Volume 8, Number 2 (March 1999)

ARTICLES

POTENTIAL DISREGARD OF THE CORPORATE ENTITY & U.S. SUBSIDIARY INVOCATION OF JAPANESE PARENT'S TREATY RIGHTS, Eric K. Kawabata

 

THE 1997 DEREGULATION OF JAPAN'S HOLDING COMPANIES, Andrew H. Thorson and Frank Siegfanz

TRANSLATION

AN INQUIRY INTO SEVERAL DIFFICULT PROBLEMS IN ENACTING CHINA'S UNIFORM CONTRACT LAW, Wang Liming, translation by Keith Hand

 

COMMENTS

ARBITRATION FAILS TO REDUCE FOREIGN INVESTORS' RISK IN CHINA, Charles Kenwothey Harer

 

ARE YOU MY MOMMY, OR MY BIG BROTHER?  COMPARING INTERNET CENSORSHIP IN SINGAPORE AND THE UNITED STATES, Lewis S. Malakoff

 

A UNITARY ASEAN PATENT LAW IN THE AFTERMATH OF TRIPS, Christian H. Nguyen

 

A LOOK AT DAMAGE AWARDS UNDER JAPAN'S TRADEMARK LAW AND UNFAIR COMPETITION PREVENTION LAW, Masumi Anna Osaki

 

 

POTENTIAL DISREGARD OF THE CORPORATE ENTITY & U.S. SUBSIDIARY INVOCATION OF JAPANESE PARENT’S TREATY RIGHTS

Eric K. Kawabata

      Abstract:  U.S. corporate subsidiaries of Japanese parent companies enjoy the same advantages of incorporation (e.g., liability limited to the amount of investment) and the same legal protections extended to domestically-held U.S. corporations (e.g., access to courts and various legal remedies).  Thus, it would be a natural and logical assumption that U.S. subsidiaries of Japanese parent companies are required to comply with U.S. law in the same manner as domestically-held corporations.  However, some U.S. subsidiaries, by asserting that they are, in reality, inseparable from their Japanese parent companies, have been allowed to avail themselves of exceptions to U.S. law under the U.S.–Japan Friendship, Commerce and Navigation Treaty (“FCN Treaty”).  Thus, the paradox arises where Japanese subsidiaries are not required to comply with provisions of the U.S. legal system, but enjoy the same advantages of incorporation and legal protection as domestically-held U.S. corporations.  A notable example of such use (or misuse) of the FCN Treaty is the avoidance of liability for discriminatory practices in employment, in particular, wrongful discharge.  However, as this Article explains, such use of the FCN Treaty is not without consequence, as the invocation of Treaty rights by a U.S. subsidiary poses the potential danger of disregard of the corporate entity and thus unlimited liability to the Japanese parent company.

 

 

THE 1997 DEREGULATION OF JAPAN’S HOLDING COMPANIES

Andrew H. Thorson and Frank Siegfanz

        Abstract:  In 1947, Japan enacted the Act Concerning Prohibition of Monopolization and Maintenance of Fair Trade (“AMA”), known to some as the “Economic Constitution of Japan” because of its fundamental role in structuring Japan’s economy.  Among the most profound legislative provisions the 1947 AMA introduced to Japanese economic law are an absolute prohibition on pure holding companies and strict regulations upon stockholding by certain other types of companies.  The legislature established these provisions as part of a plan to de-concentrate excessive economic power then wielded in the Japanese economy by large integrated enterprise complexes known as the zaibatsu.  Fifty years later, in 1997, Japan enacted the Act for Partial Amendment of the AMA which eliminated the absolute prohibition on pure holding companies and relaxed regulations on stockholding by other types of companies.  This Article discusses the 1997 AMA revisions and explores their historic legal, political, and economic significance, all of which have been a topic of great notoriety in Japan but thus far have received little comment from legal scholars in other nations.  

 

 

AN INQUIRY INTO SEVERAL DIFFICULT PROBLEMS IN ENACTING CHINA'S UNIFORM CONTRACT LAW

Wang Liming

Translation by Keith Hand

        Translator’s Forward:  In March of 1999, China’s Ninth National People’s Congress (“NPC”) passed the Contract Law of People’s Republic of China.  The new law is the product of nearly six years of drafting work by China’s Legislative Affairs Commission and contains over 400 articles, including 129 general contract provisions and 299 articles dealing with specific types of contracts.  When the law takes effect on October 1, 1999, it will unify China’s contract law by replacing the three principal contract statutes currently in force, the Economic Contract Law, the Foreign-related Economic Contract Law, and the Technology Contract Law.  The passage of this statute is thus a significant milestone in the development of China’s contract regime.

