NORMAT E INTERESIT / INTEREST RATES IMPACT AND LOAN SYSTEM IN THE ECONOMIC DE...Shkumbin Gërguri
Commercial banks are intermediators of the interaction between business entities and other economic, legal and social agents. Today, banks do not have the approach towards the classic model, whose function was only to offer classic services of deposits and loans,; with evolution of global trends and technology banks have created nowadays a modern system of operating that applies techniques and methods that are the trend of globalization.
The document provides an overview of China's major economic regions and their key characteristics. It describes the Pearl River Delta as China's most vibrant economic region, located near Hong Kong. It is a major manufacturing and consumer market hub. The Yangtze River Delta region surrounds Shanghai and includes major cities like Nanjing and Suzhou. It generates over a fifth of China's GDP and a third of foreign trade. The Bohai Bay region includes Beijing and Tianjin and accounts for around 9% of China's national GDP. The document analyzes each region's economy, logistics infrastructure and dynamics.
Doc 1 en fic report_fornasari-vtp__14-jan-13__final docFranco Fornasari
The document summarizes discussions from a roundtable on the Chinese economy. Key points include:
1) The Chinese economy is experiencing a soft landing due to both cyclical factors like weak demand in Europe/US and structural issues around overinvestment and private sector struggles.
2) Traditional manufacturing and private enterprises, especially small-medium enterprises, are being hardest hit currently. Local government debt of 20% of GDP also poses risks.
3) China is transitioning to an era of lower but still solid growth led more by consumption and services rather than investment and exports. Financial reforms aim to support this transition.
4) Opportunities remain for international investors but they must carefully consider China's economic challenges
Private capital flows and foreign direct investment (FDI) to developing and transition economies has soared throughout most of this decade. In 2008 net private sector capital flows reached an estimated $619 billion (from a record $900 billion in 2007) while FDI accounted for an estimated $580 billion. Some of this capital has headed to the Commonwealth of Independent States (CIS), a region whose prospects have improved considerably since the 1998 Russian financial crisis. Although the amount of capital flows into the CIS has been largely insignificant prior to and shortly after the crisis, currently their share of global private capital flows has averaged a more impressive 13%. Attracted by the region’s decade long growth, international investors began investing in the CIS to exploit potentially lucrative investment opportunities.
Published in 2009
This paper investigates the barriers to innovation perceived by Polish manufacturing firms. It refers to the heterogeneity of innovation active firms. We introduce a taxonomy of innovative firms based on the frequency with which they introduce commercialised innovations using data from both CIS4 (for 2002-2004) and CIS5 (2004-2006). Two groups of innovation-active firms are distinguished: those which introduced innovation in both periods covered by both CIS (which we call persistent innovators) and those which introduced innovation either in CIS4 or CIS5 (which we call occasional innovators). We use a four step analysis covering binary correlations, Principal Component Analysis, probit model and correlations of disturbances. Two types of explanatory variables describing firms’ characteristics and innovation inputs used are considered. The paper shows that there are considerable differences in sensitivities to the perception of innovation barriers and in complementarities among barriers between persistent and occasional innovators. In the case of occasional innovators, a kind of innovation barrier chain is observed. This has an impact on differences in the frequency of innovation activities between the two groups of innovators and results in a diversification of innovators.
Authored by: Ewa Balcerowicz, Marek Pęczkowski, Anna Wziatek-Kubiak
Published in 2011
The document discusses the internationalization of the Chinese yuan (RMB). It notes that while RMB deposits in Hong Kong declined in 2012 due to increased investment options in China, this represents positive development toward the RMB's role in investment. Banks are developing strategies around opportunities from RMB internationalization. The document also outlines the current state of RMB clearing infrastructure and expectations for the future evolution of RMB clearing systems to support its growing international use.
This document discusses the fiscal positions and deficits of countries acceding to the European Union. It finds that most acceding countries are arriving with unstable fiscal positions and high budget deficits. The document analyzes how EU transfers and expenditures required for accession will impact the fiscal situations of these countries. It calculates the net financial position of each country based on EU transfers versus contributions to determine the overall fiscal effect of accession. The key finding is that negotiated EU transfers will barely cover the new budget obligations required for accession.
This document discusses the future of the Chinese renminbi (RMB) as a global investment currency. While the RMB is already widely used internationally, strict controls on its usage mean it has not achieved the same status as major currencies like the US dollar. The document finds that:
1) China's central bank says it remains committed to liberalizing its markets and making the RMB freely usable, but the process will require some ongoing policy control from the government.
2) Most financial services executives still expect the RMB to become fully convertible within 5 years, though some reforms are still needed to enable its adoption as a global investment currency.
3) For the RMB to achieve full status as
NORMAT E INTERESIT / INTEREST RATES IMPACT AND LOAN SYSTEM IN THE ECONOMIC DE...Shkumbin Gërguri
Commercial banks are intermediators of the interaction between business entities and other economic, legal and social agents. Today, banks do not have the approach towards the classic model, whose function was only to offer classic services of deposits and loans,; with evolution of global trends and technology banks have created nowadays a modern system of operating that applies techniques and methods that are the trend of globalization.
The document provides an overview of China's major economic regions and their key characteristics. It describes the Pearl River Delta as China's most vibrant economic region, located near Hong Kong. It is a major manufacturing and consumer market hub. The Yangtze River Delta region surrounds Shanghai and includes major cities like Nanjing and Suzhou. It generates over a fifth of China's GDP and a third of foreign trade. The Bohai Bay region includes Beijing and Tianjin and accounts for around 9% of China's national GDP. The document analyzes each region's economy, logistics infrastructure and dynamics.
Doc 1 en fic report_fornasari-vtp__14-jan-13__final docFranco Fornasari
The document summarizes discussions from a roundtable on the Chinese economy. Key points include:
1) The Chinese economy is experiencing a soft landing due to both cyclical factors like weak demand in Europe/US and structural issues around overinvestment and private sector struggles.
2) Traditional manufacturing and private enterprises, especially small-medium enterprises, are being hardest hit currently. Local government debt of 20% of GDP also poses risks.
3) China is transitioning to an era of lower but still solid growth led more by consumption and services rather than investment and exports. Financial reforms aim to support this transition.
4) Opportunities remain for international investors but they must carefully consider China's economic challenges
Private capital flows and foreign direct investment (FDI) to developing and transition economies has soared throughout most of this decade. In 2008 net private sector capital flows reached an estimated $619 billion (from a record $900 billion in 2007) while FDI accounted for an estimated $580 billion. Some of this capital has headed to the Commonwealth of Independent States (CIS), a region whose prospects have improved considerably since the 1998 Russian financial crisis. Although the amount of capital flows into the CIS has been largely insignificant prior to and shortly after the crisis, currently their share of global private capital flows has averaged a more impressive 13%. Attracted by the region’s decade long growth, international investors began investing in the CIS to exploit potentially lucrative investment opportunities.
Published in 2009
This paper investigates the barriers to innovation perceived by Polish manufacturing firms. It refers to the heterogeneity of innovation active firms. We introduce a taxonomy of innovative firms based on the frequency with which they introduce commercialised innovations using data from both CIS4 (for 2002-2004) and CIS5 (2004-2006). Two groups of innovation-active firms are distinguished: those which introduced innovation in both periods covered by both CIS (which we call persistent innovators) and those which introduced innovation either in CIS4 or CIS5 (which we call occasional innovators). We use a four step analysis covering binary correlations, Principal Component Analysis, probit model and correlations of disturbances. Two types of explanatory variables describing firms’ characteristics and innovation inputs used are considered. The paper shows that there are considerable differences in sensitivities to the perception of innovation barriers and in complementarities among barriers between persistent and occasional innovators. In the case of occasional innovators, a kind of innovation barrier chain is observed. This has an impact on differences in the frequency of innovation activities between the two groups of innovators and results in a diversification of innovators.
Authored by: Ewa Balcerowicz, Marek Pęczkowski, Anna Wziatek-Kubiak
Published in 2011
The document discusses the internationalization of the Chinese yuan (RMB). It notes that while RMB deposits in Hong Kong declined in 2012 due to increased investment options in China, this represents positive development toward the RMB's role in investment. Banks are developing strategies around opportunities from RMB internationalization. The document also outlines the current state of RMB clearing infrastructure and expectations for the future evolution of RMB clearing systems to support its growing international use.
This document discusses the fiscal positions and deficits of countries acceding to the European Union. It finds that most acceding countries are arriving with unstable fiscal positions and high budget deficits. The document analyzes how EU transfers and expenditures required for accession will impact the fiscal situations of these countries. It calculates the net financial position of each country based on EU transfers versus contributions to determine the overall fiscal effect of accession. The key finding is that negotiated EU transfers will barely cover the new budget obligations required for accession.
This document discusses the future of the Chinese renminbi (RMB) as a global investment currency. While the RMB is already widely used internationally, strict controls on its usage mean it has not achieved the same status as major currencies like the US dollar. The document finds that:
1) China's central bank says it remains committed to liberalizing its markets and making the RMB freely usable, but the process will require some ongoing policy control from the government.
2) Most financial services executives still expect the RMB to become fully convertible within 5 years, though some reforms are still needed to enable its adoption as a global investment currency.
3) For the RMB to achieve full status as
In this paper we try to estimate effects of financial deepness and capital account liberalization on economic growth, investment and the total factor productivity (TFP) in Slovenia from 1993 to the second quarter of 2001. We find out that the only positive effect of capital account liberalization was increased credits to private sector. On the other hand, financial depth has a positive and significant effect on economic growth and investment, but not on the TFP growth. Moreover, it is not likely that also capital account liberalization positively affects above specified choice variables. Namely, financial deepening is achieved through development of adequate institutions and sustainable macroeconomic policies. Once financial system is set in the country, capital account liberalization takes place.
The document analyzes whether liberalization and deregulation of China's financial sector has encouraged foreign banking in the country. It examines quantitative data on foreign banks in China to determine if they have successfully entered the market. The author aims to assess if government regulations have specifically promoted foreign bank entry. While China has reformed its banking system and allowed more foreign competition, the document aims to determine if foreign banks have actually benefited and increased their presence or if reforms did not specifically target them.
June 2010 - Financial system: Long-term challengesFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
1) The book "Pakistan's Agenda: Economic Reforms" provides a comprehensive analysis of Pakistan's economy and policy reforms needed for improvement.
2) It highlights critical issues like low tax collection and weak accountability institutions that have hindered Pakistan's economic growth.
3) The author outlines a range of reforms in areas like fiscal policy, trade, institutions, and governance that could stabilize the economy and put it on a path towards sustainable progress if implemented earnestly.
The document summarizes the keynote speech by Dr. Victor Fung on the economic outlook of Hong Kong in the context of China's 12th Five-Year Plan. The summary is as follows:
(1) Hong Kong faces challenges from increasing regional competition and needs to further integrate economically with mainland China.
(2) The 12th Five-Year Plan aims to transform China's development pattern, improve people's livelihoods, and supports enhancing Hong Kong's status as an international financial center.
(3) The plan presents opportunities for Hong Kong to strengthen its pillar industries and priority sectors by leveraging its strengths and collaborating more with Guangdong through the Framework Agreement on Cooperation.
This document is a paper by Lubomira Anastassova titled "Institutional Arrangements of Currency Boards - Comparative Macroeconomic Analysis". The paper examines the differences in institutional frameworks for currency board arrangements across countries and assesses the impact of currency boards on macroeconomic indicators like inflation, interest rates, and economic growth. It finds that currency board countries exhibit approximately 3% lower annual inflation and 1% higher economic growth on average compared to other countries with pegged exchange rates. The paper analyzes the characteristics of currency boards, how their institutional arrangements can support successful economic development, and presents the results of a regression analysis testing the impact of currency boards on macroeconomic performance.
Vietnam _Transformation of the Financial Market ManagementDr. Oliver Massmann
This document discusses the transformation of financial market management in Vietnam. It provides context on Vietnam's rapidly developing economy and financial sector. Key points include:
- Vietnam has a dynamic economy that is undergoing substantial structural changes in its financial sector at a fast pace, presenting challenges for financial managers.
- The banking system has been reformed, with more participants and a wider range of financing activities. However, the banking sector remains underdeveloped.
- The currency is closely tied to the US dollar and managed by the State Bank of Vietnam to maintain stability and competitiveness. Inflation poses a risk to achieving growth targets.
- Developing the subnational foreign capital market could provide alternative long-term financing for
The paper first considers why central European countries wish to join EMU soon. The main reasons are the risk of macroeconomic instability they face outside the euro zone if they wish to grow quickly. At the same time, Central Europe is highly integrated as regards trade with EMU, so it is little exposed to asymmetric shocks that would require a realignment of exchange rates. Finally, it is argued that there is no cost in terms of slower growth from EMU accession, so that there is no trade-off, as has been claimed, between nominal convergence to EMU and real convergence to EU average GDP levels. Second, the paper assesses whether Central European accession to EMU would be disadvantageous to current members. It concludes that accession cannot increase inflationary pressure on existing EMU members, as has been claimed, but that slow growing members of EMU might suffer increased unemployment, unless they increase the flexibility of their labour markets. Incumbent members may also be unwilling to share power with Central Europeans in EMU institutions.
Authored by: Jacek Rostowski
Published in 2003
This paper analyzes long-term data on short-term Japanese interest rates and compares them to key foreign rates to assess Japan's integration into international money markets over time. It finds that Japanese interest rates became less volatile and more closely linked to foreign rates in the inter-war period, possibly due to deeper financial integration or use of interest rates to manage external imbalances. The paper uses econometric analysis and cointegration tests to examine these relationships under changing domestic policy regimes and degrees of capital mobility. It provides a thorough review of relevant theoretical frameworks and methodology to guide the empirical analysis.
Definition of investment strategy for sustainable development of regional eco...SubmissionResearchpa
This article is discussed that the theoretical foundations of determining the investment strategy for sustainable development of the region’s economy, as well as the current situation, analysis and future plans. by Rakhimberdiev Oybek Alisher ugli 2020. Definition of investment strategy for sustainable development of regional economies. International Journal on Integrated Education. 2, 4 (Mar. 2020), 108-115. DOI:https://doi.org/10.31149/ijie.v2i4.241. https://journals.researchparks.org/index.php/IJIE/article/view/241/234 https://journals.researchparks.org/index.php/IJIE/article/view/241
After the fall of Bretton Woods System, exchange rates become the focus of researchers and politicians. When a floating exchange rate system was started researchers investigated the impact of exchange rate volatility on international trade but the development of derivative instruments changed the researchers focus from currency volatility towards the impact of currency appreciation or depreciation on international trade. The main objective of this research was to investigate the short run and long run relationship between Turkey’s merchandise trade deficit and real effective exchange rate. The monthly data was collected from Central Bank of Republic of Turkey from March 2005 to September 2017. Autoregressive distributed lag (ARDL) approach and Error correction model (ECM) was used for the analysis. The finding shows that the variables have long run relationship but it is not significant at 5% significance level. The short run model also shows the insignificant results. These findings have the following policy implication: Turkey cannot improve the merchandise trade deficit by devaluating its currency.
Swedbank Analysis: Competitiveness adjustment in LatviaSwedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
"Highlights":
* Healthy growth, but caution warranted
* Inflation growth decelerating
* Recovery of imports increased current account deficit
"In Focus":
* Does the financing from the EU structural funds improve the competitiveness of Latvian businesses?, autors: Oļegs Krasnopjorovs
Impact of Foreign Debt on Economic Growth in Zimbabweiosrjce
The study investigates the impact of foreign debt on economic growth in Zimbabwe. Time series data
covering the period 1980 -2013 is analysed using ordinary least squares regression. Labour force, capital
investment, and trade openness are used as control variables. The results show that external debt and trade
openness impact negatively on economic growth in Zimbabwe while capital investment and labour force growth
has a positive effect. The study recommends that the country should not heavily rely on foreign borrowing to
finance economic growth but should rather create a conducive environment for alternative sources of foreign
funds such as project finance and foreign direct investment. It is further recommended that the country should
curb excessive imports of consumables and encourage value-added exports by local manufacturers.
This document analyzes the link between domestic debt, financial repression, and external vulnerability in Venezuela from 1984 to 2013. It finds that while financial repression helped reduce the stock of domestic debt, it also accelerated capital flight, weakening Venezuela's net foreign asset position. Financial repression taxes, estimated using different methodologies, were on average similar to levels in OECD countries but the "tax rate" was significantly higher in years with exchange controls and interest rate ceilings. Measures of capital flight, including over-invoicing of imports, increased markedly in periods of exchange controls, indicating a link between domestic imbalances and capital outflows.
This paper confronts the traditional balance-of-payments (BoP) analytical framework (with its dominant focus on the size of a given country’s current account imbalance and its external liabilities) with the contemporary realities of highly integrated international capital markets and cross-country capital mobility. Some key implicit assumptions of the traditional framework like those of a fixed residence of capital owners and home country bias are challenged and an alternative set of assumptions is offered. These reflect the unrestricted character of private capital flows (with no “home country bias” and fixed domicile) determined mostly by the expected rate of return. As a result, the importance of BoP constraints (in their “orthodox” interpretation) diminishes and they disappear completely with respect to individual member states within a highly integrated monetary union. This does not mean, however, immunization from other kinds of macroeconomic risks.
