Mediating Japan-Korea Trade and Investment Tensions

By Prof James Claxton, Prof Luke Nottage & Dr Brett Williams*

The following guest blog derives from a project on Asia-Pacific international business dispute resolution funded jointly over 2019 by the University of Hong Kong and the University of Sydney. It will be tabled at a second symposium on 15 November. Versions are also published by Kluwer Arbitration Blog.

  1. Introduction: complex multi-faceted tensions
    1. A media and geopolitical storm recently erupted after Japan introduced measures affecting exports to the Republic of Korea (Korea). Thunder sounded with Japan’s imposition of certification requirements on three chemicals needed by South Korean companies to make semiconductors, memory chips and displays for consumer electronics (the 4 July Measure). This was followed by lightning and rain when Japan removed Korea from its “white list” of trusted trading partners (the 2 August Measure), then threats by Seoul to retaliate by reducing military-intelligence cooperation and imposing countermeasures on trade. The growing geopolitical tempest has brought about the worst breakdown in cross-border bilateral relations in five decades, generating both regional and global ramifications.[1]
    2. Differing rationales for the geopolitical storm have been given. The Japanese government[2] and media[3] tend to emphasise security concerns, namely on-shipments of such chemicals with potential military applications to North Korea, violating multilateral sanctions. The South Korean government[4] and media,[5] as well as some international news outlets,[6] have often placed more emphasis on the possibility of Japan “retaliating” for an October 2018 judgment of the Supreme Court of Korea. That decision upheld lower court judgments from 2014 finding major Japanese companies, such as Nippon Steel, liable to compensate claimants alleging that they were forced labourers for the Japanese companies during World War 2. The companies, and the Japanese government, have argued that such claims were precluded by a bilateral treaty signed in 1965 to restore diplomatic relations.[7] (Interestingly, similar claims and defences under a different bilateral instruments have been raised before Japanese courts by Chinese war-time labourers, generating a settlement with Nishimatsu group companies.[8]) A few media reports also speculated that Japan introduced export restrictions affecting Korea to bolster the appeal of the Abe Administration in upper House of Councillor elections,[9] but it secured another solid victory anyway.[10] Some media sources also suggest that populist Korean President Moon Jae-in may be “playing to the base” too in domestic politics.[11]
    3. Introducing trade-restrictive measures, however, raises the potential for Korea to complain before the World Trade Organization (WTO). It brings to mind the claim successfully brought by the Obama Administration against China over 2012-14, resulting in China removing export duties and quotas imposed on rare earths, for which it similarly controlled almost all world trade. However, the general exceptions China failed to establish in that case, under Article XX of the General Agreement on Tariffs and Trade (GATT), dealt with health and conservation of natural resources.[12] By contrast, Japan here could be expected to raise national security exceptions under Article XXI. There are even greater differences from a procedural perspective, which we focus on below. If indeed Korea files a formal complaint and an ad hoc panel rules against Japan, this would only come by next year at the earliest. By then the Appellate Body will lack sufficient members (full-time “judges”), due to the Trump Administration blocking new appointments until its concerns about dispute resolution and other aspects of the WTO system are adequately addressed.[13] Accordingly, Japan could appeal any panel decision allowing retaliation for any GATT violations found, and then never come under pressure to remove or adjust its measures against Korea.
    4. The situation becomes even messier when we consider below [[in Part 3]] other potential inter-state dispute resolution processes. Japan could seek arbitration under the 1965 treaty, but that effectively requires the counterparty to provide further consent, which Korea does not seem to want to do. Japan might also consider litigating the treaty before the International Court of Justice (ICJ). Another option is to invoke inter-state arbitration under the Japan-Korea bilateral investment treaty (BIT) in force since 2003, and/or a trilateral investment treaty in force from 2014.[14] However, it may be difficult to prove that the Korean court judgments involved a procedural defect or discrimination towards the Japanese companies creating a denial of justice, contrary to the relevant treaty.
    5. A further possibility, mentioned so far only in a very few media reports but also sketched below [[in Part 4]], is that the companies directly initiate investor-state dispute settlement (ISDS) claims, as provided by both investment treaties in lieu of inter-state arbitration. This could theoretically include an application to the ad hoc arbitration tribunal to issue interim measures preventing enforcement of the Korean Supreme Court ruling, until the tribunal had finally determined claims such as denial of justice.
    6. A major problem for the Japanese companies is that this means they would have to fork out tribunal, lawyer and expert witness fees – often hefty, even if the claim ultimately succeeds.[15] A major problem for the Japanese government, in turn, is that ISDS claims brought by the companies would likely further incense not only the current Korean government, but also some groups within Korean society (including an association of judges).[16] They and the then opposition party became critical of ISDS especially as it was negotiated into the Korea-US Free Trade Agreement (KORUS), brought into effect from March 2012, and as the first-ever treaty-based claim was brought against Korea from late 2012 by a Belgian subsidiary of US-based Lone Star.[17] One Australian NGO even interprets a recent Korean newspaper report of current Prime Minister Lee Nak-Yeon as suggesting that Korea may “abolish” ISDS.[18] More likely he was signalling the need for further rethinking of Korea’s investment treaty policy and practice, which has anyway been evolving (eg regarding ISDS transparency).[19] But an ISDS claim by Japanese companies and/or an award favouring Lone Star would further inflame simmering political tensions, especially as this year another US investor (Gale) has filed a notice to initiate ISDS regarding a development in Incheon,[20] while Chinese and now Malaysian investors have filed notices regarding projects on Jeju Island.[21]
    7. As we conclude [[in Part 5]], given this complex set of potential claims across multiple forums, the best way forward seems to be a negotiated overall settlement, perhaps facilitated by formal mediation.

