In the final of a three-part series on China’s Belt and Road initiative, George W Russell looks at significant opportunities created for legal work in both established jurisdictions and new frontiers

China’s Belt and Road initiative – a US$900 billion infrastructure spending spree along the old “Silk Road” linking Asia to Europe – has been billed as a once in a lifetime opportunity for emerging economies to upgrade their economic and social development.

Countries in Central and South Asia in particular are seizing opportunities to rejuvenate their obsolete or non-existent energy, water and transport systems. Examples include the first modern ports in Pakistan and Sri Lanka, while Kazakhstan is building state-of-the-art dams.

But the true test of the Belt and Road will be the long-term legacy for countries involved. Roads and railways, though valuable, require constant maintenance. Higher-value infrastructure, such as dams and power plants, can operate for 50-100 years.

A more lasting legacy, from a legal perspective, would be the entrenchment of a fair and equitable rule of law. In Kazakhstan, for example, the proposed Astana International Financial Centre would hear commercial cases under English common law and decisions would be enforced by independent courts, similar to separate international courts in Dubai, Abu Dhabi and Doha.

The Belt and Road has galvanized law firms across the world. One opportunity is to work in the rarefied atmosphere of high-level, inter-governmental transactions. “Advice is needed to set up and conclude free trade zones and pacts on trade liberalization,” says Nicholas Hanna, a partner at K&L Gates in Singapore.


Digging deeper, the Belt and Road offers sophisticated legal work on a truly worldwide project. “We have lawyers who have purposefully been seeking to generate around the Belt and Road initiative, especially in helping MNCs [multinational companies] identify and secure contracts,” says Hanna. “But we also think it is very important to not exclude our global colleagues who can bring their cross-border regulatory and sector-specific knowledge to bear, this is how we truly add value.”

Hanna adds that, given the cross-border nature of the initiative, transactions are inevitably more complex due to regulatory, business landscape and language differences. “Sound legal advice is also key to negotiating sales contracts, arranging syndicated loans or working out tax obligations.”

He points to a deal in which the firm advised COSCO Shipping Corporation and Lianyungang Port Holdings Group on the acquisition of a 49% stake in a dry port on the China-Kazakhstan border. “The team of lead lawyers including one partner in Beijing, one counsel in Shanghai and another partner in Singapore,” says Hanna.

Indeed, the hub-and-spoke nature of legal markets – as well as the concentration of financial infrastructure – means a few key jurisdictions are likely to pick up the lion’s share of Belt and Road-related work.

Singapore is a natural gateway to elsewhere in Asia. “Singapore’s established capital market makes it the natural infrastructure finance hub for the region,” says Stephanie Keen, Singapore managing partner of Hogan Lovells.


Gateway to China

Given Beijing’s dominant role, it is unsurprising that Chinese cities are expected to reap the riches. The Chinese government says it sees Hong Kong as invaluable to the Belt and Road initiative.

“Hong Kong is a global financial trading and shipping centre, home to the regional headquarters of many multinationals and a city extensively connected to the world,” explains Song Ru’an, deputy commissioner of the Chinese Ministry of Foreign Affairs in Hong Kong.

Song, the mainland’s number two official resident in the special administrative region, defines Hong Kong’s prime position through an old Chinese proverb: “The waterfront pavilion catches the moonlight first,” he says, adding that Hong Kong “has developed into an intermediary facilitating two-way cooperation between the mainland and the rest of the world.”

Carrie Lam, who took office as chief executive of Hong Kong last year, wants cooperation agreements with the mainland to build Hong Kong into a financial hub for Belt and Road projects. “We shall also encourage long-term asset funds to invest and finance Belt and Road infrastructure projects, [and] enterprises will be encouraged to use Hong Kong as a platform for insurance and risk management for cross-boundary investments,” she has said of Hong Kong’s participation in the initiative.

Chinese companies, initially mostly state-owned enterprises, but later privately owned entities, will need a platform outside China for overseas investment. “Why? Because not all of these companies are very familiar with outbound investments, and many of the Belt and Road countries are not frequent investment destinations,” explains Patrick Yip, national mergers and acquisitions leader at Deloitte, a consultancy.

Furthermore, many Belt and Road projects will be carried out in countries with a less developed legal system. “Hong Kong laws could be popular choices to be chosen by parties to be the governing law of the key finance documentation,” says David Lam, a Hong Kong partner with King & Wood Mallesons.


In 2016, the Hong Kong Monetary Authority – the territory’s de facto central bank – launched the Infrastructure Financing Facilitation Office (IFFO), a platform to facilitate infrastructure investments and their financing. The IFFO’s partners include banks, investment funds, pensions, major Chinese and Hong Kong companies, accounting firms, consultancies and several law firms.

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