05 Sep 2024
HKIAC was pleased to organise an event as part of Hong Kong Maritime Week on Navigating the Belt and Road: Opportunities & Risks for the Maritime Industry on Monday 20 November, 2017.
The panel comprised of Kiran Sanghera (Business Development Deputy Director, HKIAC), David Beaves (Ince & Co), Christoforos Bisbikos (Watson Farley & Williams), Arthur Bowring (Hong Kong Maritime Arbitration Group), Elizabeth Sloane (Stephenson Harwood) and Ronald Sum (Troutman Sanders).
Here are five takeaways from the seminar:
1. The unprecedented scale of the Belt & Road and Greater Bay Area initiatives will have a lasting impact on the maritime industry, and Hong Kong stands to benefit from these developments by providing soft services to new investors. It has an internationally well-respected legal and judicial system, as recognized by the World Economic Forum’s 2017-2018 Global Competitiveness Report.
2. The panel described opportunities created by new ports in countries participating in the Belt & Road initiative, which are expected to flourish economically as a result of the scheme. As a capital raising hub and strong financial centre, Hong Kong will play an essential role in attracting foreign investment to these projects, which are today mostly depend on Chinese contributions.
3. However, the panel warned on the economic and political risks involved, specifically geo-political and credit risk, and the importance of insurance to mitigate these risks. Lawyers will be needed to streamline legal and regulatory differences between jurisdictions, and conduct extensive due diligence to prepare the correct documentation. A panelist suggested that common law could serve as the common thread to all Belt & Road contracts as many in the maritime industry are familiar with established common law jurisdictions such as Hong Kong and English law.
4. The panel highlighted that well-drafted dispute resolution clauses are critical to risk mitigation, especially regarding successful enforcement in China, an area in which Hong Kong and HKIAC have a stellar track record. They recommended the use of arbitration, known for its neutrality, enforceability and flexibility, in a neutral jurisdiction, such as Hong Kong, where courts will support the process. They noted that the Chinese Supreme People’s Court recently advised Belt & Road countries to adhere to international treaties facilitating cross-border enforcement of awards.
5. The panel further argued for the use of mediation, as it allows the continuation of a contract following the dispute, which is essential in such long-term projects. The importance of negotiation in Chinese culture could also foster the use of this method. The choice of Hong Kong maritime arbitration or mediation should be promoted to charterers overseas and in Hong Kong, as charter-parties are often adopted by shipowners without changes, which could lead to widespread adoption of such clauses in Belt & Road contracts.