  1. Korea vs Japan in the WTO
    1. So far, Korea has not filed any formal complaint under the WTO’s Dispute Settlement Understanding (DSU). Instead, quite unusually, it has raised the matter with the WTO General Council.[22] Korea may be seeking to raise wider awareness among all WTO member states about the tension and therefore prompt an informal diplomatic solution, but raising matters in this forum could entrench positions. If Korea does file a formal complaint, issues are complicated in terms of substantive WTO law and especially under the WTO dispute settlement regime.
    2. It appears that Japan’s 4 July Measure does not restrict imports of the three chemicals so it would not breach GATT Article XI:1, which applies to any restrictions on import or export other than duties or taxes. To establish a breach of Article XI:1, or of the WTO Agreement on Import Licensing, Korea would have to establish that the grant of licences Is not automatic. However, the 4 July Measure would likely violate the Most-Favoured-Nation rule in GATT Article I because exports to other WTO Members of the three chemical receive an advantage in the form of the expedited export facilitated by the bulk licences and that advantage is not extended to exports to Korea.
    3. The 2 August Measure would remove Korea from the white list of countries which receive less onerous treatment from Japan in relation to controls over exports of a broad range of goods, including both goods used in the manufacture of any weapons and also (“dual use”) goods that are generally not used in the manufacture of weapons but which could be used in the manufacture of goods.
    4. Japan might then claim justification for both measures under (potentially multiple paragraphs of) GATT Article XXI, if it can substantiate significant risks of chemicals and other exports to Korea actually or likely ending up in North Korea. Particularly interesting are the Article XXI(b) exceptions for a state “taking any action which it considers necessary for the protection of its essential security interests” relating to (i) fissionable materials, (ii) armaments or (iiii) an “emergency in international relations”. A recent WTO panel decision in one of several disputes between Russia and Ukraine,[23] including a former Japanese government official as a panelist (Professor Ichiro Araki), found that this exception is not completely “self-judging” (as asserted by Russia in this case, and by successive US governments including the Trump Administration[24]). But the panel nonetheless found Russia’s measures justifiable, applying what can be summarised as a two-step test.[25] Were the measures covered by one of the three Article XXI(b)) sub-paragraphs, determined by an objective test? If so, were they really taken to protect the state’s essential security interests or for some other reason, as determined (more subjectively) by that state albeit subject to the principle of good faith under general international law?
    5. If Korea proceeds with a WTO claim and Japan raises this particular security exception (as well as perhaps others), quite apart from the factual issues that will be need to be addressed, it remains to be seen whether the new ad hoc panel formed will follows such legal reasoning. There is further uncertainty because although the Russia-Ukraine panel decision was appealed, the Appellate Body is understaffed and cannot deal with it this year.
    6. That understaffing points to an ever bigger, procedural problem for Korea. Even if it prevails on the merits before a WTO Panel, this is unlikely to occur before next year, because under the DSU it first needs to seek formal bilateral consultations with Japan, and then call for formation of an ad hoc panel, before the detailed hearings, submissions and panel rulings characteristic of WTO proceedings. By then, however, another of the three remaining members (or judges) of the AB will have reached mandatory retirement. If the USA keeps objecting to any new appointments because of various objections to the DSU procedures and the wider WTO system,[26] the APPELLATE BODY will lack a quorum to decide any appeals, including for example by Japan if the earlier ad hoc Panel had ruled in favour of Korea. In other words, Korea will have achieved only a pyrrhic victory.
    7. Various WTO members are trying to resolve the impasse over the DSU. The EU (with support of Australia, China, Korea, Singapore and several others) proposed amendments in late 2018,[27] but the USA was not persuaded.[28] Australia and Japan proposed reforms in April 2019, but so far unsuccessfully, with one trade envoy reportedly stating that the EU, “China, and Mexico among others severely chastised the joint proposal by Japan and Australia, offering concessions on a platter to the US without securing any commitment from Washington that as a quid pro quo it would agree to the selection process for filling the APPELLATE BODY vacancies”.[29] China’s recent abandoning of panel proceedings against the EU, contesting methodology for calculating anti-dumping duties, leaves commentators wondering whether China is trying to shore up the WTO’s legitimacy or instead set up a competing multilateral system for resolving trade disputes.[30] (On 13 May 2019, China had reiterated its earlier shared proposals for amending the DSU, as part of wider WTO reforms.[31]) No compromise was announced at or around the recent G-20 Summit hosted by Japan in late June.[32]
    8. There are ongoing discussions for back-up plans whereby member states agree not to appeal or to substitute the panel/APPELLATE BODY process for inter-state arbitration under DSU Article 25, rarely used since 1995,[33] but these plans are complicated and involve states opting in to a new dispute settlement regime.[34] Would the USA, China, or indeed Korea and Japan really opt-in – including for any pending or future bilateral dispute over their export procedures? In short, these deep uncertainties over procedures further cloud the picture regarding a potential WTO claim by Korea against Japan.

