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Nottage, L --- "International Arbitration and Commercial Law Education for an International World" [2008] LegEdDig 4; (2008) 16(1) Legal Education Digest 11


International arbitration and commercial law education for an international world

L Nottage

U Syd Research Paper No. 07/84, 2007, pp 1–24

Education systems world-wide are under growing pressure to reform. One impetus comes changing demographic trends, often an aging population (as in Japan and Australia), but also greater cross- border mobility (including both shorter-term students and longer-term residents). A second cause of pressure is a shift away from strong forms of welfare statism, meaning education is seen more as a private investment in human capital and possibly a strategic public good, rather than a broader public good. Relatedly, education suppliers are diversifying: more private universities, more qualifications and certifications provided by private or semi-private organisations such as professional bodies. A third factor prompting education reform is global economic liberalisation, requiring domestic institutions to offer new forms of training for those allowed to engage in new cross-border activities, as well as allowing institutions from abroad to more readily access education services markets that are themselves being liberalised. A fourth impetus for change is the Information Technology (IT) revolution. Although this has arguably had less impact on university teaching (as opposed to research), IT is growing in importance and may indeed offer more opportunities than challenges over the next decade or so.

On the one hand, globalisation combines with economic pressures to ‘compete’ particularly with greater private delivery of legal education services. On the other, we find resistance from local traditions,attempts by the universities to meet and perhaps still help shape new ‘market’ trends, and their lingering sense of public mission. The field of Alternative Dispute Resolution (ADR) is a fruitful area of study, for this represents ‘private justice’ in tension nonetheless with certain public interests, as well as being a growth area for legal education services in Australia, Japan and elsewhere. The paper uncovers a complex interaction between universities and private suppliers of ICA education services, allowing — and arguably requiring — the scope for universities to retain a distinctive and broader approach.

Formally and functionally, arbitration law and practice in Australia can be divided into two spheres. Australia ‘received’ the old English common law, and then largely adopted English arbitration legislation, even when enacting (largely uniform) Commercial Arbitration Acts in its various states in the mid-1980s. Preserving the English tradition stems partly from lawyerly conservatism. But it is also seen as supporting the resolution of domestic disputes by arbitration, which (as in England) is still conducted by arbitrators without necessarily much legal training, like engineers in the construction area.

Responding to such criticisms, that arbitration was becoming too expensive and especially too time-consuming, arbitration specialists in Australia have begun to urge further ‘importing’ of new techniques and norms developed for ICA especially from the mid-1990s aimed at addressing similar concerns raised in cross-border arbitration over the 1980S. In this endeavour, Australia can draw on the Model Law, which it adopted into its (federal) International Arbitration Act in 1990, to be used especially in international arbitrations.

Overall, therefore, arbitration education is quite well entrenched in Australian universities, although possibly not as much as in the US. Indeed, the situation is probably the converse to that in Japanese universities, where arbitration education at all levels remains much weaker than might be expected given some excellent arbitration law scholarship produced by Japanese law professors — and indeed the active programs by the Japan Commercial Arbitration Association (JCAA) and others, which have had considerable success in educating businesspeople about ICA. This probably reflects Australian law faculties’ relative focus still on teaching over research, and closer links to the world of legal practice, where (at least domestic) arbitration has been more strongly entrenched.

I agree with the view of Professor Stephen Ware, in the US, that teaching arbitration at universities cannot be primarily focused on ‘teaching students how to be arbitrators’. Accordingly, Ware is correct in suggesting that law schools (or faculties) should teach arbitration law to train law students ‘to be lawyers’ — and not primarily to ‘teach students the law’, but rather to ‘teach students how to use the law’.

As Ware points out, arbitration is ideal for honing the more traditional skill of ‘legal analysis’ of case law and legislation. UMelbourne’s excellent postgraduate ICA course focuses on this, especially case law exegesis, in the Australian context. My course also introduces this material, but prefers secondary sources (good articles on key cases etc) and a broader array of primary ‘legislative’ material (including important ‘soft law’ like the 1999 IBA Rules on the Taking of Evidence in ICA, and the 2004 IBA Guidelines on Conflicts of Interest in ICA). In this way, I aim to review and build on knowledge obtained in other law courses, or the areas of practice my postgraduate students have since engaged in.

