JANUARY - MARCH 2004
University of Washington Law School Asian Law Center
Prof. David Linnan
This course examines on a practical and theoretical level how economic deregulation, financial restructuring, globalization and technological change affect contractual relations in developing and developed Asia, including the sale of goods, financing arrangements and e-commerce transactions. It considers both the nature of transactional relationships between private parties and the opposition of legal rules versus social norms that affect them. We shall look at aspects of commercial law and relations in Indonesia, Japan and China as representative jurisdictions, and look to the Convention on the International Sale of Goods (CISG) as an attempt at unifying or standardizing law in certain international transactions. On a technical level, special attention is paid to the law of obligations under Civil Law views, given the hidden complication that most Asian legal systems should be regarded as either Civil Law or mixed jurisdictions.
MEETING TIMES & PLACES
The course is scheduled to meet regularly 17:00-18:50 Mondays and Wednesdays in Law School Room 212. We plan on bringing in outside speakers via videoconferencing probably four times, mostly during the second half of the course on dates TBA. Videoconferencing should take place on Mondays, and we shall meet in Room 119 on those days. You will also be directed to streaming video links on the course website for general introductions to the legal systems in the representative jurisdictions. Students are required to view this material outside class. We shall also be recording classes to put up in streaming form on the course website as we go along, which you are free to consult by way of review.
TEXTS AND CONTACTS
The instructor's e-mail address is email@example.com. There is no commercial text, and readings will be available normally on the course page (http://www.lfip.org/lawe506) under the course materials link. They may also be distributed via the course LISTSERV. Normally, we shall post instructional materials including problems and class powerpoints on the course website. However, if time is pressing we shall distribute them via e-mail to the course LISTSERV. Based on past experience, we shall normally distribute class powerpoints via the LISTSERV in advance of class since students seem to prefer commenting the presentations in taking their class notes. We shall also be making a digital recording of teaching faculty presentations to put on the website in streaming form. We hope to get them up within 10-14 days following class meetings.
We have a course LISTSERV (firstname.lastname@example.org) to keep in touch generally, and for discussions plus asking questions outside of class. You must join the course LISTSERV to fully participate in this class, since teaching faculty will use it like a bulletin board for announcements about reading assignments, etc. while students and faculty should use it to ask questions and carry on discussions outside our videoconferenced classes. For those of you unfamiliar with the LISTSERV concept, a LISTSERV is simply a system in which e-mail communications are sent to a single address and then distributed to all LISTSERV subscribers (e.g., all class members). Please consult the LISTSERV information page at http://www.sc.edu/ars/listserv.html for general directions, and click on the course webpage class administration link for directions about how to subscribe to the class LISTSERV.
We will not address contracts law in Asia as a survey of substantive contracts law rules in a laundry list of Asian jurisdictions. Instead, this course addresses contract law in Asia in select jurisdictions against a background of 5-6 underlying themes which lie hidden in the materials and will reemerge periodically in class. One underlying theme involves on-going legal development aka moving towards the rule of law particularly in developing Asia, and the relationship between formal legal enforcement systems and economic activity (because if a contract is not enforceable, does it really matter what the substantive contract law rules provide?). Another involves the character of functioning informal or formal enforcement systems, since American law students are conditioned automatically to look to courts as the bedrock of enforceability. However, courts are not the sole or even preferred enforcement mechanism for contracts even in the US, which insight is lost on many US lawyers who see their primary role in litigation. What is the proper role of domestic versus foreign courts, versus arbitration, versus quasi-public insurance against non-commercial risks (OPIC, Hermes, etc.), versus business reputation? Another involves differences in substantive legal approaches attributable to the fact that most Asian jurisdictions at least commenced their modern legal development from the departure point of an (often colonial) Civil Law system (e.g., Indonesian law drawing on colonial Dutch law, which itself was heavily influenced by French law in the 19th century), or borrowing substantive Civil Law approaches as part of modernization strategies. By the same token, how far back should one go in tracing influences on current Asian law (all the way back to Roman law, regarded as helpful by traditional Civil Law scholarship to explain oddities such as the underlying code structure visible in the 1999 Chinese Unified Contracts Law)? And what is the correct understanding of how to balance Western legal imports against periodic (often ideologically motivated) claims about the importance of indigenous legal traditions in widely varying Asian societies?
For example, Japan borrowed German law in the late 19th century before reception of aspects of the US legal system under its post-World War II occupation. Analogously, Mainland China borrowed German law from the late Qing Dynasty through the Kuomintang period (from circa 1900 until 1947), which Civil Law borrowing practice has been revived since circa 1980 as China has emerged from pure Socialist law influences dating back to 1947, now accelerating its own legal development strategy as part of WTO compliance. Legal development in Asia has been on-going at least as long as modernization efforts there, which commenced already in the 19th century in Northeast Asia. The question raised, even if one focuses on formal legal systems and enforcement, is the comparative law issue of whose rules and conceptual system predominate currently and why? One viewpoint maintains that developed country legal systems are converging internationally, which downplays the importance of understanding the difference in technical approaches to the Common Law's law of contract versus the Civil Law's law of obligations. However, that seems at best a premature vision and leaves us with the problem that most lawyers are socialized professionally only in their own domestic legal system. Practicing lawyers usually have relatively little understanding of how a foreign legal system addresses questions at a technical level (instead thinking that is the role of local counsel). As a general observation, most developed country foreign lawyers practicing in Asia tend to be trained in largely Common Law systems (e.g., US, UK, Canada, or Australia). So what is the likely outcome if these lawyers are interpreters to the outside world of modern Asian legal development premised on Civil Law models?
