Enhancing Economic Co-Operation: A Regional Arbitration Centre for Asean?

1. The Association of Southeast Asia Nations with Indonesia, Malaysia, the Philippines, Singapore and Thailand being the founding members. Brunei Darussalam joined the Association on 7 Jan. 1984, Vietnam on 29 Jul. 1995 and Laos and Myanmar on 23 Jul. 1997. Cambodia, the last link in the ASEAN-10 vision, was scheduled to joint ASEAN in Jul. 1997 but its admission was delayed following the eruption of internal strife just two weeks before the original stated date of admission. At the sixth ASEAN Summit, held on 16 Dec. 1998, the decision was taken to admit Cambodia to ASEAN.

2. Tasker, R., Schwarz, A. & Vatkiotis, M., “Growing Pains”, Far Eastern Economic Review, 28 07 1994, p.22.

3. Imada, P. & Naya, S. (Eds), Afta: The Way Ahead (1992), p.12.

4. The ASEAN Declaration, Bangkok, 8 Aug. 1967, in ASEAN Documents Series (1967–1988) 3rd edn, ASEAN Secretariat, Jakarta.

5. Naya, S. & Imada, P., “The Long and Winding Road Ahead for AFTA”, in Imada, P. & Naya, S. (Eds), Afta: The Way Ahead (1992), p.55.

6. Akrasanee, N., “Issues in ASEAN Economic Regionalism”, in Jackson, K. D. & Soesastro, M. H. (Eds), ASEAN Security and Economic Development (1984), p.80.

7. Lim Boon Heng, keynote address at the International Symposium on Regional Economic Co-operation and ASEAN Growth Triangles, Singapore (23 Apr. 1992).

8. Soesastro, H., The ASEAN Free Trade Area & The Future of Asian Dynamism (1991), p.7.

9. Ibid.

10. Naya, S. & Imada, P., “The Long and Winding Road Ahead for AFTA”, in Imada, P. & Naya, S. (Eds), Afta: The Way Ahead, (1992) p.56.

11. Lee, T. S., “The ASEAN Free Trade Area: The Search for a Common Prosperity”, (1994) 8 Asian-Pacific Economic Literature 1, at p.2.

12. Naya, S. & Imada, P., “The Long and Winding Road Ahead for AFTA”, in Imada, P. & Naya, S. (Eds), Afta: The Way Ahead (1992), p.53.

13. Goh Chok Tong, Owing Statement at the fourth ASEAN Summit, Singapore (27 Jan. 1992).

14. Anand Panyarachun, Opening Statement at the fourth ASEAN Summit, Singapore (27 Jan. 1992).

15. “ASEAN Soon to Become a Borderless Entity, Says Badawi”, The Singapore Straits Times, 20 08. 1996, p.2.

16. “ASEAN ‘Strong Despite Economic Crisis’ ”, The Singapore Straits Times, 16 03. 1999, p.39.

17. Held on 15 Dec 1998.

18. The Hanoi Declaration, 16 Dec. 1998.

19. lbid., at 7.

20. Bartlett, L. S., “Full Faith and Credit Comes to the Common Market: An Analysis of the Provisions of the Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters” (1975) 24 I.C.L.Q. 44.

21. Quisumbing, P. V.. “Problems and Prospects of ASEAN Law: Towards a Legal Framework for Regional Dispute Settlement”, in Anand, R. P. & Quisumbing, P. V. (Eds), ASEAN Identity, Development and Culture (1981), 308.

22. On 20 Nov. 1996.

23. Address by Australian Chief Justice Anthony Mason at a graduation ceremony at Griffith University, Queensland on 6 Apr. 1995.

24. Ibid.

25. See generally Hooker, M. B., A Concise Legal History of South-East Asia (1978).

26. Thambipillai, P., “ASEAN Negotiating Styles: Asset or Hindrance”, in ASEAN Negotiations—Two Insights (1985).

27. Paul, Jacob, “Many see ASEAN's Expansion as a Positive Development”, The Singapore Straits Times, 21 11. 1997, at p.44.

28. Hudec, R. E., Adjudication of International Trade Disputes (1978) at p.29; Jackson, J. H., “Governmental Disputes in International Trade Relations: A Proposal in the Context of GATT”, (1979) 13 Journal of World Trade Law 1, at pp.3–4.

29. Tasker, R., Schwarz, & Vatikiotis, M., “Growing Pains” (28 07. 1994), Far Eastern Economic Review, p.23.

30. Jackson, J. H., “Governmental Disputes in International Trade Relations: A Proposal in the Context of GATT” 13 Journal of World Trade Law 1, at p.4.

