Belt and road deals conjure up legal risks for China’s lenders
Some emerging market nations along the route of Beijing’s trade initiative may not be used to abiding by contractual terms, analysts say
Increasing infrastructure construction in emerging markets along the route of Beijing’s Belt and Road Initiative will lead to heightened legal risks in project financing and execution, according to a dispute resolution expert.
Some emerging market nations and their state-related entities may not be used to abiding by contractual terms in their commercial dealings, and may see a claim of “sovereign immunity” as justifiable when faced with legal proceedings.
“For some of these governments and their related entities, it may be the first time that they are entering into significant foreign-funded project,” said Paul Teo, a partner and head of arbitration for Greater China at international law firm Baker McKenzie.
“They may be unfamiliar with the structure and operation of the contractual terms, and they may not be comfortable dealing in such a contractual setting,” said Teo, who also advises companies on the avoidance and resolution of cross-border disputes.
They may be unfamiliar with the structure and operation of the contractual terms and they may not be comfortable dealing in such a contractual setting
China could invest US$313 billion to US$502 billion in the 62 nations in Central and South Asia, Africa and the Middle East – along the Silk Road Economic Belt and the 21st Century Maritime Silk Road – in the next five years, according to a Credit Suisse research report.