 

  1. Japan vs Korea under the 1965 treaty or investment agreements
  2. The 1965 Japan and Korea Treaty on Basic Relations[35] mentioned above purports to settle and foreclose claims related to the treatment of Korean nationals during the period of Japanese colonial rule before World War 2 in exchange for a payment by Japan to Korea of USD 2.5 billion (in today’s terms) and an offer of favourable loans to Korea. Japan and Korea disagree about whether the treaty was meant to settle only state-level claims or to also extend to private claims by Korean labourers against Japanese businesses.[36] Article III provides that disputes over treaty interpretation can be settled in inter-state arbitration should diplomatic consultations fail. Although Japan invoked this provision on 20 May 2019, after consultations following Korean court execution orders issued in January, Korea has not consented to arbitrate or selected an arbitrator under the terms of the treaty. This effectively closes the door on the possibility as there is no authority named in the treaty for default appointments of party arbitrators.[37] While Korea’s non-compliance with the arbitration provision may raise the issue of good faith under general international law in principle, the practical consequence for now is that arbitration is stalled, although Japan still seems to hold out hope that the Korean government will change its course.
  3. Japan has also said it is considering bringing the dispute to the International Court of Justice (ICJ). Like arbitration, this option would require Korea’s consent because, unlike Japan, Korea has not made a declaration that the jurisdiction of the ICJ is compulsory or elsewhere consented give the Court authority over the dispute. While proceedings before the ICJ raise a different set of procedural considerations – including relative efficiency, confidentiality, and access to provisional measures – it is not immediately clear why Korea would be more open to this alternative than arbitration if Japan were to move to institute proceedings.
  4. Japan could instead make collateral claims under the 2002 Japan-Korea bilateral investment treaty (BIT) or the 2012 trilateral investment agreement between China, Japan and Korea,[38] although the Japanese government does not seem to have raised this possibility publically. Both instruments were in force when the dispute arose and each provides for mandatory inter-state arbitration supported by appointing authorities to act for non-participating parties.
  5. Article 14 of the BIT would allow Japan to commence UNCITRAL Rules (ad hoc) arbitration against Korea. It usefully adds an expedited procedure for submissions, hearings, and drafting of the arbitral award,[39] but envisages first “consultations” without specifying any time limit beyond which arbitration can be commenced. Japan may also be disconcerted that there is no express elaboration of a “loser pays” principle, as has become more common (although far from uniform) in international commercial and even investor-state arbitration.[40] The starting point under the BIT is instead that each state bears costs equally, whatever the outcome, subject to tribunal discretion.[41]
  6. Under the trilateral agreement, Article 17 provides that Japan can commence arbitration under the UNCITRAL Arbitration Rules after a mandatory consultation period of six months beginning with a written request for consultations. The scope of the written request, concerning “any dispute relating to the interpretation or application of [the trilateral agreement],” may not be broad enough to include Japan’s request for consultations under the 1965 treaty on 9 January 2019. Assuming notice is not a hurdle, the arbitration procedure mostly mirrors the expedited process and division of costs terms found in the BIT.[42] The most significant difference is that China would be permitted to make submissions and attend hearings as a right.
  7. Apart from these procedural issues, arbitration under an investment treaty may not appeal to Japan as it could narrow the scope of possible claims. Rather than deal directly with the questions of interpretation of the 1965 treaty, the arbitration would concern whether the Korean judiciary breached standards of treatment in the investment treaty by holding Japanese companies liable for forced labour. The standards for resolving this question are expressed differently in the instruments. The BIT promises state treatment that is fair and equitable without qualification while the trilateral agreement links fair and equitable treatment of investors to “generally accepted rules of international law” and goes on to stipulate that “a determination that there has been a breach of… a separate international agreement, does not ipso facto establish that there has been a breach [of the investment treaty].” Based on the broader treatment standard and indefinite consultation period, the BIT may offer a better option for Japan.
  8. To prevail under either investment treaty, Japan would likely have to demonstrate serious procedural irregularities or prove that the Korean Supreme Court’s ruling was discriminatory and not merely that the court misinterpreted the terms of the 1965 treaty in reaching its judgment. There are a few public examples of investors successfully challenging court judgments on the basis of protections in investment treaties. Chevron notably convinced an investment tribunal to stay a 9.5 billion USD Ecuadorian court judgement against the company and ultimately recovered damages for denial of justice under the Ecuador-U.S. BIT and violations of customary international law.[43] But the fit with the dispute between Japan and Korea is far from perfect. While the Chevron tribunal found that the court judgment was written by a third party in exchange for payment to the judge, there have been no such allegations of corruption against the Korean courts. More to the point, even if Japan were to convince a tribunal that its nationals were denied justice by the Korean courts, the tribunal would not necessary need to interpret the 1965 treaty to resolve the claims. Absent a ruling on the meaning of the treaty, the root cause of the dispute would remain unsettled.

