PSCs are a linguistic and cultural block united by a common language, which has led to the creation of the CPLP. This community brings together countries that are bound by the Portuguese language because of the history of the colonization process. The community brings together nine PSCs that span over four continents, including Portugal in Europe; Brazil in South America; Angola, Cape Verde, Guinea-Bissau, Equatorial Guinea,⁴ Mozambique, Sao Tome and Principe in Africa; and Timor-Leste in Asia.

In the past three decades since 1978, the beginning of the ‘reform and opening up’ policy, China has achieved significant economic growth. China has made clear that the inclusion of PSCs in the OBOR Initiative is possible (CLBRIEF, 2018), likewise has expressed willingness to work with China to promote cooperation within the framework of the initiative (GU; LIN, 2019, p. 1-6). With the exponential growth of China's economy, we can summarise China's interest in the PSCs world into three main reasons.

Firstly, China sees PSCs as important trading partners to secure their supply of crucial primary resources along the way of its expansion. The Lusophone countries play a critical role in the South Atlantic, which has grown in importance because of massive oil reserves concentrated in the Atlantic Basin (RODRIGUES SANCHES, 2014, p. 1-9).

Secondly, most of the CPLP members are from developing countries, and China perceives the community as a huge potential market.⁵

Lastly, China is fully aware of the strategic value of utilizing PSCs to open the doors to regional commercial blocs in South America, Africa, Asia and Europe. Macao in this regard, plays an important role of a service platform connecting and deepening the relationship between China and PSCs.

The rapid economic development of the Macao SAR in the last decade has attracted many foreign investors and companies to bring their business to Macao.

According to the data retrieved from the Statistics and Census Service of Macao (DSEC) in 2020, the stock of inward direct investment rocketed from 10,412 million USD in 2008 to 42,930 million USD in 2019. At the same time, the Macao court system has been highly overloaded recently. In 2019, there were 22,275 new cases filled and 13,461 cases pending from previous years (STATISTICS AND CENSUS SERVICE OF MACAO, 2020). As a result, more attention began to be paid to the use of arbitration in the region.

Macao has a history of cultural blending between China and PSCs dating back more than 400 years, and it is a natural bridge connecting PSCs with China (ALVES, 1999). Macao has actively developed a service platform for Sino-Portuguese business cooperation since the creation of the Forum Macao in 2003.⁶ The success of the Forum does not only contribute positively to economic and trade relations between China and PSCs but also helps strengthen China’s international influence.

To date, the Forum Macao has hosted five Ministerial Conferences between China and the CPLP, with notable results from the introduction and implementation of Strategic Plans for Economic and Trade Cooperation at each Ministerial Conference of the Forum for Economic and Trade Cooperation between China and PSCs.⁷ China’s central government has expressed unwavering support for Macao; it is explicitly suggested in the 13th Five-Year Plan (2016-2020) of the PRC government to assist Macao in developing a service platform for Sino-Portuguese business cooperation (MACAO…, 2017).

In the Strategic Plan of the 3rd Ministerial Conferences for the years 2010 to 2013 (FORUM MACAO, 2010, online), it is expressly stated in Clause 13.7 that:

The Forum’s fourth and fifth Ministerial Level Conferences had set up new Strategic Plans for Economic and Trade Co-operation for 2014-2016 (FORUM MACAO, 2014) and 2017-2019 (FORUM MACAO, 2017, online), respectively. It is stated in Clause 14.4 in both plans:

These provisions show the significant support from the members of the Forum Macao for Macao to be an arbitration seat for commercial disputes between China and the PSCs. The central government of China also expressed continuous support to the Macao legal profession to take advantage of this opportunity to assist mainland companies in accessing the PSCs market through the Macao platform and to increase Macao’s international presence.

In March 2011, the Sino-Portuguese Forum (Macao) Training Center was founded in Macao to deepen cooperation between China and PSCs in different fields namely language and human resources. Therefore, this research aims to analyze the comparative strengths and weaknesses of Macao in this role and evaluate the extent to which Macao can play a role as a seat and venue of commercial arbitration between China and PSCs.

For the purposes of this study, a total of thirty-six legal practitioners were surveyed. The majority of them are from Macao SAR, which accounts for 67%. Two of the twenty-four Macao respondents had prior experience participating in arbitration proceedings; On the other hand, the number of legal practitioners from Mainland China contributes 8% of the total number, with two-thirds of them having prior experience participating in arbitration proceedings. The number of legal practitioners from PSCs, on the other hand, accounted for 25%, with two participants from Angola, two from Brazil, one from Cabe Verde, one from Mozambique, two from Portugal, and one from Sao Tome and Principe. Six of the nine legal practitioners from PSCs have prior experience with arbitration proceedings.

