This paper is directed to
globalising trends in build own operate transfer (“BOT”) projects which may
take place in East Asia[1]
over the next decade.
There are a number of
infrastructure projects lining up for East Asia over the next ten years[2].
In fact, to date, we have seen relatively few successful BOT projects across
East Asia[3].
It seems certain that the number of BOT projects in the region will increase
dramatically over the next decade for reasons including the current, depressed
economic conditions in the respective host countries, yet a huge, immediate need
for infrastructure projects across the region, the desire of major
international consortia (predominantly, Japanese, US, European, Australian…..)
to promote projects for their own commercial/investment reasons, and the
likelihood (as has been observed in Australia since 1989) that the successful
completion of BOT projects in the region will progressively lower the
transaction costs/hurdles for such projects.
BOT projects, by their nature,
require multiple, complex inter-dependent agreements, between multiple private
sector and public sector parties. On BOT projects across East Asia, in addition
to the usual issues which arise in providing for long term projects, the
project agreements are likely to be affected by several further factors:
·
the trend towards
globalisation of law[4]
·
a move/desire towards trade
law harmonisation across the region[5]
·
the depressed economic
conditions across East Asia[6]
·
varying quality of host
country legal systems, including BOT legislation and procedures, across the
region[7]
The thesis of this paper is that
BOT project agreements will evolve, across the region, with substantive common
features, including dispute regimes, because of parties common to the
transactions, and the experience derived from completed projects, but with
idiosyncratic changes on a country by country basis to reflect matters such as
culture, economy, variation in legal systems, politics….
The fundamental basis for build
own operate transfer projects is the introduction of private sector investment
into public sector projects. A
government agency with a desire to deliver infrastructure services contracts
with a private sector sponsor to obtain the concession, build the infrastructure
facility, own the infrastructure facility for an agreed period (potentially up
to 30-40 years), operate and maintain the infrastructure facility during the
concession period, and, at the end of the period, transfer the infrastructure
facility to the government agency.[8]
There are several features
special to BOT projects over and above other major construction projects,
supply projects, pipeline projects, or other major contracted works, which
arise because of the nature of a BOT project.
Those features include[9]:
·
there are multiple project
agreements, all required to be inter-dependent;
·
there are multiple parties,
each requiring contractual rights and remedies in relation to every other
party;
·
the projects deal with
publicly-owned infrastructure;
·
the contracts are required
to operate over very long periods (possibly up to 30-40 years or, conceivably,
longer);
·
the financing of the
projects is, usually, critically related to the tax regime of the host country;
·
enforceability of the
contractual rights is required against, potentially, government agencies of the
host countries;
·
typically, large sums are
usually involved.
The dispute provisions,
historically, on Australian projects, have tended to be silent. The contracts involving multiple parties, and
each of the contracts being interdependent on other contracts, an arbitration
clause, in a country where there is perceived to be an adequate court system,
is usually not the preferred option.[10]
In BOT projects where international parties are involved, and rights may need
to be enforced against host countries where the local legal system may not be
so well accepted by the international parties, arbitration clauses have been
universally adopted.[11]
The types of disputes which
might need to be resolved, potentially, in international BOT projects could
include any or all of the following:
·
tariff adjustment
provisions (relating, for example, to legislative changes, delays by the
government agency,…);
·
late delivery;
·
under performance;
·
long term actions
potentially affecting demand;
·
maintenance failure;
·
financial default;
·
environmental damage;
·
property issues.
These disputes could potentially
occur over periods, up to 30 to 40 years, from the time the project documents
were executed. Typical possibilities for dispute mechanisms in project
agreements comprising such projects might include any or all of litigation,
arbitration, mediation, structured meetings between high ranking executives
from particular organisations, and other ADR possibilities. Certain of the
project agreements might also include specific dispute resolution mechanisms
(for example, the construction contract might include a dispute panel[12],
a dispute prevention panel[13],
a proof checker[14], etc.).
These dispute regime questions
are likely to be affected, project by project, by factors such as culture,
economy, variable legal systems, politics….
1.2 The
Backdrop to BOT Projects in East Asia
Infrastructure has been delivered through BOT projects in Australia since
1989-90.[15] Since that time there have been of the order
of 100 major BOT projects in Australia. Interestingly, the rise of BOT projects
in Australia coincided with the dramatic fall of the property market, and the
economic down turn generally. It seems
that the BOT style of project became popular when major contractors had little
work in their order books, and governments had little capital funds available
for needed infrastructure projects.[16]
In contrast to Australia, the
USA started performing infrastructure projects in the late 1970’s following US
Federal legislation[17]
introduced by the Carter Administration compelling private sector investment in
certain utility projects, with the aim of introducing private sector
efficiencies into public sector projects.
Over the last decade, in East
Asia, the number of infrastructure projects was not, perhaps, as high as might
have been predicted.[18]
This was probably due to the complexities in promoting such projects, and
successfully negotiating the substantial government processes involved.[19]
Since the Asian economic crash, it appears now even more likely that the need
for infrastructure services is only likely to be fulfilled by the
infrastructure of private sector investment to deliver those projects. In most instances, that private sector
investment would come from outside the host country.
The Department of Foreign
Affairs and Trade (DFAT)[20]
in a report dated 28 October 1998 comments that for private sector
infrastructure investors to become interested in Asian BOT projects,
governments will need “increased transparency and (more) certain legal
environments…and regulatory frameworks….”.[21]
The DFAT report comments that countries with Anglo-US law systems such as
Singapore, Hong Kong and Australia provide best practice examples of
transparent and predictable legal systems which provides certainty for private
infrastructure investors.
The DFAT report notes that, to
overcome gaps in those regulatory environments, several East Asian countries
have recently introduced specific legislation most notedly BOT laws to promote
and regulate private sector infrastructure.[22]
The extent of private sector infrastructure investment in East Asia is set out
on a country by country basis as Appendix 1.1 to the report. That table suggests, in brief:
·
little substantive
investment in Singapore, Korea and Taiwan through the period 1995-1998;
·
substantive private sector
investment in public infrastructure in Indonesia, Malaysia, Thailand, China,
Hong Kong and the Philippines during the period 1995-1998;
·
the substantive investment
in Indonesia, China and Philippines was in the energy sector;
·
the figures, even through
the South East Asia economic crisis, are substantial (of the order of $8
billion dollars in 1995, $36 billion dollars in 1996, $17 and $14 billion
dollars in 1997 and 1998 respectively.
·
In recent years, there have
been a number of major power projects in Vietnam[23].
·
Japan has a strong
involvement in BOT projects in East Asia, as a participant[24]
but not (yet) as a host country.
The report sets out the basic
information as to the risks to be addressed within BOT projects and briefly
addresses the need of adequate dispute resolution mechanism within the BOT
projects to give comfort to foreign investors.
There is substantial experience
on the negotiation and documentation of BOT projects in USA, Australia, Europe,
Hong Kong and other countries where, it may be fair to say, the traditional
legal systems are reasonably well developed and substantially reliable. In East Asia, by comparison, these projects
are to be performed in countries whose legal systems are, presently, highly
variable in quality.
The evolution of BOT projects in
South-East and North Asia is unlikely to be uniform. It is likely to be
affected by many factors, which will have a varying influence on a country by
country basis. Those factors will include:
2.1 Globalisation
of Legal Services/Harmonisation of Laws in BOT Projects?
The trend towards globalisation of
economies, globalisation of trade and, in particular, globalisation of law, is
likely to be observed in BOT projects across East Asia.
Shapiro[25]
describes globalisation of law as “some movement towards a relatively uniform global
contract and commercial law”[26]. He suggests, as do other commentators[27],
that Anglo-US law will have a substantive effect on law as it evolves in
less-developed countries. He comments:
“…this
globalisation of law through private corporate law making rather naturally
takes the form of the global Americanization of commercial law”[28]
This, it is submitted, is likely
to be true, more than ever, in the development of BOT projects. There is a
substantial body of experience on BOT projects in the USA dating back to the
late 1970’s[29]. Indeed, this is what we have seen in the
Australian context. The 100 or so BOT
projects which have been documented and executed in Australia since 1990 have
been substantially based on the American style of BOT project.
Shapiro notes, further, that
there has been a substantial increase in the sheer volume and penetration of
law across the world. He refers to this
as a “global acceleration of law and lawyers”[30]. He notes that some countries, in particular
Japan, have attempted, through draconian measures, shut their citizens off from
lawyers and courts[31]. He concludes, however, that the
globalisation of markets, even in those nations, has been such that many
countries will inevitably become parties to international transactions, and
will need and acquire legal services as necessary.[32]
Shapiro suggests that China may
be an exception to this rule. He notes
that China has traditionally had a legal system which was both complex and
theoretically all embracing, where the law was implemented almost wholly
without lawyers and certainly without a private professional bar.[33]
It seems fair to say, however, that, in major transactions, the non-involvement
of lawyers, both local and international in China, however, is unlikely to
occur[34],
and certainly not in the area of BOT projects[35].
Cate[36],
in an article directed to intellectual property rather than globalisation of
law per se, comments that the economic significance and inherently global
nature of digital information poses extraordinary challenges to the power of
national governments to regulate (their) ownership and use[37]. He comments that, in fact, the globalisation
of information challenges are such that individual countries are restricted to
some extent in their ability to pursue other objectives with their intellectual
property laws[38]. He
concludes that we are presently witnessing a globalisation of intellectual
property regulation in a “near futile effort” to keep pace with the
globalisation of information, with significant ramifications for national
sovereignty.[39]
Verzola[40]
discusses globalisation in the context of colonialism in the South-East Asian
region. He describes the “first wave” of globalisation as the period of
colonization where countries of superior military might forcibly imposed rule
over the colonies, that military conquest being followed by the imposition of
new religions and cultures: “we bring you Christianity….we bring you
civilization…we will teach you democracy”[41]. He suggests that the “second wave” of
globalisation was the range of anti-colonial responses, including successful
armed revolutions (as in the Philippines), peaceful withdrawal of colonial
forces (as in Malaysia, India…), and independence movements (as in China).