However, I assume that USydney students get plenty of other opportunities to engage in ‘black letter law’ analysis; and also agree with Ware that arbitration law is an excellent vehicle for developing many other skills. In particular, we were able to compare JCAA’s 2004 Rules with ACICA’s 2005 Rules, which I have been involved in drafting, using also a comparative table of other major sets of Rules world-wide.

Another skill I have emphasised in my ICA course is oral communication, especially in the form of mooting. Early on, but after students have some basic concepts of ICA, I reveal to them the inside of an arbitration hearing, using the excellent DVD footage of a mock arbitration used together with a casebook edited by Cologne University Professor Klaus Peter. As well as reinforcing how key ICA concepts are reflected and played out in a mock arbitration setting, this prepares them for the format and style expected in their own moots at the end of the course. For the latter, I select some arbitration law issues from previous Vis Moots and make available to them the prize-winning memorandums, so they can focus more on presentation (as mock advocates) or management of proceedings (as mock arbitrators).

Finally, through all this, I believe that university level arbitration education, especially at postgraduate level, has a particular responsibility and opportunity to add a broader perspective on the past, present and future of ICA — and hence law more generally nowadays. As mentioned above, in my ICA course this means stressing two main themes: tensions among (i) internationalisation, domestication, and regionalisation, and (ii) between informality and formality in legal processes.

This perspective helps identify links between various central topics in ICA law and practice nowadays, which may be crucial in resolving particular problems (in negotiating or drafting arbitration clauses, arbitral or judicial proceedings, or revising laws or rules of arbitral institutions). But it also encourages students to think about possibly similar tensions and trajectories in other areas of their study and practice of law. Inevitably, arbitration education through professional associations will find it more difficult to offer all this ‘value added’. Arguably, moreover, law faculties should include such perspectives as part of a broader responsibility to the public and to the balanced development of the legal system, even in — or particularly in — a world of ever-growing globalisation and economic pressures.

Australia, like Japan but for somewhat different reasons, stands at a promising juncture in developing further interest in arbitration and its teaching.

Arbitration, founded in party autonomy and the flexibility that allows to meet changing practices and expectations, is also well placed to link up with momentum developed in both countries for other forms of ADR: court-annexed mediation (linked to broader civil justice reforms), mediation, and expert determination. Another promising future lies in harnessing Information Technology to develop arbitration. Although ‘cyber-arbitration’ per se has not really taken root, already some arbitration courses are being run very successfully online, notably at the University of London.

Many will now be familiar with the annual Vis Moot, initiated in Vienna in 1993 in a low-key way by a professor from Pace University (New York) after his retirement from UNCITRAL. Students debate, in mock arbitration settings, issues both of arbitration law (especially the New York Convention and Model Law) and of substantive law, especially the 1980 UN Convention on Contracts for the International Sale of Goods (CISG). This moot has grown into a massive competition involving around 160 teams (usually of at least four students each) from dozens countries in 2005, and many hundreds of teachers and practitioners. Interest (and success) has always been strong from universities in Australia, especially those seeking to ‘compete’ with more established law faculties and improve their profile in specialist fields; and a few teams have come from Japan. Over the 1990s the increase in participant countries paralleled the increase in CISG accessions, but the rise in teams was even sharper. As more and more countries accede to CISG, Article 1(1)(a) makes it directly relevant by making it applicable to firms having their places of business in different accession states. But CISG also becomes increasingly applicable because in principle, pursuant to Article 1(1)(b), courts or arbitrators even in non-accession states are directed to apply CISG if their rules of private international law point to the law of an accession state. Accordingly, experience with CISG should be expanding around the world more than linearly, underpinning further success for the Vis Moot. Escalating exposure to CISG may also help explain why Japan reportedly is finally considering acceding to the Convention.

It may also explain the growing interest in the Vis Moot from the Asian region, where several countries have now acceded to CISG but others will be finding that their private international law rules lead to application of CISG as adopted in those nearby countries. In fact, the City University of Hong Kong hosted a Vis Moot (East) from 2003/4, subsequently shared among other law schools, which is also attracting growing and diversifying participation.

