Domestic arbitration solution for looming OBOR disputes

Connectivity of the infrastructure in China and the 64 countries along the Silk Road economic belt and the 21st-century Maritime Silk Road (the Belt and Road) is an important support for implementing the “One Belt, One Road” (OBOR) initiative. In order to build these massive infrastructure connectivity networks, governments at all levels in China, and domestic investors, have gone abroad as transnational investors to establish co-investment contractual relationships offshore with other Chinese enterprises. These investors, as employers of infrastructure projects offshore, established numerous contractual relationships concerning construction projects with Chinese contractors abroad.

Large construction enterprises have become the general contractors of the projects of the OBOR initiative. When they undertake a number of large-scale infrastructure projects in countries along the Belt and Road, they establish a wide range of subcontracting relationships with domestic state-owned enterprises and private construction enterprises, which also went abroad due to the long-term domestic co-operation relationship among enterprises, the configuration of construction technology, the purchase and sale of raw materials and many other reasons.

In the process of fulfilling and executing contracts for overseas projects, it is inevitable that disputes will arise among Chinese investors offshore, among the employers and contractors, as well as among the general contractors and subcontractors, for various reasons. It is understood that disputes over engineering contracts must be under exclusive jurisdiction according to the laws of various countries (including China) and must be submitted to the courts where the projects are located. To avoid bringing lawsuits to overseas courts, Chinese companies usually specify in their contractual relationships that disputes be governed by Chinese laws and settled by China’s arbitration institutions.

Zhu Shuying is the director of City Development Law Firm and chairman of the construction project and real estate committee of the All China Lawyers Association