Tuesday, 18 March 2014

Arbitor slams UMEHL over foul play

A local arbitrator presiding over a dispute between military-backed Myanmar Economic Holdings Limited (UMEHL) and a commercial partner has publically accused the conglomerate of deliberately sabotaging the suit through a number of stunts geared toward terminating the proceedings.

In a notice published in the state-run New Light of Myanmar on March 12, the arbitrator handling a commercial dispute between UMEHL and TAG Company Limited over a joint-venture soap factory accused UMEHL of physically locking the arbitrator and TAG Co representatives out of the arbitration chamber ahead of a scheduled meeting as well as removing furniture from an arbitration room.

The arbitrator, U Maung Maung Ohn Myaing, said in the statement that UMEHL ignored summonses by the arbitrator as well as intentionally breached the dispute resolution terms of its own commercial agreement with TAG Co, that leases the Padomar Soap factory in Mon State from UMEHL.

“Colonel Win Kyi (Retd) [representative of UMEHL] and his Advocate U Hla Kyi were absent and did not appear before the Arbitral Tribunal again and remove[d] chairs, tables and furniture from the Arbitral Tribunal chamber in advance … with the intention to terminate the Arbitration,” U Maung Maung Ohn Myaing wrote in his summons.

“They did not appear before Arbitral Tribunal and already locked main doors of such Arbitral Tribunal Chamber so that Arbitrator U Maung Maung Ohn Myaing [and TAG Company representatives] were standing in front of such locked chamber.

“Such performances of Colonel Win Kyi and his Advocate U Hla Kyi were carried out with the intention to terminate such Arbitral Tribunal and against provisions of the Arbitration Act.”

U Maung Maung Ohn Myaing, one of two arbitrators appointed to the case, had ruled against injunctive action proposed by UMEHL because the respondent had failed to pay money it owed the firm and subsequently the commercial giant filed a motion of no confidence in U Maung Maung Ohn Myaing and sought to terminate the proceedings. A second arbitrator, which had initially ordered injunctive relief in favour of UMEHL, later withdrew from the case.

“Such letter’s meaning is [a] one sided cancellation of the existing [agreement]. But the existing laws do not allow it,” U Maung Maung Ohn Myaing wrote in his summons, which served as the second and final summons before the arbitral tribunal continues proceedings exparte.

U Khin Maung Myint, assistant to Colonel Win Kyi (Retd), head of the production department at UMEHL and the commercial conglomerate’s representative in the arbitration said UMEHL’s actions were driven by bad faith dealings of the TAG Company Ltd and the arbitrators in the proceedings.

“We [UMEHL] are planning to respond to the advertisement in accordance with the law,” U Khin Maung Myint said of the summons printed in theNew Light of Myanmar. “Originally they [TAG Company Ltd.] did play unfair and that’s why we formed the arbitral tribunal to solve that.”

U Khin Maung Myint said the dispute stemmed from the TAG Company Ltd’s failure to pay rent and other costs from its management of the factory.

“During the arbitral tribunal process, they tried to make arbitrary one- sided decisions. And we found that the tribunal could not solve the problem,” U Khin Maung Myint said. “That’s why we dissolved it, but they do not want to accept it. We consulted our lawyers, we dissolved [the arbitration] and now we filed the case at Yangon Region court against them.”

He said the civil suit was scheduled to be heard in Yangon Regional Court on March 18 and that UMEHL had no intention to participate in any further arbitral proceedings.

“TAG wants to avoid the court and that is why they keep trying to hold a tribunal,” he added.

When The Myanmar Times visited the site of the arbitration for the dispute, the chamber was locked and no representatives were present.

The seemingly bad faith actions by the parties highlight weaknesses in Myanmar’s domestic arbitration system, which is based on the 1944 Arbitration Act. DFDL deputy managing director William Greenlee said that by its very age, the law is an outdated system.

“However, Myanmar does recognise the need to reform its arbitration system, especially for foreign investment purposes,” Mr Greenlee said. “Notably, the 2012 Foreign Investment Law provides implicitly that any type of dispute settlement, including foreign arbitration, can be used by foreign investors.”

In 2013 Myanmar acceded to the New York Convention – a multilateral treaty articulating the parameters for international arbitration as a mode of commercial dispute resolution. However, the government has not yet implemented the treaty into national law.

The 2012 Export Import Rules provide the government’s commercial policies including a requirement for domestic and foreign-domestic commercial dispute resolution through arbitration under the 1944 Act.

“Thus, until Myanmar implants regulations from the NY Convention, it appears that the 1944 Arbitration Act is still the operative arbitral regime,” Mr Greenlee said.

Last year, MEHL initiated international arbitration proceedings against Singaporean F&B giant Fraser and Neave in an effort to wrest back 100pc ownership of Myanmar Brewery after F&N sold its shareholding to companies linked to Thai billionaire Charoen Sirivadhanabhakdi.

The Myanmar Times was unable to contact U Maung Maung Ohn Myaing or representatives from TAG Company Ltd for this story.

source: The Myanmar Times
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