The Situation in East Asian Law and the
Problems of Japanese Legal Technical Assistance

Profile
Professor Yasuda graduated in 1967 from Osaka Municipal University's Department of Jurisprudence. After working for the Asian Economic Institute, he joined Nagoya University in 1992. He is the author of Asia's Society and Law, published by Sanseido and ASEAN Law(published by Nihon Hyouron-sha) and edited An Introduction to Third World Development Law (published by the Asian Economic Institute).

Beginning with Thailand's financial crisis in 1997, Asia was struck by a serious economic recession which immediately spread to Indonesia, South Korea, Malaysia and the rest of East and Southeast Asia. More than two years have past and many of these nations have survived this period of economic crisis and we have been hearing that economic conditions are on the upturn. Distortion of the overall basic political situation and the economic structure rather than policy failures by individual financial authorities brought on the crisis. We can summarize the IMF and the World Bank position as follows.

The pattern of conduct of the policy and decision-making authorities, financial institutions and other organizations were closed to the outside world so there was a lack of sufficient disclosure by corporations which resulted in funds being funneled into real estate investments and other non-productive areas rather than productivity expansion. Within both the governments of these countries and within corporate management, there was a strong nepotism, that is, government-corporate mutual dependence, which led to procrastination in dealing with the crisis which, in turn, resulted in further a deterioration in the situation. As a result, while the ultimate cause of the crisis was the lack of transparency, the inability to function in a market economy which is the backbone of this system, contributed greatly to the problem.

To remedy this crisis, the IMF and other international financial institutions, on the one hand, imposed traditional tightening of financial policy as a condition of providing aid, which had the impact of worsening the crisis. On the other hand, they also urged drastic reforms of the legal system to improve the economic structure which had been based on the above noted nepotism-based capitalism.

Consequently, at the initiative of the IMF, the World Bank and the ADB, not only had the banking system, competition law, corporate law and bankruptcy law been reviewed, but drastic measures were taken to reinvent the entire legal system. Countries such as Thailand and Indonesia whose legal systems were based on Continental law, introduced on a large-scale, an Anglo-Saxon common law-based legal system which placed emphasis on disclosure and corporate responsibility which represented the international standard.

As a legacy of colonialism, the dominance of Continental law and common law are apparent in Asia. However commercial law and transaction law, due to the above-mentioned principle, merged and created almost a universal law.
However, there is legislation in individual countries which authorities do not fully comprehend, in either terms of objective or the purpose since many of them were created in haste by consultants (many of whom were from international law firms based in the West) hired by international organizations or by the government. Moreover, when Thailand was in the process of enacting its bankruptcy law, it appeared as though it was creating a system in which bankrupt domestic companies were sold off to foreign companies. This incited nationalistic feelings and delayed implementation of reform. We must learn from this and need to observe how laws are interpreted by the public.

The recent crisis created serious social problems such as high unemployment and poverty. Even though rapid economic growth and urbanization in the 1980s dismantled the informal interdependence organization of traditional societies, the state did not construct a public social security system in its place thereby worsening the crisis. Supposedly, of all the most seriously affected countries, South Korea was the only one that had anything resembling unemployment benefits. Others nations seriously affected by the crisis were Thailand and Indonesia. Currently, under the guidance of the UN and the ILO, rapid construction of public safety nets, including such components as social security systems, are being established.
Nonetheless, compared to developed nations, the system differs with the notion of traditional autonomy organization and reevaluation of the role of the NGOs being included in the policy. This indicates revitalization of community solidarity to reaffirm the social principles in place before the breakdown of the 1980s. As evident in the corporate law system, individual responsibility and competition are pillars to nurturing universal law.
Yet, reaffirming social principles seems to be moving in the opposite direction. The fusion and adjustment of these two contrasting values will be a priority in the 21st century. From that perspective, it will be interesting to see how these two values will adjust in the contemporary world.

It is only recently that the phrase "legal technical assistance" has been used. During the late 1980s, socialist countries seriously began to transform their economies into market-oriented systems. Thereupon, it became essential to establish a legal basic framework, including property rights and contract law. Moreover, it was essential for each of these countries to construct a modern legal system. It could be said that under a socialist regime, the legal framework of what was evident in the West was lacking. Western governments and international organizations, such as the IMF, the World Bank, the ADB, and the EBRD (European Bank of Reconstruction and Development (which was created to assist East European countries to transform their economies into market-oriented systems), supported various efforts to construct judicial and legal systems to conform with economic transformation.

Besides the activities noted above, in the area of criminal law and policy field, Japan has been involved with the United Nations Asia and Far East Institute for the Prevention of Crime and the Treatment of Offenders since 1962.
Additionally, other ministries supported particular efforts such as competitive policy and intellectual property law through JICA training programs.
Nonetheless, it was not until 1996 when the Ministry of Foreign Affairs, JICA and the Ministry of Justice undertook Japanese Cooperation to Support the Formulation of Key Government Policies on the Legal System for Vietnam, that the phrase "legal technical assistance" was used. Since then, these three institutions have expanded their horizons to provide legal technical assistance to Vietnam, Cambodia, Laos, China and Mongolia.
This assistance was provided in the form of JICA technical cooperation and promoted understanding of Japanese civil law, criminal law and procedural law.
Additionally, it convened seminars and dispatched professionals to conduct training for judges and professionals involved in the legislative process, in support of the legal system. The International Civil and Commercial Law Center Foundation (ICCLC) was established at the initiative of the Ministry of Justice in 1996 to provide training and convene symposiums in the civil and commercial law field with international cooperation.

In 1997, during the Asian crisis, it was revealed that many East-Southeast Asian nations had structural problems with their economy and society as a result of the dramatic growth of economy in 1980s. The lack of both transparency and corporate responsibility were not only problems in the former socialist countries, but in all East-Southeast Asian nations. To overcome these problems and construct a legal system, the IMF and the World Bank provided assistance to form corporate legal systems, as mentioned previously, to drastically reform these countries. In Japan, in addition to the providing support to former socialist countries, the ICCLC convened symposiums on international trade law and bankruptcy law for neighboring Asian-Pacific nations, including Australia. The Fair Trade Commission had also strengthened its legal assistance for policies involving competition.
The MITI and the Asian Economic Institute are planning to provide legal technical assistance as part of their industrial policy assistance research program into Asian corporate law, by constructing and strengthening bankruptcy laws, small and medium sized corporate legal systems and competitive law system, by convening joint seminars and research study with local and Japanese professionals.

Asia's legal technical assistance problem has attracted attention from academics. For instance, the University of Nagoya and University of Kyushu have expanded their quotas for exchange students in their graduate schools and have opened an information center for legal technical assistance.
Furthermore, next year, the topic of the legal technical assistance will be taken up in the comparative academic society.