International Trade and Business Law Review: Volume XVI

Articles - Abstracts

The Trans-Tasman Single Economic Market: Best Practice for Regional Integration?
by Professor Dr Achim Rogmann
This article examines two different approaches to establish a single market under the most advanced regional trade agreements: the European Union (EU) and Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) which is agreed to be driven towards a Single Economic Market (SEM). The comparative approach is owed to the fact that a remarkable number of regions in all continents aim to set up SEMs while looking to learn from lessons learned in other regions and to adopt the best practice style of regional integration.

The ANZCERTA-style seems to be the antipode of the EU style. Whereas the EU employs a wide range of bodies and institutions which created a considerable number of supranational legal instruments which are monitored and enforced to ensure the functioning of the SEM, ANZCERTA is was designed to be the cleanest and least bureaucratic regional trade agreement in the world with minimal legislating institutions. Unlike the EU, it was planned as a trade agreement that would require low maintenance and a minimum of bureaucratic resources. Since many nations planning to establish closer economic ties with trade partners are reluctant to relinquish national sovereignty to supranational authorities, Closer Economic Relations (CER) seems to be a convincing alternative to the EU style for establishing a SEM.

This article demonstrates how integration has been expedited in both regions, which mechanisms and instruments have been applied for market integration and which achievements have been reached so far. Due to the fact that any style of regional integration can only serve as global standard if it fully implements obligations under WTO rules, both models are assessed in relation to WTO constraints.

One core aspect is the question whether ANZCERTA, with its unbureaucratic and resource saving style, can serve as a basis for a SEM despite the fact that this agreement is restricted to a free trade agreement and the absence of plans to establish a trans-Tasman customs union.

Does Anti-Corruption Legislation Work?
by Adjunct Professor Keith Thompson
This article presents a critical evaluation of the anti-corruption legislation existing for the past 15 years and changes to this legislation; turning specifically to discussion of the amendments to the Foreign Corrupt Practices Act 1977 (US), the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions, the United Nations Convention against Corruption, the Bribery Act 2010 (UK) and relevant Australian legislation. The article discusses the philosophy behind current measures to curb international corruption practices and the consequences and messages sent when corruption cases are settled out of court. The article takes a sceptical view of the future of abolishing anti-corruption practices in countries where corruption is a quantitative issue, unless first world countries provide a strong moral philosophy on anti-corruption enforcement. Finally this article suggests several new measures that could be implemented in order to eliminate corruption practices including incentivised whistleblowing legislation and educational strategies.

Unification of Business Law in Cameroon: Realities of the Application of the Ohada Uniform Act on Commercial Companies in Anglophone Cameroon Twelve Years After (1998-2010)
by Dr Simon Tabe Tabe
This article highlights the hurdles that beset the uniform working of the OHADA Uniform Act on Commercial Companies and Economic Interest Groups, twelve years after its application in Anglophone Cameroon, considering that Cameroon has a bi-juridical legal system consisting of common law (Anglophone Cameroon) and civil law (Francophone Cameroon). The article aims at pointing out that while there is much in common between English law and French law in the manner in which they handle civil claims in business law, there is also much that divides them. It is naturally upon the differences that the hurdles of the uniform working of the Acts are focused. In fact, the differences between the procedural and evidential laws operating in the two legal systems are very remarkable. The methods employed in the interpretation of the statutes of the OHADA Business Law, when claims are being processed in Anglophone and Francophone Cameroon, are different. This calls for a fundamental harmonisation of the adjectival laws within the Cameroonian context. The article finally settles for the view that official texts of the OHADA Uniform Act on Commercial Companies should be drafted in both the English and French languages, with both texts having authoritative force.

Letters of Credit and Contract of Sale: Autonomy and Fraud
by Dr Tareq Al-Tawil
This paper deals with three topics: firstly, the fundamental feature of letters of credit transactions that the contracts relating to the letters of credit are autonomous and separate from the contract of sale; secondly, the effect of fraud on the substantive rights of the parties to the documentary credit transaction and the availability of interlocutory (or interim) injunctions to prevent the bank from honouring the letter of credit or against the seller to restrain them from presenting documents to the bank to obtain payment; and thirdly whether the fraud exception is confined to fraud in the document or is extended to fraud in the underlying transactions between the buyer and seller.