31. Hudec, R. E., Adjudication of International Trade Disputes (1978), p.28.

32. Giardina, A., “The International Centre for Settlement of Investment Disputes Between States and Nationals of Other States”, in Saracevic, P. (Ed.), Essays on International Commercial Arbitration (1989), p.214.

33. Pelkmans, J., “Institutional Requirements of ASEAN with Special Reference to AFTA”, in Imada, P. & Naya, S. (Eds), After: The Way Ahead (1992), p.129.

34. Ibid.

35. Folsom, R. H., “ASEAN as A Regional Economic Group—A Comparative Lawyer's Perspective” (1983) 25 Malayan Law Review 211, at p.217.

36. By “ASEAN matters”, I am referring to disputes that arise out of investment ventures in ASEAN entered into as a direct result of governmental initiatives to enhance economic co-operation in ASEAN, whether these arise as between ASEAN nationals or between an ASEAN national and a foreign partner.

37. Folsom, R. H., “ASEAN as A Regional Economic Group—A Comparative Lawyer's Perspective” (1983) 25 Malayan Law Review 211, at p.218.

38. Calamita, J. L., “The ‘World Court’: Coping With Political Realism” (1985) 17 Ottawa Law Review 553 at p.565; see Pescatore, P., The Law of Integration (1974), pp.49–55 for a definition of “supra-nationality”.

39. Folsom, R. H., “ASEAN as A Regional Economic Group—A Comparative Lawyer's Perspective”, (1983) 25 Malayan Law Review 211, at p.216.

40. Boucher, L. J., “The Prospects for International Arbitration: Disputes Between States and Private Enterprises”, in Soons, A. H. A. (Ed.), International Arbitration: Past and Prospects (1990) p.109.

41. See “International Arbitration Involving States and State-Entity Parties” in Lew, J. D. M. (Ed.), Contemporary Problems in International Arbitration (1987) for a consideration of these problems.

42. Herman, A. H., “Disputes Between States and Foreign Companies”, in Lew, J. D. M. (Ed.), Contemporary Problems in International Arbitration (1987), p.250.

43. Some of the ASEAN countries have entered into bilateral investment protection agreements with other countries. Some of these agreements contain arbitration clauses providing for arbitration of certain investment disputes between the ASEAN country and nationals of the treaty countries to be referred to arbitration under the auspices of the International Centre for Settlement of Investment Disputes in Washington.

44. Annual Report of the ASEAN Standing Committee, 1992–1993.

45. Smit, H., “The Future of International Commercial Arbitration: A Single Transnational Institution?” (1986) 25 Colum. J. Transnat'l L. 9, at pp.10–12.

46. Calamita, J. L., “The ‘World Court’: Coping with Political Realism” (1985) 17 Ottawa Law Review 553, at p.565.

47. Tiwani, S., “Legal Implications of the ASEAN Free Trade Area” [1994] Singapore Journal of Legal Studies 218 at p.233.

48. Art.1, para.3 provides as follows: “The provisions of this Protocol are without prejudice to the rights of Member States to seek recourse to other fora for the settlement of disputes involving other Member States.”

49. The Regional Centre for Arbitration at Kuala Lumpur established under the auspices of the Asian-African Legal Consultative Committee in 1978: See Arbitration Centre at Kuala Lumpur, (1979) 13 Journal of World Trade Law 89; Yatim, Z., “The Regional Centre for Arbitration, Kuala Lumpur”, [1978] Malayan Law Journal boot.

50. The Singapore International Arbitration Centre established in 1991.

51. E.g. Zurich, Geneva and Paris under the UNCITRAL or ICC Rules or London under the Rules of the London Court of International Arbitration.

52. Boo, L., “International Arbitration Act 1994—A Model to Follow” (1994) 7 Asia Business L. Rev. 69 at p.71; See also Hsu, L., “The Adoption of the UNCITRAL Model Law on International Commercial Arbitration in Singapore” [1994] Singapore Journal of Legal Studies 387.

53. Indorf, H. H., Impediments to Regionalism in Southeast Asia—Bilateral Constraints Among ASEAN Member States (1994) p35.

54. Schwarz, A., “Bigger is Better—ASEAN Looks to Expand its Global Clout” (28 07. 1994), Far Eastern Economic Review 24.

55. Lim, P. G., Kuala Lumpur Regional Centre for Arbitration (1991), App.1.

56. Mahathir Mohamad, then Deputy Prime Minister of Malaysia, Address at the First Conference on International Commercial Arbitration for the Asian and Pacific Region in Kuala Lumpur, Jul. 1979.