During this phase, Verzola suggests, direct control was replaced by cultural
control: “we bring jobs” “we bring technology” “we will lend you money for
development” “we will protect you from communism”….[42]
Verzola suggest that the global information economy represents the “third wave
of globalisation”[43].
Barber[44]
relates the globalisation of law to the spread of democracy. He describes the forces of globalisation
“pressing nations into one commercially homogeneous global network, one McWorld
tied together by technology, ecology, communications and commerce”[45].
Delbruck[46]
comments that for more than a century an increasing number of domestic/national
matters have become “internationalized”.
He notes, for example, greenhouse effect issues, which are now of global
significance, international rather than national concern, since they affect
humankind everywhere.[47] Delbruch refers to the “globalizing forces
in the market”[48], in
particular GATT, the World Bank, the IMF, OECD…. but notes that such forces
apply only to “the sunny side of the globe..”.[49]
Perry[50]
refers to the Sri Lankan experience to examine whether, in fact, the
globalisation of law is a feasible possibility in countries with “developing
legal systems”. He notes the difficulty for globalisation of law where there is
inaccessibility to local laws, ambiguous, untested and conflicting law,
bureaucratic inconsistency, judicial impartiality, court delays, corruption,
and political interference. Perry concludes: “Current efforts to achieve legal
globalisation will not be successful while international legislators fail to
acknowledge the individual quirks of national legal systems.”[51]
Hirst[52]
comments that globalisation is not new. He downplays the views that
international capital does not seem to have flown, in the face of international
de-regulation, to markets of low wages, that multi-nationals seem, in reality,
to be substantially based in their own countries, and that globalisation has
not swept away national economies.
Weiss[53]
also concludes that the proponents of globalisation overstate the effect of the
changes in the world economy, and understate the variety and adaptability of
state capacities. She suggests that the hypothesis: weak globalisation (strong
internationalisation); state power reduced in scope.[54]
Ryland[55]
comments that the legal systems in the East Asian region are not as integrated
as in Europe or North America, and that significant differences are likely to
persist shaped by social factors which are likely to continue to be different
in each country. Ryland suggests that
one of the critical areas in which cross-border remedies are likely to be
critical will be major projects with multiple parties, for example
infrastructure projects. Ryland notes
the current harmonization initiatives in the region, including recognition and
enforcement of foreign judgements, foreign arbitral awards, service and
evidence, and regulatory co-operation, and calls for, consistent with Dr.
Mochtar’s[56] comments in
the same seminar, greater support for further harmonisation initiatives in the
region. He suggests that such initiatives might include, for example, a forum
established under the auspices of APEC.
Berger[57]
in a review of international arbitral practice and the UNIDROIT principles of international
commercial contracts, comments that over the last decade the unification law has become privatized through a
restatement-like set of rules and principles, drafted like black letter law,
but issued by a private working group of specialist practitioners and academics
rather than by convention or model law[58].
Berger
asks the question whether this approach is the correct way to achieve the
degree of harmonisation and unification of international contract law necessary
to tackle problems of international trade commerce. He concludes that the UINDROIT principles of international
commercial contracts have furnished international arbitrators with a practical
tool for comparative decision making[59]. He suggests that the increasing reference of
international arbitrators to the principles promotes the development of genuine
transnational case law of international tribunals.
Dezalay and Garth[60]
have been involved over several years in a long term project entitled,
“Constructing an International Legal Order and Transforming the State”. The authors have concluded 300 interviews
with international legal practitioners and other participants culminating in a
series of articles and a book entitled Dealing
In Virtue; International Commercial Arbitration and the Construction of a
Transnational Legal Order.
Dezalay
and Garth describe how an elite group of transnational lawyers constructed an
innovative legal field which has given them a central and powerful role in the
global market place. Their thesis is that developments in the transnational
sphere (the human rights movement, new trade regimes in NAFTA and GATT, the so
called third world debt crisis, the spread of business law firms and “global”
law schools…) are part of a process transformed by institutions and rules,
national and transnational, that govern at the national level.
In a
1995 paper[61], Dezalay
and Garth concluded that there was a group of international lawyers who
regularly became involved in international commercial arbitrations, to the
point where they controlled that area of law and its development.
Dezalay
and Garth subsequently extended their enquiry, to examine other phenomena
leading to the movement of capital into Hong Kong and China[62].
Appelbaum[63]
rejects the notion that: “….western business and legal practices are becoming
universal as a consequence either of the globalisation of capital or the
diffusion of professional training and norms..”.[64]
He suggests that the rise of the East Asian economies, especially China, may
lead to the decline of North American and European global economic dominance
and its associated legal forms.
Appelbaum takes issue with
Dezalay and Garth[65]
in relation to their thesis that the spread of Anglo-US law firms into Hong
Kong and China, as had occurred in Europe before, will have the effect of
spreading western legal practices into those markets. Appelbaum disagrees with
the Dezalay and Garth reasoning that neither Confucianism (with its hostility
to lawyers and confrontation) nor communism (with its emphasis on party rule)
afford cultural barriers to the adoption of western legal practices in China
and Hong Kong[66].
Appelbaum expresses the view
that the Chinese culture of guanxi is
substantially embedded in those markets, and as such we are more likely to
observe, over time, legal practices dominated by regimes of “flexible
accommodation….(which) would seem to have an affinity for the informality and
personal networks long associated with Chinese businesses“.[67]
The
concept that linkages between trade and various areas of social concern are
able to be observed was discussed, in general terms in a conference reported in
the University of Pennsylvania Journal of international economic law[68].
Garcia[69]
comments that the fact of linkages between trade and other areas of social
concern is not new, referring to previous papers in relation to trade and
labour rights, trade and public health, trade and human rights, etc. He
suggests that the “the trade linkage phenomena is changing not only the way we
understand trade law and policy, but also the formulation and direction of
trade policy itself”.[70]
Garcia[71]
comments that the recognition of particular trade links (for example, linkages
between trade and human rights, linkages between trade and environment…) affect
the way we negotiate and design trade rules, the role and nature of
international economic law institutions’ response to linkage issues, the extent
to which the international trading system upholds or defeats basic democratic
values and calls into questions or affirms its own legitimacy, and the manner
in which international economic law is taught in the class room[72].
In the
same seminar, Charnovitz[73]
agrees that the use of trade agreements as a vehicle to agree upon non-trade
issues is an old phenomena. He suggests
that the practice was probably reflective of a view of trade as being one of
many issues of international concern[74]. He refers to the example of policy
intervention by the International Monetary Fund and the World Bank. The intervention, through trade means, in
the economies of particular countries is but one example of the trade linkage
phenomena. He notes the traditional reasons for trade linkages to be
enhancement of policy effectiveness, to rebalance policy spillovers induced by
new treaties, to build coalitions either domestically or internationally, to
gain economies of scale[75].
Before the recent Asian economic
crisis, the region was sometimes referred to as the “South East Asian miracle”.
Anderson[76] suggests
that there were four basic conditions for the South East Asian miracle which
preceded the current economic crisis:
1. The geographic arc of the Cold War in relation to the
region.
2. The region’s geographical propinquity to Japan (in the
early 1970’s, Japan had become the single most important external investor in
the region.)
3. The success of the communist movement in China, which had
the effect of keeping China from playing a significant economic role in or
competition with South East Asia until the middle 1980’s.
4. In the late 19th century millions of young,
mostly male, mostly illiterate people left the Chinese regions of Fukien and
Kwantang for the labour-hungry European colonies in South East Asia and Siam.
This resulted in minority Chinese communities in those countries, who tended to
be excluded from positions of government, university, etc. Those Chinese
minority communities tended to concentrate on the private commercial sector,
legal and otherwise.[77]
Katzenstein[78]
suggests that there is now the emerging region of East Asia, in addition to
America and Europe. He comments that the massive inflow of Japanese investments
in recent years has aggravated severe bottlenecks in the public sector
infrastructures of countries like Indonesia and Thailand. Those bottlenecks are, in fact, turning out
to be a serious impediment for a future growth of Japanese investment in those
countries.[79]
Katzentein suggests that
increased Asian region co-operation appears to be an idea whose time has come,
at least in terms of public debate, and that inter-regional corporation is
potentially a necessary response to the process of European integration as well
as to the US-Canada free trade agreement, soon to be joined by Mexico. He also
observes, however, the sharp growth in Japanese influence and power in Asia
(the total GNP of the East Asian region amounts to less than 10% of Japan’s
GNP). Accordingly, it may be that the
other Asian countries see the US as an indispensable counterweight to Japan’s
growing power.[80]
Bello[81]
notes that with the encouragement of the IMF and the World Bank, many Asian
countries followed a three point strategy for attracting foreign couple;
liberalization of the foreign financial sector, eliminating restrictions on
capital flows, maintenance of high domestic interest rates in order to attract
portfolio investment and bank capital, and pegging the national currency to the
dollar to reassure foreign investors against currency risk.[82] Bello notes the IMF even revised its
articles of association to expand its jurisdiction in relation to the
liberalization of capital sector within the affected countries.
Khor[83]
comments that the East Asia economic crisis is probably the most important
economic event in the region in the past few decades and for the next few
decades. He notes that most commentators, though differing in their analysis of
the reasons, causes, and solutions, all agree that the economic crisis is
likely to last substantially longer than first thought. He suggests that the events leading to the
crisis included financial liberalization, currency depreciation and debt
crisis, local asset boon and bust and liquidity squeeze, and easing of fiscal
and monetary policy.
Khor
notes that the three countries under IMF direction have gone into deep
recession (Indonesia, Thailand, South Korea).
He suggests that the East Asian crisis has shown that there is a need to
regulate the global financial system, that we need to know the major
institutions and players who own financial assets and their behaviour and
operational methods and the markets that they operate in, and that the one
great lesson from the crisis is the critical importance for developing
countries to properly manage interface between global developments and national
policies, especially in planning a nations financial system and policy.[84]
Lim[85]
comments that within Asia the economic crisis had not only serious domestic,
social, political and economic impact, but it had affected international
relations as well as intellectual and policy discourse[86]. Lim notes that, as a general proposition,
besides the revaluation and austerity reforms, “structural reforms” are usually part of IMF policy
conditions[87]. Such structural reforms usually include
trade liberalization, investment liberalization, financial sector reforms to
reduce debt burdens and attract capital.