Authored by: Marek Dąbrowski
Published in 2006
Macroeconomic Developments Report, June 2017Latvijas Banka
Based on data from Latvijas Banka, Central Statistical Bureau of Latvia, Ministry of Finance, and Financial and Capital Market Commission, this publication assesses developments of the external sector and exports, financial market, domestic demand and supply, prices and costs, and balance of payments, and provides forecasts for the economic development and inflation. The publication is available only in electronic form.
The main purpose of this study is to determine what are the main factors which stand behind the diversity in performance of business services measured by their contribution to growth in the EU Member States. We show that in addition to typical growth factors which enhance labour productivity, also the extent of interconnectedness of business services with upstream industries is important to explain service-based economic growth.
The analysis yields two interesting results. Firstly, the authors show that patterns of industrial interconnectedness of business services are considerably diversified across the EU Member States indicating large differences in the integration of services as supplier with other sectors on a country level. Secondly they show that the diversified growth performance of business services across the EU25 countries can be explained by differences in labour productivity and differences in forward linkages.
The results indicate the fundamental role of business services as the main engine of growth in the European economy. This service-based growth is channelled mainly through increases in labour productivity and forward interconnectedness of services with downstream industries.
On the policy making level the results indicate that investment in human and intangible capital are crucial for the service-dominated economy as they not only enhance economic growth inside knowledge intensive services but also facilitate transmission of growth impulses to downstream industries by increasing diffusion and integration of services as suppliers of high value added inputs to the economy.
Authored by: Maciej Sobolewski, Grzegorz Poniatowski
Published in 2013
The document discusses recent banking reforms and regulatory developments across several regions:
- In Asia, regulators are trying to manage rapid credit growth and excessive leverage while still stimulating their economies. Banks are enhancing risk management practices to assess borrowers' ability to repay.
- In Europe, the ECB will likely continue monetary stimulus in 2016 due to economic uncertainty. Another banking sector assessment may occur, extending regulatory scrutiny to more banks. Political and regulatory issues around implementing new rules could also arise.
- In Africa, countries have strengthened banking supervision and risk oversight. Reforms aim to increase resilience and integrate international standards. Accounting reforms and consolidated supervision are expanding across several regions. Continued reforms are still needed regarding issues like problem loans and
This document summarizes a newsletter from the China-Europe Commercial Collaboration Association (CECCA) that includes the following articles:
1. An analysis questioning the usefulness of long-term shipping forecasts, using a 10-year forecast from Lloyd's List Intelligence as an example.
2. An interview with Professor Proshanto K. Mukherjee on issues in Chinese Maritime Law.
3. An article on third-party funding in arbitration and its potential trends and implications for China.
4. Two articles on academic topics: blockchain and smart contracts in shipping, and utmost good faith in English and Chinese law.
5. Brief news items on dry bulk shipping, LNG
This document contains 4 articles related to international commercial law:
1. An analysis of China's economic outlook for 2017-2018, noting GDP growth is expected to remain steady at 6.7% in 2017 but slow to 6.4% in 2018.
2. A guide to arbitration in China, highlighting reforms that now allow for ad hoc arbitration in free trade zones and an acceptance of this practice.
3. A case study on the application of Article 17 of the CMR convention in German case law, examining three alternatives for carrier liability exemption.
4. Two articles on China's Belt and Road initiative, one providing a brief analysis of a guiding case and the other on the "Ice Silk Road
In this paper we try to estimate effects of financial deepness and capital account liberalization on economic growth, investment and the total factor productivity (TFP) in Slovenia from 1993 to the second quarter of 2001. We find out that the only positive effect of capital account liberalization was increased credits to private sector. On the other hand, financial depth has a positive and significant effect on economic growth and investment, but not on the TFP growth. Moreover, it is not likely that also capital account liberalization positively affects above specified choice variables. Namely, financial deepening is achieved through development of adequate institutions and sustainable macroeconomic policies. Once financial system is set in the country, capital account liberalization takes place.
The document analyzes whether liberalization and deregulation of China's financial sector has encouraged foreign banking in the country. It examines quantitative data on foreign banks in China to determine if they have successfully entered the market. The author aims to assess if government regulations have specifically promoted foreign bank entry. While China has reformed its banking system and allowed more foreign competition, the document aims to determine if foreign banks have actually benefited and increased their presence or if reforms did not specifically target them.
June 2010 - Financial system: Long-term challengesFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
1) The book "Pakistan's Agenda: Economic Reforms" provides a comprehensive analysis of Pakistan's economy and policy reforms needed for improvement.
2) It highlights critical issues like low tax collection and weak accountability institutions that have hindered Pakistan's economic growth.
3) The author outlines a range of reforms in areas like fiscal policy, trade, institutions, and governance that could stabilize the economy and put it on a path towards sustainable progress if implemented earnestly.
The document summarizes the keynote speech by Dr. Victor Fung on the economic outlook of Hong Kong in the context of China's 12th Five-Year Plan. The summary is as follows:
(1) Hong Kong faces challenges from increasing regional competition and needs to further integrate economically with mainland China.
(2) The 12th Five-Year Plan aims to transform China's development pattern, improve people's livelihoods, and supports enhancing Hong Kong's status as an international financial center.
(3) The plan presents opportunities for Hong Kong to strengthen its pillar industries and priority sectors by leveraging its strengths and collaborating more with Guangdong through the Framework Agreement on Cooperation.
This document is a paper by Lubomira Anastassova titled "Institutional Arrangements of Currency Boards - Comparative Macroeconomic Analysis". The paper examines the differences in institutional frameworks for currency board arrangements across countries and assesses the impact of currency boards on macroeconomic indicators like inflation, interest rates, and economic growth. It finds that currency board countries exhibit approximately 3% lower annual inflation and 1% higher economic growth on average compared to other countries with pegged exchange rates. The paper analyzes the characteristics of currency boards, how their institutional arrangements can support successful economic development, and presents the results of a regression analysis testing the impact of currency boards on macroeconomic performance.
Vietnam _Transformation of the Financial Market ManagementDr. Oliver Massmann
This document discusses the transformation of financial market management in Vietnam. It provides context on Vietnam's rapidly developing economy and financial sector. Key points include:
- Vietnam has a dynamic economy that is undergoing substantial structural changes in its financial sector at a fast pace, presenting challenges for financial managers.
- The banking system has been reformed, with more participants and a wider range of financing activities. However, the banking sector remains underdeveloped.
- The currency is closely tied to the US dollar and managed by the State Bank of Vietnam to maintain stability and competitiveness. Inflation poses a risk to achieving growth targets.
- Developing the subnational foreign capital market could provide alternative long-term financing for
The paper first considers why central European countries wish to join EMU soon. The main reasons are the risk of macroeconomic instability they face outside the euro zone if they wish to grow quickly. At the same time, Central Europe is highly integrated as regards trade with EMU, so it is little exposed to asymmetric shocks that would require a realignment of exchange rates. Finally, it is argued that there is no cost in terms of slower growth from EMU accession, so that there is no trade-off, as has been claimed, between nominal convergence to EMU and real convergence to EU average GDP levels. Second, the paper assesses whether Central European accession to EMU would be disadvantageous to current members. It concludes that accession cannot increase inflationary pressure on existing EMU members, as has been claimed, but that slow growing members of EMU might suffer increased unemployment, unless they increase the flexibility of their labour markets. Incumbent members may also be unwilling to share power with Central Europeans in EMU institutions.
Authored by: Jacek Rostowski
Published in 2003
This paper analyzes long-term data on short-term Japanese interest rates and compares them to key foreign rates to assess Japan's integration into international money markets over time. It finds that Japanese interest rates became less volatile and more closely linked to foreign rates in the inter-war period, possibly due to deeper financial integration or use of interest rates to manage external imbalances. The paper uses econometric analysis and cointegration tests to examine these relationships under changing domestic policy regimes and degrees of capital mobility. It provides a thorough review of relevant theoretical frameworks and methodology to guide the empirical analysis.
Definition of investment strategy for sustainable development of regional eco...SubmissionResearchpa
This article is discussed that the theoretical foundations of determining the investment strategy for sustainable development of the region’s economy, as well as the current situation, analysis and future plans. by Rakhimberdiev Oybek Alisher ugli 2020. Definition of investment strategy for sustainable development of regional economies. International Journal on Integrated Education. 2, 4 (Mar. 2020), 108-115. DOI:https://doi.org/10.31149/ijie.v2i4.241. https://journals.researchparks.org/index.php/IJIE/article/view/241/234 https://journals.researchparks.org/index.php/IJIE/article/view/241
After the fall of Bretton Woods System, exchange rates become the focus of researchers and politicians. When a floating exchange rate system was started researchers investigated the impact of exchange rate volatility on international trade but the development of derivative instruments changed the researchers focus from currency volatility towards the impact of currency appreciation or depreciation on international trade. The main objective of this research was to investigate the short run and long run relationship between Turkey’s merchandise trade deficit and real effective exchange rate. The monthly data was collected from Central Bank of Republic of Turkey from March 2005 to September 2017. Autoregressive distributed lag (ARDL) approach and Error correction model (ECM) was used for the analysis. The finding shows that the variables have long run relationship but it is not significant at 5% significance level. The short run model also shows the insignificant results. These findings have the following policy implication: Turkey cannot improve the merchandise trade deficit by devaluating its currency.
Swedbank Analysis: Competitiveness adjustment in LatviaSwedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
"Highlights":
* Healthy growth, but caution warranted
* Inflation growth decelerating
* Recovery of imports increased current account deficit
"In Focus":
* Does the financing from the EU structural funds improve the competitiveness of Latvian businesses?, autors: Oļegs Krasnopjorovs
Impact of Foreign Debt on Economic Growth in Zimbabweiosrjce
The study investigates the impact of foreign debt on economic growth in Zimbabwe. Time series data
covering the period 1980 -2013 is analysed using ordinary least squares regression. Labour force, capital
investment, and trade openness are used as control variables. The results show that external debt and trade
openness impact negatively on economic growth in Zimbabwe while capital investment and labour force growth
has a positive effect. The study recommends that the country should not heavily rely on foreign borrowing to
finance economic growth but should rather create a conducive environment for alternative sources of foreign
funds such as project finance and foreign direct investment. It is further recommended that the country should
curb excessive imports of consumables and encourage value-added exports by local manufacturers.
This document analyzes the link between domestic debt, financial repression, and external vulnerability in Venezuela from 1984 to 2013. It finds that while financial repression helped reduce the stock of domestic debt, it also accelerated capital flight, weakening Venezuela's net foreign asset position. Financial repression taxes, estimated using different methodologies, were on average similar to levels in OECD countries but the "tax rate" was significantly higher in years with exchange controls and interest rate ceilings. Measures of capital flight, including over-invoicing of imports, increased markedly in periods of exchange controls, indicating a link between domestic imbalances and capital outflows.
This paper confronts the traditional balance-of-payments (BoP) analytical framework (with its dominant focus on the size of a given country’s current account imbalance and its external liabilities) with the contemporary realities of highly integrated international capital markets and cross-country capital mobility. Some key implicit assumptions of the traditional framework like those of a fixed residence of capital owners and home country bias are challenged and an alternative set of assumptions is offered. These reflect the unrestricted character of private capital flows (with no “home country bias” and fixed domicile) determined mostly by the expected rate of return. As a result, the importance of BoP constraints (in their “orthodox” interpretation) diminishes and they disappear completely with respect to individual member states within a highly integrated monetary union. This does not mean, however, immunization from other kinds of macroeconomic risks.
Authored by: Marek Dąbrowski
Published in 2006
Macroeconomic Developments Report, June 2017Latvijas Banka
Based on data from Latvijas Banka, Central Statistical Bureau of Latvia, Ministry of Finance, and Financial and Capital Market Commission, this publication assesses developments of the external sector and exports, financial market, domestic demand and supply, prices and costs, and balance of payments, and provides forecasts for the economic development and inflation. The publication is available only in electronic form.
The main purpose of this study is to determine what are the main factors which stand behind the diversity in performance of business services measured by their contribution to growth in the EU Member States. We show that in addition to typical growth factors which enhance labour productivity, also the extent of interconnectedness of business services with upstream industries is important to explain service-based economic growth.
The analysis yields two interesting results. Firstly, the authors show that patterns of industrial interconnectedness of business services are considerably diversified across the EU Member States indicating large differences in the integration of services as supplier with other sectors on a country level. Secondly they show that the diversified growth performance of business services across the EU25 countries can be explained by differences in labour productivity and differences in forward linkages.
The results indicate the fundamental role of business services as the main engine of growth in the European economy. This service-based growth is channelled mainly through increases in labour productivity and forward interconnectedness of services with downstream industries.
On the policy making level the results indicate that investment in human and intangible capital are crucial for the service-dominated economy as they not only enhance economic growth inside knowledge intensive services but also facilitate transmission of growth impulses to downstream industries by increasing diffusion and integration of services as suppliers of high value added inputs to the economy.
Authored by: Maciej Sobolewski, Grzegorz Poniatowski
Published in 2013
The document discusses recent banking reforms and regulatory developments across several regions:
- In Asia, regulators are trying to manage rapid credit growth and excessive leverage while still stimulating their economies. Banks are enhancing risk management practices to assess borrowers' ability to repay.
- In Europe, the ECB will likely continue monetary stimulus in 2016 due to economic uncertainty. Another banking sector assessment may occur, extending regulatory scrutiny to more banks. Political and regulatory issues around implementing new rules could also arise.
- In Africa, countries have strengthened banking supervision and risk oversight. Reforms aim to increase resilience and integrate international standards. Accounting reforms and consolidated supervision are expanding across several regions. Continued reforms are still needed regarding issues like problem loans and
This document summarizes a newsletter from the China-Europe Commercial Collaboration Association (CECCA) that includes the following articles:
1. An analysis questioning the usefulness of long-term shipping forecasts, using a 10-year forecast from Lloyd's List Intelligence as an example.
2. An interview with Professor Proshanto K. Mukherjee on issues in Chinese Maritime Law.
3. An article on third-party funding in arbitration and its potential trends and implications for China.
4. Two articles on academic topics: blockchain and smart contracts in shipping, and utmost good faith in English and Chinese law.
5. Brief news items on dry bulk shipping, LNG
This document contains 4 articles related to international commercial law:
1. An analysis of China's economic outlook for 2017-2018, noting GDP growth is expected to remain steady at 6.7% in 2017 but slow to 6.4% in 2018.
2. A guide to arbitration in China, highlighting reforms that now allow for ad hoc arbitration in free trade zones and an acceptance of this practice.
3. A case study on the application of Article 17 of the CMR convention in German case law, examining three alternatives for carrier liability exemption.
4. Two articles on China's Belt and Road initiative, one providing a brief analysis of a guiding case and the other on the "Ice Silk Road
This document discusses China's seaborne trade trends over the past decade. It notes that China's imports have grown spectacularly, increasing by 163% from 2007 to 2017. China contributed around half of the growth in global seaborne trade volumes over this period. The main drivers of growth have been China's large economy and strong domestic consumption. Imports of raw materials like iron ore and coal have increased substantially to fuel industrial production. Government policies around stockpiling reserves and promoting cleaner energy have also impacted trade flows. Overall, China now accounts for over 20% of global seaborne imports, cementing its importance to global shipping markets.
Trends in Commercial Policies in an Emerging Economy - CHINARutuja Chudnaik
This document summarizes trends in China's commercial policies as an emerging economy. It outlines that China has become the world's largest trader and manufacturer, with exports and imports totaling over $4 trillion in 2013. It is dominated by manufactured goods, fuels, and agricultural imports. China remains highly dependent on foreign direct investment, mainly from Hong Kong, Taiwan, Japan, and South Korea. The Ministry of Commerce leads trade policy coordination across government. China has pursued trade liberalization through participating in the WTO, implementing free trade agreements, and establishing the China Shanghai Pilot Free Trade Zone to test further reforms.
The document discusses strategies for China's transportation and logistics industry from 2015. It states that leadership in this industry will require innovation, expanding networks, and redesigning networks to adapt to new challenges. China's economic growth is expected to continue, increasing demand for transportation and logistics. The industry is poised for major growth but remains fragmented. Transportation and logistics companies will need to focus on becoming more innovative, offering value-added services, expanding and redesigning their networks, and improving sustainability. Consolidation in the industry is also expected to accelerate.
The document summarizes discussions from the 15th Annual ELFA/IMN Investors Conference about developing strategies in an uncertain economic environment. There was a theme of uncertainty due to geopolitical issues like terrorism, the US election, and China's economic transition. Panelists discussed increasing costs of funds, a sluggish ABS market, and the need to develop strategies to deal with uncertainty and rising interest rates. However, others expressed optimism in the industry's resilience and ability to grow steadily despite challenges. New entrants in areas like marketplace lending and alternative financing were noted as ways the industry is adapting to changes.
Illicit financial flows from africa hidden resources for developmentDr Lendy Spires
This document analyzes illicit financial flows from African countries from 1970 to 2008. It estimates total illicit outflows from Africa over this period to be $854 billion using economic models. However, it notes that data limitations likely cause underestimation. When adjustments are made to account for uncaptured components, total illicit flows from Africa over this period are estimated to be closer to $1.8 trillion. The large scale illicit capital leaving Africa has significantly hampered development efforts by reducing funds available for investment and social spending. Addressing illicit financial flows requires cooperation between African countries and Western nations where much of the funds are absorbed.
Deeping investment cooperation, promoting industrial transformation between China and Caribbean countries as presented by Dr. Wu Qijin, Chief Executive Officer, China-LAC Cooperation Fund on July 10, 2017 at a conference titled, 'Chinese Renminbi in the Caribbean-Opportunities for Trade, Aid and Investment,' held at the Hilton Barbados Resort.
