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Commentary by Dr. Sukjo KimIntroductory Remarks by Mr. Barry Metzger It is my pleasure to introduce Dr. Sukjo Kim. Dr. Kim has been an academic, a government consultant, a private practitioner and a corporate counsel. Educated at Seoul National University, at Yale University and Harvard, he also spent time studying at Oxford. During the course of his career, he served as a consultant to the Economic Planning Board, the Office of State Enterprise, and the Ministry of Home Affairs of the Korean Government. He served as a Professor of Law at Seoul National University and is a Research Associate at Harvard Law School. He practiced with the international firm of Paul, Weiss, Rifkind, Wharton & Garrison, and is presently serving as General Counsel at the Daewoo Group of Companies in the Republic of Korea, one of the most active Asian multinationals not only within the Asia-Pacific Region but with a global reach. Dr. Sukjo Kim I have been asked to comment on Dr. Mochtar's comprehensive and erudite presentation from the perspective of Asian foreign investors, particularly from countries that used to be called, until quite recently, newly industrializing countries (NICs). By way of expressing how relevant proceedings like this conference are to Asian foreign investors, I will first make some remarks about the recent investment patterns of these Asian multinational companies. There is no need to stress that the advanced markets such as the United States, Western European countries, and Japan continue to be vital, essential to the prosperity and survival of these companies. They are always exploring new investment opportunities and they continue to make a substantial investment in the advanced countries. However, the markets in the advanced countries tend to be too competitive and too saturated. These companies prefer the newly emerging markets such as the PRC, Viet Nam, the former socialist countries in Eastern Europe, Russia, and even the Democratic People's Republic of Korea, where the risk is higher and where they hope the yield will be higher too. These companies þ the companies from NICs (the Republic of Korea, Hong Kong, Singapore and Taipei,China) þ feel that they are constantly haunted by the predicament of being squeezed by the superior technology of Western competitors on the one hand and, on the other hand, the rising role of the NICs. So they regard these newly emerging markets as the last frontiers. In terms of experience with the legal regimes in these countries, they have to cope with the West, in particular the United States, and to a lesser degree European countries where they have felt commercial activities and business relationship are overly legalized and there seem to be too many laws and too many lawyers. Though the policymakers and the legal experts in the newly emerging markets have been working very hard to develop legal regimes that they hope will underpin market- driven economic development, an effective legal system, like Rome, cannot be built in one day. The incipient legal systems lack still many essential pieces. The laws and regulations that have been enacted are often drawn in imprecise and ambiguous terms and the possibility of a contract under such legal regimes is uncomfortably uncertain. This seems to conspire to remind these Asian multinationals of a Chinese- Korean or Korean-Chinese proverb. A boatman who buys a donkey or horse finds out that the treacherous mountain path winding like a sheep's intestine is more difficult to negotiate during a severe storm than a waterway. To practitioners who must fashion a viable legal structure for large-scale, complex transactions or investment projects in an uncertain legal environment, the development and the improvement of law, legal institutions and legal professions in the preferred host countries has become one of the most pressing tasks. It is a task over which they don't have very much control and in light of history in the advanced market economies, it will be unrealistic to expect that law and legal institutions will develop far ahead of dynamic changes in commerce and industry. I don't mean to disparage the power and the wisdom of an inductive approach. But there comes a time when our practical reason is empowered by necessity to make a determined and concerted endeavor in order to create an intellectual framework which would regulate and develop reality. So far we have subjected ourselves to the object or to the world. Why can we not try to subject the world to the object which is our reason? The function of the legal system in economic development is sometimes compared to that of a typical infrastructure as Barry Metzger and others did this afternoon. As a consequence of economic growth of the past 30 years, many Asian megalopolises have become notorious for horrendous traffic jams and the photochemical hazes which seem permanently hanging over such cities. The inadequately and haphazardly rebuilt systems of infrastructure are now hopelessly overloaded. The economic and social costs of the clogged, overloaded infrastructure and polluted environment appear incalculable. Though invisible and not so graphic, it may not be hyperbolic to suggest that a similar thing could be happening to the legal structure. The slow and the halting pace of