From an investigation conducted on European companies in China, it showed that 55% of them consider the new Silk Road as an opportunity. This notwithstanding, legal systems differences of the countries involved jeopardize the implementation of contracts. Xi’an and Shenzhen commercial Courts are a first step.
Without any certainties about the real possibility of enforcing the contractual obligations, projects and partnerships launched in the Belt & Road Initiative framework could be jeopardized. From an investigation conducted on European companies in China, it showed that 55% of them consider the new Silk Road as an opportunity. “However, wise investors know that profits bring with them risks. Therefore, they trust in a fair access to the Courts to solve eventual litigations”, reports Carlo Diego D’Andrea, the vice president European Chamber of Commerce in China, on the EURObiz online newspaper.
Concerns come from the very nature of the project launched in 2013, able to involve more countries that has different political and economic developments and different legal systems.
“The first challenge for a project in the Belt and Road framework is to ensure shared commitments through contracts legally and extensive enforceable”, adds D’Andrea that highlights, “Contracts will not be of any purpose if rules and laws keep changing, as it happens in the emerging markets”. As well as understanding the strength and transparency of terms, all relevant actors have to understand the legal environment of the countries involved in the initiative, or the legal system chosen”.
92% of the countries that are currently participating in the new Silk Road, signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Thus it would be useful that contracts would at least set out provisions for arbitrations or jurisdiction in one of these countries.
The Hong Kong International Arbitration Centre, which sets out specific provisions on disputes along the new Silk Road, could be the main location: since 2013 managed 362 cases about parts of jurisdiction along the Belt & Road.
“However, there are circumstances in which it is impossible to avoid being subject to local law”, highlights D’Andrea. In order to prevent that scenario, the Supreme People’s Court established two commercial Courts, one in Shenzhen and one in Xi’an. The first one for the Belt & Road marine routes, and the second one for the land routes. The Courts will be composed of eight judges, assisted by a panel of experts from the different jurisdictions that take part into the Silk Road. Nevertheless, the last decision is up to the judges from the Supreme People's Court. Judicial decisions will be definitive.
The establishment of the commercial Court is the first attempt to increase the interest of the international business for the Chinese Courts, conclude the vice president of the European Chamber of Commerce. It will be necessary to understand if it will affect the stipulation of agreements. In the present situation, it is however a good solution to settle disputes, above all the ones related to countries with less sophisticated legal systems.
(Source:Class Editori)
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