited collection of essays written in Japanese over the last two decades by a leading legal sociologist in East Asia and world-wide, Professor Takao Tanase (in press, forthcoming January 2010 from Edward Elgar). Leon Wolff and I hope to present an outline at the Inaugural East Asian Law and Society Conference to be held on 5-6 February 2010 at the University of Hong Kong, supported by a Collaborative Research Network within the (originally US-based) Law and Society Association.

Tanase’s empirically-based critique of legal legalism is important not only for the United States, which tends to represent an extreme case. It also helps in assessing developments in East Asian countries increasingly exposed or attracted to American views of how law does and should relate to society, including Japan - but also perhaps China (see eg Tanase, 27(3) Mich J Int’l Law, 2006). Tanase’s neo-communitarian critique also presents a challenge to liberalism more generally, making his reassessment particularly timely for two reasons. First, the Global Financial Crisis was prompted partly by a particular liberal vision of how markets do or should operate. Secondly, countries like Japan have now experienced a decade of reform discussions and initiatives allegedly aimed at “Americanising” the judicial system and the legal profession.

At the JSAA-ICJLE conference held at UNSW over 13-16 July 2009, I presented a pathbreaking comparative introduction into how the Japanese government delivers legal services, especially the central government in its high volume of litigated cases. (I also contributed to a panel discussion on ""Bridging the Gap between Japanese Language and Japanese Legal Studies" - click here for abstracts and Powerpoints.)

This presentation was based on a draft paper co-authored with Ritsumeikan University Associate Professor Stephen Green, a former lawyer for the Australian government and joint ANJeL-in-Japan Program Convenor, and Meiji University political scientist Professor Shinichi Nishikawa. We are bringing together a detailed manuscript for a law journal, as well as a shorter version for the next proposed book by Wolff, Nottage & Anderson (eds) Who Judges Japanese Law? Popular Participation in Japan’s Legal Process. Our analysis begins to fill a significant gap in the literature comparing Japan’s legal profession. This lacuna is all the more surprising, given Japan’s efforts at comprehensive reform of its judicial system underway since 2001.

Responding partly to the May judgment of the German Constitutional Court upholding a ban on hyphenated triple-barrelled surnames, Lisa Pryor suggests we adopt 'the Spanish solution' ('Repetitive name injury', Sydney Morning Herald, 6-7 June, News Review p7). That is, children get two surnames, one from each parent. She also suggests we ditch middle names. But middle names already can be used to good effect to address her concerns, especially in the Australia-Japan context.

On the other hand, there remains a problem with Japan's Nationality Law, despite its recent amendments, that might catch out children of Australian and Japanese parents.

[English version for: Baum, Nottage et al’s Bibliography chapter in Harald Baum (ed) Handbuch des japanischen Handels- und Wirtschaftsrechts [Handbook of Japanese Commercial and Economic Law] (Carl Heymann, Cologne, forthcoming 2009)]

When Harald Baum and I translated and expanded the original Bibliography chapter in the first edition of this book, and published it as Japanese Business Law in Western Languages: An Annotated Selective Bibliography (Fred B Rothman, 1998), we added a new section introducing the online resources that were already increasingly available for free over the Internet. We also created a webpage - Japanese Law Links, now archived at Sydney Law School - that updated and expanded our introductions to resources made public by various types of organisations.

After another decade, following further exponential growth in the Internet as well as steady increases in interest and writing about Japanese law world-wide, it is now both easier and harder to offer a guide to such online resources. It is harder to be as comprehensive in reviewing them, because of their sheer volume, and there is the added difficulty of selecting the more authoritative and useful resources. However, our task is also easier in that there are now several well-established and reputable websites. They often contain (sometimes annotated) links to other resources, and often original material, in Western languages – especially in English, which is therefore our main focus in this chapter. It is also easier because of higher-quality Internet search engines, such as Google, although no search engine can ever be perfect – as we show next.

All my blogs over July-October 2008, posted originally with full hyperlinks at http://eastasiaforum.org/author/lukenottage/], have been edited and updated as:

Nottage, Luke R., 'Economics, Politics, Public Policy and Law in Japan, Australasia and the Pacific: Corporate Governance, Financial Crisis, and Consumer Product Safety in 2008' (November 3, 2008) Sydney Law School Research Paper No. 08/134, Available at SSRN: http://ssrn.com/abstract=1295064 (and forthcoming, early 2009, in Ritsumeikan Law Review)

Some of the individual topics focused more directly on Japanese Law, asterisked below, are also available on this USydney blog:

* 1. Taking the Australia-Japan FTA negotiations to new levels
* 2. Whaling: What can law add to science, economics, ethics and politics?
3. Australia also should ‘Rail at Australian’s Tabloid Trash’ about Japan
* 4. Consumer over-indebtedness in Japan, Australia and the US
* 5. Dodgy foods and Chinese dumplings in Japan
* 6. FDI and corporate governance in Japan
* 7. Investor-state arbitration for Indonesia, Australia and Japan
8. Rivals: China, India and Japan – economic, not Olympic?
* 9. The politics of Japan’s new Takeovers Guidelines
* 10. Tables turned in Japanese and US financial markets
* 11. Lessons from Japan for the US financial crisis
* 12. The financial crisis - and loansharks in Japan and NZ
* 13. Consequences of melamine-laced milk for China, NZ, Japan and beyond
14. Political dynasties in Japan, the US, Australia … but not NZ?
* 15. A New Consumer Agency for Japan?