With free trade emerging as a global norm for growth, new U.N. rules on transparency in disputes between investors and host countries will play a key role in bolstering their relations while providing greater public access to arbitration procedures, UNCITRAL’s regional chief said.
Debate remains fierce over the role and effect of an investor-state dispute settlement clause since South Korea and the U.S. clinched a free trade agreement that came into force in March 2012.
Opposition lawmakers and other critics have argued that what they call the “toxic” clause would undermine Seoul’s legal independence and regulation right, while trade officials say the mechanism is an essential safeguard for Korean investors and a universal part of investment deals worldwide.
The upgraded arbitration rules of the U.N. Commission on International Trade Law took effect last month after years of preparations. They now guarantee public access to settlement proceedings, documents and hearings which were confidential in the past.
“These rules on transparency introduce further transparency in good governance principle,” Joao Ribeiro, head of UNCITRAL’s regional center for Asia and the Pacific, said in a recent interview with The Korea Herald.
|Joao Ribeiro (Kim Myung-sub/The Korea Herald)|
“With this, I believe we make investor-state relations stronger, allow transparency and (build) public trust in these proceedings. So we make very strong contributions that investor-state arbitration remains the main way of solving disputes.”
The Vienna-based organization is a core legal body of the U.N. system with regard to international trade law and a major platform of commercial arbitration.
The Songdo, Incheon-based project office was launched in 2012 as UNCITRAL’s first sole regional center for a five-year term, with the goal of promoting trade and development by helping harmonize trade laws and providing technical assistance.
The Portugal native previously taught international law at the University of Macau, advised the Macau government on administrative law and served Lisbon’s Ministry of Justice as director of international affairs before joining UNCITRAL as the center’s inaugural chief.
Given the constant proliferation of bilateral and multilateral free trade agreements, he stressed the future significance of legal barriers and the agency’s role in assisting smaller enterprises to overcome them.
“The more you have free trade agreements, the more you remove taxation and other barriers so there will be a moment where barriers that remain are legal,” Ribeiro said.
“And (small and medium enterprises) do not have the resources that big companies have to have legal advice and to allow them to reach other markets. That’s where we are strong ― creating an enabling environment for more trade without legal barriers, removing costs especially for them.”
Though Seoul’s trade law is largely in line with global standards, he called for a swift ratification of the U.N. Convention on the Use of Electronic Communications in International Contracts, saying it will be a “very important (next) step.”
Korea signed the convention in 2008 but has yet to approve it due to potential conflicts with its domestic Framework Act on Electronic Document and Electronic Commerce in terms of legal recognition of electronic communications, invitations to make offers and locations of the parties, among other parts, experts say.
“It would be an important international sign of leadership if Korea could be the first in East Asia to ratify it,” Ribeiro noted.
“This ratification would give the legal basis to support the expansion of Korean e-commerce abroad, thus giving a concrete dimension to economic development through the establishment of a creative economy.”
By Shin Hyon-hee (email@example.com)