 

  1. Japanese companies vs Korea through ISDS
  2. As early as 2014, in the wake of the first-instance Korean court judgments against Japanese companies like Nippon Steel, Investment Arbitration Reporter commentators had reported that Japanese companies could be preparing ISDS claims against Korea.[44] Apart from questions over the substantive grounds under the relevant treaties, outlined above, how likely are Japanese investors generally to bring ISDS claims?
  3. Japanese investors were initially very “reluctant claimants”, with an analogy being Japan’s “reluctant litigants” as measured by comparatively few per capita civil suits filed in Japanese courts.[45] In contrast to home countries with much higher ISDS claiming per capita (such as Canada, more so say than the US),[46] there had been only a few indirect treaty-based claims, notably Nomura via its Saluka Investments subsidiary against the Czech Republic (settled in 2007), and Bridgestone via a US subsidiary against Panama (with public hearings over the internet, 29 July – 2 August,[47] illustrating incidentally the growing transparency of ISDS proceedings[48]). At least one other threatened ISDS claim was seemingly based on consent to arbitration administered by the International Centre for the Settlement of Investment Disputes (ICSID) contained not in a treaty but an investment contract, namely between an aluminium smelter consortium and Indonesia. However, this also settled, in 2013, so no arbitration was commenced by the Japanese investors.[49]
  4. However, Japanese firms have filed three Energy Charter Treaty claims arbitrations against Spain since 2015.[50] This follows the lead of investors from many other states , also impacted by Spain’s abrupt changes in renewable energy policy, so Japanese companies and their legal advisors can reduce costs and other “institutional barriers” to pursuing formal dispute resolution procedures. Nissan’s UNCITRAL Arbitration Rules claim in 2017 under the India-Japan FTA is even bolder, as few of the many ISDS claims brought against India (since a 2011 award for Australia’s White Industries) have involved investments in manufacturing. This claim may indicate a changing mindset among the leaders of at least larger Japanese companies, towards more active engagement in international arbitration. However, Nissan is quite unusual given its alliance with French shareholder Renault[51] (although that relationaship is itself now impacted by securities law prosecutions against CEO Carlos Ghosn).[52]
  5. Tracing the emergence of claims by Japanese investors generally, the possibility of ISDS claims against Korea now by Nippon Steel and other affected companies cannot be excluded simply on the basis say of some general “cultural” aversion to formal dispute resolution processes. As for those who still favour instead the “elite management” theory put forward for such aversion to explain low levels of civil litigation within Japan, whereby government and business elites divert cases away from formal dispute resolution,[53] it is noticeable that peak business associations (especially the Keidanren) have long pressed for ISDS-backed investment treaty protections. And the Abe Administration since 2012 has signed 16 standalone BITs (all with ISDS), albeit still far fewer than Korea, as well several FTAs. This sends the message that investment treaties are important and to be used, although in highly politicised cases such as this they are probably best used as part of a multi-level negotiation and an overall dispute resolution [[as elaborated in Part 5 below]].
  6. Article 15 of the 2002 BIT envisages the investor seeking “consultations or negotiation” with the host state for up to 3 months, then a notice of intent triggering a cooling-off period of at least another 3 months, before being able to commence arbitration under the under the ICSID Convention (as both Japan and Korea are parties), with its more favourable enforcement regime, or any other separately agreed Arbitration Rules. (Articles 17-18 exclude ISDS for disputes over prudential measures concerning financial services and temporary safeguards for cross-border capital transactions, which are inapplicable here.)
  7. Article 15 of the trilateral Agreement requires more details in the investor’s request for consultations so the dispute can be “solved amicably”, but if no settlement is reached after four months the investor can seek arbitration under the ICSID Convention, UNCITRAL Rules or any other separately agreed Arbitration Rules. The host state can require the investor to first seek administrative review under any local requirements, but only for up to four months before arbitration is commenced.[54] (ISDS exclusions regarding certain intellectual property rights or temporary safeguards are again inapplicable here.)
  8. Nonetheless, ISDS filings would mean investors incurring significant arbitration expenses up-front, with empirical studies showing claimants are often unable to recover all lawyer and expert witness expenses even if successful.[55] More importantly, filings by Nippon Steel and others would likely inflame the underlying tension, resulting in boycotts, protests or even strikes around their affiliated companies in Korea. Perhaps for such practical reasons, this point has not been raised by general media, relevant companies or the Keidanren, although the Investment Arbitration Reporter has reiterated the possibility of ISDS claims since the Korean Supreme Court judgment late last year,[56]