Financial sector reforms, privatization of state enterprises and
dismantling of private as well as public sector monopolies to reduce government
expenditure, increase efficiency and attract new capital.
Lim
suggests that, once Asia recovers from the current crisis, its longer term
economic prospects remain the brightest in the world[88]. He refers to the region’s natural resources,
big population (labour and market), low current levels of income and
consumption, small governments, flexible wages, high savings and favourable
demographics. Lim suggests that the
policies adopted through the economic crisis will, in fact, encourage better
channeling of foreign investment into Asian investments[89].
He
notes, however, that Asian governments may, as a consequence of such
restructure, “fear losing national sovereignty not only in terms of ownership
and control their own economies, financial systems and enterprises, but also in
terms of political and social autonomy and cultural integrity”.[90]
Lim
also notes the efforts to strengthen region economic linkages, for example the
ASEAN countries advancing their proposed inaugural date of their regional free
trade area by one year to 2002. This,
Lim says, is in an effort to enhance their attractiveness as a region to
foreign investors.
Wade[91]
suggests that we may be on the verge of a world slump. He suggests that the intensification of
insecurity and poverty that confronts hundreds of millions of people in Asia
makes this one of the worse economic calamities of the 20th
century. He also suggests that abrupt
shift to negative growth in what had been the world’s faster growing region has
sent a contractionary wave coursing through the world economy setting off a
cycle of events elsewhere.[92]
Wade
suggests that the crisis was one of global crisis management. He comments that in Asia the IMF not only
lead but in effect monopolized the international rescue effort, with little
regional co-ordination with the World Bank and Asian Development Bank in a
subordinate role[93].
Wade
concludes that Asia is moving strongly towards capital controls and that there
are good theoretical reasons why it should.[94]
Effectively US funds are to be withheld from the IMF until all seven countries
have agreed to require the fund to withhold loans from current countries that
fail to meet certain conditions (to eliminate government-subsidized credit to
“favoured” businesses or institutions…, to liberalize restrictions on both
trade and investment….)
It is
interesting to note a recent comment from Noah Chomsky recalling that when the
US took over Cuba 100 years ago, it cancelled Cuba’s debt to Spain on the
grounds that the burden was “imposed upon the people of Cuba without their
consent and by force of arm”. Such
debts were later called “odious debt” by legal scholarship. The same doctrine
was invoked 25 years later when Costa Rica cancelled the debt of its former
dictator to the Royal Bank of Canada, the US Supreme Court Chief Justice
William Taft, in arbitration, ultimately concluded that the bank had lent the
money for “no legitimate use” so its claim for payment must fail. Chomsky
suggests that the logic extends to much current international debt as “odious
debt….with no legal or moral standing, imposed upon people without their
consent, often serving to repress and enrich their masters.”[95]
The
effect of the crisis, therefore, has been to introduce, into the region,
substantial structural reform, to encourage international investment, to
enhance local enforcement regimes for the benefit of foreign investors, and to
remove much of the locally corrupted practices involving private and government
monopolies. Clearly, the reforms will have critical relevance to future BOT
projects.
Berger[96]
notes the debate as to whether APEC is “an important vehicle for regional
integration and economic prosperity” in the South East Asia region or, alternatively
is “an important vehicle for maintaining and extending US influence in the
region”[97] He suggests that the latter interpretation
highlights the way in which Anglo-US liberalism has been increasingly
challenged by influential East Asia narratives. He suggests this challenge to Anglo-US liberalism, and to US
predominance in the region more generally, is due to the resurgence of Japan
and growing integration of countries in North East and South East Asia into a
complex network presided over by Japanese based multi-national corporations.[98]
Berger suggests that significant
recent changes have included the rise of Japan and China as powers in the
region, and a move away from US centered cold war hegemony towards
significantly reconfigured relationships between the major powers in the
context of wider global shifts. He
suggests that these global changes include an increased role for international
financial institutions and trans-national corporations, and the dramatic
internationalization of production, trade and finance, with important changes,
and a changing role for, territorial states.[99]
Berger traces the emergence of
APEC out of previous moves including the creation of the Asian Development Bank
in 1966 (primarily under the auspices of the Japanese government), the creation
of SEATO in 1954 and the Asian and Pacific Council, neither of which
organisation lasted beyond the 1970’s, and the Association of South East Asian
Nations (ASEAN). He notes the Japanese
government proposal for a Pacific Free Trade area in 1967 which did not gain
general acceptance but did lead to the foundation of the Pacific Basin Economic
Council (PBEC) in 1967. He also notes
the rise of Pacific Economic Co-operation Conference (PECC), producing reports
and recognitions, but not binding.
Subsequently APEC had its founding meeting in 1989 and subsequent meetings in
Seattle in 1993 and Bogor, Indonesia in November 1994. Further meetings lead to the action agenda,
at Osaka in November 1995, leading to verbal assurances by the representatives
of all member governments that they would make every effort to meet the
economic liberalization goals of APEC.
In a
recent report, the Asia Development Bank (ADB) announced that it intends to
take on a higher profile to assert its premier position in the region by taking
a more aggressive stance by financing to crisis-borrowers.[100] In particular, the ADB intends to promote
financial guarantee programs to Asian companies and projects that might
otherwise be difficult and expensive to finance. At its recent annual meeting, the ADB underlined the importance
of credit enhancement to Asian borrowers.
The ADB intends to provide instruments to provide political risk
coverage in project finance deals. The
bank received an additional of US$3 billion from the Japanese government this
year to support loans on an untied basis to borrowers in countries worst hit by
the economic crisis.
Chirathivat[101]
reviews the history of ASEAN and APEC and suggests that East Asia as a regional
grouping is being regarded as one of the most successful exercises in the
developing countries. He suggests that
APEC is very much the future economic forum for the region. He notes the Bogor declaration which set the
vision of APEC on trade liberalization of the year 2010 for developed economies
and 2020 for developing economies, followed by investment liberalization, trade
and investment facilitation, with a view to increased business, and
strengthening economic and technical co-operation.[102].
Nottage[103]
reviews the 1992 PECC Harmonisation Proposal, discussed in Canberra (1992) and
Singapore (1993) and suggests that the benefits of adopting such trade law
instruments were perceived as greater certainty for traders and thus reduced
cross-border transaction costs, greater enforceability of an arbitral award,
and attraction of keeping arbitrations in the region.
The World Bank[104]
has noted (though the comments were not directed to the East Asian sector) that
“low quality and high costs of infrastructure services” were the principal
problems to development and equitable income growth[105].
Arrow-Smith[106]
in a new book entitled Public
Procurement; Global Revolution notes public procurement reform in
developing and transitional countries (in particular with reference to the UNCITRAL
model law on procurement of goods, construction and services), and notes the
significant procurement legislation in states where no procurement legislation
previously existed.
Bolmin[107]
reviews the increasing private sector involvement in the financing of
previously public infrastructure work in the areas of electricity, telephone,
water, transport… He notes the PPI
initiative (private participation in infrastructure) of the World Bank, largely
inspired by the American and British experience of de-regulation and
privatization. Bolmin suggests that the purpose of co-development is to define
the operational terms of the partnership needed between the public and private
sectors to ensure the success of major infrastructure projects. He suggests that the PPI principles proposed
by the World Bank are vague and have resulted in lesser projects being built
then might otherwise have occurred.
Cultural issues in international
BOT projects remain a critical factor (in fact, they are of primary
significance….in competition with the factors of globalisation, harmonisation
…..).
Shibasasaki[108]
suggests that Japanese society is “very different” from Western countries. He
expresses concern that this may result in a “decrease in efforts to achieve
mutual understanding”. He comments that western individualism does not exist in
Japan. He notes that contracts are not widely used in Japanese society, and
notes that the Japanese government emphasizes the traditional “harmony” or “peace”
(“wa”).
Rahn[109]
comments on the plurality of human cultures showing the potential inherent in
every human being. He notes the Roman law concept of individualistic legal
relationships, and Japanese notion of giri,
a “moral obligation to loyalty incurred by special favour which is borne by the
beneficiary until he has satisfied it by a definite but unspecified act of
gratitude”.[110]
Gibson[111]
suggests that resolution of cross cultural issues are intimately connected with
communication issues. Gibson suggests that
communication will depend on the source, the content and the style, the
cultural differences between the communication of the message and the channels
through which messages are communicated.
Gibson refers to members of
cultures such as those found in Indonesia, China, Japan, South America, India
and Pakistan who tend to exhibit high power distance and in relation to
research suggests that communicators would be more likely to use formal
channels of communication rather than informal channels of communication. In
contrast, members of society in the USA, Canada, Germany and Australia tend to
view unequal power distribution as unacceptable and, accordingly,
communications within these low power distance cultures are expected to depend
more often on informal channels of communications than on formal channels of
communication.
Gibson suggests[112]
that some research suggests that sharing of culture beliefs is not always
essential to successful communication.
Gibson refers to five phases of communication: encouraging,
transmitting, receiving, decoding and feedback.
Chatman[113] defines
negotiation as “the deliberate interaction of two or more social units which
are attempting to define or redefine the terms of their interdependence”.[114] Chatman concludes that communication
scholarship sets out a perspective for understanding the negotiation process,
for examining bargaining interaction as a system, and for exploring the micro
elements and subtleties that frequently alter the course of negotiations.[115]
Chen[116]
suggests that our understanding of the connection between culture and
co-operation, and its implications for organisation of behaviour, is just
beginning to develop. Chen concludes
that comparative knowledge yielded from new research will provide a more valid
base for initiating inter cultural co-operation. Further, various degrees of mutual adaptation and signage may
occur especially in multi-cultural groups, that it is possible that new types
of co-operation mechanisms may emerge to coincide with the mergers of a “third
culture” (for example, a multi-national team of individualists and
collectivists may develop a third culture of communalism in which there is a
dual emphasis and balance on both the individual and collective rationality and
on both individuality and sociality).
