International Trade and Business Law Review: Volume XIV

Articles - Abstracts

 
The Albatross Around the Neck of the American Judicial System: A Change in the Mindset is Required
by Richard Calkins
This article discusses the change in the American judicial system which has gone from one of the finest systems in the world, to one which has become too costly and inefficient for people to utilise mainly due to the increased costs of litigation. The courtroom has become so competitive and aggressive that people are unable to handle the stress generated and this has caused the shift to the new and more popular way of resolving differences: Alternative Dispute Resolution (ADR).

This article highlights the need to change the judicial system and subsequently explores the new approach to solving problems using ADR which includes mediation and negotiation. Particularly, this article argues that the effective implementation of ADR requires a change in the mindset of both the attorneys and the parties involved. This article illustrates the differences between ADR and litigation, as well as the different types of ADR available in various situations and contexts. The article identifies the advantages and disadvantages of mediation in its various phases and explores an alternative way to change the litigation mindset especially where settlement possibilities are concerned. Real life case studies are given throughout the article.

In the final part of this article, the author discusses the qualities of a good and true peacemaker which are necessary for one to be an effective mediator. Overall, this article demonstrates the perks of the newly evolved ADR which is becoming more popular with the masses given its cost effectiveness and it is a less confrontational and stressful alternative to litigation.


The Border Tax Adjustment Provisions of the GATT/WTO and their Implications on the Design of Energy and Carbon Tax
by Wen-Chen Shih
The purpose of the ‘border tax adjustment’ (BTA) mechanism is to neutralise the possible adverse effects caused by different national tax systems on international trade. When a government uses their national tax system for policy purposes in addition to the usual purpose to raise revenues, the differences between national tax systems are more obvious. Under such circumstances, the BTA mechanism is also adopted to address concerns about competitiveness arising from the different national tax systems. This includes the current debate on energy tax and carbon tax.

As the need to tackle global warming increases, energy and carbon taxes are increasingly adopted as policy tools to control the emissions of greenhouse gases. Each domestic energy tax or carbon tax systems have different degrees of impact on the competitiveness of various industries. To address such competitiveness concerns, the current practices in several European countries give them the choice of granting various exceptions to certain energy intensive industries under the domestic energy tax system. Such exceptions, however, raise not only the question of fairness within the national tax system but also the environmental effectiveness of such an energy tax system. The BTA mechanism seems to be capable of providing an alternative to the abovementioned current practices to address concerns about competitiveness arising from different national energy and carbon tax systems. In dealing with this mechanism, the compatibility with the relevant BTA rules under the GATT/WTO must be considered. However, the main question this article seeks to answer is whether the relevant BTA rules under the GATT/WTO can provide a comprehensive legal framework to allow the BTA mechanism to be used as an effective tool to address the concerns about competitiveness.

This article examines the BTA import and export provisions in GATT/WTO and finds that asymmetries exist with respect to the subject and scope of these provisions. Only a careful and narrow-drafted set of BTA measures in terms of subject and scope can pass the legal scrutiny of the GATT/WTO rules. Further, different types of taxation, both the taxable products as well as the tax rate calculation basis in the energy and carbon tax systems, will also affect the legality of such BTA measures. These complications will ultimately increase the administrative costs and legal uncertainty of implementing a set of GATT/WTO-compatible BTA import and export measures. Nevertheless, a well-drafted set of BTA measures might be a better policy tool to achieve fiscal fairness and the country’s environmental objective in the domestic energy and carbon tax systems.


Patent Law, National Strategies and Policy Incentives: China’s Road to a Leading Innovator
by Ken Shao
This paper discusses the most recent changes of China’s innovation strategies by putting them in the context of contemporary Chinese history and law. It provides a succinct review of the innovation changes in the People’s Republic of China in its post-Mao era. It argues that China has accumulated a huge intellectual and innovation pool which is prepared to support China to become one of the world’s leading innovators in the next 5-15 years. It concludes that China’s innovative capacity is a hidden wave that has immediate policy implications to China’s trading partners.


Tracing Noxious Funds
by Gbenga Oduntan
This paper focuses upon the legal and moral arguments that prohibit or ought to prevent the transfer of stolen capital abroad from government coffers as a result of grand corruption and corruption in the conduct of international business transactions. The paper focuses on the corrupt interactions between government officials and multinational businesses. The paper advances the hypothesis that corruption by public officials in developing states involving fraudulent accounting, embezzlement, patronage networks, nepotism, kickbacks and bribery is dependent on the existence of safe havens for stolen wealth in the banking institutions of Western States and other leading safe havens for international capital. The paper identifies and examines the main treaties, principles, soft laws and procedural steps by which corrupt assets can be traced, frozen, seized, forfeited and returned.