 

  1. Mediation to assist a negotiated settlement
  2. In light of this complex and delicate situation, how could a global settlement be reached? One possibility is for one or more affected Japanese companies to seek direct consultations with Korea, but include a request for mediation to help reach a negotiated outcome. Neither the BIT or the trilateral Agreement mention mediation or conciliation, unlikely some investment treaties that refer to it as an option, but mediation can be agreed separately as neither treaty’s “fork in the road” provision preclude this possibility. Recent empirical research highlights the pervasiveness of settlements even after arbitration is filed, contrary to some commentators’ scepticism, and therefore highlights the potential for even more settlements through greater use of investor-state mediation.[57]
  3. An advantage of such ad hoc mediation is that skilled mediators could also bring in the host states, and come up with a resolution of the disputes under the 1965 treaty and the WTO as well. Mediation has not been so popular in inter-state dispute resolution, but a recent successful settlement of a maritime boundary dispute between Australia and Timor-Leste has highlighted its wider potential for large-scale international disputes nowadays.[58]
  4. There are otherwise few signs that Japan and Korea will be able to work out the dispute on their own at the moment. President Moon has warned of a “prolonged” conflict and has committed that Korea would “not be defeated again”,[59] while Japan initially resisted engaging in negotiations after Korea refused to arbitrate under the 1965 treaty and is now ratcheting up pressure on Korea in the trade dispute. This suggests that the states’ positions have hardened as public sentiment on both sides has soured amidst protests, product bans, disruptions to business and tourism, and even self-immolation by Korean nationals in protest against Japan.
  5. High-level officials from the U.S. have tried to extricate the parties from their entrenched positions. An early offer by Donald Trump to mediate did not get traction, but the U.S. has continued to try to play a role in resolving the dispute including calls for a “standstill agreement” to prevent further escalation of tensions.[60] Yet the US suffers from a credibility problem, as the Trump Administration has itself been using trade policy in a more confrontational way, evidenced by the WTO Appellate Body problem and bilateral trade war with China. Some see that approach as having spread now to Japan’s dealings with Korea.[61] Others urge the US to keep exploring ways to “quietly nudge” both nations to resolve their disputes, but acknowledge the limited scope for informal interventions even for a superpower.[62]
  6. Australian (former) officials or politicians from Australia may have a role to play, or from another influential state (such as Singapore) in current negotiations around the WTO DSU as well as a Regional Comprehensive Economic Partnership (RCEP, or ASEAN+6 FTA).[63] Furthermore, Singapore is actively positioning itself as a proponent of international mediation, not least by hosting last week the diplomatic conference for a new UN Convention on cross-border enforcement of mediated settlement agreements – signing up along with 45 others (including Korea, China and the USA, but not Australia or Japan), attracting widespread commentary.[64] Although the new treaty is designed to promote investor-state and commercial mediation, this new treaty could heighten interest also in inter-state mediation.[65]
  7. It would be further delay RCEP negotiations if there was a collapse in trust and values shared between Korea and Japan, including generally regarding ISDS and investment commitments. Already, some have suggested that this bilateral tension is behind Korea getting cold feet about seeking to join the regional CPTPP now partly in force,[66] which Japan (with Australia and Singapore) pushed to bring into force after the Trump Administration withdrew US signature of the earlier Trans-Pacific Partnership FTA.[67]
  8. However, even Australia or Singapore could be seen as having its own interests in the bilateral spat. Better candidates as neutral mediators – especially for a more structured and sustained mediation process[68] – could be senior figures (formerly) within the United Nations, such as UNCTAD,[69] or another international organisation such as:
    1. the OECD,[70] although it is more policy- than practice-oriented;
    2. the International Bar Association, which produced investor-state arbitration rules in 2012,[71] although those are hardly used so far and the Association’s leaders tend now to be full-time practitioners especially from larger law firms; and
  • the International Law Association,[72] instead comprising mostly professors specialising in international law.
  1. Both ICSID[73] and the Centre for Effective Dispute Resolution (CEDR)[74] have started to promote investor-state mediation recently, including running courses to train up mediators for investment disputes. They too could be consulted for possible mediators, with experience also preferably in WTO law and broader international relations, especially in Asia.
  2. Overall, successful mediation and negotiated settlements tend to arise in two ways. One is where the litigation behind the mediation, including likely costs and delays, has a predictable outcome. (This is one reason sometimes given for low levels of civil litigation in Japan, epitomised by traffic accident data.[75]) But another is where the dispute becomes very complicated, allowing skilled mediators to help parties find novel ways to perceive and develop shared interests. This would not be possible before an adjudicatory forum, like the ICJ or an arbitral tribunal, with a limited mandate to decide claims. An imposed solution, with a perceived winner and loser, might also fail to calm the tide of nationalism, public unrest, and deteriorating relations between the countries. These circumstances offer both a unique opportunity for mediation as well as a challenge for international dispute resolution.

