The ‘Vegas of China’: Macau’s Courts and Commercial Development
This month, we speak to Julia Brockman, Partner at DSL Lawyers in Macau where she leads the areas of Telecommunications, IT & Media and Construction, as well as the Litigation and Arbitration practices. After graduating in Law in Portugal, Julia moved to Macau in 1995, where she first worked as a legal adviser to the Macau Government in preparation for the handover from Portuguese to Chinese administration until 1999. Between 1999 and 2006 she was Legal Counsel and Company Secretary at the incumbent telecoms provider in Macau Companhia de Telecomunicações de Macau (CTM), having moved into private practice thereafter. She is a member of the Chartered Institute of Arbitration – East Asia Pacific Branch. She discusses her unique role and reveals how Macau is a small region with huge potential.
Macau has a mix of cultural influences from Portugal and Hong Kong – how has this shaped the legal sphere?
Due to the presence of the Portuguese for nearly 500 years, the cultural influence from Portugal is undeniable and very visible, not only by the architecture and beautifully kept colonial buildings and churches, but also by the fact that Macau has maintained a Chinese-Portuguese bilingual system in the Government and in its legal system. However, outside the Government and the Courts, Portuguese is not widely spoken in Macau.
Macau’s legal system has Portuguese law as its main reference, belonging to the civil law tradition of continental Europe, which originates from Roman law and is based on written legislation – statutes and codes – as its main source of law. The main characteristic of the civil law systems is not only the codification of laws, but also the methodological approach to the laws and statutes. The civil law system is systematised and structured relying on declarations of broad, general principles. Thus, the Courts base their judgments on the provisions of codes and statutes, from which solutions in particular cases are to be derived, having to reason on the basis of general rules and principles of the code. By contrast, in a common law system, such as Hong Kong, cases are the primary source of law, while statutes are seen as incursions into the common law and thus interpreted narrowly.
Culturally and commercially, Hong Kong has had a strong influence on Macau. English is the main common language used in the business community. In particular, since the liberalisation of the gaming sector in 2001, which turned Macau into the largest gaming hub in Asia, a large number of Hong Kong based businesses – e.g. construction companies, property developers, hotel operators and high end luxury retailers – have set up in Macau, which has resulted in “imports” of common law based concepts. This originates mainly from the fact that these companies use their tried and tested contract templates from Hong Kong, often referring disputes to arbitration proceedings there.
However, these “imported” common law concepts have not infiltrated the laws and regulations in Macau, which are still largely based on Portuguese law, with its major codes (mainly the Civil Code, Code of Civil Procedure, Commercial Code, Criminal Code and Code of Criminal Procedure) derived from its Portuguese models still in place.
The use of common law based contracts, which most of the times are governed by Macau law by choice of the parties, leads to some challenges when they are enforced in the Macau Courts, mainly in their interpretation and application under the general rules and principles of the codes.
How does this mixed culture enable Macau to stand out for international investment?
The mixed culture has certainly contributed to a soaring international investment, and due to its Portuguese heritage, Macau offers an important language and cultural bridge between China and the Portuguese speaking countries, such as Brazil, Angola, Moçambique and East Timor, among others.
What are common legal disputes you are faced with? Why do you think these types of disputes are common in Macau?
As a tiny enclave of just over 30 km2 located in the Pearl River Delta, Macau is a small market, which does not allow lawyers to be restricted only to their usual practice areas. Therefore, I am often faced with general commercial disputes outside my areas of expertise.
Currently, the majority of cases I am handling are property disputes. Some are related to the expiry of 25-year old land concessions that the Macau Government declared as expired due to the lack of development of the land granted to the developers.
In other cases, the disputes involve sale contracts over building units that were assigned several times to third party buyers before construction was completed, a common practice when the real estate market was soaring and the law allowed pre-sales without restrictions. In the meantime, the Government put in place several laws that have curbed speculation (mainly on stamp duty) and put restrictions on pre-sales, but a few of these disputes are still on-going.
Construction disputes are also very common, given the enormous building activity of the last 10 years, mostly related to the construction of the large casino resorts.
In these cases, I often act as Macau Counsel to arbitrations that are held in Hong Kong.
Does Macau have potential to become an international arbitration centre?
Macau is not comparable to the international arbitration centres of Hong Kong or Singapore, but in the last few years the Macau Lawyers Association has organised training sessions and workshops on international arbitration with the Chartered Institute of Arbitrators – East Asia Branch to develop and internationalise its own Arbitration Centre. I hope that this will create more confidence in the international entities doing business here to refer their disputes to arbitration in Macau. It has a particularly important niche to fill for ADR between parties from Portuguese speaking countries and the PRC.
As Thought Leader, can you share with us what you think is the key to ensuring the dispute concludes in the best circumstance for your clients?
I believe it is crucial to define strategies and to think ahead by determining the best and worst case scenarios for the outcome of a dispute. Once these aspects are clear, it is easier to help the client to decide whether it is worth trying to settle before any litigation, mid-way through litigation or not to settle at all. There is no mandatory mediation in Macau, but in practice we, as counsels, often end up acting as mediators.
Understanding the commercial side of a dispute is also essential to conduct cases in a manner that is satisfactory to the client. This requires a good understanding of the costs involved and clear communication with the client in order to avoid unexpected expenses.
Promoting communication and cooperation between the opposing parties’ counsels is also very important to avoid unnecessary contention and conflict.
How do disputes differ for telecommunications and media, in comparison to property and construction? What different considerations do you make when acting on a case?
The first main difference is that litigation in the telecoms sector is quite rare.
The only major dispute in this industry was between the Government and Macau Cable TV; this related to the Government’s lack of action to clamp down on antenna operators illegally retransmitting TV signals, who have been active in the market since the 1990’s.
The second difference is that most disputes in telecommunications and media will still be between operators and Government, rather than between competitors. Under the current telecoms regulations, it is the Government, through the Regulator, that is granted powers to resolve disputes between operators. Also, given the Government’s control on pricing, there is less potential for disputes to arise between operators.
Do you find that commercial awareness often gets in the way of legal practice? If so, what more do you think can be done to ensure they complement one another?
I believe the perception of commercial considerations getting in the way of our practice is becoming rarer with time, as nowadays we had to learn to understand the clients’ business perspective. Of course, in some instances, when we feel strongly about a certain case and are confident that we can win, it can be quite frustrating if cost considerations prevent us from conducting litigation in the manner that we think would get the best results.
I was an in-house lawyer for seven years; this experience gave me insights into business management, so I can relate to commercial awareness.
In my view, the best way to ensure commercial awareness and legal practice complement each other is to keep good communication with the clients.
As Thought Leader, can you share what the main motivation behind your role is?
Given my 10-year gap in private practice, when I worked first as a legal adviser to the Macau Government and later as in-house counsel and secretary at the main telecommunications services provider of Macau (CTM), I was particularly motivated, so I decided to work again as a lawyer, to broaden my knowledge and to interact directly with clients, which I enjoy (most of the times). I was excited to face the intellectual challenge and I look forward to reinventing myself and building up DSL Lawyers with my other Partners.