Toward Fairness in the Guarantee Market: The Rationale for Expanding Interventions from Fraud to Unconscionability in the Enforcement of Demand Guarantees
by Dr Thanuja Rodrigo
Sri Lankan law, in strict conformity with English common law principles, recognises limited scope for judicial intervention in the enforcement of demand guarantees. Fraud as recognised in common law, provides the basis for restraining the beneficiary calling under the guarantee; both Sri Lankan and English courts have not yet recognised equitable intervention strategies to provide relief against unconscionable conduct on the part of the beneficiary seeking the enforcement of a demand guarantee. This article critically examines the commercial utility of demand guarantees and the need to safeguard the reputation and international standing of financial institutions as the key rationales contributing to the narrow scope of judicial intervention in Sri Lanka. This article argues that these rationales should not stand in circumstances where the beneficiary’s conduct calling under the guarantee falls short of fraud but is clearly unconscionable. It also argues that equitable intervention to provide relief against unconscionable conduct in the enforcement of demand guarantees is a significant step towards regulation of unfair trade practices. If regulation does not occur unfair trading practices may promote lower volume, lead to trading declines and depress activity in the guarantee market.

The Applicability of RTA Jurisdiction Clauses in WTO Dispute Settlement
by Son Tan Nguyen
This article seeks to analyse two possible legal bases on which jurisdiction clauses included in Regional Trade Agreement (RTAs) may be enforced in disputes before the World Trade Organization (WTO), namely, the application of RTA jurisdiction clauses as applicable law in WTO disputes, and that as WTO tribunals’ inherent powers. It will be argued that the applicability RTA jurisdiction clauses in WTO disputes is originally a matter of applicable law. However, there are no provisions in WTO law that either fully confirm or entirely eliminate such an application. Thus, the applicability of RTA jurisdiction clauses cannot be decisively verified from the applicable law perspective. In this context, it is natural that whether they can be enforced in WTO disputes largely depends on the discretion and willingness of WTO tribunals to do so. From this understanding, the article then takes into consideration two important factors, namely, inherent powers of WTO tribunals, and the requirements set out in the Dispute Settlement Understanding (DSU) to assess how these factors, as well as the interaction between them may constrain or drive the application of RTA jurisdiction clauses in WTO disputes. It appears that even though equipped with the inherent power to decide their own jurisdiction, WTO tribunals cannot enforce RTA jurisdiction clauses because such enforcement would be inconsistent with the key provisions of the DSU.

Saving Face After Seven Years: Australia-China FTA Negotiations and Lessons from New Zealand
by Kate Deere
Australia and China have been negotiating the terms of a free trade agreement (FTA) since May 2005, with agreement still appearing some way away, based on the publicly reported information on negotiations to date. This article reviews the progress of negotiations thus far and analyses some of the major areas of contention making agreement difficult. It also discusses the Australian stated requirement for the agreement to be comprehensive, covering trade in goods and services, investment and other areas impacting trade, which contrasts with China’s existing FTA practice, which has generally involved an incremental approach to trade liberalisation. The analysis is framed by a review of China’s practice in the FTAs it has concluded with other economies, in particular the FTA concluded with New Zealand in 2008. The major gains accruing to New Zealand under its FTA with China are discussed, noting that this agreement may be useful as a benchmark for the Australian negotiators. By considering both the measures China has agreed to with other parties, as well as the Chinese preference for incremental, rather than wholesale, reform, the article concludes with the suggestion that Australia may benefit from a relaxation of its insistence on a comprehensive agreement and a focus on key areas where quick wins may be able to be achieved.

Combating Stock Market Manipulation in Australia: Trading Scandals and the Lessons to be Learnt
by Paul Constable
Notwithstanding the efforts of governments and regulators over many hundreds of years to combat the perpetration of stock market manipulation, securities markets, including Australia’s securities markets, still appear to be frequented by those intent on artificially affecting the price of listed securities through manipulative activities. Given that such activities are harmful to the integrity, fairness and international reputation of Australia’s capital markets and have the capacity to ultimately damage the wellbeing of the national economy, the traditional reliance on investigation and enforcement action after stock market manipulation has been perpetrated may not be the best means of combating this insidious activity. This paper will consider the lessons that can be learnt from several of the growing number of trading scandals that have occurred over the years and how they may assist in preventing or deterring people from engaging in stock market manipulation before the damage is done.

Process and Production Methods and Burden of Proof: A Procedural Limitation on the ‘Like’ Products Debate
by Rudi Kruse
This paper considers the debate concerning the regulation of ‘process and production method’ (‘PPM’) based measures under arts I and III of the General Agreement on Tariffs and Trade 1994 (‘GATT’). It is argued that whether or not distinctions based on the PPM of products may be relevant to considering whether such products are ‘like’ for the purposes of GATT arts I and III, the allocation of burden of proof in WTO proceedings limits the practical applicability of the PPM and ‘like’ products debate. The notion of ‘like’ products under arts I and III substantially limits the regulatory space available to construct consistent PPM-based regulations. Given this limitation, a complainant may easily establish a prima facie case, effectively shifting the burden to proceed on the respondent. In contrast, PPM-based measures do not present any unique challenge to justification under art XX general exceptions.

