The Role of Macao as a Dispute Resolution Hub in the Guangdong-Hongkong-Macao Bay Area

Keywords: Macao, Greater Bay area, dispute resolution, civil law, Asia-pacific region

The Guangdong-Hong Kong-Macao Bay Area (‘Greater Bay Area’) is one of the fastest-growing economic regions in the world, which comprises two Special Administrative Regions and nine municipalities in Guangdong Province. The Greater Bay Area has been granted the status of critical strategic planning in China’s development blueprint. The Macao Special Administrative Region of the People’s Republic of China (Macao), is one of the major cities of the Greater Bay Area and plays a vital role in its development. This article seeks to analyse the role of Macao as a dispute resolution hub under the Greater Bay Area.  

Macao’s potential as a boutique centre in the region

Compared to its sister island Hong Kong Special Administrative Region of the People’s Republic of China, Macao is less expensive but not as famous for arbitration. However, as a typical civil law jurisdiction, Macao has the potential to be a boutique centre for civil-law disputes in the Asia-Pacific region. Parties from civil law jurisdictions may prefer Macao to be their seat of arbitration rather than other common law jurisdictions. This is because parties may wish to appoint a civil-law arbitrator and institution that is familiar with civil law. However, increasing the pool of arbitrators is necessary for enhancing the attractiveness of Macao as a seat of arbitration. 

Currently, there are five arbitration centres in Macao. The recent establishment of the Macao Arbitration Association (which is a significant development), evidences the Macao arbitration community’s focus on raising awareness of its expertise and establishing its place in the international arbitration arena. The association seeks to promote arbitration as a dispute resolution mechanism in the Greater Bay Area, as well as a hub for dispute resolution between China and Portuguese speaking countries. Macao’s legal system is largely based on the Portuguese civil law system, and it has a fully independent judiciary. Also, it is the only jurisdiction in the world that enacts legislation in both the Portuguese and Chinese languages. Texts of the legislation in both languages are considered equally authentic. 

Legal infrastructure and potential reform

A new arbitration law (No. 19/2019) had been passed, and it entered into force in Macao in May 2020. This piece of legislation replaced and unified the existing parallel regimes of arbitration (i.e. Decree-Law (29/96M), arbitration legal act and the Decree-Law 55/98/M, external commercial arbitration legal act), modernizing both domestic and international arbitrations’ legislative regimes. This new legislation contains many provisions based upon the UNCITRAL Model Law on International Commercial Arbitration. It marks a significant milestone for the future development and promotion of international arbitration in Macao. This new legislation encourages the use of arbitration as one of the alternative dispute resolution mechanisms in Macao. 

The new arbitration law aims to eliminate the existing gaps between the law in Macao and the international standards and practices, to increase its efficiency. This law enables the courts in Macao to recognise and enforce foreign arbitration awards. This would alleviate the existing restrictions on Macao’s arbitration legal framework and attract globally well-known arbitrators to the region. 

However, under the existing law in Macao, contingency or conditional fee arrangements between the clients and lawyers are not permitted under the code of ethics of lawyers practising in Macao. There is no law under the Macao legal regime concerning third-party funding for arbitration. However, contingency or conditional fee arrangements between lawyers and clients are strictly prohibited in Macao. The prohibition on contingency and conditional fees in Macao will hinder the potential of Macao as an international arbitration hub. Thus a reform of legislation in this regard is required. 

Apart from the introduction of the new arbitration law, the Secretary for Administration and Justice of Macao is formulating a new set of mediation laws, to strengthen Macao’s position and capabilities as a dispute resolution hub in the Greater Bay Area. Further, the establishment of the International Negotiation Mediation Society Macau in 2014 shall further help in the promotion of mediation in Macau. 

Gaming related disputes

Macao plays a key role in the entertainment (in particular for gaming), conference and tourism hubs in the Greater Bay Area, as Macao is the only city in China where its citizens are allowed to gamble in casinos. As one of the major gambling capitals in the world, Macao has well-established legislation that applies to gambling industry. Macao has many well-equipped legal experts specialised in gaming-related matters who are available to act as an arbitrator or a legal representative in the arbitration process.

Disputes related to parties from Portuguese-speaking countries

Mr Zhou Qiang, Chief Justice of the People’s Republic of China and President of the Supreme People’s Court, stated that China and Portuguese-speaking countries keep close economic, trade and talent ties. Further, exchanges and cooperation in the judicial sector are also proceeding smoothly. As one of the major cities in the Greater Bay Area, Macao is committed to serving as a bridge between China and the Portuguese-speaking countries. 

As stated earlier Macao, a former Portuguese colony, has a legal system that recognises Portuguese law as its primary reference. Also, Macao has a civil law tradition that originated in continental Europe. Therefore, Macao is the only civil law jurisdiction in the Asia Pacific region. Many dual quailed lawyers in Macao are familiar with the Portuguese law. Hence, Macao’s legal framework and well-equipped legal professionals make the place ideal place for disputes involving parties from Portuguese-speaking countries.  

Conclusive remarks

Until now, in the international arbitration community, Macao is not a leading arbitration centre in the Asia-Pacific Region. The commitment of Macao in arbitration development will advance its place as an attractive dispute resolution hub for different parties (in particular for parties from Portuguese-speaking countries). The establishment of the Macao Arbitration Association will further promote the arbitration in Macao. There is serious potential for Macao to become a boutique centre in the region and handle varied disputes that may arise due to the development of the Greater Bay Area. 

Charles Ho Wang Mak is a Ph.D. Candidate in International Law at the University of Glasgow. He has completed his legal studies from three renowned universities, the University of Sussex, the City University of Hong Kong and The Chinese University of Hong Kong. He is an accredited Tribunal Secretary at the Hong Kong International Commercial Arbitration Centre (HKIAC). Further, Charles has been admitted to prestigious institutions such as the Chartered Institute of Arbitrators, Hong Kong Institute of Arbitrators and Royal Asiatic Society of Great Britain and Ireland as a fellow, at a very young age. 

The views and opinions expressed in the article are those of the author(s) solely and do not reflect the of official position of the institution(s) with which the author(s) is /are affiliated. Further, the statements of the author(s) produced herein should not be construed as legal advice.