The Laws of Asian International Business Transactions
52 Pages Posted: 26 Jun 2015 Last revised: 23 Aug 2016
Date Written: June 24, 2015
The purpose of this Article is to assess the preferences of parties to Asian international business transactions when they choose the law governing their contracts. For that purpose, I conduct an empirical analysis of unpublished data of the four main arbitral institutions active in Asia (outside Mainland China) for years 2011 and 2012. I find that three laws dominate the Asian market for international contracts: English law, U.S. laws and, to a lesser extent, Singapore law.
The Article makes three contributions. First, it documents the regional variations in parties’ preferences: the laws which are successful in Asia are different from those which are in Europe. Secondly, it shows that, while English and U.S. laws might govern an equivalent number of transactions, they are chosen in very different circumstances. U.S. laws are typically chosen in transactions between a U.S. and an Asian party where the parties also agree to settle their dispute in the United States under the aegis of the international division of the American Arbitration Association. These are thus transactions where the bargaining power of the U.S. party was strong, and enabled that party to impose choice of a U.S. dispute resolution institution and of a U.S. law. By contrast, English law is chosen in transactions between parties of all nationalities, in the context of arbitration under the aegis of almost all institutions, in proceedings with their seat anywhere in Asia. English law appears to be the only law to be considered as attractive to international commercial parties operating in Asia and seeking an option other than the laws of one of the parties.
Finally, the Article seeks to explain the remarkable attractiveness of English law in Asia. It explores whether certain substantive rules of English law might be especially appealing to international commercial parties, and whether the fact that many Asian jurisdictions are former English colonies might play a role. It concludes that the most convincing reasons are the wide presence of Commonwealth educated lawyers in Asia, and the fear of the American way of law.
Keywords: Choice of Law, Contracts, International business transactions, Regulatory competition, Asia, International Commercial Arbitration, Legal profession, Singapore, Japan, Hong Kong
Suggested Citation: Suggested Citation