“For Chinese contractors, Belt and Road Initiative rewards come with heightened risks in a changing world”, 28 April 2020

… Chinese contractors are now involved in many projects and jurisdictions. Most of them are in Asia, Africa and the Middle East, and range from traditional infrastructure projects to real estate, technology, education and health care. As the BRI [Belt and Road Initiative] expands its reach, they also face a growing number of risks…

Chinese contractors themselves have come to recognise the need to develop more sustainable business operations, attract higher levels of private capital and external participation in their supply chains, and improve their bidding and operations in global markets…

The following risks should be considered:

… Project-specific risks: these include the availability of labour, materials, plant or equipment, through ground and environmental conditions to the physical possibility of performing the project…

Partnering and business risks: these involve the potential for cultural conflicts and misunderstandings, which may arise as a result of partnering with foreign firms, and the risks associated with adopting new and complex structures to increase sustainability and inclusivity…

The dispute resolution procedures should be reviewed. Consideration should be given to tiered dispute resolution mechanisms, including alternative dispute resolution procedures, such as adjudication boards and mediation, to allow for disputes to be resolved at an early stage…

In addition, Chinese contractors should consider whether there are any applicable Bilateral Investment Treaties (BITs) or Multilateral Investment Treaties (MITs) containing Investor State Dispute Settlement provisions. China has in force 110 BITs and several MITs as of March 2020.

Such treaties often contain substantive rights guaranteeing fair treatment of foreign investors which will often go beyond the rights of a project contract…

By fully appraising themselves of these risks, and adopting astute dispute avoidance and pragmatic dispute resolution procedures, Chinese contractors will be well positioned to fully grasp all the opportunities that the expanding BRI has to offer.