Greenwood[117]
analyzes the relationship between cultural identities and the global political
economy in terms of anthropology and concludes that the United States society is
likely to experience increased international economic restructuring in which
the US is an important but not dominant player. He suggests that the US will enter an area in which international
organisations are involved increasingly in administering and adjudicating a
wide variety of cultural claims for rights, goods and safety.
Salacuse[118]
discusses the notion of working with foreign partners and notes the
international construction industry has developed an important form of
deal-managing mediation that employs a designated third person, often a
consulting engineer to resolve disputes which may arise in the course of a
major construction project. The
construction contract will designate a person to act as a review board, a
permanent referee or dispute adviser, and to handle disputes as they arise in a
way that will allow the construction work to continue.[119]
Bailey[120]
reviews the possible role for APEC in international commercial arbitrations
leading to APEC’s dispute mediation experts’ group and adoption of a series of
principles in its meetings, most recently in Singapore in April 1997. Bailey suggests that some of this work may
have been repetitious of work previously done by UNCITRAL, the International
Chamber of Commerce (ICC), and various arbitral and other dispute resolution
bodies.
Bailey reinforces the need for
investors to have adequate enforcement regimes: “…Businessmen have always been
ready to accept a commercial risk inherent in a foreign transaction. On the other hand the businessman, weighing
his decision to put money to work in foreign parts of the world, at least seeks
a climate of fair play. It is the
political climate which concerns him.
Therefore, if the investor believes he can secure impartial resolution
of any dispute arising with the host state, this may be enough to warrant his
risk”.[121]
Bailey suggests the factors to
provide the test for appropriateness of a country as a forum for holding an
arbitration including quality of the law of the jurisdiction as regards to
arbitration, whether or not the municipal court system or the jurisdiction is
supportive of arbitration, whether the jurisdiction allows enforcement of
relevant arbitral awards, whether there is a supportive arbitration culture,
transparency, and whether the doctrine of sovereign immunity still applies to
regular commercial transactions.
Bailey notes that the 18 member
countries of APEC present a mixed picture.
Though most jurisdictions are parties to the New York convention and the
ICSID convention, there are problems as to the quality of the domestic
arbitration law as regards international commercial arbitration.[122] Bailey notes that the number of investment
disputes is increasing in particular that references under ICSID are
growing. Bailey concludes that
efficiency and cost are highly relevant considerations to business interests in
dispute resolution. He suggests that
this is the basis for increased focus of case management, mediation and cost reduction.
China has an established
arbitration centre with established rules based in most respects on arbitration
rules commonly in place in Anglo-US legal systems.[123]
Vietnam has recently introduced its Statute of the Vietnam International
Arbitration Centre.[124] The statute provides for the creation of the
Vietnam International Arbitration Centre, having jurisdiction over disputes
arising from international economic relations, such as foreign trade contracts
where investment, tourism, international transport, etc.[125]
The Japan Commercial Arbitration Association has published rules and recently
amended its laws to permit foreign laws to represent parties in the
international arbitration conducted in Japan.[126]
A 1995 report by PECC suggests
that many APEC economies have worked hard at streamlining their investment
procedures[127]. The
report comments that at the heart of any international investment agreement is
an effective dispute mechanism.[128]
The report suggests that APEC’s dispute settlement procedures require disputes
to be resolved by negotiation and consultation between members and, failing
this, through arbitration in accordance with members’ international
commitments, or through some agreed arbitration procedures acceptable to both
parties[129].
The report refers to the World
Bank guidelines on the treatment of foreign direct investment, adopted in 1992,
and notes, in particular that disputes are to be settled by negotiation between
the parties concerned, failing this dispute mechanisms, including consolidation
and binding independent arbitrators, and that governments are encouraged to
accept settlement through ICSID.
Schneider[130]
reviews individual rights in arbitration, where private parties bring actions
against states in respect of foreign investment. He notes the creation of the
International Centre for the Settlement of Investment Disputes (ICSID) under
the auspices of the World Bank. Schneider comments on the necessity for
transparency in dispute resolution systems suggesting that, when rules and
procedures are clear, parties are more likely to use the system, that published
decisions of dispute resolution tribunals provide lessons and possible
persuasive authority for other dispute resolution tribunals, and that
transparent rules and decisions increase predictability of the system.[131]
Schneider comments that the
small number of cases referred to ICSID over the years, and the
unpredictability in terms of appeals, have lead many government and corporate
lawyers to advise their clients against this dispute resolution method.[132]
Mochtar[133]
comments that the rapid expansion of trade and commerce accompanied by large
investments has led the developing world to accept arbitration as the norm. He
notes the cultural differences between the western concept of arbitration (legalistic
and adversarial in nature) and the eastern concept (more flexible). He suggests
that countries in the Southeast Asian region are “straddling” both eastern and
western views about arbitration.
Waelde[134]
comments that the historical intention of international investment law was the
protection a sovereign tried to obtain for the property of its citizens abroad,
in exchange for a reciprocal prominence.
In the global economy, however, the main protection is no longer the
strong arm or the smart legal adviser of the home state, but rather the massive
power of the markets to sanction misconduct by deviant host states[135].
Waelde
suggests that the main concern is reputation, a bad reputation will lead to
investor strikes, capital outflow, effective blacklisting by investors.
Compliance with international economic law would, on the other hand, lead to a
“quality seal” of a country expressed in the political risk and credit rating[136]. Waelde suggests that the key concept of the
international investors is “political risk”[137],
and the closely related concept, “transaction cost”[138].
Waelde
suggests that one of the main innovations in recent enviro-lateral treaties and
multilateral investment treaties has been the introduction of private rights
for investors to bring claims before international arbitral tribunals against
host states for breach of specified rules of behavior by states towards
investors[139]. He suggests that there is little argument
that investors will perceive this as much superior to the insistence on local
courts[140].
Frankel[141]
discusses cross-border securitisation as a concept in international investment
projects. He comments that the
government’s regulatory role, in securitisation, is reduced because
sophisticated buyers have power to demand loans made prudentially. Frankel
notes that this idea was voiced in a 1997 conference in Beijing at which it was
suggested that even if China does not need foreign currency it needs foreign
investors to exercise market discipline on state enterprises that are privatized
by issuing securities to investors (for example, foreign investors could insist
that these issuers could adopt internationally acceptable accounting systems).[142]
Frankel
concludes that uniformity in international norms will probably emerge through
mechanisms such as the IMF, the World Bank, co-operating governments and
regulators, bodies developing principles and models of law, and private
agreements feeding customary laws that, like precedents, gain cohesive momentum
as they are replicated over time.
China has a track record in BOT
projects. The DFAT[143]
figures for private infrastructure investment since 1995 are as follows:
1995
$1.5 billion
1996
$9.0 billion
1997
$3.9 billion
1998
$4.5 billion
The substantive projects have
been in energy ($13.7 billion 1995-1998) and transport ($4.2 billion
1995-1998).[144]
The effect of the Asian crisis
on China’s BOT projects is not immediately apparent. It appears, however, from some reports, that China expects to
spend of the order of $65 billion US over the next 5 years to complete a
national express phone network and specialised cargo transport routes in
addition to its other infrastructure developments[145]. In Beijing alone, it is estimated that
approximately $12 billion of funds are to be invested into infrastructure
projects between 1996 and 2000, principally in the projects involving
environmental protection, ports, water, electricity, health, roads and
telecommunications.[146]. The Pudong area of Shanghai is expecting
capital investment of the order of $36 billion over the next five years,
including the new Pudong international airport, a light rail system, an
advanced telecom network and other projects[147].
China has introduced a number of
laws aimed at introducing Anglo-US style commercial laws since the cultural
revolution[148]. The China
International Economic and Trade Arbitration Commission has, for some time, had
an established arbitration procedure and established arbitration rules[149].
China has recently introduced a number of reforms to the structure of
government institutions aimed at reducing the cost of government by closing or
merging ministries and to separate the function of government from the
commercial management of industrial enterprises.[150]
In April 1988, the State
Planning Commission introduced provisional regulations on foreign investment
build-operate transfer projects[151]. Interestingly, the provisional regulations
provide that the state is to guarantee the exchange and transfer to foreign countries
of the foreign exchange necessary to repay the principal and interest on funds
and to pay the project company’s dividends[152]. The regulations provide (correctly, it is
submitted), that the government authorities will not provide any form of
guarantee regarding the rate of return on the project investment[153]. The regulations provide, however, that the
government authorities may share the risks of project financing, construction,
operation and maintenance through methods such as adjustment of the building
standards and extension of the BOT concession period.[154]
The provisional regulations
provide that disputes are to referred to a Chinese arbitral body or other
arbitral bodies for arbitration[155],
and that the laws of the Peoples Republic of China shall apply except where
there are matters not yet regulated by the Peoples Republic of China[156].
China has previously acceded to the Convention for Settlement of Investment
Disputes between states and nationals of other states (ICSID), effective 1
January 1993.
McDonald[157]
notes that the new Chinese BOT model could provide the administrative framework
that has been lacking so far in Chinese foreign PPI (private participation in
infrastructure) projects, noting that, previously, BOT projects have been based
on a set of draft guidelines published in 1995[158].
McDonald[159],
in a separate paper, outlines a number of projects which have been commenced in
China since 1995[160]. That table contains 15 toll road projects,
20 power generation projects, and 4 water projects. McDonald notes that, to date, there has been extensive autonomy
in local regulation and development and that many of China’s regions have been
experimenting with the broad range of private infrastructure concepts and
projects structures in small to medium projects for several years[161].
He suggests that the key areas of risk with Chinese BOT projects have been:
·
political force majeure;
·
currency inevitability;
·
tariff adjustment;
·
construction schedule;
·
financing[162].
