Dubai legal body seeks certainty on Belt and Road contracts

posted by Francis Churchill
29 May 2018

A Dubai legal authority is partnering with Oxford University to help resolve commercial legal conflicts that arise out of China’s Belt and Road Initiative (BRI).

The Dubai International Financial Centre’s Dispute Resolution Authority (DRA), which incorporates the Dubai International Financial Centre (DIFC) Courts, is pooling expertise with the university’s China Centre to help mitigate some of the legal minefields surrounding the vast project.

The two organisations will focus on protection and contract enforcement needed for Chinese and international investors to participate in the BRI.

BRI is China’s $5bn flagship foreign policy that aims to build international trade routes and includes several large infrastructure projects in the MENA region, which it envisions as a logistics hub.

The collaboration between the courts and Oxford University aims to encourage foreign investment by helping facilitate cross-border dispute resolution systems and transnational enforcement mechanisms to foster investor confidence and legal certainty.

It will focus on ways to protect large-scale investments through linking China and the world’s court systems, and on helping legal, judicial and arbitral systems to keep pace with the opportunities created by the BRI and other ventures.

Through joint projects such as research and reports, the collaboration aims to enhance understanding of the legal and regulatory challenges faced by businesses and courts in the 70 or so BRI countries. It hopes this will pave the way for effective dispute resolution and enforcement of court judgments along BRI’s trade routes.

A 2016 survey by Lexis Nexis and the China Institute of Corporate and Legal Affairs found half of respondent Chinese firms engaged on BRI deals face legal challenges.

Chief justice of the DIFC Courts and head of the DRA, Michael Hwang, urged the BRI countries to seek knowledge of each other’s procedures. He said that where possible they should collaborate through memorandum agreements on express recognition and enforcement of judgments.

The organisations said as investment flows into the BRI region, it becomes ever-more urgent to find practical solutions to enable contracting parties to solve complex commercial conflicts.

“In particular, BRI countries need to find ways in which judgements and awards issued from each BRI country or territory can be enforced in other BRI countries,” they said in a joint statement.

“Gathering such knowledge is only the first step hopefully to legal convergence of some degree within the BRI region.”

So far projects worth an estimated US$350bn have been financed, mainly by Chinese development banks.

Yet making judgements enforceable across multiple judicial systems and guaranteeing that money can be collected after winning a case in a foreign court is critical.

Hwang said:  “As goods and services travel across the world along the BRI, they will seamlessly cross borders – so we shall need a seamless legal platform, based on legal convergence, that can start to do the same.”

He said this aim could be partly fulfilled by the near universality of the New York Convention for recognition and enforcement of international arbitral awards.

But it should also include a robust regime of enforceable court judgments outside the boundaries of the issuing court.

“Building up connectivity and enforceability will remove many of the roadblocks that could threaten the success of the Belt and Road Initiative,” he said.

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