The document discusses China's upcoming 13th Five-Year Plan (FYP) for 2016-2020. Some key points:
- The FYP will emphasize environmental protection, innovation, and transitioning to a more consumption and services-based economy. Strategic industries like renewable energy and biotech will be supported.
- In 2015, China saw a stock market meltdown, yuan devaluation, and continued economic reforms. It abandoned its one-child policy and had diplomatic meetings with Taiwan.
- Under the new FYP, China aims to maintain GDP growth around 6.5% annually to reach its goal of doubling GDP and incomes by 2020 compared to 2010. Environmental protection, strategic industry development, and lever
The document summarizes China's upcoming Five-Year Plan for 2016-2020. Some key points:
- The plan will emphasize environmental protection, innovation, and moving China up the value chain. Strategic industries like renewable energy and biotech will be supported.
- Maintaining annual GDP growth of around 6.5% will be important for meeting targets of doubling income levels by 2020.
- Notable events in 2015 that impacted China's economy included stock market volatility and the yuan's devaluation against the dollar.
- Key anticipated strategies in the plan include developing a green economy, supporting strategic industries, boosting innovation, and continuing market reforms.
This document discusses the development of Asia's financial systems. It notes that while Asia's financial systems demonstrated resilience during the global financial crisis, development of the financial sector still lags behind real economic growth. Asia's financial systems remain bank-dominated with underdeveloped capital markets and limited access to financial services, especially in low-income countries. Further developing Asia's financial systems is important to support continued economic growth and development in the region.
Dear members,
We are pleased to announce that the issue July of CECCA Newsletter (Issue No.12) is released, you may find it in the attachment. Please don't hesitate to contact us if you have any comment.
What are in this issue?
i. China's maritime silk road (in Special Observer)
As a part of the China's 'Belt and Road Initiative', the maritime silk road plays an important role in this grand plan. Our senior consultant, Mr. Richard Scott, will provide some new insights in his article.
ii. Blockchain and the shipping industry (in Academic Frontier)
Digital technology is changing our world in many ways, and the shipping industry will benefit from those changes. Blockchain, being such a buzz word, has the potential in changing the shipping industry, such as making contracts 'smarter', making shipping documents like Bills of lading much safer and more convenient, etc. To provide you with a insight into blockchain technology and its possible effects on the shipping industry, we invited our members to write a series of articles on this topic, in which they will introduce the concept of 'blockchain' and their opinions on what kind of changes it might lead to. Any comment or feedback are more than welcome. In this issue, the first article is 'Blockchain-based Bill of Lading'. More articles on Blockchain will be published in future issues.
iii. Human rights
We are pleased to include a revised version of Andrew Drzemczewski's Lecture, 'Human Rights in Europe: An Insider’s Views' in this issue, in which the author provided with an in-house view of a selected number of human rights issues dealt with by the Council of Europe that he was involved in.
iv. Law of the sea
Editor’s Comment on Z. Zheng, Legal Effect of the Chinese Traditional Maritime Boundary Line
v. News in Brief
China's new policy in three Pilot Free Trade Zones concerning the shipping industry and the government released the 2018 Negative List; Two new international commercial courts were established in China and news on the IMO high-level forum.
vi. Brief Introduction – Senior Consultant of CECCA
Prof. Yash Tandon
We hope you will find this issue of interests. If you would like for your colleagues also to receive our monthly newsletter, or if you do not want to receive future issues, please email:contact@cecca.com.cn
Best wishes,
CECCA Editorial Department
07 Uppal Government Budget Deficit - 17th.pdfIsmaShahzad
The document summarizes a journal article about government budget deficits and bond market development in Pakistan. It discusses how fiscal discipline can be improved through stronger political institutions and market forces. It outlines challenges to fiscal policy in Pakistan, including a narrow tax base, tax evasion, and high defense spending. Pakistan's fiscal deficits and debt levels have been among the highest of comparable countries. A developed bond market could help bring fiscal discipline by signaling risks to unsustainable policies, but political will is needed to strengthen institutions and implement reforms.
This report summarizes the findings and policy recommendations from discussions on building an inclusive, resilient and sustainable economy for Pakistan. It suggests short-term measures to maintain macroeconomic stability through prudent fiscal and monetary policies. Long-term recommendations include promoting inclusive growth through improving agricultural productivity, supporting manufacturing competitiveness, and fiscal and trade reforms. Specific policies are proposed to strengthen key sectors like energy, labour markets, women's empowerment, and tourism. The overall goal is an economy that achieves sustainable development and improves living standards.
Financial crisis: Non-monetary factors influencing Employee performance at ba...AI Publications
Money and credit fluctuations, financial crises, and governmental responses have come into the spotlight as a result of the crisis that lasted from 2014 to 2018. The primary objective of this study was to investigate the non-financial elements that have an effect on employee performance in the Kurdistan region of Iraq in general and in Erbil in particular. In spite of this, the researcher came up with five assumptions about study that needed to be evaluated and quantified in order to assess how well employees performed amid financial crises. It was found that job security had the highest value, which indicates that job security has the most powerful and positive association with employee performance during financial crisis. On the other hand, job enrichment was found to be the least powerful factor that influences and is related to employee performance during financial crisis in the Kurdistan region of Iraq. The researcher used simple regression analysis to measure the developed research hypotheses.6
This document summarizes a working paper that estimates capital flight from developing countries from 1971-1998 using multiple methods. It acknowledges that while capital flight is assumed to be prevalent, estimation methods may not fully capture capital fleeing due to economic and political instability. The paper evaluates different estimation methods and definitions of capital flight used in literature. Estimates of capital flight, resident outflows, misinvoicing, and hot money flows are presented for regions and time periods. The estimates reveal high resident outflows from some countries and regions even in the 1990s, and that capital leaves countries with both liberalized and controlled capital accounts. Outflows have been large recently from East Asia, Europe, Central Asia and Latin America. The paper provides a
The IMF Executive Board concluded the 2016 Article IV consultation with Vietnam, finding that Vietnam's economy experienced solid growth and low inflation in 2015. However, manufacturing and exports moderated near the end of 2015 due to slowing external demand. While inflation declined in 2015, it ticked up in early 2016 due to higher food and administered prices. The IMF projected growth to moderate to around 6% in 2016, with headline inflation rising modestly and public debt reaching around 62% of GDP. The IMF emphasized the need for fiscal consolidation and reforms to the banking sector to address risks from high public debt and slow non-performing loan resolution.
The document summarizes an IMF report on Ukraine's 2016 Article IV consultation and third review under its Extended Fund Facility arrangement. Key points include:
- Ukraine's economy is growing again after a severe crisis in 2014-15, with GDP growth of 2.3% in 2016, helped by tight fiscal and monetary policies that reduced imbalances.
- However, progress on structural reforms has been mixed, with limited progress on reforms of state-owned enterprises, land, pensions, and tackling corruption.
- For durable recovery, Ukraine needs to accelerate critical structural reforms to improve business environment and attract investment for faster, sustainable growth.
- Continued fiscal consolidation is also needed to reduce high public debt levels and
Chinese RMB needs to be a regional currency before an international reserve c...Macro Currency Group
1. The document discusses whether the Chinese RMB is ready to become an international reserve currency like the US dollar.
2. It argues that the RMB first needs to become a truly regional currency in Asia before it can be considered for inclusion in the IMF's Special Drawing Rights basket or become a global reserve currency.
3. For the RMB to succeed as a regional currency, China must further liberalize its capital markets and allow the RMB to float freely based on market forces rather than government intervention. Only then can the RMB develop characteristics that make it attractive for international use and investment.
Chinese FDI in the EU declined for the second year in a row in 2018, dropping 40% from 2017 levels to €17.3 billion. Investment remained focused on the largest EU economies like the UK, Germany, and France, but their share declined as Northern European countries and Benelux gained more investment. The industry mix also became more diverse, with investments spreading across more sectors and hitting records in areas like financial services, healthcare, and automotive. New investment screening policies in the EU and its member states raised scrutiny of Chinese acquisitions, reflecting broader concerns about Chinese commercial presence in Europe.
Similar to Cecca newsletter issue 13 aug&sept (fina... (20)
Cecca newsletter on company and financial law (issue 1 october 2018)André Mendes 安德烈
This document summarizes the new E-commerce Law of China, which aims to create a safer commercial environment for digital economic activities. It reviews key aspects of the new law, including establishing a regulatory framework for e-commerce operators and transactions, protecting consumers' rights, and clarifying responsibilities regarding online products and services. The law aims to adapt regulations to China's fast-growing digital economy and address issues not covered by existing laws. It represents an important step for China to establish a comprehensive legal framework governing e-commerce.
- China has taken steps to further open up and internationalize its financial markets to support the Belt and Road Initiative, including allowing foreign investment in more sectors by the end of 2018 and expanding the business scope of foreign banks.
- China also released new rules allowing foreign investors to take controlling stakes in securities joint ventures and will gradually expand the business scope of such firms.
- Membership in the Asian Infrastructure Investment Bank, an important multilateral development bank for the Belt and Road Initiative, has grown to 86 approved members as it aims to improve infrastructure in Asia and beyond.
The Chinese traditional maritime boundary line(the dotted line)in the South China Sea (“SCS”) and its validity under current international law have been challenged by bordering States as well as some scholars. Particularly in recent years, the US government, some bordering States and even scholars question the validity of the dotted line in the SCS in view of various factors such as the intent of the State reflected by the map, neutrality of the cartographer, technical accuracy, consistency of the cartographic material and recognition and acquiescence by the international community. This article analyses relevant misunderstandings and misconceptions, and points out that the SCS dotted line drawn by the Chinese government in 1947 at the approximate median position between China’s SCS islands and reefs and the coastlines of bordering States reflects the scope of China’s claims and its intent. The consistency of the claims has been maintained by PRC after 1949, while the claims have been recognized or acquiesced to by bordering States over quite a long period. Therefore, the map with the dotted line has its probative force and weight under international law.
This document discusses the potential framework for a limited application of dual-class share structures in China. It analyzes data on US-listed Chinese companies that use dual-class structures and finds that restricting eligibility based solely on industry classification would not be effective. Instead, it suggests that China consider permitting dual-class shares but impose certain safeguards to balance takeover defenses with minority shareholder protections. The framework aims to utilize dual-class structures' function in deterring hostile takeovers while safeguarding company and public shareholder interests.
Dear Friends,
Please find attached the maritime conference programme.
At the moment, the registration for delegates is still open. Please use this link https://www.city.ac.uk/…/ninth-maritime-law-and-policy-conf…
I look forward to meeting you in London on April, 2018!
Have a lovely week.
Shengnan
This document provides an overview and update on the strong growth of the China-owned merchant ship fleet. Some key points:
- The China-owned fleet grew by almost 9% in 2017 to over 152 million gross tonnes. Further strong growth is expected in 2018.
- Large volumes of new ships on order at Chinese shipyards will be delivered this year, including valemax ore carriers and newcastlemax bulk carriers.
- Chinese leasing companies are playing an increasing role in financing new ship orders, helping support domestic shipbuilding. Leasing investments in ships totaled around $12 billion in 2017.
- Continued growth in China's economy and trade is driving demand for shipping capacity, and
This document contains a newsletter from the China-Europe Commercial Collaboration Association (CECCA) focusing on legal cooperation between China and Europe. It discusses several topics:
1. A review of legal cooperation between China and the EU in 2017, including a legal affairs dialogue and increased investment cooperation.
2. An empirical study on dual-class share structures of US-listed Chinese companies, finding that about half of recently listed Chinese firms used this structure.
3. The impact of China's Belt and Road initiative on shipping law in China.
4. Brief news items on collective investment schemes in China and a maritime conference in Shanghai.
The newsletter aims to provide updates on legal and policy developments between China
This document summarizes and analyzes the rise of China in three paragraphs:
1) The 19th National Congress of the Chinese Communist Party marks the beginning of the "Xi Jinping era" and the third revolutionary epoch in China, after Mao Zedong and Deng Xiaoping. However, China sees itself as a "reluctant giant" that is still working to address domestic issues like poverty and inequality before assuming global leadership.
2) As the American-led global order declines more rapidly than expected, China feels compelled to take on more leadership internationally, such as through Xi's statements at the Davos conference. However, China's priority remains domestic development for another two decades.
3)
Intellectual Property in Big Data Era: Opportunities and ChallengesAndré Mendes 安德烈
This document provides the agenda for an intellectual property conference focusing on opportunities and challenges in the big data era. The conference will take place from December 9th to 11th at Sun Yat-Sen University in Kaifeng, China. It will include four sections over the two day period covering topics such as legislative movements for big data protection, copyright dilemmas in the big data era, trade secret protection in the cloud, and balancing the use of big data with intellectual property protection from an internet industry perspective. Speakers will include professors from China, Japan, Australia, the US, South Korea and other countries.
This document discusses the internationalization of the Chinese yuan (RMB). It notes that the RMB was added to the IMF's special drawing rights basket in 2016, marking progress in its internationalization. It discusses China's opening of its currency market through policies like allowing foreign currencies for trade. The Belt and Road initiative is promoting RMB use in neighboring countries. RMB trading centers have been established in over 20 countries. The RMB is becoming a major international currency in trade and finance, challenging the US dollar. Further RMB internationalization will be supported by China's large economy and reserves. The Belt and Road is expected to further facilitate RMB use in infrastructure projects and trade.
The LUMLPG at City, University of London is hosting the Ninth Maritime Law and Policy International Postgraduate Research Conference on April 20, 2018. The conference invites researchers and postgraduate students to present their maritime law and policy research in 15-minute presentations followed by 10 minutes of discussion. Abstract submissions of 250 words are being accepted, along with general inquiries. Additionally, the CI&CL Research Group at City University is announcing its inaugural conference on April 27, 2018 to discuss cross-border corporate insolvency and commercial law.
Guide on the use of Artificial Intelligence-based tools by lawyers and law fi...Massimo Talia
This guide aims to provide information on how lawyers will be able to use the opportunities provided by AI tools and how such tools could help the business processes of small firms. Its objective is to provide lawyers with some background to understand what they can and cannot realistically expect from these products. This guide aims to give a reference point for small law practices in the EU
against which they can evaluate those classes of AI applications that are probably the most relevant for them.
The Future of Criminal Defense Lawyer in India.pdfveteranlegal
https://veteranlegal.in/defense-lawyer-in-india/ | Criminal defense Lawyer in India has always been a vital aspect of the country's legal system. As defenders of justice, criminal Defense Lawyer play a critical role in ensuring that individuals accused of crimes receive a fair trial and that their constitutional rights are protected. As India evolves socially, economically, and technologically, the role and future of criminal Defense Lawyer are also undergoing significant changes. This comprehensive blog explores the current landscape, challenges, technological advancements, and prospects for criminal Defense Lawyer in India.
सुप्रीम कोर्ट ने यह भी माना था कि मजिस्ट्रेट का यह कर्तव्य है कि वह सुनिश्चित करे कि अधिकारी पीएमएलए के तहत निर्धारित प्रक्रिया के साथ-साथ संवैधानिक सुरक्षा उपायों का भी उचित रूप से पालन करें।
Synopsis On Annual General Meeting/Extra Ordinary General Meeting With Ordinary And Special Businesses And Ordinary And Special Resolutions with Companies (Postal Ballot) Regulations, 2018
Sangyun Lee, 'Why Korea's Merger Control Occasionally Fails: A Public Choice ...Sangyun Lee
Presentation slides for a session held on June 4, 2024, at Kyoto University. This presentation is based on the presenter’s recent paper, coauthored with Hwang Lee, Professor, Korea University, with the same title, published in the Journal of Business Administration & Law, Volume 34, No. 2 (April 2024). The paper, written in Korean, is available at <https://shorturl.at/GCWcI>.
Business law for the students of undergraduate level. The presentation contains the summary of all the chapters under the syllabus of State University, Contract Act, Sale of Goods Act, Negotiable Instrument Act, Partnership Act, Limited Liability Act, Consumer Protection Act.
Receivership and liquidation Accounts
Being a Paper Presented at Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN) on Friday, August 18, 2023.
Genocide in International Criminal Law.pptxMasoudZamani13
Excited to share insights from my recent presentation on genocide! 💡 In light of ongoing debates, it's crucial to delve into the nuances of this grave crime.
Defending Weapons Offence Charges: Role of Mississauga Criminal Defence LawyersHarpreetSaini48
Discover how Mississauga criminal defence lawyers defend clients facing weapon offence charges with expert legal guidance and courtroom representation.
To know more visit: https://www.saini-law.com/
Matthew Professional CV experienced Government LiaisonMattGardner52
As an experienced Government Liaison, I have demonstrated expertise in Corporate Governance. My skill set includes senior-level management in Contract Management, Legal Support, and Diplomatic Relations. I have also gained proficiency as a Corporate Liaison, utilizing my strong background in accounting, finance, and legal, with a Bachelor's degree (B.A.) from California State University. My Administrative Skills further strengthen my ability to contribute to the growth and success of any organization.
This document briefly explains the June compliance calendar 2024 with income tax returns, PF, ESI, and important due dates, forms to be filled out, periods, and who should file them?.
Lifting the Corporate Veil. Power Point Presentationseri bangash
"Lifting the Corporate Veil" is a legal concept that refers to the judicial act of disregarding the separate legal personality of a corporation or limited liability company (LLC). Normally, a corporation is considered a legal entity separate from its shareholders or members, meaning that the personal assets of shareholders or members are protected from the liabilities of the corporation. However, there are certain situations where courts may decide to "pierce" or "lift" the corporate veil, holding shareholders or members personally liable for the debts or actions of the corporation.
