Authorized companies put together for very important B&R function | twentieth Anniversary of Hong Kong’s Return to China
Jon Lowe studies that specialists consider the SAR can present not simply financing however all kinds of authorized service for these formidable tasks — together with arbitration.
Former chief government Leung Chun-ying (middle) speaks on the China Each day Asia Management roundtable themed “Hong Kong Unleashing the Potential of Belt and Highway Initiative” on the Grand Hyatt Hong Kong in 2015. (Picture by Edmond Tang/ China Each day)
The Belt and Highway Initiative (B&R) unveiled in 2013 is “the best civil engineering mission in human historical past, higher than Nice Wall mission and Marshall Europe reconstruction mission”, in line with veteran Hong Kong commentator professor Track Sio-chong on the Analysis Middle of Hong Kong and Macao Primary Legislation in Shenzhen College.
With large infrastructure tasks in additional than 65 international locations and areas, B&R depends closely not simply on the monetary companies of “super-connector” Hong Kong, but in addition on town’s authorized companies.
Gu Minkang — an knowledgeable on Chinese language firm legislation on the College of Legislation, Metropolis College of Hong Kong (CityU) — thinks B&R dispute decision affords many alternatives for Hong Kong’s homegrown legislation companies.
“I feel that almost all Hong Kong legislation companies are able to providing companies with a specific give attention to arbitration and mediation.
“I might encourage a positive coverage being fashioned as a way to facilitate extra authorized service cooperation between Hong Kong and the Chinese language mainland. That is additionally essential to implement the B&R initiative in the long term.”
Charltons Legislation, a Hong Kong agency which focuses on company finance authorized practices with places of work in Shanghai, Beijing and Yangon, is able to embrace the initiative.
Charltons is without doubt one of the organizers of this yr’s worldwide discussion board on authorized companies for selling implementation of the Belt and Highway Initiative to be held in Chengdu, Sichuan province, on July 29 and 30.
The shut ties with the mainland supplied many alternatives for town to capitalize on the B&R Initiative, a associate at Charltons stated.
“Its fund-raising and financing capabilities, experience in infrastructure improvement, and internationally acknowledged authorized system imply Hong Kong will help construct a bridge amongst mainland and different B&R international locations and the remainder of the world,” stated Clinton Morrow.
He sees Hong Kong as being totally capable of present all kinds of authorized companies for B&R tasks, from financing to arbitration.
“As part of China, Hong Kong operates beneath the ‘one nation, two methods’ precept and has a authorized system based mostly on the widespread legislation.
“The rule of legislation is upheld by a judiciary that’s widely known by the worldwide neighborhood. Hong Kong additionally has first-class dispute decision and arbitration capabilities and accordingly will play a key function in dispute decision.”
Main greenfield tasks corresponding to roads, ports, tunnels and bridges require an enormous quantity of finance — excellent news not just for lenders but in addition for legislation companies specializing in financing.
“I feel the Belt and Highway has now matured to a stage the place the tasks which have been recognized by the governments have moved on to the implementation section,” stated Boo Bee Chun, a associate on the Hong Kong and Chinese language mainland places of work of Baker McKenzie who focuses on mergers and acquisitions.
“Within the final six months or so we have now undoubtedly acquired much more shopper requests for help from us by way of greenfield tasks in lots of creating international locations — Latin America, Southeast Asia, and Central Asia. We do see some kind of mini-explosion of offers in these international locations.”
The agency has 77 regional places of work in locations as various because the Czech Republic, South Africa and Kazakhstan.
“After all the Hong Kong/China staff gained’t know Kazakh legislation in addition to our colleagues in Almaty, however we’ve accomplished sufficient offers to know what sort of approvals you want from the federal government, and we are able to at all times associate up with our native places of work,” stated Tracy Wut, who focuses on mergers and acquisitions and international direct investments at Baker McKenzie.
Members of the inaugural Belt and Highway Summit held in Could 2016 stroll on the Hong Kong Conference and Exhibition Centre. The summit drew over 2,000 movers and shakers from authorities and enterprise to trade concepts about the best way to faucet a world of recent alternatives. (Picture offered to China Each day)
Development tasks, after all, will be fraught with issues as a result of many variables corresponding to labor, design, climate and so forth.
Therefore there will probably be a rise within the variety of arbitrations in contracts aside from financing. A extra fascinating query is whether or not there will probably be financing-related arbitration.
“Belt and Highway is at its coronary heart a geopolitical initiative, so quite a lot of the financing contracts which are being entered into proper now is probably not the hard-nosed kind of contract you’ll usually see between industrial events.
“You’ll possible see some arbitrations popping out of the financing agreements. However in lots of circumstances in the end, whether or not authorized rights are strictly enforced and whether or not there will probably be arbitrations arising from the financing agreements will rely largely on the political and broader financial local weather as nicely,” stated Paul Teo, head of arbitration for Larger China at Baker McKenzie, a world legislation agency which has places of work in Hong Kong.
