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p. 1 of 14 BACK | NEXT Opening Remarks by Mr. Barry Metzger Presentation of Prof. Mochtar Kusuma-Atmadja Commentary by Mr. Michael Ryland Commentary by Dr. Sukjo Kim Discussion

Seminar on Legal Aspects of Regional Cooperation

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Opening Remarks by Mr. Barry Metzger

Good afternoon, ladies and gentlemen. I am Barry Metzger, General Counsel of the Asian Development Bank. It is my pleasure to welcome you this afternoon on behalf of the Office of the General Counsel and on behalf of the Bank to our seminar on "Legal Aspects of Regional Cooperation" which is being held in conjunction with the Twenty-Ninth Annual Meeting of the Board of Governors of the Bank.

This is the second Annual Meeting seminar to be organized by the Office of the General Counsel and to be devoted to legal dimensions of the Bank's work in promoting the economic development of its developing member countries and in fostering regional cooperation towards that objective. Last year's Annual Meeting seminar, which was held in Auckland, New Zealand, was devoted to the legal aspects of the corporatization and privatization of state-owned enterprises in the Asia-Pacific Region and to the legal aspects of the private development of infrastructure, as private sector investment in infrastructure þ often referred to as "BOO" and "BOT" projects þ sweeps the Region and serves as a model to other countries in the developing world.

The topic of our seminar today is "Legal Aspects of Regional Cooperation". Before launching into that subject and introducing our distinguished speakers, I would like to take this opportunity to say a few words about the Asian Development Bank's interest in legal subjects as they relate to development and about the Bank's law-related technical assistance programming. These are often referred to as the Bank's Law and Development program.

Legal issues have played a part in the Asian Development Bank's lending and technical assistance programs since the Bank's earliest days in the late 1960s. It was not unusual for there to be a narrow slice of technical assistance þ expert international advisory services and training þ on legal subjects relating to, for example, an agricultural or financial sector loan. Typical of this tradition of legal assistance would have been advice on agrarian law reform, advice on legal rules and administrative structures to encourage the formation of water users associations among farmers, and advice on amended collateral security laws and systems for recording collateral security interests as part of a Bank loan to strengthen local development finance institutions. The attention to legal subjects on the development agenda has become more focused and more intense in recent years as governments have turned from central planning towards market- oriented models, as a result of political revolution or the conscious economic choice to pursue liberalization. The wholesale revamping of economic law, and in some countries administrative law, is taking place in Viet Nam, the People's Republic of China (PRC), Mongolia, the Lao People's Democratic Republic, Cambodia, Kazakstan, the Kyrgyz Republic and Uzbekistan, among the Bank's developing member countries; the landscapes of these legal systems are being reshaped. In other countries committed to economic liberalization þ among them, India, Pakistan, Sri Lanka and Bangladesh þ narrower, but quite significant legal and regulatory reforms are accelerating, to encourage the development and vigor of the private sector and to deal with new challenges þ for example, with crafting regulatory systems to accommodate and regulate industries þ such as electric power and telecommunications þ where state monopolies have given way to competition from the private sector and from foreign investors.

As I noted in my remarks last year, it has come to be recognized that, in the same manner as a packed dirt road does not provide adequate infrastructure for road transport by modern, heavy duty trucks (particularly in the rainy season), so outdated legal rules and lawyers (particularly government lawyers) with outdated legal skills are incapable of carrying the burden, often through equally stormy weather, of a modern commercial economy, the fate of which is determined by its ability to compete in the international marketplace as a producer of goods and as a provider of services.

The past year has been a significant year in the Law and Development programming of the Asian Development Bank. Most significant was the adoption by the Board of Directors in October 1995 of a policy paper, Governance: Sound Development Management. The Bank is the first multilateral development finance institution to develop sufficient consensus among its members to adopt at the Board of Directors a policy on what many describe as "good governance". The Bank's Governance policy recognizes the important contribution which the institutional framework in a country makes to such country's ability to achieve sustainable economic development. The critical attributes of effective governance are identified in the Governance policy paper as transparency, predictability, accountability and participation, and include explicit recognition of the importance of legal rules, legal institutions and legal personnel to effective delivery of such attributes of governance. The policy paper commits the Bank to evaluating each of its loans and investments and, in particular, to responding to requests from developing member governments for technical assistance and other financial support for institutional reforms, to achieve more effective governance as it relates to development management.

In speaking of governance and the year 1995, I should also note the approval by the Board of Directors of the establishment of an Inspection Function at the Bank. The Bank cannot promote good governance among its member governments unless the Bank itself effectively embodies the principles of transparency, predictabliltiy, accountability and participation. The Bank has become a more open and pro-active institution in recent years, adopting in 1994 a broad-ranging new Disclosure of Information policy and, over a period of years, expanding its work with nongovernment organizations (NGOs). By the establishment of an Inspection Function, the Bank has created procedures whereby community groups in its developing member countries who believe they have been, or will be, materially and adversely affected by a Bank-financed project by reason of a failure of the Bank to observe its own operational policies and procedures, can seek review of that action by the Board of Directors, assisted by a panel of independent experts. The Inspection Function is scheduled to become operational at the Bank in June 1996.