        The article translated here was originally published in the Chinese law journal Zhengfa Luntan in 1996.  The author, Professor Wang Liming of the People’s University of China, has written numerous articles on contracts and was intimately involved in the drafting of the Contract Law as an NPC deputy.  He is thus well qualified to provide insight into the drafting process.  For those seeking to understand the new statute, this article provides an introduction to Chinese contract theory as well as a comprehensive analysis of the policy considerations and practical problems that influenced the drafters of the Contract Law.  Some minor revisions to the original text have been made with the cooperation of Professor Wang.  In addition, translator’s notes have been included to clarify aspects of Chinese law that may be unfamiliar to Western readers and to direct the reader to supplementary source material. 

 

ARBITRATION FAILS TO REDUCE FOREIGN INVESTORS’ RISK IN CHINA

Charles Kenworthey Harer

        Abstract:  Arbitration is often perceived as a fair and efficient method of reducing risk associated with business transactions and investments.  In China, Arbitration is constrained by statute and local protectionism such that arbitration can fail to live up to the expectations of foreign investors.  Arbitration in China divides all disputes into domestic or foreign-related disputes, with different procedures for each, and different standards for enforcement and judicial review of those awards.  Local protectionism presents a substantial risk to foreign parties involved in arbitration.  A general lack of expertise in foreign-related disputes law, and difficulty in enforcing arbitration awards in favor of foreign parties in Chinese Courts are major problems that investors must consider.  In contrast, Chinese parties that receive arbitration awards will be able to pursue enforcement in foreign countries based on the New York Convention of 1958.

 

ARE YOU MY MOMMY, OR MY BIG BROTHER?  COMPARING INTERNET CENSORSHIP IN SINGAPORE AND THE UNITED STATES

Lewis S. Malakoff

        Abstract:  Governments across the globe are grappling to find an appropriate and effective way to regulate Internet activity. Singapore’s experience with Internet regulation is particularly instructive, illustrating the inherent tension when a government simultaneously champions the Net’s commercial, educational, and social potential while attempting to protect its population from material that offends the community’s normative sensibility.  Singapore has enacted regulations that require Internet Service Providers to filter content at the network level through the use of proxy servers.  In addition, Singapore has issued an Internet Code of Practice that establishes the framework for acceptable speech in cyberspace.  In the United States, Congress faces a similar struggle: constructing an appropriate legislative response to issues posed by the Internet while balancing competing interests of free speech and community values.  Despite political, cultural, and social differences between Singapore and the United States, both nations’ fledgling attempts to regulate the Internet have been driven by similar goals and have led to remarkably similar conclusions.  Regulation in cyberspace presents challenges that transcend national idiosyncrasies and will potentially push divergent nations toward a common legal regime in which a limited market-driven response might provide the most effective instrument of control.

 

 

 

A UNITARY ASEAN PATENT LAW IN THE AFTERMATH OF TRIPS

Christian H. Nguyen

        Abstract:  Members of the Association of Southeast Asian Nations (“ASEAN”) have come to recognize that rigorous protection for industrial and technological innovations is essential to the economic viability of the Southeast Asian region.  This recognition has heightened since the inception of the Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPs”).  TRIPs imposes minimum standards for patent protection upon signatories to the World Trade Organization, which includes most of the ASEAN member countries.  Strict compliance with TRIPs standards can severely aggravate the administrative deficiencies in national patent systems, but such deficiencies can be considerably alleviated with the institution of a regional patent scheme for the administration of patents.  In addition to the definite advantages that an ASEAN Patent Office will present for individual countries, the ASEAN members can also ensure patent owners optimum patent protection only with the adoption of uniform post-grant enforcement procedures.  In the absence of such procedures, patents granted in either the national ASEAN offices or the regional office would be accorded inadequate protection in light of existing weak enforcement mechanisms for intellectual property rights.  These weaknesses are exacerbated by cultural and political norms unfavorable to national efforts at heightened protection.  Accordingly, a unitary ASEAN patent law is indispensable if the ASEAN countries are to maintain internationally competitive markets and achieve vigorous economic development.

 

 

A LOOK AT DAMAGE AWARDS UNDER JAPAN’S TRADEMARK LAW AND UNFAIR COMPETITION PREVENTION LAW

Masumi Anna Osaki

        Abstract:  Although the United States and Japan have similarly worded intellectual property statutes, significant differences in the stated statutory objectives as well as the substantive rights protected by those laws give rise to concern over the scope and quality of intellectual property protection offered in Japan.  Collectivist values that frown upon personal gain have contributed to the less-than-adequate enforcement of individual intellectual property rights in Japan, and this socio-judicial ethic has been consistently reflected in the minimal damage awards granted by the courts.  The courts’ traditionally narrow construction of damage provisions in the intellectual property arena has resulted in the limitation of damage awards to a minimal lost-royalty amount, which in turn resulted in a lack of deterrence effect.  A number of recent cases, however, indicate that Japanese courts may be in the process of re-assessing their traditional stance with respect to intellectual property enforcement.  This Comment addresses the recent Michelin decision and considers whether this case may represent a shift in Japan’s intellectual property jurisprudence.