57. Lim, P. G., Kuala Lumpur Regional Centre for Arbitration (1991) p.3.

58. Ibid., pp.1 and 4.

59. See Giardina, A., “The International Centre for Settlement of Investment Disputes Between States and Nationals of Other States”, in Sarcevic, P. (Ed), Essays on International Commercial Arbitration (1989) 214, at p.215; Delaume, G. R., “ICSID Arbitration” in Lew, J. D. M. (Ed.), Contemporary Problems in International Arbitration (1987) 23.

60. For a detailed discussion of the workings of ICSID, see Hirsch, M., The Arbitration Mechanism of the International Centre for the Settlement of Investment Disputes (1993).

61. For a list of the contracting States and other signatories of the Convention (as of 30 Jun. 1997), sec International Centre for Settlement of Investment Disputes, ICSID 1997 Annual Report, Annex 1.

62. Ibid.

63. Art.25 of the Convention.

64. Folsom, R. H., “ASEAN as A Regional Economic Group–A Comparative Lawyer's Perspective” (1983) 25 Malayan Law Review 211 at p.220.

65. Pinto, M. C. W., “The Prospects for International Arbitration: Inter-State Disputes”, in Soons, A. H. A.*** (Ed.), International Arbitration: Past and Prospects 84 (1990).

66. S.28.

67. Irani, P. K., “International Commercial Dispute Resolution through Arbitration—I” (1993) 1 Asia Business L. Rev. 29, at p.10.

68. Lew, J. D. M., “The Case for the Publication of Arbitration Awards”, in Schultz, J. C. & van Den Berg, A. J. (Eds), The An of Arbitration (1982) 224, at p.321.

69. Ibid. p.228.

70. Ibid.

71. Ibid.

72. Smit, H., “The Future of International Commercial Arbitration: A Single Transnational Institution?” (1986) 25 Colum. J. Transnat'l L. 9, at p.18.

73. Knoepfler, F. & Schweizer, P., “Making of Awards and Termination of Proceedings”, in Sarcevic, P. (Ed.), Essays on International Commercial Arbitration (1989) 167.

74. Supra n.61. Sec also Irani, P. K., “International Commercial Dispute Resolution Through Arbitration” (1994) 3 Asia Business L. Rev. 38, at p.47.

75. There is some doubt as to the effectiveness of the 1958 New York Convention in Thailand. The Thai military government that promulgated the domestic legislation to give effect to the Convention had apparently acted without a parliament and there may be some issue as to the legality of the relevant decree: Raissi, J. P., “Arbitrating in Thailand” (1992) 16 Hastings International and Comparative Law Review 99, at p.116.

76. Art.25(l) of the ICSID Convention.

77. This would probably require amendment to local arbitration legislation.

78. See Sarcevic, P., “The Setting Aside and Enforcement of Arbitral Awards under UNCITRAL Model Law”, in Sarcevic, P. (Ed.), Essays on International Commercial Arbitration (1989) 167, at p.177 and Schmitthoff, C. M., “Finality of Arbitral Awards and Judicial Review” in Lew, J. D. M. (Ed.), Contemporary Problems in International Arbitration (1987) 230.

79. It should be pointed out that, whilst it is generally accepted as a principle of the 1958 New York Convention that the enforcing court may not review the merits of the arbitral award: Van den Berg, A. J., The New York Arbitration Convention of 1958 (1981), p.269, the Convention would not apply if the venue of the arbitration proceedings is in the country in which recognition and enforcement of the award is also sought. This is because the application of the NY Convention is limited to the recognition and enforcement of foreign awards and hence would not apply in the country in which, or under the laws of which, the award was made.

80. See Boo, op. cit., supra n.52 for a consideration of the limited circumstances in which the court has jurisdiction to set aside an arbitral award.

81. S.24 provides that a court may deny enforcement of an arbitral award in cases “where the court is of the opinion that an award is contrary to the law governing the dispute, is the result of any unjustified act or procedure or is outside the scope of the binding arbitration agreement or relief sought by the party …”.

82. 2 B.D.I.E.L. (CCH) 529 (13 Dec. 1960); The Treaty was originally by Guatemala, Honduras, El Salvador and Nicaragua. Costa Rica adhered to the Treaty in 1963 but Honduras dropped out in 1969.

