China, Malaysia Mull Dispute Resolution for ‘Belt and Road’ Countries

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China, Malaysia Mull Dispute Resolution for ‘Belt and Road’ Countries

Special envoy proposes dispute settlement collaboration to provide legal protection for projects.

This week, Malaysia’s special envoy to China proposed a way for the two countries to address disputes that arise among countries along China’s ‘One Belt One Road’ (OBOR) initiative and to provide better legal protection for future projects.

Since 2013, China has been promoting OBOR – comprising the Silk Road Economic Belt and the Maritime Silk Road – as a way to boost connectivity between China and Eurasia through infrastructure development, trade liberalization, financial integration, policy coordination and stronger people-to-people ties. Though the idea has become central to China’s regional economic diplomacy, it continues to face obstacles due to lingering disputes among countries that could hamper future cooperation.

This week, Ong Ka Ting, who is both Malaysian Prime Minister Najib Razak’s special envoy to China as well as the the chairman of the Malaysia-China Business Council (MCBC), suggested during a meeting in Beijing that Malaysia and China could collaborate in facilitating dispute settlement between countries along OBOR, including through arbitration.

Ong told the annual joint business council meeting between MCBC and the China Council for the Promotion of International Trade (CCPIT) that the two countries could cooperate through the Kuala Lumpur Regional Center for Arbitration (KLRCA) and the China International Economic and Trade Arbitration Commission (CIETAC).

The focus, he said, would be on harmonizing arbitration law among countries along OBOR and ensuring a uniform and consistent mechanism for the enforcement of awards, thereby enhancing legal protections for investments and projects.

“The rules will be more transparent and the awards (of the arbitration centers) will be enforced with certainty,” he said according to the Malaysian daily The Star.

No further specifics were publicly available about Ong’s proposal. But the fact that Malaysia is talking about ways to help resolve disputes among OBOR countries should come as no surprise. Despite some irritants, including on the South China Sea issue, Malaysia continues to view a strong economic relationship with China – its top trading partner – as critical to helping it realize its goal of becoming a high-income country by 2020.  And OBOR has become an important part of bilateral ties over the past few years, with Malaysia not only playing a role in the initiative but also promoting it through a series of meetings and conferences.

For China, Malaysia is an important node in the Maritime Silk Road segment of OBOR that covers Southeast Asia. Strategically, Malaysia is a littoral state of the Strait of Malacca, providing an opportunity for cooperation in the maritime domain including port infrastructure. And geographically, lying between Thailand and Singapore, Malaysia is a useful connector in China’s broader infrastructure plans, including a high-speed railway Beijing envisions that would eventually run from Kunming, China down to Laos and Thailand and on to Malaysia and Singapore.

Though Sino-Malaysian cooperation on OBOR is still at its early stages, there have already been a series of projects linked to the initiative. These include the launch of the world’s first-ever 21st Century Maritime Silk Road bond, a commercial alliance between Chinese and Malaysian ports, and the development of rail infrastructure.