Examining the Controversy Surrounding Qian Kai Port: Safeguarding Investment Boundaries for Chinese Enterprises in Overseas Rule of Law

The Port of Chancay in Peru has recently become embroiled in a regulatory authority dispute, attracting considerable attention. The issue revolves around whether the Peruvian infrastructure investment regulatory body, OSITRAN, has the authority to implement comprehensive regulation over this privately invested, privately owned port that serves public functions. Chancay has initiated multiple legal proceedings. On the surface, this appears to be a dispute over port regulatory authority. Looking deeper, it highlights a very practical issue for Chinese enterprises: after a project is launched, potential problems may not just stem from contracts or permits themselves. How the host country interprets its laws, how regulatory bodies perceive their authority, and whether market competition conditions are redefined can all impact the stable operation of a project.

Chancay Port Dispute: Superficially About Regulation, Fundamentally About Boundaries

It is not surprising for a host country to regulate an important port. Any infrastructure project that fulfills public service functions cannot be entirely separate from local laws and administrative systems.

The operational activities of the Port of Chancay have always been under the overall regulatory framework of the Peruvian government. The OSITRAN regulatory dispute does not indicate that the project is escaping local government oversight. So far, the port is regulated by the National Customs and Tax Administration (SUNAT) in customs matters, the Environmental Assessment and Control Agency (OEFA) for environmental issues, the National Police Drug Enforcement Directorate (DIRANDRO) for anti-drug efforts, and overseen in maritime traffic, labor, health, food safety, and international crew control by the Navy’s Port Authority, the Peruvian National Labor Inspection Bureau (SUNAFIL), the National Agricultural Health Service (SENASA), the General Directorate of Environmental Health (DIGESA), and the Immigration Bureau, respectively.

OSITRAN is just one of many regulatory entities in Peru. Even if the agency does not perform its related regulatory duties, it does not change the fact that the project is subject to overall Peruvian government oversight. Therefore, the question here is not whether to regulate, but rather who regulates, on what basis they regulate, and the extent of their regulatory authority.

Based on disclosed information, the dispute between OSITRAN and Chancay concerns not whether the port has public service attributes but whether a port financed and owned by private entities with operational permits from Peru’s National Port Authority naturally falls under OSITRAN’s full regulatory, supervisory, auditing, and punitive authority. Chancay argues that Peru's current port law framework primarily targets traditional publicly-owned infrastructure and concession models, and does not automatically apply to privately financed ports like Chancay. OSITRAN, however, insists that as long as the port provides public service functions, it should be included in its regulatory system.

Such disputes may appear highly technical but are not solely about technicalities. If the regulatory boundaries are redefined, the impact extends far beyond regulatory fees. It could affect whether the port can operate as previously planned, additional compliance obligations for the enterprise, and the feasibility of the project’s originally calculated returns. At first glance, it is a struggle over regulatory authority—but in essence, it raises the question of whether the rules understood when the investor entered the project remain valid.

In practice, this type of risk is often underestimated. During project negotiations, businesses typically focus on entry permits, licenses, land, financing, and construction. While these are undoubtedly important, another layer of issues tends to emerge only after the project begins operations: No matter how detailed a contract is, it cannot prevent the host country from later redefining regulatory authority or reassessing market and competition conditions.

Procedural Setbacks Do Not Equate to Defining Substantive Boundaries

Chancay initially received favorable rulings in the first trial. However, the appellate court overturned the decision, ruling the constitutional protection case inadmissible due to a failure to exhaust preliminary administrative remedies. At first glance, this seems like a “reversal,” but in the context of cross-border dispute resolution, the more accurate interpretation is that the case is encountering procedural setbacks rather than reaching a substantive resolution.

The appellate court did not conduct a full substantive review on whether OSITRAN naturally holds regulatory authority over Chancay. Instead, the court focused on procedural thresholds: whether the enterprise should first exhaust administrative remedies before entering judicial processes. In other words, the key regulatory authority issue was not substantively addressed in this round of litigation but was sent back to another procedural level.

This is also one of the most easily misunderstood aspects of cross-border disputes. Many view litigation as a simple win-or-lose scenario: winning indicates merit, while losing indicates a lack of merit. But cross-border disputes involving infrastructure investment and industry regulation cannot be viewed this way. A procedural defeat does not mean substantive claims lack validity, and a setback on appeal does not imply the core demands lack a legal basis. The enterprise's ability to hold its position often depends not on any single ruling but on its ability to switch processes, continue litigating, and keep the key boundary issues on the table.

From this perspective, Chancay’s decision to file a special appeal to Peru’s Constitutional Court after the appellate court’s ruling is a normal legal remedy. When Chinese companies encounter similar issues abroad, completing legal procedures according to the law is neither “stubbornness” nor an emotional reaction—it is the necessary work to be done.

From Regulatory Authority to Competition Assessment: The Real Risk Lies in Reinterpretation of Rules

While the OSITRAN dispute focuses on regulatory authority, the Peruvian competition regulator, INDECOPI, has raised the stakes by assessing Chancay’s competitive positioning, thus touching on issues of industry regulation and commercial autonomy.

Once competition assessment conclusions become a major basis for regulatory agencies to intervene in pricing, the conflict is no longer limited to whether a specific agency has the power to issue letters, oversee operations, or collect fees. It directly impacts the core commercial arrangements of the project. For large-scale infrastructure investments, matters like determining fee rates, recovering revenue, and operational autonomy are significant. If these are subjected to post-operation control, the impact often surpasses that of a single procedural dispute.