development of law and the legal institutions in at least some of the host countries will seriously impede trade and investment in Asia. Clearly, the harmonization of subject rules and the procedures will greatly facilitate trade and investment from the prospective of cross- border investors. The more pressing task of the day is development and the improvement of the legal systems in the host countries. Though the relationship between law and economics is complex and indeterminate, it cannot be a mere accident or coincidence that advanced countries all have relatively autonomous, authoritative and reasonably competent, honest and consistent legal institutions. Such institutions are indispensable to a market exchange, for market exchange cannot be effected in the absence of a reasonable expectation that market agreements will be performed and enforced. Can many of the newly emerging market economies in Asia develop such a legal system, keeping up with the speed, the magnitude and complexity of economic growth? Either political, economic and cultural conditions may give rise to the evolution of a model legal order. This obviously is not an occasion to discuss these questions. I am raising these questions rhetorically to remind us of the magnitude of intellectual and practical tasks involved in the enterprise of law reform and development. So I can merely say that we can sensitize ourselves to the fact that institutions are built by men. We need people who will build the legal institutions. We need teachers, scholars, practitioners and policymakers and students whose life and career are bound up with the creation and the development of law and legal institutions in their country. There should be steadily increasing number of opportunities for them to critically study laws and the legal institutions of the more developed countries, of other places and other times, with the objective that such comparative learning will be used as an intellectual tool to analyze the specific circumstances of their own country on the basis of their culture, historical values and traditions. There are historical examples for the relatively successful adoption of law and the legal institutions of other countries, though over a long period of time. The "reception" of Roman law by Germany and other European countries, and the so-called adoption of the civil law systems of Europe by Japan in the late 19th century are examples. These short-hand references to legal reform and the reception of foreign law are misleading, though, because what was involved was a significant creative intellectual, political and social effort. We all know that the national will and the resources and the scholarship were mobilized to undertake these historic reforms. Earlier, it was pointed out that legal reform activities are taking place over the last 10 years to a greater extent than ever in Asia. We may be entering an era where at least some of these countries should take up the task similar to what Germans and the Japanese did in the 19th century. But as a practitioner, we cannot wait until these legal systems are in place. The business of commerce cannot stop. Life must go on. So whenever I go to countries where they have developing legal regimes, at least for commerce and business activities, I ask myself what are the things that would make me comfortable? What do I ask of the legal system at a minimum? I have the answer. The answer is that the agreements we are negotiating so laboriously with our partners should be enforceable. That would be the minimum, otherwise the whole exercise would be hollow. Many of these companies are willing to take their chances with the still incomplete, imperfect legal regimes; but one thing they expect of such a legal system is the relatively assured enforcement of contracts made under the aegis of such a legal regime, or with someone who is subject to that legal regime. I think internationally, regionally, what we can do is to create a mechanism or a procedure which would contribute toward increasing the possibility of enforceability of contracts in some of these countries. Anyone who has tried to have a foreign arbitral award enforced by a court in a foreign country can tell you all kinds of interesting war stories and horror stories, but their experience is the same. Under the New York Convention, all you have are five reasonably clear and legitimate self-evident grounds for refusing enforcement of a foreign award by a court. But you can go up and down in the judiciary of the country where you are seeking the enforcement and it will take four years, five years. In the meantime, the respondent becomes judgment proof. I think the way to avoid this þ you know I used to be, or I hope I was, a human rights advocate, I still am þ there should be a sort of minimum standards for human rights. You look at the countries, each country's legislation about the enforcement of foreign arbitral awards in particular, and then civil remedies in general. See if they live up to the minimum standards that would be agreed upon by the parties and then create a treaty regime and you have of course I think sanctions and the benefits for joining such a treaty regime. That came to my mind while I was listening to the presentation of Dr. Mochtar and others.
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