On Legal Harmonisation Within ASEAN

by Joanne Wong

While the Association of Southeast Asian Nations (“ASEAN”) has readily embraced the concept of the rule of law, it has been slow to adopt binding legal frameworks to govern the relationships between its members. Instead, it prefers to operate on the basis of ad hoc understandings and informal agreements. This “ASEAN Way” of musyawarah (consultation) and musfakat (consensus), as contrasted against the formal legalism of most Western international institutions, is deeply embedded in the processes and structures of ASEAN. It has since been widely recognised as the key to ASEAN’s success – or, at least, survival – as a regional entity.

However, ASEAN’s disinclination towards the use of “hard” legal mechanisms has been questioned in light of the proliferation of cross-border trade and an increasing dependence on external trade and investment within the region. This has been accompanied by an urgent need for a viable legal framework for trade and investment that has, till date, yet to materialise. As observed by Chief Justice Sundaresh Menon, “it is still not possible to speak of a “Southeast Asian” commercial law in the way one might speak of European commercial law”1. Accordingly, Menon CJ has encouraged ASEAN countries to consider recognising one another’s civil court judgments by, for instance, signing the Hague Convention on Choice of Court Agreements. In a similar vein, Foreign Affairs and Law Minister K Shanmugam noted that the harmonisation of legal rules “can help to remove uncertainty, reduce cost, generate greater business confidence, and ultimately advance ASEAN community-building goals.”2

However, the path towards homogeneity is one filled with potential pitfalls, given the divergence in the cultural, political and social makeup of the region3 – or, phrased in more vivid terms, its “rampant pluralism”4. Further, the legal systems of the member states differ greatly, ranging from the common law systems of Brunei, Malaysia, and Singapore, to civil law systems such as Indonesia, and even hybrids of both in the systems of Thailand and the Philippines.5 Given countries’ natural attachment to their respective and substantially different legal traditions, attempts to harmonise national legal rules would indeed prove difficult, especially considering ASEAN members’ aversion to the creation of supranational authority. As Lay postulates, “ASEAN leaders will never surrender national sovereignty for a “fortress Europe” type of regionalism”6.

In this light, it is of paramount importance to distinguish between (1) legal transplantation, where legal systems unilaterally amend their internal rules and adopt rules that are more frequently observed in other legal systems; (2) legal unification, where countries agree to replace national rules and adopt a unified set of rules chosen at the interstate level; and, lastly, (3) legal harmonisation, where countries agree on a set of objectives and targets, and leave each country free to amend their internal law to fulfill the chosen objectives.7 While all three adaptation processes seek to facilitate the reduction of differences among legal systems, it is legal harmonisation that is best suited to the peculiarities of the region and to ASEAN itself. For instance, Lay suggests that ASEAN will likely rely on the musyawarah and musfakat principles to reach agreement on delicate issues such as harmonising ASEAN members’ national laws into a regional system that respects cultural sensitivities and national sovereignty.8

In view of the region’s aim to create an integrated economy by 2015, ASEAN has, till date, made slow but steady progress towards legal harmonisation within domains such as e-commerce. While ASEAN continues to make a shift towards greater legalisation, it would be prudent for it to continue to adopt the gradualist approach that has defined the organisation through the years, as opposed to grand transformative plans that ignore or discount the importance of the durability of the institutional status quo.9

[1] ASEAN Integration Through Law Concluding Plenary, 25 August 2013, Keynote Address by Chief Justice Sundaresh Menon at [13]

[2] “Rule of law key for ASEAN’s progress, says Shanmugam” (20 June 2012) Today

[3] Lim Yew Ngee, “A case for harmonisation of ASEAN contract laws”, 17 Sing LR 373, p. 403

[4] Andrew Harding, “Comparative Law and Legal Transplantation in South East Asia: Making Sense of the “Nomic Din”” [ch.9 of Nelken, D., and Feest, J. (ed), Adapting Legal Cultures (Oxford, Hart Publishing, 2001)]; p. 15

[5] Deborah A Haas‚ “Out of Others’ Shadows: ASEAN moves toward greater Regional co-operation in the Face of the EC and NAFTA”‚ 9:3 AmUJ Int’l & Pol’y 809‚ 814 (1994) at 857-863.

[6] Lay Hong Tan, “Law and Policy in ASEAN Economic Integration”, Asia Business Law Review, No 38, October 2002, p. 7

[7] Carbonara, Emanuela and Parisi, Francesco, The Paradox of Legal Harmonization. Public Choice, 2007; George Mason Law & Economics Research Paper No. 05-40; Minnesota Legal Studies Research Paper No. 07-14, p. 368.

[8] Lay Hong Tan, “Law and Policy in ASEAN Economic Integration”, Asia Business Law Review, No 38, October 2002, p. 8.

[9] Prado, Mariana Mota and Trebilcock, Michael J., “Path Dependence, Development, and the Dynamics of Institutional Reform”, University of Toronto Law Journal, 2009; U Toronto, Legal Studies Research Paper No. 09-04, p. 379.