 

 

 

 

 

 

* Respectively: Professor of Law, Kobe University; Professor and Associate Director (Japan), Centre for Asia and Pacific Law at the University of Sydney (CAPLUS); Principal, Williams Trade Law & CAPLUS Associate.

[1] https://www.abc.net.au/news/2019-07-28/what-does-japan-south-korea-trade-war-mean-for-smartphone-costs/11341254?pfmredir=sm

[2] https://www.japantimes.co.jp/news/2019/07/16/business/meti-chief-seko-defends-tighter-japanese-export-controls-imposed-south-korea/#.XUilplAlGUZ

[3] https://asia.nikkei.com/Spotlight/Japan-South-Korea-rift/Japan-to-decide-to-remove-South-Korea-from-whitelist-on-Aug-2

[4] http://english1.president.go.kr/BriefingSpeeches/Briefings/444

[5] https://www.koreatimes.co.kr/www/nation/2019/08/356_273101.html

[6] https://www.bloomberg.com/news/articles/2019-08-01/japan-may-decide-on-controlling-exports-to-south-korea

[7] https://mainichi.jp/english/articles/20190626/p2g/00m/0fp/073000c

[8] Book review by Nottage, https://web.archive.org/web/20190406202157/http://blogs.usyd.edu.au/japaneselaw/2018/07/civil_society_and_postwar_paci.html, outlining a chapter by Aiko Utsumi that “begins with a summary of the lawsuits brought in 1998 by Chinese forced labourers against the Nishimatsu Group. The Hiroshima High Court ordered compensation, but the Supreme Court reversed in 2007 based on the 1972 China-Japan Joint Communique in conjunction with the 1952 San Francisco Peace Treaty. Nonetheless, in 2009 the Supreme Court noted that Nishimatsu had acknowledged its historical responsibility, agreed to payments, and would erect a memorial. Utsumi then looks at how different scholars and courts, including recently in Korea, have interpreted such inter-state agreements on Japan’s wartime responsibility, insofar as they may preclude private rights to claim compensation.”