Here are some common scenarios in which courts might lift the corporate veil:
Fraud or Illegality: If shareholders or members use the corporate structure to perpetrate fraud, evade legal obligations, or engage in illegal activities, courts may disregard the corporate entity and hold those individuals personally liable.
Undercapitalization: If a corporation is formed with insufficient capital to conduct its intended business and meet its foreseeable liabilities, and this lack of capitalization results in harm to creditors or other parties, courts may lift the corporate veil to hold shareholders or members liable.
Failure to Observe Corporate Formalities: Corporations and LLCs are required to observe certain formalities, such as holding regular meetings, maintaining separate financial records, and avoiding commingling of personal and corporate assets. If these formalities are not observed and the corporate structure is used as a mere façade, courts may disregard the corporate entity.
Alter Ego: If there is such a unity of interest and ownership between the corporation and its shareholders or members that the separate personalities of the corporation and the individuals no longer exist, courts may treat the corporation as the alter ego of its owners and hold them personally liable.
Group Enterprises: In some cases, where multiple corporations are closely related or form part of a single economic unit, courts may pierce the corporate veil to achieve equity, particularly if one corporation's actions harm creditors or other stakeholders and the corporate structure is being used to shield culpable parties from liability.
Lifting the Corporate Veil. Power Point Presentation
Cecca newsletter issue 13 aug&sept (fina...
1. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 1
CONTENTS
1.Special Observer
1.1 China’s Economy, A Mesmerising Focus for
Shipping………………………………………………………………..2
1.2 China International Commercial Court –
International Commercial Litigation and Diversified
Dispute Resolution for Belt and Road Initiative……….5
2. Arbitration
Third-Party Funding in Arbitration: Potential Trends
and Implications for China (I)….…………………………….9
3. EU Tax Law
Predicting the ‘Unpredictable’ General Anti-
Avoidance Rule (GAAR) in EU Tax Law (I)….…….….25
4. News in Brief
4.1 Latest Reports on Maritime Law of China were
published by the Chinese Courts in August 2018,
several typical maritime cases were selected to clarify
the applicable laws and provide adjudicative
guideline……………………………………………………………...35
4.2 “Regulation on the Jurisdiction of Shanghai
Financial Court” was released by the Supreme People’s
Court of P.R. China……...........................................……35
4.3 Trade War Shock: Will the Domestic Shipping
Industry Bear the Brunt of that? ……………………………35
4.4 The Fortune’s Wheel is turning………………………..35
5. Brief Introduction – CECCA Senior Consultant
Mr. Richard J. Scott………………..………………..………….36
CECCA
China-Europe Commercial
Collaboration Association
Professional Consultancy on Legal,
Trade, Finance and Policy Matters.
London, United Kingdom
Contact
www.cecca.org.uk
contact@cecca.com.cn
CECCA LinkedIn Page
www.linkedin.com/company/cecca
CECCA on Twitter
https://twitter.com/CECCA_London
CECCA on Facebook
ISSN 2631-3405
We sincerely invite our readers
to visit and subscribe at CECCA
website and follow us on
LinkedIn to keep up-to-date with
our newsletter, events and other
information.
CECCA NEWSLETTER
Publisher: CECCA Editorial Department Publishing Directors: Dr. Lijun Zhao, Shengnan Jia
Executive Editor: Haiyang Yu
Intern: Roberto Rovayo, Marianna Xifara, Zhe Chen
2. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 2
1. Special Observer
1.1 China’s economy, a mesmerising focus for shipping
Authored by Richard Scott 1
Attempts to assess China’s macro-economic outlook have been complicated by the ongoing
trade dispute with the USA. Greater negative risks are implied by trade tension. So far,
consequences for China have been limited and the economy has performed solidly.
Several short-term indicators in recent weeks pointed to a slackening pattern emerging, but
supportive influences in China remain prominent. Nevertheless, expectations of a slowing
longer-term economic output growth trend have prevailed for some time. Evidence
confirming that this change is consistently under way is awaited. Yet a gradual slowdown in
the wider economy over the next few years is still seemingly a realistic view.
Trends in China’s economic activity are a crucial aspect of gauging trends in global seaborne
trade volumes, given the large proportion of trade which is comprised of cargo movements to
and from China. For this reason a new report on China’s economy, published at the end of
July by the International Monetary Fund, provides a valuable addition to insights into
unfolding events.
The title of the new IMF report, ‘People’s Republic of China – Staff Report for the Article
IV Consultation’, provides no obvious clues about its value. A feature of the format is that
significant aspects incorporate IMF economists’ analysis, accompanied by the official
response of the Chinese authorities, thus providing sometimes differing perceptions. The
new report merits more recognition and attention than the rather bland title may attract.
A broadly upbeat tone, modified by cautionary notes
Looking at the broadest measure of economic activity, gross domestic product, a trend of
gradual slowdown in China is foreseen. GDP, representing all goods and services output, is
projected to decelerate by 0.2-0.3 percentage points each year. After the slight acceleration
achieved last year to a 6.9 percent increase, GDP growth is put at 6.6 percent in 2018,
followed by 6.4 percent in 2019 and continuing in that pattern of growth-rate changes.
1
Richard Scott, Senior Consultant of the CECCA; Associate, China Centre (Maritime), Solent University
and managing director, Bulk Shipping Analysis.
This article was first published in Hellenic Shipping News Worldwide, 3 August 2018
https://www.hellenicshippingnews.com/chinas-economy-a-mesmerising-focus-for-shipping/.
3. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 3
Moderating growth in 2018 reflects “the lagged effect of regulatory tightening and the
softening of external demand”. The strategy of the Chinese authorities’ policies is a change of
emphasis from high-speed growth to high-quality growth. As a key part of this strategy
reining in credit availability is a priority. Mounting debt throughout the economy and the
speed at which it has been growing, coupled with uncertainty about its quality and
sustainability, has resulted in more determined attempts to restrain lending and improve its
efficiency.
Rebalancing remains a major objective
Amid strong momentum in the economy recently, the IMF comments that the desired
rebalancing has slackened. Rebalancing is a formal objective of the Chinese government, with
the intention of shifting national dependence on investment spending towards consumption,
particularly consumer spending, and from goods production towards services. In 2017 while
investment growth moderated, in accordance with the overall plan, other signs suggested that
rebalancing had not progressed much.
In the IMF’s words, during 2017 “growth became less dependent on credit, investment
growth moderated, the current account surplus continued to decline, and the environmental
clean-up campaign led to some improvement in air quality and energy efficiency. But many of
the drivers behind the growth acceleration in 2017…slowed rebalancing”.
Although the rebalancing intention is widely viewed among economists as likely to be
beneficial for the Chinese economy’s long-term health, it has some unfavourable implications
for the global shipping industry. A large part of China’s remarkable upwards trend in imports
of raw materials and fuels over the past decade and longer has reflected spending on
infrastructure and other investment which has greatly boosted the country’s production of
steel and many industrial products. A future trend of shifting away from this development
model, towards a less production-intensive model is potentially a restraining influence on
commodity import demand.
Beneficial implications of the Belt & Road Initiative
One aspect of China in which the international shipping industry has a particular interest is
the much-discussed Belt & Road Initiative (formerly and still occasionally now known as One
Belt One Road). The part of the BRI comprised of sea routes and ports within the 21st
Century Maritime Silk Road is especially relevant. But the whole concept, including the
accompanying Silk Road Economic Belt of land routes and infrastructure, is significant for
shipping.
The new IMF report expresses a predominantly positive view of the BRI, stating that the
concept has great potential for both China and participating countries. Among beneficial
features “it could fill large and long-standing infrastructure gaps in partner countries,
boosting their growth prospects, strengthen global supply chains and trade, and increasing
employment”. A comment in the report’s appraisal section describes the BRI as “a welcome
and potentially transformative initiative”.
Moderating future infrastructure spending
amid rebalancing the economy could
restrain steel production and raw materials
imports
4. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 4
However, IMF staff analysts suggest that some characteristics of the BRI as evident currently
could be improved. The success of the Initiative, in the IMF’s view, would be enhanced by
“more opening up by China”. Success would also be boosted by “a clearer overarching
framework governing BRI investment, better coordination and oversight, more focus on debt
sustainability of the partner countries and a transparent mechanism for dealing with project
disputes, non-performance and debt service problems, as well as more open procurements
and greater transparency over contracts”.
The response of the Chinese authorities to that assessment, included in the report, is worth
noting. The Chinese authorities thought that IMF staff had “overstated concerns”.
Furthermore, in the authorities’ view “project selection and governance were decisions of
market entities and were already strong”, although “they saw scope for further enhancing
coordination among agencies and risk assessment”.
Imponderables for international shipping
Features of China’s economy portrayed in the latest IMF analysis point to a broadly
satisfactory outlook for the near-term future, summarised in its conclusion that “the
economy continues to perform strongly and reforms progressed in several areas”. Yet this
conclusion is overshadowed by the ongoing trade dispute with the USA, and consequences
which are unpredictable in both duration and magnitude.
For the international shipping industry, continuation of a fairly robust economic activity
trend in China is an essential component of a return to more balanced freight markets. If the
trend suggested by IMF analysts – gradual slowing of China’s economy over the next few
years coupled with the measured rebalancing implied – proves achievable, adjustments will be
required in global shipping markets. But these potentially could be accommodated without
too much upheaval. A number of positive influences could be sustained, and growth impulses
in some seaborne trades may continue.
5. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 5
1. Special Observer
1.2 China International Commercial Court
– International Commercial Litigation and Diversified Dispute
Resolution for Belt and Road Initiative
Authored by Roberto Rovayo, LL.M. and Haiyang Yu, LL.M.1
Following the proposal of the Belt and Road Initiative (BRI), the Chinese government has
launched two international commercial courts (China International Commercial Court,
CICC) as permanent judicial organs of the Supreme People’s Court (the SPC) in order to
provide a dispute resolution mechanism which offers judicial protection for traders and
investors of the BRI. The CICC devotes to settling international commercial disputes fairly
and efficiently, and protecting the legal rights and interests of the Chinese and foreign parties
equally, so as to ‘create a stable, fair, transparent, and convenient rule of law international
business environment.’2
1. The CICC’s infrastructure
The Supreme People’s Court of China launched the First International Commercial Court
located in Shenzhen, Guangdong Province and the Second International Commercial Court
located in Xi’an, Shanxi Province on 29 June 2018. Both International Commercial Courts are
designed under the current legal framework of China,3
and they are permanent judicial organs
of the SPC.4
The judgments and rulings made by the CICC are final and binding on the
parties and with legal effect.
1
Roberto Rovayo, LL.M. in International Commercial Law , University of Westminster (London),
barrister at Ecuador; email: roberto.rovayo@live.com;
Haiyang Yu, LL.M. in Commercial Law (Rotterdam, Distinction Equivalent) , Deputy Editor in Chief,
CECCA; Email: haiyang.yu@cecca.com.cn.
2
CICC, About China International Commercial Court .
<http://cicc.court.gov.cn/html/1/219/193/195/index.html> accessed on 12 August 2018.
3
The Supreme People’s Court of P.R. China, ‘Provisions of the Supreme People’s Court on Several Issues
Regarding the Establishment of the International Commercial Court’ (Judicial Interpretation of the
Supreme People’s Court of the People’s Republic of China) Fa Shi [2018] 11 (The Judicial Intepretation).
4
Ibid, Article 1.
6. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 6
Since the CICC is established to deal with international commercial disputes, for each
specific case trialed by the CICC, the tribunal, or so-called ‘collegial panel', shall consist of
three or more judges of the CICC, selected and appointed by the SPC from a list of senior
judges who are experienced in international treaties, international usages, international trade
and investment practices and at the same time are capable of using both Chinese and English
as working languages. Recently, eight senior judges have been appointed for the CICC,
namely Wang Chuang, Zhu Li, Sun Xiangzhuang, Du Jun, Shen Hongyu, Zhang Yongjian, Xi
Xiangyang, and Gao Xiaoli.5
2. Jurisdiction
Under Article 3 of the Judicial Interpretation, disputes are considered “international” where:
a) one or both of the parties are foreign,
b) where one or both parties have their habitual residence outside the territory of
China,
c) where the subject matter is located outside the territory of China, and
d) where legal facts that create, change or eliminate commercial relations occur
outside the territory of China.
The Jurisdiction of the Court is framed by five types of the first instance international
commercial cases:
1) a case where the parties have chosen to litigate in the SPC according to Article 34 of
the Chinese Civil Procedural Law and the amount in dispute exceeds 300 million
Chinese yuan;
2) a case that is subject to the higher people’s court, which nevertheless considered
that the case should be heard by the SPC upon the SPC’s approval;
3) cases that have a nationwide impact;
4) cases where one party applies for preservation measures in arbitration,6
setting aside
and enforcement of international commercial awards in accordance with Article 14 of
the Judicial Interpretation; and
5) other international commercial cases that the SPC considers appropriate to be
heard by the CICC.
The jurisdiction of the CICC has made two breakthroughs to the current Chinese legal
system from the following two aspects, namely,
i) In accordance with the current Chinese Civil Procedure Law,7
for international commercial
cases where the amount in dispute exceeds 300 million Chinese yuan, only Higher People’s
Courts (High Courts) located in places which have ‘actual connection’ with the disputes,8
can
be valid choices for parties' forum shopping or so-called ‘Jurisdiction by agreement (协议管辖
)’ as provided by Article 34 of Chinese Civil Procedure Law. Now with the establishment of
the international commercial courts, parties can choose to bring the case before the CICC,
which actually means parties can choose to bring the case before the SPC.
5
China International Commercial Court, Eight Judges of China International Commercial Court were appointed
(2018), http://cicc.court.gov.cn/html/1/219/208/210/821.html; accessed on 8 August 2018.
6
The legal term ‘Preservation measures in arbitration’ under Chinese law is similar to ‘Interim measures of
protection’ as under English Law.
7
Article 34 of Civil Procedural Law of P.R. China jo. Article 1 Paragraph 1 of ‘Notice of the Supreme
People's Court on Clarifying the Jurisdiction Level of the First Trial of Foreign Commercial Cases and
Handling Relevant Issues’ Fa [2017] 359.
8
E.g. the People's Court at the location of the Defendant's domicile, place of performance of contract,
place of execution of contract, address of the Plaintiff, location of the subject matter, etc.
Article 34, Civil Procedural Law of the People’s Republic of China (Amended in 2017), effective from
2017.07.01.
7. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 7
ii) Under the current Chinese legal system, the preservation, revocation and enforcement of
foreign-related arbitration awards are under the jurisdiction of the Intermediate People's
Court. In accordance with article 14 of the Judicial Interpretation, in case of parties choosing
one of the international commercial arbitration tribunals selected by the CICC as defined
under Article 11(1), which is part of the dispute resolution methods,9
parties are entitled to
apply to the CICC for preservation, revocation and enforcement of the arbitration awards.
3. CICC’s dispute resolution methods: One-Stop Shop
The CICC will provide with a so-called ‘International Commercial Litigation and Diversified
Dispute Resolution’. According to the Judicial Interpretation, it has integrated three dispute
resolution methods, namely mediation, arbitration and litigation, into one system.10
The goal
of this ‘International Commercial Litigation and Diversified Dispute Resolution’ is to form a
‘one-stop shop’ for International commercial dispute resolution.11
If a party chooses to file a lawsuit, the CICC applies the “First Instance Being Final” system,
which means that the judgments and rulings made by the CICC are final and binding for the
parties (i.e. Judgements and rulings made by the CICC are no appealable but can only be
overruled in a retrial brought before the SPC in accordance with China's Civil Producer Law).
This aims to provide convenience and keep the cost of the dispute settlement low.
The mediation is carried out by the International Commercial Experts Committee or an
international commercial mediation institute delegated by the CICC. An agreement is
reached by the parties after the mediation, then the CICC issues a settlement agreement or a
judgement which is binding for the parties.
On arbitration, after an award is issued, a party can apply to a revocation of the arbitration
award if he thinks that the award violates the law. Also, parties can apply to the CICC to
enforce an international commercial arbitration award.
Furthermore, in accordance with the Judicial Interpretation, parties may apply to the CICC
for enforcement of effective judgements, settlement agreements and decisions made by the
CICC.12
This provides further convenience and efficiency of the CICC's dispute resolution.
4. The “Expert Committee”
The Judicial Interpretation also provides the establishment of the International Commercial
Expert Committee (the “Expert Committee”). On 26 August 2018, thirty-two Chinese and
foreign experts who have exhaustive level of comprehension of international trade law and
international investment law were appointed as the First Group of members of the Expert
Committee. The experts come from different countries and regions with different legal
systems, including leaders of important international organizations, legal experts, eminent
scholars, experienced judges, outstanding lawyers, etc. The makeup of the Committee reveals
a broad representation in respect of both geographic regions and professional fields.
As a unique and innovative institution, “Expert Committee” is a feature of the CICC that no
other similar resolution dispute system of other countries has proposed. Members of the
Committee could be entrusted to mediate international commercial disputes based on the
9
Article 11 of the Judicial Interpretation.
10 Du Tao, Ye Shanshan, ‘International Commercial Court: A new type of international commercial
dispute resolution body’ (7 July 2018), http://cicc.court.gov.cn/html/1/218/149/156/828.html; accessed on 8
August 2018.
11
Article 11 of the Judicial Interpretation.
