December Edition: content

Welcome! In this issue, we will be covering recent legal developments in the ASEAN region: regulation of microfinance in Cambodia, Indonesia's criminal code updates, the Vietnamese "Peppa Pig" litigation and more!

Legal Regulation of Microfinance in Cambodia Cambodian microfinance (MFI) is an especially attractive sector for socially responsible investors in 2022. MFI is a type of banking service specifically catering to the poor and unemployed, who would normally not be eligible to be served by conventional larger institutions due to their poor credit; Investopedia explains in more detail. Services offered by MFI providers may include accounting, financial literacy lessons, and seed capital provision. In theory, developing countries’ governments especially benefit from MFI because their mainstream financial institutions can remain secure, while their most needy populations still receive essential services. In Cambodia, over 1 in 5 people has taken out a microloan (Borgen Project); the sector gives the poor an alternative to borrowing from predatory loan sharks. The real needs of indebted low-income locals, coupled with favorable legal conditions — such as the Law on Investment 1994, which incentivizes foreign investment through tax & duty perks — supposedly makes Cambodia an ideal location for MFI. MFI is subject to two types of legal frameworks: prudential and non-prudential. Prudential regulation is done to ensure that MFI institutions can meet their financial commitments, and in the event that they cannot, prevents the collapse of one institution leading to the collapse of others. Non-prudential regulation deals mainly with consumer protection issues like interest rate caps. Because of the aforementioned liberalism in regulations on foreign direct investment in Cambodia, the oversight mechanisms focus primarily on prudential regulation — protecting business conduct & operations to ensure smooth commercial activities in the system as a whole. As a result of this resilience-first approach (explained by Knowledge at Wharton), in a situation where an individual takes out a loan, the legal system is geared primarily towards securing repayment of the loan as soon as humanly possible. An absence of specificity in MFI client protection standards can result in recipients being bullied and harassed by local authorities & debt collectors with impunity. Bloomberg Quicktake explains the problems with this system, and shows its human impact in greater detail, in this 2022 video. The World Bank also explicitly highlights this problem in its Microfinance Consensus Guidelines report, saying “MFIs cannot continue to provide tiny loans unless their loan charges are considerably higher in percentage terms than normal bank rates.” As a result, the debt cycle may be perpetuated for some people, forcing them to sell their homes and land. Indonesia's Criminal Code Updates This month, Indonesia made international news for the sweeping revisions made to its penal code. Headlines primarily focused on the shock value of Articles 411-412, which outlaw premarital sex and unwed partners living together; they operate on a basis of voluntary reporting by family members, and critics say these provisions would impact the civil rights of countless Indonesians, from indigenous couples married only via traditional kawin siri ceremonies to LGBTQ+ couples — Human Rights Watch explains. However, there are far more serious features of the new code that have gone comparatively undiscussed in the media. These include Articles 218 and 219, which ban public criticism of the “honor & dignity” of the president & vice president, and Articles 300 to 302, which expand the scope of blasphemy & apostasy bans. A previous attempt to pass this criminal code in 2019 led to widespread mass protests, after which President Joko Widodo’s administration conducted a lengthy “socialization” campaign to acclimatize the general public to the new legislation. This included the consultation process, a stage in the formation of a statute which involves civil servants soliciting feedback from academic experts & ordinary people. The British case of R v Brent London Borough Council provides some useful principles on what makes a good consultation, which can be applied anywhere in the world — it must take place at a formative stage, allow enough time for responses, and the consulted persons’ proposals should be taken into account when finalizing the law. In this case, consultation of human rights groups and the general public has yielded a few progressive inclusions in the criminal code, such as allowing the death penalty to be revised to a life sentence after 10 years of good behavior in prison (The Diplomat). However, per Reuters, the consultation process has been mostly informative rather than participatory. The New York Times reports that Edward Omar Sharif Hiariej (Deputy Minister for Law and Human Rights of Indonesia) has invited citizens who feel their rights are being violated to challenge the penal code in constitutional court. It is likely that challenges will be made when enforcement of this law commences in 3 years’ time. Vietnamese Peppa Pig: An Introduction to Intellectual Property “Made for Kids” online content is among the most lucrative in the world. In recent years this has raised additional challenges for intellectual property (IP) law, explained here in greater detail by the World Intellectual Property Organization, which protects the rights of creatives to their original work — from trademark catchphrases, to your favorite song, to new inventions. This is because media companies focus on creating profit by trying to conform to the promotional algorithm on sites like YouTube, sometimes at the expense of content originality. One of the most popular cartoon characters in the world, Peppa Pig, was recently the subject of an IP dispute between its owner EOne (a subsidiary of the American conglomerate Hasbro) and Vietnamese company Sconnect. Litigation commenced in Russia & the United Kingdom this year. The Russian courts in August dismissed EOne’s claim and affirmed that Sconnect had not breached any IP rights with its Wolfoo franchise. At the crux of the dispute is the question of how similar Sconnect’s creation is to EOne’s Peppa Pig. A copyright violation here basically means that one entity has been using the other’s intellectual property without permission for profit. The specific complaints made by EOne, laid out in Dezan Shira & Associates’ Vietnam Briefing this month, are that Wolfoo is designed and formulated in a way so similar to Peppa Pig that it can mislead consumers into thinking they are part of the same preschool franchise. Examples include EOne’s accusation that dialogue from the Wolfoo episodes is lifted from Peppa Pig, and that Peppa Pig’s likeness has appeared in the background of some Wolfoo episodes. However, the Russian courts have found that there are enough differences between Peppa and Wolfoo to render the latter an original creation, free of derivative influence. In spite of this victory for Sconnect, YouTube recently took down about 2000 Wolfoo videos after it internally assessed the similarities and determined the Wolfoo franchise to be an infringement of EOne’s IP. Sconnect has retaliated by suing EOne in Vietnam, citing a violation of Article 129 of the Intellectual Property Law. Additionally, Sconnect plans to countersue in the UK as it says its videos are targeted at children outside of the jurisdiction. However, EOne has called these claims “fallacious” and it is indeed not likely that they will succeed in court. (Not So) Ludicrous Litigation Welcome to (not so) Ludicrous Litigation, in which we cover infamous legal cases and explain the rationale behind them! This month, we bring you Carlill v Carbolic Smoke Ball, a case involving a defendant who manufactured medicinal smoke balls and Mrs Carlill, a customer determined to enforce one of the defendant's advertising claims.  Read the article. We want to hear from you!

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