83. Unfortunately, the Central American Common Market essentially collapsed near the end of the 1970s due to revolution, war and other political problems, as well as economic imbalances and disruptions. However, renewed efforts at economic integration were taken by the Central American nations in 1990, although progress on this front has been rather slow: see Abbot, K. W. & Bowman, G. W., “Economic Integration in the Americas: A Work in Progress” (1994) 14 Northwestern Journal of International Law and Business 493, at p.504.

84. Art.26; see also FOLSOM, , supra n37, at p.219.

85. Eklund, C. D., “A Primer on the Arbitration of NAFTA Chapter Eleven Investor-State Disputes”, (1994) Journal of International Arbitration 135, at p.153.

86. Schmitthoff, op. cit., supra n.78, p.230.

87. Ibid., p.237.

88. The view has been expressed that forcing compulsory jurisdiction of a supra-national court on sovereign states is politically impractical: see Calamita, supra n.38, at p.568.

89. Pescator, P., The Law of Integration (1974), p.84.

90. Irani, P. K., “International Commercial Dispute Resolution Through Arbitration—II” (1994) 3 Asia Business L Rev. 38.

91. Irani, op. cit. supra n.90, at p.47.

92. Art.III.

93. See the Indonesian Supreme Court Regulation No.1 of 1990, 1 Mar. 1990; Gautama, S., “Some Legal Aspects of International Commercial Arbitration in Indonesia” (1990) 7 Journal of International Arbitration 93, at 103; Surowidjojo, A. T. & Surowidjojo, L. G., “ADR in Asia—Indonesia” (1989) 19 Asia Business L. Rev. 42, at p.44.

94. Art.4, para.2 of the Supreme Court Regulation No.l of 1990.

95. Art.15, Philippine Civil Code.

96. Irani, op. cit., supra n.90, at p.47.

97. Ibid.

98. Issues of immunity of the State from execution proceedings are distinguished from issues of immunity of the State from jurisdiction, which are raised during recognition and enforcement procedures: see G. Bernini & Van den Berg, A. J., “The Enforcement of Arbitral Awards Against a State: The Problem of Immunity From Execution”, in Lew, J. D. M. (Ed.), Contemporary Problems in International Arbitration (1987) 359.

99. Art.V, para.2 provides as follows: Recognition and enforcement of an arbitral awards having obtained the force of res judicata, in the country where recognition and enforcement is sought may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: (a) the subject-matter of the difference is not capable of settlement by arbitration under the law of that country; or (b) the recognition or enforcement of the award would be contrary to the public policy of that country.

100. Although the view has been expressed that the trainers of the Convention contemplated a “circumscribed public policy doctrine” and hence the exception should be narrowly construed: Bernini, G., “The Enforcement of Foreign Arbitral Awards by National Judiciaries: A Trial of the New York Conventions Ambit and Workability”, in Schultsz, & Van den, Berg (Eds), The An of Arbitration (1982) 51, p.59.

101. Shenoy, G. S., “The Emergence of a Legal Framework for Economic Policy in ASEAN” (1987) 29 Malayan Law Review 116, at p.129.

102. Pescatore, op. cit., supra n.89, 78.

103. Fernandez, P. V., “Law and Culture in ASEAN: Towards New Structures for Economic-Cultural Development”, in Anand, R. P. & Quisumbing, P. V. (Eds), ASEAN Identity, Development and Culture (1981) 328.

104. Reported in Business Malaysia, Sept. 1994 at p2.

105. The original members were Colombia, Chile, Peru, Ecuador and Bolivia. Venezuela became a member in 1973 and Chile withdrew in 1976.

106. Agreement on Andean Subregional Integration, 26 May 1969, 8 I.L.M. 910 (1969) (the “Cartegena Accord”).

107. Kenner, E. B., “The Andean Common Market Court of Justice: Its Purpose, Structure and Future” [1978] 2 Journal of International Dispute Resolution 39, at p.43.

108. Treaty Creating the Court of Justice of the Cartegena Agreement, 28 May 1979, 18 I.L.M. 1203, Venezuela did not ratify the Treaty until four years later.

109. These included the Andean Investment Code (the Common Regime of Treatment of Foreign Capital and of Trademarks, Patents, Licences and Royalties, adopted 31 Dec 1970, 11 I.L.M. 126) and the Trade Liberalisation Program, Chaps.IV and V of the Cartegena Accord: Keener, op. cit., supra n.107, pp.43–44.

110. Keener, op. cit, supra n.107, pp.43–49.

111. Comment, “Chile's Rejection of the Andean Common Market Regulation of Foreign Investment”, 16 Colum. J. Transnat'l L. 138.

112. Keener, op. cit., supra n.107, pp.44–47.