Another newer development in this region is the Intercollegiate Negotiation Competition, initiated in Tokyo in 2002 also in a low-key way, but by professors and their seminars at two law faculties keen more to collaborate rather than compete at the institutional level. The INC is somewhat of a misnomer in that one round consists of mock commercial negotiations, but another involves arbitration of a contract law dispute under the UNIDROIT Principles of International Commercial Contracts (inaugurated in 1994 as ‘opt-in’ soft law, but with many of its provisions based on CISG). However, unlike the Vis Moots, the students do not debate any issues of arbitration law per se — the arbitration round merely provides an agreed (and unassailable) mechanism for presenting each side’s legal arguments, as opposed to the broader perspectives that the organisers expect to emerge from the round when the teams try to negotiate either a commercial settlement of a dispute (as in the fourth Competition in 2005) or especially an initial deal (as in the third Competition in 2004).

Another distinctive feature of the INC is that law faculties can send teams to compete in both English and Japanese streams.

Another set of more recent experiments tend to be less ambitious in involving just two universities, but mostly more ambitious in using additional IT to enhance learning experiences. A simpler model is the course taught by the late Professor Mal Smith from Chuo University in Tokyo, who had kept co- teaching a course in ADR in Asia for an international LLM course offered by Chulalongkorn University in Bangkok, which he first became involved in when based at the University of Melbourne.

Like the Moot competitions, however, this course still involved students physically crossing borders to improve their training as more globally aware jurists. Other courses have turned instead to IT solutions, since the late 1990s. Before Professor Gerald McAlinn moved from Aoyama Gakuin University in Tokyo (AGU) to Keio Law School, he involved his students (as clients) with law students of Professor Arthur Rosett at UCLA Law School (as lawyers) in simulated contract negotiations conducted primarily by email.

More ambitious was the course first offered regularly in 2000 by Professor Dan Foote from Todai, and by various colleagues at the University of Washington (UW) Law School, after he moved from UW to Todai. These parallel courses added client interview simulations and, most importantly, video- conferencing involving joint lectures (by some with extensive experience as practitioners) and especially sessions to advance the contract negotiations between the teams from both sides. A more recent experiment used similar (email plus high-quality videoconferencing) IT in parallel courses offered at AGU and ANU, but differed in several respects. First, it was designed as an optional part of each university’s course, which in the ANU case was open to both law students and Asian Studies students. Secondly and relatedly, the ANU fielded three teams, to negotiate respectively in Japanese, English, and a mixture of both, with AGU counterparts. Thirdly, it aimed at more denationalised approach, mixing up roles (buyer/seller etc) in the respective teams, and making currency a matter for the contract negotiations. Finally, it involved a first phase of negotiations towards reaching a deal (requiring deliberation on sales price, quantity, duration and shipping; but with all teams also ultimately agreeing on dispute resolution clauses); but then an external shock (force majeure, arguably) triggering a dispute and contract renegotiations.

Most of these educational initiatives, completely or (more often) partly involving ADR as an important part of contemporary procedural law and practice, have developed quite spontaneously out of mostly personal convictions and enthusiasm of the teachers involved, and connections among them. From this perspective, I would like to conclude first by encouraging us all (particularly as procedural lawyers) to think of developing new courses or programs to maximise synergies and benefits, which would cover: (a) contract negotiations towards an initial deal (including major emphasis on dispute resolution clauses, plus background Arbitration Rules); (b) contract renegotiation following some breakdown in the underlying relationship (including ultimately a new or redrafted arbitration clause); then (c) resolution of further contract disputes due to a different breakdown, through arbitration (possibly even combined with mediation). All aspects, including for the first time (to my knowledge) the last-mentioned arbitration proceedings, would also involve video-conferencing.

The now demonstrated educational benefits for the students justify the extra time and resources that nevertheless will be needed — and hopefully we can persuade our Deans and other workload managers accordingly! This broader-based pedagogical approach is also the area where universities retain their comparative advantage, and indeed their public mission even in liberalising economies, vis-à-vis professional associations and more narrowly commercial suppliers of education services. Particularly by turning the challenges of IT into opportunities, to foster collaboration among universities especially across borders, we can all move more effectively into a new era in training global commercial lawyers for the 21st century.


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