China's Belt and Road initiative (BRI) is transformative - for Asia and beyond.
The numbers are staggering. To date, over US$1tn
has been committed to thousands of BRI projects
around the world. With the continued backing of
the Chinese government and other governments
jumping on board, we expect the BRI to gain further
momentum in 2018, and to present opportunities
for both Chinese and foreign companies investing
in significant infrastructure projects in Asia, the
Middle East, North Africa and Europe. Indeed, some
estimates place cumulative investment in BRI
projects at US$4tn to US$8tn over the longer term.
The impact of the BRI certainly will be felt in the
arbitration sphere. The BRI can be expected to
generate disputes in arbitration over the years
to come. In fact, some BRI projects already are
experiencing difficulties, with delays in the
construction of the Sino-Thai high-speed rail line
and the Colombo port project, and cancellations
of dam construction projects in Kashmir and
Nepal being some of the better known examples.
We expect to see a number of arbitration-related
trends emerging as a result of the BRI.
First, China, as an arbitration seat, and Chinese
arbitration institutions may well become
increasingly prominent as options for resolving
BRI disputes. This is a consequence of the
negotiating power of Chinese parties investing in
BRI projects, and their natural preference for a
China seat. Hong Kong and other Asian seats - most
notably Singapore as a leading seat in the region -
can expect a further uptick in cases. Hong Kong will
be seen as a 'compromise' option where the foreign
party is able to resist a mainland China seat and
the Chinese party is resistant to a non-China seat.
China's International Economic and Trade
Arbitration Commission (CIETAC) has a Hong Kong
office and there is now precedent for CIETAC Hong
Kong awards being enforced in mainland China.
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opportunities and risks