Integration and International Dispute Resolution in Small States

This chapter provides an overview of the themes the authors explore in the remainder of the book. It does so by weaving a red thread through the contributions. Importantly, the chapter lays the foundations for an in-depth understanding of what is a Small State and what makes scholarship regarding Small States so important.

The growing number of international dispute settlement mechanisms over the past decades has been critically addressed in academic literature. Concerns have also been voiced as to whether ‘small states’ as specific actors are disadvantaged in their participation in international dispute resolution. When such dispute resolution mechanisms are incorporated in regional integration schemes, similar concerns arise: small states participating in these integration processes, it is argued, face particular challenges due to their lack of quantitative resources, not least due to their narrow population base. This article analyses dispute resolution mechanisms of two regional integration schemes—the Caribbean Community (CARICOM) and the currently negotiated Pacific Agreement on Closer Economic Relations (PACER)-Plus—in order to ascertain whether these mechanisms fit challenges resulting from the smallness of the participating member states.

In the Caribbean two sub-regional integration movements, the Caribbean Community (CARICOM) and the Organisation of Eastern Caribbean States (OECS), are developing and strengthening their regional economic regimes. CARICOM is assisted by the Caribbean Court of Justice (CCJ), a court that serves two distinct roles. Under its appellate jurisdiction the CCJ acts as a final court of appeal; under its original jurisdiction the CCJ acts as an international, treaty-interpreting tribunal. After providing a brief overview of the two Caribbean regional integration movements, the chapter examines the potential of judicial enforcement of treaty rules through the CCJ, particularly in the context of conflicting national legislation. It also scrutinises the practical problems of a closer co-operation regime for CARICOM, in light of recent OECS initiatives, and finishes with concluding observations.

Beginning in the mid-1990s, a wave of company and securities regulation law reform flowed from New Zealand across the South Pacific. The model for reform was the Companies Act 1993 (NZ) and, to a lesser extent, the now repealed Securities Act 1978 (NZ). The Kingdom of Tonga was the first to adopt a version of the New Zealand Companies Act in the Companies Act 1995 (Tonga). Papua New Guinea looked to the New Zealand model in the Companies Act 1997 (PNG) and the Securities Act 1997 (PNG). Four other jurisdictions followed New Zealand: Samoa; Niue; the Solomon Islands, and, the Republic of Vanuatu. Some aspects of the New Zealand design architecture were especially influential such as the placing of machinery provisions in schedules, the abolition (in PNG and Tonga) of the private company/public company distinction and the carving out of securities regulation into a discrete statute following the example of the Securities Act 1978 (NZ) in PNG and Samoa.

This paper argues that the definition of consumer in Fiji should be broadened to include the micro and small enterprises (MSEs). A survey conducted by the National Centre for Small and Micro Enterprises Development in Fiji provides a deep insight into the operation of MSEs in Fiji. The survey findings reveal that MSEs are vulnerable and could be easily exploited by larger companies in the market. One of the ways in which MSEs could be protected is by providing them with the consumer-level protection. This paper argues that MSEs are eligible for consumer protection because like consumers, they also have poor bargaining power, less expertise in making an informed purchasing decision and significant difficulties in seeking remedies against the large suppliers. The paper further contends that the definition of consumer must not only be widened in the general consumer protection law but in the consumer credit legislation and with respect to unfair contract terms too. The arguments against the proposal to broaden the definition are that all businesses, regardless of their size, should be treated the same, there are other relevant laws for the protection of business-consumers and that it would put extra burden on the suppliers, many of whom are small businesses themselves. The paper ends with a draft definition of consumer which includes domestic consumers, micro businesses, whether purchasing for business use or re-sale and small businesses purchasing for business consumption.