Wang[163]
et al review the risks critical in China BOT power projects and suggest a
number of potential mitigating measures. The potential types of risk mitigation
measures suggested include obtaining government guarantees as to the tariff or
concession period, maintaining good relationships with government authorities,
establishing joint ventures with local partners including central government
agencies or state owned enterprises, establishing joint ventures with local
partners, gaining accurate information as to the financial status of Chinese
entities, insurance for political risks and force majeure risks, obtaining
expert credits from the sponsor’s government, appointing independent
accountants to audit the Chinese entities.[164]
Wang et al conducted an
international survey of participants on case study projects.[165]
They concluded that the end result of the Laibin B power project was a fair
allocation of risks for all parties.
The political and legal risks were mainly borne by the government, the
construction, operating, and technical finance risk were mainly borne by the
consortium, the force majeure risks were shared between the government and the
consortium.[166]
Verzariu[167],
an officer of the US Department of Commerce International Trade Administration,
reviews developments in China’s power sector. Verzariu notes the proposed
reforms being introduced by the Chinese Government to accelerate growth in the
power sector and at the same time to ensure central oversight of the sector’s
expansion. Verzariu comments that it is
likely that foreign investors will prefer smaller projects, in the less than
$100 million range. He comments that,
for foreign sponsors, the principal obstacle to involvement with power projects
has previously been the sealing of investment returns to the foreign company,
which the Chinese government has informally capped at 15% for projects approved
by the State Planning Commission.[168]
Verzariu notes that despite being required to devise financial schemes, foreign companies have also been saddled with a weak dispute resolution process through the Chinese courts, an inadequate regulatory framework, over priced asset valuation criteria, a less than transparent approval process, and still vague BOT legal blue print.[169]
Verzariu suggests that it would
be necessary, if China is to entice a high number of private lenders and equity
sponsors, to modify the country’s legal and regulatory framework in step with
evolving finance structures[170].
Wang[171]
notes the development of the civil law tradition in China commenting that the
legal system in new China develops by imitating that of the former soviet
union, and is therefore socialist in character. He suggests, however, that one
can yet find traces of the Roman tradition noting that court verdicts,
including the Supreme Peoples Court, has no binding power over the later
verdicts of other courts but serves only for reference purposes.[172]
Chung Jie[173]
reviews the sources of law in China, including references to law, regulation,
rules, some decisions, and “even the construction made by the Supreme Court or
the Supreme Procuratorate”. Above that
law is the Constitution, the supreme law in China, enacted in 1982 after three
other preliminary constitutions (1954, 1975, 1978), and revised in 1988 and
1993, and 11 further amendments.
Underneath this is the second level, basic statutes enacted by the
National Peoples Congress. Underneath
this, there are statutes enacted by the standing committee of the NPC. Underneath this, there is administrative
legislation.
Chung Jie notes the conflict of
laws and suggests that this leads to inconsistent laws adopted by the different
law making bodies in China.[174]
She suggests the solution of the common law, namely the doctrine of implied
repeal where there are inconsistent of statutes. Chung Jie secondly suggests the option of “central paramountcy”,
as occurs in the USA and in Canada. Chung Jie, notes that conflicts of statutes
between different legislatures is unlikely because the legislative authority of
each province is confined to its territory[175]. She suggests, however, that conflict of
regulation between different branches of the administrative is bound to occur
from time to time because such regulations are applicable in the same
territory.
Chung Jie suggests that in cases
of conflict, the doctrine of negotiation would usually be applied. This, she
says, is one of the most popular doctrines in China, based in the Chinese
preference for harmony and avoidance of confrontation. Chung Jie refers to the
1989 Administrative Procedure Law of the PRC which provides for inconsistencies
to be referred by the Supreme Peoples Court to the State Council for
interpretation or ruling.[176]
Chung Jie concludes that the
conflict of laws in China is still a major problem bewildering even the Chinese
legal community.
Graham[177]
reviews, comparatively, foreign investment laws in the USA and in China. He suggests that the Chinese legal system is
not adequate to sustain growth and gain the confidence of foreign investors[178]. He notes that investment bankers have
expressed pessimistic views as to how long it may take to develop necessary
legal and commercial infrastructure because of high level opposition to
codification of contract and business law.
Andrews-Speed[179]
comments that China is a state in transition marked by annual rates of economic
growth consistently in the range 8%-12%.
He notes that the government has identified the energy structure as
being strategic to the economy and has placed great emphasis on increasing
capacity of the main energy industry (coal, oil and electricity). He comments that Chinese government has been
characterized by decentralization noting that local government leaders have
wide ranging incentives to invest heavily and raise local economic output. This combined with a national preference for
reaching decisions by consensus, has lead local administrations to become a
power force in economic reform and growth, while at the same time retaining an
effective working relationship with central government.[180]
Andrews-Speed comments that the
old system of regulation has been unable to react to the growth of the
non-state sector. Provincial and lower level governments have increased their
level of influence and reduced the value of the central government to control
or regulate the state enterprises. At
the same time an effective apparatus for regulating non-state enterprises has
not been put into place[181]. He suggests that despite the continuing
enactment of laws designed to regulate this transition, it is now clear that
these laws cannot be implemented effectively. The legal system offers little
protection for contractual arrangement.
Further, the power of local government prevents the courts from
providing substantial control over official arbitrariness. He concludes that a fundamental change is
required if China is to have a regulatory system attuned to its evolving, mixed
economy[182].
Chan[183]
reviews the practices of typical Chinese construction projects including the
enactment of legislative regulations in the early 1990’s to enhance the
construction industry in China. He
concludes that there are difficulties in managing construction projects in
China, in particular:
·
difficulties in relation to
pre-construction payments, standard practice in China, often diverted by
contractors to support other fund-shortage projects[184]
·
intervention by government,
for example, clients have to submit detail business and economic information of
projects to the government for assessment of project, feasibility, and are
subject to project approvals rarely required in western society[185]
·
tedious project approval
process, including design approval and construction approval[186]
·
quality of contractors,
high at technician level, however most people are unskilled and are not full
time construction workers
·
testing and commissioning
process for a project is often not serious, contractors establish good
relationships with government construction departments, accordingly approvals
are obtained easily without the project being properly completed and defects
rectified or noticed[187]
Chan suggests that Confucianism
affects the Chinese construction industry legislation. Ordinances allow local
common officials, assumed to have a high moral ethnical standard, substantial
discretion to interpret the ordinances. Construction contracts drafted with the
same philosophy lead to disputes where contract conditions are not sufficiently
detailed to adequately define the obligations of the parties.
The DFAT figures and the Tiong
analysis[188] suggest
that the Chinese projects to date have been concluded in spite of the existing
legal system. The likelihood is that
the regulatory system will improve with time and experience as projects are
completed. In fact, one could suggest
that this is exactly what occurred in Australia since the first BOT projects in
1989-1990.
Hong Kong has a history of
successful BOT projects, particularly in transport. Between 1995 and 1998
approximately $14.1 billion dollars was invested in BOT projects in the
transport sector (principally the new Hong Kong International Airport). There
have also been a number of successful tunnel projects.
Man[189]
notes the inheritance of the western legal system from the British and suggests
that the rule of law had been hailed (progressively more as the change of
sovereignty in 1997 drew nearer) as the secret of the present success of the
economy and key to Hong Kong’s future prosperity.[190]
Man refers to the classic text by Edward Said, Orientalism[191]
and the converse concept of “occidentalism”, a concept Man suggests develops
from orientalism. Following Hong Kong’s return to China in 1997, Man suggests,
the rule of law (and its western history) was one which, to the Hong Kong
public, was to be preserved rather than its proposed replacement, a non-elected
provisional legislature.[192]
Man refers to the concept of
Quing, a concept particular to the Chinese, which has no equivalent in English
language, but loosely translated as “appeal to other’s feelings”, “emotions”,
“sense of humanity” or “ common decency”.[193] He suggests that in the tradition of Chinese
culture, law must also be based upon human nature.[194]
Hill[195]
notes the clash in ideology and government philosophy created by the
integration of China and Hong Kong, in particular the combination of a developed
western legal system in Hong Kong, and a developing legal system in China. He suggests that one of the worlds largest
financial markets, Hong Kong, requires certainty and predictability of the law
to remain confidence in the operation and effectiveness of those markets. Further, that lack of confidence would lead
to human and other infrastructure resources leaving Hong Kong.
Hill suggests that the PRC
regime will have difficulty dealing with the Hong Kong concept of the
individual. He notes the cultural issue
which arise between the confucian-communism philosophy, which has a fundamental
opposition to a fixed set of rules with rigid universal application to all
people, and the British-liberalism philosophy in which the political system
does not favor any one particular interest and an economic system which is
capitalist based on competition for free individuals.[196]
The position in Hong Kong, visa
via BOT projects, remains very much the Anglo-US system.
Tiong, in a series of papers on
the evaluation of BOT projects in East Asia[197]
has collected substantial empirical and interview data on BOT projects in East
Asia, including responses from participants in BOT projects on the negotiation
process, the approval process, and risk issues.
Tiong examines the equity
finance provided by the international sponsor on a number of BOT projects to
test the hypothesis that the higher the equity the more likely the bid is to be
successful. He concludes that in Thailand and Hong Kong a high level of equity
was usually required for short listed promoters to proceed to the final round
of negotiations before the winner is selected[198]. He suggests that in other countries, where
the level of equity is not specified in the request for proposal documents, a
higher level of equity may have also increased the chances of success in a BOT
tender[199].
Tiong reviews the risks and
guarantees required in BOT tenders on a number of international projects. He notes, for example, the Hong Kong
government rejection of providing any government financial guarantees on
Eastern Harbor crossing, though on Tate’s Cairn project, the government decided
to participate in the equity investment.
He also notes the general position on most BOT projects that the
government declined to provide financial guarantees.
Wang et al[200]
reviews the valuation and competitive tendering on BOT power project plant in
China, particularly in relation to the roles of BOT project agencies on certain
projects.[201]
Experience and demographics
suggest that we will see a dramatic increase in the number of BOT projects in
East Asia over the next decade.
The commentators referred to
above are uniform in their view that international investment, if it is to be
encouraged, needs a reliable and transparent legal framework.[202]
Yet, despite the general view that the Chinese legal system is obscure,[203]
and the processes cumbersome,[204]
we still see a number of concluded BOT projects in China.
