Following from last week’s announcement that China would be putting in place a dispute mechanism structure to deal with disputes concerning Belt and Road projects, Chinese news media have reported that the new BRI dispute settlement mechanism will comprise of three international commercial courts. These will be established by China’s Supreme People’s Court in Beijing, Xi’an, and Shenzhen; the headquarters will be in Beijing.
The court in Xi’an will cover commercial disputes along the Silk Road Economic Belt, the land-based route which runs from western China to Europe and the Middle East through Central Asia, while the Shenzhen court will oversee cases arising along the 21st Maritime Silk Road, a sea route which links the Chinese coast to Europe and Africa via Southeast Asia and other waters. The courts will resemble Singapore’s International Commercial Court and Dubai’s International Finance Centre Courts. It is also reported that Beijing’s top legal body is eager to promote mediation to resolve BRI disputes.
This moves the goalposts somewhat as regards existing protocols for China-related dispute mechanisms. The majority of BRI projects impacting foreign countries are generally ruled, in principle, by existing bilateral or multilateral treaties.
These include existing bilateral investment treaties (the Dezan Shira & Associates website has an extensive library of them here); for example in the case of ASEAN nations, projects are covered by the 2012 “Agreement on Dispute Settlement Mechanism of the Framework Agreement on Comprehensive Economic Cooperation” between ASEAN and China as well as specific bilateral investment treaties. Such existing agreements provide for a standard process in conflict resolution: consultation, followed by mediation, followed by arbitration by an ad-hoc arbitration tribunal, with no preset venue or choice of law, either procedural or substantive.
Beijing’s moves to establish specific Belt and Road Courts, based in China, looks at changing these protocols. It is presumed that details of this change may be found in the bilateral Belt and Road MoUs that China has signed with some 70 individual nations. It is recommended that government legal counsels examine these documents, many of them freshly agreed, for any clauses within that indicate a change of legal dispute mechanism may be instigated by China for projects classified as being part of the Belt and Road agreement.
Silk Road Briefing is produced and written by Dezan Shira & Associates. The firm provides governments and corporate businesses worldwide with strategic, legal, tax and operational advisory services to their SMEs and MNCs investing throughout Eurasia and has 28 offices across China, India, Russia and the ASEAN nations, and partner firms in Central Asia. We have specific and long term experience in China and the OBOR countries. For assistance with OBOR related issues, please contact the firm at firstname.lastname@example.org or visit the practice at www.dezshira.com
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