The larger concern is not whether a particular agency collected an additional 1% in regulatory fees. The real problem exposed by the Chancay dispute is a new challenge faced by Chinese enterprises going global: project uncertainties may not arise from breaches of contract by counterparties—it may come from regulatory bodies later reinterpreting their authority, redefining public service functions, or reassessing market competition conditions.

Many outbound projects face similar issues. Initial conditions may appear clearly defined when entering the market, but new problems emerge once the project begins operations: industry regulators adopt new interpretations, competition authorities intervene, the scope of public interest expands, and external voices may rapidly politicize technical issues. Ultimately, enterprises no longer deal with singular contract compliance risks but rather a chain of systemic risks.

From the perspective of strategic infrastructure investment, the Chancay Port case is not an isolated example. When perceptions of regulatory boundaries, public interests, or competitive order shift in a host country, the original institutional expectations upon which enterprises rely can be reopened.

When Legal Issues Are Amplified in Public Narratives, Enterprises Face More Than Compliance Risks

The recent public narrative surrounding the Chancay Port also illustrates this point. In the context of the regulatory authority dispute, some external opinions have moved beyond technical issues like port law interpretation, regulatory authority, or competitive condition assessment, instead placing the legal issues into broader public discussions. It is important to emphasize that the Chancay Port dispute should fundamentally be understood as a matter within legal and regulatory frameworks and not oversimplified or politicized.

When legal issues are overly amplified in public narratives, their nature can change. Problems that could have been handled through courts, regulatory processes, or administrative dispute mechanisms may be escalated into discussions around institutional autonomy, public interest, or international influence. At this stage, enterprises face not only defendable compliance risks but much harder-to-mitigate systemic risks that legal processes alone cannot address.

This represents a new reality Chinese enterprises must adapt to when going global. Entering overseas markets means entering into a local legal, regulatory, public interest, and public opinion environment. It often goes unrecognized that contracts may not always lock in expectations, permits may not preclude subsequent regulation, and temporary procedural victories may not guarantee final commercial outcomes. Whether a project remains stable often depends on whether the enterprise can safeguard its rights and institutional expectations when rules are reinterpreted, market conditions are reassessed, and public pressure is amplified.

Overseas litigation, appeals, arbitration, or administrative disputes do not mean a company has “caused trouble” or should be simplistically viewed as business failure. The deeper Chinese capital integrates into global infrastructure networks, the more likely it is to encounter legal disputes with host country regulators, partners, or even state institutions. Such disputes are inherently part of cross-border operations. The true concern should not be why enterprises engage in legal battles but whether they hesitate, lack the skills to fight, or retreat when their boundaries are first challenged.

Truly Mature “Going Global” Means Successfully Launching Projects While Safeguarding Boundaries

The Chancay Port dispute provides a crucial lesson for Chinese enterprises: mature “going global” involves not just a competition of commercial execution capabilities but also a competition of legal adaptability.

Historically, many enterprises understood “going global” as focusing primarily on project acquisition, cost control, construction efficiency, and operational capacity. While these are undoubtedly important, they are no longer sufficient. Enterprises must also be able to identify gray areas in foreign legal frameworks, know when to initiate legal procedures, and understand when disputes should be addressed openly. When necessary, they must use litigation, arbitration, administrative remedies, or institutionalized negotiations to secure investment expectations and ensure stability.

The core of building foreign legal capacity is not about “winning every case.” The more realistic question is: in an uncertain institutional environment, are enterprises able to discern which rules were reasonably relied upon at project entry, which changes are normal regulatory adjustments, and which expansions have crossed boundaries requiring correction through legal principles and procedures?

From this perspective, Chancay’s current response carries a certain exemplary value. Unlike some overseas projects that only enter dispute resolution after risks fully materialize and the situation becomes highly passive, Chancay proactively challenged substantial regulatory differences through the host country’s legal mechanisms, seeking clarification early. Simply put, this approach prioritizes legal protection and proactive risk controls. For overseas infrastructure investment, effective risk management is not just about post-incident remedies but also about acting promptly and legally when boundaries first begin to slip.

Such a capacity for “going global” is particularly commendable today. It is not problematic for enterprises to encounter legal disputes abroad. What is problematic is when rules begin to be reinterpreted, regulation intensifies step by step, and enterprises still view the issue as temporary friction, hoping commercial negotiations will naturally resolve it, ultimately missing the opportunity to safeguard their boundaries. Compared to responding passively after risks fully materialize, promptly, rationally, and consistently leveraging the host country’s legal mechanisms to assert rights is often more effective in preventing projects from sliding into more unmanageable situations.

At a practical level, the significance of the Chancay Port dispute does not depend on its final ruling or settlement outcome. The message to outward-bound enterprises is straightforward: overseas investments need to protect not only tangible assets but also the rules, procedures, and investment expectations underpinning those assets. Only by safeguarding expectations within another jurisdiction’s framework can an enterprise truly enter the global market.

(Author Liu Yang is a partner at Haiwen & Partners’ Hong Kong office and the Chief Representative of the International Chamber of Shipping's China Office. He holds several public appointments with the Hong Kong SAR government, including as a member of the Chief Executive’s Policy Unit Expert Group, the Department of Justice’s Advisory Group on International Law and Dispute Resolution Services, and more.)