Figure 1 Source: authors.

To further analyze and elucidate the underlying factors revealed by the survey results. This study collected data from an additional twenty-three legal practitioners by conducting direct face-to-face interview. Within them, nineteen interviews were conducted with legal practitioners from Macao, eight of whom had experience with arbitration proceedings; On the other hand, two interviews were conducted via online video conferences with legal practitioners with arbitration experience from the PRC, and two interviews were conducted via online video conferences with legal practitioners with arbitration experience from the PSCs. None of these individuals had previously completed my survey.

Approximately 46% of respondents from Macao and China and 49% of respondents from PSCs pointed out the success of Macao as a platform connecting China and PSCs, along with professional exchange, the supply venues, and other infrastructure to support the cooperation between the two sides¹¹. For instance, there have been five Ministerial Conferences between China and PSCs so far, all of which have taken place in Macao. They were held in October 2003, September 2006, November 2010, November 2013 and October 2016 respectively.

Since the establishment of Forum Macao, according to official figures of the IPIM and the China Statistical Bureau in 2021, trade between China and PSCs has surged in the past decade. The annual value of trade between China and PSCs in 2003 was US$10 billion and surged to US$45 billion in 2007, further rocketing to US$149.6 billion in 2019.

The success of Macao in promoting economic and trade exchanges between the two sides not only enhances the political and commercial relationship between the two sides but, also enhances Macao's status internationally. Forum Macao and the Macao Trade and Investment Promotion Institute (IPIM) both contributed to building PSCs confidence in Macao's ability to serve as an appropriate seat of arbitration.

Regarding language, 35% of respondents from Macao and 45% of respondents from PSCs indicated that Macao's unique linguistic ability is one of Macao's most important strengths, which increases their inclination to select Macao as the arbitration seat for disputes between China and PSCs.

In the Macao Basic Law, it is stated that Macao is characterized by 'bilingualism', and Chinese and Portuguese are the official languages. Article 9 of the Macao Basic Law states explicitly that in addition to Chinese, Portuguese may also be used as an official language by the executive, legislative, and judicial branches of government in Macao. As a result of this clause, both Chinese and Portuguese have equal status in Macao as the official language.

Thus, requiring bilingual competencies from arbitrators and lawyers could reduce several costs such as translation costs and can highly increase the effectiveness of the arbitration proceedings between China and the PSCs.

As Macao is the only place in the world that offers Chinese and Portuguese as official languages, this soft power subsequently serves as an important strength for the region to serve as a bridge between China and PSCs.

Throughout the years, the existence of a ‘Lusophone legal system’ has been a controversial subject. The similarities between PSCs’ legal systems result from their shared colonial history (SIMÕES, 2017)¹². The influence of Portuguese law is still clear at present. Several Portuguese-speaking jurisdictions have adopted legislation influenced by Portuguese law. Brazilian Civil Code 2002 adopted for example rules from the Portuguese Civil Code (VICENTE, 2010); the Portuguese law on voluntary arbitration was the direct source of a new law in Guinea-Bissau in the same field in 2000 (VICENTE, 2010); Cape Verde enacted a commercial company code 1999 that reflects the process of modernization of commercial law in Portugal (VICENTE, 2010), and the same happened in Mozambique with the new commercial code 2005 (VICENTE, 2010).

Most Portuguese legislations were extended to Macao during the period of Portuguese administration (TONG; WU, 2010, online). The handover of Macao to Mainland China did not have a huge impact on Macao’s legal system. In fact, it is expressly stated in Article 8 of the Macao Basic Law that:

The legal system of Macao and PSCs have similar traditions, values, and common languages. This clear similarity of the legal framework with PSCs is an undisputable advantage of Macao. The existence of common legal values and language facilitates Macao’s position not only as an effective service platform but also as a valuable arbitration seat when commercial disputes arise between PSCs and China.

Neutrality is one of the main reasons that parties choose arbitration and the seat arbitration to resolve their disputes. Macao is one of two Special Administrative Regions of China in Eastern Asia, along with Hong Kong. Macao has been governed under the principle of "One Country, Two Systems" since it returned to China on 20 December 1999. In Macao, the capitalist economic system has been preserved, along with most of the legal and social systems that were in existence before the handover.

The Macao Basic Law and the Constitution Law of the PRC (MACAO; CHINA) ¹³ stipulate that the National People’s Congress delegated to the Macao SAR a high degree of autonomy and a wide range of executive, legislative, and independent judicial power, including the power of final adjudication¹⁴. In this regard, Macao has a legal system distinct from other legal systems within the PRC, and China’s national laws do not apply in Macao, except as provided in Annex III of the Basic Law (MACAO). Thus, the SAR has been granted high autonomy making it neutral enough to serve as a seat for arbitration between China and PSCs.