[9] https://www.reuters.com/article/us-japan-southkorea-laborers-feud-analys/japan-export-curbs-on-south-korea-may-widen-rift-over-wartime-labor-compensation-idUSKCN1U7101

[10] https://www.eastasiaforum.org/2019/07/25/abe-and-the-ldp-remain-dominant-after-japans-upper-house-elections/

[11] https://www.reuters.com/article/us-japan-southkorea-laborers-feud-analys/japan-export-curbs-on-south-korea-may-widen-rift-over-wartime-labor-compensation-idUSKCN1U7101

[12] https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds431_e.htm

[13] Eg Stoler, https://iit.adelaide.edu.au/news/list/2019/04/08/crisis-in-the-wto-appellate-body-and-the-need-for-wider-wto-reform

[14] See generally Pekkanen (2012), https://www.researchgate.net/publication/254402775_Investment_regionalism_in_Asia_New_directions_in_law_and_policy.

[15] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3227401 [[and/or ACFI Concept Paper via Unige CIDS]]

[16] https://www.cigionline.org/publications/investor-state-arbitration-south-korean-international-trade-policies-uncertain-future

[17] Remarkably, still pending (https://icsid.worldbank.org/en/Pages/cases/casedetail.aspx?CaseNo=ARB/12/37), despite expectations it would be resolved by March 2019 (https://pulsenews.co.kr/view.php?year=2018&no=691385).

[18] http://aftinet.org.au/cms/node/1757, reproduced at https://bilaterals.org/?south-korean-prime-minister#forum7787

[19] https://brill.com/view/book/edcoll/9789004360105/B9789004360105_019.xml

[20] http://www.iareporter.com /articles/us-investor-to-start-2-billion-icsid-proceedings-against-south-korea/

[21] http://www.iareporter.com /articles/malaysian-investor-warns-of-arbitration-against-south-korea-over-thwarted-development-project-on-jeju-island/

[22] https://www.reuters.com/article/us-southkorea-japan-laborers-wto/japan-and-south-korea-clash-at-wto-over-trade-row-idUSKCN1UJ1EM

[23] https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds512_e.htm

[24] https://www.reuters.com/article/us-russia-ukraine-wto-ruling/russias-wto-national-security-victory-cuts-both-ways-for-trump-idUSKCN1RH1K9

[25] https://www.herbertsmithfreehills.com/latest-thinking/landmark-ruling-on-the-wto-national-security-exception

[26] https://iit.adelaide.edu.au/news/list/2019/04/08/crisis-in-the-wto-appellate-body-and-the-need-for-wider-wto-reform

[27] https://europa.eu/rapid/press-release_IP-18-6529_en.htm

[28] https://www.lexology.com/library/detail.aspx?g=002f617d-5a3e-41b9-83e6-77ea44a3be91

[29] https://www.twn.my/title2/wto.info/2019/ti190421.htm

[30] Gao and Zhou, https://www.eastasiaforum.org/2019/07/10/the-end-of-the-wto-and-the-last-case/

[31] https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=254127&CurrentCatalogueIdIndex=0&FullTextHash=371857150&HasEnglishRecord=True&HasFrenchRecord=False&HasSpanishRecord=False

[32] https://www.eastasiaforum.org/2019/06/30/the-rules-based-economic-disorder-after-osaka-g20/

[33] https://www.acwl.ch/download/training-course-documents/tpd-2014-2015/session_09_-_initiating_procedures_under_the_dsu_(3)/Nottage_and_Bohanes_2007.pdf

[34] https://www.maastrichtuniversity.nl/blog/2019/05/seven-months-until-appellate-body-apocalypse-time-prepare-worst-case

[35] https://treaties.un.org/doc/Publication/UNTS/Volume%20583/volume-583-I-8471-English.pdf

[36] Article II(1) of the treaty provides, “[t]he Contracting Parties confirm that [the] problem concerning property, rights and interests of the two Contracting Parties and their nationals (including juridical persons) and concerning claims between the Contracting Parties and their nationals, including those provided for in Article IV, paragraph (a) of the Treaty of Peace with Japan signed at the city of San Francisco on September 8, 1951, is settled completely and finally.”

[37] https://www.mofa.go.jp/press/release/press4e_002553.html.

[38] Via https://investmentpolicy.unctad.org/international-investment-agreements/countries/105/japan

[39] “4. Unless otherwise agreed by the Contracting Parties, all submissions of documents shall be made and all hearings shall be completed within a period of six months from the date of selection of the third arbitrator, and the arbitral tribunal shall render its decisions within two months from the date of the final submissions of documents or the date of the closing of the hearings, whichever is later.”

[40] Concept Paper on Costs by WG1 and on Empirical Perspectives by WG7 via https://www.cids.ch/academic-forum-concept-papers.

[41] “5. Expenses incurred by the chairperson and other arbitrators, and other costs of the proceedings, shall be borne equally by the Contracting Parties. However, the arbitral tribunal may, at its discretion, decide that a higher proportion of the costs be paid by one of the Contracting Parties.”

