The role of mediation in the resolution of belt and road disputes

China’s Belt and Road Initiative (BRI) has gained huge momentum of late, with governments, companies and lawyers keen to maximise the many opportunities it presents. The resolution of disputes arising from the BRI is no exception. The sheer complexity and scale of BRI projects is prompting a welcome review of dispute resolution processes, with a view to resolving BRI disputes more quickly and amicably, ideally in a confidential and enforcement-friendly environment. Recent developments suggest that the BRI presents an opportunity for less formal procedures, like mediation, to flourish and enter the mainstream. Indeed, three key BRI jurisdictions – China, Singapore and Hong Kong – have recently promoted mediation in the context of BRI disputes.

In September 2017, the Singapore International Mediation Centre (SIMC), and the China Council for the Promotion of International Trade China Chamber of International Commerce Mediation Center (CCOIC) agreed to cooperate on assisting businesses to resolve cross-border disputes arising out of the BRI. The two mediation centres will help: (a) Chinese companies investing in Singapore (33% of its investment in BRI countries); (b) Singapore companies investing in China (85% of the total inbound investment from BRI countries); and (c) companies investing in other markets under the BRI.

In tandem, Hong Kong has also signalled its willingness to embrace mediation as an intrinsic BRI dispute resolution tool. The Department of Justice appears keen to develop eBRAM.hk – an online dispute resolution tool tailored to big infrastructure projects under the BRI providing for secure online arbitration and mediation services. Other proposals discussed recently at the Hong Kong government’s Belt and Road Summit include a bespoke BRI arbitral and mediation centre, as well as a harmonised dispute resolution clause for BRI disputes requiring mediation first, then arbitration.

The rate of investment under the BRI – for example, major projects like the US$13bn Malaysian East Coast Rail Link and a US$105m Thai rail contract have just been agreed – may simply outpace development and harmonisation of BRI dispute resolution provisions in underlying contracts. However, these recent statements and discussions in Singapore and Hong Kong represent a further demonstration of the growing popularity of mediation in Asia, and the central role it could play in years to come under the BRI. Continue reading

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Filed under ADR, China, South East Asia

China proposes dedicated “Belt and Road” court

Supreme People’s Court Monitor has published a highly informative article on proposals by the SPC relating to China’s “Belt and Road” initiative.  These include establishing a dedicated court, along the lines of the Singapore International Commercial Court, to hear Belt & Road disputes.  Click here to read the piece.

Our thanks to Susan Finder of SPC Monitor for permission to re-publish.

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Filed under Announcements, China

PRC signs the Hague Convention on Choice of Court Agreements: a step forward in the resolution of cross-border litigation

On 12 September 2017, the People’s Republic of China (PRC) signed the Hague Convention on Choice of Court Agreements (Convention).  The Convention, in force since 1 October 2015, seeks to provide certainty in cross-border litigation by allowing parties to choose the exclusive court in which any disputes arising under a commercial agreement will be resolved.  Courts of member states must accordingly respect exclusive jurisdiction clauses in commercial agreements by staying proceedings in favour of the courts of other member states. They must also recognise and enforce judgments of the courts of other member states, subject to certain limited exceptions.

The PRC needs to ratify the Convention before it becomes a member state and bound by the terms of the Convention.  Once the PRC formally joins the Convention, there will be increased opportunities for the recognition of Chinese court judgments internationally and vice versa. Continue reading

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Filed under Announcements, China, Hong Kong, Jurisdiction

Hong Kong: immigration win for same-sex couple

In a landmark ruling, the Court of Appeal held that the Immigration Department’s visa policy, insofar as it denies same-sex couples eligibility for consideration for a dependant visa, breaches the right to equality enshrined in article 25 of the Basic Law.

The Decision

This case involved an application to the Immigration Department for a dependent’s visa for an individual in a same-sex civil partnership recognised under the Civil Partnership Act 2004 in England. The application had been rejected on the basis that the Immigration Department did not view the applicant as a “spouse” for the purposes of its dependent visa policy.

In the Immigration Department’s view, “spouse” was limited to a husband or wife in a heterosexual and monogamous marriage as defined under section 40 of Hong Kong’s Marriage Ordinance. This interpretation  thereby excludes couples whose same-sex marriage or civil partnership has been legalized under the laws of some other jurisdiction but is not legally recognised in Hong Kong.

The Court of Appeal held that such interpretation breached article 25 of the Basic Law, which provides that “All Hong Kong residents shall be equal before the law”. It followed that the dependent visa policy would be unconstitutional on the basis that it discriminates on the ground of sexual orientation, unless the difference in treatment could be objectively justified.