Another theme involves potential linkages between cultural arguments about Asian law versus economic explanations of social behavior including law (e.g., arguments that Japanese society is non-confrontational in its orientation and so abhors litigation, or that legal systems covering ethnic Chinese populations throughout Asia play out against Neo-Confucian social values stressing relationships and ethical behavior over liberal economic views of freedom of contract). To what extent do many Westerners maintain that law and legal rules are foreign to Asian cultures because of an underdeveloped understanding of their economic incentives or structures? And what do we make of the idea that even in Western legal systems we blithely draw lines between enforceable and unenforceable promises, plus recognize that even as between Western legal systems there are broad differences about which promises are enforceable (summarized under the concept of public policy)? There is an analogous link to the peculiar problem of an arguable disconnect between contract law doctrine and the character of economic relations. Law & economics approaches to US contracts law have recognized for at least 30 years that contract law doctrine is oriented towards discrete transactions, while the more common pattern of business involves continuing relationships. This affects everything from how you conceptualize economic relations to resolution of individual disputes, which insight is seemingly lost on those pursuing strict enforcement of promises under broad ideas of freedom of contract in Asian legal development. This is not just a hypothetical problem, but rather a practical one as witnessed by the issue of how to address changed circumstances in a long-term contractual relationship. The Civil Law is not necessarily the same as the Common Law answer as witnessed by views of the 1920s German inflation cases. Meanwhile, the issues live on in enforceability questions concerning fixed rate take-or-pay contracts underlying project finance infrastructure deals (e.g., following currency readjustments in 1997's Asian Financial Crisis).
The final theme involves the problem of the state role in the economy, which typically looms large in the East Asian developmental state, or what is sometimes referred to as under alternate views of capitalism. Legally speaking, the state is a distinctly different creature from private parties when it enters into contractual relations, both in terms of foreign sovereign immunity under public international law and its treatment particularly under Civil Law views of administrative courts and laws. Lawyers as a whole may lose sight of the extent to which economic actors in Asia may be states as often as private parties, or the extent to which disputes between nominally private parties may be transformed into intergovernmental disputes via quasi-public insurance. Dispute resolution looks distinctly different depending upon whether it takes place between private parties or at the state level, which the practicing lawyer may turn to his or her advantage in structuring dispute resolution in the appropriate case to be transformed from a disagreement between private parties to one between states.
Concerning course structure, we shall spend the first 2-3 weeks building a conceptual framework in terms of developing an understanding of competing ideas along the lines of our different themes, concentrating on legal development versus economic versus comparative law (indigenous versus Civil Law) views. Thereafter, we shall spend 3-4 weeks examining the basics of the CISG as that piece of "internationalized" law lawyers arguably encounter most often in simple cross-border transactions in goods in Asia. We shall then spend one week looking at dispute resolution in Japan as a way of approaching claims about whether cultural or economic interpretations are more insightful. Thereafter, we shift our focus for the final 3-4 weeks to project finance and financial market transactions as competing examples of more complex contractual relations within Asia that may be tied by law or practice in the alternative to local or international commercial law standards (usually New York or English law). We use recent Asian transactional problems to examine specific issues including Civil Law views of how to deal with changed circumstances (looking initially to the German inflation decisions), plus commercial arbitrations, plus competing domestic and international court decisions, plus sovereign immunity issues (through Karaha Bodas, an Indonesian electric generation plant deal gone bad, arbitrated in Geneva and followed by parallel "foreign" litigation in the Second and Fifth Circuits plus "domestic" litigation in Indonesia). We shall also spend a week looking at the modern face of international supply chain contracting, namely the idea that rather than the CISG itself B2B on-line bidding on buyers' terms increasingly may define the large scale integrated international production of goods (e.g., if you are an Asian supplier wanting to sell your products to a large multinational, it may be in response to bids solicited on the multinational's B2B internet exchange, which looks different from the classic dispatch of telexes in a small import-export transaction perhaps governed by the CISG).
Concerning videoconferenced speakers, Tim Manring, Managing Partner of Baker & McKenzie's Jakarta office, will join us for a session to discuss Civil Law views of the permissibility of rewriting contracts judicially versus remedies like rescission in the context of a recent Singapore arbitration of a project finance deal gone bad. Prof. Hikmahanto Juwana of the University of Indonesia will also join us for a session to discuss the developing country view of a complex dispute involving a state-owned enterprise project finance deal gone bad followed by arbitration and litigation in several different countries (Karaha Bodas). There are two other speakers who I hope will agree to join us, first a senior American legal counsel working on transpacific transactions within a Japanese multinational, and second a senior Southeast Asian lawyer to talk about the issues arising in conjunction with Westerners contracting with sophisticated ethnic Chinese conglomerates.
Grading will be based on either (i) a research paper, or (ii) a final exam. Students may choose either assessment option. Part of the course will cover the Convention for the International Sale of Goods (CISG), and students adopting either assessment option will also be expected to complete during the quarter short written assignments working through CISG problems. Students wishing to write a research paper should talk early and often with the instructor, since you will be required to choose a topic in consultation with the instructor, produce an outline, followed by a first draft and then a final version of the paper. Note that you must confer with the instructor at least three times in the process: to chose a topic cooperatively, to review your writing outline together, and then for comments between your first draft and the final paper version.
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