Multiple Jurisdictions can build Marine Economy in South China’s Greater Bay Area

China’s Ocean Economic Development Index, which measures China’s Marine Economy Development, rose 2.3% to 134.3 in 2019. The Country’s gross ocean product rose 6.2% to Yuan 89trn ($1.32trn) in 2019.

The trade volume increase between China and Other Countries along the Belt & Road Initiative is contributing to the steady growth of China’s Marine Economy.

The Guangdong-Hong Kong-Macao Greater Bay Area (the “GBA”) is regarded as the micro-version and gateway to Belt & Road. Among the nine cities and two special administrative regions in the GBA, there are already three different jurisdictions; Mainland China’s civil law system, the Hong Kong legal system based on English common law, and Macau civil law based on Portuguese law. Hence, how the multiple jurisdictions can collaborate and create synergy will be a key to the success in GBA.

Challenges under Conflicts of Law: Dispute Resolution Mechanism

Currently, the main solutions to these differences between the legal systems are reached through special legal assistance arrangements, allowing the respective courts to mutually recognise and enforce civil and commercial judgments as well as arbitral awards.

In practice, it is common for commercial parties, especially in a shipping context, to incorporate a suitable governing law clause as well as a dispute resolution provision that can provide parties with a commercial and cost effective dispute resolution mechanism.

In fact, Hong Kong is a popular seat of arbitration and international dispute resolution hub. Recently, BIMCO announced the addition of Hong Kong, alongside London, New York and Singapore as the fourth named option of arbitration venue in its standard dispute resolution clause. Hong Kong Maritime Arbitration Group and its rules have been designated for maritime arbitration in Hong Kong under the clause.

On November 27, 2020, the HKSAR Government and the Supreme People’s Court signed the Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the HKSAR (the “Supplemental Arrangement”).

The amendments in this Supplemental Arrangement will further supplement the spirit of the New York Convention and refine the 20-year-old Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the HKSAR, providing a simple and effective mechanism in both places on reciprocal enforcement of arbitral awards. It also fosters legal and judicial cooperation in civil and commercial matters.

Marine Economy in GBA

To give effect to the Outline Development Plan issued on February 18, 2019, which confirmed in Chapter 6 that shipping and logistics are key industries in GBA development, the regional governments have been working closely to ensure that new policy measures are smoothly and successfully implemented, to further enhance the flow of people, goods and information within the GBA.

  • To better support international shipowners, Hong Kong has set up several Regional Desks of the Hong Kong Shipping Registry at selected economic trade offices and Mainland Offices and Liaison Units, including London, Shanghai and Singapore. There are also plans to extend the network to Australia, North Asia and North America. This allows shipowners better access to the registry and their services regardless of their geographical location. The Hong Kong Shipping Register, administered by the HKSAR Marine Department, is the fourth-largest globally, with gross tonnage of 129m gt (2020), representing nearly 10% of the world’s merchant fleet.
  • To further promote Hong Kong as the preferred jurisdiction for ship-leasing businesses, concessionary tax regimes for qualifying ship lessors and ship leasing managers have been introduced, providing tax exemption for qualifying profits derived from ship leasing activities in relation to operating leases and funding leases carried out by ship lessors. It is also anticipated that the Hong Kong Government will provide tax relief to promote the development of marine insurance and the underwriting of specialty risks in Hong Kong.
  • In terms of maritime manpower development, the $300m Maritime and Aviation Training Fund has been set up to build up a vibrant, diversified and competitive pool of professionals and technical personnel to support Hong Kong’s future development in the maritime and aviation sectors.

On June 12, 2020, China’s Ministry of Transport issued opinions on advancing the development of maritime services in the GBA and achieving the goal of building the GBA into a pioneer zone for maritime service and transportation, a pilot zone for maritime reform and opening-up innovation and development and a demonstration zone for maritime high-quality development.

Furthermore, on August 22 this year, the Ministry of Transport signed an agreement with maritime authorities from Hong Kong and Macao for maritime cooperation in the GBA, which will establish a collaborative mechanism and jointly maintain water transportation safety in the GBA, promote green shipping development and optimise the business environment for maritime industry players.

Conclusion

Going forward, through sharing resources and market forces, cities within the region will diversify their economies in order to maintain their respective competitiveness. No doubt the Chinese Government will continue to take the lead in coordinating the areas of shipping policy, market regulation, shipping safety, environmental conservation and talent nurturing etc.

Thanks to the “One Country, Two Systems” framework, Hong Kong also has unique strength as an extraordinary international financial, trade and shipping centre, supported by a robust common law system and laissez-faire economy. Hong Kong should continue to act as the backbone and bloodline of the GBA, serving as the super-connector by bridging the GBA, as well as the rest of China, to the international market.

As the Chief Executive of the HKSAR Carrie Lam said in her Policy Address 2020, which was announced on November 25 this year, “the Belt & Road Initiative and the GBA development in recent years have provided unlimited opportunities for Hong Kong and thus, there is no reason not to take advantage of this development when Hong Kong seeks to inject impetus to relaunch the economy”.

Edward Liu
Author: Edward Liu, Legal Director, Hill Dickinson Hong Kong & Co-Opted Member, Hong Kong Maritime & Port Board.