While it was recognised that courts will generally allow the legislature and/or government decision makers a wide margin of discretion when it comes to matters of socio-economic policy, the court noted that where such a measure discriminates against individuals on grounds such as sexual orientation, there would have to be “very weighty” reasons justifying the policy.

In this case, the Immigration Department failed to satisfy the court that the difference in treatment was objectively justified taking into account its discriminatory effects.

Key takeaways for employers

This decision will be welcomed by employers for whom the inability to secure immigration approval for the same-sex spouses of potential candidates has to date hindered recruiters efforts to secure and retain the best possible talent in the international market.

Gareth Thomas
Gareth Thomas
Partner, Head of Commercial Litigation, Hong Kong
Email | Profile
+852 2101 4025
Gillian McKenzie
Gillian McKenzie
Senior Associate
Email | Profile
+852 2101 4222

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Filed under Employment, Hong Kong

Chinese Court recognises a US commercial judgment for the first time based on principle of reciprocity

On 30 June 2017, the Wuhan Intermediate People’s Court (Wuhan Court) handed down a decision recognising and enforcing a civil judgment of the Los Angeles Superior Court in California, USA (the “Wuhan Decision“) based on the principle of reciprocity. This is the first time that a Chinese court has recognised and enforced a US commercial judgment.

Pursuant to the PRC Civil Procedure Law, Chinese courts can recognise and enforce foreign court judgments only on the basis of international convention, bilateral treaties or the principle of reciprocity, provided they do not violate basic principles of Chinese law, state sovereignty and security, or public interest. China has not ratified the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters nor has it entered into any bilateral treaty with major jurisdictions such as US and UK for the mutual recognition and enforcement of civil court judgments. It follows that the only ground upon which US commercial judgments may be recognised by the Chinese courts is the principle of reciprocity.

There is no clarity as to the meaning of the principle of reciprocity in China. However, we note that in December 2016, the Nanjing Intermediate People’s Court recognised and enforced a Singaporean commercial judgment in Kolma v SUTEX Group (the “Nanjing Decision“) on the basis of de facto reciprocity in Singapore. Continue reading

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Filed under China, Enforcement, Jurisdiction

Herbert Smith Freehills hires three new projects and disputes partners in China

Herbert Smith Freehills has appointed three partners to its Mainland China team, specialising in projects and projects-related disputes.

  • Hew Kian Heong is one of the leading international construction and infrastructure disputes lawyers in China, regularly acting for Chinese and international clients in complex cross-border disputes.
  • Ellen Zhang is one of the leading lawyers in the Chinese PPP and outbound investment market, advising Chinese companies on complex project development, investment and financing overseas, particularly in the power and infrastructure sectors.
  • Michelle Li has a strong reputation in construction and infrastructure disputes, particularly advising Chinese state-owned enterprises on a broad range of project implementation issues and disputes arising from overseas projects.

“Our firm has already captured a healthy amount of Chinese project and investment work generated by China’s US$900 billion ‘Belt and Road’ initiative,” said CEO Mark Rigotti. “Adding the transactional and disputes experience on complex projects offered by Hew, Ellen and Michelle will complement our existing team perfectly. I’m delighted to welcome them to the partnership.”

The appointments will increase the size of Herbert Smith Freehills’ Greater China team to 27 partners and over 170 other legal professionals in Beijing, Hong Kong and Shanghai.

“The massive scale of the ‘Belt and Road’ initiative is generating huge numbers of infrastructure projects across Asia and beyond – and every new project also has the potential for complex disputes,” said Justin D’Agostino, Managing Partner, Asia. “Hew, Ellen and Michelle will join our existing team advising clients on these developments and add essential projects, financing and projects disputes expertise to our offering.”

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Filed under Announcements

Forum Election, Forum Non Conveniens and the Singapore International Commercial Courts

In its recent decision in Rappo v. Accent Delight International Ltd and another [2017] SGCA 27, the Singapore Court of Appeal considered the distinction and relationship between the doctrines of forum election and forum non conveniens.  Notably, the Court also considered whether the potential availability of the Singapore International Commercial Court (“SICC“) represents a relevant consideration in determining whether Singapore is an appropriate forum. Continue reading

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Filed under Jurisdiction, South East Asia

Spotlight on investor protection: The Hong Kong Financial Dispute Resolution Centre implements a more moderate package of reforms

The Financial Dispute Resolution Centre (FDRC) in Hong Kong has issued its conclusions to its consultation on proposals to significantly expand the jurisdiction of the Financial Dispute Resolution Scheme (FDRS), its alternative dispute resolution scheme for conflicts between financial institutions and their individual customers.

