Dacheng Lawyers Invited to Deliver a Keynote Speech at the Consulate General of Nepal in Guangzhou

On March 29, 2024, lawyers Li Xiaoyi (partner), Lin Zhihua, and Chen Xi from Dacheng Shenzhen were invited by the Consulate General of Nepal in Guangzhou to participate in an investment promotion conference titled Transforming Nepal into a Premier Global Investment Destination, organized by the Consulate General of Nepal in Guangzhou in collaboration with the China Council for the Promotion of International Trade (CCPIT) and the Guangdong Chamber of International Commerce (GCOIC).

Mr. Saroj Bhattarai, Acting Consul General of Nepal in Guangzhou, delivered the opening remarks at the conference. Following this, Ms. Li Xiaoyi presented a keynote speech on Legal Application for Chinese Enterprises Investing in Nepal. Additionally, Mr. Namaraj Ghimire, Joint Secretary from the Office of the Prime Minister and Council of Ministers of Nepal, delivered a keynote address at the conference.

As more Chinese enterprises "go global" under the Belt and Road Initiative (BRI), investors are primarily concerned about the political, economic, and cultural environment of the country they invest in, whereas law is the foundation of the business environment. Ms. Li Xiaoyi introduced topics including risk management, dispute resolution, and legal applicability for Chinese enterprises investing in Nepal. These topics have broader theoretical relevance for Chinese businesses investing in other countries as well. The key points of her speech included:

To address uncontrollable commercial and political risks, investors should conduct thorough due diligence beforehand, and can also employ risk management measures such as insurance, factoring, and guarantees. For instance, obtaining export credit insurance and specific contract insurance from the policy-oriented insurance company China Export & Credit Insurance Corporation can help mitigate the risk of receivable losses. Additionally, financial instruments like factoring and forfaiting can expedite cash flow and reduce transaction risks.

Disputes in bilateral trade often opt for international arbitration, where parties can agree on the arbitration institution and applicable law. It is important to note that Nepal's (and other investing countries') domestic laws may exclude the application of foreign jurisdictions and foreign laws. Furthermore, since arbitral awards must be recognized and enforced by local courts in Nepal, the awards must comply with the law of Nepal. In principle, the New York Convention requires contracting states to mutually recognize and enforce foreign arbitral awards, but it is essential to be aware of any reservations from some countries and their requirements on compliance with their laws.

The predominant type of Chinese investment in Nepal is in infrastructure projects, with FIDIC contracts being the most frequently employed international engineering contract format. Ms. Li Xiaoyi emphasized the claims clauses, Dispute Adjudication Board (DAB) clauses in FIDIC contracts, and the enforcement pathways for arbitration and arbitral awards in case of dissatisfaction with DAB awards.

Nepal is an important trade partner and development partner for China in South Asia. China is Nepal's largest source of foreign investment, biggest source of tourists, and second-largest trade partner. Foreign-related legal services constitute a core practice area for Dacheng. With its exceptional professionals and rich international experience, Dacheng supports Chinese enterprises to navigate global markets with its global resources and local expertise.