In 1995 and in these opening months of 1996:

• The Bank has been providing technical assistance administered by the Office of the General Counsel to PRC on State Enterprise Insolvency Law Reform. This is an area of central importance to the Government's consideration of further reform in the state enterprise sector, in which inefficient and often insolvent state- owned enterprises continue to draw heavy subsidies from government. Such technical assistance has also focused on social assistance and retraining to deal with employees displaced by the liquidation, reorganization and restructuring of insolvent state enterprises.

• The Bank is providing technical assistance to the Governments of Viet Nam, PRC, Mongolia and Cambodia focusing on institutionalizing mid-career training for government lawyers who advise the "front line" development ministries and for other members of the legal community, including the judiciary. In each of these countries a legal revolution is taking place, with large numbers of new laws and regulations þ many of them quite strange to legal professionals trained in communist legal ideology. Government lawyers and judges charged with administering and enforcing such laws and regulations are in need of comprehensive retraining: to learn about the laws and regulations they are to administer and enforce and to be trained in new skills of legal analysis and negotiation required by their new responsibilities.

• The Bank has recently approved financial assistance to the National University of Singapore and the World Conservation Union (IUCN) for a program to develop environmental law courses at universities throughout the Asia-Pacific Region for the benefit of lawyers and non- lawyers. The program responds to the troubling slowness with which knowledge about international and national environmental laws is being absorbed by lawyers, academics and government personnel in the Region. Within the Bank, the technical assistance is being administered jointly by the Office of the Environment and the Office of the General Counsel.

• Consultants will be fielded next month under a Small-Scale Technical Assistance grant to the Government of India for Training in Alternate Dispute Resolution. As part of the Government's economic reform program, attention has been focused on the impediments which the court system presents to the expeditious resolution of commercial disputes. In conjunction with promulgation by the Government of a Conciliation and Arbitration Ordinance, the Bank is providing assistance to the Ministry of Law, Justice and Company Affairs and to the [Indian] International Centre for Alternate Dispute Resolution for development of a model training program for Indian conciliators and mediators.

• The 1995/96 Law and Development projects and technical assistance which I am citing do not constitute an exhaustive listing of such activities. I will end my illustrative list with what we refer to in the Office of the General Counsel as "RETA III", a comparative research study and program development exercise formally entitled "The Role of Law and Legal Institutions in Asian Economic Development". The period 1960-1995 has been a period of dynamic economic and social change in many countries in the Asia-Pacific Region. The dimensions of those economic changes have been extensively studied. The dimensions of those social changes, such as urbanization, have also been the subject of extensive study. Yet in the same countries there has been little study and analysis of how their legal systems have changed over that 35-year period and little study and analysis of how those changes relate to the economic and social changes which have been so painstakingly documented. Using an interdepartmental working group within the Bank chaired by the Office of the General Counsel, Asian and international scholars will examine these changes and relationships in and across six Asian countries þ Japan, the Republic of Korea, PRC, Indonesia, Thailand and India. An effort will be made to draw lessons from the experience of such countries which will be of assistance to the Bank, to our developing member countries and to other development assistance organizations in using the legal system to foster economic and social development objectives.

In addition to direct assistance to the Bank's developing member countries, the Bank has sought to play a leadership role in fostering greater attention on development-related legal issues within the Asia-Pacific Region, in encouraging greater academic research in the field, and in fostering greater communication, interchange and coordination between development assistance organizations (in both the public and private sectors) which are interested in such issues. Publications launched by the Office of the General Counsel in 1995 have been:

LAW AND DEVELOPMENT AT THE ASIAN DEVELOPMENT BANK. This provides an overview of the Bank's work in the Law and Development field. A new edition of this publication has just been released, edited by my colleague in the Office of the General Counsel, Henry Pitney.

LAW AND DEVELOPMENT: AN ASIAN BIBLIOGRAPHY. In conjunction with this meeting, we are releasing the 1996 edition of the BIBLIOGRAPHY which seeks to identify current scholarship on legal issues of relevance to economic and social development in the Bank's developing member countries. The BIBLIOGRAPHY has been compiled by Susan Amomoy, the Office of the General Counsel's very able librarian.

LAW AND DEVELOPMENT BULLETIN. The BULLETIN is a quarterly publication of the Office of the General Counsel and lists, for each of the Bank's developing member countries which are eligible borrowers, law-related technical assistance projects þ both existing projects and proposed projects þ at the Bank and at other development assistance organizations such as the World Bank, USAID, AusAID and The Asia Foundation. Issue number 4 has just been released and the Bank receives continuous feedback about the contribution which the BULLETIN has made to knowledge in the region about law-related technical assistance. The BULLETIN's success is a tribute to its editors, my colleagues Eveline N. Fischer and John A. Boyd, both of whom are Senior Counsel in the Office of the General Counsel.

Each of these Law and Development publications, among others, are available in hard copy from the Office of the General Counsel.