Exploring the Rationale of Enlightened Shareholder Value in the Realm of UK Company Law – The Path Dependence Perspective
by Shuangge Wen and Jingchen Zhao
Despite conventional beliefs in the predominance of shareholder value, a broader agenda of stakeholder consideration has been advocated in the UK by the recently-introduced ESV principle – the overriding corporate objective in the new company law regime. In this paper, the efficiency of this principle in terms of stakeholder enhancement is challenged through an interdisciplinary analysis. Through a critical review of the ESV principle, it is discovered that stakeholder enhancement practices in the context of the 2006 company law regime are still for the fundamental goal of shareholder value maximisation, and that their enlightened impact has been fairly limited in practice. Furthermore, by revisiting the interrelationships between UK economic, political and cultural factors with the predominance objective of shareholder value maximisation in the Companies Act 2006, it is discovered that the enlightened effect of this new approach in the company law regime is in fact impeded by strong, persistent forces deriving from shareholder-oriented particulars. Providing insight into the future direction of corporate governance practice, the paper concludes the rationale behind the shareholder-oriented ESV principle, and further suggests the continuing predominance of shareholder value in UK corporate governance.


Emerging Oil and Gas Economies: Mitigating Legal, Political and Economic Risks of Foreign Investors in the Russian Federation (Part A)
by Marina De Kwant
With worldwide trends in oil consumption, and a growing fear of its depletion, global energy investors are forced to enter into newly emerging and high-risk energy markets. One such market is the Russian Federation. Russia looms on the horizon as an immense opportunity for domestic and foreign investors. Despite Russia’s willingness to welcome foreign investment capital into its growing economy, foreign investors appear to be reluctant to accept the Russian Federation as a reliable business partner. This paper outlines some of the major reasons for the current investor’s concerns. It entails a survey of the various investment protection mechanisms that are available to foreign investors in Russia under contract and public international law.


Tempering Services Liberalization with Regulation: The World Trade Organisation and the International Financial Architecture
by Dan Juma
It is hardly disputable that the international financial system is at a crossroads. In the second half of the last century through today, the international financial system has witnessed phenomenal growth. This development, attributable in part to globalization and its appurtenances, has been characterized by massive international capital flows and investment, complex financial technology, and transnational financial intermediation in proportions and styles never witnessed before. The benefits are well known, but so is the price: frequent financial and economic crises. Paradoxically, the regulation of global finance remains largely domestic, fragmentary, and sometimes absent in some jurisdictions or with regard to some financial products, institutions or intermediaries. Even where present, the remit of international regulation, constituted by a web of institutions, networks and norms is inadequate to perform regulatory, surveillance and stabilization functions. This study attempts to examine the current debates, assessing whether the World Trade Organization General Agreement on Trade in Services regime could have any role to play in a new international financial architecture. It concludes that although the WTO is not a regulatory institution, it should embed regulatory discourse in its liberalization of trade. Accordingly, it proposes the enrolment of the WTO in the new international financial architecture and a reorientation of the WTO to a discourse of liberalization with regulation.


About-Face: The New Rules of Strict Compliance Under the Uniform Customs and Practice for Documentary Credits (UCP 600)
by Nicholas P Manganaro
Letters of credit secure the payment process in an international sale of goods and thereby allow buyers and sellers to conduct trade under circumstances that would otherwise pose great risk. A letter of credit represents an assurance by the issuer that drafts accompanied by specified documents and presented in ‘strict compliance’ with the terms of the letter of credit will be honoured. That basic concept is roughly as old as the lex mercatoria itself, and in modern practice has been codified by the International Chamber of Commerce’s Uniform Customs and Practice for Documentary Credits (UCP). UCP 600, effective as of 1 July 2007, represents a significant departure from what case law and previous versions of the UCP had construed as strict compliance in the presentation of such documents, and as such may be a watering down of what had been a time-tested criterion for evaluating discrepant documents. If so, buyer-applicants face increased risks under the revised rules and should conduct greater due diligence to ensure that a prospective trading partner can be trusted with the latitude the UCP now affords.


A Bailout for the International Trade System: Rescuing the WTO from TARP
by Fabio Leonardi
During 2008 the world’s economy experienced a systemic financial crisis that nearly led the international financial system to collapse for the first time since the Great Depression. In response to this fragile economic situation and sharp contraction of the global economy, the world’s governments adopted numerous measures aimed at ensuring the integrity and stability of their financial systems. This Article will address one of the emergency measures adopted by the US government, namely the Troubled Asset Relief Program, and will review its implementation under the law of the World Trade Organization. In particular, it will analyze the programs that the US Department of the Treasury adopted under the authority conferred by the Emergency Economic Stabilization Act of 2008, and will conclude that the federal bailout of the financial industry violates WTO law. Indeed, by disguising discriminatory measures in programs allegedly adopted for domestic regulation, the US failed to fulfill the international obligations that it assumed under the General Agreement on Trade in Services.