The close link between aid and trade means that for developing countries dependent to a greater or lesser extent on financial support from external sources, autonomy in determining the frameworks to support commercial relations with external partners are severely constrained. The agenda is driven largely by developed economies using laws with which they are most familiar and which consequently become integrated into trade agreements. For those countries which are persuaded to sign up to the World Trade Organisations (WTO)—and this includes several Pacific island states (PICs)—this means incurring obligations to comply with TRIPS and TRIPS Plus agreements (TRIPS stands for Trade-Related Aspects of Intellectual Property Rights). Even for those countries outside the WTO, regional trading agreements with developed economies such as Australia and New Zealand [PACER and the proposed PACER-Plus; PACER is the Pacific Agreement on Closer Economic Relations (see below)], or the European Union through inclusion in the Asia, Caribbean, Pacific group (EU-ACP Agreements) may include intellectual property obligations either expressly or obliquely—the so-called ‘spaghetti bowl’ of overlapping and intersecting free-trade agreements (A term coined by Jagdish Bagwati, ‘US Trade Policy: The Infatuation with Free Trade Agreements’ in Bhagwati and Krueger (eds) The Dangerous Drift to Preferential Trade Agreements, AEI Press, 1995). Historically, the purpose of intellectual property laws introduced into the legal systems of small states was to protect the commercial interests of colonisers, not the interests of indigenous people (Even today most applications are by non-indigenous people. See Susan Farquar, ‘A Regional International Property Rights Office for the South Pacific: Cost-Benefit Analysis’, Pacific Studies Series – towards a New Pacific Regionalism, Volume 3: Working Paper No 16, Asian Development Bank, Commonwealth Secretariat, Joint Report to the Pacific Islands Forum Secretariat, 2010). They were rarely used, poorly understood and expensive to implement. Post-independence many of these laws remain. Others have been modified and in recent years some attempts, albeit with limited success, have been made to bring within the same intellectual property umbrella indigenous perceptions of intellectual property, traditional knowledge and expressions of traditional culture. Among the underpinning difficulties are the failure of regional initiatives, tensions between different stakeholders, conflicting agendas at ministerial and local levels, fundamental misunderstandings about rights to intellectual property and lack of resources to implement or enforce legislative provisions. In attempting to both protect and preserve indigenous intellectual property and foster creative industries, promote tourism and utilize natural resources—including a wealth of bio-diversity, for commercial advantage, small states face a number of dilemmas. This paper looks at recent developments in Pacific island small states triggered by commercial relations and draws attention to some of the challenges that arise when the law tries to encompass very different value systems within national frameworks informed by international imperatives.

The growing prominence of small jurisdictions in cross-border corporate and financial services over recent decades has raised a host of complex and highly contentious issues that remain exceedingly difficult to resolve. How small jurisdictions relate to larger markets in various fields of cross-border finance; what challenges small jurisdictions face as they work to develop capacity in their respective fields of specialisation; and what opportunities might arise that small jurisdictions would be uniquely well positioned to pursue, are all matters that involve numerous professions, disciplines, and regulatory fields. These questions are also intimately bound up with hotly contested political and diplomatic debates regarding the propriety and legitimacy of various modes of cross-border regulatory competition—and as in other such fraught contexts, much turns on how the debate is framed, and the perspective from which one views the issues at hand.

The chapter takes issue with reoccurring claims by NGOs and pressure groups that certain Small States and Overseas Territories are tax havens. It argues that IFCs in Small States fulfil an important function.

Small states can sometimes be slow to change, but in some instances, their size gives them a degree of agility that larger States do not have to respond quickly to global changes. This chapter seeks to explore the ways that small jurisdiction IFCs can respond to the shift in public opinion about international finance shown in the responses to the Panama and Paradise Papers by putting human rights concerns at the heart of the way they do business in the future.

Current mechanisms for resolving cross-border disputes through national court litigation pose substantial risks to business engaged in international trade, including the risk of conflicting national laws, biased, inefficient, inexperienced, or otherwise unsuitable decision-makers, inconsistent and duplicative national court proceedings, and severe obstacles to the enforcement of judgments. These shortcomings inhibit cross-border trade and investment, in some instances denying parties effective access to justice. The impact of these deficiencies is felt more by developing small States that are traditionally disadvantaged market participants. This paper discusses the role that international arbitration can play in alleviating these obstacles to trade for small States. In particular, through the use of international arbitration, including the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the UNCITRAL Model Law on International Commercial Arbitration and bilateral arbitration treaties (BATs), small States will be able to mitigate the risks and uncertainties posed by the existing mechanisms for international dispute resolution, thereby promoting international trade and investment.