[42] “5. Unless otherwise agreed by the disputing Parties, all submissions of documents shall be made and all hearings shall be completed within a period of one hundred and eighty days from the date of selection of the third arbitrator. The arbitral tribunal shall render its award, in accordance with the provisions of this Agreement and the rules of international law applicable to the disputing Parties, within sixty days from the date of the final submissions of documents or the date of the closing of the hearings, whichever is the later.”

[43] Award https://www.italaw.com/sites/default/files/case-documents/italaw9934.pdf as discussed in UWA LRev special issue 2018 article by Kyle Dickson-Smith http://www.law.uwa.edu.au/__data/assets/pdf_file/0003/3381519/4.-Kyle-Dickson-Smith.pdf.

[44] www.iareporter.com/articles/analysis-japanese-companies-may-pursue-chevron-type-bit-arbitration-in-response-to-korean-court-rulings-in-forced-labour-cases/

[45] See generally our https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3299097

[46] http://arbitrationblog.kluwerarbitration.com/2016/11/14/are-us-investors-exceptionally-litigious-with-isds-claims/

[47] https://icsid.worldbank.org/en/Pages/News.aspx?CID=333

[48] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3227401

[49] https://www.ashurst.com/en/news-and-insights/legal-updates/indonesia-and-nippon-asahan-aluminium-consortium-reach-settlement/

[50] https://icsid.worldbank.org/en/Pages/cases/AdvancedSearch.aspx

[51] https://www.ft.com/content/6c65eb46-91d9-11e9-b7ea-60e35ef678d2

[52] https://time.com/5543639/carlos-ghosn-nissan-bail/

[53] On culture, institutional barriers, and elite management theories for low levels of formal filings in Japanese civil courts as well as ISDS disputes involving Asian parties, see also Nottage and Weeramantry, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2041686.

[54] Incidentally, the trilateral agreement is much better for Japanese investors in any disputes against China under the old 1988 BIT. That latter’s article 11(2) provides advance consent by the host state, if the investor seeks arbitration or conciliation “with reference to” the 1965 ICSID Convention (which both states have acceded to), only for any “dispute concerning the amount of compensation” for expropriation (which some but not all tribunals interpreting similar wording in other treaties have interpreted also as providing jurisdiction over whether expropriation occurred). Other disputed BIT violations “may be submitted” to arbitration or conciliation under the respective ICSID Convention rules, but only “by mutual agreement”

[55] Concept Paper on Costs by WG1 and on Empirical Perspectives by WG7 via https://www.cids.ch/academic-forum-concept-papers

[56] www.iareporter.com/articles/as-japanese-companies-face-potential-asset-seizure-in-korea-japan-demand-inter-state-arbitration-potential-for-investment-treaty-claims-lurk-in-background/

[57] Ubilava, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3352181

[58] https://academic.oup.com/jids/article-abstract/10/1/126/5142413?redirectedFrom=fulltext

[59] https://regionbusinessworld.news/readnews-122285-south-korea-says-wont-be-defeated-again-as-japan-trade-dispute-escalates.html

[60] https://www.japantimes.co.jp/news/2019/07/31/national/pompeo-calls-standstill-agreement-give-feuding-japan-south-korea-time-cool-off/

[61] https://www.washingtonpost.com/politics/2019/07/18/japan-claims-its-restricting-exports-south-korea-because-national-security-heres-real-reason-why/?noredirect=on

[62] https://www.csis.org/analysis/japan-and-korea-rising-above-fray

[63] https://www.eastasiaforum.org/2019/08/04/rcep-vital-to-defend-global-trade-order/

[64] https://www.straitstimes.com/singapore/key-facts-about-the-singapore-convention-on-mediation

[65] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3239527

[66] https://www.csis.org/analysis/japan-and-korea-rising-above-fray

[67] Nottage, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2767996

[68] Claxton, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3320087

[69] https://investmentpolicy.unctad.org/

[70] https://www.oecd.org/daf/inv/investment-policy/oecdworkoninternationalinvestmentlaw.htm

[71] https://www.ibanet.org/LPD/Dispute_Resolution_Section/Mediation/State_Mediation/Default.aspx

[72] http://www.ila-hq.org/index.php/committees

[73] Eg https://icsid.worldbank.org/en/Pages/process/adr-mechanisms–mediation.aspx.

[74] https://energycharter.org/what-we-do/events/investor-state-mediation-training/

[75] Nottage and Weeramantry, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2041686

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