The Belt and Road Initiative (B&R, OBOR, 一带一路), announced by President Xi Jinping in late 2013, is China’s most ambitious development strategy. It aims to create new economic zones based around the ancient Silk Road trade route overland (the belt) and across the sea (the road).
China expects to trade more than US$2.5 trillion a year with over 60 countries within the next decade. The B&R will affect a total population of some 4.4 billion, which is approximately 63% of the world’s population. Over 600 contracts have already been signed by Chinese enterprises for projects in countries along the B&R routes.
A significant number of infrastructure and other projects are expected to be undertaken under the B&R. In March, New Zealand signed a bilateral memorandum of understanding with China, which formally recognised the B&R. Although New Zealand is not geographically placed along the six economic corridors or the maritime silk road, it could potentially also benefit from infrastructure investment.
In April the Northland Regional Council agreed to provide information to China Railway Group Limited to help it invest in infrastructure in Northland.
Between May 31 and June 7, a delegation comprising senior engineers from major companies including Beca, Aurecon, Auckland Transport and Transpower visited Beijing, Chengdu and Shanghai to look at how Chinese companies can help New Zealand develop its infrastructure.
Although the B&R signals Chinese outbound investment and opportunities, it is not without risks. With commercial relationships that span multiple jurisdictions, unfamiliarity with courts and laws is a particularly significant risk. International arbitration in an arbitration friendly jurisdiction will most likely be a more favoured dispute resolution option. International arbitration affords limited rights of appeal, providing greater commercial certainty, and arbitral awards are enforceable in over 150 countries that have signed up to the New York Convention.
In terms of New Zealand and the B&R, Hong Kong seems to be a suitable arbitration jurisdiction in the Asia Pacific region. Hong Kong will be familiar to many common law jurisdictions and the HKIAC has a number of qualified and bilingual arbitrators. Chinese parties will also likely be comfortable with Hong Kong as a half-way meeting point.