Belt and Road dispute resolution: options for Myanmar
Belt and Road dispute resolution: options for Myanmar

Belt and Road dispute resolution: options for Myanmar

Summary:

Legal risks are largely underestimated by many Chinese businesses seeking overseas opportunities. The success of the Belt and Road Initiative (BRI) depends not only on bilateral agreements but also on multilateral agreements between countries, so as to form a comprehensive legal framework within which these countries can operate. Legal structures in many ASEAN member-states are sufficient for international collaboration necessitated by the BRI, but the difficulties often lie in legal practice and the task is how to implement the law in individual business cases. Singapore and Japan are active in arbitration in the Thilawa Special Economic Zone, while London is stepping up as a legal service hub for the BRI. Myanmar has a few choices to consider for disputes resolution. Now, as Professor Teresa Cheng, senior counsel and chair of the Asian Academy of International Law, told to The Myanmar Times, Hong Kong can also be an option for Myanmar to settle disputes with Chinese business within the BRI framework.

 

Belt and Road Dispute Resolution: Options for Myanmar

SINGAPORE is active in Thilawa Special Economic Zone (SEZ) as the dispute resolution centre, while London is stepping up its game in legal services in Beijing’s Belt and Road Initiative (BRI). When it comes to infrastructure disputes, Myanmar has a few choices to consider.

Some businesses in China seeking to expand their operations beyond domestic borders and to export their products and services internationally have greatly underestimated the legal risks in the process, according to Dr Ying Yu from Oxford. The success of the initiative depends not only on bilateral agreements but also on multilateral agreements between countries, so as to form a comprehensive legal framework within which these countries can operate.

Contract disputes are inevitably a risk in large-scale infrastructure projects between jurisdictions which are at different stages of development and legal maturity.

Professor Teresa Cheng, senior counsel and chair of Asian Academy of International Law, spoke to The Myanmar Times at a sideline interview during the Belt and Road Summit. Jointly organised by Hong Kong’s government and the Hong Kong Trade Development Council (HKTDC), the summit was held on September 11 in the city.

Professor Cheng argued that the legal structures in many individual member-states within ASEAN are sufficiently advanced to allow the level of international collaboration necessitated by the BRI. The law exists in practice and the task is how to implement the law in individual business cases.

“Now a lot of the projects might be China’s money investing into some of the countries, and the platform would be to use Hong Kong for financing or forming the company and so on,” she said, adding that fairness in the legal system is an important consideration for ASEAN and Myanmar.

Singapore, London and Hong Kong are all positioning themselves as the legal platforms for BRI projects.

“Hong Kong transactional lawyers are very experienced in transactions involving Chinese parties as well. So if there’s a Chinese investment going into one of the Belt and Road stakes, Hong Kong has had many experiences that has dealt with companies based in China – investing outbound investments.

“The other thing then is that Chinese companies, being advised by Hong Kong-based law firms, will have the benefit of being able to communicate with Chinese lawyers,” she noted.

When a dispute arises in a BRI-related project in Myanmar, there are four criteria for choosing a dispute resolution centre, according to the barrister. Firstly, if the two parties have to resolve a dispute, they don’t want to go into Myanmar or mainland China. Geographically, it doesn’t make sense for these two Asian countries, Myanmar and China, to run to the rest of the world. Secondly, the bilingual proficiency of the Hong Kong system allows disputes to be managed in both languages.

“Thirdly, Hong Kong has been ranked number 3 and 4 in the past two years by the World Economic Forum’s global competitiveness report for judicial independence. In terms of rule of law — the World Bank has published a report [October 2016] looking at the past 20 years of how various states behaved in a number of initiatives – Hong Kong’s rule of law position in the world moved from somewhere around 60 to number 12. Therefore the judiciary and legal system are solid,” Ms Cheng observed, adding that the arbitration culture in the city is also very strong.

The Myanmar Times asked the chair of Asian Academy of International Law why Singapore and Japan are ahead in terms of arbitration in Thilawa Special Economic Zone. She conceded that the city has been “a bit slower” than the other two, but “it doesn’t mean that it isn’t going there – they have set up a Hong Kong-Myanmar tourism board that promotes the two jurisdictions in terms of tourism and commerce.”

In May, the Asian Academy of International Law has provided training for Asian judges on New York Convention (The Convention on the Recognition and Enforcement of Foreign Arbitral Awards). Last month, the organization undertook another capacity-building exercise with a number of Asian and African government officials mainly from the foreign affair ministries. The capacity-building focused on public-private partnerships (PPP) and encouraged government to explore PPPs.

“With Myanmar, in particular, I have been told that there have been visits from government officials here, such as the one two months ago, to attend trainings. There is a long-term relationship with most places. There’s always capacity-building, collaboration – a more long-term relationship which is [a core part of] the ethics and culture of Hong Kong businessmen,” she explained.

Professor Cheng is confident that international investors can structure the joint venture and use legal services in Hong Kong to provide advice, separately, to the Myanmar and Chinese party. The deal can be structured and financed through the Asian Infrastructure Investment Bank (AIIB) or the Infrastructure Financing Facilitation Office (IFFO) established by the Hong Kong Monetary Authority.

Source: The Myanmar Times, Thompson Chau, Oct, 3 2017. Photo: Keiichiro Asahara.

 

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