12
Article17 of the Judicial Interpretation.
8. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 8
principle of party autonomy and to provide advisory opinions to people's courts on
specialized legal issues during the trial of international commercial disputes. Members could
also advice on the revision of the rules of International Commercial Court, development
plans, judicial interpretations and judicial policies of the Supreme People's Court.
5. Conclusion
The modern and advanced development of the CICC system located in the cities of
Shenzhen and Xi’an, would support the Chinese government to provide an efficient and
effective judicial service to national and international traders and investors of the Belt and
Road Initiative. This will guarantee fairness and low cost for all parties with its ‘one-stop
shop’ dispute resolution consisting of Litigation, mediation and arbitration.
The CICC will not only offer legal certainty but will settle international commercial disputes
and protect the legal rights and interests of the Chinese and foreign parties equally. Also, the
it would expand and promote the “Belt and Road Initiative”. Considering that ADR methods
are more popular among traders and investors compared to litigation, the CICC would be
more appealing for foreign parties seeking for a professional ADR mechanism and legal
certainty, especially the countries that have signed agreements with China for the
construction of the BRI.
It is important to say that the CICC also offers the recognition and enforcement of foreign
arbitral awards and a body of experts in international commercial and investment law to
advice and settle disputes. It is just a matter of time and experience to decide if the brand-
new CICC system is a viable option for traders and investors.
9. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 9
2. Arbitration
Third Party Funding in Arbitration: Potential Trends and
Implications for China14
(I)
Authored by Dr Hui Wang15
KEYWORDS: Arbitration; Champerty; China; Comparative law; Hong Kong;
Maintenance; Singapore; Third party funding
Introduction
In TPF is at the forefront of international arbitration. Originating from litigation, TPF has
increasingly gained popularity in international arbitration. In 2016, statistics showed that
over 40 per cent of the current investment arbitration claims have either secured or explored
TPF.16
To date, there is no universally accepted definition of TPF. The broadest definition covers all
kinds of third party dispute resolution supporting mechanisms. According to such a broad
definition, loan, contingency fee or conditional fee, insurance, assignment and third party
investment are all categorised as TPF.17
In a narrow sense, conversely, only third party
investment is defined as TPF. Third party investment involves an unrelated third party
14 1
This article was first published by Thomson Reuters, trading as Sweet & Maxwell, 5 Canada Square,
Canary Wharf, London E14 5AQ, in Journal of Business Law as “Third-Party Funding in Arbitration:
Potential Trends and Implications for China” [2018] J.B.L. 122 and is reproduced by agreement with the
publishers. For further details of Journal of Business Law, please see the publishers’ website:
http://www.sweetandmaxwell.co.uk/Catalogue/ProductDetails.aspx?recordid=537&searchorigin=Journal+of+
Business+Law&productid=7330.
15
Dr. WANG Hui, Ph.D. in Laws (East China University of Political Science and Law, Shanghai, China),
LL.M. (Stockholm University, Sweden), admitted to the P.R.C. bar in 2012. The author can be contacted
at jianpingwanghui@163.com. The author would like to express his gratitude to Mr Alexander Barnes LLB,
who provided constructive advice regarding the formatting and use of language in this text.
16
Stavros Brekoulakis, ‘Third Party Funding: Conflict of Interests’ (2 December 2016) CIArb,
http://www.ciarb.org/docs/default-source/ciarbdocuments/events/2016/december/das-convention-presentations/stavros-
brekoulakis.pdf?sfvrsn=2 [accessed 1 May 2017].
17
M. Scherer, A. Goldsmith and C. Flechet, ‘Third party funding in international arbitration in Europe:
part 1–funders’ perspectives’ (2012) 2012 Int’l Bus. L.J. 207, 209
10. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 10
acquiring the right to claim for remuneration, by first investing in the dispute (i.e.
reimbursement of attorney fee, arbitration or litigation costs). The investment is on a non-
recourse basis. If the funded case fails, the funder will lose all the investments.18
The
remuneration usually amounts to a certain percentage of the case value or damages awarded.
In practice, there are funders who acquire a percentage of 30 to 60 per cent of the case value
or damages awarded.19
This article only studies third party investment, namely, TPF in the narrow sense.20
For the
purpose of limiting the scope of this study, this article will not study not-for-profit funders,
usually non-governmental organisations, who fund a case through donation for the sake of
philanthropy.21
Generally speaking, TPF has profit-making characteristic. It has also been
confirmed by leading commercial funders, such as Juridica Investments and Burford Capital.22
It
is important to clarify the nature of TPF, because it will enable us to have a clearer picture on
TPF and related TPF issues. Various normative arguments, whether in favour of TPF or
against TPF, can be better understood when bearing in mind TPF’s core nature.
For those who support TPF, the following arguments are frequently adopted. Firstly, TPF
improves access to justice. Since dispute resolutions (litigation or arbitration) are expensive,
some plaintiffs or claimants lacking sufficient economic capacity would otherwise be unable
to pursue their rights through legal proceedings even though they have good arguable cases.23
Secondly, it is argued that TPF helps to facilitate case settlement. The strong economic party
may make use of the opposing party’s restrained economic status and strategically oppose
case settlement. While if the economic restrained party is supported by TPF, both parties’
bargaining power will meet a balance. It can push the originally strong economic party to
choose settlement.24
Thirdly, TPF enables parties to have a more reasonable case evaluation.
Normally, comprehensive due diligence takes place before a funder decides to invest the case.
If a funder refuses to fund the case, it may signal to the requesting party the need to re-
evaluate the case and consider whether it is worthwhile to continue the dispute resolution
proceedings.25
18
B.M. Cremades Román, Jr, ‘Third Party Litigation Funding: Investing in Arbitration’ (2011) 4 TDM 155,
156-157.
19
D. S. Abrams and D.L. Chen, ‘A Market for Justice: A First Empirical Look at Third Party Litigation
Funding’ (2013) 15 U. Pa. J. Bus. L.1075, 1088.
20
Besides definitions provided by scholars and practitioners, IBA, ICCA-QMUL Task Force, the EU have
also in different occasions provided a definition for TPF. Taking the working definition of ICCA-QMUL
Task Force as an example, TPF refers to any natural or legal person who is not a party to the dispute but
who enters into an agreement either with a disputing party, an affiliate of that party, or a law firm
representing that party: (a) in order to provide material support or to finance part or all of the cost of the
proceedings, either individually or as part of a selected range of cases, and (b) such support or financing is
provided either through a donation or grant or in return for remuneration dependent on the outcome of
the dispute.
21
A famous example of not-for-profit funder is the ‘Anti-Tobacco Trade Litigation Fund’ created by
Bloomberg Philanthropies and Bill and Melfinda Gates Foundation. It finances the low-income and
middle-income countries to defend against tobacco companies’ claims under investment treaties. This not-
for-profit funder has funded Uruguay in ICSID Case No. ARB/10/7. See also Victoria Shannon Sahani,
‘Revealing Not-for-Profit Third-Party Funders in Investment Arbitration’ (1 March 2017), Investment
Claims, http://oxia.ouplaw.com/page/third-party-funders [Accessed 15 December 2017].
22
Matt Byrne, ‘World’s largest dispute financier’ targets US litigation market uptick’ (28 November 2010),
The Lawyer, https://www.thelawyer.com/issues/29-november-2010/worlds-largest-dispute-financier-targets-us-
litigation-market-uptick/ [Accessed 15 December 2017].
23
M. Steinitz, ‘Whose Claim is This Anyway? Third-Party Litigation Funding’ (2011) 95 Minn. L. Rev.1268,
1326.
24
Steinitz, ‘Whose Claim is This Anyway? Third-Party Litigation Funding’ (2011) 95 Minn. L. Rev.1268,
1313.
25
L. Atherton, ‘Third Party Funding in Arbitration: A Perspective from England’ (October 2009), K&L
Gates, http://m.klgates.com/arbitration-world-10-01-2009/ [Accessed 15 December 2017].
11. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 11
Opponents to TPF usually raise the following counter-arguments. First, they argue that the
alleged access to justice by TPF is a false proposition. Since TPF primarily aims at making
profits (not pro bono activities), they are unwilling to support cases that have limited
investment value even when parties in such cases need justice desperately.26
Moreover, for
some funded parties, the reason why they seek TPF is due to business considerations (cash
flow management) rather than lack of capital to self-support the case.27
Secondly, TPF may
open the floodgates and encourage frivolous suits or arbitrations.28
Fuelled by TPF, more and
more unmerited cases will enter into litigations or arbitrations, which will impose heavier
burdens on the limited and scarce dispute resolution resources. Thirdly, instead of facilitating
settlement, TPF makes it even harder. For the sake of the funders’ interests, they may
discourage or restrict the funded parties’ ability to settle the case at a lower price, as this
would limit the returns on their investment. In such a scenario, TPF raises the threshold of
case settlement.29
Following the premise that TPF is of profit-making character, having a close look at the
normative arguments, they indeed reflect TPF’s double-edged (positive and negative)
internalities and externalities. Internality deals with how TPF affects parties’ decision
making. For example, how TPF affects parties’ decision on whether to accept settlement
reflects TPF’s internality, while the externality refers to how TPF can influence the dispute
resolution system and society as a whole. Arguments around TPF may add a greater burden
to the whole dispute resolution system, which is a typical example of TPF’s potential
externality. As we all know, private costs are not equal to the social costs of filing disputes
resolution proceedings. 30
Unlike investing in stock markets or real estate, capital’s
involvement in dispute resolution proceedings is more sensitive. This is because dispute
resolutions deal with rule of law, stability and social governance.
In this author’s opinion, lacking persuasive empirical evidence, various normative debates will
continue. Disregarding value orientation, as long as there are legally recognised profit-making
opportunities, subject to market mechanisms, TPF (investment capital) will continue
expanding. Meanwhile, since TPF is a combination of law and finance, TPF’s double-edged
internalities and externalities are inevitable. Therefore, at the current stage, the most
essential task is not to simply reiterate normative debates. Instead, we should consider
methods to enlarge TPF’s positive effects while limiting its potential negative effects.
This article focuses on the latest TPF developments in arbitration in Hong Kong Special
Administrative Region of the People’s Republic of China (Hong Kong) and Singapore.
Regarding the legal methodology, this article adopts a comparative law approach. Taking into
account England’s (i.e. England and Wales) and Australia’s litigation-oriented TPF regimes,
and a growing consensus among the global arbitration community, this article tries to answer
three research inquiries: (1) Are there any difference between TPF in litigation and TPF in
arbitration? (2) Do the latest TPF developments in Hong Kong and Singapore indicate
potential TPF trends in arbitration? And (3) Supposing there are potential TPF trends in
arbitration, what are their implications for inland China?
26
J. M. Shepherd, ‘Ideal Versus Reality in Third-Party Litigation Financing’ (2011) 8 JL Econ. & Pol’y 593,
599-600.
27
C. Veljanovski, ‘Third Party Litigation Funding in Europe’ (2011) 8 JL Econ. & Pol’y 405, 421.
28
J. Beisner, J. Miller and G. Rubin, ‘Selling Lawsuits, Buying Trouble: Third-Party Litigation Funding in
the United States’ (October 2009), U.S Chamber of Commerce,
http://www.instituteforlegalreform.com/uploads/sites/1/thirdpartylitigationfinancing.pdf [Accessed 15 December
2017].
29
M. Rodak, ‘It’s About Time: A Systems Thinking Analysis of the Litigation Finance Industry and its
Effect on Settlement’ (2006) 155 U. Pa. L. Rev. 503, 522.
30
P. H. Rubin, ‘Third-Party Financing of Litigation’ (2011) 38 N. Ky. L. Rev. 673, 681.
12. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 12
Distinctions between TPF in litigation and TPF in arbitration
TPF is an accessory to specific dispute resolution mechanisms. Though we should
acknowledge that TPF has expanded from litigation to arbitration and TPF’s business modes
have many similarities between litigation and arbitration, we cannot simply equate TPF in
litigation and TPF in arbitration. It is this author’s opinion that differences between
litigation and arbitration not only influence TPF’s market profile, but also influence TPF’s
regime construction.
TPF in litigation—incentives and territorial differences
Regarding TPF in litigation, differentiated performances are observable. TPF in litigation
appears to be more popular in common law jurisdictions than in civil law jurisdictions. In the
United States alone, TPF market is estimated to reach $1 billion in 2010.31
In many civil law
jurisdictions, however, TPF in litigation is comparatively less well-known, with France,
Germany, Austria and Switzerland the exceptions. 32
Even within the common law
jurisdictions, the development levels on TPF in litigation vary. Australia is widely accepted as
a leading jurisdiction on TPF in litigation. Within Australia, funders show more willingness
in investing in class action litigations. 33
While in England, another well-known TPF
jurisdiction, funders invest in a more diverse manner, including both commercial and non-
commercial litigations.34
The situation in the US differs from Australia and the UK. Many
funders show preference for patent infringement and anti-trust litigations in the US.35
Recalling TPF’s nature, differentiated TPF performance in litigation indicates that the
underlining profit-making incentives vary among jurisdictions. There are many variants that
can qualitatively affect TPF’s performance in litigation. For example, the overall cost for
litigation, the existence and prevalence of competing funding mechanism (e.g. contingence
fee or conditional fee), the unique features of certain procedural and substantive law.36
Considering those variants, one reason why TPF is more active in some common law
jurisdictions is that the litigation costs herein are normally higher and less predictable than
that in some civil law jurisdictions.37
Besides, the reason why some US funders prefer patent
infringement and anti-trust litigations is that relevant substantive laws are structurally in
favour of the plaintiffs, usually the funded party.38
What we should not neglect is that the prima facie differences on economic incentives
actually mirror the differences among various legal culture and litigation regimes. Those
differences are deeply rooted and extremely hard to harmonise. For instance, some
jurisdictions may culturally show more preference over litigation while some others may
31
B. Appelbaum, ‘Putting Money on Lawsuits, Investors Share in the Payouts’ N.Y. TIMES (15 November
2010), p.A1.
32
G. R. Barker, ‘Third-Party Litigation Funding in Australia and Europe’ (2011) 8 JL Econ. & Pol’y 451, 493.
33
L. Jason, ‘Revolution in progress: Third-party funding of American litigation’ (2010) 58 UCLA L. Rev.571,
591.
34
M. de Morpurgo, ‘A Comparative Legal and Economic Approach to Third-Party Litigation Funding’
(2011) 19 Cardozo J. Int’l & Comp. L. 343, 398.
35
Shepherd, ‘Ideal Versus Reality in Third-Party Litigation Financing’ (2011) 8 JL Econ. & Pol’y 593, 601-
607.
36
Kalajdzic, Jasminka, Peter Cashman and Alana Longmoore, ‘Justice for Profit: A Comparative Analysis
of Australian, Canadian and US Third Party Litigation Funding’ (2013) 61 Am. J. Comp. L. 93, 138-141
37
M. de Morpurgo, ‘A Comparative Legal and Economic Approach to Third-Party Litigation Funding’
(2011) 19 Cardozo J. Int’l & Comp. L. 343, 406.
38
Shepherd, ‘Ideal Versus Reality in Third-Party Litigation Financing’ (2011) 8 JL Econ. & Pol’y 593, 601-
607.
13. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 13
not. 39
Likewise, the legal regimes in some jurisdictions are more open to class action
litigations while some others are not. Since it is less likely that legal culture, procedural or
substantive law in litigation will be globally harmonised, it is this author’s prediction that
TPF in litigation will continue to develop territorially. By the same token, litigation-oriented
TPF regimes may only be influential on a territorial basis.
TPF in litigation—unique governance and global impact
TPF’s expansion into international arbitration shares both similarities and differences as to
the scenario in litigation. For similarities, the dynamics for TPF to set foot in international
arbitration are also driven by profit-making. Like litigation, international arbitration also
provides enticing business opportunities. According to Queen Mary University’s 2015
International Arbitration Survey (hereinafter ‘QM Survey’), 90 per cent of the respondents
express that international arbitration is their preferred dispute resolution mechanism on
cross border disputes and 68 per cent of the respondents complain about the high cost of
international arbitration.40
From the QM Survey, we can reasonably infer that there are many
case resources (potential investment assets) and market demands for TPF in arbitration.
As to the differences between TPF in litigation and TPF in arbitration, the characteristics of
different dispute resolution mechanisms have to be clarified. On the one hand, unlike
litigation which embeds state sovereignty and mainly serves domestic social welfare,
arbitration is consent-based, of more service character and more foreign-related. The
development of arbitration has many connections with the need to promote international
trade and investment. It is globalisation that calls for more harmonised and uniformed
arbitration system. By the same token, when we decide to establish TPF regimes in
arbitration, we need to consider arbitration’s character and pursue more harmonised and
uniformed regimes.
On the other hand, the governance structure of arbitration is unique. Arbitration normally
adopts a bottom-up development mode.41
Arbitration is market-oriented, highly competitive
and practice driven. The global arbitration community is consists of various stakeholders,
including international governmental organisations, international non-governmental
organisations, arbitration institutions, users, arbitrators, lawyers and now funders. Among
various stakeholders, there are countless bilateral and multilateral connections. In this sense,
the governance structure of arbitration is like an intertwined network, where any new
arbitration developments and innovations are easy to spread.42
In this author’s opinion,
compared to the litigation-oriented TPF regimes, the arbitration-oriented TPF regimes are
more likely to have a ‘spread effect’, namely, influencing other arbitral seats. This conclusion
can be inferred from the development of arbitration rules, where once a major arbitration
institution updates its arbitration rules, other arbitration institutions will quickly follow up
(e.g. emergency arbitration proceeding).