Arbitration and Fragmentation of the Dispute Resolution Process into Competing Arbitral and Judicial Proceedings – The Court’s Role
by Professor Peter Gillies
A question periodically arises in the context of both international and domestic commercial arbitration as to whether a court should stay, or alternatively refuse to stay, proceedings in the court in order to avoid or minimise a multiplicity of proceedings – arbitral and curial – focusing on essentially the same or a related cluster of disputes. Clearly it will normally be in the interests of the parties that their dispute be consolidated in the one adjudication and if they are party to an arbitration agreement their ex facie preference will be for a one-stop adjudication by way of arbitration. This paper examines the responses of the courts and legislatures to this and related issues, in common law jurisdictions. Topics reviewed include the consolidation of issues, the consolidation of parties, contemporary authority on the scope of arbitral clauses, the court’s statutory and inherent jurisdictions to stay proceedings, the circumstances in which non-signatories can be deemed to be party to the arbitration agreement, and the conditioning of stay orders.

The Evolution of the Australian Derivative Action: Floodgates to Shareholder Activism?
by Kenny Yang
This paper will first introduce the notion of a derivative action and examine the evolution of derivative action in Australia, from the general law to its current statutory form. It will highlight the perceived inadequacies of the former and the attempts of the statutory regime in curing its predecessor’s defects. It will analyse these distinctions, coming to a conclusion that the statutory approach does little more than encapsulate and lend clarity to the position at general law in Australia and as far as current research suggests, does not lead to shareholder activism.

Comments

 
Arbitration and Fragmentation of the Dispute Resolution Process into Competing Arbitral and Judicial Proceedings – The Court’s Role
by Professor Peter Gillies
A question periodically arises in the context of both international and domestic commercial arbitration as to whether a court should stay, or alternatively refuse to stay, proceedings in the court in order to avoid or minimise a multiplicity of proceedings – arbitral and curial – focusing on essentially the same or a related cluster of disputes. Clearly it will normally be in the interests of the parties that their dispute be consolidated in the one adjudication and if they are party to an arbitration agreement their ex facie preference will be for a one-stop adjudication by way of arbitration. This paper examines the responses of the courts and legislatures to this and related issues, in common law jurisdictions. Topics reviewed include the consolidation of issues, the consolidation of parties, contemporary authority on the scope of arbitral clauses, the court’s statutory and inherent jurisdictions to stay proceedings, the circumstances in which non-signatories can be deemed to be party to the arbitration agreement, and the conditioning of stay orders.

The Evolution of the Australian Derivative Action: Floodgates to Shareholder Activism?
by Kenny Yang
This paper will first introduce the notion of a derivative action and examine the evolution of derivative action in Australia, from the general law to its current statutory form. It will highlight the perceived inadequacies of the former and the attempts of the statutory regime in curing its predecessor’s defects. It will analyse these distinctions, coming to a conclusion that the statutory approach does little more than encapsulate and lend clarity to the position at general law in Australia and as far as current research suggests, does not lead to shareholder activism.

Moots

Ninth Annual Willem C Vis (East) International Commercial Arbitration Moot
by Brar Harprabdeep Singh, Chan Yin Wai Ada , Chow Yat Sau Jessica, Lau Chirk Yen Jason, Kirpalani Lavesh Prakas, Rajesh Sharma and Gabriël Moens

The Sun Rises in the West Conference Papers

Liberalism, Optimism and Utopia
by Christian Porter

Book Reviews

Francis N Botchway (ed), Natural Resource Investment and Africa’s Development, Edward Elgar Publishing, 2011, ISBN 9781848446793 (hbk), ISBN 9780857930408 (ebk), 529 pages
review by Michelle Gaynor

Geraint Howells, The Tobacco Challenge: Legal Policy and Consumer Protection, Ashgate Publishing Limited, 2011, ISBN 9780754645702 (hbk), ISBN 9780754691143 (ebk), 323 pages
review by Jasmine Sims

Michael J Trebilcock, Understanding Trade Law, Edward Elgar, 2011, ISBN 9780857931498 (pbk), ISBN 9780857931450 (hbk), ISBN 9780857931467 (ebk), 204 pages
review by Sumaiyah Abdul Kader

Jeannie Paterson, Unfair Contract Terms in Australia, Thomson Reuters, 2012, ISBN 9780455229089, 221 pages review
by Nicola Thomas-Evans