So what will be the form of BOT
projects, how will they be documented in the future?
The commentators, in general,
suggest a substantial degree of globalisation of legal services, in particular
the spread of Anglo-US legal practices throughout the world, including East
Asia, through legal practitioners and other participants, and transactions
involving foreign investors used to Anglo-US practice.[205]
Yet this is not without debate.
Dezalay and Garth[206]
suggest that bodies of legal practitioners who become dominant in an area
spread their Anglo-US legal practices into the countries in which the
international transactions move. They observed this in Europe, in the
mid-1990’s, and conclude that a similar phenomenon may occur in China and Hong
Kong. Appelbaum[207],
in contrast, suggests the traditional Chinese business cultural values are more
likely to prevail.
Certainly, all projects seem to embrace international commercial arbitration,
in the Anglo-US tradition, as the method for dispute resolution.
Perhaps the economic conditions,
the influence of APEC and the IMF, will further encourage Anglo-US forms and
practices on future East Asian BOT projects.
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[1] This paper is directed to
developments in the South-East Asia and North-East Asia regions, including
generally Thailand, Malaysia, Indonesia, Vietnam, China and surrounding countries.
For convenience, in this paper, I will refer to this as the East Asian region.
[2] See, for example,
Infrastructure Sector Strategy Living By Serving New Directions for the
Transition Economies, September 25, 1998 http://www.atomnet.pl/gaps2/infrawb.htm;
Department of Foreign Affairs and Trade in Co-operation with Tasman Asia
Pacific, Report, “Asia’s Infrastructure in the Crisis, Harnessing Private
Enterprise” http://www.dfat.gov.au/eaau
[3] See, for example,
Infrastructure Sector Strategy Living By Serving New Directions for the
Transition Economies, September 25, 1998 http://www.atomnet.pl/gaps2/infrawb.htm
[4] See, for example, Shapiro M,
“The Globilisation of Law” Global Legal
Studies Journal , http://www.law. indiana.edu/glsj/vol1/shapiro.htm1; Perry A
“Is Legal Globalisation an Impossible Dream? National Implementation of
International Standards” http://www.dundee.ac.uk/cepmlp/html/article3-4htm ; Web Seminar – Globalisation and
International Trade, Department of Law http://www.iue.it/LAW/weblaw/links.htm.
[5] Nottage L, “Trade Law
Harmonization in the Asia-Pacific Region: A Realist’s View from New Zealand –
and A Way Forward?” http://www.law.kyushu-u.ac.jp/~luke/nzlj95.html;
Ryland M, Metzger B, Kim S Dr, ”Seminar on Legal Aspects of Regional
Cooperation” http://www.adb.org/Work/Law_Devt/Seminar_Proceedings/ryland.asp
[6] See, for example, Wade R,
Venerso F, “The Gathering World Slump and the Battle Over Capital Controls” New Left Review October 1998, p 231; Lim
L, “The Asian Economic Crisis. The
Challenges for Government Policy and Business Practice”
http://www.asiasociety.org/publications/update-crisis-lim.html
[7] See, for example, “Survey of
Impediments To Trade and Investment in the APEC Region”, Chapter 6, A report by The Pacific Economic Cooperation
Council for APEC, 1995; Bartels J, “Asian Commercial Risk Review Payment Terms and Delays” http://www.dnb.com/newsview/0105news2.htm
[8] This is not the place for a
detailed discussion of the nature of a BOT project. For a more detailed analysis, see Shirbin J, Craven C, and
McMullan J, “Infrastructure – Private Funding Issues”, Paper presented to Infrastructure
1993 Conference, Melbourne, October 1993; McMullan J, "BOT
Contracts", Paper presented to
International Seminar on Property and Investment Laws, Beijing Municipal
Foreign Economic Relations & Trade Commission, Beijing, 23 May 1995,
reproduced at http:\\www.mcmullan.net\eclj
[9] See note 7 above.
[10] Commercial arbitration,
contractual by nature, is not ideally suited to resolving disputes between
multiple parties. There is, in theory, no objection to multiple parties to an
arbitration, and arbitration rules generally permit consolidation of
arbitrations. In practice, however,
where multiple parties may need to be involved in any litigation, at least in
Australia, the preferred course is to avoid arbitration, in favour of
litigation in the courts.
[11] For example, a recent power
purchase agreement in China included an arbitration clause referring disputes,
until repayment of the international lenders, to arbitration at the Hong Kong
International Arbitration Centre, and, after the international lenders had been
repaid in full, to arbitration at the Chinese International Economic and Trade
Commission; a recent power purchase agreement in Vietnam included an
arbitration clause referring disputes to ICC arbitration (in accordance with
the Arbitration Rules of the International Chamber of Commerce); a recent
Indonesian power purchase agreement included an arbitration clause referring
disputes to arbitration in accordance with the rules of the Singapore
International Arbitration Centre,
[12] This is not the convenient
place for a detailed discussion of this process. In brief, during the construction project, the parties refer any
disputes to a panel of senior construction experts (agreed between the parties
at the time of entering into the contract, and named in the contract) as a
pre-condition to further litigation or arbitration. The empirical evidence is
to the effect that a substantive proportion of disputes referred to the panel
are resolved at that level, leaving a small number of disputes remaining to be
resolved through the more formal dispute methods. The Channel Tunnel is regarded as an example of a project where
of many disputes were referred to the dispute panel, only a small percentage of
those disputes remained to be resolved by formal dispute methods.
[13] This is a slight variation
on the dispute panel, In theory, this group addresses the project generally and
attempts to take steps to avoid potential disputes, in addition to acting as
the dispute panel. There is little empirical evidence as to this type of panel.
[14] On some major projects, in
Australia and elsewhere, the government has required an independent
expert/consultant firm to assess the sponsor’s work, as it progresses, and
certify its correctness.
[15] This is the not the place
for a detailed history of BOT projects in Australia. In fact, the origins of
the BOT process, in Australia, can be traced back to the Eraring project,
financed on not dissimilar project finance principles, in the 1950’s.
[16] Even more interestingly,
following this theme, the only state in Australia which seem to not develop a
fascination for BOT projects in the early 1990’s was Queensland, a state with
strong economic circumstances. This
theme should not be taken too far, however, Victoria presently has strong economic
circumstances, yet BOT projects are as likely to be promoted in Victoria today
as they were in the early 1990’s.
[17] PURPA
[18] Department of Foreign
Affairs and Trade in Co-operation with Tasman Asia Pacific, Report, “Asia’s
Infrastructure in the Crisis, Harnessing Private Enterprise” http://www.dfat.gov.au/eaau, see
Appendix Table 1.1. DFAT notes that the region’s infrastructure requirements
for the decade to 2004 is likely to be of the order of US$1.0-1.2 trillion
dollars. This is down on the World Bank’s pre-1997 forecast of $1.5 trillion
dollars.
[19] See, for example, the
observations on processes in Tiong R, “Risks and Guarantees in BOT Tender”, Journal of Construction Engineering and
Management, June 1995, p 183.
[20] Department of Foreign
Affairs and Trade in Co-operation with Tasman Asia Pacific, Report, “Asia’s
Infrastructure in the Crisis, Harnessing Private Enterprise” http://www.dfat.gov.au/eaau
[21] Ibid, at p 1.
[22] Ibid, at p 72. The reference
to new BOT legislation is to the Philippines, China, and Vietnam.
[23] Phu Ny Power Project in Ba
Ria, Vung Tau, outside Ho Chi Minh City, a 100% foreign owned BOT projects
comprising 9 multi national consortia bidding for the contract to build and
operate Hu Mi 2-2, a 700 MW gas fire electricity plant expected to cost US$500
million; Man Son Pipeline, US $450
million dollars, to link gas fields to the Phu Ny site at Ba Ria, Vung, Tau; Ba
Ria, Wartsila, US $130 million dollars dual fuel (coal or gas) 2 line power
project, 120 MW; Hiep Phuoc Power Plant, Saigon South Development Industrial
Zone, 650 MW; Oxbow project, Quang Nih, BOT Coal-Fire Power Project, US $300
million dollars; Ham Thuian Dam Hydro-Power Project Central Vietnam; Vung Tau
Petro-Chemical Plant US$100 million dollars; Thu Duc Water Supply Project for
Ho Chi Minh City, US$30 million dollars.
[24] See, for example, Takahashi
T, “The Role of Japanese Companies in Asia’s BOT (Build-Operate-Transfer)
Infrastructure Projects”, Research Report, NLI Research Institute Industrial
Research Department http://www.nlireseach.co.jp/ENG/RESEA/ECONO/ECO9510C.HTM
[25] Shapiro M, “The
Globilisation of Law” Global Legal
Studies Journal http://www.law.indiana.edu/glsj/vol1/shapiro.htm1.
[26] Ibid at p 1.
[27] See, for example,
Chirathivat S, “ASEAN, APEC and the Americas: Its Interconnections in Regional
Integration”
http://orpheus.ucsd.edu/las/prrpsc.html;
and the questions raised as to the role of APEC in fostering US interests in
Weiss L, “Globilisation and the Myth of the Powerless State”, New Left Review October 1998, p 225.
[28] Ibid
[29] See note 17 above.
[30] Shapiro M, “The
Globilisation of Law” Global Legal
Studies Journal http://www.law.indiana.edu/glsj/vol1/shapiro.htm1,
at p 6.
[31] Ibid at p 6.
[32] Ibid
[33] Ibid
[34] See Wang Z, “The Civil Law
Tradition in China and Its Future Development”, The China Connection Legal Forum
http://www.enstar.co.uk/china/law/articles/legal-b.htm.
There are a substantial number of local government and private lawyers and law
firms in China, dating back to the Cultural Revolution in the late 1970’s.
[35] In fact, the BOT projects in
China to date have universally involved both local lawyers and international lawyers
in the transaction.
[36] Cate F, “Introduction
Sovereignty and the Globalisation of Intellectual Property” http://www.law.indiana.edu/glsj/vol16/nolcate.
html
[37] Ibid at 1.
[38] Ibid at p 2.
[39] Ibid at p 3.