Potential TPF trends in arbitration--Indications from Hong Kong and
SINGAPORE
39
Barker, ‘Third-Party Litigation Funding in Australia and Europe’ (2011) 8 JL Econ. & Pol’y 451, 523.
40
Queen Mary University of London, “2015 International Arbitration Survey: Improvements and Innovations
in International Arbitration” (6 October 2015), Queen Mary University of London,
http://www.arbitration.qmul.ac.uk/docs/164761.pdf [Accessed 5 March 2017].
41
R. Alford, ‘The Nature of International Arbitration’ (January 29, 2009), Kluwer Arbitration Blog,
http://kluwerarbitrationblog.com/2009/01/29/the-nature-of-international-arbitration/ [Accessed 5 March 2017].
42
G. Kaufmann-Kohler, ‘Globalization of Arbitral Procedure’ (2003) 36 Vand. J. Transnat’l L. 1313
14. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 14
The reason why this article mainly focuses on Hong Kong and Singapore are twofold. On one
hand, as famous international arbitration harbours, both Hong Kong and Singapore have
recently opened their doors for TPF in arbitration. To be more specific, Singapore has
already amended the Civil Law Amendment Bill (Singapore TPF Amendment), the Civil Law
(Third Party Funding) Regulations (Singapore TPF Regulations) and the Legal Profession
(Professional Conduct) Rules 2015 (Singapore Legal Profession Rules) on 10 January, 2017,
while Hong Kong has published a Consultation Paper on TPF43
and the Third Party Funding
for Arbitration (HKLRC Report) respectively on October 2015 and October 2016. The
HKLRC Report provides many suggestions to the amendment of Hong Kong Arbitration
Ordinance. The Arbitration and Mediation Legislation (Third Party Funding) (Amendment)
Bill was passed on 14th
June 2017 ( ‘Hong Kong TPF Amendment’).44
On the other hand, as will be illustrated, TPF regimes in Hong Kong and Singapore are
arbitration-oriented. It is worth comparing Hong Kong and Singapore with England and
Australia. Hong Kong and Singapore’s core TPF developments in arbitration are as follows:
first, in order to legitimise TPF in arbitration, both jurisdictions have abolished or restricted
doctrines of maintenance and champerty. Secondly, both jurisdictions have introduced a
mandatory TPF disclosure obligation. Thirdly, both jurisdictions have chosen the mixed TPF
regulatory framework. Studying the rationales behind Hong Kong and Singapore’s
arbitration-oriented TPF updates and bearing in mind the history of the developments, this
author is of the opinion that potential TPF trends in arbitration are observable.
Abolishing or Restricting Doctrines of maintenance and champerty
Doctrines of maintenance and champerty have a long history. Traced back to ancient Greece
and Rome,45
the doctrines are later on introduced into England and spread among many
common law jurisdictions. Maintenance is defined as:
“The giving of assistance or encouragement to one of the parties to an action by a
person who has neither an interest in the action nor any other motive recognised
by the law as justifying his interference”.46
Champerty is an aggregate form of maintenance, which means
“maintenance of an action in consideration of a promise to give to the maintainer a
share of the subject matter or proceeds thereof, if the action succeeds”.47
Doctrines of maintenance and champerty represent certain public policy. On the one hand,
decision makers are reluctant to see the litigation system being made use of by unrelated
persons for the sake of profit-making. That behaviour could harm the purity of judicial
system. For example, during the medieval ages, there were rich landlords trying to acquire
lands at lower prices by funding others’ litigation.48
To prohibit such behaviour, doctrines of
43
The Law Reform Commission of Hong Kong, ‘Third Party Funding for Arbitration Sub-Committee
Consultation Paper’ (October 2015), The Law Reform Commission of Hong Kong,
http://www.gov.hk/en/theme/bf/consultation/pdf/10119_Consultation_Paper.pdf [Accessed 15 December 2017].
44
The Law Reform Commission of Hong Kong, ‘The Law Reform Commission Of Hong Kong Report
Third Party Funding For Arbitration’ (October 2016), The Law Reform Commission of Hong Kong,
http://www.hkreform.gov.hk/en/docs/rtpf_e.pdf [Accessed 10 March 2017].
45
M. Radin, ‘Maintenance by Champerty’ (1937) 24 Cal. L. Rev. 48, 49-56.
46
Massai Aviation Services v Attorney General [2007] UKPC 12, quoted in Winnie Lo v HKSAR [2012] 15
HKCFAR 16 at [10].
47
Lo v HKSAR [2012] 15 HKCFAR 16 at [10].
48
Radin, ‘Maintenance by Champerty’ (1937) 24 Cal. L. Rev. 48, 58.
15. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 15
maintenance and champerty were established, reflecting the public policy at the time. On the
other hand, doctrines of maintenance and champerty also reflect the prevailing religious
spirit present at that time. During the medieval ages, litigation was deemed evil from the
perspective of Christian. In this sense, doctrines of maintenance and champerty were in
conformity with the religious spirits.49
Recalling TPF’s definition, it is obvious that TPF is in conflict with doctrines of maintenance
and champerty. Fairly speaking, no matter how economically enticing certain legal markets
are, as long as doctrines of maintenance and champerty are not abolished or restricted, TPF
is unable to develop. Although maintenance and champerty are ancient legal doctrines, they
still have some influence among common law jurisdictions, such as Australia, Hong Kong and
Singapore.
As time went by, there were some developments on doctrines of maintenance and
champerty. In England, following the Law Commission’s recommendation in its 1966 report
(Proposals for Reform of the Law relating to Maintenance and Champerty), the tort liability
and criminal liability on doctrines of maintenance and champerty have been abolished by the
Criminal Law Act 1967 (UK). However, as to contract, the influence of doctrines of
maintenance and champerty somehow remains. When dealing with the enforceability of
funding agreements, for the sake of public policy, the contract may be regarded null and
void.50
As to what constitutes an enforceable funding agreement and what is the public policy
exception, there used to be some uncertainties. Luckily, in England, the legal and social
environments have constantly moving in favour of TPF.
In 1994, it was held in the Giles case that:
“As the centuries passed the courts became stronger, their mechanisms more
consistent and their participants more self-reliant. Abuses could be more easily
detected and forestalled, and litigation more easily determined in accordance with
the demands of justice, without recourse to separate proceedings against those who
trafficked in litigation.”51
In the judge’s opinion, the judicial system has become robust enough to prevent abuse of
process, which doctrines of maintenance and champerty are designed to protect. Later on, in
the Factortame case52
and the Gulf Azo case,53
judges respectively clarified that contemporary
public policy highly appreciates access to justice in litigation. Taking the Gulf Azo case as an
example, Lord Phillips MR decided that:
“Public policy now recognises that it is desirable, in order to facilitate access to
justice, that third parties should provide assistance designed to ensure that those
who are involved in litigation have the benefit of legal representation.”54
49
Radin, ‘Maintenance by Champerty’ (1937) 24 Cal. L. Rev. 48, 58.
50
Criminal Law Act 1967 (UK) s.14 provides: “(1)No person shall, under the law of England and Wales, be
liable in tort for any conduct on account of its being maintenance or champerty as known to the common
law, except in the case of a cause of action accruing before this section has effect.(2)The abolition of
criminal and civil liability under the law of England and Wales for maintenance and champerty shall not
affect any rule of that law as to the cases in which a contract is to be treated as contrary to public policy or
otherwise illegal.”
51
Giles v Thompson [1994] 1 AC 142, at 153.
52
Factortame Ltd v Secretary of State for Transport, Local Government and the Regions (No 2) [2003] QB 381 CA
(Civ Div).
53
Gulf Azov Shipping Co Ltd v Idisi [2004] EWCA Civ 292.
54
Gulf Azov Shipping Co Ltd v Idisi [2005] 1 WLR 3055 CA (Civ Div) at [34].
16. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 16
All those developments have been confirmed by the landmark Arkin Case, where it was held
as long as the funded party remains in control of the litigation proceedings, funding
agreements in litigation per se do not go against public policy.55
In Australia, tort liability and criminal liability for doctrines of maintenance and champerty
have also been abolished in some states.56
Before the abolition, Australia had developed some
exceptions. For instance, funding agreements were enforceable in the insolvency and
bankruptcy spheres.57
However, funders were not satisfied with this status quo. They sought to
expand TPF into other types of cases including, for instance, class action litigations.58
Such an
expansion was challenged. In the landmark Fostif case, a case originated from New South
Wales, facing a class action litigation that involves TPF, the majority judges in the Australian
High Court held that TPF in litigation does not per se go against contemporary public
policy.59
In other words, it is not justified for the aged doctrines of maintenance and
champerty to become an obstacle for access to justice in litigation.
It is clear that both England and Australia have abolished or at least substantially restricted
the application of the doctrines of maintenance and champerty.60
They both confirm that
TPF agreements per se do not go against contemporary public policy. Spurning the
traditional thinking that litigation is evil and confirming the importance of access to justice
in litigation, both England and Australia hold that public policy has shifted. The public policy
shift reflects certain social background evolutions. Taking Australia as an example, the Fostif
case occurred in a social environment where Australians have increasingly relied on litigation
to pursue individual rights.61
What is more, growing litigation costs and cuts in legal aid have
made external funding outstanding in Australia. TPF in litigation hence meets the social
demands and is treated as a mechanism ensuring the smooth functioning of Australia’s
litigation system.62
As a matter of the legal tradition, Hong Kong and Singapore are influenced by England and
Australia. For example, the Singapore TPF Amendment establishes the new s.5A and s.5B;
the former states:
“Subject to Section 5B, the abolition of civil law liability under the law of Singapore
for maintenance and champerty does not affect any rule of that law as to the cases
in which a contract is to be treated as contrary to public policy or otherwise
illegal.”63
Likewise, the 98I of Hong Kong TPF Amendment specifies that “The tort of maintenance
(including the tort of champerty) does not apply in relation to third party funding of
arbitration.” Section 98M of the Hong Kong TPF Amendment further clarifies that:
55
Arkin v. Borchard Lines Ltd [2005] EWCA (Civ) 655; [2005] 1 W.L.R.3055.
56
Doctrines of maintenance and champerty were abolished in South Australia by the Criminal Law
Consolidation Act 1935, in Victoria by the Wrongs Act 1958 and the Crimes Act 1958, in New South Wales
by the Maintenance, Champerty and Barratry Abolition Act 1993 and in the Australian Capital Territory
by the Civil Law Act 2002.
57
Barker, “Third-Party Litigation Funding in Australia and Europe” (2011) 8 JL Econ. & Pol’y 451, 462.
58
Cento Veljanovski, ‘Third Party Litigation Funding in Europe’ (2011) 8 JL Econ. & Pol’y 405, 433.
59
Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd [2006] 229 C.L.R 386.
60
Barker, ‘Third-Party Litigation Funding in Australia and Europe’ (2011) 8 JL Econ. & Pol’y 451, 494.
61
D. S. Abrams and D. L. Chen, ‘A Market for Justice: A First Empirical Look at Third Party Litigation
Funding’ (2013) 15 U. Pa. J. Bus. L.1075, 1085.
62
Kalajdzic, Cashman and Longmoore, ‘Justice for Profit: A Comparative Analysis of Australian, Canadian
and US Third Party Litigation Funding’ (2013) 61 Am. J. Comp. L. 93, 97.
63
Parliament of Singapore, Civil Law (Amendment) Act Parliament of Singapore 2017,
https://sso.agc.gov.sg/Acts -Supp/2-2017/Published/20170224?DocDate=20170224 [Accessed 8 January 2018].
17. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 17
“Sections 98K and 98L do not affect any rule of law as to the cases in which a
contract is to be treated as contrary to public policy or otherwise illegal.”64
As shown, the Hong Kong TPF Amendment and Singapore TPF Amendment both in
principle confirm the enforceability of TPF agreements in arbitration. Meanwhile, they
maintain the public policy exception, leaving some room for interpretation.
The legislative languages are almost identical among four jurisdictions. However, the
rationales behind Hong Kong and Singapore’s legislations are not exactly the same as England
and Australia. Unlike England and Australia, both Hong Kong and Singapore adopt a ‘dual
track’, distinguishing TPF in litigation and TPF in arbitration. Before the Singapore TPF
Amendment comes into effect, as shown in the Otech case, subject to limited exceptions, TPF
agreements are in principle unenforceable. Doctrines of maintenance and champerty
continue then to apply both to litigation and arbitration in Singapore. 65
Interestingly,
Singapore now makes a distinction. As the Singapore TPF Regulations shows, TPF
agreements are now enforceable in international arbitrations, court litigations and mediations
arising out of international arbitration. 66
By contrast, TPF agreements in domestic
arbitrations or litigations which are not related to international arbitrations are still
unenforceable.
Similar situations exist in Hong Kong. Prior to the Hong Kong TPF Amendment, in the
Unruh case, although it was held that there is public policy shift and there exist justified
exceptions to the doctrines of maintenance and champerty, it is unclear whether TPF
agreements in litigation are in principle enforceable in Hong Kong.67
The situation in
arbitration used to be even less clear. Judges in the Unruh case purposely left open the
question of whether the doctrines of maintenance and champerty continue to apply to TPF
in arbitration in Hong Kong.68
Fortunately, the Hong Kong TPF Amendment now makes a
clarification on TPF’s legality in the arbitration context (domestic and international
arbitration). 69
Hong Kong’s and Singapore’s legislative documents explain the rationale for the ‘dual track’.
Taking Singapore as an example, during the second read of Singapore TPF Amendment, Ms
Indranee Rajah SC, the senior minister of state for law, explained the reason why Singapore
limits the application of TPF to international arbitrations only. It is for assessment and
piloting purposes. In Singapore, whether TPF’s sphere of application will be broadened
depends on international arbitration’s performance. International arbitration is considered
more commercialised and sophisticated for TPF piloting.70
Although not expressed explicitly,
it can be reasonably inferred that Singapore is quite cautious about TPF’s overall influence on
its litigation system. Likewise, by distinguishing TPF in litigation and TPF in arbitration,
Hong Kong seemingly has similar concerns.
64
Legislative Council of Hong Kong, Arbitration and Mediation Legislation (Third Party Funding)
(Amendment) Bill 2016, http://www.legco.gov.hk/yr16-17/english/bills/b201612301.pdf [Accessed 8 January
2018].
65
Otech Pakistan Pvt Ltd v Clough Engineering Ltd & Anor [2007] 1 S.L.R. (R) 989.
66
Parliament of Singapore, Civil Law (Third-Party Funding) Regulations 2016 (24 February 2017),
Parliament of Singapore, https://www.mlaw.gov.sg/content/dam/minlaw/corp/News/TPF%20-
%20Annex%20B.pdf [Accessed 15 December 2017].
67
Unruh v Seeberger [2007] 10 H.K.C.F.A.R. 31, at [77].
68
Unruh v Seeberger [2007] 10 H.K.C.F.A.R. 31, at [123].
69
Unlike England, Australia and Singapore, as the Hong Kong TPF Amendment shows, Hong Kong only
restricts the application of doctrines of maintenance and champerty to Hong Kong arbitration, while not
directly abolish the doctrines.
70
Parliament of Singapore, Civil Law (Amendment) Bill 2016 Second Reading (10 January 2017), Ministry of
Law, https://www.gov.sg/~/sgpcmedia/media_releases/minlaw/speech/S-20170110-1/attachment/2R%20Speech%20-
%20Civil%20Law%20Amendment%20Bill%202016.pdf [Accessed 15 December 2017].
18. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 18
One step further, comparing Hong Kong and Singapore with England and Australia, their
incentives for legalizing TPF, and abolishing or restricting the doctrines of maintenance and
champerty, are different. England and Australia are litigation-oriented, aiming at encouraging
TPF’s positive externalities (e.g. access to justice in litigation).71
By contrast, Hong Kong and
Singapore are arbitration-oriented. Hong Kong and Singapore appear to care less about
TPF’s influence on the access to justice in their litigation system. By legalizing TPF in
arbitration, both Hong Kong and Singapore aim to consolidate their position as influential
arbitral seats. Such incentives are confirmed more than once by consultation papers for both
the Hong Kong TPF Amendment72
and the Singapore TPF Amendment.73
Learning from studied jurisdictions and historical developments, one potential trend lies in
abolishing or restricting the doctrines of maintenance and champerty. Considering
arbitration’s governance structure and Hong Kong and Singapore’s arbitration-oriented TPF
updates, it is likely that other jurisdictions where doctrines of maintenance and champerty
continue to remain will conduct some re-evaluation. Influenced by seat competiveness, it is
likely that those jurisdictions will also adopt a ‘dual track’, first removing legal obstacles for
TPF in arbitration.
Imposing mandatory TPF disclosure obligation in arbitration
Both the Hong Kong TPF Amendment and the Singapore TPF Amendment establish
mandatory TPF disclosure obligation. Section 98T of the Hong Kong TPF Amendment is
titled “Disclosures about third party funding of arbitration”. It requires that the funded party
must give written notice of the fact that a funding agreement has been made, and the name of
the funder. Such disclosure shall be given to the opposing party and the arbitration body
before or on the commencement of the arbitration (if the funding agreement already exists)
or within 15 days after the funding agreement is made (the arbitration proceeding has
commenced).74
Meanwhile, the Singapore Legal Profession Rules also introduces a mandatory
TPF disclosure provision. Section 49A of the Singapore Legal Profession Rules requires legal
71
Steinitz, ‘Whose Claim is This Anyway? Third-Party Litigation Funding’ (2011) 95 Minn. L. Rev.1268,
1336.