With the FIDIC (Fédération Internationale des Ingénieurs-Conseils, or Worldwide Federation of Consulting Engineers) type of contract, a template contract usually is used between employers and contractors on worldwide building tasks, events are required to enter right into a multi-tiered course of earlier than ending up in arbitration.
Many disputes will probably be referred to a dispute adjudication board, a proper physique made up of engineers written into all FIDIC contracts. It should take a look at claims on an ongoing foundation, make technical evaluations, and attempt to resolve quite a lot of the problems.
For unresolved points, the subsequent step will probably be negotiations between senior executives of the (Chinese language) building firm and their B&R shoppers. If this fails to resolve a dispute, will probably be referred to formal mediation.
The actually difficult disputes that can’t be sorted out by mediation will go to arbitration. “FIDIC contracts enable for this multi-tiered course of to be engaged”, stated Teo.
Arbitration is each pricey and might injury reputations. Thus, mediation is changing into ever extra essential in dispute decision. It’s an space during which HK is a pioneer, in line with Francis Legislation Wai-hung, president of the non-profit Hong Kong Mediation Centre (HKMC), which is self-funding by way of coaching and mediation companies and has one other function as a charitable group.
As time wore on we’ve discovered individuals in Hong Kong like mediation extra and acknowledge mediators as impartial professionals that may assist them to resolve their disputes earlier than they arrive to court docket. That could be a essential factor, as a result of they get monetary savings, time and strain
Francis Legislation Wai-hung, president of the Hong Kong Mediation Centre
Consequently, it has acquired casual help from the federal government, corresponding to forthcoming use of a constructing subsequent to town’s Excessive Courtroom. “Folks used to assume mediation was like a high-status intermediary. However as time wore on we’ve discovered individuals in Hong Kong like mediation extra and acknowledge mediators as impartial professionals that may assist them to resolve their disputes earlier than they arrive to court docket. That could be a essential factor, as a result of they get monetary savings, time and strain,” Legislation stated.
The HKMC has teamed up with mainland counterparts to kind the Mainland-Hong Kong Joint Mediation Middle, itself one thing of a B&R initiative, to create a brand new community for mediation amongst Asian, Arab and European international locations and areas — with Hong Kong on the middle.
It additionally seeks to strengthen enforcement of mediation agreements. “We’re utilizing a technique which is collaboration between mediation and arbitration. We do the mediation settlement, and get the arbitration middle to endorse it.
“After a settlement settlement has been signed, within the Hong Kong mediation middle or in different facilities in different international locations if events need, we are able to ahead the settlement to the arbitration middle in one other B&R place — say Thailand or Spain — after which they will make an arbitration award,” he stated.
Mediators are drawn from varied professions in addition to authorized and obtain coaching at varied ranges. “Mediation is the best way ahead for B&R,” stated Legislation, “since you can not anticipate the authorized system from different locations to simply settle for yours. You can not ask them to vary their authorized system simply because Hong Kong is utilizing the widespread legislation system.”
Financing to completion
There’s a virtually fixed want for authorized companies throughout your complete timeline of any B&R mission however it at all times begins with financing.
And, in line with the Hong Kong Financial Authority, 68 p.c of international direct investments into the mainland and 62 p.c of the mainland’s outward direct investments in 2015 had been made by way of Hong Kong.
“With Belt and Highway tasks, there will probably be completely different transactions entered into between completely different gamers at completely different phases of a mission and mission financing is invariably the primary merchandise on the agenda.
“They (tasks and finance attorneys) will speak to the banks and help the banks in lending to firms that need to construct these tasks,” Teo stated.
“The lending will probably be ruled by the financing agreements and they are going to be adopted by different agreements corresponding to the development agreements and facility utilization agreements,” he added.
The financing stage can also require the enter of different authorized jurisdictions and groups of specialists, in line with Boo from Baker Mckenzie.
“We just lately helped a Chinese language energy firm with its funding in over 60 wind farm vegetation around the globe, and we needed to work with native counsels in all these international locations the place the wind farm vegetation are situated.
“We depend on native counsels for very particular native legislation recommendation, corresponding to whether or not a wind farm plant has the mandatory licenses for energy technology within the native nation.
“In the case of assessing whether or not the belongings are bankable and possible, and whether or not they’re enticing to worldwide buyers, that will probably be accomplished by our staff of knowledgeable mission attorneys in China, Hong Kong and Singapore.”
Francis Legislation Wai-hung, president of the Hong Kong Mediation Centre. (Picture offered to China Each day)
As soon as the financing preparations have been accomplished, a mission strikes towards the nitty-gritty of really constructing it.
This requires a separate suite of contracts to be entered into. Then comes the precise building and completion of the contract. Past that, there is likely to be different kinds of post-completion agreements — for which the governing legislation will be completely different once more relying on how events discount and negotiate.
“So from financing to building and post-completion, there will probably be a sequence of various contracts, all with completely different wording, completely different governing legislation, and completely different events coming in at completely different junctures,” Teo summarized.
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