[40] Verzola R, “Globilisation:
The Third Wave” http://www.corpwatch.org/trac/feature/microsoft/globilisation/verzola.html
[41] Ibid at p 1.
[42] Ibid at p 2.
[43] Ibid at p 4.
[44] Barber B, “Global Democracy
or Global Law: Which Comes First?” http://www.law.indiana.edu/glsj/vol16/no1)cate.html
[45] To be faithful to the writer’s
comments, the full context of Barber’s comments are to the effect that: “…the
forces of globalisation …. dragging the law behind ….. affected by two spectres
haunting Europe, the first … a tribalisation of large swathes of human kind by
war and blood shed … and the second …the on rush of economic and ecological
forces that demand integration and uniformed and that mesmorize the world with
fast music, fast computers and fast food with MTV, Macintosh, and McDonalds,
pressing nations into one commercially homogeneous global network, one McWorld
tied together by technology, ecology, communications and commerce”. He
describes the forces of globalisation as
“folding precipitately apart and
coming reluctantly together at the very same moment” (original emphasis).
[46] Delbruck J, “Globilisation
of Law, Politics, and Markets – Implications for Domestic Law: a European
Perspective”
http://www.law.indiana.edu/glsj/vol1/delbruck.html
[47] Ibid
[48] Ibid at 3.
[49] Ibid
[50] Perry A “Is Legal
Globalisation an Impossible Dream? National Implementation of International
Standards”
http://www.dundee.ac.uk/cepmlp/html/article3-4htm
[51] Ibid at p 7.
[52] Hirst P Prof, “Globilisation
–ten frequently asked questions and some surprising answers” http://www.gu.edu.au/centre/cmp/Hirst.html
[53] Weiss L, “Globilisation and
the Myth of the Powerless State”, New
Left Review October 1998, p 225.
[54] Ibid at p 6. The alternative
hypotheses, which Weiss rejects, are (i) strong globalisation, state power
erosion; and (ii) strong globalisation, state power unchanged.
[55] Ryland M, Metzger B, Kim S Dr,
”Seminar on Legal Aspects of Regional Cooperation” http://www.adb.org/Work/Law_Devt/Seminar_Proceedings/ryland.asp
[56] See the reference below to
comments by Dr Mochtar in relation to commercial arbitration in the region.
[57] Berger M, “A New East-West
Synthesis? APEC and Competing Narratives of Regional Integration in the
Post-Cold War Asia-Pacific”, Alternatives
23(1998), p 1-28.
[58] Ibid at p 130.
[59] Ibid at p 149.
[60] Dezalay Y, Garth B, “Dealing In Virtue; International Commercial
Arbitration And The Construction Of A Transnational Legal Order” Chicago
University Press, Chicago 1996; Dezalay Y, Garth B, “Law, Lawyers and Social
Capital: ‘Rule of Law’ Versus Relational Capitalism , Social and Relational
Capitalism”, Social and Legal Studies
Vol 6 (1), p 109.
[62] Dezalay Y, Garth B, “Dealing In Virtue; International Commercial Arbitration And The Construction Of A Transnational Legal Order” Chicago University Press, Chicago 1996.
[63] Appelbaum R, “The Future of
Law in a Global Economy”, Social and Legal Studies Vol 7 (2), p 171.
[64] Ibid at p 187.
[65] Dezalay Y, Garth B, “Dealing In Virtue; International Commercial
Arbitration And The Construction Of A Transnational Legal Order” Chicago University
Press, Chicago 1996. And see Dezalay Y, Garth B, “Law, Lawyers and Social
Capital: ‘Rule of Law’ Versus Relational Capitalism , Social and Relational
Capitalism”, Social and Legal Studies
Vol 6 (1), p 109, referred to below in relation to the likely influence of
western legal practice in the future development of BOT models in East Asia.
[66] Ibid at p 176.
[67] Appelbaum R, “The Future of
Law in a Global Economy”, Social and Legal Studies Vol 7 (2), p 171, at p 188.
[68] Garcia F J, Symposium “The Trade Linkage Phenomenon”: Pointing the
Way to the Trade Law and Global Social Policy of the 21st Century”, University of Pennsylvania Journal of
International Economic Law Vol 19, Summer 1998 No 2 201.
[69] Ibid
[70] Ibid at p 202.
[71] Ibid
[72] Ibid at 202-3.
[73] Charnovitz S, “Linking
Topics in Treaties”, University of
Pennsylvania Journal of International Economic Law Vol 19, No 2, 1998.
[74] Ibid at p 333.
[75] Ibid at p 338-339.
[76] Anderson B, “Sauve Qui
Peut”, in The Spectre of Comparisons
Nationalism, South East Asia and the
World, Verso, London, 1998, chapter 14.
[77] Ibid at pp 302-304.
[78] Katzenstein P, “A World of
Regions: America, Europe, and East
Asia” Indiana University School of Law
– Bloomington http://www.law.indiana.edu/glsi/vol1/katz.htm1
[79] Ibid at p 3.
[80] Ibid at p 3.
[81] Bello W, “IMF’s Role in
Asian Crisis” http://www.ifg.org/imf_asia.html
[82] Ibid at p 1.
[83] Khor M, “The Economic Crisis
in East Asia: Causes, Effects, Lessons”
http://www.ifg.org/khor.html
[84] Ibid at p 13.
[85] Lim L, “The Asian Economic
Crisis. The Challenges for Government Policy
and Business Practice”
http://www.asiasociety.org/publications/update-crisis-lim.html
[86] Ibid at p 1.
[87] Ibid at p 5.
[88] Ibid at p 13.
[89] Ibid at p 13-14.
[90] Ibid at p 14.
[91] Wade R, Venerso F, “The Gathering World Slump and
the Battle Over Capital Controls” New
Left Review October 1998, p 231.
[92] Ibid at p 14.
[93] Ibid at p 18.
[94] Ibid at p 33.
[95] Chomsky N,
[96] Berger M, “A New East-West
Synthesis? APEC and Competing Narratives of Regional Integration in the
Post-Cold War Asia-Pacific”, Alternatives
23(1998), p 1-28.
[97] Ibid at p 1.
[98] Ibid at p 2.
[99] Ibid at p 2.
[100] Project Finance
International: The Global Infrastructure
Magazine, Issue 168, 5 May 1999 http://www.ifrpub.com/PROJFIN/12.HTM
[101] Chirathivat S, “ASEAN, APEC
and the Americas: Its Interconnections in Regional Integration”
http://orpheus.ucsd.edu/las/prrpsc.html
[102] Ibid
[103] Nottage L, “Trade Law Harmonisation in the Asia-Pacific Region: A Realist’s View from New Zealand – and A Way Forward?” http://www.law.kyushu-u.ac.jp/~luke/nzlj95.html
[104] Infrastructure Sector
Strategy Living By Serving New Directions for the Transition Economies,
September 25, 1998 http://www.atomnet.pl/gaps2/infrawb.htm
[105] These comments were directed
to the European and Central Asia sector.
[106] Arrowsmith S, Davies A,
(Eds); “Public Procurement: Global
Revolution” Kluwer Law International London, 1998 http://www.dundee.ac.uk/cepmlp/html/review24.htm
[107] Bolmin P, “Co-Development:
Towards a New System of Partnering In the Public and Private Sectors in the
Execution of Major Infrastructure Projects”, 2 International Business Law Journal 1999.
[108] Shibasaki Y, “Life and Law
are Different in Japan – the Difficulty of Internationalization”, EU-Japan
Legal Dialogue
http://www.kc/c.or.jp/EUDialogue/shiba.htm
[109] Rahn G, “Cultural Differences and Doing Business in Europe and Japan” http://www.kclc.or.jp/EUDialogue/rahn.htm
[110] Ibid at p 3.
[111] Gibson C, “Do you hear what
I hear?: a framework for reconciling intercultural difficulties arising from
cognitive styles and cultural values” in P.C. Earley and M. Erez, eds, New Perspective on international
industrial/organizational Psychology, San Francisco, 1997.
[112] Ibid at p 352.
[113] Chatman J, Putnam L, and
Sondak H, “Integrating communication and negotiation research” , in Research on Negotiation in Organizations,
3 , 1991, 139-164.
[114] Waltin and McKersie, 1965, p
35, Cited by Chatman, Ibid at p 139.
[115] Ibid at 159.
[116] Chen C, Chen X-P, &
Meindl J, “How can co-operation be fostered? the effects of
individualism-collectivism”, Academy of
Management Review, 1998, pp 285-304.
[117] Greenwood D, “Cultural
Identities and the Global Political Economy from an Anthropological Vantage
Point”, Global Legal Studies Journal http://www.law.indiana.edu/glsj/vol
1/green.html
[118] Salacuse J W, “After the
Contract What? Negotiating to work successfully with a foreign partner”
http://www.dundee.ac.uk/cepmlp/html/article3-1
[119] See the discussion above at
note 12 above.
[120] Bailey D, “Some Current
Issues in International Commercial Arbitration. Does APEC have a role?”, The
Arbitrator, Vol 18, No 1, May 1999, p 24.
[121] Ketcham, W T, General
Council, IBM World Corporation, “Arbitration between the State and Foreign
Private Party”, seen posing of private investors abroad, rights and duties:
South Western Legal Foundation, 1965, P, 404, Cited by Bailey, Ibid, at p 26.
[122] Ibid at p 28.
[123] Arbitration Rules of the
China International Economic and Trade Arbitration Commission
http://www.qis.net/chinalaw/prclaw50.htm
[124] Decision No. 204/TTG 28
1993, of the Prime Minister of the Government.
[125] Article 2.
[126] See, for example, JCA
Newsletter Number 3 March 1998, “Expedited Procedures Introduced by JCAA”
http://www.jcaa.or.jple/arbitration-e/syuppan/-e/newslet/news3.html;
“Foreign Lawyers Allowed to Represent a Party in Japan”, JCA Newsletter Number 1 February 1996 http://www.jcaa.or.jp/e/arbitration-e/syuppan-e/newslet/news1.html
[127] “Survey of Impediments To
Trade and Investment in the APEC Region”, Chapter 6, A report by The Pacific Economic Cooperation Council for APEC,
1995, at p 102
[128] Ibid at p 109.
