Authorized providers put together for important B&R function | twentieth Anniversary of Hong Kong’s Return to China
Jon Lowe experiences that specialists imagine the SAR can present not simply financing however all kinds of authorized service for these bold tasks — together with arbitration.
Former chief govt 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 undertaking in human historical past, larger than Nice Wall undertaking and Marshall Europe reconstruction undertaking”, in keeping with veteran Hong Kong commentator professor Track Sio-chong on the Analysis Heart of Hong Kong and Macao Fundamental 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 providers of “super-connector” Hong Kong, but additionally on town’s authorized providers.
Gu Minkang — an professional on Chinese language firm legislation on the College of Legislation, Metropolis College of Hong Kong (CityU) — thinks B&R dispute decision provides many alternatives for Hong Kong’s homegrown legislation companies.
“I feel that almost all Hong Kong legislation companies are able to providing providers with a specific give attention to arbitration and mediation.
“I’d encourage a positive coverage being fashioned in an effort 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 among the organizers of this yr’s worldwide discussion board on authorized providers 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 mentioned.
“Its fund-raising and financing capabilities, experience in infrastructure growth, and internationally acknowledged authorized system imply Hong Kong may also help construct a bridge amongst mainland and different B&R international locations and the remainder of the world,” mentioned Clinton Morrow.
He sees Hong Kong as being absolutely in a position to present all kinds of authorized providers for B&R tasks, from financing to arbitration.
“As part of China, Hong Kong operates underneath 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 well 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 additionally 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,” mentioned Boo Bee Chun, a associate on the Hong Kong and Chinese language mainland places of work of Baker McKenzie who makes a speciality of mergers and acquisitions.
“Within the final six months or so we’ve got positively obtained much more consumer 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 finished sufficient offers to know what sort of approvals you want from the federal government, and we will all the time associate up with our native places of work,” mentioned Tracy Wut, who makes a speciality of mergers and acquisitions and overseas direct investments at Baker McKenzie.
Contributors 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 latest alternatives. (Picture offered to China Each day)
Development tasks, in fact, might be fraught with issues because of the many variables corresponding to labor, design, climate and so forth.
Therefore there can be a rise within the variety of arbitrations in contracts aside from financing. A extra attention-grabbing query is whether or not there can be financing-related arbitration.
“Belt and Highway is at its coronary heart a geopolitical initiative, so a number of the financing contracts which might be being entered into proper now is probably not the hard-nosed kind of contract you’ll usually see between industrial events.
“You’ll probably see some arbitrations popping out of the financing agreements. However in lots of instances in the end, whether or not authorized rights are strictly enforced and whether or not there can be arbitrations arising from the financing agreements will rely largely on the political and broader financial local weather as properly,” mentioned Paul Teo, head of arbitration for Higher China at Baker McKenzie, a global 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 development tasks, events are required to enter right into a multi-tiered course of earlier than ending up in arbitration.
Many disputes can be referred to a dispute adjudication board, a proper physique made up of engineers written into all FIDIC contracts. It is going to take a look at claims on an ongoing foundation, make technical evaluations, and attempt to resolve a number of the problems.
For unresolved points, the following step can be negotiations between senior executives of the (Chinese language) development firm and their B&R shoppers. If this fails to resolve a dispute, will probably be referred to formal mediation.
The actually tough 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”, mentioned Teo.
Arbitration is each pricey and might harm reputations. Thus, mediation is turning into ever extra essential in dispute decision. It’s an space by which HK is a pioneer, in keeping with Francis Legislation Wai-hung, president of the non-profit Hong Kong Mediation Centre (HKMC), which is self-funding via coaching and mediation providers and has one other function as a charitable group.
As time wore on we’ve discovered folks 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 lower your expenses, time and strain
Francis Legislation Wai-hung, president of the Hong Kong Mediation Centre
Consequently, it has obtained casual help from the federal government, corresponding to forthcoming use of a constructing subsequent to town’s Excessive Court docket. “Folks used to suppose mediation was like a high-status intermediary. However as time wore on we’ve discovered folks 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 lower your expenses, time and strain,” Legislation mentioned.
The HKMC has teamed up with mainland counterparts to type the Mainland-Hong Kong Joint Mediation Heart, 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 way 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 will 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 mentioned.
Mediators are drawn from numerous professions moreover authorized and obtain coaching at numerous ranges. “Mediation is the best way ahead for B&R,” mentioned Legislation, “since you can not count on the authorized system from different locations to simply settle for yours. You can not ask them to alter their authorized system simply because Hong Kong is utilizing the widespread legislation system.”
Financing to completion
There’s a virtually fixed want for authorized providers throughout the complete timeline of any B&R undertaking nevertheless it all the time begins with financing.
And, in keeping with the Hong Kong Financial Authority, 68 % of overseas direct investments into the mainland and 62 % of the mainland’s outward direct investments in 2015 have been made via Hong Kong.
“With Belt and Highway tasks, there can be totally different transactions entered into between totally different gamers at totally different levels of a undertaking and undertaking financing is invariably the primary merchandise on the agenda.
“They (tasks and finance attorneys) will discuss to the banks and help the banks in lending to firms that need to construct these tasks,” Teo mentioned.
“The lending can 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 may additionally require the enter of different authorized jurisdictions and groups of specialists, in keeping with Boo from Baker Mckenzie.
“We not too long ago helped a Chinese language energy firm with its funding in over 60 wind farm crops world wide, and we needed to work with native counsels in all these international locations the place the wind farm crops 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 era within the native nation.
“Relating to assessing whether or not the belongings are bankable and possible, and whether or not they’re engaging to worldwide traders, that can be finished by our staff of professional undertaking 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 undertaking strikes towards the nitty-gritty of really constructing it.
This requires a separate suite of contracts to be entered into. Then comes the precise development and completion of the contract. Past that, there is likely to be different types of post-completion agreements — for which the governing legislation might be totally different once more relying on how events cut price and negotiate.
“So from financing to development and post-completion, there can be a collection of various contracts, all with totally different wording, totally different governing legislation, and totally different events coming in at totally different junctures,” Teo summarized.
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