A symbiotic relationship is a biological interaction, optional or obligatory, as the case may be, where dissimilar organisms cooperate with each other to survive or improve their ‘life quality’. In such a relationship, both organisms benefit from this interaction, which could be termed a “win-win” scenario. If we take this analogy and transpose it to international arbitration and governing contract law, these questions may come to mind: how much weight is attributed to arbitration and governing contract law choices in cross-border transactions? How is this relationship nurtured? Is it nurtured at all? Is there any connection between arbitration and choice of law of which we should be aware?

International Financial Centres that operate in Small States are commonly known as Small States International Financial Centres (“SS IFCs”) and they act as tax neutral zones and consequently provide investors with the necessary business climate to invest in those jurisdictions. Most of these Small States are developing nations. Even though they have an existing investment regime, they have not been able to establish themselves as international trade centre because of various demographic, economic, geographical reasons and hence substantially lack behind in growth and sustainable development goals as compared to big states.

In the early 2000s, Kosovo found itself in a post-conflict environment with a rapidly evolving commercial market. That, accompanied by a dysfunctional and inefficient court system, gave rise to the need for alternative dispute resolution mechanisms. In view of these developments and local courts being consistently regarded as unsuitable to the demands of the market, many benefactors, including the United States government and the European Union, committed to contribute to the establishment of commercial arbitration, as an alternative to local courts. Particularly, the support has been channelled through the adoption of a pro-arbitration legal framework. Thus, Kosovo adopted a stance in support of arbitration through its relatively new arbitration law, which naturally lead towards the establishment of arbitration institutions, and later the outward support for arbitration in investment disputes. These recent developments bring Kosovo in line with an international arbitration mentality, and the country has made a solid resolution to support such a change.

The rise of globalisation and the expansion of international commerce and free market principles have resulted in a need to readjust our approach to resolving disputes. At the international level, litigation comprises a framework within which municipal and international rules are applied to disputes between private individuals or entities that are primarily based in different countries or to legal disputes that have a “foreign” component. The issues that are typically the subjects of international litigation can range from the validity of service of process; the Court’s personal jurisdiction over defendants; and the recognition and enforcement of foreign judgements and awards. The law to be applied in the resolution of these disputes will depend on several factors, including where the action is filed, and the existence of any written agreement between the parties with a choice of law clause. The Caribbean Basin has long been an attractive region for trade relations with the outside world, particularly North America and Europe. This is due in large part to the region’s strategic location as well as its social and economic stability that has been enhanced by the operations of the Caribbean Community (CARICOM) and its supporting institutions. However, as a result of a high level of open trade practices, the geographically small islands of the region are highly susceptible to external influences. The proliferation of bilateral and multi-lateral agreements around the Caribbean region and globally can be viewed in large part as a means of addressing some of the issues that arise from trade disputes. Prior to this, cross-jurisdiction trade disputes were primarily resolved in the national courts of one party’s home country which often times raised questions relating to the appropriateness of municipal judges as adjudicators of international disputes.

Rising costs in international dispute settlement may be viewed as an issue of access to justice. In particular, economic, environmental, or military crises may disproportionately affect developing States, which are in this manner rendered more vulnerable to higher volumes of claims. While cost-saving measures have taken on systemic importance in international dispute settlement across a range of party dynamics, they have arguably surfaced in the most varied ways in inter-State proceedings. The present chapter analyses the institutional, independent, and mutual paths toward greater cost-efficiency in such cases, and identifies specific innovations that can be adopted to better meet this objective. In so doing, the author highlights disputes in which small States with limited financial or human resources have promoted the growth of cost-saving strategies in litigation and arbitration.