[129] Ibid at Appendix E.
[130] Schneider A K. “Democracy
and Dispute Resolution: Individual Rights in International Trade Organization”,
University of Pennsylvania Journal of International
Economic Law Vol 19, Summer 1998 No 2
587.
[131] Ibid at p 613-614.
[132] Ibid at p 164. Schneider
notes that in its 32 year history ICSID has only handled 45 cases. It therefore lacks the history and case load
to provide predictability and assurances to investors in efficient and
effective arbitration facility.
[133] Mochtar K-A Prof, “Arbitration in the 1990’s: Developments in East Asia”, Seminar Proceedings, ADB Work Law and Development, http://www.adb.org/Work/Law_Devt/Seminar_Proceedings/mochinsin.asp
[134] Waelde T, “Changing
Directions for International Investment Law in the Global Economy An Overview
of Selected Issues” http://www.dundee.ac.uk/cepmlp/html/article4-2.htm
[135] Ibid at p 5.
[136] Ibid
[137] Ibid at p 11.
[138] Ibid at p 12.
[139] Ibid at p 19.
[140] Ibid at p 20.
[141] Frankel T, “Cross-border Secularization:
Without Law, But Not Lawless” 8 Duke J.
of Comparative and International Law 255 http://www.law.duke.edu/jounalss /djcil/articles/djcil8p
255. html
[142] Ibid at p 7.
[143] Department of Foreign Affairs
and Trade in Co-operation with Tasman Asia Pacific, Report, “Asia’s
Infrastructure in the Crisis, Harnessing Private Enterprise” http://www.dfat.gov.au/eaau, Appendix
Table 1.1
[144] Ibid
[145] Infrastructure
http://www.cbw.com/business/quarter1/infrastr.htm;
Sunday Morning Post – Money (Hong Kong) 26 January 1997
[146] Infrastructure http://www.cbw.com/business/quarter1/infrastr.htm;
CBNET (PRC), 24 February 1997.
[147] Infrastructure http://www.cbw.com/business/quarter1/infrastr.htm;
US Consulate Shanghai, 14 March 1997.
[148] For example, Sino-Foreign
Contracts for Joint Venture Law of Peoples Republic of China, 13 April 1988;
Arbitration Rules of China International Economic and Trade Arbitration
Committee, 17 March 1994; Accounting law, 21 January 1985, amended 29 December 1993;
Implementation Regulations on Foreign Exchange Control Regulations relating to
Enterprises with Overseas Chinese Capital, Foreign Capital Enterprises, and
Sino-Foreign Equity Joint Ventures, 1 August 1993; Economic Contract Law, 1
July 1982; Foreign Economic Contract Law, 1 July 1985; General Principles of
Civil Law, 12 April 1986; Sino-Foreign Contractual Joint Venture Law, 13 April
1988; Provisional Regulations on Foreign Investment Build-Operate Transfer
Projects (a draft); Foreign Trade Law, 12 May 1994; Income Tax Law for
Enterprises for Foreign Investment and Foreign Enterprises, 1 July 1999.
[149] Arbitration Rules of the
China International Economic and Trade Arbitration Commission
http://www.qis.net/chinalaw/prclaw50.htm
[150] See Andrews-Speed P, Dow S,
Gao Z, “A Provisional Evaluation of the 1998 Reforms to China’s Government and
State Sector: The Case of the Energy Industry” http://www.dundee.acuk/ceplp/html/article4-7.htm, discussed
below.
[151] Provisional Regulations on
Foreign Investment Build-Operate–Transfer Projects http://www.qis.net/chinalaw/prclaw61.htm
[152] Article 20.
[153] Article 23.
[154] Article 26.
[155] Article 28.
[156] Article 27.
[157] Macdonald R, Yashiro T,
Yoshida T and Kunishima M, PPI in the PRC, “Two Categories and Six Models of
Private Participation in Chinese Infrastructure” http://cmis
10.t.u-tokyo.ac.jp/~mac/cibpaper.html
[158] Ibid at p 4.
[159] Macdonald, R, Takeuchi S
Prof, Yoshida T Prof, Kunishima M Prof, Background
of PPI in the PRC, “Implementation of Private Infrastructure Development
Methods in China” http://cmis10.t.u-tokoyo.ac.jp/~mac/dobokupaper.html
[160] Ibid at p 2.
[161] Macdonald R, Yashiro T,
Takeuchi S, Kunishima M, “Camparison of Policies for Private Infrastructure
Development in China and Japan” http://cmis10.tu-tokyo.ac.jp/~mac/policies.htm,
at p 1-2.
[162] China BOT’s Executive
Summary http://cmis10.t.u-tokoyo.ac.jp/~mac/china.html at p 4.
[163] Wong, Tiong, Ting, and Ashley,
Risk Management Frame Work for BOT power projects in China”, General of Project
Finance, Vol 4, No. 4, 1999.
[164] Ibid at Exhibit 1, p 57.
[165]The projects were the first
province-approved BOT project in China, Shajiao B power plant in Guang Dong
province, the first state-approved BOT project, Laibin B in Guangxi province,
the first BOT project in Shanghai, Yan-an Second Tunnel, the first
state-approved BOT water project in China, Chengdu water plant in Sichuan
province, the second state-approved BOT project in China, Chang Sha power plant
in Hunan province, and the second state-approved BOT water project in China, Da
Chang water plant in Shanghai.
[166] Ibid at p 66.
[167] Verzariu P, “Development In
China’s Power Sector”, Journal of Project
Finance Vol 3 No 4, 1997, p 43.
[168] Ibid at p 45.
[169] Ibid at p 46.
[170] Ibid
[171] Wang Z, “The Civil Law
Tradition in China and Its Future Development”, The China Connection Legal Forum
http://www.enstar.co.uk/china/law/articles/legal-b.htm
[172] Ibid at p 5.
[173] Cheng Jie C, “Conflict of
Laws in China”, in The China Connection
Legal Forum http://www.enstar.co.uk/china/law/articles/legal-b.htm
[174] Ibid at p 6.
[175] Ibid at p 7.
[176] Ibid at p 7.
[177] Graham H, “Foreign
Investment Laws of China and the United States: A Comparative Study”, Journal
Transnational Law and Policy, Vol 5:2 Spring 1996 http://www.law.fsa.edu/transnational/issues/5-2/grati.html
[178] Ibid at p 7-8.
[179] Andrews–Speed P, Dow S,
“Regulating Energy In Federal Transition Economies: the case of China”
http://www.dundee.ac.uk/cemp/html/artlicle2-4.htm
[180] Ibid at p 2.
[181] Ibid at p 3.
[182] Ibid at p 3.
[183] Chan W, Wong F, Scott D,
“Managing construction projects in China – the transitional period in the
Millenium”, International Journal of
Project Management Vol 17, no 4, 1999 p 257.
[184] Ibid at p 260.
[185] Ibid at p 260.
[186] Ibid
[187] Ibid at p 261.
[188] Tiong R, “Risks and
Guarantees in BOT Tender”, Journal of
Construction Engineering and Management, June 1995, p 183, discussed below.
[189] Man S W, & Wai C Y, “Whose
Rule of Law? Rethinking (Post-) Colonial Legal Culture in Hong Kong”, Social and Legal Studies Vol 7 (2), p
169.
[190] Ibid at p 148.
[191] Said E, Orientalism,
[192] Ibid at p 150.
[193] Ibid at p 152.
[194] Ibid at p 153. This compares
well with Appelbaum’s views, that the Chinese business culture will not, as
Dezalay and Garth might suggest, be necessarily subsumed by western legal
practice.
[195] Hill M, “The Rule of Law and
Democracy in Hong Kong – Comparative analysis of British Liberalism and Chinese
Socialism” http://www.murdoch.edu.au/elaw/issue/vln2/mhills.txt
[196] Ibid at p 6-7.
[197] Tiong R, “Impact of
Financial Package Versus Technical Solution in a BOT Tender”, Journal of Construction Engineering and
Management, September 1995, p 304; Tiong R, “Risks and Guarantees in BOT
Tender”, Journal of Construction
Engineering and Management, June 1995, p 183; Tiong R, “Competitive
Advantage of Equity in BOT Tender”, Journal of Construction Engineering and Management,
September 1995, p 282; Tiong R, “CSF”s
in Competitive Tendering and Negotiation Model For BOT Projects”, Journal of Construction Engineering and
Management, September 1996, p 205; Tiong R, “Final Negotiation in
Competitive BOT Tender”, Journal of
Construction Engineering and Management, March 1997, p 6; Tiong R,
“Evaluation of proposals for BOT projects”,
International Journal of Project Management, Vol 15, No 2, 1997, p 67;
Tiong R, “Financial commitments for BOT projects”, International Journal of Project Management, Vol 15, No 2, 1997, p
73.
[198] Ibid
[199] Ibid at p 288
[200] Wang S, Tiong R, Ting S,
Chew D, Ashley D, “Evaluation and Competitive Tendering of BOT Power Plant
Project in China”, Journal of
Construction Engineering and Management, July/August, 1998, p 333.
[201] Bridge of Trust, as agent
for Laibin B; Beijing BOT Investment and Development Co Ltd (Beijing BOT), as
agent for the Beijing-Tongxia Expressway; BOT International Project Development
Co Ltd (BOT International), as agent for the Wang Chang Power Plant in the City
of Chang Sha, in Hunan Province.
[202] See, for example, the DFAT
report, note 18 above; the PECC Report, note 7 above; Perry, note 50 above;
Ryland, note 55 above; Bailey, note 116 above; Waelde, note 129.
[203] See the comments by Chung
Jie, note 168 above.
[204] See the comments by Tiong in
his paper, Tiong R, “Evaluation of proposals for BOT projects”, International Journal of Project
Management, Vol 15, No 2, 1997, p 67.
[205] See, for example, Shapiro,
note 25; Delbruch, note 46.
[206] See note 61 and the
discussion above.
[207] See note 63 and the
discussion above.