Does the Geneva Convention on Agency in the International Sale of Goods Reflect Australian Agency Law?
by Adam E Levitan
It is commercial common practice that agency relationships arise in international transactions. Many delicate issues emerge when an agent acting on behalf of his principal enters into an international contract. The Geneva Convention on Agency in the International Sale of Goods (Geneva Convention) was adopted on 15 February 1983 by a group of at least 58 Government Delegations at a Diplomatic Conference in Geneva. It attempts to harmonise and unify agency law by taking into account the law of agency in different jurisdictions. The Geneva Convention has not entered into force as it has not received the requisite number of ratifications. Australia has not ratified the Geneva Convention. From a purely legal perspective, this thesis provides an impetus for Australia to decide whether it should ratify the Geneva Convention. It attempts to answer the question, whether the Geneva Convention reflects Australian law. It analyses the Geneva Convention’s agency provisions and compares and contrasts them to Australian agency law. By exploring the intricacies of each legal position and their underlying rationale, it attempts to ascertain the similarities and differences between the Geneva Convention and Australian law. Moreover, it proposes reforms and evaluates which position seems preferable.


The Limited Protection of Corporations and Shareholders at International Law
by Rupert Coldwell
At international law a State may exercise its right of diplomatic protection over a national that has suffered an injury in another State. This right also applies to corporations. A State must establish that the corporation in question has the nationality of that State for it to have standing at a legal international forum such as the International Court of Justice or the ICSID tribunal. The predominant test determines the nationality of a corporation by the State in which it is incorporated. However, the application of a test that analyses the control over a corporation to determine its nationality has found a consistent following among States. The policy considerations for the use of a control test to determine nationality increasingly outweigh those against, yet international law continues to relegate a control based test to the back seat. A further contentious issue at international law is whether a State may exercise its right of diplomatic protection of its nationals who are shareholders in an injured company. As addressed in Barcelona Traction, and later, in Diallo, it was held that the State of nationality of shareholder’s in a corporation may not diplomatically protect those shareholders, should they be indirectly injured by a wrong committed on the company. The exceptions where a State may exercise protection over shareholders are limited; a development contrary to international law’s purported encouragement of foreign investment.

Comments

Uniform Law of Electronic Commerce in Private International Law: Where Have been and Where are we Going?
by Henry Gabriel
This article addresses recent and proposed initiatives in the application of electronic commerce in international commercial law. The article examines the success of current law in the area and discuses the likely effect of proposed new law of electronic commerce in international commercial law.


An Introduction to Conflict of Laws in International Commercial Arbitration
by Sam Luttrell
This comment will focus on the role played by conflicts rules in International Commercial Arbitration (ICA), and look at how arbitrators use conflicts rules to solve problems of applicable law in international disputes. It begins with a very brief overview of Anglo-common law conflict of laws rules, and a summary of the various streams of law that may be applicable in an ICA. It then considers the role of conflicts principles at each stage of the arbitration. The focus then shifts to the genesis of the Doctrine of Direct Choice, which allows international arbitrators to apply the conflict of laws rules they consider to be ‘most appropriate’ to the dispute. The comment ends with an example from my own recent experience which is intended to illustrate two points: first, that conflict of laws principles are very important in ICA; and second, that conflict of laws rules come in the arbitrator’s briefcase.


‘Fair and Equitable Treatment’ for Foreign Investment: What is the Current Standard at International Law?
by Raphaël de Vietri
Although referred to in most international investment treaties, the concept of Fair and Equitable Treatment remains nebulous. This paper aims to give an outline of the scope and content of the concept through an examination of selected international treaties, international customary law, general principles of law, various arbitral and judicial decisions, and the opinions of the most qualified publicists.


The Changing Face of the Internet: A Comment on Roadshow Films Pty Ltd v Iinet Ltd (No 3) (2010) 263 ALR 215
by Clive Hutcheon
There is no doubting that the internet has played, and will continue to play, a pivotal role in the development of international trade and business. The internet as we know it, however, is the arena in which a battle is being waged between the internet users who regard illegal file-sharing as a natural expression of a free and neutral internet, and those who wish to enforce the copyright entitlements infringed by those users. This case comment explores both the development of the internet and peer-to-peer file sharing in relation to a unique case that was recently decided by the Federal Court of Australia in Roadshow Films Pty Ltd v iiNet Ltd (No 3) (2010) 263 ALR 215 (‘Roadshow v iiNet’).

Book Reviews

Author: Dr Alan Davidson
The Law of Electronic Commerce
Review by: Peter McDermott

Author: Esther Lam
China and the WTO – A Long March Towards the Rule of Law
Review by: Joseph Eugene Lopez (Gino)

Author: Rafael Leal-Arcas
International Trade and Investment Law: Multilateral, Regional and Bilateral Governance
Review by: Shu Ying Wee

Author: Daniel Lovric
Deference to the Legislature in WTO Challenges to Legislation
Review by: Ryan van der Merwe

Authors: Bryan Mercurio, Leon Trakman, Meredith Kolsky Lewis and Bruno Zeller
International Business Law
Review by: Mitchell Earnshaw

Author: A J Oakley
Parker and Mellows: The Modern Law of Trusts
Review by: Emma Forbes