72
The Law Reform Commission of Hong Kong, ‘Third Party Funding for Arbitration Sub-Committee
Consultation Paper’ (October 2015), The Law Reform Commission of Hong Kong,
http://www.gov.hk/en/theme/bf/consultation/pdf/10119_Consultation_Paper.pdf [Accessed 10 March 2017].
73
Parliament of Singapore, ‘Civil Law (Amendment) Bill 2016 Second Reading’ (10 January 2017), Ministry
of Law, https://www.gov.sg/~/sgpcmedia/media_releases/minlaw/speech/S-20170110-
1/attachment/2R%20Speech%20-%20Civil%20Law%20Amendment%20Bill%202016.pdf [Accessed 10 March
2017].
74
See Hong Kong TPF Amendment s.98T, Disclosure about third party funding of arbitration:
(1) If a funding agreement is made, the funded party must give written notice of
(a) the fact that a funding agreement has been made; and
(b) the name of the third party funder.
(2) The notice must be given—
(a) for a funding agreement made on or before the commencement of the arbitration—on the
commencement of the arbitration; or
(b) for a funding agreement made after the commencement of the arbitration—within 15 days after
the funding agreement is made.
(3) The notice must be given—
(a) each other party to the arbitration; and
(b) the arbitration body.
(4) For subsection (3)(b), if there is no arbitration body for the arbitration at the time, or at the end of
the period, specified in subsection (2) for giving the notice, the notice must instead be given to the
arbitration body immediately after there is an arbitration body for the arbitration.
19. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 19
practitioners to disclose to the arbitral tribunal and other parties the existence of TPF, and
the identity and address of the funder at the date of commencement of the dispute resolution
proceedings or after the date of commencement when funding agreement is entered into
afterwards.75
The reasons why both Hong Kong and Singapore adopt mandatory TPF disclosure are
threefold. First, by introducing the mandatory TPF disclosure, Hong Kong and Singapore
primarily aim at protecting the stability of the arbitration system. The involvement of
funders has made the traditional triangle arbitration relationship, namely, arbitral tribunal,
claimant(s) and respondent(s), more complicated.76
The increased complexity could lead to
potential conflicts of interest between arbitrators and funders. For example, arbitrators are
usually lawyers. When they or their law firms used to have or are having business
relationships with funders, potential conflicts of interest may arise.77
To avoid conflicts of
interest, TPF disclosure in arbitration is of vital importance. It is only when arbitrators are
made aware of TPF’s existence that they can make follow up disclosures. Meanwhile, in order
to balance the funder’s interests (e.g. the business confidentiality), the mandatory TPF
disclosure obligation is only a restricted one (‘restrained mandatory TPF disclosure mode’). It
only requires the disclosure of basic TPF information (identify and address of funders) - not
the content of funding agreement.78
Secondly, by introducing the mandatory TPF disclosure, Hong Kong and Singapore have
learned from England and Australia. On the one hand, it remains ambiguous on how England
treats TPF disclosure in litigation. The Civil Procedure Rules do not generally require TPF
disclosure, although courts have the power to order disclosure of the funder identity.79
On
the other hand, Australia’s approach is much clearer. Australia’s TPF legal framework focuses
much on avoiding conflicts of interest. For instance, when the Corporations Amendment
Regulation 2012 No. 6 (Corporations Amendment Regulation) is adopted, which aims at
exempting litigation funding from the managed investment scheme, it will specifically require
conflicts of interest management.80
To clarify the procedures for managing conflicts of
interest (required by Corporations Amendment Regulation 2012 No. 6), the Australian
Securities and Investment Commission (ASIC) issued the Regulatory Guide 248 (ASIC
Guide) in 2013. The ASIC Guide specifies that funders and lawyers should review potential
conflicts of interest. Conflicts of interest may exist when (1) Lawyers act for both the funder
and the members; (2) There is a pre-existing legal or commercial relationship between the
funder, lawyers and/or members; and (3) The funder has control of, or has the ability to
control, the conduct of proceedings. If conflicts of interest may exist, funders and lawyers are
required under ASIC Guide to forward written procedures dealing with TPF disclosure
75
See Singapore Legal Profession Rules r.49A: “When conducting any dispute resolution proceedings
before a court or tribunal, a legal practitioner must disclose to the court or tribunal, and to every other
party to those proceedings—(a) the existence of any third-party funding contract related to the costs of
those proceedings; and (b) the identity and address of any Third-Party Funder involved in funding the
costs of those proceedings.”
76
C.A. Rogers, Ethics in International Arbitration (Oxford University Press, 2014), p. 74.
77
M. C. Scherer, “Third-Party Funding in International Arbitration Towards Mandatory Disclosure of
Funding Agreements?’ in B.M. Cremades Román and A. Dimolitsa (eds), Third-Party Funding in
International Arbitration (Paris: ICC Dossier, 2013), p.97.
78
W. Stone, “Third Party Funding in International Arbitration: A Case for Mandatory Disclosure?’ (2015)
17 Asian Dispute Review 62, 66.
79
M. Secomb, P. Tan and T. Wingfield, “Third Party Funding for Arbitration: An Opportunity for
Singapore to Lead the Way in Regulation” (2016) 18 Asian Dispute Review 182, 186.
80
See Corporations Amendment Regulation 7.6.01 AB, which provides that “(5B) If the regulations
prescribe an exemption under paragraph (2) (k) that covers the provision of a service by a person in relation
to a litigation scheme (within the meaning given by the regulations), the regulations may require the person
to have adequate arrangements, and follow certain procedures, for managing conflicts of interest in
relation to the scheme”.
20. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 20
throughout the litigation.81
Although neither the Corporations Amendment Regulation nor
the ASIC Guide mentions arbitration, they nonetheless inspire Hong Kong and Singapore
regarding mandatory TPF disclosure in arbitration.
Thirdly, by introducing the mandatory TPF disclosure, Hong Kong and Singapore have
drawn inspirations from the arbitration community. In 2014, the amended IBA Guidelines
on Conflicts of Interest in International Arbitration (hereinafter ‘IBA Guidelines on
Conflicts of Interest’) serves as a good attempt in regulating TPF disclosure. Reading in
conjunction General Standard 7 and Explanation to General Standard 6, on his own initiative
at the earliest opportunity, a party shall inform the arbitral tribunal the entity with a direct
economic interest in, or a duty to indemnify a party for, the award to be rendered in the
arbitration. The aforementioned entity includes funders.82
Besides the IBA Guidelines on
Conflicts of Interest, some major arbitration institutions have also moved forward TPF
disclosure. For insistence, CIETAC Hong Kong Arbitration Center enacts the Guideline for
Third Party Funding in Arbitration (CIETAC TPF Guideline), which proposes:
“A Funded Party must give written notice to the arbitral tribunal and each party to
the arbitration via the Arbitration Court of CIETAC Hong Kong of: (i) the fact
that a Funding Agreement has been entered into; and (ii) the name of the
Funder.”83
What’s more, the latest developments on Free Trade Agreements are also moving toward
mandatory TPF discourse. For example, the EU-Canada Comprehensive Economic and
Trade Agreement (hereinafter ‘CETA’) adopts a provision, requiring the disputing party
benefitting from TPF to disclose the name and address of the funder to the tribunal.84
Lastly,
the 2017 Investment Arbitration Rules of the Singapore International Arbitration Centre
(SIAC Investment Arbitration Rules) also includes TPF provisions that deal with TPF
disclosure.85
What needs to be emphasised is that the mandatory TPF disclosure not only deals with the
arbitrator’s independence and impartialities, it is also closely connected with the cost issues
(security for costs and adverse costs). In practice, even without mandatory TPF disclosure,
the unfunded parties will apply to the courts or the arbitral tribunals to order for TPF
disclosure. TPF disclosure is of vital importance when the unfunded parties intend to apply
for security for costs or adverse costs. The unfunded parties may even raise arguments that
are based on the existence of TPF and content of the funding agreement. From the
perspective of some funders and funded parties, one reason why they are reluctant to disclose
TPF is that they worry the disclosure may negatively influence judges’ and arbitrators’ verdict
on cost issues.86
They labour under the presumption that simply because TPF is involved, the
81
Australian Securities and Investment Commission, “ASIC Regulatory Guide 248: Litigation schemes and
proof of debt schemes: Managing conflicts of interest” (27 March 2013), ASIC,
http://download.asic.gov.au/media/1247153/rg248.pdf [Accessed 15 December 2017].
82
See IBA Guidelines (7) Duty of the Parties and the Arbitrator and Explanation to General Standard 6.
83
CIETAC Hong Kong, CIETAC Hong Kong TPF Guideline (September 2017),
https://hkarbitration.files,wordpress.com/2017/09/cietac-hk-tpf-guidelines.pdf [Accessed 9 January 2018].
84
See Article 8.26 of CETA which provides: “Where there is third party funding, the disputing party
benefiting from it shall disclose to the other disputing party and to the Tribunal the name and address of
the third party funder.”
85
Article 24 of SIAC Investment Arbitration Rules provides that, unless otherwise agreed, the arbitral
tribunal have the power to “order the disclosure of the existence of a Party’s third-party funding
arrangement and/or the identity of the third-party funder and, where appropriate, details of the third-party
funder’s interest in the outcome of the proceedings, and/or whether or not the third-party funder has
committed to undertake adverse costs liability.”
86
M. Scherer, A. Goldsmith and C. Flechet, “Third party funding in international arbitration in Europe:
part 1–funders’ perspectives” (2012) 2012 Int’l Bus. L.J. 207, 218.
21. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 21
security for costs or adverse costs should be granted. To date, how TPF will influence the
cost issues is still debated.
As to the security for costs, in litigations (especially in common law jurisdictions), following
the TPF disclosure, the court has the jurisdiction to order security for costs against the
funded parties. Moreover, under exceptional scenarios, the court can even directly order the
funders to pay security for costs. For example, in the RBS case (group litigation), the England
High Court, according to the Civil Procedure r.25.14(2), ordered security for costs against a
professional commercial litigation funder, who is located outside England.87
Meanwhile, the
England High Court has declined to order security for costs against another funder who was
not primarily motivated by profit-making. In the RBS case, following the TPF disclosure,
when making its decisions, the court took into account numerous elements, such as the
funder’s motivation, the potential difficulty of enforcing cost orders,
the causation between
funding and costs for which recovery was sought, the nature of funders and their awareness of
investment risks.88
Unlike litigations, owing to the privity of arbitration agreement, the arbitral tribunal is
unable to order security for costs and adverse costs directly on funders (the non-signatories).
Concerning the adverse costs, especially the recovery of funding costs, the Essar case is
illustrative. The Essar case originated from an ICC arbitration that is seated in London. The
arbitral tribunal discovered that as a consequence of Essar’s behaviours, Norscot had no
alternative, but was forced to enter into litigation funding. Pursuant to the Arbitration Act
1996 and the ICC rules, under the category of “other costs”, the arbitral tribunal ordered
Essar (the losing party) to bear the funding cost (£1.94m) incurred by Norscot (the winning
party). Essar sought to challenge the award arguing that, under the Arbitration Act 1996
s.59(1)(c), “other costs”, do not include the costs of funding and the arbitral tribunal had no
power to allocate such costs.89
This challenge was, however, denied. The court held that
“other costs” can include the costs of obtaining funding and the allocation of such costs is
subject to the arbitrator’s discretion.90
Many debates have been raised around question such
as whether the ruling under the Essar case has rendered the claimant risk-free, whether it is
proper to treat the funding expenses as costs. or it is better to treat it as damages, and
whether it is justified to provide differentiated treatments on those who “have to” resort to
funding or who does not “have to”.91
It remains to be seen how the RBS case and the Essar
case will be followed up and further developed.
87
Civil Procedure Rules 25.14:cSecurity for costs other than from the claimant
(1) The defendant may seek an order against someone other than the claimant, and the court may
make an order for security for costs against that person if –
(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order;
and
(b) one or more of the conditions in paragraph (2) applies.
(2) The conditions are that the person –
(a) has assigned the right to the claim to the claimant with a view to avoiding the possibility of a costs
order being made against him; or
(b) has contributed or agreed to contribute to the claimant’s costs in return for a share of any money or
property which the claimant may recover in the proceedings; and is a person against whom a costs order
may be made.
88
The RBS Rights Issue Litigation [2017] EWHC 1217 (Ch).
89
Arbitration Act 1996 s59(1)(c): “Costs of the arbitration: (1)References in this Part to the costs of the
arbitration are to—(c)the legal or other costs of the parties.”
90
Essar Oilfields Services Limited v Norscot Rig Management PVT Limited [2016] EWHC 2361 (Comm).
91
M. Szymanski, (8 October 2016), Kluwer Arbitration Blog,
http://kluwerarbitrationblog.com/2016/10/08/recovery-of-third-party-funding-ordered-by-icc-tribunal-and-confirmed-
by-the-english-high-court-an-under-theorised-area-of-the-law/ [Accessed 15 December 2017].
22. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 22
While both Hong Kong and Singapore have established mandatory TPF disclosure, they have
not provided a “one-size-fits-all” mandatory approach to the ordering of costs. Hong Kong
and Singapore have opted to leave the cost issues for the arbitral tribunal to decide. As they
are lacking sufficient TPF practice in arbitration, it is still unclear how Hong Kong and
Singapore will react to costs issues when TPF is involved in arbitrations. But, in this respect,
the arbitration community has provided some guidance. For example, the CIETAC TPF
Guideline provides that:
“An arbitral tribunal may, to the extent permitted by applicable laws or rules,
consider whether the existence and extent of Funding is a relevant factor when
considering any application for security for costs.”92
In addition to the CIETAC TPD Guideline, both the ICCA-QMUL Task Force “Report on
Security on Security for Costs and Costs”93
, and the Chartered Institute of Arbitrators
(CIArb) guidelines on “Applications for Security for Costs” 94
have provided some
recommend criteria on cost issues.
In this author’s opinion, when the mandatory TPF disclosure obligation is established,
besides considering the challenge of arbitrators, parties also need to think more about the
cost issues. For the funded parties, before signing the funding agreements, they need to pay
special attention to whether funders are able to bear security for costs (if any) and have the
capacity to bear adverse costs.95
Meanwhile, the funded parties need to prepare for defending
themselves by proving that they have good arguable cases and the use of TPF will not impact
their financial capacity to continue the legal proceedings. Moreover, when selecting funders,
they need to think about the funder’s nature. As the RBS case shows, concerning security for
costs, there can be different treatments between professional commercial funders and other
funders. For respondents, following the mandatory TPF disclosure, on one hand, they need
to discover the funded parties’ financial status (if possible). When deciding cost issues,
although TPF is a factor, merely the existence of TPF is not adequate for successfully seeking
security for costs. On the other hand, drawing the lessons from the Essar case, respondents
need to be more cautious about how to impose pressure on the funded parties. Respondents
should prevent the legal causation found between their behaviours (maybe for tactical
considerations) and the funding costs incurred. If not, they may face a risk on bearing the
adverse costs including the funding costs. To avoid the ambiguity, parties may in advance
exclude the allocation of funding costs in the arbitration agreements.
To conclude, as this author acknowledges, there is a growing consensus on mandatory TPF
disclosure. 96
Considering the latest developments in Hong Kong and Singapore, the
restrained mandatory TPF disclosure mode represents a potential TPF trend. This is because
the restrained mandatory TPF disclosure mode effectively safeguards the arbitrator’s
92
CIETAC Hong Kong, CIETAC Hong Kong TPF Guideline (September 2017),
https://hkarbitration.files,wordpress.com/2017/09/cietac-hk-tpf-guideline.pdf [Accessed 9 January 2018].
93
Applicaions for Security for Costs (29 November 2016), CIarb, http://www.ciarb.org/docs/default-
source/ciarbdocuments/guidance-and-ethic/practice-guidelines-protocols-and-rules/international-arbitration-guidelines-
2015/2015securityforcosts,pdf?sfvrsn=28 [Accessed 15 December 2017].
94
ICCA-QMUL Task Force on TPF in International Arbitration Subcommittee on Security for Costs and
Costs Draft (1 November 2015), Reports, http://www.arbitration-
icca.org/media/6/09700416080661/tpf_taskforce_security_for_costs_and_costs_draft_report_november_2015.pdf
[Accessed 15 December 2017].
95
Following the restrained TPF disclosure, the unfunded party may further ask for the disclosure of the
funding agreements. If granted in Hong Kong and Singapore, whether there is security for costs or adverse
costs clauses, may ultimately influence the arbitral tribunal’s decision.
96
The Paris Bar Council has on 21 February 2017 passed a resolution confirming that TPF is a positive
development in international arbitration. The resolution, together with a report, is in favour of restrained
TPF disclosure in arbitration. The report advises counsels to prompt their clients to adopt TPF disclosure
measures and explain to them the implications for lack of disclosure.
23. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 23
independence and impartiality on one side and the funders’ interests on the other.
Meanwhile, since the TPF disclosure is closely connected with cost issues, cost issues will
definitely be raised in Hong Kong and Singapore.