Since July 2005, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention") has been applied in Macao, which means that Macao's courts recognize and enforce arbitral awards subject to the provisions of the New York Convention. Furthermore, Macao has recently reformed its Arbitration Law: Law no. 19/2019 (MACAO, 2019) which reflects the government and the Macao Lawyers’ Association’s active commitment to promoting Macao as a seat and venue for international arbitration. The new law unifies the laws governing domestic and international arbitrations seated in Macao and is based on the UNCITRAL Model Law on International Commercial Arbitration (SHAH; GRASSI; QI, 2020).

The new arbitration law provides that an arbitral award rendered in Macao has the same executory effect as a judgment rendered by the court of the first instance in Macao, as well as for the confirmation and enforcement of arbitral decisions issued by arbitral courts outside of the boundaries of Macao.

The Supreme People's Court has determined that the agreement between Mainland China and Macao regarding reciprocal recognition and enforcement of arbitration awards, and the recognition and enforcement of arbitral awards between Mainland China and Macao, remains unchanged under the new Arbitration Law (MACAO, 2007).

An arbitration award, regardless of the quality of the reasoning and the terms of the decision, will lose much of its value if it is not enforceable (BRABANT; DIVOY, 2016).

The New York Convention harmonizes the recognition and enforcement of international arbitral awards. As a result, it lessens the uncertainty for the parties to international arbitration and creates confidence to the parties and makes transnational awards enforceable between states parties to the convention.

Currently, Angola, Brazil, Cape Verde, China, Portugal, Macao¹⁵, Mozambique, and Sao Tome and Principe have ratified and are official parties to the New York Convention, while three members within the PSCs including Timor-Leste, GuineaBissau, and Equatorial Guinea have not yet joined¹⁶. As a result, awards rendered in Macao or under Macao law (as the seat of arbitration) are recognized and enforceable in other jurisdictions (in this case, Mainland China and the PSCs who are a member of the NY Convention).

Ultimately, the common legal framework, values, culture, and in particular the common language between Macao and PSCs enable Macao to be the ideal platform and bridge for China and PSCs. A recent reform of the Arbitration Law 19/2019 demonstrates the dedication and support of the government, which is essential to the development of a successful arbitration hub. In addition to the autonomy granted by the central government of the PRC to Macao, the neutrality of the region makes it an excellent seat and venue for arbitration of business disputes.

Even though participants indicated that Macao can be an adequate seat and venue for arbitration, several weaknesses were also identified.

One of the main weaknesses of Macao is the lack of arbitration culture, which is mainly the consequence of insufficient promotion and lack of confidence on the part of the public. The use of arbitration in Macao is still relatively low at present. In some instances, disputes involving Macao-based companies are arbitrated outside of the region (CASTELLUCCI, 2012), notably in Hong Kong and Singapore¹⁷.

Even after the recent reform that led to the adoption of Arbitration Law No. 19/2019, arbitration remains an unpopular and largely underutilized dispute resolution process in Macao. One of the reasons for such reluctance to use arbitration is the lack of awareness of the general public and business community about the safety and effectiveness of arbitration compared to litigation.

Generally speaking, the majority of respondents from PSCs believe that while Macao has all of the necessary advantages of serving as a perfect seat and venue for arbitration between China and PSCs, the region is still unprepared to perform this function for two reasons: There is no arbitral experience in Macao domestically, nor are there arbitration proceedings between China and PSCs settled in Macao or using Macao as a seat.

Clearly, investors are reluctant to bring their claims to Macao due to a lack of local and international arbitration expertise. Instead, they prefer to bring their claims to Hong Kong, Singapore, London or other recognized arbitral institutions. Consequently, this reflects the lack of confidence of foreign investors in Macao's arbitration record either as a seat or venue.

Academics and lawyers have been raising this issue for more than a decade, but little has been accomplished. In addition to inviting arbitration experts from neighbouring regions, such as Hong Kong and Singapore, to lecture legal practitioners, the Macao government should also invite experts from PSCs.

In terms of recommendation, some interviewees suggested that in order to enhance public confidence in arbitration, the Macao government should act and set an example by making arbitration mandatory for certain government disputes with private companies. Institutions such as the Macao Trade and Investment Promotion Institute (IPIM) should inform and advise their clients on the importance of including an arbitration clause in their contracts.

