Part A
Ozco is a Sydney-incorporated company that invests A$3m in 2018 to established a joint
venture company in Bangkok (owned in equal shares with a private Thai company),
ThaiJVco, to produce and distribute home medical testing kits primarily for Thai, Australian
and Japanese end-users.
A month after the WHO declares the COVID-19 pandemic in March 2020, the Thai
government orders ThaiJVco and some other producers to limit all kit supplies only to
domestic users, declaring that this is essential for public health management of the pandemic.
Ozco is unhappy as this reduces the joint ventures profits considerably and some other
producers (with closer connections to the government, such as State-Owned Enterprises) do
not seem to be subjected to such restrictions.
As set infections spread, in June 2020 the government announces that it plans to nationalise
ThaiJVco to ramp up production of the kits and produce other medical supplies to address the
pandemic. It offers to pay Ozco A$3m in compensation, but the latter voices discontent
because by end-2019 an independent valuation of its investment was $5m. After fruitless
negotiations, in August 2020 the government publically alleges that that Ozco bribed some
officials to facilitate establishment of the JV, which Ozco completely denies.
Question A.1
Advise OzCo about its best options and related procedural law and practice issues to
resolve this dispute with the Thai government.
In September 2020, ThaiJVcos exclusive distributor of the kits in Japan, Jco incorporated in
Osaka, notifies termination of the distributorship contract. As grounds for termination Jco
points to the Thai corruption allegations, as well as non-delivery of the medical kits, resulting
in Jco becoming close to bankruptcy. After ThaiJVco counter-argues force majeure for nondelivery, in October 2020 Jco adds as another ground for termination that some of its own
buyers (consumers of the kits) are reporting that they contain serious defects causing personal
injury and/or emotional distress. Jco also refuses to make payments for some kits delivered
before the April 2020 export ban from Thailand, and threatens to seek the freezing of some
ThaiJVco funds held in Japanese bank accounts.
The written distributorship contract states that all related disputes must be resolved by
mediation administered in Kyoto, then if necessary subject to arbitration administered in
Osaka.2
Question A.2
Advise ThaiJVco about its best options and related procedural law and practice issues
to resolve this dispute with Jco.
In November 2020, some Thai consumers read news about the Japanese consumer complaints
about defective kits sourced via Jco, and they start to complain to ThaiJVco about similar
defects in some of their kits. A few file product liability claims in the Bangkok Civil Court.
Thailands main NGO, the Foundation for Consumers, starts hearing about and publicising
these claims. Discussion emerges across print and social media about a possible class action,
and that news also reaches some smaller NGOs and other consumer groups in Japan.
Question A.3
Advise ThaiJVco about the risks and issues around dispute resolution processes for
such consumer complaints in both Thailand and Japan.
Part B
Common Facts for Questions B.1, B.2 and B.3
AusCoal is a company incorporated in Queensland and specializes in coal exploitation and
exportation. It supplies coal to customers across the Asia-Pacific region. SingTech is a
company incorporated in Singapore and is famous for its special software to enhance the
strength of steel which is mostly produced by burning coal.
Because of the huge demand in coal and steel in China, early in 1995, AusCoal and SingTech
established a joint venture, China Coal and Steel (CCS), incorporated in Shanghai China.
CCS regularly buys coal from AusCoal and has an exclusive license to use the special
software designed by SingTech. CCS made a huge investment to build warehouses close to
the Shanghai port because the Shanghai Municipal Government signed a long-term contract
with it, which authorized CCS to use the Shanghai port to import Australian coal freely from
1995 to 2025. In return, the contract also required CCS to hire Chinese employees and license
the software to Chinese steel manufacturers who would buy coal from CCS.
Since its establishment, CCSs business in China has gone very well. However, in 2020,
according to the ABC News Report in Australia, due to the tension between Australia and
China, the Chinese central government suddenly issued informal instructions to prevent ships
carrying Australian coal from entering any Chinese ports, which included the Shanghai port.
When this apparent ban was issued there were several ships carrying the coal that CCS had
paid for that were on their way to Shanghai. All the ships were refused permission to be
anchored in the Shanghai port and any other Chinese ports for an indefinite period. It was
very hard for CCS to resell the coal quickly due to the bad global economy in the wake of the
COVID-19 pandemic. Consequently, CCS suffered a huge loss.
Question B.1
Advise CCS and its shareholders AusCoal and SingTech about their best options and
related procedural law and practice issues to resolve its dispute with the Chinese
government about using the Shanghai (or other Chinese) Port.3
Facts only for Question B.2
ChinaSteel is a state-owned enterprise in China and is CCSs largest coal buyer. However,
because ships carrying Australian coal are not allowed to enter Chinese ports due to the
scenario outlined above, ChinaSteel decided to look for other suppliers. AusCoal
recommends its subsidiary in Indonesia, IndoCoal, to CCS. IndoCoal specializes in
producing and exporting high-quality Indonesian coal. ChinaSteel has basically agreed to
sign a sales contract with IndoCoal and AusCoal. This contract provides that ChinaSteel shall
buy Indonesian coal worth of RMB 250 million (AU$ 50 million) from IndoCoal. The coal
will be shipped from Indonesia to China. However, they have disagreement on the drafting of
the dispute resolution clause in their sales contract. IndoCoal and ChinaSteel are concerned
about burgeoning costs and delays in international arbitration, so agree to resolve all disputes
arising from the sales contract through a cross-border litigation process.
Question B.2
Advise IndoCoal and AusCoal about the risks and issues to resolve their disputes in (1)
regular courts in China, Australia or Indonesia, or (2) international commercial courts
in either China or Singapore. You should also discuss the procedural issues to recognize
and enforce foreign judgments in Australia, China, and Indonesia, respectively.
Facts only for Question B.3
Australia and China have resumed a very friendly relationship. Ships carrying Australian
Coal are now allowed to enter Chinese ports. ChinaSteel continues to purchase coal from
CCS. SingTech licensed ChinaSteel to use the software to enhance the strength of steel.
However, the US government discovers that ChinaSteel is a company with a military
background, so it required all US companies including their overseas subsidiaries not to do
business with ChinaSteel. Because SingTech is a wholly owned subsidiary of a US company,
it has to comply with the US governments order. Consequently, it stops licensing the
software to ChinaSteel. ChinaSteel argued that, according to the Chinese Rules on
Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other
Measures, SingTech must continue to license the software to it.
Suppose that the software licensing agreement concluded by SingTech and ChinaSteel
contains the following clauses:
Clause 9: Governing Law: This contract is subject to English law.
Clause 10: Dispute Resolution: Parties agree to submit disputes arising from this
contract to arbitration administered by the Singapore International Arbitration Centre
in Shanghai China.
Question B.3
Advise SingTech about its best options and related procedural law issues to resolve its
dispute with ChinaSteel regarding the licensing of the software.