The FDRC’s consultation met with mixed responses, with respondents from the banking and securities sectors opposing the proposed changes while other respondents, including the Department of Justice and consumer rights groups, supported the suggested reforms.  Given this, the FDRC has chosen to implement a more moderate package of reforms than those it originally contemplated (as outlined in our October e-bulletin).

The key changes from the consultation paper include:

  • raising the maximum claimable amount to HK$1,000,000.  This is an increase from the current limit of HK$500,000, but significantly lower than the proposed increase to HK$3,000,000;
  • extending the limitation period for lodging claims from 12 months to 24 months from the date of purchase of the financial instrument or date of first knowledge of loss, whichever is later, rather than the 36 months previously suggested; and
  • that the FDRC will cease its current practice of providing case information such as application forms, mediated settlement agreements or arbitral awards, to the Securities and Futures Commission and Hong Kong Monetary Authority.  However, it will continue to provide monthly reports regarding the number and type of disputes handled by the FDRC and information regarding systemic issues and suspected serious misconduct.

The FDRC also announced that it will enact a range of other reforms in a form largely unchanged from that proposed in its consultation paper. These include:

  • expanding the scope of eligible claimants by allowing “small enterprises” to bring complaints against financial institutions (FIs);
  • accepting applications for claims which are under current court proceedings without requiring the claimant to withdraw the case from court; and
  • introducing a voluntary referral system.

These reforms amount to a sizeable expansion of the FDRC’s jurisdiction. As foreshadowed in our previous bulletin, FIs are likely to see an increase in claims being accepted by the FDRC once these reforms are enacted, though this increase is likely to be smaller than that which would have resulted from the enactment of the FDRC’s original proposals.

The amended terms of reference for the FDRS are expected to take effect on 1 January 2018, with the exception of the reforms allowing small enterprises to bring claims, which will take effect on 1 July 2018.

Our recent e-bulletin sets out the reforms in more detail.  If you wish to discuss these further, please do not hesitate to contact our Hong Kong team featured on the e-bulletin or your usual Herbert Smith Freehills contact.

 

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Filed under Financial Services Regulation, Hong Kong

The Apology Ordinance has been gazetted today in Hong Kong

The Apology Ordinance has been gazetted today and will come into force on 1 December 2017.  The law was passed on 13 July and is intended to facilitate the resolution of civil disputes in the territory. Hong Kong is the first jurisdiction in Asia to enact apology legislation and its Apology Law is the broadest enacted to date worldwide.

The Apology Ordinance reforms the legal consequences of making any sort of apology (written, oral or by conduct). An apology will not constitute an admission of fault or liability (even if it includes such an admission), nor may it be admissible in evidence to the detriment of the apology maker. This is the case unless the maker of the apology wishes it to be admitted or it falls to be admitted in the usual way through discovery, oral evidence or an equivalent tribunal process.  The law has far-reaching consequences for anyone involved in contentious civil disputes, whether before the courts or tribunals in Hong Kong. The Apology Ordinance has the scope substantially to change the way insurance, evidence and settlement are approached in civil proceedings and regulatory and disciplinary matters.  For more details on the impact of the Ordinance, please click here.

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Filed under Announcements, Hong Kong

Hong Kong Court of Appeal finds against bank on the basis that the bank’s exclusion of liability clauses were unconscionable and unreasonable

The Hong Kong Court of Appeal (CA) has recently affirmed a decision of the Court of First Instance (CFI), in which a ruling was made in favour of the plaintiff investors in a mis-selling claim against a bank, albeit on different grounds to that of the CFI (click here for the full judgment and here for our e-bulletin on the CFI decision).

Overturning the CFI’s ruling on contractual interpretation, the CA held that the exclusion clauses in the bank’s services agreement did apply to the plaintiffs’ non-discretionary accounts. The CA however went on to find that the exclusion clauses the bank sought to rely on to limit its liability were unconscionable under the Unconscionable Contracts Ordinance and did not satisfy the requirement of reasonableness under the Control of Exemption Clauses Ordinance.

This is the first decision of its kind where the court considered unconscionability in a banking context.  Our recent e-bulletin examines the decision in more detail.  If you wish to discuss this further, please do not hesitate to contact our Hong Kong team as listed on the e-bulletin, or your usual Herbert Smith Freehills contact.

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Filed under Contract, Financial Services Regulation, Hong Kong