There are currently three arbitral institutions in Macao, including the World Trade Center Macao Arbitration Center (WTC), the Macao Lawyers Association Arbitration Center and the Macao Consumer Mediation and Arbitration Center, all of which are considered to be underutilized and have limited experience in resolving disputes. As an example, the Macao Arbitration Center (WTC) was established in 1998 authorized by Order 48/GM/98 (MACAO, 1998a) and began receiving cases in 2010, and the number of cases it has received in recent years has slowly increased. The second center, the Macao Lawyers Association Arbitration Center, was created in 1998 and authorized by Order 26/GM/98 (MACAO, 1998b). However, this center exists only in the law and is not fully operational (SIMÕES, 2012), it does not even have a panel of arbitrators yet. The third one is a specialized arbitration center set up under the Consumer Council ¹⁸ , created in 1998, authorized by Order of the Governor No. 19/GM/98. The center handles the mediation and arbitration of consumer disputes, aiming to solve civil or business disputes between consumers and traders that arise from the supply of goods or services. The arbitration award is made by a court judicial officer who serves as the arbitration judge in a part-time system (TONG, 2013).

Apart from the aforementioned centers, there used to be two more specialized arbitration centers in Macao; however, they were forced to close in 2020 due to having received almost no cases in their 10-year period. The first of these arbitration centers was the Arbitration Center for Property Management Affairs, set up by the Housing Bureau of the Macao Special Administrative Region in 2011 (MACAO, 2011). The center focused mainly on the resolution of building management disputes and it was rarely used by the public. There was also the Arbitration Center for disputes concerning insurance and private funds, established in 2001 (MACAO, 2001, 2002). Both arbitration centers were closed in 2020 pursuant to Orders of the Chief Executive no. 112/2020 and 128/2020 (MACAO, 2020a, 2020b).

Thus, as of today, among the three existing arbitral institutions, only the WTC and the Consumer Council Arbitration Center are actually operational.

Aside these issues, respondents indicated that administrative staff at the arbitration centers are not familiar with Macao's arbitration legislation. In some cases, this results in delaying the administrative processing of the cases.

In view of the above, it is important to note that a jurisdiction's legal infrastructure and rule setting must be of a high quality in order to attract international arbitration (SIMÕES, 2012). In terms of venue, World Trade Center Macao Arbitration Center (WTC) is the most important and well-structured suited for the resolution of international commercial disputes (TONG, 2013). There is, nonetheless, room for improvement in terms of size. In order to handle high-profile cases, the WTC must sometimes borrow space from the Macao Lawyers Association Arbitration Center, according to interviewees.

As of today, different forums exist to resolve disputes between Chinese and African parties. The China-Africa Joint Arbitration Center Shanghai (hereinafter referred to as "CAJAC Shanghai") and the China-Africa Joint Arbitration Center Johannesburg (hereinafter referred to as "CAJAC Johannesburg") are examples of such arbitration forums.

Therefore, besides using Macao as a seat of arbitration, the establishment of a proper and dedicated forum (Sino-Luso arbitration center) for the settlement of disputes between China and PSCs could contribute to strengthening Macao's position both as an arbitration seat and as a venue for resolving disputes.

In total, the WTC has 31 arbitrators on its panel, 20 of whom reside in Macao and 11 in Hong Kong¹⁹. Data collected indicate that it is very difficult in Macao to identify arbitrators with the necessary and specialized skills for arbitrations involving field such as construction and medicine. In the course of the interview, a number of respondents addressed the issue of difficulty in selecting arbitrators in Macao from the panel list, where the majority are lawyers. Some lawyers (potential arbitrators) may have conflicts of interest due to their previous involvement in the case as lawyers. As a result, it may take longer than one or two years to appoint arbitrators. It may also result in greater costs (in terms of lost revenue) for the parties and damage the credibility of arbitration, which is touted as being fast and efficient.

The Macao Lawyers Association president, Dr. Jorge Neto Valente, stated that the proportion of Portuguese native-speaking lawyers in Macao has dropped dramatically, from 70% three decades ago, to less than 30% in 2021 (MACAU BUSINESS, 2021). Moreover, he mentioned that in recent years, the number of Portuguese lawyers who come to Macao to practice their legal profession has declined (MACAU BUSINESS, 2021).

The Macao Lawyers Association's data shows that there were 359 lawyers registered with the organization as of 31 December 2016, with 224 of them speaking Portuguese, 135 speaking Chinese, and 48 speaking both languages. In addition, the Association has 109 trainee lawyers enrolled, 18 of whom are bilingual (SUN, 2017). In recent years, the number of bilingual lawyers has steadily increased. However, it is still far from sufficient to make Macao stand out from other arbitration centers.

The other issue that represents a weakness of Macao as a seat and eventually as a venue for the settlement of disputes between China and PSCs concerns the recent choice by Macao courts to favor the use of Chinese language in litigations. Currently, decisions are more often produced in Chinese during criminal proceedings than during civil proceedings. Though such a situation is less likely to occur in arbitration, it may send the wrong message if it is extended to other fields of dispute resolution.