Adopting mixed TPF regulatory framework
Since TPF has both positive and negative internalities and externalities, and leaving TPF
totally unregulated may lead to unexpected results, it is necessary to regulate TPF. The
purpose of regulating TPF is to enlarge TPF’s positive impacts while limit TPF’s negative
impacts. As the QM Survey shows, 71 per cent of the respondents support the idea that TPF
needs to be regulated, which represents the majority opinion in the arbitration community.97
England has adopted the ‘soft law approach’ on TPF regulation. ‘Soft laws’ refer to non-
governmental norms. Although they are not legally binding, they have some regulatory and
normative effects.98
In England, by establishing the Association of Litigation Funders (ALF)
and enacting the Code of Conduct for Litigation Funders (ALF Code), a soft law, the
England TPF industry seeks to self-regulate funding actors. The ALF Code covers various
aspects of TPF, including formation and termination of funding agreements, capital adequacy
of funders, extent of control, confidentially and cost allocation. The ALF Code is a positive
attempt in regulating TPF, although it is enacted primarily for TPF in litigation.
In the context of arbitration, soft law has its unique value. On the one hand, soft law helps to
clarify abstract arbitration principles. Through codification, ‘soft law’ enables us to better
understand the arbitration proceedings, which increases the predictability and foreseeability
of the arbitration regime.99
On the other hand, soft law is capable of providing quick
responses to the latest arbitration developments. It can efficiently fill the gap within the
arbitration network.100
However, the most obvious drawback of ‘soft law’ lies in its non-
binding character, which leads to many uncertainties as to their regulatory effect.
In contrast to England, Australia has adopted the ‘hard law’ approach. ‘Hard laws’ are enacted
or recognised by states (regions). They are legally binding. In Australia, there are only a
limited number of ‘hard laws’ concerning TPF in litigation, among which includes the above-
mentioned Corporations Amendment Regulation. The most obvious benefit for ‘hard law
approach’ lies in its enforceability. Mandatory norms bring more legal certainty. However,
the shortcomings of ‘hard law approach’ are also prominent, especially in the arbitration
context. For existence, the procedure on enacting ‘hard law’ is rigid, complicated and usually
time-consuming. That is why, in arbitration, an area that develops rapidly, hard law often lags
behind the latest arbitration developments. Also, relying too much on hard laws may cause
side effects on the arbitration system, namely depressing the flexibility of arbitration
proceedings and the creativity of the arbitration community.
Having considered both the advantages and disadvantages of each approach, Hong Kong and
Singapore have wisely chosen a mixed TFP regulatory framework (the mixed approach),
combing both hard law and soft law approach. To be more specific, when the Singapore TPF
Amendment was at its second reading, Ms Indranee Rajah SC made it clear that the
97
Queen Mary University of London, “2015 International Arbitration Survey: Improvements and
Innovations in International Arbitration” (6 October 2015), http://www.arbitration.qmul.ac.uk/docs/164761.pdf
[Accessed 15 December 2017].
98
E. Picanyol, “Due Process and Soft Law in International Arbitration” [2015] Spain Arbitration Review 29,
51-52.
99
G. Kaufmann-Kohler, “Soft Law in International Arbitration: Codification and Normativity” (2010) 1
Journal of International Dispute Settlement 1, 3.
100
P. Hodges, “The Proliferation of ‘Soft Laws’ in International Arbitration: Time to Draw the Line?” in
C. Klausegger and P. Klein, et al. (eds), Austrian Yearbook on International Arbitration 2015 (Vienna:
Manz’sche Verlags- und Universitätsbuchhandlung 2015), pp.216-217.
24. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 24
Singapore Ministry of Law is working with arbitration institutions and practitioners to
initiate the production of related ‘soft laws’ on TPF in arbitration.101
Meanwhile, in the Hong
Kong TPF Amendment, it specifies that when the Hong Kong Arbitration Ordinance is
amended, a related Arbitration Code of Practice will be enacted as well. The Arbitration
Code of Practice will set out standards and practices (including financial and ethical
standards) with which funders will ordinarily be expected to comply.102
Importantly, the
Arbitration Code of Practice is a ‘soft law’, since it is emphasised in the Hong Kong TPF
Amendment that, “The code of practice is not subsidiary legislation” and:
“A failure to comply with a provision of the code of practice does not, of itself, render any
person liable to any judicial or other proceedings”.103
It is worth mentioning that Hong Kong and Singapore only implement hard laws to regulate
the most essential TPF issues. Legitimacy of TPF is one of the essential issues. Through hard
laws, both Hong Kong and Singapore abolish or restrict the doctrines of maintenance and
champerty so as to confirm the enforceability of a TPF agreement in arbitration. Meanwhile,
since TPF disclosure serves as a vital premise for arbitrators to determine potential conflicts
of interest, both Hong Kong and Singapore establish mandatory TFF disclosure through hard
laws, whereas, regarding other TPF issues, both Hong Kong and Singapore leave them to soft
laws. The balance between hard laws and soft laws in Hong Kong and Singapore is guided by
the ‘light touch’ approach, which on the one hand ensures proportionate public power
supervision and on the other hand respects the arbitration communities’ autonomy and self-
discipline. In this author’s opinion, the ‘mixed approach’ also represents a potential TPF
trend in arbitration. The ‘mixed approach’ best fits arbitration’s governance structure, where
states and non-state actors together regulate arbitrations.
Last but not least, we should not neglect the connections between hard laws and soft laws.104
Taking IBA Guidelines on Conflicts of Interest as an example, lacking mandatory TPF
disclosure, its application to TPF scenario used to remain ambiguous. Naturally, owing to
information asymmetry, it is not practical for the party to disclose the relationship between
funders and arbitrators. Fortunately, now that the mandatory TPF disclosure has been
established by hard laws, the situation becomes clearer. It is arbitrators who know better
their relationship with funders. This conclusion can reasonably be inferred from the QM
Survey where 71 per cent of the respondents had seen IBA Guidelines on Conflicts of
Interest used in practice and 19 per cent of respondents are aware of it but have not seen it
used in practice.105
Likewise, in Hong Kong and Singapore, some newly created soft laws on
TPF may also achieve better regulatory effects when ‘hard laws’ are updated.
101
Parliament of Singapore, Civil Law (Amendment) Bill 2016 Second Reading’ (10 January 2017) Ministry of
Law,https://www.gov.sg/~/sgpcmedia/media_releases/minlaw/speech/S-20170110-1/attachment/2R%20Speech%20-
%20Civil%20Law%20Amendment%20Bill%202016.pdf [Accessed 15 December 2017].
102
See Hong Kong TPF Amendment 98P: Content of code of practice. For example, the code of practice
may require third party funders to ensure that the funding agreements set out their key features, risks and
terms, including whether, and to what extent, third party funders (or persons associated with the third
party funders) will be liable to funded parties for adverse costs, insurance premiums, security for costs and
other financial liabilities.
103
See Hong Kong TPF Amendment 98Q, Process for issuing code of practice and 98R: Non-compliance
with code of practice.
104
P. Hodges, “The Proliferation of “Soft Laws” in International Arbitration: Time to Draw the Line?” in
Austrian Yearbook on International Arbitration (2015), pp.221-222.
105
Queen Mary University of London, “2015 International Arbitration Survey: Improvements and
Innovations in International Arbitration” (6 October 2015) http://www.arbitration.qmul.ac.uk/docs/164761.pdf
[Accessed 15 December 2017]
25. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 25
3. EU Tax Law
Predicting the ‘Unpredictable’ General Anti-Avoidance Rule (GAAR)
in EU Tax Law1
(I)
Authored by Shu-Chien Chen2
KEYWORDS: General Anti-Avoidance Rule (GAAR), EU law, Abuse of Law. Common
Consolidated Corporate Tax Base (CCCTB), Anti-Tax Avoidance Directive (ATAD), legal
certainty
1. Introduction
In the development process of EU market integration, barriers from discrepancy between
national tax laws are obvious. Despite the harmonization of customs law, the integration
process in the other fields of tax law is relatively slow, especially regarding direct taxation,
such as corporate tax. Indirect taxation has been harmonized much better, due to the
comprehensive Value Added Tax (VAT) Directives and relevant implementing regulations.
The reason behind is, direct taxation is still the core of Member States’ fiscal autonomy.
However, exercising such fiscal autonomy will always be in line with EU internal market law.
In a tax law system, including national tax laws as well as EU tax law harmonization, it is very
common to provide a general anti-avoidance rule (GAAR), which combats any tax avoidance
scenario that the legislators cannot expect or contemplate when they made the law. Since
GAAR has the function to combat unexpected tax avoidance scenarios, being abstract and
flexible enough is the essence of such rule; otherwise a GAAR would never be able to apply
to the tax avoidance in hand.
While being abstract enough to react to all the unexpected tax avoidance scenarios, a GAAR
is quote often criticized as infringing legal certainty for taxpayers. This is a paradox also
appearing in the discussions of ‘abuse of law’/’abuse of rights’ in other field of law. GAAR is
1
This paper has been published in InterEULawEast, Volume 5 Issue 1, p.91-120.
https://doi.org/10.22598/iele.2018.5.1.5 The early draft of this paper has been presented in the symposium
“The Changing Shape of Tax Avoidance”, organized by Journal of Tax Administration University of
Exeter, on 6th
May 2016 in London and the conference “Europe and its crises”, organized by Department
of Politics and International Studies (POLIS), on 30th
June and 1st
July 2016, in University of Cambridge.
The author would like to express the generous support and the discussion forum of these organizers and
feedback from conference participants.
2
Shu-Chien Chen is pursuing her PhD degree in EU tax law at Erasmus University Rotterdam in the
Netherlands. Since 2015, she has been giving lectures and presentations in North America, Europe, China
and Ethiopia. Email: chen@law.eur.nl
26. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 26
inherently a rule needing flexibility and abstractness, whereas taxpayers have high
expectations to a certain tax system and governance. This is why courts, scholars and
practitioners continue the debates and discussions, in order to interpret such “unpredictable”
rule in a logical way. The discussions have reached a consensus that, the current GAARs, no
matter derived from EU secondary laws or case of Court of Justice of European Union
(CJEU), can be broken into two tests: the objective test and the subjective test. The objective
test refers to the objective circumstances or economic reality of the involved arrangement;
the subjective test involves the taxpayers’ subjective intention to deviate from the purpose of
the tax law. The debates are focusing on the subjective test: whether the subjective test is still
necessary or desirable and what the relation between the taxpayer’s intention and the
“purpose of the law”. It seems that, scholars have reached the agreement of ‘not to agree’
regarding the definition of GAAR in the EU law.
Based on the semi-consensus above, this paper will ask a follow-up question: what do GAAR
in the EU tax law should be designed, especially regarding the subjective test. In Section 2,
this paper will short revisit the main discussion focal points, to demonstrate the difficulty of
explaining the GAAR. I will shortly present my theory of explaining these seemingly
inconsistent formulations. In Section 3, statutory GAARs will be analyzed. In Section 4, case
law of CJEU from VAT, direct taxation and export refund will be compared and further
demonstrate the different formulations. In Section 5, I will present a three-test structure that
incorporates the purpose of the norm involved, and showing that all these various
formulations still follow a predictable pattern, mainly influenced by the purpose of the norm
being abused. Section 6 concludes and provides a new thinking of a GAAR.
2. General Anti-Avoidance Rule (GAAR) In EU Tax Law: An Overview of
Controversies and a New Theoretical Attempt
There are enormous academic discussions on GAAR, both at the EU law level and Member
States law level.3
A GAAR has been recognized as a final weapon against all the creative and
aggressive scenarios. However, there are also suspicions around it because a GAAR can
infringe legal certainty. There are mainly two streams of discussions regarding EU GAAR:
The first stream of literature observes that, despite of various different formulations, there
are two main types of GAARs in EU law, and the difference lies on whether a specific piece
of EU law itself being abused (the so-called abuse of right) or whether a national law being
abused due to implementing EU law (the so-called abuse of law). The second stream discusses
the nature of such GAAR and explores whether there is a general principle of law for GAAR.
The starting points of these academic discussions have followed the well-accepted legal
principle: Rights should not be abused. The formal observance of legal form with an abusive
intention can be declared as invalid or regarded as another legal consequence. Therefore, in
the analytical framework, there are always two sets of tests: the subjective test and the
objective test. The subjective test examines the taxpayer’s subjective intention; the objective
test examines the economic effect of the involved arrangement. It is sometimes difficult to
distinguish these two tests apart, because these two tests are actually just describing one
specific behavior from two perspectives.
De La Feria4
wrote about two types of formulations in EU GAAR: The distinction of abuse
of rights and abuse of law in CJEU. ‘Abuse of rights’ refers to abusing a specific EU law
instrument, such as abusing VAT Directive; abuse of law concept, derived from the CJEU’s
3
Freedman, J.: General Anti-Avoidance Rules (GAARs) – A Key Element of Tax Systems in the Post-BEPS Tax
World? The UK GAAR. WU Institute for Austrian and International Tax Law - Tax Law and Policy Series,
2014. Available at SSRN: https://ssrn.com/abstract=2769554 or http://dx.doi.org/10.2139/ssrn.2769554
4
De La Feria, R.: Prohibition of abuse of (Community) law: The creation of a new general principle of EC law
through tax, Common Market Law Review, 45(2), 2008, pp. 395–441
27. Issue Thirteen August & September 2018
CECCA NEWSLETTER cecca.org.uk 27
evaluation of Member States’ anti-avoidance rules as their justification to restrict the EU
fundamental freedoms. CJEU seems stricter when evaluating Member states’ law that is
claimed to restrict the fundamental freedoms, i.e. the abuse of la cases. National anti-
avoidance concern can only be justified when national anti-avoidance rules are designed to
combat scenarios whose ‘sole’ purpose is tax-avoidance. As to abuse of rights cases, CJEU is
more lenient to accept there is a tax avoidance and focus less on the taxpayers’ subjective
intention or purpose.
Due to the variety of case law regarding tax avoidance, it has been argued if there is a general
principle of anti-tax avoidance in the EU law.5
Some scholars have affirmative opinion6
whereas others are still quite skeptical.7
As Panayi analyses8
, it seems that there is not yet a
completely coherent approach of anti-avoidance developed by CJEU, but two universal
consensuses: first, taxpayers are in principle to structure their affairs in such a way as to limit
their tax liability, so ‘trying to reduce tax burden’ itself does not automatically constitute tax
avoidance. Second, Member States are entitled to adopt some measures against abusive
scenarios, provided that these measures do not infringe EU law, such as fundamental
freedoms. However, it is still difficulty draw the boundary of EU Member States’ legitimate
discretion to combat abusive scenarios and the boundary of taxpayers’ legitimate freedom
minimize tax burden.
Among the academic discussions and the subjective test is the core of the debates. Lang has
argued that, the subjective test is redundant in the analytical framework, because it is too
controversial. It is too difficult to find out the intention of a human being.9
Even for the
statutory GAARs provided by EU secondary law, such as Anti-Tax Avoidance Directive
(ATAD), de Wilde is also very critical and described ATAD’s GAAR as Pandora’s box10
,
because it is almost impossible to predict what CJEU would adjudicate based on ATAD.
Even from the perspective of Member States, some scholars are also very skeptical. Seiler has
compared development GAARs from EU, Germany and UK11
, and provocatively concludes
that a GAAR is ‘danger and detrimental to the legal culture’.12
He argues that, the subjective
test is meaningless and unnecessary, providing undesirable opportunities for taxpayers to
refute the existence of abuse and grants tax authorities’ risky discretion to pardon taxpayers.
Therefore, Seiler is opposing extending the application scope of the GAAR.
Despite of all the criticisms to the subjective test, it is undeniable that in a tax avoidance
case, the taxpayer’s intention is an important indicator; when there are no sufficient objective
circumstances, the arrangement could be labeled as tax avoidance or abuse of law. Such
subjective test is ‘objectivized’13
, and can function as an important indicator for the start of
the tax authorities’ investigations. Some scholars such as Seiler, argue that, the subjective test
in GAAR merely involves an interpretation method of law, I agree; but I seriously doubt the
progressive claim14
that the subjective test, or even GAAR is redundant and ‘harmful’ for the
5
Panayi, C: European Union Corporate Tax Law, Cambridge University Press, 2013, at 8.1 (Online version)
6
For example Piantavigna, P.: Tax abuse in European Union law: a theory, EC Tax Review 20 (3) 2011, p. 134–
47; Jiménez, A.M.: Towards a homogeneous theory of abuse in EU (direct) tax law, Bulletin for International
Taxation 66 (4/5), 2012, p. 270–92, available at SSRN: https://ssrn.com/abstract=2392512
7
For example, Seiler, M: GAARs and Judicial Anti-Avoidance in Germany, the UK and the EU, Linde, Vienna,
2016
8
See supra footnote 5, Panayi, C, at 8.1 (Online version)
9
Lang M.: Cadburry Schweppes’ Line of Case Law from the Member States’ Perspective, in De La Feria,
R. and Vogenauer, S. (ed.), Prohintion of Abuse of Law: A New General Principle of EU Law, Oxford, 2011
10
de Wilde, M: The ATAD's GAAR: A Pandora's Box? (May 1, 2017). Available at SSRN:
https://ssrn.com/abstract=3040709 or http://dx.doi.org/10.2139/ssrn.3040709
11
Seiler, M: GAARs and Judicial Anti-Avoidance in Germany, the UK and the EU, Vienna, 2016
12
Id, p. 311
13
Weber, D.: European Union - Abuse of Law in European Tax Law: An Overview and Some Recent Trends in the
Direct and Indirect Tax Case Law of the ECJ – Part 1, European Taxation, 53(6), 2013.
14
Seiler, M.: GAARs and Judicial Anti-Avoidance in Germany, the UK and the EU, Linde, 2016