My colleagues suggested that, at this stage in my presentation, I should pull out a surfboard and a gavel to demonstrate what it looks like when an international lawyer goes surfing on the Internet. Not wanting to frighten the audience, I have declined to do so. I do, however, wish to mention LAW-DEV, an Internet forum launched ten weeks ago by the Office of the General Counsel. Accessible to anyone with an e-mail address, it is an informal network of development assistance agency staff, developing country government officials, academics, practicing lawyers and law students around the world who are interested in law and development. Only ten weeks old, LAW-DEV links together 450 subscribers in more than 20 countries. If you are interested in subscribing, send an e-mail message on the Internet to MAJORDOMO@IPHIL.NET and in the body of the message simply state SUBSCRIBE LAW-DEV. LAW-DEV has been created at the Office of the General Counsel by one of our lawyers, Omar Hayat Tiwana, with support from the Bank's Office of Computer Services.

Finally, in talking about the Bank's Law and Development programming, I wish to pay tribute to the lawyers of the Office of the General Counsel. In addition to serving as "traditional lawyers" representing the interests of the Bank as a lender and investor and as a borrower in the international capital markets, lawyers of the Office of the General Counsel provide advice to governments on project-related law reforms, design and administer legal technical assistance programs, and write and speak on subjects of law reform and legal development. It is one of the things which distinguishes and dignifies the contribution which such lawyers make to the Bank as an institution and to the developing countries which the Bank serves. I want in particular to mention the contribution of Jeremy Hovland, Assistant General Counsel, who coordinates the Office's Law and Development activities.

Let us turn to the subject of today's seminar.

The theme of our seminar þ Legal Aspects of Regional Cooperation þ is central to one of the principal reasons for establishment of the Bank: to foster regional cooperation on economic issues. That objective is embodied in the opening provisions of the Bank's Charter. Chapter I, Article 1 of the Charter opens with the words:

"The purpose of the Bank shall be to foster economic growth and co-operation in the region of Asia and the Far East...."

The Region has been the scene of dramatic economic growth. International trade and domestic investment, including foreign investment, have been important factors which have contributed to such dramatic economic growth. One of the strongly emerging patterns in such international trade and foreign investment is the growth of intra-regional trade and investment: Asians producing goods for Asian markets and Asian investors investing in productive enterprises in other Asian countries, though still within the broader context of very strong trans-Pacific trade and investment.

Here, as in many other contexts, when we speak of the Asia-Pacific Region, we must be careful about being drawn to overly broad generalizations. The Region, and the countries which comprise it, are remarkably diverse. That diversity extends to the legal and regulatory systems of the countries of the Region, which have been shaped by tradition, national history, colonial heritages, and differing economic and political agendas over time.

We are in the midst of a period of rapid legal change in many countries of the region, as I have noted in my remarks about the Bank's Law and Development activities. We are also in the midst of a period in which regional economic cooperation is receiving greater attention than at any time in the past thirty years. The role of the Asia Pacific Economic Cooperation forum (APEC) in developing an agenda and commitments to freer trade within the Region has been greater than anyone had anticipated at the time of its formation. The Asian-European Ministers Summit recently held in Bangkok aspires to a European-Asian trade and investment agenda similar to the trans-Pacific agenda of APEC. The Association of Southeast Asian Nations (ASEAN) and the South Asian Association for Regional Cooperation (SAARC) are increasing their attention to issues of regional trade and investment. The focus, particularly of APEC and the Asian-Economic Summit has been on lowering tariffs and facilitating commercial travel and removing immigration control barriers to trade and investment activity. The APEC meeting in Osaka last year also saw attention being focused, I understand on the initiative of the Japanese Government, on greater regional cooperation on intellectual property protection and licensing issues.

To what extent do national legal systems þ the national diversity of legal systems and legal rules þ constitute impediments to trade and investment in the Region? If such diversity is an impediment to freer trade and investment, what can be done to improve the legal climate for such trade and investment? What should be done by lawyers, in government and the private sector, by governments and by the business communities to address these issues?

These are the questions which we seek to explore this afternoon.

To address these questions, we have brought together a distinguished group of speakers and we also look forward in the discussion period to your views on these questions. Our speakers this .afternoon, about whom I will have more to say in a few moments, are Professor Mochtar Kusuma-Atmadja of Indonesia, Mr. Michael Ryland of Australia and Dr. Sukjo Kim of the Republic of Korea. Dr. Fred Bergsten has had to return to the States from his Asian trip and, unfortunately, has not been able to join us this afternoon.

In searching for an appropriate speaker to deliver the principal address this afternoon on "Legal Aspects of Regional Cooperation" we realized that a unique combination of perspectives and experience was required. The subject is too important to be left to a "traditional lawyer" as legal practitioner. The subject requires the perspectives of a diplomat, a government law minister, a leading academic and a legal practitioner familiar with the world of commerce. Our principal speaker today embodies that unique combination - Professor Mochtar Kusuma-Atmadja, who is a legal scholar and educator, a legal practitioner, and has served as Minister of Justice and Minister of Foreign Affairs of the Republic of Indonesia.

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